I. Background

In section 1021(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress established the Bureau's statutory purpose as ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive. 1 Relatedly, the Bureau's objectives include exercising its authorities under Federal consumer financial law  2 for the purposes of ensuring that markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation, and that outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens. 3

As these provisions make clear, the Bureau's statutory mission of protecting consumers is not limited to vigorously enforcing the law. It includes facilitating innovation in markets for consumer financial products and services, as innovation drives competition, which in turn lowers prices and promotes access to more and better products and services. Innovation holds the promise of benefitting consumers in numerous ways, including by creating or expanding access to products and services; increasing the range of products and services; improving the functionality of existing products and services; reducing prices; increasing consumer understanding and control; and enhancing safety and security. 4

A primary means of facilitating innovation is removing barriers to innovation. This can be accomplished in a variety of ways. As noted, Congress expressly identified one of these: reducing unwarranted regulatory burdens. Another consists in reducing uncertainty regarding the meaning or application of statutory and regulatory provisions. Faced with such regulatory uncertainty, some companies may hesitate to develop and offer potentially beneficial products and services, not wishing to run the risk of supervisory findings, enforcement actions, or private lawsuits. Reducing this uncertainty may encourage these companies to offer these products and thereby benefit consumers.

Such regulatory uncertainty may be particularly acute in the case of innovative products and services, as such products and services may not have existed, or even been contemplated, at the time potentially applicable statutes and regulations were promulgated. In such circumstances, companies with innovative financial products or services may find it difficult to attract sufficient investment, business partners, or other support, and bring innovative ideas to market in a timely fashion.

Given that there are a variety of different impediments to innovation, a variety of different regulatory tools are needed to reduce such impediments. Congress has given the Bureau a variety of authorities under title X of the Dodd-Frank Act and the enumerated consumer laws  5 that it can exercise to promote its purpose and objectives, including facilitating innovation. These authorities include supervision and enforcement authority, and the authority to issue orders and guidance. 6 These authorities provide the basis for the Policy on No-Action Letters (Policy) and the No-Action Letters issued pursuant to the Policy. Issuing such No-Action Letters is also a means through which the Bureau can further its understanding of the legal and policy implications of innovative products and services to help support official interpretations and rulemakings.

The Bureau proposed the original version of its Policy on No-Action Letters in October 2014  7 and finalized it in February 2016 (2016 Policy). 8 In the preamble of the 2016 Policy, the Bureau anticipated that No-Action Letters would be provided rarely and on the basis of exceptional circumstances, and estimated that the Bureau would on average receive one to three actionable applications per year. This estimate was based on the features built into the 2016 Policy; i.e., the 2016 Policy was designed to result in no more than three No-Action Letters per year. The Bureau issued only one No-Action Letter under the 2016 Policy in the nearly three-year period between its issuance and publication of the proposed Policy in December 2018. 9

The Bureau has determined that the approach to facilitating consumer-beneficial innovation through No-Action Letters built into the 2016 Policy is not an adequate response to the extent of innovation occurring in markets for consumer financial products and services. Given that the 2016 Policy was designed to result in a small number of No-Action Letters per year, the Bureau determined that the 2016 Policy required modification. Accordingly, in December 2018, the Bureau proposed to revise the 2016 Policy in order to more effectively carry out the Bureau's statutory purpose and objectives. 10

The Bureau received 31 unique comments in response to the December 2018 proposal. Industry trade associations and other industry groups submitted 12 comments. Individual financial services providers submitted three comments. Four comments were submitted by consumer groups and civil rights organizations. There were six comments from research and advocacy organizations, two from groups of State Attorneys General, one from a group of State regulators, one from an academic, one from a law firm, and one from an individual. 11

Industry commenters uniformly supported the proposed Policy, and stated that it is more likely to incent companies to apply for a No-Action Letter than the 2016 Policy. One of the two groups of State Attorneys General likewise supported the proposed Policy. Although generally supportive of the proposed Policy, industry commenters recommended discrete changes to certain provisions of the proposed Policy.

In contrast, all but one of the consumer group commenters opposed the proposed Policy on numerous grounds, and stated that it marks a step backwards vis-à-vis the 2016 Policy. The second group of State Attorneys General were of the same opinion. One consumer group stated that provision of compliance assistance  12 by the Bureau is not really needed because (i) few technologies lead to products where the application of a well-established law or regulation is in question, and (ii) the vast majority of fintech innovation falls within known product categories and rarely raises novel questions of law and policy. The Bureau disagrees with this assessment.

The other consumer groups and the group of State Attorneys General appear to agree with the Bureau's view that innovative products and services face regulatory uncertainty, but disagreed with the Bureau's approach in the proposed Policy to address it. Instead, these commenters generally supported the approach taken in the 2016 Policy, and thus opposed virtually every revision of the 2016 Policy proposed by the Bureau.

This disagreement between the Bureau and these commenters regarding the optimal level of facilitation of consumer-beneficial innovation may be based, in turn, on a disagreement about the Bureau's consumer protection mission under title X of the Dodd-Frank Act. As these commenters emphasized, Congress gave the Bureau supervisory and enforcement authority to protect consumers from unfair, deceptive, and abusive acts and practices, as well as other violations of Federal consumer financial law. 13 As noted above, however, the Bureau reads the purpose and objectives Congress set for the Bureau as clearly signaling that the Bureau should also exercise its numerous authorities to facilitate access and innovation in markets for consumer financial products and services. These commenters, in contrast, appear to diminish this aspect of the Bureau's consumer protection mission. For example, one consumer group letter states that facilitating consumer-beneficial innovation falls outside the Bureau's “core mission.”

Many comments from stakeholders across the spectrum requested greater specificity or detail regarding various provisions of the proposed Policy. The Bureau notes in this regard that the Securities and Exchange Commission's (SEC) procedures regarding no-action letters are significantly shorter and less detailed than the proposed Policy. 14 Nonetheless, the SEC has managed to provide scores of no-action letters per year over the course of many decades in a manner that is widely viewed as promoting the interests of regulated entities, shareholders, and the public more generally. 15 Indeed, a number of the streamlining revisions in the proposed Policy were designed to move the Policy in the direction of the SEC model.

The Policy is designed to apprise potential applicants and other stakeholders of one way in which the Bureau plans to exercise its supervision and enforcement discretion, namely, through the issuance of No-Action Letters under the Policy. The Policy is necessarily relatively general as compared to particular No-Action Letters issued under it. Moreover, given that the Policy is being issued based on relatively little practical experience in issuing No-Action Letters, the Bureau is concerned that an attempt to provide significantly more detail and specificity at this time would be counterproductive. Nevertheless, the Bureau has provided additional specificity and detail in a number of instances, as explained below. As the Bureau gains experience implementing the Policy and engages in additional stakeholder outreach, it will consider the extent to which additional clarifications or adjustments are necessary or appropriate.

Finally, the Bureau voluntarily sought public comment on the proposed Policy because it recognizes that facilitating consumer-beneficial innovation is a topic in which many stakeholders have a keen interest, and because it anticipated receiving comments that would enable it to improve the proposed Policy. The Bureau appreciates all of the comments received and has given each of them careful consideration. In the proposal, the Bureau strove to facilitate consumer-beneficial innovation, while minimizing the risk of consumer harm. Based on the many constructive, and instructive, comments received, the Bureau has further revised the Final Policy in line with these goals.

This section provides a summary of the significant comments received by subject matter. It also summarizes the Bureau's assessment of such comments by subject matter and, where applicable, describes the resulting changes that the Bureau is making in the final Policy. 16

The Bureau received a number of comments claiming that the proposed Policy violates applicable rulemaking requirements as well as other requirements of administrative law. Relatedly, some commenters argued that individual No-Action Letters could violate applicable rulemaking requirements.

In section III of the document published in the Federal Register on December 13, 2018, the Bureau stated that, if finalized, the two-part proposed Policy would constitute an agency general statement of policy and a rule of agency organization, procedure, or practice exempt from the notice and comment rulemaking requirements under the Administrative Procedure Act (APA). Due to the types of compliance assistance that would be available under Part II of the two-part proposed Policy, the Bureau deemed it appropriate to treat Part II as both a general statement of policy and a procedural rule. It was largely for this reason that section III stated that the entire proposal ( i.e., both parts), if finalized, would constitute a general statement of policy and a procedural rule. Now that the Bureau is separately finalizing the No-Action Letter Policy, it has determined that the Policy is more appropriately characterized solely as a general statement of policy.

Consumer groups disagreed with the Bureau's characterization of the proposed Policy as a general statement of policy, arguing that the proposed Policy, if finalized, would be a de facto legislative rule because (i) it would limit the Bureau's discretion to take a supervision or enforcement action once it issues a No-Action Letter; and (ii) it would replace staff-issued No-Action Letters with Bureau-issued No-Action Letters. 17 Each of these claims concerns the binding nature of particular No-Action Letters, rather than the proposed Policy—a topic addressed in section III.A.2 below.

As finalized, the Policy is a non-binding general statement of policy under applicable law. 18 As stated in section IV below, the Policy is intended to provide information to interested parties regarding the Bureau's plans to exercise its enforcement and supervisory discretion to provide No-Action Letters. 19 The Bureau retains the discretion to change these plans as it gains experience in operating the Policy—just as it had done in the 2016 Policy. 20

As noted above, and in the proposal, a particular No-Action Letter would constitute an exercise of the Bureau's supervisory and enforcement discretion. Consumer groups appeared to accept this characterization as to some No-Action Letters, but argued that other No-Action Letters could be de facto legislative rules issued in contravention of applicable law because they could change, in a binding manner, and broadly, whether and how consumer protection laws apply in the future. The claim that such No-Action Letters would be binding and have future effect is based on their claim that No-Action Letters would restrict the Bureau's ability to take enforcement or supervision action in the future. That claim was based, in turn, on two features of the proposal: (1) The Bureau's statement that, whereas a No-Action Letter under the 2016 Policy was a staff recommendation of no-action, a No-Action Letter under the proposed Policy would be issued by duly authorized officials of the Bureau in order to provide recipients greater assurance that the Bureau itself stands behind the No-Action Letters; and (2) the Bureau's proposal to omit from No-Action Letters a statement that the letter is subject to modification or revocation at any time at the discretion of the staff for any reason.

As regards the first feature, the shift from staff-issued No-Action Letters to Bureau-issued No-Action Letters was proposed to address concerns that a no-action recommendation by some Bureau staff would be reversed sometime later by other Bureau staff with a different view of the matter, and to provide applicants with a reasonable basis for believing that this “whiplash” scenario would not occur under the proposed Policy. The commenters' apparent argument that a no-action position issued by an agency, as opposed to a staff recommendation of no-action, transforms an exercise of enforcement discretion into a legislative rule is without basis. It is well-settled that agency-level exercise of enforcement discretion, even if stated in binding terms, does not constitute legislative rulemaking. 21

As regards the second feature, the Bureau proposed omitting the “any time/any reason” statement because it was concerned that this statement may create a false impression about the Bureau's intent regarding revocation, and thus may deter entities with potentially beneficial products and services from applying for a No-Action Letter. It could mistakenly be understood to suggest that the Bureau plans to modify or revoke No-Action Letters ad libitum. As the Bureau noted in the proposal, other Federal agencies with no-action letter programs have terminated no-action letters very rarely. The Bureau anticipates that revocations would be equally rare under the Policy. Accordingly, section C.7 of the final Policy replaces the “any time/any reason” statement with the more accurate statement that the Bureau may terminate  22 a No-Action Letter if it determines that doing so is necessary or appropriate to promote the primary purposes of the Policy as stated therein, and gives three examples of such circumstances.

As noted, the consumer groups also identified effecting a change in existing law or regulations as an element of No-Action Letters that could be legislative rules. Prima facie, an exercise of discretion not to enforce a particular statutory or regulatory provision against a particular entity does not effect a change in the agency's substantive interpretation or implementation of the provision. The provision remains unchanged, and the agency may decide to bring an enforcement action against another entity based on a violation of the provision.

Finally, as noted, the consumer groups also identified breadth or generality as a feature of No-Action Letters that could be legislative rules. They identified several types of generality: (i) No-Action Letters that would apply generally to all consumers that might use a given company's product or service; (ii) No-Action Letters that would apply to all members of an industry association; and (iii) No-Action Letters that would apply to all customers of a software provider. These commenters indicated that No-Action Letters of the second two types could result from the proposed alternative process for applications by third parties, under which an industry association or service provider could apply for a provisional No-Action Letter on behalf of their member or customers, and additional members or customers could be added to the letter over time.

The Bureau proposed this alternative process to address circumstances in which the standard process of applying for a No-Action Letter might not work for one reason or another. As explained in section III.F below, the Bureau is finalizing this aspect of the proposal by adding a new section E to the Policy, which provides greater detail and clarity regarding alternative application, assessment, and issuance procedures. Like the standard process described in sections A through C, these alternative procedures are necessarily somewhat general and open-ended. Not only is the Policy a general statement of policy, but, as noted in section II above, the Bureau has relatively little experience in implementing this type of policy. And this is a fortiori the case as regards the alternative application procedures, which were not a feature of the 2016 Policy. The Bureau is mindful of the concerns raised by commenters and intends to implement these procedures in a manner consistent with the APA's procedural and substantive requirements.

The proposed Policy stated that its main purpose is to provide a mechanism through which the Bureau may more effectively carry out its statutory purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive; and its statutory objectives, which include exercising its authorities under Federal consumer financial law for the purposes of ensuring that markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation. In the preamble of the proposed Policy, the Bureau described various changes it was proposing to make to the 2016 Policy and explained that those changes were designed, inter alia, to streamline the application and review process and to bring the Policy more in line with certain aspects of no-action letter programs operated by other Federal agencies.

Consumer groups claimed that the proposed Policy, if finalized, would be arbitrary and capricious for several reasons. The Bureau notes that a determination of whether the Policy is arbitrary or capricious would be based on the content of the final Policy, not the proposed Policy. Accordingly, the discussion below references the final Policy as well as the proposed Policy.

First, consumer groups contended that the proposed Policy entirely fails to consider an important aspect of the problem the proposed Policy was intended to address by making no mention of its impact on consumers. The Bureau disagrees. As noted in the proposed Policy and in section II above, the main purpose of the Policy is to more effectively carry out the Bureau's consumer-focused purpose and objectives. In addition, the Bureau expects that (i) applications for a No-Action Letter under the Policy will include a discussion of both consumer benefit and consumer risk, and (ii) the Bureau's assessment of applications will place particular emphasis on these aspects of the application.

Second, consumer groups claimed that the Bureau failed to give adequate reasons for the proposed revisions of the 2016 Policy. More specifically, they stated that the only rationale the Bureau provided was that more incentives need to be provided to companies to apply for a No-Action Letter in light of the fact that the Bureau issued only one No-Action Letter under the 2016 Policy. As noted above, however, the Bureau provided other rationales, including streamlining the application and review processes and bringing the Policy more in line with certain features of no-action letter programs operated by other Federal agencies.

Third, these commenters asserted that the proposed Policy offers “virtually no explanation” of the proposed revisions to the 2016 Policy. As noted above, however, such explanations were provided in the proposed Policy. Moreover, additional explanations of the revisions are provided throughout the instant preamble.

A number of comments from stakeholders across the spectrum addressed the subject matter scope of the proposed Policy, i.e., the types of products or services that could be included in an application. Section A.3 of the 2016 Policy provided that No-Action Letters were not intended for either well-established products or purely hypothetical products that are not close to being able to be offered. And in response to comments on the proposed 2016 Policy regarding the types of products or services within its scope, the Bureau noted that the 2016 Policy was limited to emerging products. The proposed Policy omitted the statement regarding well-established products and hypothetical products, and likewise did not state that No-Action Letters would be limited to emerging products and services.

Consumer groups opposed these proposed changes, and interpreted them as signaling the Bureau's intention to provide No-Action Letters for well-established products that do not need a No-Action Letter, and to give companies a “back-door channel” to obtain outcomes they failed to obtain through the notice-and-comment process. This was not the Bureau's intent in proposing these changes. As noted above, one of the primary bases of the Policy is to more effectively implement the Bureau's statutory objective of facilitating innovation. Innovation is a broad concept, and not limited to new or emerging products and services. As regards the concern that the Bureau intends to grant No-Action Letters in cases where they are not needed, it is unclear why an entity would take the trouble to apply for a No-Action Letter in such a case. In any event, the Bureau has no intention to issue No-Action Letters in such circumstances.

The Bureau proposed to omit the statement about hypothetical products because it was concerned that the statement might discourage applications regarding products and services under development that could benefit consumers. Indeed, it is for this reason that the Bureau proposed accepting applications from service providers and is including a process for such applications in section E.1 of the final Policy (as discussed in section III.F below).

Industry commenters generally understood the Bureau's intent in proposing to omit the above statements, but asked the Bureau to state more expressly in the final Policy that the Policy is not intended to be limited to new or emerging products. That is indeed the case, and the text of the final Policy is consistent with that position.

In finalizing the 2016 Policy, the Bureau addressed two types of comments on the application section of the proposed 2016 Policy: (i) Comments that the proposal would have required applicants to submit an unduly burdensome volume of information; and (ii) comments that the information requirements be minimized specifically for smaller organizations that may have relatively fewer resources to devote to the No-Action Letter process. The Bureau declined to reduce the volume of information to be included in applications for a No-Action Letter based on its belief that the volume was not unduly burdensome. The Bureau's main rationale in this regard was its expectation that any conscientious firm intending to launch a consumer financial product or service that would raise substantial regulatory questions would compile the same information on its own, apart from an application for a No-Action Letter.

In addition, the Bureau stated that it planned to monitor the effectiveness of the 2016 Policy and to assess periodically whether changes to the Policy would better effectuate the purposes of facilitating innovation and otherwise substantially enhancing consumer benefit. In the proposed Policy, the Bureau explained that it was proposing to revise the 2016 Policy in various respects for a number of reasons. Most generally, the Bureau explained the proposed changes were designed to increase utilization of the Policy, thereby enabling the Bureau to more effectively carry out its statutory purpose and objectives. More specifically, the Bureau explained that certain proposed changes were designed to (i) streamline the application and review process by eliminating redundant and unduly burdensome elements; and (ii) more closely align the Policy with certain elements of no-action letter programs operated by other Federal agencies.

The Bureau believes that the low level of interest in applying for a No-Action Letter under the 2016 Policy indicates that the application elements included in the 2016 Policy were in fact unduly burdensome, particularly when viewed as a total package. In addition, the Bureau believes that a more streamlined set of application elements will ensure that smaller entities are not disadvantaged relative to larger entities in being able to take advantage of the Policy. The Bureau also believes that the rationale provided in the 2016 Policy for why the package of application information was not unduly burdensome is inapplicable or overstated as regards certain application elements in the 2016 Policy, as explained below.

Industry commenters generally supported the proposed revisions of the application section of the 2016 Policy. Consumer groups opposed each proposed revision, and in some cases urged the Bureau to request more information from applicants than is specified in the 2016 Policy.

Section A.5 of the 2016 Policy instructed applicants to include a candid explanation of potential consumer risks posed by the product—particularly as compared to other products available in the marketplace—and undertakings by the applicant to address and minimize such risks. Section A.14 of the 2016 Policy instructed applicants to include a description of any particular consumer safeguards the applicant will employ, although they may not be required by law, if a No-Action Letter is issued, including any mitigation of potential for or consequences of consumer injury. It went on to say that the description should specify the requester's basis for asserting and considering that such safeguards are effective, and should also address any future study the requester will undertake to further evaluate the effectiveness of such safeguards.

The Bureau proposed replacing section A.5 with a similar instruction to include an explanation of the potential consumer risks posed by the product or service and/or the manner in which it is offered or provided, and how the applicant(s) intends to mitigate such risks. The Bureau proposed omitting section A.14 altogether. Consumer groups asserted that these proposed revisions would lead to the Bureau granting No-Action Letters without any reliable assessment of risks to consumers, and urged the Bureau not to finalize the proposed revisions. The Bureau believes that proposed revisions to section A.5, as finalized, retain the core information needed for the Bureau to assess consumer risk. The information to be provided in applications for no-action letters provided by other Federal agencies typically does not include a comparison to risks posed by competitors' offerings. 23 Nor does the Bureau believe that potential applicants typically have such information ready to hand, including especially smaller entities. The same is true of the “future study” portion of section A.14. The Bureau thus remains of the view that these elements of the 2016 Policy are unduly burdensome.

The Bureau likewise continues to believe that the remainder of section A.14 of the 2016 Policy is largely redundant vis-à-vis section A.5. A description of any particular consumer safeguards the requester will employ, including any mitigation of potential for or consequences of consumer injury, and a specification of the requester's basis for asserting and considering that such safeguards are effective (per section A.14) is substantially similar to a candid explanation of potential consumer risks posed by the product and undertakings by the requester to address and minimize such risks (per section A.5).

More generally, section B of the final Policy specifies that the Bureau intends to base its assessment of applications, inter alia, on the quality and persuasiveness of the application, with particular emphasis on the consumer risk element. This should incent applicants to ensure that the information they submit regarding consumer risk is of high quality and persuasive.

The 2016 Policy instructed applicants to explain how the product in question is likely to provide “substantial” consumer benefit to consumers, and to identify the “substantial” regulatory uncertainty on which the request for a No-Action Letter is based. These were key features of a policy designed to result in one to three actionable No-Action Letter applications per year. The Bureau thus proposed to eliminate these limitations as part of its general policy shift toward increasing the level of support for consumer-beneficial innovation. Industry commenters and advisory/research organizations supported these proposed changes. Consumer groups opposed them.

Regarding the proposed elimination of “substantial” as to consumer benefit, consumer groups' opposition appears to be based on their general support of the approach to innovation-facilitation taken in the 2016 Policy. The Bureau is finalizing the revised application element as proposed, i.e., as instructing applicants to include an explanation of the potential consumer benefits of the product or service and/or the manner in which it is offered or provided, because it continues to believe this change vis-à-vis the 2016 Policy is needed to increase use of the Policy.

The Bureau is finalizing the proposed elimination of “substantial” as to legal uncertainty for the same reason. Consumer groups noted that the proposed Policy instructs applicants instead to identify “potential” uncertainty for which a No-Action Letter is needed. The Bureau acknowledges that use of the term “potential” in this context can be improved. The Bureau's use of this term was driven by its recognition that the full extent of uncertainty may not be apparent at the time an application is submitted. To allow for this circumstance, the proposed Policy includes a footnote explaining that the Bureau recognizes that in some cases it may be difficult to determine precisely which provisions would apply, in the normal course, to the product or service in question; that, in other cases, the applicant may lack the legal resources to make a fully precise determination; and that, in such circumstances, the applicant should provide the maximum specification practicable under the circumstances and explain the limits on further specification. It is thus unnecessary to attempt to make the same point using the term “potential,” and that term is not included in section A.5 of the final Policy.

The Bureau proposed eliminating three elements of section A of the 2016 Policy that concerned compliance with other law in some manner. Section A.6.c required a showing of the product's compliance with other relevant Federal and State regulatory requirements. Section A.10 required an affirmation that, to the requester's knowledge (except as specifically disclosed in the request), neither the requester nor any other party with substantial ties to transactions involving the product is the subject of an ongoing, imminent, or threatened governmental investigation, supervisory review, enforcement action, or private civil action respecting the product, or any related or similar product. Section A.11 required an affirmation that (except as specifically disclosed in the request) the principals of the requester have not been subject to license discipline, adverse supervisory action, or enforcement action with respect to any financial product, license, or transaction within the past ten years. Relatedly, section C.7 of the 2016 Policy—which the Bureau also proposed eliminating—provided that one of the considerations Bureau staff would use in assessing applications was whether the applicant is demonstrably in compliance with other relevant Federal and State regulatory requirements.

Industry commenters were generally supportive of these proposed revisions. Consumer groups worried that these proposed revisions signaled the Bureau's intent to short-circuit enforcement of the law by other government agencies or consumers and to interfere in ongoing disputes, and urged the Bureau to reinstate them. The Bureau declines to do so for a number of reasons. First, the Bureau is concerned that these elements of section A of the 2016 Policy, in combination with section C.7 of the 2016 Policy, unnecessarily discouraged viable applications. Potential applicants could have interpreted these provisions to mean that No-Action Letters would only be provided to entities, individuals, and products/services that had never been so much as threatened with some type of governmental action or private lawsuit. Indeed, potential applicants could have interpreted section A.10 to mean that there would be no point in submitting an application for a No-Action Letter if other entities with “substantial ties” to transactions involving the product or service, or even “related or similar” products or services, had been threatened with such action or suits.

Second, the Bureau is concerned that these provisions are unduly burdensome—as suggested by commenters on the proposed 2016 Policy. An applicant would have to “show” or “demonstrate” that the product or service was compliant with all relevant law. An applicant would have to list not only ongoing investigations or lawsuits, but also “threatened” investigations and suits. And the list would have to contain not only actions and suits targeted at the applicant, but also those targeted at any entity with “substantial ties” to “related or similar” products or services. An application would have to list all types of adverse actions against the principals of the applicant during the prior ten years. Finally, the applicant effectively would have to attest that these lists are full and complete. 24

Third, the Bureau believes that the more effective and efficient means of handling the concerns raised by consumer groups is to clarify that the Bureau expects its assessment of applications (described in section B of the final Policy) to include due diligence regarding the applicant, its principals, and the product or service in question. Despite not including sections A.7, A.10, and A.11 of the 2016 Policy in the final Policy for the reasons set forth above, the Bureau does not intend to allow the Policy to be used—or rather abused—by entities seeking to evade investigations or actions by other regulators. On the contrary, the Bureau intends to conduct necessary and appropriate due diligence on applicants—including consulting with other regulators—to ensure that the Policy is used for its intended purposes.

The 2016 Policy did not expressly provide that No-Action Letters would be of limited duration. But section A.13 instructed applicants to specify whether the request is limited to a particular time period. And section C.8 provided that the Bureau would base its assessment of applications, in part, on the extent to which the application is sufficiently limited in time, volume of transactions, or otherwise, to allow the Bureau to learn about the product and the aspects in question while minimizing any consumer risk. There was thus a suggestion that applications for No-Action Letters of unlimited duration might be disfavored.

Section A.9 of the 2016 Policy instructed applicants to include an undertaking, if the request is granted, to share appropriate data regarding the product with the Bureau, including data regarding the impact of the product on consumers, and its plans for development of additional data. Section C.9 provided that the Bureau's assessment of applications would be based, in part, on the extent to which any data that the entity has provided and agrees to provide to the Bureau regarding the operation of the product's aspects in question will be expected to further consumer protection.

In the proposed Policy, the Bureau stated that the default assumption under the proposed Policy would be that No-Action Letters would be of unlimited duration and that there would be no expectation of data sharing. The Bureau explained that it was proposing these changes in order to bring the Policy more in line with certain elements of the no-action letter programs of other agencies.

Industry commenters generally supported these proposed shifts, while consumer groups opposed them. In consumer groups' view, the duration of No-Action Letters should be determined on a case-by-case basis. If a No-Action Letter addresses a narrow technical issue there may be no reason for an end date. But UDAAP-focused No-Action Letters, for example, should be of short duration. Similarly, consumer groups advised the Bureau to at least require No-Action Letter recipients to submit data on the consumer impact of the products or services in question.

The Bureau believes there is some merit to the consumer groups' point that a one-size-fits-all approach to the duration of No-Action Letters is inadvisable. In certain cases, it may be appropriate to limit the duration of a No-Action Letter. Indeed, in some cases an applicant itself might wish the No-Action Letter to be of limited duration. However, the Bureau believes that, to account for such variation, it is not necessary to change the Policy as proposed. Nothing in the final Policy prevents No-Action Letters of limited duration. In a given case, if the Bureau and/or the applicant believes that a temporal limitation is appropriate, such a limitation can be included in the No-Action Letter.

The Bureau declines the specific request to require recipients of a No-Action Letter under the Policy to routinely submit data regarding consumer impact. However, the Bureau agrees with the general concern behind this specific request: If the product or service covered by a No-Action Letter is not performing as anticipated in the application—including especially by injuring consumers—it is important for the Bureau to become aware of that fact as soon as reasonably possible. To address this general concern, a No-Action Letters under the proposed Policy would have required recipients to inform the Bureau of material changes to information included in the application that would materially increase the risk of material, tangible harm to consumers. As noted below in section III.H.1, commenters found this “material, tangible harm” standard to be vague and subjective. To address this issue, and to increase the likelihood that the Bureau will learn of any consumer injury caused by the product or service covered by a No-Action Letter in a timely manner, the Bureau is revising this provision (section C.4 in the final Policy) to include the Bureau's expectation that a No-Action Letter will require recipients “to apprise the Bureau of (a) material changes to information included in the application and (b) material information indicating that the described aspects of the product or service are not performing as anticipated in the application.” In addition, the Bureau is adding a footnote to section C.4 explaining that “not performing as anticipated” includes the materialization of consumer risks identified in the application, and the materialization of other consumer risks not identified in the application.

Section A.10 of the 2016 Policy advised applicants to include a commitment that, if the application is granted, the recipient will not represent that the Bureau or its staff has licensed, authorized or endorsed the product, or its permissibility or appropriateness, in any way. In the proposed Policy, the Bureau proposed deleting this element as part of its general streamlining effort.

Consumer groups urged the Bureau to retain this element. The Bureau declines to do so, but agrees with the commenters' more general point that receipt of a No-Action Letter should not be misconstrued to be the Bureau's endorsement of the product or service in question—which could potentially give the recipient an unfair advantage over its competitors or mislead consumers. Accordingly, the Bureau is adding to the list of statements that would be included in a No-Action Letter a statement that the No-Action Letter does not constitute an endorsement of the product or service that is the subject of the letter, or of any other product or service offered or provided by the recipient(s). 25

Consistent with the Bureau's proposed streamlining of the application elements of the 2016 Policy, the Bureau proposed streamlining section C of the 2016 Policy to focus the Bureau's assessment on the core application elements: The potential benefits of the product or service, its potential consumer risks, and the need for a No-Action Letter. Industry commenters generally supported these proposed changes. Consumer groups opposed these proposed changes, and asserted that they would result in vague assessment criteria and demand no accountability to the Bureau or to the public. They accordingly urged the Bureau to retain all of the assessment criteria in the 2016 Policy.

The Bureau emphasizes that it did not propose a wholesale replacement of the assessment elements of the 2016 Policy. Rather, as noted, the Bureau proposed retaining what it viewed as the core assessment elements, and discarding only those falling outside the core. More specifically, the proposal would have largely retained sections C.2 (consumer benefit); C.4 (consumer risk); and C.5 (regulatory uncertainty). The Bureau believes that section C.1, regarding consumer understanding, was largely redundant vis-à-vis sections C.2 and C.4; that section C.3, regarding the availability of benefits in the existing marketplace, was largely redundant vis-à-vis section C.2; and that section C.6, regarding whether the identified regulatory uncertainty may be better addressed by other means, was largely redundant vis-à-vis section C.5. As for section C.7, regarding compliance with other law, it is addressed above in section III.C.3. Similarly, sections C.8 and C.9, regarding temporal duration and data sharing, are addressed above in section III.C.4. The same is true to some extent of section C.10, regarding the applicant's amenability to public disclosure of relevant data. Since the default assumption under the final Policy is that no data sharing will be required, the applicant's amenability to public disclosure of shared data is generally not a relevant assessment element.

More generally, the Bureau acknowledges that the assessment section of the proposal may have sketched an incomplete picture of the Bureau's intended assessment of applications. The Bureau intended to apprise potential applicants and other interested stakeholders that its assessment of applications would focus on the quality and persuasiveness of the applications, particularly the elements concerning consumer benefit, consumer risk, and regulatory uncertainty. The Bureau did not intend to suggest that other factors will not play a role in its decisions. To remove any such misimpression, the Bureau is revising section C of the final Policy to clarify that it expects its assessment of applications to involve a complicated balancing of many factors, including an assessment of the quality and persuasiveness of the application, with particular emphasis on the information specified in sections A.3, A.4, and A.5; as well as information about the applicant and the product or service in question derived through Bureau due diligence processes; the extent to which granting the application would be consistent with Bureau enforcement and supervision priorities; an assessment of litigation risk; and available Bureau resources.

The proposed Policy stated the Bureau's intention to grant or deny an application within 60 days of notifying the applicant that the Bureau has deemed the application to be complete. The Bureau received a range of comments on this new provision. Consumer groups stated that a 60-day review period is unreasonably short and will encourage hasty and flawed reviews of applications, resulting in harm to consumers. They recommended that the Bureau not make any assurances regarding the time it will take to review an application, and that any specific time period should be much longer and more flexible than 60 days. A trade association stated that 60 days is too long, and encouraged the Bureau to commit to completing its assessment of applications within 30 days. An advisory/research organization opined that while 60 days should generally be sufficient, the Bureau should afford itself the option of taking an additional 30 days, provided notice is given to the applicant.

The Bureau is finalizing the 60-day provision as proposed because it believes that this period strikes the optimal balance between permitting sufficient time for a thorough review of applications and encouraging entities to submit applications. Consumer groups' concerns may be based somewhat on a misunderstanding of the provision. Their comments appear to envision a scenario in which no more than 60 days will elapse between the Bureau first setting eyes on a potential application and the Bureau granting or denying a formal application. The proposed Policy encouraged potential applicants to contact the Bureau for informal, preliminary discussion of a proposal before submitting a formal application. The final Policy strongly encourages such informal, preliminary discussion. Thus, in a typical case, the Bureau's review of a proposal likely would take place over a period longer than 60 days. The new 60-day provision is designed to give an applicant reasonable assurance that, once an application is deemed to be complete, the Bureau intends to grant or deny it within 60 days. That said, the final Policy indicates that certain circumstances may lead to a longer processing time, such as a request that the Bureau coordinate with other regulators prior to granting or denying an application.

More generally, the Bureau has no intention of permitting the 60-day review goal to trump its goal of thoroughly assessing applications before granting them, as the latter is more integral to the long-term success of the Policy and the consumer benefit the Bureau expects the Policy to yield. Moreover, if experience operating the Policy indicates that the 60-day review period is not working as intended, the Bureau intends to adjust it in an appropriate manner.

The Bureau proposed a number of revisions to section D of the 2016 Policy, which concerned the Bureau's intended procedures for issuing No-Action Letters, including the expected content of such letters. Industry commenters generally supported these proposed revisions. Consumer groups opposed each proposed revision.

As noted, in the preamble of the 2016 Policy, the Bureau estimated that only one to three actionable No-Action Letter applications would be received each year. The Bureau also stated that No-Action Letters focused on the UDAAP prohibition in the Dodd-Frank Act  26 are expected to be particularly uncommon. In the proposed Policy, the Bureau stated that there would be no such expectation under the proposed Policy.

Industry commenters uniformly supported this policy shift. For example, a group of trade associations stated that a No-Action Letter that does not include assurance against UDAAP liability has limited value due to the subjectivity of such claims. Similarly, a trade association commented that the fact that the majority of enforcement actions are brought under UDAAP authority makes clear that entities are in need of guidance in a gray area that is principle based rather than rule based.

