The Fair Housing Act prohibits discrimination in the provision of housing based on race, color, religion, sex, handicap, familial status, or national origin. 1 Section 808(e)(5) of the Fair Housing Act of 1968 (42 U.S.C. 3608(e)(5)) requires that the HUD Secretary “administer the programs and activities relating to housing and urban development in a manner affirmatively to further the policies of [the Fair Housing Act].” In addition, recipients of HUD funding are required by other statutes to certify they will AFFH:

• Housing and Community Development Act. Jurisdictions directly receiving Community Development Block Grants must certify that they will AFFH (§ 104(b)(2), 42 U.S.C. 5304(b)(2)). Local governments receiving grants from a state must also certify they will AFFH (§ 106(d)(7)(B), 42 U.S.C. 5306(d)(7)(B)).

• Cranston-Gonzalez National Affordable Housing Act. States and local governments receiving certain grants must certify they will AFFH as part of their 5-year comprehensive housing affordability strategy identifying needs for affordable and supportive housing for the following 5 years (§ 105(b)(15), 42 U.S.C. 12705(b)(15)).

• United States Housing Act of 1937. Public housing agencies must include a certification they will AFFH as part of their annual plan (§ 5A(d)(16), 42 U.S.C. 1437c-1(d)(16)).

Recipients of HUD funding, therefore, are required to affirmatively further the Fair Housing Act's goal of promoting fair housing and equal opportunity. The Fair Housing Act and subsequent acts requiring certifications do not specify how HUD, or recipients of funding, are to AFFH, granting the Secretary broad discretion to define the precise scope of the AFFH obligation for HUD's program participants, including the AFFH certification. 2 Further, in Inclusive Communities, the Supreme Court warned that the Fair Housing Act “is not an instrument to force housing authorities to reorder their priorities”  3 and is not meant to remedy mere statistical imbalances in housing for protected class members. 4

HUD satisfies its own AFFH obligations in various ways, including by imposing site and neighborhood standards for HUD-funded development, 5 requiring affirmative marketing of housing units to promote integrated neighborhoods, 6 and designing its programs to be consistent with its AFFH obligation. HUD also uses the disparate impact theory as a method of addressing violations of the Fair Housing Act where there is not clear evidence of intent to discriminate. HUD's grantee compliance monitoring advances the same goal—by requiring that grantees maintain records to support their AFFH certifications, HUD can use the information gathered to address violations of the Fair Housing Act that are not immediately apparent.

In 2015, HUD issued a final rule  7 revising the AFFH reporting regulations for program participants. That rule required program participants to use a computer assessment tool to complete an Assessment of Fair Housing (AFH) by answering 92 questions on fair housing issues, priorities, and goals. Topics included segregation, racially or ethnically concentrated areas of poverty, significant disparities in access to opportunities, and disproportionate housing needs. The rule contemplated separate assessment tools for public housing agencies (PHAs), States and Insular Areas, and local governments. HUD released a tool for local governments  8 but never released a tool for States and Insular Areas, and the tool for PHAs never became operational.

While the statutory obligation to AFFH has not changed, HUD has, over time, required program participants to document their efforts and plans to AFFH in several different ways. Since the issuance of the 2015 final rule, HUD has determined that the current regulations are overly burdensome to both HUD and grantees and are ineffective in helping program participants meet their reporting obligations for multiple reasons. While some of the burdens are a result of the assessment tools themselves, the tools are closely tied to the regulatory language, which HUD believes is too prescriptive in outcomes for jurisdictions. Therefore, HUD believes it is necessary to revise the codified regulation, not just the assessment tools.

First, the AFH required significant resources from program participants, and its complexity and demands resulted in a high failure rate for jurisdictions to gain approval for their AFH in the first year of AFH submission. HUD became aware of significant deficiencies in the Local Government assessment tool that impeded completion and HUD acceptance of meaningful assessments by program participants. The number of questions, the open-ended nature of many questions, and the lack of prioritization between questions made the planning process both inflexible and difficult to complete.

On May 15, 2017, HUD issued a notice inviting public comments to assist HUD in identifying existing regulations that may be outdated, ineffective, or excessively burdensome. 9 Many commenters specifically indicated that, as program participants, they found the rule's requirements to be (or likely to be) extremely resource-intensive and complicated, placing a strain on limited budgets. A representative of PHAs wrote that compliance with the “overly burdensome and impractical” rule  10 would be expensive, with particular concern for PHAs with small housing portfolios, while other commenters stated that the rule did not provide enough consideration to the fact that jurisdictions are limited geographically in what they can do, even when a jurisdiction is in a regional partnership.

Of the 49 jurisdictions that were in the first group to submit an AFH between October 2016 and December 2017, 31 (63 percent) were either never accepted or were only accepted after HUD required revisions. 11 While regional AFHs allowed program participants to pool knowledge and resources, the joint AFHs had the same defects as individual AFHs. 12 Program participants attempted to prepare successful AFHs by hiring outside consultants, redirecting resources that could have been used to support affordable housing directly. 13

The sheer volume of data and variety of expertise required under the 2015 rule placed an undue burden on jurisdictions. While the assessment tool for PHAs was not finally implemented, under a published draft, PHAs would have been responsible for reporting on factors such as segregation levels and patterns dating back to 1990, community attitudes leading to observed patterns, and the presence or lack of private or public investment for the jurisdiction's protected classes. 14 The tool would also require PHAs to analyze and consider data and policies beyond their jurisdictional control and typical subject-matter expertise. For example, the rule required identifying disparities in “. . . access to public transportation, quality schools and jobs . . . [and] environmental health hazards” and “programs, policies, or funding mechanisms that affect disparities” to such access. 15 A commenter on the advance notice of proposed rulemaking on AFFH regulations issued in 2018 noted that this jurisdictional analysis was simply too complex to be effectively completed by staff without specific statistical and mapping knowledge, as housing providers generally have staff with skills that lie in providing affordable housing services, but not in providing complex statistical data analysis. 16 The same is likely true for many smaller jurisdictions.

The 2015 rule also had public participation requirements that were similar to the consolidated plan citizen participation requirements, but it created a separate process for the AFH that duplicated the existing requirements for citizen participation and consultation with outside organizations that were already required for the consolidated plan. Jurisdictions were required to hold at least one public hearing specifically on their proposed AFFH strategies prior to publishing the AFH for comment. According to some commenters, these AFFH-specific hearings created high additional costs for jurisdictions. 17

Second, the administration of the rule was burdensome to HUD. While implementing the 2015 rule, HUD spent over $3.5 million to provide technical assistance to the initial 49 jurisdictions. A workforce management plan, written by a contractor prior to the initial AFH submissions, estimated that HUD would need 538 full-time employees to conduct reviews of the AFHs submitted in 2019, given the increased number of jurisdictions originally scheduled to submit AFHs in 2019 (up to 682). 18

Third, the 2015 rule's scope was particularly burdensome because HUD did not tailor the rule depending on the program participant, other than through creating broad categories. Every jurisdiction, regardless of their size, civil rights record, or current housing conditions, had to go through the same AFH process, without the flexibility to identify their locality's most relevant issues or to adapt their process to the unique conditions of the jurisdiction. Commenters expressed concerns that they lacked the capacity to analyze the several contributing factors prescribed by HUD and requested that HUD allow grantees flexibility in identifying issues and developing a course of action. 19

Fourth, HUD determined that the 2015 rule focused too much on planning and process, and not enough on either the jurisdiction or HUD evaluating fair housing results. Jurisdictions were required to consider and provide extensive documentation for every question, regardless of whether