In contrast, consumer groups opposed this policy shift. The consumer groups stated that, under the proposed Policy, the Bureau would give a stamp of approval that a company is not committing UDAAPs. This is not correct. Rather, the proposal provided that a No-Action letter would include a statement that, subject to good faith, substantial compliance with the terms and conditions of the letter, and in the exercise of its discretion, the Bureau will not make supervisory findings or bring a supervisory or enforcement action against the recipient predicated on the recipient's offering or providing the described aspects of the product or service under its authority to prevent unfair, deceptive, or abusive acts or practices. The proposal noted that this statement implies that the Bureau has not determined that the acts or practices in question are unfair, deceptive, or abusive. A statement that the Bureau has not made a UDAAP determination is different than a statement that the Bureau has determined that the acts or practices in question do not constitute a UDAAP. The final Policy retains this “implication” statement.

The consumer groups also opposed this policy shift on the more general ground that many aspects of the way a product or service works in practice or is implemented could be poorly understood or could change from the time an application is granted, and unfair, deceptive or abusive aspects of a product or service “might only become apparent in the future.” A group of State Attorneys General made essentially the same point.

The Bureau is not persuaded that such considerations warrant placing a categorical limitation on UDAAP-focused No-Action Letters. The proposed Policy stated that No-Action Letters would be based on particular facts and circumstances and be limited to the recipient's offering or providing the “described aspects of the product or service.” The proposal explained that the term “described aspects of the product or service” is a short-hand term used in the proposed Policy to encompass the subject matter scope of a No-Action Letter, including both the particular aspects of the product or service in question, and the particular manner in which it is offered or provided. These aspects of the proposal are being finalized as proposed. The Bureau intends that a particular No-Action Letter issued under the Policy will include a description of this subject matter scope. Indeed, it is in the interest of both the Bureau and the recipient that the subject matter scope is described with as much precision as possible. To the extent the recipient significantly changes the “described aspects of the product or service” without seeking a modification of the No-Action Letter under section D.1 of the Policy, the recipient would risk exceeding the subject matter scope of the letter, and thus would expose itself to a potential Bureau supervisory or enforcement action. Relatedly, to the extent the recipient fails to apprise the Bureau of material changes to information included in the application, as required by section C.4 of the Policy, the recipient would risk failing to substantially comply in good faith with one of the terms of the letter—which could be a ground for termination or even a retroactive enforcement action under section D.2 of the Policy.

As regards consumer groups' speculative scenario in which the recipient does not significantly change the described aspects of the product or service but a UDAAP “becomes apparent in the future,” the Bureau could terminate the No-Action Letter on the ground that the described aspects of the product or service failed to perform as anticipated in the Policy, as specified in sections C.7 and D.2 of the Policy.

Under section D.4 of the 2016 Policy, No-Action Letters were expected to include a lengthy disclaimer that the letter does not constitute an interpretation, exception, waiver, or safe harbor. As part of the Bureau's general streamlining effort, the proposed Policy would not have included this statement in No-Action Letters. Commenters interpreted the proposed omission of this statement to mean that the Bureau now intends to provide interpretations in No-Action Letters.

More specifically, consumer groups stated that the deletion suggests that the Bureau may include legal interpretations in No-Action Letters in the hope that they will be viewed as official interpretations to which courts will defer, and strongly opposed such a shift. In contrast, a group of trade associations urged the Bureau to include in a No-Action Letter an affirmation that its issuance represents the Bureau's conclusion that the product or service in question, implemented consistently with the terms and conditions of the letter, does not violate applicable Federal consumer financial law, including the prohibition on UDAAP. Relatedly, these commenters requested that the final Policy emphasize the deference assigned by Congress to the Bureau's interpretation of Federal consumer financial law in order to encourage courts, other regulators, and private litigants to defer to Bureau No-Action Letters. Similarly, an advisory/research organization recommended that No-Action Letters include an explanation of the Bureau's rationale for granting the application, and provide assurances that the Bureau views the conduct in question as being consistent with relevant statutory or regulatory requirements.

The proposed deletion of the “no interpretation” disclaimer was not intended to signal a shift to including official interpretations in No-Action Letters, or any lesser types of interpretation for that matter. To clarify this point, the Bureau is adding to the list of statements expected to be included in a No-Action Letter, a statement that the letter does not purport to express any legal conclusions regarding the meaning or application of the laws and/or regulations within the scope of the letter.

While the Bureau appreciates the desire for liability protection greater than that provided by No-Action Letters, it believes that the better means to this end is making available forms of compliance assistance that provide a high-degree of such protection. This is one reason why the Bureau proposed the Product Sandbox Policy and is finalizing certain aspects of it, as the Compliance Assistance Sandbox Policy (CASP), contemporaneously with the finalization of the Policy. The Bureau also appreciates the need and desire for the type of compliance assistance provided by interpretations. Accordingly, the Bureau intends to separately propose an interpretive letter program as soon as practicable.

Section D.3 of the 2016 Policy provided that the expected contents of a No-Action Letter include a statement that the letter is based on the facts stated and factual representations made in the request, and is contingent on the correctness of such facts and factual representations. As part of its general effort to streamline the Policy, the Bureau did not include this statement in the proposed Policy. However, section I.A of the proposed Policy, which provided a general description of No-Action Letters, stated that such letters are based on particular facts and circumstances. To clarify this point, section C.3(c) of the final Policy provides that a No-Action Letter is expected to include a statement that the No-Action Letter is based on the factual representations made in the application, which may be incorporated by reference.

The proposed Policy would have permitted No-Action Letter applications from trade associations, service providers, and other third parties. The proposal recognized that third parties, which generally do not themselves provide consumer financial products or services, may face challenges when attempting to submit an application pursuant to the standard process contemplated in the proposal. Accordingly, the Bureau proposed an alternative process for third parties: The Bureau would issue a provisional No-Action Letter based on the information available to the third party at the time of application and then issue a non-provisional letter once necessary information became available about the entities intending to use the product or service in question and how they intended to offer or provide it.

Comments from trade associations were generally supportive of the proposed third-party application procedures. Some of these comments noted that group applications by trade associations would equalize access to No-Action Letters and allow smaller financial institutions to participate in the program. Other trade association commenters explained that third-party applications would increase use of the Policy and thereby provide the Bureau with greater evidence of unnecessary regulatory barriers and potential methods to address those barriers. Another trade association stated that third-party applications would correctly focus on the product or service at issue rather than the entity or entities involved in the provision of the product or service. While supportive of the overall process, some trade associations sought greater clarity regarding the specific steps of the application and issuance process, including those related to provisional No-Action Letters.

Comments from consumer groups and a law firm expressed significant concerns about allowing trade associations and service providers to apply for No-Action Letters. These commenters stated that permitting such applications would mean that a No-Action Letter could cover entire markets or thousands of clients and potentially affect millions of consumers. These types of applications would also, according to the same commenters, afford the Bureau no ability to evaluate the practices of the company that provides the product or service in question. These commenters further asserted that allowing parties other than the applicant to come forward later and automatically join a No-Action Letter, without additional review or approval by the Bureau, would shirk the Bureau's duty to protect consumers. 27

A comment from a group of State Attorneys General likewise raised the possibility that third-party applications could lead to blanket coverage of entire industries while making it difficult for the Bureau to enforce No-Action Letter conditions. The comment also questioned how the Bureau could ensure the veracity and accuracy of an application submitted by a party other than the party that would ultimately be the recipient of a No-Action Letter.

Finally, an academic commenter noted that, while No-Action Letter applications should not be granted without particularized analysis, trade association applications could help ensure that similarly situated competitors receive consistent treatment and that no single No-Action Letter recipient receives an undue competitive advantage. Comments by some trade associations also encouraged the Bureau to implement application processes that would help ensure consistent treatment of competitors providing a product or service similar to one that is already the subject of a No-Action Letter.

As regards the proposed procedures for third-party applications, the Bureau was not proposing to issue a No-Action Letter to a company without knowing who is requesting it and without conducting a particularized analysis of how the company intends to offer or provide the product or service. This is the reason why the proposed Policy limited third-party applicants to provisional No-Action Letters until information necessary for a complete application is submitted. Nor would there be an “automatic” process under the proposed Policy that would allow a non-applicant to subsequently join a No-Action Letter without additional individualized assessment by the Bureau.

The final Policy seeks to clarify the alternative application process that service providers, trade associations, consumer groups, and other third parties may use. This clarification includes adding a separate section to the Policy on this topic and providing greater detail and specificity regarding the various steps of the process. In particular, under new section E.1 of the final Policy, a service provider or facilitator ( e.g., a trade association, consumer group, or other third party) could provide the application information specified in section A with appropriate adjustments given that the applicant itself will not be offering or providing the consumer financial product or service in question. The section also describes the manner in which the Bureau intends to assess the application information provided and the type of document successful applicants should expect to receive from the Bureau. The final Policy refers to this type of document as a “No-Action Letter Template” instead of a “provisional” No-Action Letter in order to more accurately describe the intended purpose of this document and clarify that it would be non-operative and non-binding on the Bureau. New section E.1 also describes the Bureau's anticipated application, assessment, and issuance procedures for applications for a standard No-Action Letter based on a No-Action Template.

New section E.2 addresses comments regarding applications involving products or services that are substantially similar to those that are the subject of an existing No-Action Letter. The Bureau believes applications involving a product or service that is substantially similar to the product or service that is the subject of an existing No-Action Letter warrant an alternative application procedure that focuses on similarities in the product or service itself and the manner in which it is offered or provided. While the Bureau intends to assess this applicant-specific information in a particularized manner, it anticipates being able to process such applications in a timeframe shorter than that specified in section B given that the underlying No-Action Letter has already been granted.

Finally, consistent with the fact that the Policy is a general statement of policy under the APA, new section E includes a final footnote explaining that, in circumstances where neither the Standard Process nor the alternative procedures described in section E (Alternative Process) are appropriate, the Bureau may utilize other procedures that diverge in one or more respects from the Standard Process or the Alternative Process, consistent with the purposes of the Policy.

Section D.1 of the 2016 Policy provided that the no-action statement included in a No-Action Letter does not mean that the Bureau will not conduct supervisory activities or engage in enforcement investigation to evaluate the requester's compliance with the terms of the No-Action Letter or to evaluate other matters. Consumer groups opposed this change, arguing that the Policy should include, at the very least, a statement that the Bureau retains this investigation and supervision authority. It appears that these commenters did not notice that the proposed Policy included a proviso that the Bureau maintains the right to obtain information relating to the consumer financial product or service subject to a No-Action Letter under its applicable supervision and enforcement authorities. The final Policy modifies this proviso somewhat, as explained below.

Several industry commenters expressed concern that the Bureau's reliance on its supervisory authority to evaluate compliance with a No-Action Letter would create an unlevel playing field between recipients that are supervised by the Bureau and recipients that are not. To address this circumstance, an industry policy organization suggested that No-Action Letters issued to firms not subject to the Bureau's supervisory authority include a term requiring affirmative consent to the submission of data to and review by the Bureau with respect to compliance with the other terms and conditions of the letter.

The Bureau declines to make the recommended change to the Policy. Although the Bureau maintains the right to obtain information about the product or service subject to a No-Action Letter using its supervisory authority, it does not follow that the Bureau intends to routinely do so. Moreover, the Bureau has authorities other than supervisory authority that can be used for this purpose. To clarify this issue, the Bureau is amending the proviso that was included in the proposal to state that the Bureau maintains the authority to obtain information relating to the consumer financial product or service subject to a No-Action Letter under its applicable supervision, enforcement, and other authorities in the same manner and frequency that it obtains information relating to consumer financial products or services not subject to a No-Action Letter.

Furthermore, under section C.4 of the final Policy, all recipients of a No- Action Letter—regardless of their supervisory status—are required to apprise the Bureau of (a) material changes to information included in the application and (b) material information indicating that the described aspects of the product or service are not performing as anticipated in the application.

The 2016 Policy provided that a No-Action Letter would include a statement that the letter is subject to modification or revocation at any time at the discretion of Bureau staff for any reason. The 2016 Policy also stated that a No-Action Letter would include a statement that, to the extent that the facts and representations in the request are materially inaccurate, or the requester fails to satisfy conditions or violates limitations specified in the No-Action Letter, and in other similar circumstances, the No-Action Letter is by its own terms inapplicable (even without modification or revocation); and the staff may recommend initiating a retrospective enforcement or supervisory action if appropriate. The 2016 Policy also anticipated that No-Action Letter recipients would be given the grounds for a potential modification or revocation and an opportunity to respond.

The Bureau proposed revising this aspect of the 2016 Policy in various respects. The proposed Policy stated that the Bureau might revoke a No-Action Letter in whole or in part, in certain circumstances—but that the Bureau expected revocation to be quite rare. The proposal also stated that the Bureau expects a No-Action Letter to specify the grounds for revocation, and that the Bureau anticipates specifying three such grounds. A No-Action Letter under the proposed Policy would also include a statement that, if the letter is revoked for a reason other than the recipient's (or recipients') failure to substantially comply in good faith with the terms and conditions of the letter, the revocation is prospective only; i.e., that the Bureau would not pursue an action to impose retroactive liability in such circumstances. In addition, the proposed Policy described the steps the Bureau intended to take prior to revoking a No-Action Letter. These steps included providing recipients with notice of the ground(s) for revocation, an opportunity to respond (including an opportunity to cure a failure to substantially comply in good-faith with the terms and conditions of the No-Action Letter), and a period for winding down the offering or providing of the product or service in question in most circumstances.

While generally supportive of these proposed changes, trade association commenters and a research/advisory organization requested greater clarity on the anticipated grounds for revocation and certain portions of the proposed revocation procedures. Consumer group commenters urged the Bureau to provide additional grounds for revocation and retroactive liability, and had concerns about certain steps of the proposed revocation procedures.

The Bureau received a number of comments regarding the three anticipated grounds for revocation identified in the proposal. The first such ground was failure to substantially comply in good faith with the terms and conditions of the No-Action Letter. A research/advisory organization urged the Bureau to clarify this standard, particularly regarding its application to technical deficiencies, harmless compliance failures, and the like. The same commenter also requested more clarity on the second ground for revocation identified in the proposal: A determination by the Bureau that the recipient's offering or providing the described aspects of the product or service is causing material, tangible, harm to consumers. A group of trade associations asserted that the second ground is undefined and subjective, and expressed concern that revocation based on this ground would constitute a finding of fault against the recipient. These commenters recommended that the second ground be replaced with a determination by the Bureau that the product or service did not perform as intended.

The Bureau also received a comment on the third ground for revocation identified in the proposal: A change in the legal context within which the letter was granted as a result of statutory amendments or Supreme Court opinions. Consumer groups asserted that this ground is too narrow because the Supreme Court weighs in on fewer than 100 cases a year—most of which do not involve consumer financial products or services, and lower courts create binding law that should guide the Bureau's revocation decisions.

More generally, consumer groups found the three anticipated grounds for revocation to be too narrow individually and, taken together, too limiting on the Bureau. These groups contended that the inclusion of these anticipated grounds in the Policy would place a high burden on the Bureau to revoke a No-Action Letter in order to protect consumers.

Finally, comments were submitted on the statement regarding retroactive liability in the proposed Policy. Industry commenters generally supported this statement. Consumer groups urged the Bureau to retain material inaccuracy of facts and representations in an application as an additional ground for retroactive liability. A research/advisory group recommended that the Bureau list consumer harm caused by the product or service in question as an additional basis for retroactive liability.

Based on these comments and other considerations, the Bureau is revising the discussion of revocation in the final Policy in certain respects (and locating these changes in a new section (section D) concerning Modification and Termination). First, in the proposal, the Bureau stated that it expected revocation of a No-Action Letter to be quite rare. To clarify this point, the Bureau is adding an express statement that the Bureau intends that the recipient of a No-Action Letter should be able to reasonably rely on the No-Action Letter, including especially the no-action statement.

Second, the Bureau agrees that the proposed “material, tangible harm” ground may not be sufficiently clear and objective and accordingly is replacing it with the ground recommended by commenters: Failure to perform as anticipated in the application. The Bureau is also adding a footnote explaining that this ground includes the materialization of consumer risks identified in the application, or the materialization of other consumer risks not identified in the application.

Third, as noted, the proposed Policy simply identified three anticipated grounds for revocation, but failed to identify a more general standard or principle underlying them. To clarify this point, the final Policy states that a No-Action Letter will include a statement that the Bureau may terminate the letter if it determines that it is necessary or appropriate to do so to advance the primary purposes of the Policy, such as where the recipient fails to substantially comply in good faith with the terms and conditions of the letter; the described aspects of the product or service do not perform as anticipated in the application; or controlling law changes as a result of a statutory change or a Supreme Court decision that clearly permits or clearly prohibits conduct covered by the letter.

Fourth, as recommended by a group of trade associations, the Bureau is replacing the term “revocation” with the term “termination” because it is concerned that “revocation” misleadingly suggests that any termination would involve a Bureau determination of wrongdoing on the part of the recipient.

Fifth, the Bureau is revising the retroactive liability statement to provide that a failure to substantially comply in good faith with the terms and conditions of the No-Action Letter that causes “Dodd-Frank Act actionable substantial injury,” under 12 U.S.C. 5531(c), would provide the basis for termination and an action to impose retroactive liability. 28

The Bureau declines to adopt the recommendation to identify material inaccuracy of facts and representations in an application as a separate potential basis for a retroactive action because it believes doing so is unnecessary. As noted above, the Bureau expects that a No-Action Letter issued under the final Policy will include a statement that the letter is based on factual representations made in the application. Relatedly, pursuant to section C.4 of the Policy, a No-Action Letter is expected to include a requirement to apprise the Bureau of material (a) changes to information included in the application and (b) information indicating that the described aspects of the product or service are not performing as anticipated in the application. A recipient's failure to substantially comply in good faith with this requirement would provide a necessary condition for retroactive liability under the Policy.

The Bureau also declines to provide additional clarity regarding the “good-faith substantial compliance” standard because it believes these terms have a sufficiently established meaning in the law.

The Bureau received a number of comments about the revocation procedures described in the proposed Policy. Consumer groups raised concerns about the statement that, if the Bureau determines that the recipient failed to substantially comply in good faith with the terms and conditions of the No-Action Letter, it will offer the recipient an opportunity to cure the failure within a reasonable period of time before revoking the No-Action Letter. In their view, companies that act in bad faith or violate the terms of a No-Action Letter should have no second chance at complying with those terms. The Bureau is persuaded by this comment. Although the Bureau anticipates that there will be few, if any, cases in which a recipient fails to comply in good-faith with the terms and conditions of the No-Action Letter, in such cases an opportunity to cure would be inappropriate. However, there may be cases in which an opportunity to cure may be appropriate, such as when the recipient attempts to comply in good faith, but fails to comply with relatively technical terms and conditions. Accordingly, in the final Policy, this statement has been revised to provide that the Bureau intends to offer an opportunity to cure in appropriate circumstances. In addition, the Bureau notes that a request for modification under section D.1 of the final Policy may be more appropriate in some cases than providing an opportunity to cure.

The proposed Policy also stated that, in most cases, the Bureau expects to allow the recipient of a No-Action Letter to wind-down the offering or providing of the described aspects of the product or service during an appropriate period after revocation. Consumer groups contended that the proposed Policy provided the Bureau too little flexibility to revoke a No-Action Letter without a wind-down period. The Bureau disagrees. While the Bureau expects a wind-down period to be afforded in the rare instance that a No-Action Letter is terminated, the proposed Policy does not guarantee a wind-down period. Thus, in appropriate cases, the Bureau has the flexibility to terminate without providing a wind-down period.

A group of trade associations noted that the proposed Policy's provision regarding a wind-down period, which stated that the wind-down period would be an appropriate period after revocation, differed from the parallel provision in the proposed Product Sandbox Policy, which stated that the wind-down period would be six months. A nonpartisan public policy organization likewise identified this discrepancy. This discrepancy was inadvertent. The Bureau believes that a six-month period is equally appropriate for No-Action Letters and has accordingly specified such a six month period in the final Policy.

A research/advisory group urged the Bureau to provide greater detail and a more formalized process respecting how the Bureau will (i) determine a reasonable time frame for a recipient to cure a failure to comply with the terms of a No-Action Letter, (ii) offer an opportunity to respond to a revocation, as well as the period of time provided for a response, and (iii) issue a revocation and whether such a revocation would be made public. The Bureau generally declines to provide additional detail regarding the termination process for the reasons set forth in section II above. However, the Bureau is including in the final Policy a statement that termination information will be published on the Bureau's website.

As indicated above, the “any time/any reason” statement in the 2016 Policy covered modification of a No-Action Letter as well as revocation. The Bureau proposed omitting this statement, and did not propose alternative language concerning modification. Consumer groups noted this silence about modification, and suggested that the final Policy should provide for modification. A trade association suggested that modification procedures should be included in the final Policy because some innovative consumer financial products and services depend on machine learning and artificial intelligence and will therefore evolve through continuous “learning” and routine re-evaluation of data and models. The commenter recommended that the Bureau develop a framework that allows for slight and graduated deviations from the product or service described in the application, rather than require the recipient to submit an entirely new application each time there is a change.

The Bureau generally agrees that the Policy should include anticipated procedures for modifying No-Action Letters. Accordingly, the final Policy includes a new section (D.1) that specifies the Bureau's anticipated procedures regarding requests for modification of a No-Action Letter.

Section G of the proposed Policy stated that the Bureau is interested in entering into agreements with State authorities that issue similar forms of no-action relief that would provide for an alternative means of receiving a No-Action Letter from the Bureau. Consumer groups read this statement as implying that a company that obtained a no-action letter from a State would “automatically” receive one from the Bureau. That is not the Bureau's intent. Rather, the Bureau anticipates that such agreements would include provisions designed to ensure that the Bureau's issuance of a No-Action Letter in such circumstances would be consistent with its statutory authority and duties, as well as applicable law more generally. The Bureau has no intention of issuing a No-Action Letter though this type of alternative means if it believes that consumers would be injured.

The proposed Policy also would have permitted applicants to request that the Bureau coordinate with other regulators with respect to the application. A group of trade associations commented that the Bureau should not put the onus on the applicant to identify other governmental authorities with which the Bureau may coordinate. Rather, the Bureau should lead the coordination effort among Federal and State regulators, as it is better positioned to do so than the applicant. More broadly, these commenters urged the Bureau to ensure that other regulators understand the Policy and to request that other regulators defer to the Bureau's No-Action Letters. These comments were seconded by an industry policy organization.

As evidenced by the inclusion in the Policy of a separate section headed Regulatory Coordination, the Bureau very much appreciates the need for coordination with other regulators for purposes of operating the Policy. However, such coordination must be balanced against other considerations. For example, as the Policy notes, if an applicant wishes the Bureau to coordinate with other regulators, the Bureau may need more time to process the application, depending on the degree of coordination requested. Moreover, the degree of coordination needed likely will vary from case to case. The Bureau intends to use its best efforts to find the optimal balance between coordination and other considerations for each No-Action Letter issued under the Policy. For the reasons discussed above, the Bureau is finalizing the section on regulatory coordination largely as proposed.

Section E of the 2016 Policy, headed Bureau Disclosure of Entity Data, was quite brief. The primary statement made was that the Bureau's disclosure of a version or summary of the application and any data received from the applicant in connection with a request for a No-Action Letter is governed by the Bureau's Rule on Disclosure of Records and Information (Disclosure Rule). The Bureau subsequently received requests that the Bureau provide a more detailed explanation of its plans relating to disclosure of information received from applicants for and recipients of No-Action Letters. In response, the Bureau proposed expanding this section to include the Bureau's expectations regarding which types of data and information submitted by applicants and recipients would qualify as business information and confidential supervisory information under the Disclosure Rule.

Industry commenters generally supported the proposed expansion. Consumer groups stated that the revised section is in tension with the requirements of the Freedom of Information Act (FOIA), and questioned how the Bureau can forecast that certain aspects of applications will satisfy applicable FOIA exemption requirements. The Bureau is basing its expectations, in part, on the nature of the information requested from applicants and recipients, and the final Policy notes that information submitted that is not actually responsive to a particular request may not be protected from disclosure.

The Bureau is not finalizing the proposed language regarding confidential supervisory information because it has determined it to be unnecessary. The Bureau believes that potential applicants' main concern is that trade secrets and proprietary business information submitted to the Bureau by applicants and recipients not be publicly disclosed. This concern can be adequately addressed by the statements in section G of the final Policy that the Bureau anticipates that much of this information will qualify as confidential information, and, more specifically, business information exempt from public disclosure.

In addition, in light of a recent Supreme Court opinion concerning FOIA Exemption 4, 29 the Bureau is adding to section G a statement making clear that where information submitted to the Bureau is both customarily and actually treated as private by the submitter, the Bureau intends to treat it as confidential in accordance with the Disclosure Rule.

The proposed Policy stated that the Bureau may publish denials of applications for a No-Action Letter on its website, including an explanation of why the application was denied, particularly if it determined that doing so would be in the public interest. The Bureau received divergent comments on this aspect of the proposal. A group of trade associations supported the publication of denials on the ground that such transparency will inform market participants about the types of proposals that are more or less likely to receive approval, and the accompanying reasons for approval or denial will promote agency accountability for the No-Action Letter Policy. In contrast, a trade association stated that it sees no utility in publishing denials. The Bureau is finalizing the statement about denials as proposed. The Bureau notes that the final Policy, as did the proposal, includes two related statements about denials: (1) The Bureau intends to publish denials only after the applicant is given an opportunity to request reconsideration of the denial, and (2) upon request, and if disclosure is not required by 5 U.S.C. 552(a)(2) or other applicable law, the Bureau does not intend to release identifying information from published denials, and intends to redact such information from the denials published on its website.

More generally, the Bureau expects denials to be quite rare, for at least two reasons. First, the Policy strongly encourages potential applicants to contact the Office of Innovation for informal, preliminary discussion of a contemplated proposal prior to submitting a formal application. If it appears during such discussions that an application is not likely to be granted, the potential applicant may choose not to submit an application in the first place. Second, the Policy provides that an application may be withdrawn at any time. If the applicant has reason to believe its application may not be granted, it can withdraw the application prior to a denial.

A group of trade associations requested clarity on which of the Bureau's three proposed innovation policies to apply under in a given case. The same commenter requested that, during the preliminary, informal discussions, which the proposed Policy would have encouraged potential applicants to have with the Bureau, the Bureau discuss with the potential applicant which process will be best suited for the product or service in question. Given the necessarily general nature of the three policies and the necessarily particular nature of a given proposal, the answer to the first request is provided by a positive answer to the second request. That is, the Bureau does intend to discuss with potential applicants during the preliminary, informal discussion phase which of the policies is best suited for the product or service in question.

In comments on the proposed 2016 Policy, certain consumer group commenters requested that the Bureau modify the proposed 2016 Policy to provide that any No-Action Letter would be subject to a 30-day notice-and-comment period, preferably in advance of No-Action Letter issuance. These commenters asserted that such a process is advisable to balance an applicant's self-interested submissions by bringing to bear other viewpoints through a public process. The Bureau declined to adopt the comment period suggestion because (i) comment periods are not typical of other agencies' no-action letter programs; and (ii) the Bureau believed that imposing such a comment period requirement in advance of issuance would unnecessarily discourage No-Action Letter applications, delay the process of granting or denying applications, and thus inhibit the intended benefits of the proposed 2016 Policy.

The comments on the proposed Policy did not include such an express comment for a notice-and-comment process for No-Action Letters issued under the proposed Policy. Rather, consumer groups noted the lack of public input on particular No-Action Letters in the course of expressing other concerns about the proposed Policy. In response to this implied request for public input, the Bureau reiterates the points it made in its response to the express request for public input in the comments on the proposed 2016 Policy.

The Bureau has concluded that this Policy Guidance constitutes an agency general statement of policy exempt from the notice and comment rulemaking requirements under the Administrative Procedure Act, pursuant to 5 U.S.C. 553(b). The Policy is intended to provide information regarding the Bureau's plans to exercise its enforcement and supervisory discretion to provide No-Action Letters. The Policy does not impose any legal requirements on external parties, nor does it create or confer any substantive rights on external parties that could be enforceable in any administrative or civil proceeding. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 30

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Bureau plans to submit a report containing this Policy and other required information to each House of Congress and the Comptroller General prior to the Policy's applicability date. The Office of Information and Regulatory Affairs has designated this Policy as not a “major rule” as defined by 5 U.S.C. 804(2).

The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C 3501 et seq. ) requires that federal agencies may not conduct or sponsor, and notwithstanding any other provision of law, a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The information collection requirements as contained in this final Policy and identified below have been approved by OMB and assigned the OMB control number 3170-0059 OMB's approval will expire on September 30, 2022.

The information collections contained in this Policy include Application for a No Action Letter.

The Bureau's proposed Policy, published December 13, 2018, 83 FR 64036, sought comment on these information collection requirements. While the Bureau received numerous comments on the Proposed Policy, which are addressed above, the Bureau received no comments specifically regarding the burden estimates for these information collections, utility or appropriateness. Additional details on comments received can be found in the Supporting Statement for the related 30-day notice published as required under the PRA. 31

A complete description of the information collection requirements, including the burden estimate methods, is provided in the information collection request (ICR) that the Bureau submitted to OMB under the requirements of the PRA. The ICR submitted to OMB requesting approval under the PRA for the information collection requirements contained herein is available at OMB's public-facing docket at www.reginfo.gov .

The text of the final Policy is as follows:

In section 1021(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress established the Bureau of Consumer Financial Protection's (Bureau's) statutory purpose as ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive. 32 Relatedly, the Bureau's objectives include exercising its authorities under Federal consumer financial law for the purposes of ensuring that markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation, and that outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens. 33

Congress has given the Bureau a variety of authorities under title X of the Dodd-Frank Act and the enumerated consumer laws  34 that it can exercise to promote this purpose and these objectives. These authorities include supervision and enforcement authority, and the authority to issue orders and guidance. 35 These authorities provide the basis for the Policy on No-Action Letters (Policy) and the No-Action Letters issued pursuant to the Policy.

The primary purposes of the Policy are to provide a mechanism through which the Bureau may more effectively carry out its statutory purpose and objectives and to facilitate compliance with applicable Federal consumer financial laws. The Bureau believes that the No-Action Letters issued pursuant to the Policy will benefit consumers, entities that offer or provide consumer financial products and services, and the public interest more generally. The Bureau expects that implementation of the Policy will also inform the exercise of its other authorities, including rulemaking. 36

The Policy consists of seven sections:

• Section A describes information to be included in an application for a No-Action Letter.

• Section B describes the factors the Bureau intends to consider in assessing applications for a No-Action Letter.

• Section C describes the standard procedures the Bureau intends to use in issuing No-Action Letters.

• Section D describes the procedures the Bureau intends to use for modification and termination of No-Action Letters.

• Section E describes alternative application, assessment, and issuing procedures that the Bureau may use for certain circumstances.

• Section F describes how the Bureau intends to coordinate with other regulators with respect to No-Action Letters.

• Section G describes the Bureau's intentions relating to disclosure of information relating to No-Action Letters.

Potential applicants are strongly encouraged to contact the Office of Innovation at officeofinnovation@cfpb.gov for informal, preliminary discussion of a contemplated proposal prior to submitting a formal application. 37

Applications for a No-Action Letter should include the following:

1. The identity of the applicant;  38

2. A description of the consumer financial product or service in question, including (a) how the product or service functions; (b) the terms on which it will be offered; and (c) the manner in which it is offered or provided, including any consumer disclosures;

3. An explanation of the potential consumer benefits associated with the product or service;

4. An explanation of the potential consumer risks associated with the product or service, and how the applicant intends to mitigate such risks;

5. An identification of the statutory and/or regulatory provisions as to which the applicant seeks a No-Action Letter and an explanation of why a No-Action Letter is needed, such as uncertainty or ambiguity regarding the application of the identified statutory and/or regulatory provisions to the product or service in question;  39

6. If the applicant wishes to request confidential treatment under the Freedom of Information Act (FOIA), 40 the Bureau's rule on Disclosure of Records and Information (Disclosure Rule), 41 or other applicable law, this request and the basis therefor should be included in a separate letter and submitted with the application. 42 The applicant should specifically identify the information for which confidential treatment is requested, and may reference the Bureau's intentions regarding confidentiality under section G of the Policy; and

7. If the applicant wishes the Bureau to coordinate with other regulators, the applicant should identify those regulators, including but not limited to those the applicant has contacted about offering or providing the product or service in question. 43

Applications may be submitted via email to: officeofinnovation@cfpb.gov or through other means designated by the Office of Innovation. 44 Submitted applications may be withdrawn at any time.

In deciding whether to grant an application for a No-Action Letter, the Bureau intends to balance a variety of factors, including an assessment of the quality and persuasiveness of the application, with particular emphasis on the information specified in sections A.3, A.4, and A.5; information about the applicant and the product or service in question derived through Bureau due diligence processes; the extent to which granting the application would be consistent with Bureau enforcement and supervision priorities; an assessment of litigation risk; and available Bureau resources. 45

The Bureau intends to grant or deny an application within 60 days of notifying the applicant that the Bureau deems the application to be complete.

When the Bureau decides to grant an application for a No-Action Letter, it intends to provide the recipient(s) with a No-Action Letter signed by the Assistant Director of the Office of Innovation (pursuant to authority delegated by the Director of the Bureau) that sets forth the specific terms and conditions of the No-Action Letter provided. 46 The Bureau expects a No-Action Letter will:

1. Identify the recipient;  47

2. Specify the subject matter scope of the letter, i.e., the described aspects of the product or service;  48

3. State that the letter:

(a) Is limited to the recipient, and does not apply to any other persons or entities;

(b) is limited to the recipient's offering or providing the described aspects of the product or service, and does not apply to the recipient's offering or providing different aspects of the product or service;

(c) is based on the factual representations made in the application, which may be incorporated by reference;

(d) does not purport to express any legal conclusions regarding the meaning or application of the laws and/or regulations within the scope of the letter; and

(e) does not constitute the Bureau's endorsement of the product or service that is the subject of the letter, or any other product or service offered or provided by the recipient;

4. Require the recipient to apprise the Bureau of (a) material changes to information included in the application and (b) material information indicating that the described aspects of the product or service are not performing as anticipated in the application;  49

5. Specify any other limitations or conditions, and the extent to which the Bureau intends to publicly disclose information about the No-Action Letter;  50

6. State that, unless or until terminated by the Bureau as described in section C.7, the Bureau will not make supervisory findings or bring a supervisory or enforcement action against the recipient predicated on the recipient's offering or providing the described aspects of the product or service under (a) its authority to prevent unfair, deceptive, or abusive acts or practices;  51 or (b) any other described statutory or regulatory authority within the Bureau's jurisdiction. 52

7. State that, (i) the recipient may reasonably rely on any Bureau commitments made in the letter; (ii) the Bureau may terminate the letter if it determines that it is necessary or appropriate to do so to advance the primary purposes of the Policy, such as where the recipient fails to substantially comply in good faith with the terms and conditions of the letter; the described aspects of the product or service do not perform as anticipated in the application;  53 or controlling law changes as a result of a statutory change or a Supreme Court decision that clearly permits or clearly prohibits conduct covered by the letter;  54 and (iii) upon termination, the Bureau will not bring an action to impose retroactive liability with respect to conduct covered by the letter, except where a failure to substantially comply in good faith with the terms and conditions of the letter caused Dodd-Frank Act actionable substantial injury. 55

A recipient of a No-Action Letter may apply for a modification of the letter. The recipient may seek modification to address an anticipated or unanticipated change in circumstances, such as iterations of the underlying product or service or changes to the information included in the No-Action Letter application. Applications for a modification should include the following:

a. Any material changes to the information included in the original application;

b. The specific requested modification(s) to the No-Action Letter;

c. The ground(s) for modifying the No-Action Letter; and

d. Any other information the recipient wishes to provide in support of the modification application.

In deciding whether to grant an application for modification of a No-Action Letter, the Bureau intends to balance a variety of factors, including the quality and persuasiveness of the application. The Bureau expects to grant or deny such applications within 30 days of notifying the applicant that the Bureau has deemed the application to be complete. When the Bureau grants an application for modification, it intends to provide the recipient with a modified No-Action Letter in accordance with the procedures specified in section C.

The Bureau intends that the recipient of a No-Action Letter should be able to reasonably rely on any Bureau commitments made in the letter. The Bureau expects termination of a No-Action Letter to be quite rare based, in part, on its knowledge of no-action letter programs operated by other Federal agencies. Such agencies appear to terminate no-action letters very infrequently. 56 The Bureau expects that its practice with respect to termination will be in line with the practices of these agencies.

The Bureau expects a No-Action Letter will state that, (i) the recipient may reasonably rely on any Bureau commitments made in the letter; (ii) the Bureau may terminate the letter if it determines that it is necessary or appropriate to do so to advance the primary purposes of the Policy, such as where the recipient fails to substantially comply in good faith with the terms and conditions of the letter; the described aspects of the product or service do not perform as anticipated in the application;  57 or controlling law changes as a result of a statutory change or a Supreme Court decision that clearly permits or clearly prohibits conduct covered by the letter;  58 and (iii) upon termination, the Bureau will not bring an action to impose retroactive liability with respect to conduct covered by the letter, except where a failure to substantially comply in good faith with the terms and conditions of the letter caused Dodd-Frank Act actionable substantial injury. 59

The Bureau anticipates that such retroactive actions will be exceedingly rare based, in part, on its knowledge of the practices of other Federal agencies that operate no-action letters programs. It appears that, in the very small percentage of cases in which such agencies have terminated no-action letters, they have not initiated actions to impose retroactive liability. 60 The Bureau expects its practice regarding such retroactive actions to be in line with the practices of these agencies.

In accordance with principles of fair notice, before terminating a No-Action Letter, the Bureau intends to notify the recipient of the possible grounds for termination, and permit an opportunity to respond within a reasonable period of time. In appropriate cases, the Bureau intends to offer the recipient an opportunity to modify its conduct to avoid termination. The Bureau intends to allow the recipient to wind-down the offering or providing of the described aspects of the product or service during a period of six months before termination, unless the described aspects of the product or service are causing Dodd-Frank Act actionable substantial injury to consumers, and a wind-down period would permit such injury to continue. If the Bureau terminates a No-Action Letter, it intends to do so in writing and specify the reasons for its decision. The Bureau intends to publish termination decisions on its website.

The Bureau recognizes that the process described in sections A, B, and C (Standard Process) may not be appropriate in certain circumstances. These include applications by service providers that develop products or services for use by covered persons that offer or provide consumer financial products or services; applications facilitated by trade associations, consumer groups, or other third parties that are not themselves covered persons that offer or provide consumer financial products or services; and applications involving a consumer financial product or service that is substantially similar to one that is the subject of an existing No-Action Letter.

Service providers that develop products or services for use by covered persons that offer or provide consumer financial products or services may use the Standard Process if they have secured an applicant that intends to use the service provider's product or service in connection with offering or providing a consumer financial product or service. Similarly, No-Action Letter applications facilitated by trade associations, consumer groups, or other third parties that are not covered persons that offer or provide consumer financial products or services may use the Standard Process if the third party has secured an applicant that intends to offer or provide the consumer financial product or service in question.

a. No-Action Letter Template. As an alternative to using the Standard Process, a service provider or facilitator may apply for a No-Action Letter Template. A No-Action Letter Template is (i) non-operative, i.e., it itself is not a No-Action Letter, and (ii) non-binding on the Bureau. 61

i. Application Information. Such applications should include the information specified in section A, as applicable and with appropriate adjustments given that the applicant itself will not be offering or providing the consumer financial product or service in question. In particular, a service provider applicant should describe how it anticipates its product or service will be used by a provider of consumer financial products or services.

ii. Assessment. In deciding whether to grant an application for a No-Action Letter Template, the Bureau intends to balance a variety of factors, as described in section B, with appropriate adjustments given the alternative nature of the application. The Bureau intends to grant or deny an application within 60 days of notifying the applicant that the Bureau has deemed the application to be complete.

iii. Issuance. The Bureau expects that a No-Action Letter Template will include many of the elements specified in section C, with appropriate adjustments based, in part, on the non-operative, non-binding nature of a No-Action Letter Template. In addition, a No-Action Letter Template will include a statement that the Bureau intends to grant applications for a No-Action Letter based on the No-Action Letter Template, under section E.1.b, in appropriate cases.

b. No-Action Letter Based on a No-Action Letter Template. A covered person that intends to offer or provide a consumer financial product or service covered by a No-Action Letter Template (whether using a service provider product or service, or otherwise) may apply for a No-Action Letter based on the No-Action Letter Template.

i. Application Information. Such applications should include the information specified in section A, with appropriate adjustments. In particular, the applicant should include (i) a statement that the application is based on a No-Action Letter Template and an identification of the No-Action Letter Template on which it is based; and (ii) a statement describing how the applicant's offering or providing its product or service is consistent with the framework described in the No-Action Letter Template. The application may cross reference any relevant information contained in the application for the No-Action Letter Template or the No-Action Letter Template itself.

ii. Assessment. In deciding whether to grant an application for a No-Action Letter under section E.1.b, the Bureau intends to balance a variety of factors, as described in section B, with appropriate adjustments. In particular, the Bureau intends to include in its assessment the additional factor of the degree to which the applicant's offering or providing its product or service is consistent with the framework described in the No-Action Letter Template. The Bureau anticipates being able to process such applications in a timeframe shorter than that specified in section B given that the underlying No-Action Letter Template has already been granted.

iii. Issuance. When the Bureau grants an application for a No-Action Letter under section E.1.b, it intends to provide the recipient with a No-Action Letter in accordance with the procedures specified in section C.

If an applicant offers or provides a consumer financial product or service that it believes is substantially similar to the consumer financial product or service that is the subject of an existing No-Action Letter, it may apply for a No-Action Letter based on the existing No-Action Letter.

a. Application Information. Such applications should include the information specified in section A, with appropriate adjustments. In particular, the applicant should include (i) a statement that the application is based on an existing No-Action Letter and an identification of the No-Action Letter on which it is based; and (ii) a statement describing how the consumer financial product or service in question and the manner in which it is offered or provided is substantially similar to the consumer financial product or service that is the subject of the existing No-Action Letter and the manner in which it is offered or provided. The application may cross reference any relevant information contained in the application for the existing No-Action Letter or the existing No-Action Letter itself.

b. Assessment. In deciding whether to grant an application for such a No-Action Letter, the Bureau intends to balance a variety of factors, as described in section B, with appropriate adjustments. In particular, the Bureau intends to include in its assessment the additional factor of the degree to which the consumer financial product or service in question, and the manner in which it is offered or provided, is substantially similar to these aspects of the existing No-Action Letter. The Bureau anticipates being able to process such applications in a timeframe shorter than that specified in section B given that the underlying No-Action Letter has already been granted.

c. Issuance. When the Bureau grants an application for such a No-Action Letter, it intends to provide the recipient with a No-Action Letter in accordance with the procedures specified in section C. 62

Section 1015 of the Dodd-Frank Act instructs the Bureau to coordinate with Federal agencies and State regulators, as appropriate, to promote consistent regulatory treatment of consumer financial and investment products and services. 63 Similarly, section 1042(c) of the Dodd-Frank Act instructs the Bureau to provide guidance in order to further coordinate actions with the State attorneys general and other regulators. 64 Such coordination includes coordinating in circumstances where other regulators have chosen to limit their enforcement or other regulatory authority. The Bureau is interested in entering into agreements with State authorities that issue similar forms of no-action compliance assistance that would provide for an alternative means of receiving a No-Action Letter from the Bureau, i.e., alternative to the process described in sections A through D.

Furthermore, the Bureau is interested in coordinating with other regulators more generally. To this end, the Bureau intends to enter into agreements whenever practicable to coordinate No-Action Letters issued under the Policy with similar forms of compliance assistance offered by State, Federal, or international regulators.

Public disclosure of information regarding No-Action Letters is governed by applicable law, including the Dodd-Frank Act, 65 the FOIA, and the Disclosure Rule. The Disclosure Rule generally prohibits the Bureau from disclosing confidential information, 66 and defines confidential information to include information that may be exempt from disclosure under the FOIA 67 —including FOIA Exemption 4 regarding trade secrets and confidential commercial or financial information that is privileged or confidential. 68 Relatedly, the Disclosure Rule defines business information as commercial or financial information obtained by the Bureau from a submitter that may be protected from disclosure under FOIA Exemption 4, and generally provides that such business information shall not be disclosed pursuant to a FOIA request except in accordance with section 1070.20 of the rule. 69

Consistent with applicable law, the Bureau intends to publish No-Action Letters and No-Action Letter Templates on its website, as well as a version or summary of the application. The Bureau also may publish denials of applications on its website, including an explanation of why the application was denied, particularly if it determines that doing so would be in the public interest. 70

Where information submitted to the Bureau is both customarily and actually treated as private by the submitter, the Bureau intends to treat it as confidential in accordance with the Disclosure Rule. 71 The Bureau anticipates that much of the information submitted by applicants in their applications, and by recipients during the pendency of the No-Action Letter, will qualify as confidential information under the Disclosure Rule. 72 In particular, the Bureau expects that information submitted that is responsive to sections A.2, A.3, A.4, C.4, and parallel information under sections E.1.a and E.2.a, will qualify as business information under the Disclosure Rule. 73 Other information submitted by applicants or recipients may also qualify as confidential information.

Disclosure of information or data provided to the Bureau under the Policy to other Federal and State agencies is governed by applicable law, including the Dodd-Frank Act  74 and the Disclosure Rule.

To the extent the Bureau wishes to publicly disclose non-confidential information regarding a No-Action Letter, the Bureau intends to include the terms of such disclosure in the letter. The Bureau intends to draft the No-Action Letter in a manner such that confidential information is not disclosed. Consistent with applicable law and its own rules, the Bureau does not intend to publicly disclose any information that would conflict with consumers' privacy interests.

I. Background

On December 13, 2018, the Bureau proposed a Policy on No-Action Letters and the BCFP Product Sandbox (Proposed Policy). 1 The Proposed Policy had two parts. The first concerned No-Action Letters exclusively. The resulting No-Action Letter Policy (NAL Policy) has been finalized and published elsewhere in this issue of the Federal Register . The second part concerned the Sandbox (Proposed Sandbox Policy). This document finalizes the Proposed Sandbox Policy as the Compliance Assistance Sandbox Policy (CAS Policy or Policy). It reflects adjustments to the Proposed Sandbox Policy that the Bureau is making in response to comments on that proposal. The differences between the Proposed Sandbox Policy and the CAS Policy are discussed in detail in section IV below, which reviews the Bureau's consideration of comments received on the Proposed Sandbox Policy.

In section 1021(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress established the Bureau's statutory purpose as ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive. 2 Relatedly, the Bureau's objectives include exercising its authorities under Federal consumer financial law for the purposes of ensuring that markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation, and that outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens. 3

Congress has given the Bureau a variety of authorities under title X of the Dodd-Frank Act and the enumerated consumer laws that it can exercise to promote this purpose and these objectives. 4 These authorities include the authority to implement the Federal consumer financial laws through rules, orders, guidance, and interpretations, and to establish general policies with respect to such functions. 5 As discussed in the Proposed Sandbox Policy and explained further below, three of the enumerated consumer laws describe the safe harbor effect of Bureau approvals  6 issued to a particular entity or entities. 7

The primary purpose of the CAS Policy is to provide a mechanism through which the Bureau may more effectively carry out its statutory purpose and objectives by better enabling compliance in the face of regulatory uncertainty. One of the Bureau's core statutory functions is to issue guidance implementing Federal consumer financial law, 8 and the Director is authorized to issue such guidance as may be necessary or appropriate to carry out that law and to prevent regulated entities from evading it. 9 To that end, Congress has instructed courts to treat Bureau determinations on the meaning and interpretation of such law as those of an agency with exclusive authority to interpret it. 10

The Bureau uses the Official Interpretations (Commentary) as its primary means of fulfilling its interpretive mission. Like other forms of guidance that the Bureau uses, the CAS Policy is intended to supplement the Commentary. The Policy does this by helping regulated entities better understand, in conditions of regulatory uncertainty, how Federal consumer financial law applies to specific aspects of particular products and services. It is for this reason that the Bureau is finalizing the Policy as the Compliance Assistance Sandbox Policy. The Policy, as finalized, provides for the issuance of approvals. Approvals offer a regulated entity that confronts regulatory uncertainty the binding assurance that specific aspects of a product or service are compliant with specified legal provisions. (Applicants to the Sandbox can also apply for a No-Action Letter under the Bureau's NAL Policy. 11 As discussed in the Bureau's NAL Policy published in this issue of the Federal Register , No-Action Letters provide an entity with the Bureau's discretionary determination not to exercise supervisory or enforcement activity against specific aspects of a product or service.)

The Bureau expects that approvals will usually be time limited, typically to two years, but recipients may apply for extensions under specified procedures. 12 A given approval may ultimately be used to help support an amendment to a regulation or Commentary, negating the need for further extensions of one-off assistance. 13 The Policy commits approval recipients to specified forms of data sharing with the Bureau.

Applicants for compliance assistance under the Policy follow a streamlined application and review process. 14 The Bureau expects to grant or deny an application within 60 days of notifying the applicant that its application is deemed complete. 15 The Policy also lays out mechanisms for Bureau coordination with other regulators that maintain similar programs designed to facilitate innovation. 16

The Bureau plans to propose further forms of assistance that may be of value to innovators. The Proposed Sandbox Policy would have provided for the issuance of exemptions by order from regulatory and certain statutory requirements. As explained further below, the final CAS Policy does not include such exemptions, but the Bureau does intend to propose a legislative rule providing for the issuance, by order, of exemptions from regulatory requirements, as well as other categories of exemptions, as an additional form of assistance. The Bureau also intends to issue a proposal regarding the issuance of interpretive letters, and other forms of interpretive guidance. These developments have been informed by comments received in response to the Proposed Sandbox Policy.

The Bureau received 29 unique comments covering the Proposed Sandbox Policy. Industry associations and individual financial services providers together submitted 17 of these. Consumer and civil rights organizations submitted five comments covering the Proposed Sandbox Policy. Government actors submitted three such comments. The remaining Proposed Sandbox Policy comments were provided by law firms (one), research centers (two), and members of the public (one).

Industry commenters uniformly supported the Proposed Sandbox Policy. One of two groups of State Attorneys General also did so. These supporters generally agree that legal and regulatory uncertainties pose a barrier to innovations being developed in the marketplace. In their view, the Proposed Sandbox Policy, along with other Office of Innovation policies and programs, can help lower that barrier. Industry stakeholders made a number of comments intended to improve the functioning of the Proposed Sandbox Policy in that respect.

Some of the most significant such comments, in the Bureau's view, requested that the Bureau add interpretive guidance to the available forms of compliance assistance. For example, one industry think tank called for the Bureau to further compliance by issuing interpretive legal opinions in circumstances warranting further legal clarity on a particular practice or activity. The commenter noted that other regulatory agencies—including the Office of the Comptroller of the Currency, the FTC, the Securities and Exchange Commission, and the Commodity Futures Trading Commission—provide for opinions of this kind. Another group of industry commenters requested that, to bring the proposal closer into line with similar programs offered by other regulators, issuance of compliance assistance under the Policy should represent the Bureau's conclusion that the proposed product or service does not violate applicable Federal consumer financial law. 17 A trade association commenter suggested that the Bureau should use its authority to issue advisory opinions under the Fair Debt Collection Practices Act (FDCPA) to clarify regulatory expectations by providing clear legal interpretations for debt collectors that want to use newer technologies. 18 Another commenter called for the Bureau to clarify the interpretive activity associated with approvals, in part so that third parties would better understand what reliance they could place on Bureau action under the Sandbox. These kinds of comments on the importance of interpretive guidance build on earlier comments submitted in response to the Bureau's 2018 Request for Information on Guidance and Implementation Support (Guidance RFI). 19

This feedback is informing the Bureau's present consideration of a proposal to implement an interpretive letter program that could benefit innovators and other regulated entities confronting regulatory uncertainty. The Bureau agrees with these commenters that the present lack of an interpretive letter or advisory opinion policy represents a gap in the Bureau's plans for providing compliance assistance to stakeholders under the Federal consumer financial laws. Because the Bureau did not propose an interpretive letter or advisory opinion program in the Proposed Sandbox Policy, and because of the significant public interest in how such a program might be structured, the Bureau believes it would be appropriate to provide an opportunity for public comment before establishing an interpretive letter or advisory opinion program. Accordingly, the Bureau intends to separately propose an interpretive letter program as soon as practicable. 20

With one exception, consumer and civil rights organizations—together with a second group of State Attorneys General, and a group of State financial regulators—opposed the Proposed Sandbox Policy. 21 Their predominant objection was that it would permit regulated entities to evade their legal responsibilities. The Bureau believes this objection is ultimately misplaced, but acknowledges that the proposal may not have been sufficiently clear on this point. Approvals are intended to facilitate compliance in the face of regulatory uncertainty. The relief they provide is from regulatory uncertainty, not from regulatory obligation. This central purpose is why the Proposed Sandbox Policy is being finalized as the Compliance Assistance Sandbox Policy. It is also why the Policy refers to assistance rather than relief. Plainly, Congress gave the Bureau authority to issue orders to advance this compliance goal. 22

To the extent that some stakeholders continue to disagree with the Policy, the Bureau believes that their differences will primarily be about the practical importance of resolving specific regulatory uncertainties for regulated entities that seek to innovate and improve access to financial services, consistent with the requirements of Federal consumer financial law. 23 Other agencies show steady demand for their interpretive and No-Action Letter programs and there is no reason to believe the Bureau's experience will be any different. 24

This section provides a summary of significant comments received on the Proposed Sandbox Policy. It covers the Bureau's assessment of such comments by subject matter and, where applicable, describes the resulting changes that the Bureau is making in the Compliance Assistance Sandbox Policy. 25 Comments addressed to the Bureau's proposed issuance of No-Action Letters have been addressed in the process of finalizing the NAL Policy published elsewhere in today's issue of the Federal Register . That review is incorporated herein by reference.

Section II.A of the Proposed Policy provided a high-level description of the types of compliance assistance available under the Proposed Sandbox Policy. Section II.A.1 explained that an approval issued under the Proposed Sandbox Policy would be based on one or more of three statutory safe harbor provisions, and would include a statement that, subject to good faith compliance with specified terms and conditions, the Bureau approves the recipient's offering or providing the described aspects of the product or service in question. It further explained that, by operation of the applicable statutory provision, the recipient would have a safe harbor from liability under the applicable statute to the fullest extent permitted by the applicable provision as to any act done or omitted in good faith in conformity with the approval.

Section II.A.2 of the Proposed Policy explained that an exemption issued under the Proposed Sandbox Policy would include a statement that, subject to good faith compliance with specified terms and conditions, the Bureau exempts the recipient from complying with or deems it to be in compliance with specified statutory or regulatory provisions in connection with its offering or providing the described aspects of the product or service in question. The exemption would be based on authority to grant exemptions by order: (i) From statutory provisions (as well as provisions of regulations implementing the statute in question) under statutory exemption-by-order provisions (statutory exemptions); or (ii) from regulatory provisions that do not mirror statutory provisions under rulemaking authority or other general authority (regulatory exemptions). Section II.A.2 further explained that, where the Bureau provides such an exemption, the recipient would be immune from enforcement actions by any Federal or State authorities, as well as from lawsuits brought by private parties, based on the relevant statutory or regulatory provisions and on the recipient's offering or providing the described aspects of the product or service.

The Bureau received a number of comments about State-level effects of these two sections. They fall into two categories: (1) Comments regarding the effect of an approval or exemption on the ability of States to enforce Federal consumer financial law under section 1042(a) of the Dodd-Frank Act; and (2) comments about the effect of an approval or exemption on State law. The CAS Policy, as finalized, no longer includes statutory or regulatory exemptions by order. As a result, comments on exemptions are addressed further below rather than in this section. 26

A group of State financial regulators, a group of State Attorneys General, and a group of consumer advocates asserted that the approvals available under the Proposed Sandbox Policy would exceed the Bureau's authority under title X of the Dodd-Frank Act. Specifically, they argued that the Bureau cannot provide this degree of liability protection because section 1042(a) of the Dodd-Frank Act gives the States authority to enforce Federal consumer financial law. 27 The Bureau disagrees.

The basic operation of the statutory provisions that describe a safe harbor for Bureau approvals and Bureau interpretations is straightforward. For example, section 130(f) of TILA provides that various liability provisions of TILA do not apply to any act done or omitted in good faith in conformity with any approval or interpretation by an official or employee of the Bureau duly authorized by the Bureau to issue such interpretations or approvals under such procedures as the Bureau may prescribe. The CAS Policy prescribes such procedures for approvals (and the Bureau's planned interpretive letter proposal will propose to prescribe them for interpretations). Under those procedures, the Assistant Director, Office of Innovation, is authorized to issue approvals with respect to specific provisions of—for example—TILA and Regulation Z. At that point, no party, including a State, can override the statutorily conferred safe harbor. 28

State authority to enforce Federal consumer financial law does not invalidate the Bureau's exclusive authority to give meaning to that same law. The Dodd-Frank Act is clear that the Bureau has such authority. 29 Thus, the Commentaries for Regulations Z, E, and B inform regulated entities that they can be relied upon for safe harbor effect. They do not observe any exception for State enforcement actions that purport to rely on contrary interpretations of TILA, EFTA, and ECOA, and no State has ever suggested that they should. Similarly, the Bureau has also used its authority to grant exemptions by rule from various statutory or regulatory provisions. For example, section 1026.41 of Regulation Z requires mortgage servicers to provide periodic statements. 30 Using its authority under TILA to grant exemptions by rule, 31 the Bureau exempted small servicers from the periodic statement requirement. 32 No one would suggest, however, that States could now state a claim under TILA against exempted small servicers for failing to provide periodic statements.

A group of State Attorneys General observed that the Proposed Sandbox Policy appears not to contemplate the preemption of State law. 33 One consumer group urged the Bureau not to preempt state regulators until sufficient time has passed for states to establish their own financial services regulatory sandboxes. A research organization stated that the Bureau has a strong case for preemption under the Proposed Sandbox Policy. The compliance assistance available under the Policy, however, concerns Federal consumer financial law, not State law, and the Bureau does not foresee that such assistance would preempt State law.

The Bureau received a number of comments specific to approvals. A consortium of consumer groups made several points. Their main concern was that the Bureau might issue de facto exemptions as approvals. This concern appears to derive from the Bureau's description of an approval as a form of “relief” from statutory and regulatory provisions. The Proposed Sandbox Policy used the term “relief” as a generic term that encompasses exemptions, but also other actions that are designed to reduce regulatory uncertainty and facilitate compliance. The Bureau did not—and does not—intend to issue approvals that are de facto exemptions. The Bureau intends to provide approvals with respect to products, services, and practices that are compliant with identified statutory and regulatory provisions. 34 To avoid further confusion on this point, the Bureau is finalizing the proposal as the Compliance Assistance Sandbox Policy, which now refers to compliance assistance rather than relief.

Second, the consumer groups pointed out that the Commentary applicable to regulations implementing TILA, EFTA, and ECOA include statements indicating that, except in unusual circumstances, Bureau interpretations that trigger the safe harbor provisions of the respective statutes will be included in the Commentary. 35 The commenters stated that the Proposed Sandbox Policy did not mention these statements or purport to change them. The main reason it did not do so is that these statements concern interpretations, not approvals that apply to specific entities. In addition, the Bureau has already issued several standalone interpretations that offer safe harbor protection even though they did not follow the general practice of being issued after notice-and-comment as part of the Commentary. 36

Third, the consumer groups took issue with the Bureau's description of the safe harbor effect of an approval. They objected, in particular, to the term “immunity” as overstating the impact of an approval because: (i) An entity must have relied on the approval in good faith; (ii) a court must find that the approval was issued prior to the time of the entity's action; (iii) the entity is not protected from liability for future acts in conformance with the approval after a court invalidates the approval; and (iv) an approval only protects a recipient from liability, and does not prevent a plaintiff from obtaining declaratory or injunctive relief. Similarly, a group of State Attorneys General objected that the safe harbor provisions do not confer “absolute immunity,” but instead provide entities an affirmative defense to liability when entities can demonstrate they acted in good faith and in conformity with the approval in question.

This objection reflects a semantic difference. The legislative history of the TILA safe harbor provision uses the term “immunity” from civil liability. 37 In addition, the Bureau's statements on the safe harbor made clear that the liability protection provided by an approval depends on the recipient's good faith conformity with its terms. As a result, the Bureau believes that immunity from liability is a reasonable description for the protection against liability that Congress provided under section 130(f) of TILA, section 706(e) of ECOA, and section 916(d) of EFTA. By the same token, however, the Bureau has no objection to referring to safe harbors from liability rather than immunity from liability, and the CAS Policy has been adjusted accordingly.

Section II.A.2 of the Proposed Policy indicated that exemptions by order would be available in two forms: (1) Exemptions from statutory provisions (as well as provisions of regulations necessitated by the statute in question) under statutory exemption-by-order provisions (statutory exemptions);  38 or (2) exemptions from regulatory provisions that are not specifically necessitated by statutory provisions under rulemaking authority or other general authority (regulatory exemptions). 39 The Bureau received comments about both types.

Consumer groups and one group of State Attorneys General observed that the Bureau has limited authority to provide statutory exemptions by order. In light of the comments received, the Bureau has concluded that the purposes of the specific statutory exemption by order provisions described in the Proposed Sandbox Policy are sufficiently distinct from the purposes of the Compliance Assistance Sandbox Policy that they do not need to be included in it. The exclusion of statutory exemptions from the Policy does not affect the Bureau's authority to issue such exemptions pursuant to these specific statutory provisions.

A number of industry and trade association commenters, among others, supported the Bureau's proposal to provide regulatory exemptions, generally arguing that regulatory exemptions would allow companies and service providers to test innovative products and services in a controlled environment, without incurring the risk of a lawsuit or enforcement action.

Consumer groups and a group of State Attorneys General asserted that the Bureau lacks authority to provide regulatory exemptions. In their view, apart from the very limited authority to grant statutory exemptions by order, the Bureau only has authority to grant exemptions by rule. These commenters contend that such exemption-by-rule provisions typically include standards that the Bureau must satisfy when prescribing such exemptions, and that the Proposed Sandbox Policy impermissibly sought to circumvent what they asserted was the Bureau's obligation to grant regulatory exemptions only through a rulemaking process.

The Bureau believes that regulatory exemptions— i.e., exemptions from regulatory provisions that are not specifically necessitated by statute—would be an important component of the CAS Policy. Regulatory exemptions would enable the Bureau to learn, from real-world experience, whether technological or other developments since current rules were issued warrant a change in discretionary aspects of Bureau rules. As contemplated in the Proposed Sandbox Policy, regulatory exemptions would allow the Bureau, in a controlled environment, to learn whether a new aspect of a product or service that was not fully contemplated when existing rules were promulgated nonetheless advances the purposes and objectives of the underlying statute.

The Bureau appreciates the comments emphasizing the value of additional public feedback before proceeding with an exemption program. Thus, the Bureau will at a later date issue a proposal to establish a program for exemptions by order through a separate notice-and-comment rulemaking.

Consumer groups and one of the State Attorneys General groups contended that the Proposed Sandbox Policy fails to comply with the Administrative Procedure Act (APA) in various respects. The Bureau disagrees. 40

A number of commenters asserted that the Proposed Sandbox Policy, if finalized, would be a legislative rule and accordingly subject to notice-and-comment (and other) requirements under the APA. The Policy is intended as a policy statement and procedural rule that provides the public with information regarding the Bureau's plans to exercise its discretion to issue approvals under the Policy, and to describe the procedural components of such discretion. It does not purport to impose on any regulated entity any legally-binding obligations or prohibitions. It does not create substantive rights in any party, but rather describes procedures for how compliance assistance can be sought under the Policy and how the Bureau intends to resolve such applications. Whether an individual approval impacts substantive legal rights is a separate question that is addressed in subsection D.3 below. But the fact that such compliance assistance may change substantive rights does not convert into a substantive legislative rule the procedures that describe how the Bureau intends to exercise its discretion to provide compliance assistance.

Consumer groups claimed that the Proposed Sandbox Policy, if finalized, would be arbitrary and capricious for several reasons. The Bureau notes that a determination of whether the Policy is arbitrary or capricious would be based on the content of the final Policy, not the proposed Policy. Accordingly, the discussion below references the final Policy as well as the proposed Policy.

First, consumer groups characterized the Proposed Sandbox Policy as arbitrary and capricious for not considering impacts on consumers. The Bureau believes this characterization is incorrect. The proposed Policy advised applicants for compliance assistance to describe consumer benefits and risks associated with the product or service. It also stated that the Bureau intends to place particular reliance on those elements of an application when assessing the merits of any application for assistance. The final Policy confirms the point. Moreover, under the Proposed Sandbox Policy, regulated entities granted an approval were to: (i) Report information about the effects of the described aspects of the product or service on complaint patterns, default rates, or similar metrics that will enable the Bureau to determine if such aspects are causing material, tangible harm to consumers; and (ii) compensate consumers for any material, quantifiable, economic harm caused by the described aspects of the product or service. As described further below, these provisions have been adjusted in the final Policy to track more established standards of consumer injury, but their core focus on detecting and mitigating consumer risks remains. 41

Second, consumer groups claimed that the Bureau failed to give adequate reasons for developing the Proposed Sandbox Policy. As explained further above, the Bureau's immediate aim here is to better enable compliance in circumstances of regulatory uncertainty—and thereby serve a number of the Bureau's statutory objectives. Building new mechanisms to improve adherence to consumer protection laws benefits consumers directly—by improving compliance—and indirectly—by lowering compliance costs and helping innovators to provide new products and services to compete for consumer demand. In addition, the Bureau explained in the Proposed Sandbox Policy how it expected information obtained thereunder to inform the Bureau's exercise of related authorities, such as market monitoring and rulemaking.

Commenters opposed to the Proposed Sandbox Policy made two broad arguments that approvals would amount to legislative rules. One group of State Attorneys General suggested that the Bureau lacks authority to issue approvals absent notice-and-comment rule-making. However, the case they cite to support this proposition discusses whether a generally applicable policy document is a legislative rule that requires notice-and-comment rulemaking. 42 It does not address particularized determinations like the approvals contemplated by the Policy.

Some consumer groups asserted that particular approvals could be legislative rules requiring notice-and-comment rulemaking—even as the procedures specified in the Proposed Sandbox Policy for providing approvals do not contemplate such rulemaking. Particular approvals could be legislative rules, they contend, because they could change, in a binding manner, and broadly, whether or how consumer protection laws apply in the future, and affect the future action and future rights of consumers and other State and Federal agencies, as well as the Bureau.

Approvals issued under the Policy will be based on one or more of three statutory safe harbor provisions. These state that approvals will be issued by duly authorized Bureau officials or employees. The provisions do not indicate that such personnel must do so by rule or regulation. 43 The Bureau acknowledges that simply labeling a Bureau action as an approval does not render it immune from challenge as a de facto legislative rule; the question is one of substance, not form. 44 But the Bureau's intention under the Policy is that approvals will be particularized determinations based on the application of existing law to specific factual scenarios. Approvals will issue only when they are a rational product of existing law, and they will be expressly limited to the particularized facts and circumstances of the described aspects of the product or service identified by the applicant. As such, they are not subject to notice and comment requirements under the APA.

Section II.B of the Proposed Policy listed nine items that should be included in an application under the Proposed Sandbox Policy, as appropriate, including: (1) The identity of the applicant; (2) a description of the product or service at issue; (3) the requested duration of participation; (4) any other limits on participation; (5) explanations of the potential consumer benefits and risks of the application; (6) an identification of the relevant statutory and regulatory provisions; (7) a description of data that would be shared with the Bureau; (8) any request for confidential treatment of information; and (9) an identification of any regulators the applicant wished the Bureau to coordinate with. Section II.C of the Proposed Policy stated that the Bureau would consider the quality and persuasiveness of the application in deciding whether to grant the application, with a particular emphasis on the potential risks and benefits, as well as an analysis of the relevant statutory and regulatory provisions. Section II.C also stated that the Bureau intended to grant or deny an application within 60 days of notifying the applicant that the Bureau deemed the application to be complete.

A coalition of consumer groups argued that the application and assessment procedures described in the Proposed Sandbox Policy were inadequate, for a variety of reasons. Specifically, these commenters argued that: The information to be included in an application was insufficient for the Bureau to properly evaluate applications; certain specific items (such as a showing of the product or service's compliance with existing State and Federal law) proposed to be deleted from the application requirements were necessary for the Bureau to provide an adequate review; and that the Bureau should add certain evaluation criteria from the prior NAL policy to the Proposed Sandbox Policy.

The Policy finalizes the application requirements largely as proposed. 45 The Bureau appreciates these commenters' concern about the importance of adequately reviewing applications for compliance assistance. The Bureau intends in many cases for the issues raised by these commenters to be addressed as part of the Bureau's assessment of applications. However, as discussed in the preamble to the Proposed Policy, the Bureau's experience with the initial 2016 version of its NAL policy suggests that those application criteria were so burdensome as to deter potentially meritorious applications. By replacing the previous prescriptive application requirements with more flexible mechanisms (which can be tailored based on pre-application discussions between an applicant and relevant Bureau staff), applicants will be able to provide the Bureau with information necessary to evaluate an application without unduly burdening potential applicants. Ultimately, the Bureau believes that the most effective and efficient means of handling the concerns raised by consumer groups is to clarify that the Bureau expects its assessment of applications to include due diligence regarding the applicant, its principals, and the product or service in question.

With specific respect to concerns about removing requirements to show compliance with State and Federal law more generally, and to certify that all information in the application is true and accurate, the Bureau believes that these requirements are either unnecessary or redundant. As stated in the final Policy, compliance assistance provided under the Policy will be limited to specific applications of Federal law, as well as limited to the facts stated in the application. To the extent that a product or service violates a provision of law outside the scope of the Bureau's compliance assistance, it will be unaffected by the Bureau's compliance assistance. Similarly, if an applicant misstates or misrepresents to the Bureau material facts about the product or service at issue, it will not obtain the benefit of the Bureau's compliance assistance. 46 The final CAS Policy reflects revisions intended to make clear that each form of compliance assistance attaches only to specifically described aspects of a given product or service and only to the legal provisions encompassed under that form of assistance.

As described in the Policy, in assessing applications the Bureau will place a particular emphasis on the potential consumer benefits and risks of the product or service at issue. The Policy makes clear that the Bureau will focus on the nature of the ambiguity or uncertainty identified in the application, and the manner in which the requested approval would resolve that ambiguity or uncertainty. The final Policy indicates that an approval granted under the Policy will include a statement of the Bureau's basis for providing the compliance assistance at issue. 47

Several trade associations requested that the Bureau clarify that the proposal was not limited to “emerging” or “fintech” firms, but extend to any firm interested in testing innovative products and services. The Bureau agrees that compliance assistance should be generally available to entities offering (or contemplating offering) an innovative product or service that is subject to regulatory uncertainty, and the final Policy reflects that intent. Thus, the application procedures, as finalized, call for the applicant to describe how an intended product or service may further innovation, but they do not restrict the kinds of providers that may apply for compliance assistance. 48

Several commenters expressed concern about the Bureau's intent to grant or deny an application within 60 days of the application being deemed complete. These commenters believed that a 60-day review period would be insufficient for the Bureau to evaluate the application adequately, conduct appropriate due diligence, and coordinate with other regulators, among other things. Under the final Policy, potential applicants are strongly encouraged to discuss their application with the Bureau prior to filing a formal application; the Bureau understands that this is common practice among other Federal agencies with similar programs. This pre-application period typically will allow Bureau staff to conduct a preliminary evaluation of an application (and the applicant) before its formal submission to the Bureau. Thus, the final Policy retains language stating that the Bureau intends to grant or deny an application within 60 days of notifying the applicant that the Bureau has deemed the application to be complete. The final Policy also notes that while the 60-day review period will be the Bureau's general expectation, particular circumstances—in particular the potential need to coordinate with other regulators—may lengthen that timeline.

Sections II.A and II.B of the Proposed Sandbox Policy described the particularized scope of approvals to be issued under the Policy. Section II.D.7 noted that approvals would normally be limited to two years. Section II.E described extension procedures and stated that extensions would be based on the quality and persuasiveness of the data provided to the Bureau under Section II.D. Section D.10 described potential revocation grounds and procedures.

Several commenters noted that compliance assistance is made more valuable when generally applicable. As noted above, however, approvals are intended to be particularized determinations based on the application of existing law to specific factual scenarios. The Bureau recognizes that there is some tension between the value of generally applicable assistance and the practicality of particularized assistance. It believes that the best way to resolve that tension is by reevaluating an approval after an appropriate period of time to determine whether: (a) It should be confirmed in the Bureau's regulations or incorporated in the Commentary (or other generally applicable interpretative guidance);  49 (b) it is of sufficiently narrow applicability that maintaining it as a particularized approval is appropriate; or (c) data received from the recipient indicates that the approval should be modified or terminated. Accordingly, the Bureau is not changing the Policy to make approvals of broader applicability.

The Bureau continues to believe that two years will generally be an appropriate length of time to gather and analyze data to determine appropriate follow-on action. Several commenters objected to this time period as too long. They also objected to the potential for extensions, particularly in the context of follow-on rulemaking. The Bureau believes, however, that this concern does not fully take into account that approvals are used to provide compliance assistance to recipients. The Bureau is not waiving licensing requirements or taking similar steps to enable innovators to operate outside of the regulatory environment for some start-up period. Rather, it is providing assistance, beyond the existing Commentary and non-rule guidance offered, to innovators to comply with legal requirements in conditions of regulatory uncertainty. Any time limits would be calculated to enable the Bureau to make a considered decision about how to tackle that uncertainty over the longer term.

Industry commenters generally supported the proposed procedures for revocations of assistance, although some objected that the Bureau's focus on material, tangible harm to consumers was an unclear standard for revocation and compensation. Some consumer group commenters argued that the proposal's revocation procedures failed to reserve to the Bureau sufficient discretion to modify or end assistance without notice or an opportunity to respond or cure any failure to comply with the terms under which the Bureau provided assistance. Consumer groups also saw the standards for revocation as too limited. In particular, they objected to the Bureau's focus on material, tangible harm to consumers as too narrow a ground for revocation and compensation.

In response to these comments, the Bureau is revising the Policy's termination procedures in part. The Bureau agrees that it retains authority to end an approval when it deems that necessary in light of the purposes of the Policy. The Policy identifies the three circumstances in which it intends to effect termination on that basis: (i) The recipient fails to substantially comply in good faith with the specified terms and conditions of the approval; (ii) the described aspects of the product or service do not perform as anticipated in the application;  50 or (iii) a statutory amendment or Federal judicial holding cause the Bureau to conclude that the recipient can no longer rely in good faith on the Bureau's approval as the safe harbor provisions require. At the same time, precisely because it retains the authority to end approvals, the Bureau believes that it is important to provide notice of an intended termination, explaining the grounds for that proposed action, providing an opportunity to respond, and, in appropriate circumstances, take corrective action to address the stated grounds for termination.

The Bureau is revising the Policy to refer to termination rather than revocation because the effect of approvals for the period that they are provided by the Bureau cannot be revoked. 51 The Bureau is also revising the Policy to use standards for consumer harm that come directly from the Dodd-Frank Act and accordingly reflect well-understood and established legal norms. Finally, the Bureau is adding procedures under which recipients of compliance assistance can apply for modifications to an approval to address unanticipated changes in circumstances, such as potential changes to the described aspects of a product or service.

Section II.G of the Proposed Policy listed types of information that the Bureau intended to publicly disclose about entities receiving compliance assistance, including the identity of the recipient and the subject matter, rationale, and legal authority for the compliance assistance provided. It also noted that the Bureau intended to publish certain information about denials. Section II.G identified a number of legal authorities—including the Freedom of Information Act (FOIA) and the Bureau's rule on Disclosure of Records and Information (Disclosure Rule)—that would govern the disclosure of any other information about applications for compliance assistance, and noted that much of the information submitted by applicants and recipients would be protected from disclosure under these authorities.

Industry commenters were broadly supportive of this approach. One trade association objected, however, to the proposed publication of denials. The Bureau is finalizing the statement about denials as proposed. The Bureau notes that the final Policy, as did the proposal, includes two related statements about denials: First, that the Bureau intends to publish denials only after the applicant is given an opportunity to request reconsideration of the denial; and second, that upon request, and if disclosure is not required by 5 U.S.C. 552(a)(2) or other applicable law, the Bureau does not intend to release identifying information from published denials, and to instead redact such information from denials published on its website. More generally, the Bureau expects denials to be relatively unusual. The Policy strongly encourages potential applicants to contact the Office of Innovation for informal, preliminary discussion of a contemplated proposal prior to submitting a formal application. If it appears during such discussions that an application is not likely to be granted, the potential applicant may choose not to submit an application in the first place. Applicants are free to withdraw applications at any time prior to denial.

A number of consumer groups and a law firm commenter saw the described disclosures as too limited. However, the Bureau merely intends to redact or withhold information to the extent that it is protected from disclosure by the FOIA. While the Bureau anticipates that much information submitted by applicants would be exempt from disclosure under the FOIA, it will disclose information consistent with the FOIA's requirements. In light of a recent Supreme Court opinion concerning FOIA Exemption 4, 52 the Bureau is adding a statement in the final Policy making clear that where information submitted to the Bureau is both customarily and actually treated as private by the submitter, the Bureau intends to treat it as confidential in accordance with the Disclosure Rule.

Section II.B of the Proposed Policy stated that the Bureau invites applications from trade associations, service providers, and other third-parties; however, the Proposed Policy noted that such third parties might not be able to submit a complete application. In such cases, the Proposed Policy stated that the Bureau may grant provisional assistance, subject to the submission of additional information and the Bureau's subsequent grant of non-provisional assistance. The Proposed Policy further stated that additional entities identified by the third-party may be granted assistance at the same or later time by informing the Bureau that they wish to be granted admission and providing the necessary information.

Trade association commenters generally supported the Bureau's proposal to allow third parties to apply for compliance assistance under the Policy. These commenters stated that allowing third parties to facilitate applications would increase access to compliance assistance, in particular for smaller entities that might otherwise lack the resources to obtain compliance assistance.

Consumer groups and a group of State Attorneys General opposed the proposal to allow applications from third parties. These commenters raised concerns that the Bureau's granting of an application from a trade association in particular could amount to rulemaking by the Bureau that would require notice and comment under the APA. These commenters also expressed concerns that under the Proposed Policy the Bureau would not be able to adequately evaluate applications from individual applicants that might seek compliance assistance under the auspices of previously-granted compliance assistance.

The Bureau continues to believe that in some cases it will be valuable for a third party to apply for a version of compliance assistance on behalf of another entity. 53 To cite two examples: (1) A service provider may need preliminary compliance assistance from the Bureau before the service provider is able to find a partner willing to test an innovative product or service, and that partner could in turn apply for compliance assistance under the same terms; or (2), as noted by commenters, a trade association could facilitate participation in the Policy by smaller entities that otherwise would lack the resources to obtain compliance assistance directly from the Bureau.

In response to concerns about the Bureau's assessment of such applications, however, the Bureau has revised the structure of such third-party applications under the Policy. The final Policy contemplates that a third party (such as a service provider, trade association, or consumer group) could apply for and receive a “template” approval. The template itself is non-operative, meaning that no party can rely on it to trigger the statutory safe harbor, and the Bureau retains discretion at any time thereafter to reevaluate preliminary factual or legal findings reflected in the template. But as a statement of how the Bureau plans to interpret the law under certain circumstances, entities may use the template as a basis to apply for compliance assistance under substantially the same terms as those contemplated in the template. The Bureau would evaluate each application on an individual basis. The Bureau believes that this approach will still allow the benefits of third-party facilitation, while ensuring sufficient review of additional applicants.

The Bureau has also made provision for a third party to apply for compliance assistance based on offering a consumer financial product or service that has substantial similarity to an aspect of another product or service, offered by a first-party, that is already the subject of Bureau compliance assistance under the CAS Policy. This procedure closely resembles the procedures for “template”-based applications, but is adjusted to reflect the fact that the first party did not apply for any form of assistance on behalf of the third-party.

Section II.F of the Proposed Policy stated that the Bureau is interested in entering into agreements with State authorities that issue similar forms of assistance that would provide for an alternative means of receiving assistance from the Bureau. Some consumer advocacy group commenters read this statement as implying that a company that obtained assistance from a State would “automatically” receive compliance assistance from the Bureau. That is not the Bureau's intent. The Bureau anticipates that such agreements would include provisions designed to ensure that the Bureau's provision of compliance assistance in such circumstances would be consistent with its legal authority and duty to protect consumers, as well as with other applicable law. Approvals issued under the Policy will conform with the Bureau's statutory obligations regardless of how the application is presented to the Bureau. 54

The Proposed Policy also permits applicants to request that the Bureau coordinate with other regulators with respect to the application. A group of trade associations commented that the Bureau should not put the onus on the applicant to identify other governmental authorities with which the Bureau may coordinate. Rather, the Bureau should lead the coordination among Federal and State regulators, as it is better positioned to do so than the applicant. More broadly, these commenters urged the Bureau to ensure that other regulators understand the Policy and to request that other regulators defer to actions taken under its terms. These comments were seconded by an industry policy organization.

As evidenced by the inclusion in the Policy of a separate section headed Regulatory Coordination, the Bureau fully appreciates the need for coordination with other regulators for purposes of administering the Policy. However, such coordination must be balanced against other considerations. For example, as the Policy notes, if an applicant wishes the Bureau to coordinate with other regulators, the Bureau may need more time to process the application, depending on the degree of coordination requested. Moreover, the degree of coordination needed likely will vary from case to case. The Bureau intends to use its best efforts to find the optimal balance between coordination and other considerations for each approval issued under the Policy. For the reasons discussed above, the Bureau is finalizing the section on regulatory coordination largely as proposed.

The Bureau has concluded that the Policy constitutes an agency general statement of policy and a rule of agency organization, procedure, or practice exempt from the notice and comment rulemaking requirements under the APA, pursuant to 5 U.S.C. 553(b). Because the Policy relates solely to agency procedure and practice, it is not substantive, and therefore is not subject to the 30-day delayed effective date for substantive rules under section 553(d) of the APA. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 55

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Bureau plans to submit a report containing this Policy and other required information to each House of Congress and the Comptroller General prior to the Policy's applicability date. The Office of Information and Regulatory Affairs has designated this Policy as not being a “major rule,” as defined by 5 U.S.C. 804(2).

The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C 3501 et seq. ) requires that Federal agencies may not conduct or sponsor, and notwithstanding any other provision of law, a person is not required to respond to a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements as contained in this final Policy and identified below have been approved by OMB and assigned the OMB control number 3170-0059. OMB's approval will expire on September 30, 2022.

The information collections contained in this Policy include Application for an Approval and Data Provided Pursuant to an Approval.

The Bureau's Proposed Policy, published December 13, 2018, 83 FR 64036, sought comment on these information collection requirements. While the Bureau received numerous comments on the Proposed Policy, which are addressed above, the Bureau received no comments specifically regarding the burden estimates for these information collections, utility or appropriateness. Additional details on comments received can be found in the Supporting Statement for the related 30-day notice published as required under the PRA. 56

A complete description of the information collection requirements, including the burden estimate methods, is provided in the information collection request (ICR) that the Bureau submitted to OMB under the requirements of the PRA. The ICR submitted to OMB requesting approval under the PRA for the information collection requirements contained herein is available at OMB's public-facing docket at www.reginfo.gov.

The text of the final CAS Policy is as follows:

In section 1021(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress established the Bureau of Consumer Financial Protection's (Bureau's) statutory purpose as ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive. 57 Relatedly, the Bureau's objectives include exercising its authorities under Federal consumer financial law for the purposes of ensuring that markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation, and that outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens. 58

Congress has given the Bureau a variety of authorities under title X of the Dodd-Frank Act and the enumerated consumer laws  59 that it can exercise to promote this purpose and these objectives. These authorities include the authority to implement the Federal consumer financial laws through rules, orders, guidance, and interpretations, and to establish policies with respect to such functions. 60 Three of the enumerated consumer laws describe the safe harbor effect of Bureau approvals  61 issued to particular entities. 62 Providing compliance assistance of the type described in this Policy may not only benefit consumers and entities that offer or provide consumer financial products or services, but it may also inform the Bureau's exercise of other authorities with respect to such products or services, such as market monitoring and rulemaking. 63

The Compliance Assistance Sandbox Policy (CAS Policy or Policy) sets forth the Bureau's policy and procedures regarding compliance assistance. The Bureau's policy and procedures regarding No-Action Letters (NAL Policy) are also incorporated by reference. 64 The Policy's main purpose is to provide a mechanism through which the Bureau may more effectively carry out its statutory purpose and objectives by better enabling compliance in the face of regulatory uncertainty. 65

The Policy consists of eight sections:

• Section A describes the compliance assistance available under the Policy;

• Section B describes information to be included in an application for compliance assistance;

• Section C describes factors the Bureau intends to consider in deciding whether to grant an application for compliance assistance;

• Section D describes the standard procedures the Bureau intends to use in providing compliance assistance;

• Section E describes procedures the Bureau intends to use for granting extensions of, modifying, and terminating compliance assistance;

• Section F describes alternative application, assessment, and issuing procedures that the Bureau may use for certain circumstances;

• Section G describes how the Bureau intends to coordinate with other regulators with respect to compliance assistance; and

• Section H describes the Bureau's intentions regarding disclosure of information relating to approvals.

An approval is provided by the Bureau to a particular entity under one or more of three statutory safe harbor provisions, based on the application of existing law to particular facts and circumstances. 66 An approval issued to a particular entity will state that, subject to good faith compliance with specified terms and conditions, the Bureau concludes for the reasons stated therein that offering or providing the described aspects of the product or service complies with the Federal consumer financial law identified therein. 67 By operation of the applicable statutory provision, the recipient has a safe harbor from liability under the relevant statute, to the fullest extent permitted by these provisions, as to any act done or omitted in good faith in conformity with the approval. 68

No-Action Letters available to recipients of compliance assistance under the Policy will be issued in accordance with the NAL Policy. Applicants for compliance assistance under the CAS Policy may use a single application to cover their request for compliance assistance and any accompanying request for a No-Action Letter. (If an applicant wishes to receive only a No-Action Letter, no application should be submitted under the CAS Policy.)

Potential applicants are strongly encouraged to contact the Office of Innovation at officeofinnovation@cfpb.gov for informal, preliminary discussion of a contemplated proposal prior to submitting a formal application. 69 An application for compliance assistance under the Policy should include the following:

1. The identity of the applicant;  70

2. A description of the consumer financial product or service to be offered or provided, including (a) how the product or service functions; (b) the terms on which it will be offered; (c) the manner in which it is offered or provided, including any consumer disclosures; and (d) an identification of how the product or service, or the manner in which it is offered or provided to consumers, may further innovation;

3. An explanation of the potential consumer benefits associated with the product or service, and suggested metrics for evaluating whether such benefits are realized, such as consumer utilization numbers;

4. An explanation of the potential consumer risks associated with the product or service, and how the applicant intends to mitigate such risks, including plans for addressing unanticipated consumer harms;

5. (a) An identification of the described aspects of the product or service as to which the applicant seeks an approval; an identification of the statutory and regulatory provisions as to which the applicant seeks that approval;  71 an identification of the potential uncertainty or ambiguity that such approval would address; and an explanation of why the requested approval is an appropriate resolution of that uncertainty or ambiguity, including an explanation of why the described aspect of the product or service complies with the applicable statutory and regulatory provisions;

(b) If the applicant also seeks a No-Action Letter, it should consult the NAL Policy for information about what to include for that aspect of its application;

6. The requested duration of compliance assistance, 72 and a description of other limitations on the scope of such assistance, such as limits on the volume of transactions, the number of consumers to which the product or service is to be offered or provided, or geographic scope;

7. A description of data on consumer impacts associated with the described aspects of the product or service that the applicant possesses or intends to develop and that will be shared with the Bureau if the application is granted, and a proposed schedule for sharing this data with the Bureau;  73

8. If the applicant wishes to request confidential treatment under the Freedom of Information Act (FOIA), 74 the Bureau's rule on Disclosure of Records and Information (Disclosure Rule), 75 or other applicable law, this request and the basis therefor should be included in a separate letter and submitted with the application. 76 The applicant should specifically identify the information for which confidential treatment is requested, and may reference the Bureau's intentions regarding confidentiality under section H of the Policy; and

9. If the applicant wishes the Bureau to coordinate with other regulators, the applicant should identify those regulators, including but not limited to those that the applicant has contacted about offering or providing the product or service in question. 77

Applications may be submitted via email to: officeofinnovation@cfpb.gov or through other means designated by the Office of Innovation. 78 Submitted applications may be withdrawn by the applicant at any time.

The Bureau may grant or deny a compliance assistance application in its sole discretion. If it chooses to grant an application, the Bureau also has discretion to grant the application in whole or only in part. In deciding whether to grant an application for compliance assistance, the Bureau intends to balance a variety of factors in considering the quality and persuasiveness of the application, with particular emphasis on the information specified in sections B.2(d) through B.5, as well as information about the applicant and the product or service in question derived through Bureau due diligence processes. The Bureau intends to grant or deny applications for No-Action Letters pursuant to the NAL Policy. The Bureau intends to grant or deny an application within 60 days of notifying the applicant that the Bureau deems the application to be complete.

When the Bureau decides to grant an application for compliance assistance, it intends to provide the recipient with a Compliance Assistance Statement of Terms (CAST) setting forth the terms under which compliance assistance is provided, including the types and scope of assistance provided to the recipient. The CAST will be signed by the Assistant Director of the Office of Innovation, and by an officer of the recipient. 80 The Bureau expects that the CAST will:

1. Identify the recipient;

2. Specify the subject matter scope of the CAST, i.e., the described aspects of the product or service;  81

3. State that the CAST and the compliance assistance provided:

(a) Is limited to the recipient, and does not apply to any other persons or entities;

(b) Is limited to the recipient's offering or providing the described aspects of the product or service, and does not apply to the recipient's offering or providing different aspects of the product or service;

(c) Is based on the factual representations made in the application, which may be incorporated by reference; and

(d) Does not constitute the Bureau's endorsement of the product or service that is the subject of the CAST, or any other product or service offered or provided by the recipient.

4. Require the recipient to inform the Bureau of: (a) Material changes to information included in the application; and (b) material information indicating that the described aspects of the product or service are not performing as anticipated in the application;  82

5. Require the recipient to report information about the effects of offering or providing the described aspects of the product or service, including with respect to complaint patterns, default rates, or similar metrics that will enable the Bureau to identify material increase in any risk of injury to consumers;

6. Where appropriate, include a commitment by the recipient to compensate consumers for Dodd-Frank Act actionable substantial injury caused by the recipient's offering or providing the described aspects of the product or service;  83

7. Specify any other limitations or conditions, such as the duration of the compliance assistance, 84 the nature and extent of the recipient's data-sharing, and the extent to which the Bureau intends to publicly disclose information about the recipient's participation;  85

8. With respect to any approval the Bureau is providing the recipient: (a) State that, subject to good faith compliance with the CAST, the Bureau approves the recipient's offering or providing the described aspects of the product or service under the relevant law identified therein;  86 and (b) explain the Bureau's basis for issuing the approval;

9. State that: (a) the recipient may reasonably rely on any Bureau commitments made in the CAST; and (b) the Bureau may terminate  87 any approval described in the CAST if: (i) The recipient fails to substantially comply in good faith with the specified terms and conditions of the CAST; (ii) the described aspects of the product or service do not perform as anticipated in the application;  88 or (iii) a statutory change or Federal judicial holding causes the Bureau to conclude that the recipient can no longer rely in good faith on the Bureau's approval as the safe harbor provisions require; and

10. If the applicant also applied for a No-Action Letter using their application under the CAS Policy for compliance assistance, incorporate any No-Action Letter that the Bureau is issuing pursuant to the terms of the NAL Policy. 89

Recipients of compliance assistance may apply for an extension of a specified period of time. In considering applications for extensions, the Bureau expects to place particular weight on the extent to which the data provided to the Bureau under the terms of the CAST shows that the described aspects of the product or service are benefitting consumers, not causing unanticipated harms, and not materially increasing the risk of substantial injury. Such applications for an extension should include the proposed duration of the extension and should be submitted no later than 90 days prior to the expiration of the compliance assistance under the terms of the CAST. 90 The recipient should explain the reasons for the requested extension, such as whether it is intended to last until a possible amendment to Bureau regulations or the Commentary, or is instead intended for more particularized compliance assistance purposes.

Upon the presentation of persuasive data, the Bureau anticipates granting such extension applications for a period at least as long as the period of the applicant's original receipt of assistance. The Bureau anticipates permitting longer extensions where the Bureau is considering amending applicable regulatory requirements or the relevant Commentary. 91 During the time period pending a rule or Commentary amendment, the Bureau intends to consider means of providing similar assistance to other covered entities that engage in the same or similar conduct in offering or providing comparable products.

A recipient of compliance assistance may apply for a modification of the CAST. The recipient may seek modification to address an anticipated or unanticipated change in circumstances, such as iterations of the underlying product or service or changes to the information included in the application for assistance. Applications for a modification should include the following:

a. Any material changes to the information included in the original application;

b. The specific requested modification to the CAST;

c. The grounds for modifying the CAST; and

d. Any other information the recipient wishes to provide in support of the modification application.

In deciding whether to grant an application for modification, the Bureau intends to balance a variety of factors, including the quality and persuasiveness of the application. The Bureau expects to grant or deny such applications within 30 days of notifying the applicant that the Bureau has deemed the application to be complete. When the Bureau grants an application for modification, it intends to provide the recipient with a modified CAST in accordance with the procedures specified in Section D.

The Bureau intends that the recipient of compliance assistance should be able to reasonably rely on any Bureau commitments made in the associated CAST. The Bureau expects terminations prior to any pre-determined expiration date to be quite rare based, in part, on its knowledge of similar programs of compliance assistance operated by other Federal agencies. The Bureau expects that its practice with respect to termination will be in line with the practices of these agencies.

The Bureau expects that a CAST will state that: (a) The recipient may reasonably rely on any Bureau commitments made in the CAST; and (b) the Bureau may terminate any approval described in the CAST if: (i) The recipient fails to substantially comply in good faith with the specified terms and conditions of the CAST; (ii) the described aspects of the product or service do not perform as anticipated in the application;  92 or (iii) a statutory amendment or federal judicial holding causes the Bureau to conclude that the recipient can no longer rely in good faith on the Bureau's approval as the safe harbor provisions require. By operation of law, no retroactive action premised on the described aspects of the product or service will lie under provisions within the scope of an approval. If the Bureau is also providing a No-Action Letter to the recipient, termination will be in accordance with the NAL Policy.

In accordance with principles of fair notice, before terminating any approval provided under the Policy, the Bureau intends to notify the recipient of the possible grounds for termination, and permit an opportunity to respond within a reasonable period of time. In appropriate cases, the Bureau intends to offer the recipient an opportunity to modify its conduct to avoid termination. The Bureau intends to allow the recipient to wind-down the offering or providing of the described aspects of the product or service during a period of six months before termination is effective, unless the described aspects of the product or service are causing Dodd-Frank Act actionable substantial injury to consumers, and a wind-down period would permit such injury to continue. If the Bureau terminates any approval provided under this Policy, it intends to do so in writing and specify the reasons for its decision. The Bureau intends to publish termination decisions on its website.

The Bureau recognizes that the process described in sections B, C, and D (Standard Process) may not be appropriate in certain circumstances. These include applications by service providers that develop products or services for use by covered persons that offer or provide consumer financial products or services; applications facilitated by trade associations, consumer groups, or other third parties that are not themselves covered parties; and applications involving a consumer financial product or service that is substantially similar to one that is the subject of an existing CAST.

Service providers that develop products or services for use by covered persons that offer or provide consumer financial products or services may use the Standard Process if they have secured an applicant that intends to use the service provider's product or service in connection with offering or providing a consumer financial product or service. Similarly, compliance assistance applications facilitated by trade associations, consumer groups, or other third parties that are not covered persons that offer or provide consumer financial products or services may use the Standard Process if the third party has secured an applicant that intends to offer or provide the consumer financial product or service in question.

a. CAST Template. As an alternative to using the Standard Process, a service provider, trade association, consumer group, or other third party may apply for a CAST Template. A CAST Template is (i) non-operative, i.e., it does not provide compliance assistance to any party, and (ii) non-binding on the Bureau. 93

i. Application Information. Such applications should include the information specified in section B, as applicable and with appropriate adjustments given that the applicant itself will not be offering or providing the consumer financial product or service in question. In particular, for service provider applications the applicant should describe how it anticipates its product or service will be used by a provider of consumer financial products or services.

ii. Assessment. In deciding whether to grant an application for a CAST Template, the Bureau intends to balance a variety of factors, as described in section C, with appropriate adjustments given the alternative nature of the application. The Bureau intends to grant or deny an application within 60 days of notifying the applicant that the Bureau has deemed the application to be complete.

iii. Issuance. The Bureau expects that a CAST Template will include many of the elements specified in section D, with appropriate adjustments based, in part, on the non-operative, non-binding nature of a CAST Template. In addition, a CAST Template will include a statement that the Bureau intends to grant applications for a CAST based on the CAST Template, under subsection F.1.b, in appropriate cases.

b. CAST Based on a CAST Template. A covered person that intends to offer or provide a consumer financial product or service using the product or service covered by a CAST Template (whether using a service provider product or service, or otherwise) may apply for compliance assistance based on the CAST Template.

i. Application Information. Such applications should include the information specified in section B, with appropriate adjustments. In particular, the applicant should include: (i) A statement that the application is based on a CAST Template and an identification of the CAST Template on which it is based; and (ii) a statement identifying the aspects of the product or service for which a CAST is being sought describing how the applicant's offering or providing those aspects of its product or service is consistent with the framework described in the CAST Template. The application may cross reference any relevant information contained in the application for the CAST Template or the CAST Template itself.

ii. Assessment. In deciding whether to grant an application for such compliance assistance, the Bureau intends to balance a variety of factors, as described in section C, with appropriate adjustments. In particular, the Bureau intends to include in its assessment the additional factor of the degree to which the applicant's offering or providing the described aspect of its product or service is consistent with the framework described in the CAST Template. The Bureau anticipates being able to process such applications in a timeframe shorter than that specified in section C given that the underlying CAST Template has already been granted.

iii. Issuance. When the Bureau grants an application for such compliance assistance, it intends to provide the recipient with a CAST in accordance with the procedures specified in section D.

If an applicant offers or provides a consumer financial product or service that it believes is substantially similar to an aspect of a consumer financial product or service that is the subject of an existing CAST, 94 it may apply for compliance assistance based on public information about the existing CAST.

a. Application Information. Such applications should include the information specified in section B, with appropriate adjustments. In particular, the applicant should include (i) a statement that the application is based on an existing grant of compliance assistance and an identification of that grant; and (ii) a statement describing how the consumer financial product or service in question and the manner in which it is offered or provided is substantially similar to the described aspects of the product or service that are the subject of the existing CAST. The application may cross reference any relevant information contained in public disclosures on the existing grant.

b. Assessment. In deciding whether to grant an application for such compliance assistance, the Bureau intends to balance a variety of factors, as described in section C, with appropriate adjustments. In particular, the Bureau intends to include in its assessment the additional factor of the degree to which the consumer financial product or service in question, and the manner in which it is offered or provided, is substantially similar to these aspects of the existing CAST. The Bureau anticipates being able to process such applications in a timeframe shorter than that specified in section C given that the existing CAST has already been granted.

c. Issuance. When the Bureau grants an application for such compliance assistance, it intends to provide the recipient with a CAST in accordance with the procedures specified in section D. 95

Section 1015 of the Dodd-Frank Act instructs the Bureau to coordinate with Federal agencies and State regulators, as appropriate, to promote consistent regulatory treatment of consumer financial and investment products and services. 96 Similarly, section 1042(c) of the Dodd-Frank Act instructs the Bureau to provide guidance in order to further coordinate actions with the State attorneys general and other regulators. 97 Such coordination includes coordinating in circumstances where other regulators have chosen to offer assistance to entities offering innovative products and services. One method of providing such assistance is through a State sandbox, or group of State sandboxes, or other limited scope State authorization program (State sandbox). 98 The Bureau is interested in entering into agreements with State authorities that operate or plan to operate a State sandbox, which may include a process to receive compliance assistance under this Policy in a coordinated manner with assistance from the State sandbox.

Furthermore, the Bureau is interested in coordinating with other regulators more generally regarding this Policy. To this end, the Bureau intends to enter into agreements whenever practicable to coordinate compliance assistance under the Policy with assistance offered by State, Federal, or international regulators.

Public disclosure of information regarding approvals under this Policy is governed by applicable law, including the Dodd-Frank Act, 99 FOIA, and the Disclosure Rule. The Disclosure Rule generally prohibits the Bureau from disclosing confidential information, 100 and defines confidential information to include information that may be exempt from disclosure under the FOIA  101 —including Exemption 4 regarding trade secrets and confidential commercial or financial information that is privileged or confidential. 102 Relatedly, the Disclosure Rule defines business information as commercial or financial information obtained by the Bureau from a submitter that may be protected from disclosure under Exemption 4 of FOIA, and generally provides that such business information shall not be disclosed pursuant to a FOIA request except in accordance with section 1070.20 of the rule. 103

Consistent with applicable law, the Bureau intends to publish on its website its final disposition of applications for approvals processed pursuant to sections B, C, D, E.1, E.2, F.1.b, and F.2. If the Bureau decides to grant an application, it intends to publish an order regarding the decision on its website as soon as practicable. The Bureau expects that the order will overlap with the CAST provided to the recipient, but will contain other information and will not include information protected from public disclosure under applicable law. The Bureau expects the order to include: (i) The identity of the recipient; (ii) the described aspects of the product or service to which the approval applies; (iii) the approval's specified duration, basis, and legal authority; and (iv) in appropriate cases, a version of the summary of the application. 104 The Bureau also intends to publish denials of applications on its website, including an explanation of why the application was denied in whole or in part. 105 When the Bureau grants an application for a CAST Template under section F.1.a, the Bureau expects to publish on its website the CAST Template and a summary of the application.

Where information submitted to the Bureau is both customarily and actually treated as private by the submitter, the Bureau intends to treat it as confidential in accordance with the Disclosure Rule. 106 The Bureau anticipates that much of the information submitted by applicants in their applications, and by recipients while operating pursuant to a CAST, will qualify as confidential information under the Disclosure Rule. 107 In particular, the Bureau expects that information submitted that is responsive to subsections B.2, B.3, B.4, B.6, D.4, and D.5, and parallel information submitted pursuant to subsections E.1, E.2, F.1.a.i, F.1.b.i and F.2.a, will qualify as business information under the Disclosure Rule. 108 Other information submitted by applicants or recipients may also qualify as confidential information.

Disclosure to other Federal and State agencies of information or data provided to the Bureau under the Policy is governed by applicable law, including the Dodd-Frank Act  109 and the Disclosure Rule.

To the extent the Bureau wishes to publicly disclose non-confidential information regarding approvals, the Bureau intends to include the terms of such disclosure in the CAST. The Bureau intends to draft the CAST in a manner such that confidential information is not disclosed. Consistent with applicable law and its own rules, the Bureau does not intend to publicly disclose any information that would conflict with consumers' privacy interests.

Disclosure of information about No-Action Letters will be in accordance with section G of the NAL Policy.

In section 1032(e) of the Dodd-Frank Act, Congress gave the Bureau authority to provide certain legal protections to covered persons to conduct trial disclosure programs. 1 This authority furthers the Bureau's statutory purpose, stated in section 1021(a) of the Dodd-Frank Act, to ensure that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive. 2 Furthermore, this authority advances the Bureau's statutory objectives in section 1021(b) of the Dodd-Frank Act to ensure consumers are provided with timely and understandable information to make responsible decisions about financial transactions; outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens; and markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation. 3

More specifically, under section 1032(e), the Bureau may permit covered persons to conduct trial disclosure programs, limited in time and scope, for the purpose of providing trial disclosures designed to improve upon model forms within the Bureau's jurisdiction. 4 Such permission may include providing a legal safe harbor; i.e., the Bureau may deem a covered person conducting such a program to be in compliance with, or exempt from, a requirement of a rule or enumerated consumer law. 5 Such trial disclosure programs must be subject to standards and procedures that are designed to encourage covered persons to conduct such programs. 6 Similarly, although Bureau rules must provide for public disclosure of such programs, such public disclosure may be limited to the extent necessary to encourage covered persons to conduct effective trials. 7

Pursuant to the purpose, objectives, and authority listed above, the Bureau proposed the original version of its Policy to Encourage Trial Disclosure Programs in December 2012, and finalized it in September 2013 (2013 Policy). However, the 2013 Policy failed to effectively encourage trial disclosure programs: The Bureau did not permit any such programs under the 2013 Policy.

On September 10, 2018, the Bureau published a notice in the Federal Register inviting the public to comment on its proposal to create a Disclosure Sandbox through its revised Policy to Encourage Trial Disclosure Programs. 8 The Bureau received 26 unique comments on the proposed Policy during the comment period. Industry trade associations and other industry groups submitted 12 comment letters. Individual financial services providers submitted two comment letters. There were four comment letters from consumer groups, two from groups of State Attorneys General, two from groups of State financial regulators, and one from a law firm. Individuals submitted a further three comments.

Industry commenters uniformly supported the proposed Policy, and stated that it is more likely to encourage companies to conduct trial disclosure programs than the 2013 Policy. In contrast, consumer groups stated that the proposed Policy is a step backwards vis-à-vis the 2013 Policy and asked the Bureau not to finalize it as proposed. One of the two groups of State Attorneys General was supportive of the proposed Policy; the other group was not.

Although generally supportive of the proposed Policy, industry commenters requested greater protection from liability and greater assurance that any information or data provided to the Bureau would be protected from public disclosure and disclosure to other Federal and State regulators. To the extent consumer groups recommended revisions, they urged the Bureau to limit the scope of the proposed Policy or build in consumer protections that go beyond those included in the 2013 Policy, in some cases reiterating recommendations such groups made on the proposed 2013 Policy that were not adopted by the Bureau.

The Bureau appreciates all of the comments received and has given each of them careful consideration. In determining whether to adopt recommended revisions for purposes of the final Policy, the Bureau's guiding light is Dodd-Frank Act section 1032(e), which evinces a specific congressional intent for the Bureau to encourage covered persons to conduct trial disclosure programs limited in time and scope pursuant to specified standards and procedures. As noted, the 2013 Policy did not effectively encourage covered persons to conduct trial disclosure programs. Commenters urging the Bureau to return to the 2013 Policy or to add requirements or limitations to the proposed Policy that go beyond those in the 2013 Policy did not explain how such approaches would enable the Bureau to fulfill Congress' intent. That said, the Bureau has adopted suggested revisions designed to increase consumer protections that it believes are consistent with this intent. The Bureau has also adopted a number of suggested revisions that it believes will provide further encouragement to companies to conduct trial disclosure programs. But it has endeavored not to make any revisions of this type that it believes will diminish the consumer protections built into the Policy.

Many comments from stakeholders across the spectrum requested greater specificity or detail regarding various provisions of the proposed Policy. The Bureau has provided such additional specificity and detail in a number of instances, as explained below. However, the Bureau believes that, in many cases, providing greater specificity and detail is premature. As the Bureau gains experience implementing the final Policy and engages in additional stakeholder outreach, it will consider the extent to which additional clarifications or adjustments are necessary or appropriate.

This section provides a summary of the significant comments received by subject matter. It also summarizes the Bureau's assessment of such comments by subject matter and, where applicable, describes the resulting changes that the Bureau is making in the final Policy. 9

A letter from several consumer groups declared that the proposed Policy exceeds the Bureau's authority under Dodd-Frank Act section 1032(e) in various respects. 10 First, they stated that the proposed Policy exceeds the Bureau's authority under section 1032(e) because that section does not authorize trial disclosure programs that change or deviate from substantive disclosure requirements. The Bureau does not agree with this contention, as it appears to read out of the statute section 1032(e)(2), which expressly gives the Bureau authority to exempt covered persons conducting trial disclosure programs from disclosure requirements under an enumerated consumer law or a Bureau rule. Indeed, this waiver authority is the central pillar of section 1032(e): To identify improvements to Federal disclosure requirements, companies must be able to test disclosures that deviate from those requirements. The consumer groups appear to base this view on a claim some of the same groups made in comments on the 2013 Policy, namely, that section 1032(e) must be read in the context of the Bureau's authority to prescribe model forms—both in section 1032(b) and in the enumerated consumer laws—such that trial disclosures must meet the criteria for model forms in those sources. A group of State Attorneys General made the same point in their letter. In 2013, the Bureau explained why it believes this to be an unpersuasive interpretation of section 1032(e), and it remains of the same view. 11

Second, the consumer groups asserted that the proposed Policy exceeds the Bureau's authority under section 1032(e) because it would permit trial disclosure programs based on cost-effectiveness alone, i.e., even where consumer understanding is diminished. This point was echoed by several other commenters, including the same group of State Attorneys General. The Bureau does not intend to permit trial disclosures that it believes will cause a material, adverse impact on consumer understanding, regardless of potential cost-savings. Accordingly, the Bureau has added a footnote in the final Policy to clarify this point.

Third, the consumer groups stated that the proposed Policy exceeds the Bureau's authority under section 1032(e) because that section only gives the Bureau authority to permit covered persons to engage in trials of disclosures found in existing model forms. By this they appear to mean that section 1032(e) does not authorize the Bureau to permit trial disclosure programs unless such programs relate directly to disclosure requirements for which model forms already exist.

The Bureau believes this construction of section 1032(e) is unduly restrictive and risks frustrating Congress' intent. Section 1032(e)(1) authorizes the Bureau to permit trial disclosure programs “that are designed to improve upon any model form issued pursuant to” section 1032(b)(1) or any other enumerated consumer law. Consistent with the policy objective of section 1032 to develop new ways and means of enhancing consumer understanding, the Bureau believes section 1032(e)(1) should be interpreted to incorporate model forms that have been issued by the Bureau prior to a particular trial disclosure program, as well as model forms that could be issued by the Bureau subsequent to a particular trial disclosure program.

The Bureau generally has broad discretion to issue model forms as a component of its broad authority to issue disclosure rules under the Federal consumer financial laws. A trial disclosure program that involved testing changes to Federal disclosure requirements could assist the Bureau in developing model forms with respect to those disclosure requirements. The resulting model forms would improve upon model forms that would be issued by the Bureau with respect to those Federal disclosure requirements without the benefit of the trial disclosure program. This reading of section 1032(e)(1) is consistent with section 1032(e)(2), which gives the Bureau broad authority to waive Federal disclosure requirements, irrespective of the current existence of an associated model form. The commenters' contrary interpretation would preclude the Bureau from relying on the results from such trial disclosure programs when establishing new model forms. Such a result would be inconsistent with Congress's recognition that in-market disclosure testing can provide an invaluable supplement to traditional consumer testing. 12

Even assuming arguendo that section 1032(e)(1) encompasses only existing model forms, the Bureau still believes that the consumer groups' interpretation of the provision as limited to disclosure requirements for which model forms already exist is unduly restrictive. Specifically, the interpretation fails to recognize the various ways and means by which the Bureau may improve upon an existing model form. Indeed, trial disclosures not included in existing model forms may lead to improvements of the disclosures that are included in such forms. For example, they could inform the Bureau on the best means to deliver the form, on enhanced ways of presenting the content in the form, or on a range of other lessons learned. Further, even where the Bureau has not issued a model form with respect to a particular or discrete disclosure requirement that is the subject of a trial disclosure program, the program could improve upon the universe or class of model forms that have been issued with respect to the product or service or rule in question. For example, following a successful trial disclosure program, the Bureau could decide to add the additional tested content to an existing form, thereby improving upon it.

Accordingly, the Bureau interprets section 1032(e) to permit trial disclosure programs designed to improve upon any model form that has been issued or could be issued by the Bureau, irrespective of the existence of a model form directly tied to the particular disclosure requirement that is the subject of the trial disclosure program.

Fourth, the consumer groups claimed that the proposed Policy exceeds the Bureau's authority under section 1032(e) because that section provides that trial disclosure programs must be of limited time and scope. For example, the consumer groups stated that permitting two-year trial disclosure programs is not sufficiently limited in time, and permitting groups of companies to conduct trial disclosure programs is not sufficiently limited in scope. And they faulted the proposed Policy for not placing any limits on the size of the testing population or the range of products or services. The Bureau disagrees with this line of comment. Although the trial disclosure programs the Bureau permits under section 1032(e) must indeed be limited in time and scope, that language should not be read in isolation. Rather, it should be read in the context of section 1032(e)'s instruction to the Bureau to issue standards and procedures designed to encourage covered persons to conduct such programs. Developing a robust trial disclosure program requires significant resources. If the proposed Policy limited trial disclosure programs to a period of time the commenters deem to be sufficiently limited and did not permit extensions for successful programs, a company would have little or no incentive to expend such resources. In addition, the comment appears not to appreciate the difference between the Policy and particular trial disclosure programs permitted under the Policy. Section 1032(e) requires particular trial disclosure programs to be limited in scope. It does not follow that the Policy must specify precise scope limitations in advance that are applicable to every trial disclosure program. 13

A group of State Attorneys General, a group of State financial regulators, and several industry commenters asked the Bureau to clarify the effect of a waiver provided under the proposed Policy on State law. As noted in the 2013 Policy, such a waiver provides a safe harbor from liability as to the Federal disclosure requirements within the scope of the waiver. This means that there would be no predicate under the described Federal disclosure requirements for a private suit or Federal or State enforcement or supervisory action based on the recipient's permitted use of the trial disclosures in question within the scope of the waiver.

Several industry commenters expressed concern about the proposed Policy based on the authority State Attorneys General have under Dodd-Frank Act section 1042 to enforce provisions of title X, including especially the prohibition of unfair, deceptive, or abusive acts and practices (UDAAP). 14 They noted that a State Attorney General could use this authority to bring a UDAAP action against a recipient of a waiver, and asked the Bureau to urge State Attorneys General not to bring such actions. As an initial matter, the Bureau notes that there would be no basis for such a title X UDAAP action predicated on a violation of the Federal disclosure requirements within the scope of the waiver. Rather, a State Attorney General would have to show that, despite the consumer protections built into the Policy and despite the Bureau's issuance of a waiver under the Policy, which the Bureau would not issue if it believed the relevant conduct was unfair, deceptive, or abusive, the applicable elements of its title X UDAAP action had been established.

Moreover, if requested by the applicant, the Bureau intends to coordinate with Federal and State regulators to attempt to secure their support for a trial disclosure program, or at least a commitment not to initiate enforcement actions predicated on permitted use of the trial disclosures. The Bureau notes in this regard that, prior to issuing a No-Action Letter to Upstart Network, Inc. (Upstart) in September 2017  15 under its related Policy on No-Action Letters, 16 the Bureau consulted with both other Federal regulators and State regulators regarding the application. No other regulator has brought an enforcement action against Upstart for engaging in the acts or practices that are the subject of the letter.

In comments on the proposed 2013 Policy, a number of commenters asked the Bureau to clarify the liability protections provided by a section 1032(e) waiver. In the preamble of the final 2013 Policy, the Bureau explained that such a waiver would provide complete liability protection, including against actions brought by other regulators and private plaintiffs. 17 Several industry commenters on the proposed Policy asked the Bureau to include such a statement in the Policy itself. The Bureau agrees that it is important for all stakeholders that such language be included in the Policy itself, and in the TDP Waiver Terms and Conditions document (WT&C) provided to recipients under section C of the Policy. Accordingly, the Bureau has revised section C of the final Policy to specify that it expects the WT&C will include a statement that, subject to good faith, substantial compliance with the WT&C, the Bureau deems the waiver recipient to be in compliance with, or exempt from, described Federal disclosure requirements and that, as a result of this determination, there is no predicate under the described Federal disclosure requirements for a private suit or Federal or State enforcement or supervisory action based on the recipient's permitted use of the trial disclosures within the scope of the waiver. 18

Several industry commenters asked the Bureau to clarify that a waiver under the Policy would extend to agents of the waiver recipient, as well as all the necessary participants in a particular kind of transaction, explaining that failure to do so could have a chilling effect on applications. The Bureau acknowledges the general point that parties involved in a transaction in which a recipient is using non-compliant disclosures might have concerns about being a party to the transaction. To address this issue, the Bureau has revised the final Policy to state that the Bureau will entertain requests from applicants to extend waiver protection to identified or described agents, as appropriate, and that, where such a request is granted, the scope of the waiver included in the WT&C will extend to those identified or described agents. To address the concern about other necessary participants in a type of transaction, the Bureau may include, as appropriate, language in the WT&C designed to assure such parties that there is no basis for such concerns.

Finally, several industry commenters asked the Bureau to clarify the liability effects of termination  19 of a waiver on a company's providing trial disclosures during the period in which the waiver was in effect. At least two such commenters urged the Bureau to specify that no such “retroactive” liability would apply regardless of the grounds for termination. Another industry commenter suggested that if the termination was based on a ground other than the recipient's failure to comply with the terms and conditions of the waiver, there should be no retroactive liability. The Bureau notes that, prior to a termination of a TDP Waiver, the recipient's use of the trial disclosures covered by the waiver is lawful; i.e., there is no basis for a retroactive action based on failure to comply with existing disclosure requirements. To clarify this point, section D.3 of the final Policy states that, by operation of law, no retroactive action premised on the recipient's permitted use of the trial disclosure will lie under provisions within the scope of a TDP Waiver.

The Bureau received a range of comments on section E of the proposed Policy, entitled Regulatory Coordination, specifically, as well as on the topic of coordination with other regulators more generally.

A joint consumer group letter stated that section E of the proposed Policy exceeds the Bureau's authority under section 1032(e) because that section does not authorize the Bureau to “transfer” or “offload” its own statutory duties to the States or give the States authority to waive Federal requirements. This comment appears to be based on a misunderstanding of section E. That section—which is Section F in the final Policy—does not involve a transfer of the Bureau's authority under section 1032(e) to permit trial disclosure programs and to issue waivers. Nor does it give States authority to waive Federal disclosure requirements. Rather, section F expresses the Bureau's interest in entering into agreements with State authorities that operate or plan to operate a State sandbox, which may include a process to receive a TDP Waiver under this Policy in a coordinated manner with regulatory assistance from the State sandbox.

An association of State financial regulators urged the Bureau to exercise caution in the implementation of section E of the proposed Policy, as the agreements between the Bureau and State authorities contemplated in that section risk creating a “race to the bottom;” i.e., they could encourage some States to reduce consumer financial protections. The Bureau believes that section F will not lead to a “race to the bottom” and is committed to implementing it in a manner designed to ensure that it will not. As noted in section F of the final Policy, the Bureau does not intend to enter into such agreements unless consumers are provided sufficient protections in the State sandbox program.

The same association of State financial regulators urged the Bureau to include, within the scope of its intention to coordinate with other regulators, coordination for purposes of assessing the impact of trial disclosure programs on consumers. The association noted that State regulators possess information relevant to such assessment, including consumer complaints, and advised the Bureau to seek such information from State regulators. The Bureau welcomes this type of information and assistance from State regulators.

Dodd-Frank Act section 1032(e)(3) provides that the Bureau's rules shall provide for public disclosure of trial disclosure programs, but that such disclosure may be limited to the extent necessary to encourage covered persons to conduct effective trials. Section F of the proposed Policy described the Bureau's expectations regarding public disclosure of information regarding permitted trial disclosure programs. Proposed section F did not include, however, a detailed description of the Bureau's expectations regarding disclosure of information submitted to the Bureau by applicants for and recipients of a trial disclosure program waiver.

Under the anticipated operation of the Policy, the Bureau expects to receive various types of information or data from applicants and recipients. Most, if not all, of this information and data is expected to serve more than one purpose. For example, test result data submitted by recipients will enable the Bureau to assess the extent to which the trial disclosures improve upon Federal disclosure requirements. To the extent that such data shows that the trial disclosures are such an improvement, it may also be used to support a rulemaking that changes disclosure requirements in the direction of the trial disclosures. Proposed section F indicated that disclosure of such information and data would be governed by the Bureau's rule on Disclosure of Records and Information (Disclosure Rule). 20

Several industry commenters urged the Bureau to make various changes to the proposed Policy to provide greater assurance that trade secrets and proprietary business information provided to the Bureau by applicants and recipients would be protected from public disclosure. A law firm commenter recommended that section A of the proposed Policy be revised to expressly permit applicants to request and be assured that such information included in applications receive confidential treatment from the Bureau. The Bureau believes that aspects of this recommendation are reasonable and has revised the Policy accordingly. Specifically, the Bureau has added a paragraph to section A that instructs applicants wishing to request confidential treatment for certain information included in the application to identify the information as specifically as possible.

A joint trade association letter stated the Bureau should commit to applying the exemption from disclosure under the Freedom of Information Act (FOIA) for trade secrets and confidential commercial or financial information that is privileged or confidential. 21 The same commenter asked the Bureau to clarify that trial disclosure applications and associated communications with the Bureau are confidential information under the Bureau's Disclosure Rule. 22 Similarly, a law firm commenter requested that the Bureau confirm that information or data submitted by an applicant that describes the applicant's business processes constitutes business information under the Disclosure Rule. 23 The Bureau agrees that such clarifications are warranted and has accordingly revised proposed section F—which is section G of the final Policy—to clarify that the Bureau anticipates that information or data that is responsive to sections of the Policy that request such information or data will qualify as confidential information, and, more specifically, business information.

The joint trade association letter also asked the Bureau to specify that any testing data provided to the Bureau by a recipient of a TDP Waiver be treated as confidential supervisory information (CSI) under the Disclosure Rule. The trade associations reasoned that such testing data should be treated as CSI because CSI is defined to include any information provided to the Bureau by a financial institution to enable the Bureau to monitor for risks to consumers in the offering or provision of consumer financial products or services. 24 A law firm commenter went further, recommending that all information submitted by an applicant to the Bureau be treated as CSI.

The Bureau declines to make the suggested revisions regarding CSI to the Policy for two reasons. First, the Bureau notes that commenters' interpretation of the definitional clause in question is at odds with the Bureau's stated interpretation of the clause, which reads it to refer to information collected under the Bureau's “market monitoring” authority. 25

Second, the Bureau believes that the suggested revisions are unnecessary. As indicated above, the fundamental concern expressed by industry commenters is that trade secrets and proprietary business information submitted to the Bureau by applicants and recipients not be publicly disclosed. The Bureau has revised section G to clarify that the Bureau anticipates that much of this information will qualify as confidential information, and, more specifically, business information protected from public disclosure. In addition, in light of a recent Supreme Court opinion concerning FOIA Exemption 4, 26 the Bureau is adding a statement in the final Policy making clear that where information submitted to the Bureau is both customarily and actually treated as private by the submitter, the Bureau intends to treat it as confidential in accordance with the Disclosure Rule. Revising section G to provide that such information will also qualify as CSI thus would not significantly increase the level of such protection.

The Bureau notes that the preceding protections from public disclosure must be balanced against the Bureau's potential need to publicly disclose test result data in some form—as permitted by applicable law and/or the consent of recipients—if it decides to revise disclosure requirements through notice-and-comment rulemaking based, in part, on trial disclosures that test successfully. Indeed, many of the commenters that recommended the clarifications discussed above also asked the Bureau to commit to amending its disclosure regulations in light of successful trial disclosure programs.

Section F of the proposed Policy provided that the Bureau intends to publish on its website certain information about permitted trial disclosure programs, including the identity of recipients and a summary of the trial disclosures. Two industry commenters urged the Bureau to delay such publication until after the recipient has begun providing the trial disclosures in the market, reasoning that earlier publication would discourage potential applicants from investing the resources needed to develop innovative products or services, as earlier publication would permit competitors to copy the recipient's innovative product or service prior to market launch.

The Bureau appreciates this general concern, but believes that the commenters' suggested remedy goes further than is necessary to address it. Section 1032(e)(3) of the Dodd-Frank Act instructs the Bureau to provide for some degree of public disclosure of trial disclosure programs, but gives the Bureau authority to limit such disclosure in order to encourage covered persons to conduct such programs. The proposed Policy attempted to balance these competing concerns, but the Bureau acknowledges that further clarification of its intentions regarding publication of information about permitted trial disclosure programs would be beneficial to all stakeholders.

Section G of the final Policy clarifies that, consistent with applicable law, the Bureau intends to publish on its website, as soon as practicable, its final disposition of applications processed pursuant to sections A, B, C, D.1, D.2, E.1.b, and E.2—including both grants and denials of applications. 27 In each case, the Bureau expects that the published order will not include information protected from public disclosure under applicable law, including proprietary information and trade secrets that could be used by a competitor of the recipient.

Finally, one industry commenter requested clarification regarding the extent to which the Bureau intends to share information or data provided to the Bureau under the proposed Policy with other Federal and State agencies. Disclosure of such information to other Federal and State agencies is governed by applicable law, including the Dodd-Frank Act  28 and the Disclosure Rule. The Bureau has added the requested clarification in the final Policy.

Several commenters addressed the Bureau's intention to consider applications that involve testing by more than one company, including applications from trade associations or other groups applying on behalf of their members. Commenters on this topic were generally supportive of the Bureau's intention to consider these types of applications, noting, for example, that group applications could spread trial disclosure development costs in a manner that could enable smaller entities to participate in a trial disclosure program. Some industry trade associations noted that the final Policy could further allow smaller entities to participate in a trial disclosure program if third parties other than trade associations, such as Credit Union Service Organizations or data processing vendors, were allowed to apply for a trial disclosure program waiver. Several industry trade associations also requested more specificity on the steps required for a trade association to apply for a waiver on behalf of its members. One industry trade association noted possible challenges to submitting a trade association application, as some information required for the application might not be readily available to a trade association.

In light of these comments, the final Policy seeks to clarify the application process that service providers, trade associations, consumer groups, or other third parties may use. This clarification includes adding a separate section to the Policy on this topic and providing greater detail and specificity regarding the various steps of the process. In particular, under new section E.1 of the final Policy, a service provider or facilitator ( e.g., a trade association, consumer group, or other third party) could provide the application information specified in section A with appropriate adjustments given that the applicant itself will not be using the trial disclosures in question. The section also describes the manner in which the Bureau intends to assess the application information provided and the type of document successful applicants should expect to receive from the Bureau. The final Policy refers to this type of document as a “TDP Waiver Template.” New section E.1 also describes the Bureau's anticipated application, assessment, and issuance procedures for applications for a standard TDP Waiver based on a TDP Waiver Template.

Several industry commenters suggested that the final Policy should offer greater flexibility as to the range of disclosures tested under a trial disclosure program. In particular, some industry commenters addressed the proposed Policy's allowance for iterative testing, in which an applicant might engage in a sequence of relatively short tests that enable ongoing improvements to a trial disclosure concept. Under the proposed Policy, an applicant would be expected to specify the initial disclosures and describe the range or type of modifications intended for iterative testing. These contemplated modifications would then be reflected in the associated waiver. Commenters recommended that the Bureau consider other ways to support iterative testing, including in instances where the initial application and waiver do not contemplate trial disclosure iterations that would address ongoing test findings. One commenter suggested that a staggered application process could address this issue, while another commenter noted that a defined process for modifying a waiver could address instances where a company seeks to change the scope of a trial disclosure program based on test results.

The Bureau intends for the final Policy to support iterative testing when appropriate and generally agrees that the Policy should include anticipated procedures for modifying TDP Waivers. Accordingly, the final Policy includes a new section (D.2) that specifies the Bureau's anticipated procedures regarding requests for modification of a TDP Waiver.

Section A of the final Policy also addresses the possibility of concurrent testing during a trial disclosure program. As one trade association noted, some companies may wish to test multiple variations of a disclosure at the same time. Section A of the final Policy instructs applicants seeking to conduct such concurrent testing to identify the range of variations to be tested concurrently.

Some comments, particularly from industry trade associations, urged the Bureau to provide greater clarity regarding its assessment of applications for a waiver under section B of the proposed Policy. One industry trade association asked that the Bureau identify certain additional factors that it will consider in determining whether a trial disclosure is designed to improve upon Federal disclosure requirements. The same industry trade association urged the Bureau to explain how it intended to assess an application's quality and persuasiveness under section B of the proposed Policy. The trade association suggested that the Bureau might do so by confirming the types of proposals it will consider, such as those involving new methods for providing disclosures or disclosures for long-established products.

Under the final Policy, the Bureau intends to consider the general quality and persuasiveness of an application when deciding whether to permit a proposed trial disclosure program. The Bureau expects to place particular emphasis on items covered in sections A.3, A.4, and A.5 of the final Policy as well as information about the applicant and the trial disclosures in question derived through Bureau due diligence processes. Section A.3 of the final Policy provides examples of ways in which trial disclosures may be designed to improve upon Federal disclosure requirements, but the examples are by no means exclusive. The final Policy does not exclude applications involving disclosures associated with long-established products or applications that describe a new method for providing disclosures. Indeed, like the proposed Policy, the final Policy expressly invites applications involving changed delivery mechanisms.

The proposed Policy stated that the Bureau would review reasonable requests for reconsideration of a denial of an application. Some industry trade associations asked the Bureau to commit to a timeframe for responding to a request for reconsideration of a denied application. The Bureau agrees that such a timeframe would be beneficial for stakeholders, and has revised the Policy to specify that the Bureau expects to respond to reasonable requests for reconsideration of a denied application within 60 days of the request.

A trade association recommended that the Bureau revise the Policy to include an expedited application process for companies wishing to test trial disclosures that already have been permitted by the Bureau. The Bureau agrees that processing such applications likely would not require the same amount of time as the initial application regarding the trial disclosures in question. New section E.2 of the final Policy provides for expedited processing of any application that seeks to conduct a trial disclosure program that is substantially similar to one that is the subject of an existing TDP Waiver.

Industry trade associations sought more time to apply for an extension prior to expiration of a trial disclosure program and associated waiver. Under section D of the proposed Policy, waiver recipients would have had to submit extension requests no later than 150 days prior to the expiration of the waiver. One industry trade association recommended that the Bureau allow extension requests to be filed up to 90 days prior to expiration. Another industry trade association contended that extension request deadlines should be scalable and contingent on the period of time for which the trial disclosure program was originally permitted, noting that the proposed Policy would require the recipient of a waiver lasting one year to apply for an extension at approximately the halfway mark of the trial disclosure program. The Bureau considers these requests to be reasonable and has revised the final Policy to permit extension requests up to 90 days prior to expiration of the waiver. When issuing a waiver for a testing period of one year or less, the Bureau may consider an extension deadline appropriate for the testing period.

A number of industry comment letters sought additional specificity regarding the proposed procedures for terminating waivers. More specifically, some industry commenters urged the Bureau to clarify the circumstances under which it would terminate a waiver. One trade association requested that the Bureau clarify how it will evaluate certain information, such as complaint patterns and customer service inquiries, to determine if trial disclosures are causing a material, adverse impact on consumer understanding. Another trade association and a financial services firm asked the Bureau to define material, adverse impact on consumer understanding.

Industry commenters also requested clarification of the termination procedures described in the proposed Policy and additional procedural protections during the termination process. Some commenters asked the Bureau to grant waiver recipients an opportunity to cure any failure to comply with the terms and conditions of a waiver prior to termination. One industry commenter argued for a reasonable grace period following termination to permit the recipient to wind down the trial disclosure program. Other commenters sought explicit timelines and procedures for the termination process.

The Bureau considers many of the comments regarding termination to have merit and has amended the Policy accordingly. Under section D.3 of the final Policy, the Bureau intends to provide waiver recipients (i) the grounds for termination, (ii) a reasonable period of time to respond, (iii) as appropriate, an opportunity to address the grounds for termination within a reasonable period of time before terminating a waiver, (iv) the reason(s) why an attempt to cure such a failure to comply was deemed inadequate, and (v) a period of six months before termination to wind down use of the trial disclosures, unless the termination was based upon the disclosures causing material, adverse, impact to consumers and a wind-down period would permit such injury to continue.

With respect to requests for additional detail regarding circumstances under which termination might be triggered, section D.3 of the final Policy provides that the Bureau anticipates basing termination on three grounds. The final Policy does not, however, define material, adverse impact on consumer understanding—except to identify examples of objective criteria the Bureau intends to use to determine whether such impact has occurred. These determinations will depend significantly on the type of information provided by a waiver recipient and the facts and circumstances associated with the testing. To the extent practicable, the Bureau expects to provide additional clarity regarding the appropriate criteria in the WT&C associated with each waiver.

Under the proposed Policy, recipients would have been required to notify the Bureau of material changes in customer service inquiries, complaint patterns, default rates, or other effects indicating that trial disclosures may be causing a material, adverse, impact on consumer understanding. Consumer groups expressed concern about the efficacy of this requirement, noting in particular that it would not require recipients to record such information, and that the “material” standard is too vague. The consumer groups asserted that this would create a risk that the Bureau would fail to detect consumer harm caused by trial disclosures in a timely fashion. The Bureau acknowledges this point and has revised the final Policy to mitigate such risk. Under section C of the final Policy, the Bureau anticipates that the WT&C will require recipients to report to the Bureau information about the effects of trial disclosures on relevant objective indicators of consumer behavior, such as customer service inquiries, complaint patterns, default rates, or other objective criteria, that will enable to the Bureau to determine if the trial disclosures are causing a material, adverse, impact on consumer understanding. In addition, under the final Policy, the Bureau anticipates that, in most cases, it will be appropriate for the recipient to provide such information three months after the start of the trial disclosure program and then every six months thereafter for the duration of the program.

Several consumer groups urged the Bureau to revise the Policy to provide for public comment on a proposed trial disclosure program prior to the Bureau permitting the program. The Bureau received this same comment on the proposed 2013 Policy. The Bureau declined to add such a requirement based on its belief that it would discourage rather than encourage companies to conduct trial disclosure programs, and remains of the same opinion. 29

An association of State financial regulators recommended that the Policy should require companies conducting trial disclosure programs to obtain consumers' consent before providing them with trial disclosures. This is likewise a comment the Bureau received on the proposed 2013 Policy, and the Bureau remains of the view that obtaining such consent would significantly limit the ability of trial disclosure testing to lead to improved disclosures. 30

The Bureau has concluded that this Policy constitutes an agency general statement of policy and a rule of agency organization, procedure, or practice exempt from the notice and comment rulemaking requirements under the Administrative Procedure Act, pursuant to 5 U.S.C. 553(b). Because the Policy relates solely to agency procedure and practice, it is not substantive, and therefore is not subject to the 30-day delayed effective date for substantive rules under section 553(d) of the APA. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 31

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Bureau plans to submit a report containing this Policy and other required information to each House of Congress and the Comptroller General prior to the Policy's applicability date. The Office of Information and Regulatory Affairs has designated this Policy as not a “major rule” as defined by 5 U.S.C. 804(2).

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ), Federal agencies are generally required to seek the Office of Management and Budget (OMB) approval for information collection requirements prior to implementation. According to 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 currently a valid control number assigned by OMB. The information requested in section A of this Policy has been previously approved by OMB and assigned OMB control number 3170-0039. The Bureau has determined that the revisions to this Policy do not introduce any new or substantively or materially revised collections of information beyond what has been previously approved by OMB.

The text of the final Policy is as follows:

Consumers need timely and understandable information to make the financial decisions that they believe are best for themselves and their families. Much Federal financial consumer protection law, therefore, rests on the assumption that accurate and effective disclosures will help Americans understand the costs, benefits, and risks of consumer financial products and services.

In section 1032 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress gave the Bureau of Consumer Financial Protection (Bureau) authority to prescribe rules to ensure that consumers receive such disclosures, and to include in such rules model forms to facilitate compliance. 32 Furthermore, in section 1032(e) of the Dodd-Frank Act, Congress gave the Bureau authority to provide certain legal protections to covered persons to conduct trial disclosure programs. 33 This authority furthers the Bureau's statutory purpose, stated in section 1021(a) of the Dodd-Frank Act, to ensure that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive. 34 Furthermore, this authority advances the Bureau's statutory objectives in section 1021(b) of the Dodd-Frank Act to ensure consumers are provided with timely and understandable information to make responsible decisions about financial transactions; outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens; and markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation. 35

PBGC's regulations on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) and Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974 (ERISA). The interest assumptions in the regulations are also published on PBGC's website ( https://www.pbgc.gov ).

PBGC uses the interest assumptions in appendix B to part 4022 (“Lump Sum Interest Rates for PBGC Payments”) to determine whether a benefit is payable as a lump sum and to determine the amount to pay as a lump sum. Because some private-sector pension plans use these interest rates to determine lump sum amounts payable to plan participants (if the resulting lump sum is larger than the amount required under section 417(e)(3) of the Internal Revenue Code and section 205(g)(3) of ERISA), these rates are also provided in appendix C to part 4022 (“Lump Sum Interest Rates for Private-Sector Payments”).

This final rule updates appendices B and C of the benefit payments regulation to provide the rates for October 2019 measurement dates.

The October 2019 lump sum interest assumptions will be 0.00 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2019, these assumptions represent a decrease of 0.50 percent in the immediate rate and are otherwise unchanged.

PBGC uses the interest assumptions in appendix B to part 4044 (“Interest Rates Used to Value Benefits”) to value benefits for allocation purposes under section 4044 of ERISA, and some private-sector pension plans use them to determine benefit liabilities reportable under section 4044 of ERISA and for other purposes. The fourth quarter 2019 interest assumptions will be 2.53 percent for the first 25 years following the valuation date and 2.53 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2019, these interest assumptions represent no change in the select period (the period during which the select rate (the initial rate) applies), a decrease of 0.39 percent in the select rate, and a decrease of 0.54 percent in the ultimate rate (the final rate).

PBGC updates appendix B of the asset allocation regulation each quarter and appendices B and C of the benefit payments regulation each month. PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to issue new interest assumptions promptly so that they are available to value benefits and, for plans that rely on our publication of them each month or each quarter, to calculate lump sum benefit amounts.

Because of the need to provide immediate guidance for the valuation and payment of benefits under plans with valuation dates during October 2019, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.

Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

In consideration of the foregoing, 29 CFR parts 4022 and 4044 are amended as follows:

It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest since it is based on removing DoD internal policies and procedures that are publicly available on the Department's website.

DoD internal guidance will continue to be published in DoD Instruction 1332.35, “Transition Assistance Program,” at https://www.esd.whs.mil/Directives/issuances/dodi/ .

Removal of this part does not reduce burden or costs to the public as it will not change how transition assistance is provided to caregivers, spouses and dependents of eligible Service members.

This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review.” Therefore, the requirements of E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs,” do not apply.

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 would be impractical. It would be impracticable to publish an NPRM because we must establish the Special Local Regulation by September 22, 2019 and lack sufficient time to request and respond to comments within a reasonable time.

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 establish a Special Local Regulation associated with the Renaissance Man Triathlon by September 22, 2019.

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 Ohio Valley (COTP) has determined that potential hazards associated with the Renaissance Man Triathlon will be a safety concern for participants. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the Special Local Regulation zone during this time period.

This rule establishes a Special Local Regulation from 6 a.m. through 9 a.m. on September 22, 2019. The Special Local Regulation will cover all navigable waters from MM. 254.0-258.0 being used by participants in the Renaissance Man Triathlon. The duration of the regulated area is intended to protect personnel, vessels, and the marine environment in these navigable waters while the swim event is taking place. No vessel or person will be permitted to enter the special local regulationwithout 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, and duration of the marine event. The Special Local Regulation will only impact four miles of the Tennessee River for three hours on one day.

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 special local regulation 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 special local regulation lasting only 3 hours that will prohibit entry on the Tennessee River from mile marker 254.0-258.0.

It is categorically excluded from further review under paragraph L61in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures 5090.1. A Memorandum for the Record 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 100 as follows:

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 to publish an NPRM because we must establish this special local regulation by September 14, 2019 and lack sufficient time to provide a reasonable comment period and then consider those comments before issuing this rule.

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 public interest because immediate action is necessary to respond to the potential safety hazards associated with the boat festival.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70041. The Captain of the Port Sector Ohio Valley (COTP) has determined that potential safety needs associated with the Shoals Dragon Boat Festival event on September 14, 2019 present a safety concern. The purpose of this rule is to ensure the safety of the Shoals Dragon Boat Festival participants within the regulated area before, during, and after the scheduled times.

This rule establishes a temporary special local regulation on the Tennessee River from mile 255 to mile 257 on September 14, 2019 from 9 a.m. through 4 p.m. The special local regulation zone is intended to ensure the safety of the participants of the Shoals Dragon Boat Festival before, during, and after the scheduled times. Vessels are not permitted to enter or transit the special local regulation 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, and duration of the regulated area. This rule is impacts a two-mile stretch of the Tennessee River from mile 255 to mile 257 from 9 a.m. through 4 p.m. on September 14, 2019. Moreover, the Coast Guard will issue Broadcast Notice to Mariners via VHF-FM marine channel 16 about the regulated area and the rule allows vessels to seek permission to enter the area.

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 this temporary regulated area 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 establishing a temporary special local regulation on the Tennessee River from mile 255 to 257. The regulated area, specified in the discussion portion of this rule, will be in effect from 9 a.m. through 4 p.m. on September 14, 2019. It is categorically excluded from further review under paragraph L61 in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures 5090.1.

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 100 as follows:

The existing regulation in 33 CFR 165.754, contains a moving safety zone around transiting Liquefied Petroleum (LPG) carriers en route to, or departing from, the Gulf Refinery Oil dock or the Cataño Oil dock. On December 12, 2017, the Coast Guard received a request to assess the waterway suitability of transiting and semi-permanently moored liquefied natural gas (LNG) carriers within the San Juan Harbor. On September 26, 2018, the Coast Guard determined the Port of San Juan could accommodate the safe navigation and mooring of LNG carriers within the San Juan Harbor. On July 26, 2019, U.S Coast Guard Sector San Juan and New Fortress Energy held two public meetings in San Juan, Puerto Rico. There were approximately 50 attendees and 20 comments received. The public meetings' summary and comments have been added to this docket number.

Due to their highly volatile cargoes, size, draft, and the local channel restrictions, LPG carrier require use of the center of these channels for safe navigation. The COTP San Juan has determined that potential hazards associated with LNG carriers would be a safety concern for anyone within 50-yards of these carriers. The purpose of this rule is to ensure the safety of vessels and the navigable waters within a 50-yard radius of LNG and LPG carriers transiting San Juan Harbor. The temporary final rule would safeguard vessels at an adjacent berthing location, Puerto Nuevo Berth B, which supplies LNG to the Puerto Rico Electric Power Authority (PREPA) and other industrial sectors.

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) because immediate action is needed to safeguard incoming, moored, and outgoing LNG carriers within San Juan Harbor, San Juan, Puerto Rico.

Under 33 CFR 165.754, the Coast Guard has an existing safety zone in effect for this area but for only LPG carriers. The Coast Guard did not receive sufficient information regarding the transit of LNG with sufficient time to publish an additional NPRM and receive public comment in order to complete the rulemaking process. Delay in promulgating this rule would be impracticable and contrary to public interest because a safety zone is required to safeguard the first LNG carrier expected to arrive in San Juan, Puerto Rico on August 25, 2019.

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 above.

We note that the Coast Guard is in the process of publishing an NPRM proposing to revise the existing safety zone for LPG carriers in § 165.754 to include LNG carriers.

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 (COTP) San Juan has determined that the LNG carrier expected to arrive on August 25, 2019 will be a safety concern for anyone within a one-half mile during its transit entering and departing San Juan Harbor and within a 50-yard radius when the vessel is moored. This rule is needed to ensure the safety of personnel, vessels, and the marine environment in the navigable waters within the safety zone.

This rule establishes a safety zone from 12:01 a.m. on August 25, 2019 until 11:59 p.m. on November 15, 2019. The safety zone will cover all navigable waters one half mile around each Liquefied Gas carrier entering and departing San Juan Harbor and a 50-yard radius around each vessel when moored. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.

If authorization to enter, transit through, anchor in, or remain within the safety zone is granted by the COTP San Juan or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the COTP San Juan or a designated representative. The Coast Guard will provide notice of the safety zone through Local Notice to Mariners, Broadcast Notice to Mariners via VHF-FM marine channel 16, and designated on-scene representatives.

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, available exceptions to the enforcement of the safety zone, and notice to mariners. The regulated area will impact small designated areas of navigable channels within San Juan Harbor. The rule will allow vessels to seek permission to enter, transit through, anchor in, or remain within the safety zone. Additionally, notifications to the marine community will be made through Local Notice to Mariners, Broadcast Notice to Mariners via VHF-FM marine channel 16, and on-scene representatives. The notifications will allow the public to plan operations around the affected areas.

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 call or email 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 call or email 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 36 days that will prohibit entry within one half mile around each Liquefied Gas carrier entering and departing San Juan Harbor and a 50-yard radius around each vessel when moored. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the NPRM to modify the San Juan Harbor, San Juan, Puerto Rico safety zone is properly proposed and implemented. It is categorically excluded from further review under paragraph L60(a) in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures. 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 call or email 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 is proposing to amend 33 CFR part 165 as follows:

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

In Fall 2018, the Captain of the Port Sector Upper Mississippi River (COTP) began the annual review of section 165.801 Table 2 of Title 33 of the Code of Federal Regulations (CFR) (33 CFR 165.801 Table 2) to ensure it accurately reflected safety zones occurring on a regular basis in the Sector Upper Mississippi River Captain of the Port Zone. On May 31, 2019 the Coast Guard published a notice of proposed rulemaking (NPRM) titled Sector Upper Mississippi River Annual and Recurring Safety Zones Update [84 FR 25212]. There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to the annual update. During the comment period that ended July 1, 2019, we received no comments.

The Coast Guard is issuing this rule under the authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port Sector Upper Mississippi River (COTP) is amending and updating section 165.801 Table 2 of Title 33 of the Code of Federal Regulations (CFR) (33 CFR 165.801 Table 2) to accurately reflect safety zones occurring on a regular basis in the Sector Upper Mississippi River Captain of the Port Zone. This rule ensures that the public is informed of annual and recurring safety zones taking place within the Sector Upper Mississippi River Captain of the Port Zone, that the table of annual and recurring safety zones is easy to read, and minimizes administrative burden to both the Coast Guard and those requesting the enforcement of recurring safety zones. The recurring safety zones are necessary to provide for the safety of life on navigable waters during events which pose a risk to persons and vessels operating on the waterway.

As noted above, we received no comments on our NPRM published on May 31, 2019. We are adding the Kansas City Airshow into this rule because the sponsor said the 2019 Airshow was successful and it will be taking place again in 2020. Additionally, although we proposed to remove them in the NPRM, we are retaining the safety zones for the City of Champlin/Father Hennepin Fireworks Display and the McGregor/Marquette Chamber Commerce/Independence Day Celebration. We now believe that both of these events will continue to re-occur.

Section 165.801 of Title 33 CFR contains regulations related to annual and recurring safety zones. From time to time, this section requires amendment to properly reflect safety zones recurring within the Eighth Coast Guard District. This rule updates Table 2 of this section by removing two safety zones, adding one safety zone, updating details for all safety zones to include the correction of twelve names, re-defining the date of safety zones for fireworks displays for 4th of July celebrations to permit greater flexibility in planning of these events, correcting errors in the nearest city for nine safety zones, removing sponsor names from all safety zones, and rearranging the Table to display safety zones first by the body of water on which they take place (alphabetically), second by the date(s) on which those safety zones will be enforced, and third by mile marker (descending). The changes are as follows.

This rule is removes the following two safety zones from Table 2 of 33 CFR 165.801:

Both of these events are expected to continue. However, the Coast Guard is changing how the events are regulated and, correspondingly, will be relocating the regulations for these events to other portions of the CFR in a separate rule or rules.

This rule adds one safety zone (line 15 below), updates the details of all safety zones in Table 2 of 33 CFR 165.801, and reorganizes the table as follows:

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 location, size, and duration of the safety zones that will be in place during the listed events. The enforcement of these safety zones is limited in size and duration to only that necessary to ensure the safety of life during the listed events. Additionally, this rule only modifies the existing Table of safety zones by removing two that no longer take place, adding one, updating the details of safety zones to ensure they are current and accurate, and modifying the table for easier reading.

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 received no comments from the Small Business Administration on this rulemaking. 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 zones 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 call or email 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 call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

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 made a preliminary determination 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 the amendment of existing safety zone tables found in 33 CFR 165.801 to accurately reflect recurring safety zones occurring on a regular basis within the Eighth Coast Guard District. Normally such actions are categorically excluded from further review under paragraph L60(b) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01, for which a Record of Environmental Consideration is not required. However, prior to the activation of any listed safety zone, a complete environmental review will be conducted in accordance with DHS Instruction Manual 023-01-001-01, Rev.01 and Commandant Instruction M16475.1D. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email 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:

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

On June 7, 2019, the EPA proposed to change the initial designation of Williamson County, Illinois, from nonattainment to attainment/unclassifiable. See 84 FR 26627. A detailed analysis of the EPA's rationale, which was provided in the notice of proposed rulemaking, is hereby incorporated into this notice and will not be restated here. The public comment period for this proposed rule ended on July 8, 2019.

The EPA received one anonymous comment on the proposal, which is addressed in this section.

Comment: In general, the commenter questions the EPA's authority to revisit final agency actions in certain circumstances by asserting that the EPA cannot reconsider a final agency action that has already become effective and where statutory deadlines have already been implicated by EPA's action. Because the EPA's final rule designating Williamson County as nonattainment has been in effect for almost 3 years, the commenter implies that the only way to change the area's designation is for the state to request redesignation under the CAA. Lastly, the commenter argues that air dispersion modeling to reconsider the prior designation must use actual SO 2 emissions from the most recent 3 years of data and should consider potential emissions, whereas the modeling used as the basis for the EPA's proposal evaluated Marion Power Station's 2013-2015 actual SO 2 emissions.

Response: The EPA's ability to revisit previous final actions is well-grounded in the law. Specifically, the EPA has inherent authority to reconsider, repeal, or revise past decisions to the extent permitted by law so long as the agency provides a reasoned explanation. See, e.g., Encino Motorcars LLC v. Navarro, 136 S.Ct. 2117, 2125 (2016). This is true when, as is the case here, review is undertaken “in response to . . . a change in administrations.” National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967, 981 (2005). Indeed, “[a]gencies obviously have broad discretion to reconsider a regulation at any time” and an agency “is free to do so as long as `the new policy is permissible under the statute . . ., there are good reasons for it, and . . . the agency believes it to be better.' ” Clean Air Council v. Pruitt, 862 F.3d 1, 8-9 (D.C. Cir. 2017) (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009)). Here, the EPA changed its view regarding whether, as an exercise of the agency's discretion in this particular matter, it would be appropriate to reconsider this designation based on information that was submitted to the EPA after the close of the public comment period and that had not been demonstrated to be impracticable to raise within such time, but which upon review appeared to reflect better information regarding air quality in the area at the time of the initial designation than the information that formed the basis for the agency's prior determination. The EPA thinks that this change in this particular circumstance leads to a more accurate determination, as it results in a designation that is based on the most complete and informative information regarding the area's air quality at the time of the EPA's initial designation. The EPA also notes that its authority to reconsider prior decisions exists regardless of whether the final agency action has already become effective, though the initial action remains effective until the action reconsidering it is finalized. The 2016 nonattainment designation becoming effective and triggering planning requirements does not preclude the EPA from reconsidering that action. The EPA is reconsidering the Williamson County area's initial designation for the 2010 SO 2 NAAQS under its inherent reconsideration authority. It is not redesignating the area pursuant to its authority under CAA section 107(d)(3) authority, and, therefore, the requirements of section 107(d)(3) do not apply to this action. 1 Thus, to the extent the comment discusses what requirements apply to and what information is relevant to redesignation actions under CAA section 107(d)(3), those comments are outside the scope of this action. 2

Regarding the appropriate use of SO 2 emissions data, the EPA's SO 2 NAAQS Designations Modeling Technical Assistance Document outlines our longstanding rationale for using actual emissions in modeling for designations, and we hereby incorporate that rationale in support of basing our reconsidered designation on such actual emissions modeling. 3 Marion Power Station's 2013-2015 actual SO 2 emissions data are representative of conditions in the area at the time of the final designation action for Williamson County on June 30, 2016, and the air quality for the area at that time is what we were evaluating for that designation. Because this action is a reconsideration of the initial designation for this area that occurred in 2016, rather than a redesignation based on an evaluation of current air quality, it is reasonable for our analysis of the air quality and the resulting designation to be based on modeling of actual emissions from that same time, rather than of more recent emissions. 4 Therefore, as outlined in the proposed action, the modeling appropriately demonstrates that the Williamson County area was not violating the 2010 1-hour SO 2 NAAQS and was not contributing to a NAAQS violation in a nearby area at the time of our initial designation in 2016.

The EPA is changing the initial designation of Williamson County, Illinois for the 2010 1-hour SO 2 NAAQS. Based on the information available to the EPA, we are finalizing the Williamson County, Illinois area's initial designation as attainment/unclassifiable for that SO 2 NAAQS. 5 This final action relieves Illinois of obligations under CAA sections 172, 191, and 192 to submit a state implementation plan that demonstrates attainment of the SO 2 NAAQS, because those requirements do not apply to areas designated attainment/unclassifiable.

When the EPA establishes a new or revised NAAQS, the CAA requires the EPA to designate all areas of the United States as either nonattainment, attainment, or unclassifiable.

This final action reconsiders the initial nonattainment designation for the Williamson County, Illinois area for the 2010 1-hour SO 2 NAAQS. Area designations address environmental justice concerns by ensuring that the public is properly informed about the air quality in an area. In locations where air quality does not meet the NAAQS, the CAA requires relevant state authorities to initiate appropriate air quality management actions to ensure that all those residing, working, attending school, or otherwise present in those areas are protected, regardless of minority and economic status.

This action is exempt from review by the Office of Management and Budget because it is a reconsideration of an initial action taken pursuant to the CAA requirement to promulgate air quality designations after promulgation of a new or revised NAAQS. This final rule is not a significant regulatory action under Executive Order 12866.

This action is not an Executive Order 13771 regulatory action because actions such as air quality designations after promulgating a new revised NAAQS are exempt under Executive Order 12866.

This action does not impose an information collection burden under the PRA. In this action, the EPA reconsiders the SO 2 NAAQS designation for the Williamson County, Illinois area promulgated previously on July 12, 2016. The action does not encompass any information collection activities.

This action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. NAAQS designations do not in and of themselves create any new requirements beyond what is mandated by the CAA. Instead, this rulemaking only makes factual determinations, and does not directly regulate any entities.

This action does not contain any unfunded mandate as described in the Unfunded Mandates Reform Act, 2 U.S.C. 1531-1538 and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local, or tribal governments or the private sector.

This action does not have federalism implications. It will 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. The division of responsibility between the federal government and the states for purposes of implementing the NAAQS is established under the CAA.

This action does not have tribal implications, as specified in Executive Order 13175. This action concerns the designation of Williamson County, Illinois for the 2010 1-hour SO 2 NAAQS. This rule does not have a substantial direct effect on one or more Indian tribes. This action changes the initial designation for Williamson County for the 2010 1-hour SO 2 NAAQS, but no areas of Indian country are designated or have their designation changed by this action. There are no areas of Indian country in or near Williamson County. Furthermore, this rule does not affect the relationship or distribution of power and responsibilities between the federal government and Indian tribes. The CAA and the Tribal Authority Rule establish the relationship of the federal government and tribes in developing plans to attain the NAAQS, and this rule does nothing to modify that relationship. Thus, Executive Order 13175 does not apply.

The EPA interprets Executive Order 13045 as applying to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks.

This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations, and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). When the EPA establishes a new or revised NAAQS, the CAA requires the EPA to designate all areas of the U.S. as either nonattainment, attainment, or unclassifiable. This action reconsiders the nonattainment designation for the Williamson County, Illinois area for the 2010 1-hour SO 2 NAAQS. Area designations address environmental justice concerns by ensuring that the public is properly informed about the air quality in an area. In locations where air quality does not meet the NAAQS, the CAA requires relevant state authorities to initiate appropriate air quality management actions to ensure that all those residing, working, attending school, or otherwise present in those areas are protected, regardless of minority and economic status.

This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the U.S. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for review of this final action must be filed in the U.S. Court of Appeals for the appropriate circuit within 60 days from the date this final action is published in the Federal Register .

For the reasons set forth in the preamble, 40 CFR part 81 is amended as follows:

Why we need to publish a rule. Under the Act, a species warrants protection through listing if it is endangered or threatened. Conversely, a species may be removed from the Federal List of Endangered and Threatened Wildlife (List) if the Act's protections are determined to be no longer required based on recovery, original data error, or extinction. Removing a species from the List can be completed only by issuing a rule. This rule finalizes the removal of the Foskett speckled dace ( Rhinichthys osculus ssp.) from the List due to recovery, as proposed on January 4, 2018 (83 FR 475).

The basis for our action. We have determined that the Foskett speckled dace is no longer at risk of extinction and has exceeded or met the following criteria for delisting described in the species' recovery plan (USFWS 1998): (1) Long-term protection of habitat, including spring source aquifers, spring pools and outflow channels, and surrounding lands, is assured; (2) long-term habitat management guidelines are developed and implemented to ensure the continued persistence of important habitat features, and include monitoring of current habitat and investigation for and evaluation of new spring habitats; and (3) research into life history, genetics, population trends, habitat use and preference, and other important parameters is conducted to assist in further developing and/or refining criteria (1) and (2), above. We consider the Foskett speckled dace to be a conservation-reliant species, which we define in this case as a species that has generally met recovery criteria but requires continued active management to sustain the species and associated habitat in a recovered condition (see Scott et al. 2010, entire), given that the Foskett speckled dace requires active management to maintain suitable habitat. To address this management need, the Bureau of Land Management (BLM), the Oregon Department of Fish and Wildlife (ODFW), and the Service developed, and are implementing, the Foskett speckled dace Cooperative Management Plan (CMP; USFWS et al. 2015), and are committed to the continuing long-term management of this species.

Peer review and public comment. We evaluated the species' needs, current conditions, and future conditions to support our proposed rule. We sought comments from independent specialists to ensure that our determination is based on scientifically sound data, assumptions, and analyses. We invited these peer reviewers to comment on the draft post-delisting monitoring plan. We considered all comments and information we received during the public comment period on the proposed rule to delist the Foskett speckled dace and the post-delisting monitoring plan when developing this final rule.

In carrying out our responsibility to administer the Act, we maintain the Lists of Endangered and Threatened Wildlife and Plants in title 50 of the Code of Federal Regulations (CFR). We published a final rule listing the Foskett speckled dace as threatened in the Federal Register on March 28, 1985 (50 FR 12302). This rule also found that the designation of critical habitat was not prudent because it would increase the likelihood of vandalism to the small, isolated springs that support this species. On April 27, 1998, a recovery plan was completed for the Foskett speckled dace as well as two other fish of the Warner Basin and Alkali Subbasin (USFWS 1998).

Our most recent 5-year review, completed on October 26, 2015 (USFWS 2015, entire), concluded that the status of the Foskett speckled dace had substantially improved since the time of listing according to the definitions of “endangered species” and “threatened species” under the Act and recommended that the Foskett speckled dace be considered for delisting.

On January 4, 2018, we published a proposed rule in the Federal Register (83 FR 475) to delist the Foskett speckled dace on the basis of recovery. In that document, we requested information and comments from the public regarding the proposed rule and the draft post-delisting monitoring plan for the Foskett speckled dace.

The Foskett speckled dace is in the family Cyprinidae (Girard 1857) and is represented by one population in Lake County, Oregon: A natural population that inhabits Foskett Spring on the west side of Coleman Lake, and an introduced subpopulation at nearby Dace Springs (USFWS 1998, p. 14). The Foskett speckled dace is a small, elongate, rounded minnow (4 inches (in) (10 centimeters (cm)) with a flat belly. The snout is moderately pointed, the eyes and mouth are small, and ventral barbels ( i.e., whisker-like sensory organs near the mouth) are present. Foskett speckled dace have eight dorsal fin rays and seven anal fin rays, and the caudal fin is moderately forked (USFWS 1998, p. 8). The color of its back is dusky to dark olive; the sides are grayish green, with a dark lateral stripe, often obscured by dark speckles or blotches; and the fins are plain. Breeding males are reddish on the lips and fin bases.

Typically, speckled dace breed at age 1 year, and spawning begins in March to April and extends into July; individual fish can live for at least 4 years (Scheerer et al. 2015, p. 2). Multiple age classes of Foskett speckled dace are present at Foskett Spring and successful reproduction occurs annually (Sheerer and Jacobs 2009, p. 5). To describe the different habitat types occupied by Foskett speckled dace, Scheerer split the habitat types into categories. The four habitat types are defined as the (1) Spring Pool; (2) Spring Brook; (3) Tule Marsh; and (4) Cattail Marsh. Aside from 1997, Cattail Marsh supports few Foskett speckled dace; the small population size in the Cattail Marsh habitat is due to habitat encroachment (Scheerer et al. 2011, pp. 6-7; Scheerer et al. 2016, p. 9). Most of the Cattail Marsh habitat is outside the fence protecting Foskett Spring habitat, and the habitat is known to dry periodically (U.S. Fish and Wildlife Service 1998, p. 14). Young-of-the-year fish are more common in the shallow marsh habitats (Scheerer et al. 2016, p. 3). Presumably, similar to other dace, Foskett speckled dace require rock or gravel substrate for egg deposition (Sigler and Sigler 1987, p. 208). The taxonomy of the Foskett speckled dace is summarized in the species' 5-year review (USFWS 2015).

The Foskett speckled dace is endemic to Foskett Spring in the Warner Basin, in southeastern Oregon (see Figure 1). The historical known natural range of the Foskett speckled dace is limited to Foskett Spring. At the time of listing in 1985, Foskett speckled dace also occurred at Dace Spring, a smaller spring located approximately 0.5 miles (mi; 0.8 kilometers (km)) south of Foskett Spring, where translocation was initiated in 1979 (Williams et al. 1990, p. 243).

Foskett speckled dace were probably distributed throughout prehistoric Coleman Lake (see Figure 1) during times that it held substantial amounts of water. The timing of the isolation between the Warner Lakes and the Coleman Lake Subbasin is uncertain, although it might have been as recent as 10,000 years ago (Bills 1977, entire). As Coleman Lake dried, the salt content of the water increased and suitable habitat would have been reduced from a large lake to spring systems that provided adequate freshwater.

Given that both Foskett and Dace springs were historically below the surface elevation of Coleman Lake, it is reasonable to assume that Foskett speckled dace occupied Dace Spring at some point in the past, although none was documented in the 1970s. Beginning in 1979, Foskett speckled dace were translocated into the then-fishless Dace Spring to attempt to create a subpopulation (see Abundance, below).

Foskett Spring is a small, natural thermal artesian spring that rises from a springhead pool that flows through a narrow, shallow spring brook into a series of shallow marshes, and then disappears into the soil of the normally dry Coleman Lake (Scheerer et al. 2016, p. 1; Sammel and Craig 1981, p. 113). Foskett Spring is a cool-water thermal spring with temperatures recorded at a constant 64.8 degrees Fahrenheit (°F) (18.2 degrees Celsius (°C)) (Scheerer and Jacobs 2009, p. 5). The spring water is clear, and the water flow rate is consistently less than 0.5 cubic feet (ft 3 ) per second (0.01 cubic meters (m 3 ) per second). The springhead pool has a loose sandy bottom and is heavily vegetated with aquatic plants. The ODFW estimated approximately 864 square yards (yds 2 ) (722 square meters (m 2 )) of wetland habitat are associated with the Foskett Spring area, including the spring pool, spring brook, tule marsh, cattail marsh, and sedge marsh (Scheerer and Jacobs 2005, p. 6; hereafter “marsh” unless otherwise noted). Foskett speckled dace occur in all the wetlands habitats associated with the spring. The fish use overhanging bank edges, grass, exposed grass roots, and filamentous algae as cover.

In 1987, the BLM acquired the property containing both Foskett and Dace springs and the surrounding 161 acres (ac) (65 hectares (ha)), of which approximately 69 ac (28 ha) were fenced to exclude cattle from the two springs. After fencing and cattle exclusion, encroachment by aquatic vegetation reduced the open-water habitat (Sheerer and Jacobs 2007, p. 9). This is a common pattern in desert spring ecosystems and has resulted in reductions of fish populations at other sites (see Kodric-Brown and Brown 2007).

In 2005, 2007, and 2009, the ODFW considered Foskett speckled dace habitat to be in good condition, but limited in extent. They noted that encroachment by aquatic plants may be limiting the population and that a decline in abundance of Foskett speckled dace since 1997 was probably due to the reduction in open-water habitat (Scheerer and Jacobs 2005, p. 7; 2007, p. 9; 2009, p. 5). Deeper water with moderate vegetative cover would presumably be better habitat, judging from the habitats used by other speckled dace, although Dambacher et al. (1997, no pagination) noted that past habitat management to increase open water has been unsuccessful in the long run due to sediment infilling and regrowth of aquatic plants. To increase open-water habitat, the BLM and the Service worked together in 2009 constructing two ponds connected to the outlet channel of Dace Spring. To address the encroachment by aquatic vegetation at Foskett Spring, in 2013, the BLM reduced vegetation biomass by implementing a controlled burn in the surrounding marshes. In 2013 and 2014, the BLM hand-excavated 11 pools and increased the open-water habitat around Foskett Spring by 196 yds 2 (164 m 2 ) (Scheerer et al. 2014, p. 9). The response of Foskett speckled dace to this habitat enhancement was substantial but relatively short-lived (see Abundance, below).

The BLM initiated baseline water quality and vegetation monitoring at Foskett and Dace springs in 1987. Data collected on September 28, 1988, documented that the two springs had similar water chemistry, temperature, and turbidity (Williams et al. 1990, p. 244). In 2013, the BLM reconfigured the inlet and outlet to the two ponds at Dace Spring, allowing greater water flow and improving water quality (Scheerer et al. 2013, p. 8).

The population of Foskett speckled dace has been monitored regularly by the ODFW since 2005, and, while variable, appears to be resilient ( i.e., capable of withstanding natural variation in habitat conditions and weather as well as random events). General observations made during these surveys included the presence of multiple age-classes and the presence of young-of-the-year, which indicates that breeding is occurring and young are surviving for multiple years. Bond (1974) visually estimated the population in Foskett Spring to be between 1,500 and 2,000 individuals in 1974. In 1997, the ODFW obtained mark-recapture population estimates at both Foskett and Dace springs (Dambacher et al. 1997, no pagination). The Foskett Spring estimate was 27,787 fish, and the majority of the fish (97 percent) occurred in an open-water pool located in the marsh outside of the existing Foskett Spring cattle exclosure. Since 1997, population estimates have varied from 751 to 24,888 individuals (see Table 1, below).

Abundance declined substantially from 1997 through 2012, a period when aquatic plants substantially expanded into open-water habitats (Scheerer et al. 2016, p. 9). ODFW attributed the higher population estimates from 2013 through 2015 to habitat management that increased open water (see below); during these years most fish were found in these maintained habitats (Scheerer et al. 2016, p. 9). The population decline documented in 2016 in Foskett Spring was likely a result of vegetation regrowth into the excavated areas (Scheerer et al. 2016, pp. 6-9). As a result of the vegetation regrowth and population decline in 2016, and consistent with the CMP, the BLM conducted an extensive habitat enhancement project in 2017. The project entailed excavating approximately 300 cubic yards (yds 2 ) (251 m 2 ) of vegetation and accumulated sediment in the Foskett Spring pool, stream, and portions of the wetland, resulting in a significant increase in open-water habitat. Prior to initiating this enhancement project in 2017, the ODFW conducted a population survey that estimated 4,279 dace in Foskett Spring (95 percent confidence interval (CI): 3,878-4,782), a moderate increase in the estimate from the prior year (1,830) (P. Scheerer 2017, pers. comm.). As noted previously, and as illustrated in Table 1 below, the variability in abundance is not uncommon for dace species and appears, based on observations by ODFW biologists, to be driven in part by the availability of open-water habitat. Given information gained from prior habitat enhancement actions at Foskett and Dace springs, we anticipate the extensive habitat enhancement work conducted by the BLM in 2017 will support abundance commensurate with available habitat in coming years.

No Foskett speckled dace were documented in Dace Spring in the 1970s. In 1979 and 1980, individuals were translocated from Foskett Spring to Dace Spring (Williams et al. 1990, p. 243; see Table 2, below). Although an estimated 300 fish were documented in 1986 (Williams et al. 1990, p. 243), this initial effort failed to establish a subpopulation at Dace Spring due to a lack of successful recruitment (Dambacher et al. 1997, no pagination). Only 19 fish were observed in 1997, and subsequent surveys failed to locate individuals in Dace Springs (Scheerer and Jacobs 2005, p. 2). In 2009, two pools were created at Dace Spring to increase open-water habitat and additional individuals were moved to the spring. Although recruitment was documented, major algal blooms and periods of low dissolved oxygen resulted in low survival (Scheerer et al. 2012, p. 8). Habitat manipulation by the BLM in 2013 improved water quality, and recruitment was documented in 2014 and 2015 (Scheerer et al. 2014, p. 6; Scheerer et al. 2015, p. 5). The two constructed pools at Dace Spring are currently providing additional habitat and may continue to serve as a refuge for Foskett speckled dace. Table 2 summarizes population estimates, translocations, and habitat management at Dace Spring (Williams et al. 1990, p. 243; Dambacher et al. 1997, no pagination; Scheerer and Jacobs 2005, p. 2; Scheerer et al. 2012, p. 1; Scheerer et al. 2013, pp. 2, 8; Scheerer et al. 2014, pp. 6, 9; Scheerer et al. 2015, p. 5; Scheerer et al. 2016, p. 6; Scheerer et al. 2017, p. 6; Monzyk et al. 2018, p. 10).

Section 4(f) of the Act directs us to develop and implement recovery plans for the conservation and survival of endangered and threatened species unless we determine that such a plan will not promote the conservation of the species. Under section 4(f)(1)(B)(ii), recovery plans must, to the maximum extent practicable, include objective, measurable criteria which, when met, would result in a determination, in accordance with the provisions of section 4 of the Act, that the species be removed from the List. However, revisions to the List ( i.e., adding, removing, or reclassifying a species) must reflect determinations made in accordance with sections 4(a)(1) and 4(b) of the Act. Section 4(a)(1) requires that the Secretary determine whether a species is endangered or threatened (or not) because of one or more of five threat factors. Section 4(b) of the Act requires that the determination be made “solely on the basis of the best scientific and commercial data available.” Therefore, recovery criteria should help indicate when we would anticipate an analysis of the five threat factors under section 4(a)(1) would result in a determination that the species is no longer an endangered species or threatened species (see Summary of Factors Affecting the Species, below).

While recovery plans provide important guidance to the Service, States, and other partners on methods of minimizing threats to listed species and measurable objectives against which to measure progress towards recovery, they are not regulatory documents and cannot substitute for the determinations and promulgation of regulations required under section 4(a)(1) of the Act. A decision to revise the status of a species or remove it from the List is ultimately based on analysis of the best scientific and commercial data available to determine whether a species is no longer considered endangered or threatened, regardless of whether that information differs from the recovery plan.

Recovery plans may be revised to address continuing or new threats to the species as new substantive information becomes available. The recovery plan identifies site-specific management actions that will help recover the species, measurable criteria that set a trigger for eventual review of the species' listing status ( e.g., under a 5-year review conducted by the Service), and methods for monitoring recovery progress. Recovery plans are intended to establish goals for long-term conservation of listed species and define criteria that are designed to indicate when the threats facing a species have been removed or reduced to such an extent that the species may no longer need the protections of the Act.

There are many paths to accomplishing recovery of a species, and recovery may be achieved without all criteria being fully met. For example, one or more criteria may be exceeded while other criteria may not yet be met. In that instance, we may determine that the threats are minimized sufficiently to delist. In other cases, recovery opportunities may be discovered that were not known when the recovery plan was finalized. These opportunities may be used instead of methods identified in the recovery plan. Likewise, information on the species may be learned that was not known at the time the recovery plan was finalized. The new information may change the extent that criteria need to be met for recognizing recovery of the species. Recovery of a species is a dynamic process requiring adaptive management that may, or may not, fully follow the guidance provided in a recovery plan.

The Oregon Desert Fishes Working Group has been proactive in improving the conservation status of the Foskett speckled dace. This group of Federal and State agency biologists, academicians, and others has met annually since 2007 to: (1) Share species' status information; (2) share results of new research; and (3) assess ongoing threats to the species.

The primary conservation objective in the Foskett speckled dace recovery plan is to enhance its long-term persistence through the conservation and enhancement of its limited range and habitat (USFWS 1998, entire). The recovery plan states that the spring habitat of the Foskett speckled dace is currently stable, but extremely restricted, and any alterations to the spring or surrounding activities that indirectly modify the spring could lead to the extinction of this species. While the recovery plan does not explicitly tie the recovery criteria to the five listing factors in section 4(a)(1) of the Act, our analysis of whether the species has achieved recovery is based on these five factors, which are discussed below under Summary of Factors Affecting the Species. The recovery plan outlines three recovery criteria (summarized below) to assist in determining when the Foskett speckled dace has recovered to the point that the protections afforded by the Act are no longer needed. A detailed review of the recovery criteria for the Foskett speckled dace is presented in the species' 5-year review (USFWS 2015), which is available online at https://ecos.fws.gov/docs/five_year_review/doc4758.pdf, at http://www.regulations.gov under Docket No. FWS-R1-ES-2017-0051, or by requesting a copy from our Oregon Fish and Wildlife Office (see FOR FURTHER INFORMATION CONTACT ). The 2015 5-year review concluded that the risk of extinction has been substantially reduced, as threats have been managed, and recommended that the species be proposed for delisting (USFWS 2015, p. 29). The Foskett speckled dace has exceeded or met the following criteria for delisting described in the recovery plan:

Recovery Criterion 1: Long-term protection to habitat, including spring source aquifers, spring pools and outflow channels, and surrounding lands, is assured .

Criterion 1 has been met. In 1987, the BLM acquired and now manages the 160-ac (65-ha) parcel of land containing both Foskett and Dace springs (see below) and fenced 70 ac (28 ha) to exclude cattle from both springs, although the fence does not include the entire occupied habitat for Foskett speckled dace. This parcel of land was acquired by the BLM specifically to provide conservation benefit to the Foskett speckled dace. We anticipate continued ownership of this habitat by the BLM in the future in part due to direction in the BLM's Lakeview District Resource Management Plan (RMP), which includes a management goal of retaining public land with high public resource values and managing that land for the purpose for which it was acquired (BLM 2003, p. 92). Additional support for continued ownership and management of the site by the BLM rests in the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et seq. ), as amended, which directs the BLM to manage public land to provide habitat for fish and aquatic wildlife and to protect the quality of water resources. Lastly, continued ownership and management by the BLM, as well as the protections afforded to Foskett and Dace springs from public ownership, are supported by the BLM's involvement as a cooperating agency in the development and implementation of the CMP that was agreed to, finalized, and signed by the BLM in August 2015 (USFWS et al. 2015). The BLM's official commitment to carry out the CMP demonstrates that Criterion 1 has been met.

While little information is available regarding spring flows or the status of the aquifer, the aquifer has limited capability to produce water for domestic or stock use (Gonthier 1985, p. 7). Given this, the few wells that exist in the Warner Valley are unlikely to impact Foskett or Dace springs. Recovery Criterion 1 addresses listing factor A (present or threatened destruction, modification, or curtailment of habitat or range).

Recovery Criterion 2: Long-term habitat management guidelines are developed and implemented to ensure the continued persistence of important habitat features and include monitoring of current habitat and investigation for and evaluation of new spring habitats.

Criterion 2 has been met. With the understanding that the Foskett speckled dace is a conservation-reliant species, the BLM, ODFW, and Service developed a CMP (USFWS et al. 2015) that outlines long-term management actions necessary to provide for the continued persistence of habitats important to Foskett speckled dace. The CMP was agreed to, finalized, and signed by the BLM, ODFW, and Service in August 2015. The cooperating parties committed to the following actions: (1) Protect and manage Foskett speckled dace habitat; (2) enhance the habitat when needed; (3) monitor Foskett speckled dace populations and habitat; and (4) implement an emergency contingency plan as needed to address potential threats from the introduction of nonnative species, pollutants, or other unforeseen threats (USFWS et al. 2015, p. 3). The CMP has no termination date.

Although the CMP is a voluntary agreement among the three cooperating agencies, we anticipate the plan will be implemented into the foreseeable future for the following reasons. First, each of the cooperating agencies have established a long record of engagement in conservation actions for Foskett speckled dace, including the BLM's prior contributions through land acquisition and three decades of habitat management at Foskett and Dace springs; scientific research and monitoring by the ODFW dating back to 1997; and funding support, coordination of recovery actions, and legal obligations by the Service to monitor the species into the future under the Foskett speckled dace post-delisting monitoring plan. In addition, all three cooperating agencies are active participants in the Oregon Desert Fishes Working Group, an interagency group facilitated by the Service that meets annually to discuss recent monitoring and survey information for multiple fish species, including Foskett speckled dace, as well as to coordinate future monitoring and management activities.

Second, implementation of the CMP is already underway. Under the auspices of the CMP, the BLM has conducted quarterly site visits to determine the general health of the local spring environment using photo point monitoring techniques. In 2017, the BLM conducted an extensive habitat enhancement project by excavating approximately 300 yards (yds 2 ) (251 m 2 ) of vegetation and accumulated sediment in the Foskett Spring pool, stream, and portions of the wetland, resulting in a significant increase in open-water habitat. The BLM also provided funding to ODFW to conduct estimates of Foskett speckled dace. The ODFW provided personnel and technical assistance to the BLM for the above-mentioned excavation work in 2017, and they conducted an abundance estimate in 2017 to keep track of the long-term trend of the population. The Service provided personnel and technical assistance to the BLM for the 2017 excavation work and provided funding to the ODFW in 2005, 2007, and 2009 at Foskett Spring, and in 2015, 2016, and 2017 to conduct population estimates in both Foskett and Dace springs.

Third, the conservation mission and authorities of these agencies authorize this work even if the species is delisted. For example, the Lakeview District BLM's Resource Management Plan (RMP) and BLM Manual 6840.06E both provide general management direction for Special Status Species, including the Foskett speckled dace. “Special Status” species for the BLM includes sensitive, proposed for listing, threatened, and endangered species. When delisted, the Foskett speckled dace would still be considered a “Special Status” species, as it meets the criteria to be “sensitive” for the BLM. According to the BLM's Criteria for determining FS R6 and OR/WA BLM Sensitive and Strategic Species (July 13, 2015), all federally delisted species that are suspected or documented on BLM or U.S. Forest Service lands are considered “sensitive” for the duration of their delisting monitoring plan unless the species meets some of the other criteria for being “sensitive.” In this case, being a State/Oregon Biodiversity Information Center (ORBIC) rank 1 species, with a Heritage program/NatureServe rank of S1 puts the Foskett speckled dace firmly in the “sensitive” category (R. Huff 2018, pers. comm.; ORBIC 2016, p. 5). Special Status species lists and criteria are updated and transmitted to the BLM Districts approximately every 3 years through the State Director, who then directs the Districts to use the new list (R. Huff 2018, pers. comm.). The Federal Land Policy and Management Act of 1976 directs the BLM to manage public land to provide habitat for fish and aquatic wildlife and to protect the quality of water resources. The ODFW's State of Oregon Wildlife Diversity Plan (Oregon Administrative Rule (OAR) 635-100-0080), Oregon Native Fish Conservation Policy (OAR 636-007-0502), and the Oregon Conservation Strategy (ODFW 2016) each provide protective measures for the conservation of native fish including Foskett speckled dace, which will remain on the ODFW's sensitive species list even if the species is removed from the Federal List. The Service is authorized to assist in the protection of fish and wildlife and their habitats under authorities provided by the Act (16 U.S.C. 1531 et seq. ), the Fish and Wildlife Coordination Act (16 U.S.C. 661 et seq. ), and the Fish and Wildlife Act of 1956 (16 U.S.C. 742a-742j, not including 742 d-l).

Fourth, there is a practical reason to anticipate implementation of the CMP into the foreseeable future: the CMP actions are technically not complicated to implement, and costs are relatively low. We also have confidence that the actions called for in the CMP will be effective in the future because they have already proven effective as evidenced by the information collected from recent habitat actions and associated monitoring (including abundance data, the effects of exclosure fences and vegetation encroachment, and vegetation management through controlled burns and pool expansion) (Scheerer et al. 2016, entire).

Lastly, if the CMP is not adhered to by the cooperating agencies or an evaluation by the Service suggests the habitat and population are at risk, the Service would evaluate the need to again add the species to the List ( i.e., “relist” the species) under the Act. Taken together, it is therefore reasonable to conclude that the CMP will be implemented as anticipated and that the long-term recovery of the Foskett speckled dace will be maintained and monitored adequately.

Criterion 2 is further met by the establishment of a refuge subpopulation of Foskett speckled dace at nearby Dace Spring. As described earlier in this rule, dating back to 1979, multiple unsuccessful attempts were made to create a refuge for Foskett speckled dace at Dace Spring. More recent actions have been more successful. Habitat modification at Dace Spring by the BLM, first in 2009 and again in 2013, and translocation of dace from Foskett Spring to Dace Spring by the ODFW in 2010, 2011, 2013, and 2014, has provided for adequate abundance of the species over time with reflected natural variability (see Table 2, above). Natural recruitment was documented in 2014, 2015, and 2016 (Scheerer et al. 2016, p. 6).

Our decision to delist the Foskett speckled dace is not dependent on the existence of a subpopulation at Dace Spring. However, the existence of a subpopulation of Foskett speckled dace, should it be resilient over the long term, provides increased redundancy to the species' overall status and may reduce vulnerability to catastrophic events and any future threats that may appear on the landscape.

Recovery Criterion 3: Research into life history, genetics, population trends, habitat use and preference, and other important parameters is conducted to assist in further developing and/or refining criteria 1 and 2 above .

This criterion has been met through population surveys by the ODFW and the Service, and investigations into the genetic relatedness of the Foskett speckled dace to other nearby dace populations. In 1997, the Service contracted the ODFW to conduct an abundance survey and develop a population estimate for the Foskett speckled dace. In 2005, 2007, 2009, and 2011 through 2017, the Service again contracted the ODFW to obtain mark-recapture abundance estimates for both Foskett and Dace springs, and also in 2018 only at Dace Spring. At Foskett Spring, habitat-specific population estimates were developed. Captured fish were measured to develop length-frequency histograms to document reproduction. In addition to collecting abundance data, ODFW staff mapped wetland habitats, monitored vegetation, and measured temperature and water quality at both springs during each survey. Together, the population estimates and habitat mapping at Foskett Spring suggested a relationship between open-water habitat and fish abundance (Sheerer et al. 2016, p. 8). Water quality monitoring highlighted the need for habitat enhancement at Dace Springs. Thus, these data assisted in further developing and/or refining recovery criteria 1 and 2.

We considered all comments and information we received during the comment period for the proposed rule to delist Foskett speckled dace (83 FR 475; January 4, 2018). This resulted in the following changes from the proposed rule in this final rule:

• We made some minor editorial changes to the document.

• Based on a request for clarification regarding our discussion of open-water habitat and population size, we replaced the word “variability” with the word “abundance” in one sentence (at the end of the Abundance discussion, above).

• Based on a comment on the uncertainty regarding the contribution of the Dace Spring population to the overall status of the species, we revised our discussion of the Dace Spring population (at the end of the “Small Population Size” discussion under Factor E in Summary of Factors Affecting the Species, below).

• Based on comments that the ODFW study only shows an observed response of Foskett speckled dace abundance to increased open water and not a direct correlation between the two variables, we have removed the reference to a direct response from this final rule. Although we present population information and discuss the relationship between population size and open-water habitat as suggested by ODFW (Scheerer et al. 2016, pp. 1, 9), our rationale for delisting Foskett speckled dace is based on the removal or reduction of threats to the species, not on population size.

• Based on comments regarding the potential response of the Foskett speckled dace to the effects of climate change, we added information to the climate change discussion under Factor E in Summary of Factors Affecting the Species, below.

Section 4 of the Act and its implementing regulations (50 CFR part 424) set forth the procedures for listing species, reclassifying species, or removing species from listed status. “Species” is defined by the Act as including any species or subspecies of fish or wildlife or plants, and any distinct vertebrate population segment of fish or wildlife that interbreeds when mature (16 U.S.C. 1532(16)). A species may be determined to be an endangered or threatened species because of any one or a combination of the five factors described in section 4(a)(1) of the Act: (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence. We must consider these same five factors in delisting a species. We may delist a species according to 50 CFR 424.11(d) if the best available scientific and commercial data indicate that the species is neither endangered nor threatened for one or more of the following reasons: (1) The species is extinct; (2) the species has recovered and is no longer endangered or threatened; or (3) the original scientific data used at the time the species was classified were in error.

A recovered species is one that no longer meets the Act's definition of endangered or threatened. Determining whether a species is recovered requires consideration of the same five categories of threats specified in section 4(a)(1) of the Act. For species that are already listed as endangered or threatened, this analysis of threats is an evaluation of both the threats currently facing the species and the threats that are reasonably likely to affect the species in the foreseeable future following delisting or downlisting ( i.e., reclassification from endangered to threatened) and the removal or reduction of the Act's protections.

A species is “endangered” for purposes of the Act if it is in danger of extinction throughout all or a “significant portion of its range” and is “threatened” if it is likely to become endangered within the foreseeable future throughout all or a “significant portion of its range.” The word “range” refers to the general geographical area in which the species occurs at the time a status determination is made.

The Act does not define the term “foreseeable future;” we think it is reasonable to define the foreseeable future for the Foskett speckled dace as 30 years based upon the following analysis:

Based on monitoring that began in 1997 by the ODFW, the Foskett speckled dace population is highly variable in size, and may be linked to the amount of open-water habitat (Scheerer et al. 2016, p. 8). The relationship between open-water habitat and population size has not been thoroughly studied for Foskett speckled dace, but the relationship has been shown in other types of narrow endemic fishes in spring type environments (Kodric-Brown and Brown 2007, entire). We have no information to suggest this apparent relationship would change in the future. There also is no reason to expect local changes to ground water levels (see Factor A discussion, below), and climate changes modeled over the next 30 plus years ( i.e., through 2049) are not predicted to impact the Foskett speckled dace (see Factor E discussion, below).

The BLM has owned and managed the habitat at Foskett and Dace Springs since 1987, and ODFW has conducted monitoring of the Foskett speckled dace for 20 years. The BLM, ODFW, and Service are committed to long-term continued monitoring and implementation of conservation measures for the species through the CMP. Modeling of climate change impacts suggest little change in environmental conditions over the next 30 years (through 2049) in the Warner Lakes Basin. Although we also looked at climate models that projected an additional 25 years into 2074, we determined that the 30-year timeframe reflects climate change models that are relevant to the Foskett speckled dace and its habitat, as well as our ability to project land management decisions; therefore we think it is reasonable to define the foreseeable future for the Foskett speckled dace as 30 years.

In considering what factors might constitute threats, we must look beyond the exposure of the species to a particular factor to evaluate whether the species may respond to the factor in a way that causes actual impacts to the species. If there is exposure to a factor and the species responds negatively, the factor may be a threat, and during the status review, we attempt to determine how significant a threat it is. The threat is significant if it drives or contributes to the risk of extinction of the species, such that the species warrants listing as endangered or threatened as those terms are defined by the Act. However, the identification of factors that could impact a species negatively may not be sufficient to compel a finding that the species warrants listing. The information must include evidence sufficient to suggest that the potential threat is likely to materialize and that it has the capacity ( i.e., it should be of sufficient magnitude and extent) to affect the species' status such that it meets the definition of endangered or threatened under the Act.

The Service listed the Foskett speckled dace as threatened in 1985 (50 FR 12302; March 28, 1985), due to the species' very restricted range, its low abundance, and its extremely restricted and vulnerable habitat, which was being modified at that time. Potential habitat-related threats that were identified in the final listing rule included groundwater pumping for irrigation, use of the area by livestock, channeling of the springs for agricultural purposes, and other mechanical modifications of the aquatic ecosystem. The vulnerability of the habitat was accentuated by its very small size and a water flow rate of less than 0.5 cubic feet (ft 3 ) per second (0.01 cubic meters (m 3 ) per second) (50 FR 12304; March 28, 1985).

In listing the species, the Service noted that Foskett Spring was a livestock watering area and grazing occurred in the area, although the exact impact had not been determined. The Service indicated that uncontrolled trampling of the springs by livestock could probably have a negative effect on the aquatic ecosystem and livestock use above those existing at the time of listing would have a negative impact (50 FR 12304 and 12305; March 28, 1985). Grazing cattle affects the form and function of stream and pool habitat by hoof shearing, compaction of soils, and mechanical alteration of the habitat. Since the 1985 listing, the BLM acquired the property containing Foskett and Dace springs by land exchange in 1987, and fenced 70 ac (28 ha) of the 160-ac (65-ha) parcel to exclude cattle from both Foskett and Dace springs as well as the two recently constructed ponds, and protect any Foskett speckled dace in the springs. While the exclusion of cattle likely improved water quality and habitat stability, it may also have played a role in increasing the extent of encroaching aquatic vegetation. Although most of the habitat was excluded from grazing, a portion of the occupied habitat was not included in the fenced area. Examining the population trends within this unfenced habitat illustrates the variability of the population and the ability of the population to respond to management. The Foskett Spring was revisited in 1997, and 97 percent of the estimated population of Foskett speckled dace was located in a shallow open-water pool in a previously dry marsh outside of the exclosure fence (Dambacher et al. 1997, entire). The changed conditions noted at this site over time illustrate the natural variability in habitat conditions of this ephemeral wetland system.

In 2007, 14 percent of the estimated population of 2,984 Foskett speckled dace was located in the marsh outside of the exclusion fence (Scheerer and Jacobs 2007, p. 7), and trampling of the wetland habitat by cattle was evident (USFWS 2015, p. 19). In 2011 and 2012, no Foskett speckled dace were detected in the marsh outside of the exclusion fence (Scheerer et al. 2014, p. 6). In response, the BLM conducted a controlled burn in 2013; and in 2013 and 2014, they excavated open-water habitat in the marsh. In 2013, over 13,000 Foskett speckled dace were detected, with nearly 10,000 being in the restored marsh (Scheerer et al. 2013, p. 9). In 2014, nearly 25,000 Foskett speckled dace were detected, with nearly 19,000 being in the restored marsh (Scheerer et al. 2014, p. 9). Unfortunately, the marsh and excavated pools outside the fence quickly grew dense with vegetation, and the excavated pool filled in with sediment; it is unclear if the pasture was rested during this period. The relationship between dace abundance and open water (Scheerer et al. 2016, p. 8) illustrates the need for periodic vegetation removal to maintain appropriate habitat for the Foskett speckled dace (Scheerer et al. 2014, p. 9). While the area outside the exclusion fence may provide habitat for Foskett speckled dace in the future, we do not view it as critical to the long-term persistence of the species. The primary habitat for the fish, and the area that has received recent habitat management to create open water, is within the enclosure.

Sometime in fall and/or winter of 2014 to 2015, unauthorized cattle grazing occurred in both the Foskett and Dace Spring exclosures (Leal 2015, pers. comm.). Cattle accessed the site after a nearby gate was removed illegally. Based on photos provided by the BLM, it appears the vegetation utilization was sporadic although heavy in some areas, but damage to Foskett and Dace springs' streambanks appeared inconsequential. The BLM has replaced the gate and will continue to maintain the fence per their commitments outlined in the CMP (USFWS et al. 2015). Although cattle did access the Foskett and Dace spring sites, over time these exclosures have sufficiently protected Foskett and Dace springs from damage from livestock grazing, and use of the area by livestock remains below the level at the time of listing in 1985. The quarterly site visits committed to by the BLM in the CMP will increase the ability to detect and remedy any future issues with open gates or downed fences. However, due to the remoteness of the site, it is possible unauthorized grazing within the enclosures may infrequently occur in the foreseeable future. Given the minimal impact of the singular observation of unauthorized grazing within the enclosures and the commitment of quarterly monitoring of the site by BLM, we do not view grazing in the enclosure as a threat in the foreseeable future.

Surveys conducted from 2005 through 2015 at Foskett Spring did not reveal any sign of artificial channeling of water or mechanized impacts beyond the remnants of historical activities ( i.e., two small rock cribs and side-casting of material around the spring). The habitat at Foskett Spring is extremely limited, and past encroachment by aquatic vegetation has reduced the area of open water. The decline in abundance of Foskett speckled dace from 1997 to 2011 (see Table 1, above) was likely due to the reduction in open-water habitat (Scheerer and Jacobs 2005, pp. 5, 7; Scheerer et al. 2012, p. 8). Management to increase open-water habitat, while very effective in the short term, needs to be periodically repeated as sediment infilling and subsequent growth of aquatic vegetation is continuous. As such, periodic management will be needed in perpetuity to maintain high-quality habitat for the Foskett speckled dace.

The ODFW recommended that restoration efforts to increase open-water habitat are needed to increase carrying capacity for Foskett speckled dace (Scheerer and Jacobs 2007, p. 9; Scheerer and Jacobs 2009, pp. 5-6). Restoration efforts were conducted at Foskett Spring in 2013 and 2014, and resulted in a 164-percent increase in open-water habitat and a peak population estimate in 2014 of 24,888 individuals (Scheerer et al. 2016, pp. 8-9). Periodic habitat maintenance at Foskett and Dace springs will be necessary to maintain open-water habitat for the Foskett speckled dace. The BLM, ODFW, and Service have committed to periodic habitat maintenance in the CMP signed in August 2015. As noted earlier in this rule, the CMP identifies actions such as protection of the aquatic habitat and surrounding land; management of the habitat to ensure continued persistence of important habitat features; monitoring of the fish populations and habitat; and implementation of an emergency contingency plan in case of nonnative introduction, pollutants, or other unforeseen threats. Implementation of these actions will significantly reduce or eliminate threats related to destruction, modification, or curtailment of the Foskett speckled dace's habitat or range. It is reasonable to conclude the CMP will be implemented into the foreseeable future for the reasons summarized under Recovery Planning and Recovery Criteria, above.

Mechanical modification and livestock watering uses are no longer considered a threat since the BLM acquired the property containing both Foskett and Dace springs and constructed a fence to exclude cattle from a majority of the habitat. We anticipate continued monitoring and maintenance of the exclusion fence into the foreseeable future by the BLM based on their commitments in the CMP and their long record of conservation management of habitat at Foskett and Dace springs.

Streams and lakes in and around the Warner Basin have produced a variety of unconsolidated Pliocene to Holocene sediments that have accumulated and contribute to the structure of the aquifer (Gonthier 1985, p. 17). Wells in other portions of the Warner Basin using these Pleistocene lake bed aquifers tend to have low to moderate yields. Pleistocene lake bed deposits of clay, sand, and diatomaceous earth ( i.e., soft, crumbly soil formed from the fossil remains of algae) have a thickness of up to 200 ft (60 m) (Gonthier 1985, pp. 38-39; Woody 2007, p. 64). Hydraulic conductivity ( i.e., ease with which a fluid can move) in these sediments ranges from 25 to 150 ft (7.6 to 46 m) per day; while transmissivity (horizontal groundwater flow) in valleys in this sediment-filled basin and range region of Oregon, such as the Warner Valley aquifer system, ranges from 1,000 to 15,000 square feet (ft 2 ) (92.90 to 1,393.55 square meters (m 2 )) per day (Gonthier 1985, p. 7). This is considered a poor quality aquifer with limited capability to produce water for domestic or stock use (Gonthier 1985, p. 7). Therefore, few wells exist in the Warner Valley and are not likely to impact Foskett or Dace spring.

We have no evidence of groundwater pumping in the area. A query of the Oregon Water Resources Department database for water rights did not reveal any wells within 5 mi (8 km) of Foskett Spring. The closest well listed in the database is 5.9 mi (9.5 km) away along Twentymile Creek. No other wells were located closer to Foskett Spring.

There are no Oregon Water Resources Department records of water rights within approximately 5 miles of either spring. Any development of water resources and filing of water rights on BLM lands would require a permit (BLM 2003), and we anticipate the likelihood of the BLM receiving a permit request related to a new water right in the future would be low. Although groundwater pumping was identified as a potential threat at the time of listing, we have determined this is not currently a threat and is not anticipated to be a threat in the foreseeable future.

To assess the effects of management on reducing the encroachment of aquatic vegetation at Foskett Spring and the response of fish to increased open water, the BLM conducted a controlled burn in 2013 in the tule and cattail marsh to reduce plant biomass (Scheerer et al. 2014, p. 9). In 2013 and 2014, the BLM excavated pools to increase open-water habitat. The response of dace to these restoration efforts was remarkable, with the 2014 population estimated at 24,888 (19,250-31,500; 95-percent confidence interval) fish, and most of these fish occupied the restored marsh areas. The population data indicate that fluctuations in abundance and population trends are tied to the availability of open water (Scheerer et al. 2016, p. 8) and illustrate the need for periodic management to maintain open-water habitat.

Habitat restoration at Dace Spring followed by translocations of dace has resulted in a second subpopulation of Foskett speckled dace. Two ponds were created in 2009, and connected to the outlet channel of Dace Spring. Foskett speckled dace were translocated to the ponds. The 2016 population estimate was 1,964 fish, which is a substantial increase from the 2013 estimate of 34 fish. The estimate includes the 200 dace that were transplanted from Foskett Spring in 2013 (Scheerer et al. 2014, p. 6). The 2017 population estimate in Dace Spring was 15,729 (confidence interval: 3,470-58,479) (Scheerer et. al. 2017, p. 6), although the broad confidence limits infer low precision. The 2018 estimate at Dace spring was 1,924 (confidence interval: 1,890-1,968) (Monzyk et al. 2018, p. 10). Reproduction at Dace Spring was documented by the ODFW in 2014 (Scheerer et al. 2014, p. 6) and in 2015 (Scheerer et al. 2015, p. 5). The ODFW is evaluating the long-term status of the Dace Spring subpopulation. Although results appear positive, it is premature to conclude if establishment of this refuge will be successful over the long term. While our decision to delist Foskett speckled dace is not dependent on establishment of a refuge, the resilience of a subpopulation at Dace Spring may provide increased redundancy to the species' overall status in the future by reducing vulnerability to catastrophic events.

Securing long-term habitat protections (Recovery Criterion 1) and developing and implementing long-term management techniques (Recovery Criterion 2) are important recovery criteria for this species, and many of the factors discussed above fulfill these criteria, which also were identified in the most recent 5-year review (USFWS 2015, entire). Acquisition of the property by the BLM has facilitated the recovery of the Foskett speckled dace. The recent habitat enhancement work and the commitments made in the CMP provide assurance that minor oversight and continued habitat enhancement by the BLM and ODFW will allow the species to persist at abundance levels commensurate with available habitat. Although the CMP is voluntary, it is reasonable to conclude, for reasons summarized under Recovery Planning and Recovery Criteria, above, that the plan will be implemented by all three cooperating agencies for the foreseeable future.

Based on the best available information and confidence that current management will continue into the future as outlined in the CMP, we conclude that the present or threatened destruction, modification, or curtailment of habitat or range does not constitute a substantial threat to the Foskett speckled dace now or in the foreseeable future.

Overutilization for commercial, recreational, scientific, or educational purposes was not a factor in listing, nor do we have information to suggest that it has become a threat since that time. Therefore, based on the best available information, we conclude that it does not constitute a substantial threat to the Foskett speckled dace now or in the foreseeable future.

The 1985 listing rule states, “There are no known threats to . . . Foskett speckled dace from disease or predation” (50 FR 12304; March 28, 1985). During the 2005 and 2011 population surveys, the ODFW biologist noted that: “[t]he fish appear to be in good condition with no obvious external parasites” (Scheerer and Jacobs 2005, p. 7; Scheerer 2011, p. 6). During the 2007 and 2009 population surveys, the ODFW noted that the Foskett speckled dace appeared healthy and near carrying capacity for the available habitat at that time (Scheerer and Jacobs 2007, p. 8; 2009, p. 5). We have no additional information that would change this conclusion.

The CMP includes quarterly field visits to Foskett and Dace springs to determine general health of the local spring environment and to identify threats that necessitate implementation of the emergency contingency plan, which could include the detection of disease and introduced predators. The emergency contingency plan describes steps to be taken to secure Foskett speckled dace in the event their persistence is under immediate threat ( e.g., from introduction of nonnative fish that may threaten them due to predation or act as a disease vector).

Based on the best available information, we conclude that disease and predation do not constitute substantial threats to the Foskett speckled dace now or in the foreseeable future.

Under this factor, we examine whether existing regulatory mechanisms are inadequate to address the threats to the Foskett speckled dace discussed under other factors. Section 4(b)(1)(A) of the Act requires the Service to take into account “those efforts, if any, being made by any State or foreign nation, or any political subdivision of a State or foreign nation, to protect such species.” In relation to Factor D under the Act, we interpret this language to require us to consider relevant Federal, State, and Tribal laws, regulations, and other such mechanisms that may minimize any of the threats we describe in the threats analyses under the other four factors, or otherwise enhance conservation of the species. We give strongest weight to statutes and their implementing regulations and to management direction that stems from those laws and regulations; an example would be State governmental actions enforced under a State statute or constitution, or Federal action under statute.

For currently listed species that are being considered for delisting, we consider the adequacy of existing regulatory mechanisms to address threats to the species absent the protections of the Act. We examine whether other regulatory mechanisms would remain in place if the species were delisted, and the extent to which those mechanisms will continue to help ensure that future threats will be reduced or minimized.

The 1985 listing rule states, “The State of Oregon lists . . . Foskett speckled dace as [a] “fully protected subspecies” under the Oregon Department of Fish and Wildlife regulations. These regulations prohibit taking of the fishes without an Oregon scientific collecting permit. However, no protection of the habitat is included in such a designation and no management or recovery plan exists [for the Foskett speckled dace]” (50 FR 12304; March 28, 1985).

The Foskett speckled dace was listed as threatened by the State of Oregon in 1987, as part of the original enactment of the Oregon Endangered Species Act (Oregon ESA). That listing designated Foskett speckled dace as a “protected species” and prohibited take or possession unless authorized by a permit. The Oregon ESA prohibits the “take” (kill or obtain possession or control) of State-listed species without an incidental take permit. The Oregon ESA applies to actions of State agencies on State-owned or -leased land, and does not impose any additional restrictions on the use of Federal land. In recognition of the successful conservation actions and future management commitments for the Foskett speckled dace and its habitat, the Oregon Fish and Wildlife Commission (OFWC) ruled to remove the Foskett speckled dace from the State List of Threatened and Endangered Species on April 21, 2017.

The ODFW's Native Fish Conservation Policy calls for the conservation and recovery of all native fish in Oregon (ODFW 2002), including Foskett speckled dace, now listed as sensitive on the ODFW's sensitive species list. The Native Fish Conservation Policy requires that the ODFW prevent the serious depletion of any native fish species by protecting natural ecological communities, conserving genetic resources, managing consumptive and nonconsumptive fisheries, and using hatcheries responsibly so that naturally produced native fish are sustainable (OAR 635-007-0503). The policy is implemented through the development of collaborative conservation plans for individual species management units that are adopted by the OFWC. To date, the ODFW has implemented this policy by following the federally adopted recovery plan and will continue to conserve Foskett speckled dace according to the State rules for conserving native fish and more specifically the commitments made by the ODFW in the CMP. The State of Oregon Wildlife Diversity Plan (OAR 635-100-0080), Oregon Native Fish Conservation Policy (OAR 636-007-0502), and the Oregon Conservation Strategy (ODFW 2016) provide additional authorities and protective measures for the conservation of native fish, including the Foskett speckled dace.

Finally, the BLM manages the 160-ac (65-ha) parcel of land containing the Foskett and Dace spring sites consistent with the Lakeview District's RMP (BLM 2003), which provides general management guidelines for Special Status Species, and specifically states that the BLM will manage the Foskett speckled dace and its habitat consistent with the species' 1998 recovery plan.

Additionally, though not a regulatory mechanism, the CMP, which was prepared jointly and signed by the BLM, ODFW, and Service, is a conservation measure that will guide future management and protection of the Foskett speckled dace, regardless of its State or Federal listing status. The CMP, as explained in more detail under Recovery Planning and Recovery Criteria, above, identifies actions to be implemented by the BLM, ODFW, and Service to provide for the long-term conservation of the Foskett speckled dace (Recovery Criterion 2). The approach of developing an interagency CMP for the Foskett speckled dace to promote continued management post-delisting is consistent with a “conservation-reliant species,” described by Scott et al. (2005, pp. 384-385) as those that have generally met recovery criteria but require continued active management to sustain the species and associated habitat in a recovered condition. A key component of the CMP is continued management of aquatic vegetation, as necessary, to promote open-water habitat important to the species' long-term viability.

In our discussion under Factors A, B, C, and E, we evaluate the significance of threats as mitigated by any conservation efforts and existing regulatory mechanisms. Regulatory mechanisms may reduce or eliminate the impacts from one or more identified threats. Where threats exist, we analyze the extent to which conservation measures and existing regulatory mechanisms address those threats to the species. The existence of regulatory mechanisms like the Lakeview District BLM's RMP, State conservation measures such as the Oregon Native Fish Conservation Strategy, along with the other authorities supporting each cooperating agency's entrance into the CMP agreement, reduce risk to the Foskett speckled dace and its habitat. For the reasons discussed above, we anticipate that the conservation measures initiated under the CMP will continue through at least the foreseeable future, which we have defined as 30 years. Consequently, we find that conservation measures, along with existing State and Federal regulatory mechanisms, are adequate to address threats to the species absent protections under the Act.

The 1985 listing rule states, “Additional threats include the possible introduction of exotic fishes into the springs, which could have disastrous effects on the endemic Foskett speckled dace, either through competitive exclusion, predation, or introduced disease. Because these fishes occur in such limited and remote areas, vandalism also poses a potential threat” (50 FR 12304; March 28, 1985).

No exotic fish introduction or acts of vandalism of the springs have occurred since the time of listing more than 30 years ago. As mentioned in the discussion of livestock grazing, sometime in 2014 or 2015, a gate was illegally removed near the springs, but damage to Foskett and Dace springs' streambanks appeared inconsequential. The BLM replaced the gate and will continue to maintain the fence per their commitments outlined in the CMP (USFWS et al. 2015). The Foskett speckled dace is vulnerable to invasive or nonnative species (aquatic plants, invertebrates, or fish species). However, this vulnerability is reduced in part due to the remoteness of the site and the lack of recreational or other reasons for the public to visit the area. It is also reduced by the establishment of a refuge population in Dace Spring. While the risk of exotic fish introductions is low, the potential impact is high due to the highly restricted distribution of the Foskett speckled dace. The CMP includes quarterly monitoring and an emergency contingency plan to address potential threats from introduction of nonnative species or pollutants (for information on how to access the CMP for further reference see ADDRESSES , above).

A species' habitat requirements, population size, and dispersal abilities, among other factors, help to determine its vulnerability to extinction. Key risk factors include small population size, dependence on a rare habitat type, inability to move away from sources of stress or habitat degradation, restrictions to a small geographic area, and vulnerability to catastrophic loss resulting from random or localized disturbance (Williams et al. 2005, p. 27). The Service listed the Foskett speckled dace in part due to these factors. This species had a very restricted natural range; the species occurred in low numbers in a small spring that was extremely vulnerable to destruction or modification due to its small size and a water flow rate of less than 0.5 ft 3 per second (0.01 m 3 per second). Additionally, the habitat upon which the Foskett speckled dace depends is fragile and has been affected by past livestock grazing and mechanical modification.

Surveys by the ODFW from 2005 through 2017 have documented that the number of Foskett speckled dace vary considerably through time and by habitat type (see Table 1, above), and available open-water habitat, which fluctuates annually, appears to be the key factor in determining the population size of this species (Scheerer et al. 2016, p. 8). The lowest population estimate was 751 fish (using the Lincoln-Petersen model) in 2011, and no individuals were documented in the cattail marsh that year (see Table 1, above). Management to create more open water in the marsh habitat at Foskett Spring was initiated in 2012 and completed in 2014, increasing the amount of open-water habitat by 150 percent, to approximately 358 yds 2 (300 m 2 ) (Scheerer et al. 2016, pp. 7-9). The increase in fish abundance in 2013 through 2015 was notable, especially in the two habitats where management occurred (see Table 1, above).

Based on the relationship between the amount of open water and the number of Foskett speckled dace, the CMP includes removing encroaching vegetation to enhance open-water habitat, and excavating open-water pools. These activities will be conducted every 5 to 10 years or as determined necessary to maintain open-water habitat to support healthy populations of Foskett speckled dace.

Additionally, the ongoing effort by the BLM and the Service to restore Dace Spring provides the potential for a refuge population of Foskett speckled dace. Two ponds have been created and connected to the outlet channel of Dace Spring; Foskett speckled dace have been translocated to the ponds (see Table 2, above). Reproduction and an associated population increase was documented by the ODFW in 2014, 2015, 2016, 2017, and 2018. The ODFW is currently evaluating the status of the Foskett speckled dace in the new ponds, and, although results are positive, it is premature to predict long-term viability of the Dace Spring population.

This species is known to occupy only Foskett Spring and Dace Spring. Due to the small size of Foskett Spring and the lack of connectivity to other aquatic habitat, there is no opportunity for the Foskett speckled dace to disperse away from stress, habitat degradation, or disturbance factors. There are no streams or drainages or other aquatic connections that provide alternate habitat or allow for emigration. As noted previously in this rule, the BLM created two new ponds connected to the outlet channel of Dace Spring, and the ODFW has introduced Foskett speckled dace into these ponds in an attempt to establish a refuge population.

The Foskett speckled dace is restricted to one small spring and has been translocated to two small, constructed ponds at an adjacent spring. The available open-water habitat at Foskett Spring is naturally limited, and encroaching aquatic vegetation periodically limits suitable habitat. However, removing sediments and vegetation to increase open-water habitat is a proven conservation measure that results in a significant increase in fish abundance. Because of its restricted natural distribution and dependence on a single water source, the Foskett speckled dace is more vulnerable to threats that may occur than species that are more widely distributed. Foskett speckled dace has persisted in this habitat, likely since the more recent pluvial period of the Pleistocene epoch 10,000 to 60,000 years ago.

Additionally, the CMP provides for management of Foskett Spring and Dace Spring areas for the long-term conservation of the Foskett speckled dace. Although it is difficult to plan for and address potentially catastrophic events (such as vandalism, contaminants, or introduction of nonnative fish), quarterly site visits and habitat and population surveys conducted regularly will facilitate the timely detection of changes to the habitat and as well as other unforeseen future threats.

We also analyzed the effects of changing climate to the Foskett speckled dace and its habitat. The Intergovernmental Panel on Climate Change (IPCC) concluded that the evidence for warming of the global climate system is unequivocal (IPCC 2013, p. 3). Numerous long-term climate changes have been observed including changes in arctic temperatures and ice, widespread changes in precipitation amounts, ocean salinity, wind patterns, and aspects of extreme weather including droughts, heavy precipitation, and heat waves (IPCC 2013, p. 4). The general climate trend for North America includes increases in mean annual temperatures and precipitation and the increased likelihood of extreme weather events by the mid-21st century (IPCC 2014, pp. 1452-1456). Changes in climate can have direct or indirect effects on species; may be positive, neutral, or negative; and may change over time, depending on the species and other relevant considerations such as the effects of interactions of climate with other variables ( e.g., habitat fragmentation) (IPCC 2007, pp. 8-14, 18-19). In our analyses, we used our expert judgment to weigh relevant information, including uncertainty, in considering the effects of climate change on the Foskett speckled dace.

Global climate projections are informative and, in some cases, the only or the best scientific information available for us to use. However, projected changes in climate and related impacts can vary substantially across and within different regions of the world (IPCC 2007, pp. 8-12). Therefore, we use “downscaled” projections when they are available and have been developed through appropriate scientific procedures because such projections provide higher-resolution information that is more relevant to spatial scales used for analyses of a given species (see Glick et al. 2011, pp. 58-61, for a discussion of downscaling).

Downscaled projections as of 2016 were available for our analysis of the Foskett speckled dace from the U.S. Geological Survey (USGS) ( https://www2.usgs.gov/climate_landuse/clu_rd/nccv/viewer.asp ). The National Climate Change Viewer is based on the mean of 30 models, which can be used to predict changes in air temperature and precipitation for the Warner Lakes basin in Lake County, Oregon, for two of the emission scenarios, RCP4.5 and RCP8.5. Scenario RCP4.5 is a moderate emissions scenario (where atmospheric concentrations of greenhouse gases are expected to equal approximately 650 parts per million (ppm) after the year 2100), and RCP8.5 is the most aggressive emissions scenario (in which greenhouse gases continue to rise unchecked through the end of the century) (Alder and Hostetler 2016, entire). At this time, there are no available climate projections on the persistence of springs into the future. For the 25-year period from 2025 to 2049, the model set shows an increase in the mean maximum air temperature of between 2.7 °F (1.6 °C) (RCP4.5) and 3.2 °F (1.8 °C) (RCP8.5), and an increase in the mean annual minimum air temperature of between 2.5 °F (1.5 °C) (RCP4.5) and 3.1 °F (1.8 °C) (RCP8.5). For both scenarios, mean precipitation is not predicted to change, but annual snow accumulation is predicted to decrease by 0.4 in (10.16 millimeters (mm)). The model set also shows evaporative deficit over this 25 year period with changes projected in evaporation in the summer that may affect soil moisture for the vegetative community around the springs. However, the projected increase remains similar to current conditions and within the confidence intervals for the predicted change (Alder and Hostetler 2016, entire). Over the subsequent 25-year period from 2050 to 2074, the model set shows an increase in mean annual maximum air temperature of between 4.1 °F (2.3 °C) (RCP4.5) to 5.9 °F (3.3 °C) (RCP8.5), and an increase in mean annual minimum air temperature of between 4.1 °F (2.3 °C) (RCP4.5) to 6.1 °F (3.4 °C) (RCP8.5). For the 2050 to 2074 period, the model set shows no change in the mean annual precipitation for both scenarios, and shows a decrease in annual snow accumulation of between 0.2 in (5.4 mm) (RCP4.5) to 0.3 in (7.1 mm) (RCP8.5) for the Warner Lakes basin (Alder and Hostetler 2016, entire).

An increase in the ambient air temperature may cause slight warming of Foskett Spring surface water. This may reduce the overall amount of habitat available for Foskett speckled dace due to an increase in water temperatures, especially at the lower end of the outlet stream and marsh habitat. However, Foskett speckled dace have persisted overtime in these springs located in a naturally variable ephemeral wetland system, and abundance data indicate Foskett speckled dace may have a preference for the spring and pool habitats through the stream portion of the outlet channel as shown in Table 1, as opposed to shallower marsh habitat that might be more impacted by evaporation.

Furthermore, the occupied habitat for Foskett speckled dace is fed from a thermal artesian spring that has a fairly consistent temperature of approximately 65 °F (18 °C) and consistent flow. Springs have been identified as potential hydrologic refugia that may protect species from the effects of climate change (McLaughlin et al. 2017, p. 2946). Springs have geologic features that are independent of climate, and their recharge is decoupled from their discharge; these features make them less sensitive to, or buffered from, changes in the local climate, including regional drought intensification (McLaughlin et al. 2017, p. 2946; Cartwright et al. 2017, p. 16).

The 1985 listing rule identified introduction of exotic fishes and vandalism as potential threats. However, in over 30 years of monitoring, no exotic fishes have been detected, there is no evidence of attempts to introduce exotic fish species, and no vandalism has occurred beyond one singular incident of gate removal. Other potential threats such as small population size, dependence on a specific or rare habitat type, the inability to disperse, restriction to a small geographic area, vulnerability to stochastic events, and climate change also have been assessed and determined to be minimal. Based on the best available information, we conclude that other natural or manmade factors do not constitute a substantial threat to the Foskett speckled dace now or in the foreseeable future.

Together, the factors discussed above could result in cumulative impacts to the Foskett speckled dace. For example, effects of cattle grazing directly on the habitat in combination with mechanical disturbances could result in a greater overall impact to Foskett speckled dace habitat. Although the types, magnitude, or extent of cumulative impacts are difficult to predict, we are not aware of any combination of factors that have not already been, or would not be, addressed through ongoing conservation measures that are expected to continue post-delisting and into the future, as described above. The best scientific and commercial data available indicate that the species experiences natural variably in abundance; the species has maintained abundance commensurate with available habitat; and the factors discussed above are not currently leading, nor are they anticipated to cumulatively lead, to reductions in Foskett speckled dace numbers and/or reductions of the species' habitat.

In our proposed rule published on January 4, 2018 (83 FR 475), we requested that all interested parties submit written comments on the proposal by March 5, 2018. We also requested public comments on the draft post-delisting monitoring plan. We contacted appropriate Federal and State agencies, scientific experts and organizations, and other interested parties and invited them to comment on the proposal. We did not receive any requests for a public hearing. Newspaper notices inviting general public comment were published in the Lake County Examiner.

During the comment period, we received 20 letters or statements directly addressing the proposed action. These included 4 comments from peer reviewers, 1 from the State, and 15 from the public. All comments are posted at http://www.regulations.gov under Docket No. FWS-R1-ES-2017-0051. Nine of the public comments (including comments from the State) supported the proposed action to delist the Foskett speckled dace. Nine commenters did not state whether they support the decision or not. Five provided no relevant information related to Foskett speckled dace and our proposed action. The remaining two public commenters objected to the action to delist the Foskett speckled dace; however, neither provided substantive scientific information regarding the proposed delisting rule.

We reviewed all comments we received from the peer reviewers and the public for substantive issues and new information regarding the Foskett speckled dace. Substantive comments received during the comment period are addressed below and, where appropriate, incorporated directly into this final rule and the post-delisting monitoring plan.

Section 4(b)(5)(A)(ii) of the Act states that the Secretary must give actual notice of a proposed regulation under section 4(a) to the State agency in each State in which the species is believed to occur, and invite the comments of such agency. Section 4(i) of the Act directs that the Secretary will submit to the State agency a written justification for his or her failure to adopt regulations consistent with the agency's comments or petition. We solicited and received comments from the Oregon Department of Fish and Wildlife (ODFW). The ODFW supports our delisting of the Foskett speckled dace and has delisted Foskett speckled dace from their State endangered species list.

Comment (1): One commenter stated that the Service should delay delisting in order to conduct additional monitoring.

Our Response: Extensive habitat and population abundance surveys at Foskett and Dace springs have been regularly conducted since 2005 and as a result, we do not agree additional monitoring is necessary prior to delisting. These data contributed to our analysis of the five threat factors to the species and our decision to delist the species. We have determined the threats to Foskett speckled dace have been eliminated or reduced to the point that protection under the Act is no longer needed. Monitoring will continue after delisting as described in our post-delisting monitoring (PDM) plan to confirm the maintenance of the species' recovered status and amelioration of threats.

Comment (2): Two peer reviewers suggested we consider genetic analysis published in scientific journals (Ardren et al. 2009; Ardren et al. 2010; Hoekzema 2013; Hoekzema and Sidlauskas 2014) to discuss the current taxonomic status of the Foskett speckled dace.

Our Response: We reviewed the information provided by the peer reviewers, and conclude that the genetic analysis supports the taxonomic status of the Foskett speckled dace currently and at the time of listing, specifically that the Service knowingly listed the Foskett speckled dace as an “undescribed subspecies.” We are not seeking a change in that status, but are delisting the entity as it is currently classified. Future genetic and taxonomic study may be conducted that may revise the fish's taxonomic classification. We are not pursuing a study to describe the Foskett speckled dace, but are making a decision to remove it from the Federal List of Endangered and Threatened Wildlife.

Comment (3): Two peer reviewers and several commenters stated that actions to eliminate threats from physical habitat modification or water extraction have been implemented. Commenters also stated that the immediate threats have been adequately addressed, that the Foskett speckled dace is no longer at risk of extinction, and that criteria for delisting have been met or exceeded. Commenters noted that the CMP does not necessarily eliminate threats but provides guidance and actions to eliminate threats.

Our Response: The Service agrees that the Foskett speckled dace has recovered due to conservation efforts of the BLM, ODFW, and Service and qualifies for removal from the Federal List of Endangered and Threatened Wildlife. Conservation efforts by the BLM, specifically the acquisition and fencing of the property, have largely removed the threats from mechanical disturbance to the habitat by precluding livestock grazing. Any disturbance from machinery or drilling of wells has also either never materialized or would be subject to the BLM's evaluation and/or permitting now that this is land managed by the BLM. Additional conservation actions include the excavation of excess sediment and vegetation from the spring and outflow and the implementation of a cooperative management plan with the BLM, ODFW, and Service. In addition to providing guidance and actions to eliminate threats, the CMP articulates the agencies' commitment to implementing those actions.

Comment (4): Two peer reviewers suggest we conduct a survey for internal and external parasites to assess risk from disease because the only evidence presented is lack of obvious external parasites. The reviewers suggest a basic necropsy should be undertaken by ODFW staff to be certain there are no underlying disease or parasite problems.

Our Response: Our decision to delist the Foskett speckled dace is based on the removal or reduction of threats to the species identified at the time of listing, since the time of listing and in the foreseeable future. At no time has the Service had any information to indicate that disease may pose a threat to the Foskett speckled dace. Other studies of disease in fishes occupying nearby waters (in the Warner basin) have indicated common fish parasites and disease are present in low levels. These diseases are common in freshwater fishes. Therefore, as we do not have any information that disease or predation are a threat, we are not conducting a new study to detect disease. Based on observations and the best available information, we have determined it is unlikely parasites or disease represent a threat to the Foskett speckled dace now or in the foreseeable future.

Comment (5): One peer reviewer commented that the proposed rule defines foreseeable future as 30 years. As such, the 9-year duration of the CMP does not match the identified need for monitoring, and after it concludes, it is possible that Factor D would again threaten the Foskett speckled dace.

Our Response: We think the commenter is confusing the CMP (cooperative management plan) with the PDM (post-delisting monitoring plan). In our draft PDM that was available for public comment, we stated that the PDM would be in place for 9 years after delisting; however, the CMP does not have a termination date and will proceed well into the foreseeable future. Between the proposed and final PDM, we reassessed the duration of the plan and determined that reducing the duration of the PDM from 9 years to 5 years and eliminating consecutive year monitoring will help to minimize unnecessary handling of the fish and reduce risk to individuals. In addition, 5 years is an adequate monitoring period to ensure the species remains secure once delisted because the CMP will continue indefinitely following the PDM period. Monitoring may be increased during the PDM, depending on information needs and availability of funding. In the long term, it will be the responsibility of the BLM and ODFW to monitor and manage the species, and the strategy for this is detailed in the CMP, which does not have a termination date. As discussed under Summary of Factors Affecting the Species, above, we anticipate that the conservation measures initiated under the CMP will continue through at least the foreseeable future, which we have defined as 30 years. Consequently, we find that conservation measures, along with existing State and Federal regulatory mechanisms, are adequate to address these specific threats, including Factor D, absent protections under the Act.

Comment (6): One peer reviewer suggested the Service's conclusion that threats are minimal appears to be unwarranted. The commenter stated that the Foskett speckled dace currently meets at least two of the three criteria for rarity (narrow geographic range and narrow habitat requirements) and that threats from vandalism and introduced species that were included in the 1985 listing rule for the species have not changed substantially. The commenter further stated that most of the factors mentioned in the 2018 proposed delisting (remoteness of the site, minimal visitation, and lack of connectivity to other water bodies) were equally true at the time of listing in 1985. The commenter refers to populations of other endangered species such as the Devil's Hole pupfish ( Cyprinodon diabolis ) that have been subjected to vandalism in recent memory (Rocha 2016), despite similar legal protection and monitoring.

Our Response: While rarity may increase risk to a species from an operative threat, rarity, in and of itself, does not represent a threat under the Act. The Foskett speckled dace is an endemic species that is naturally restricted in its distribution to a localized spring system. Introduced species and vandalism of the springs could represent a potential threat, but neither has been identified at Foskett Spring nor have these potential threats occurred during the more than 30 years since listing. Because of this, we believe it is reasonable to conclude the likelihood of these threats being realized is very low. There was a single instance of gate removal near the springs, but the BLM replaced the gate and committed in the 2015 CMP to monitor the gate to ensure its integrity. The management and protections provided by the BLM and ODFW will monitor these potential threats to the species now and into the foreseeable future and provide for actions to be taken should these threats be detected. Therefore, we have determined protection under the Act is no longer warranted for the Foskett speckled dace.

Comment (7): One peer reviewer commented that the current existence of the refuge population at Dace Spring provides resilience and robustness, but the long-term stability of the Dace Spring population is unclear. The reviewer also stated that the introduction to Dace Spring has failed at least once before, but that if the current population proves to be viable, its existence would reduce risk to the Foskett Spring population from its inherent rarity.

Our Response: We agree with the peer reviewer and have incorporated this information into this final rule (see “Small Population Size” under Factor E discussion, above). Although we acknowledge the refuge population at Dace Spring adds to the security of the population, it is not required, nor do we depend on it for our determination to remove the Foskett speckled dace from the Federal List of Endangered and Threatened Wildlife.

Comment (8): One peer reviewer stated that the CMP conflates the concept of effective population size (Ne) with census population size (Nc), which would indicate a low population size for Foskett speckled dace. The reviewer stated an effective population size of 500 or higher for the Foskett speckled dace would require a sustained census population size of at least 2,500 to 3,500 individuals. The reviewer also stated that this threshold of 500 should be corrected in the CMP, and genetic studies should calculate Ne as part of the proposed monitoring.

Our Response: We think the commenter is confusing the CMP (cooperative management plan) with the PDM (post-delisting monitoring plan). Regarding the threshold of 500 fish, we are making the assumption, given what we know about the life history of the fish and size of the mesh in the minnow traps (the primary method to develop population estimates) that all fish captured are of reproductive age (age one or older, or Ne). We will add this specificity to the final PDM.

Comment (9): We received several peer review comments regarding the suggested relationship between open-water habitat and abundance of the species. One commenter questioned whether the proposed rule's suggestion of a clear link between open-water habitat and population size of Foskett speckled dace was an overstatement of evidence and said there appears to be substantial natural variation in recruitment success and population size independent of the amount of open-water habitat. Some commenters pointed out that there is limited evidence to demonstrate all the drivers of the variable abundance exhibited by the species, and that population size may be a result of other habitat parameters such as annual weather changes. One commenter suggested that several decades' worth of data would be needed to establish statistical confidence in any relationship between open-water habitat and variability in abundance. Another commenter suggested that a correlation between open-water habitat and variability in abundance appeared to be stronger in the marsh habitats at Foskett Spring than in the pool.

Our Response: Although we have observed a link between open-water habitat and population size based on surveys by ODFW, we acknowledge that a strict correlation between open-water habitat and population size has not been clearly established. However, we note that our decision to delist the Foskett speckled dace is not based on the management for open-water habitat or on population estimates; we based our decision on the removal or reduction of threats to the species identified at the time of listing (groundwater pumping for irrigation, use of the area by livestock, channeling of the springs for agricultural purposes, other mechanical modifications of the aquatic ecosystem, introduction of exotic fishes, and vandalism). We included discussion of population estimates as part of the healthy status of the population at the time we proposed delisting of the Foskett speckled dace. While not the basis for delisting, the observed increases in population documented by ODFW give the Service confidence that the habitat enhancement project conducted by the BLM will likely result in improved habitat conditions. The value of maintaining and/or increasing open-water habitat will continue to be assessed in the future by the BLM and ODFW to determine if additional habitat enhancement activities benefit the species post-delisting. The BLM and ODFW will use their discretion and authorities outlined in the CMP to continue conservation of the Foskett speckled dace into the future. In response to the commenters, we have removed the reference to a direct response of the species to open-water habitat from this rule and also clarified the difference between abundance estimate and variability in abundance (see Abundance, above).

Comment (10): One commenter stated that it seems unwise to remove protection under the Act for this species. This commenter expressed concern that something could “exterminate” the fish before the Government or conservationists could react. They suggest that since the Foskett speckled dace lives in such a small area, with human activity, the Government should try to acquire and safeguard all of the fish's habitat and continue trying to establish new populations where the fish may have been found in the past. The commenter also stated that because the fish's habitat is so small, there should not be a lot of economic tradeoffs, and economic losses are acceptable to preserve the species.

Our Response: The Service analyzed all the reasonably foreseeable threats to the species and did not find any threats that would “exterminate” the Foskett speckled dace. The BLM acquired the land in 1987, and has agreed, via the CMP, to continue management of the parcel of land on which Foskett Spring is located for the protection and conservation of the species. The Foskett speckled dace is known to occur only in its native Foskett Spring and the nearby Dace Spring, into which it was transferred for conservation purposes. Therefore, it is already present in all of its historic habitat.

Section 4(b)(1)(A) of the Act requires us to make status ( i.e., listing, delisting, and reclassification) determinations based “solely on the basis of the best scientific and commercial data available.” The word “solely” was added in the 1982 amendments to the Act (Pub. L. 97-304, 96 Stat. 1411) to clarify that the determination of endangered or threatened status was intended to be made “solely upon biological criteria and to prevent non-biological considerations from affecting such decisions.” In making the clarification, Congress expressed concerns with the requirements of the Regulatory Flexibility Act, Paperwork Reduction Act, and Executive Order 12291 potentially introducing economic and other factors into the basis for determinations under the Act (H.R. Rep. No. 97-567 at 19-20, May 17, 1982). Therefore, we make status determinations based solely on biological considerations.

The Service has the authority under the Act to emergency-list the species if threats re-emerge.

Comment (11): One peer reviewer commented that the extent of available habitat is small and requires careful management and close monitoring to ensure that the Foskett speckled dace persists for the long term. The commenter cautioned against assuming major mechanical restoration of open pool habitat was always preferred, especially given things like unintended disturbance of other aspects of the habitat and related species, and that smaller scale, shovel-based habitat improvement should be considered.

Our Response: The Foskett speckled dace is a narrow endemic with limited habitat. With the understanding that the species will require some habitat management and monitoring into the future, the Service entered into an agreement with the BLM and ODFW to ensure management actions take place for the benefit of the Foskett speckled dace. In order to allow maximum flexibility and responsiveness to conditions in future management of the species, the CMP is not restrictive with respect to the type of management actions required. Since the 1985 listing of the Foskett speckled dace, the Service, BLM, and ODFW have been actively managing Foskett speckled dace habitat for the conservation of the species. Information learned from decades of management will inform the partners for optimizing future management decisions.

Comment (12): One peer reviewer and several other commenters stated that climate change will have effects that could impact the shallow water habitat of the Foskett speckled dace. Concerns were noted regarding the potential increase of drought and drought intensity through increased evaporation rates and more erratic precipitation.

Our Response: We assessed the potential effects from climate change using the most current science available, although at this time there are no available climate projections on the persistence of springs into the future. Downscaled climate models project an increase in the mean maximum air temperature of between 2.7 °F (1.6 °C) (RCP4.5) and 3.2 °F (1.8 °C) (RCP8.5), and an increase in the mean annual minimum air temperature of between 2.5 °F (1.5 °C) (RCP4.5) and 3.1 °F (1.8 °C) (RCP8.5) in the 25-year period from 2025 to 2049. Mean precipitation is not predicted to change, but annual snow accumulation is predicted to decrease by 0.4 in (10.16 mm) during this period. Although the higher temperatures may contribute to changes in summer evaporation affecting soil moisture for the vegetative community around the springs, the evaporative deficit is projected to remain similar to current conditions and within the confidence intervals for the predicted change (Alder and Hostetler 2013, entire).

The thermal artesian springs that make up Foskett speckled dace habitat have a near constant temperature and flow. Springs have features that are independent of climate that make springs potential refugia for species from the effects of climate change (McLaughlin et al. 2017, p. 2946; Cartwright et al. 2017, p. 16). The springs are located in a wetland that is ephemeral by nature; the dace have persisted in the area despite conditions that are somewhat variable from year to year. Although dace have been found in shallower, marshy areas, the largest number of individuals have been observed in the deeper pool habitat. Through implementation of the CMP, the partners will continue to evaluate habitat conditions at Foskett and Dace springs and note where the dace are occurring. Future enhancements to optimize Foskett speckled dace habitat, in the pool areas and marsh areas, will be based on the best information available at the time.

Comment (13): One commenter stated that this species only occurs at two springs in an arid area, and humans established the Dace Springs population. Both populations fluctuate. The commenter also states that neither population is secure and likely to become even less secure with increased climate change. The commenter opposes removing the Foskett speckled dace from the Federal List of Endangered and Threatened Wildlife.

Our Response: The species is known as a “narrow endemic,” which means it exists in a very small range. While this small range may increase risk to a species from an operative threat, in and of itself, its limited range does not represent a threat under the Act. We have carefully analyzed the potential threats to the species including an analysis of the potential effects from climate change using the best information available. The Service has considered this condition in assessing the potential threat factors listed in section 4(a)(1) of the Act (see Summary of Factors Affecting the Species, above). Based on the best available scientific and commercial information, the Service has determined the threats identified in the 1985 listing rule are either not as significant as originally anticipated or have been eliminated or reduced since listing, and we no longer believe the species meets the definition of an endangered or a threatened species. See also response to Comment (12), above.

Comment (14): One peer reviewer commented that it is reasonable to assume that population size is a function of available habitat and it is also a function of prior abundance and of carrying capacity, which can change within the same available habitat. There is not a sufficiently long time-series and appropriate analysis for understanding the Foskett speckled dace's responses to management intervention. Change in a population from one year to the next might be positive or negative. If there is an intervention with an anticipated positive effect, one can expect the variability to still be present but that the mean response will be positive. Ideally, such an evaluation is achieved through a time-series with a sufficient pre- and post-response period to evaluate the response over a variety of annual patterns.

Our Response: We do not have information to show that population size is strictly a function of habitat at Foskett Spring. However, observations of other similar fish in similar habitats indicate that these fish are likely to increase in abundance with an increase in open-water habitat (Kodric-Brown and Brown 2007, entire). Our decision to delist the Foskett speckled dace is based on the removal or reduction of threats to the species. Despite this, we have made some assumptions in managing the habitat for greater abundance of fish in the population. The Service is not conducting additional studies prior to removal of the Foskett speckled dace from the Federal List of Endangered and Threatened Wildlife. The future management and monitoring included in the CMP allows for flexibility in habitat management and adaptive management to benefit the long-term stability of the species.

Comment (15): Several peer reviewers commented on the draft post-delisting monitoring plan. These peer reviewers suggested monitoring of: (1) Groundwater in and around the vicinity of Foskett and Dace springs; (2) surface water quality; (3) water levels; (4) the extent of water; and (5) climatic conditions. In addition, one peer reviewer suggested a plan to evaluate stability of habitat conditions, sensitivity to climate or drought, and ultimately vulnerability.

Our Response: Post-delisting monitoring is designed to monitor those threats identified at the time of listing and any additional threats we have identified during the species' 5-year status reviews. Since the time of listing in 1985, water level and quality have not been found to be adversely impacting the Foskett speckled dace, nor are they anticipated concerns relating to the future management of the species. The springs have been found to have near constant flow and temperature; water levels and temperature have been adequate for the species, and we anticipate they will continue to be into the future. Therefore, we did not revise the PDM plan in response to these comments.

Section 4 of the Act (16 U.S.C. 1533) and its implementing regulations (50 CFR part 424) set forth the procedures for determining whether a species meets the definition of “endangered species” or “threatened species.” The Act defines an “endangered species” as a species that is “in danger of extinction throughout all or a significant portion of its range,” and a “threatened species” as a species that is “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” The Act requires that we determine whether a species meets the definition of “endangered species” or “threatened species” because of any of the following factors: (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence.

As required by section 4(a)(1) of the Act, we conducted a review of the status of the Foskett speckled dace and assessed the five factors to evaluate whether the Foskett speckled dace is endangered or threatened throughout all of its range. We examined the best scientific and commercial information available regarding the past, present, and future threats faced by the species. We found that, with periodic management, Foskett speckled dace populations are persistent but cyclical within a range of 751 to 24,888 individuals over the last decade (see Table 1, above).

As a result of our analysis, we found that impacts believed to be threats to the habitat of the Foskett speckled dace at the time of listing (groundwater pumping for irrigation, use of the area by livestock, channeling of the springs for agricultural purposes, and other mechanical modifications of the aquatic ecosystem) are either not as significant as originally anticipated or have been eliminated or reduced since listing, and we do not expect any of these conditions to substantially change post-delisting and into the foreseeable future (Factor A). The finalization of the CMP acknowledges the “conservation-reliant” nature of the Foskett speckled dace and the need for continued management of the habitat at Foskett Spring, and affirms that the BLM, ODFW, and Service will continue to carry out long-term management actions. Long-term management actions and elimination and reduction of threats apply to all populations of the species, such that both the Foskett Spring population and the Dace Spring subpopulation are secure.

We found that overutilization for commercial, recreational, scientific, or educational purposes (Factor B) and disease or predation (Factor C) still pose no threat to the Foskett speckled dace.

The existence of Federal regulatory mechanisms like the Lakeview District BLM's management of the area under its RMP and the Federal Land Policy and Management Act of 1976, State conservation measures such as the Oregon Native Fish Conservation Strategy, and other authorities supporting each cooperating agency's entrance into the CMP agreement reduce risk to the Foskett speckled dace and its habitat (Factor D).

Finally, in over 30 years of monitoring, no exotic fishes have been detected in, and there is no evidence of attempts to introduce exotic fish species into, Foskett speckled dace habitat, no vandalism has occurred beyond a single incident of gate removal, and other potential threats (such as small population size, dependence on a specific or rare habitat type, the inability to disperse, restriction to a small geographic area, vulnerability to stochastic events, and climate change) also have been assessed and determined to be minimal. Based on the best available information, we found that other natural or manmade factors (Factor E) do not constitute a substantial threat to the Foskett speckled dace now or in the foreseeable future.

After assessing the best available information, we conclude that the previously recognized impacts to the Foskett speckled dace no longer are a threat to the species, such that the Foskett speckled dace is not currently in danger of extinction, and is not likely to become so within the foreseeable future throughout all of its range.

Because we determined that the Foskett speckled dace is not in danger of extinction or likely to become so in the foreseeable future throughout all of its range, we will consider whether there are any significant portions of its range in which the species is in danger of extinction or likely to become so.

Under the Act and our implementing regulations, a species may warrant listing if it is in danger of extinction or likely to become so in the foreseeable future throughout all or a significant portion of its range (SPR). Having determined that the Foskett speckled dace is not in danger of extinction now or likely to become so in the foreseeable future throughout all of its range, we now consider whether it may be in danger of extinction or likely to become so in the foreseeable future in an SPR. The range of a species can theoretically be divided into portions in an infinite number of ways, so we first screen the potential portions of the species' range to determine if there are any portions that warrant further consideration. To do this, we look for portions of the species' range for which there is substantial information indicating that: (1) The portion may be significant, and (2) the species may be in danger of extinction or likely to become so in the foreseeable future in that portion. A portion only warrants further consideration if there is substantial information that both of these statements are true for that portion. Therefore, for a particular portion, if we determine that there is not substantial information that one of these statements is true, then the species does not warrant listing because of its status in that portion of its range.

We evaluated the range of the Foskett speckled dace to determine if any area may be a significant portion of the range. The Foskett speckled dace is endemic to Foskett Spring in the Warner Basin. The known historical, natural range of the Foskett speckled dace is limited to Foskett Spring. At the time of listing in 1985, Foskett speckled dace also occurred at nearby Dace Spring, located approximately one-half mile south of Foskett Spring, where translocation of specimens from Foskett Spring was initiated in 1979. Because of its narrow range limited to two springs within a half-mile of each other, and because speckled dace currently occupying Dace Spring originated from translocations from Foskett Spring, we find that the species is comprised of a single, population and that there are no separate areas of the range that are likely to be of greater biological or conservation importance than any other areas due to natural biological reasons alone. Therefore, there is not substantial information that logical, biological divisions exist that would support delineating one or more portions within the species' range.

Based on our determination that no natural biological divisions delineate separate portions of the Foskett speckled dace population, we conclude that there are no portions of the species' range for which both (1) the portions are likely to be significant, and (2) the species is likely to be in danger of extinction or likely to become so in the foreseeable future in those portions. This makes it unnecessary for us to undertake any further consideration or analysis of whether this species is endangered or threatened throughout an SPR. We conclude therefore that there is no significant portion of the species' range where it is an endangered species or a threatened species. Our approach to analyzing SPR in this determination is consistent with the court's holding in Desert Survivors v. Department of the Interior, No. 16-cv-01165-JCS, 2018 WL 4053447 (N.D. Cal. August 24, 2018).

We have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to the Foskett speckled dace. The threats that led to the species being listed under the Act (primarily the species' extremely restricted and vulnerable habitat, which was being modified; Factor A) have been removed or ameliorated by the actions of multiple conservation partners over the past 30 years; these actions include securing the property, and developing and implementing long-term management strategies to ensure that appropriate habitat is maintained. Given various authorities that enabled the three cooperating agencies to enter into the Foskett Speckled Dace CMP, and the long record of engagement and proactive conservation actions implemented by the three cooperating agencies over a 30-year period, we expect conservation efforts will continue to support a healthy, viable population of the Foskett speckled dace post-delisting and into the foreseeable future. Because the species is not in danger of extinction now or in the foreseeable future throughout all or a significant portion of its range, the species does not meet the Act's definition of an endangered species or a threatened species. We conclude that the Foskett speckled dace no longer requires the protection of the Act, and, therefore, we are removing it from the Federal List of Endangered and Threatened Wildlife.

This rule revises 50 CFR 17.11(h) to remove the Foskett speckled dace from the Federal List of Endangered and Threatened Wildlife and revises 50 CFR 17.44(j) to remove the Foskett speckled dace from the applicable rule promulgated under section 4(d) of the Act. On the effective date of this rule (see DATES , above), the prohibitions and conservation measures provided by the Act, particularly through sections 7 and 9, no longer apply to this species, and Federal agencies are no longer required to consult with the Service under section 7 of the Act in the event that activities they authorize, fund, or carry out may affect the Foskett speckled dace. There is no critical habitat designated for this species; therefore, this rule does not affect 50 CFR 17.95. Current State laws related to the Foskett speckled dace will remain in place and be enforced, and will continue to provide protection for this species.

Section 4(g)(1) of the Act requires us, in cooperation with the States, to implement a system to monitor effectively, for not less than 5 years, all species that have been recovered and delisted. The purpose of this post-delisting monitoring is to verify that a species remains secure from risk of extinction after it has been removed from the protections of the Act. The monitoring is designed to detect the failure of any delisted species to sustain itself without the protective measures provided by the Act. If, at any time during the monitoring period, data indicate that protective status under the Act should be reinstated, we can initiate listing procedures, including, if appropriate, emergency listing under section 4(b)(7) of the Act. Section 4(g) of the Act explicitly requires us to cooperate with the States in development and implementation of post-delisting monitoring programs, but we remain responsible for compliance with section 4(g) of the Act and, therefore, must remain actively engaged in all phases of post-delisting monitoring. We also seek active participation of other entities that are expected to assume responsibilities for the species' conservation post-delisting.

We prepared a PDM plan for the Foskett speckled dace, building on and continuing the research that has taken place in the time since the species was listed. The PDM plan discusses the current status of the taxon and describes the methods to be used for monitoring after the taxon is removed from the Federal List of Endangered and Threatened Wildlife. The PDM plan: (1) Summarizes the current status of the Foskett speckled dace; (2) provides an outline of the roles of PDM cooperators; (3) describes monitoring methods; (4) provides an outline of the frequency and duration of monitoring; (5) provides an outline of data compilation and reporting procedures; and (6) defines thresholds or triggers for potential monitoring outcomes and conclusions of the PDM.

It is our intent to work with our partners towards maintaining the recovered status of the Foskett speckled dace.

We have determined that environmental assessments and environmental impact statements, as defined under the authority of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), need not be prepared in connection with regulations pursuant to section 4(a) of the Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244).

In accordance with the President's memorandum of April 29, 1994, Government-to-Government Relations with Native American Tribal Governments (59 FR 22951), Executive Order 13175, and the Department of the Interior's manual at 512 DM 2, we readily acknowledge our responsibility to communicate meaningfully with recognized Federal Tribes on a government-to-government basis. In accordance with Secretarial Order 3206 of June 5, 1997 (American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered Species Act), we readily acknowledge our responsibilities to work directly with Tribes in developing programs for healthy ecosystems, to acknowledge that Tribal lands are not subject to the same controls as Federal public lands, to remain sensitive to Indian culture, and to make information available to Tribes.

We do not believe that any Tribes will be affected by this rule. However, we contacted the Burns Paiute Tribe to coordinate with them regarding the proposed rule to delist the Foskett speckled dace. We provided the Tribe with a copy of the proposed rule and draft PDM, but we did not receive any comments from them.

A complete list of all references cited in this final rule is available on the internet at http://www.regulations.gov under Docket No. FWS-R1-ES-2017-0051 or upon request from the person listed under FOR FURTHER INFORMATION CONTACT .

The primary authors of this final rule are staff members of the Service's Oregon Fish and Wildlife Office.

Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below: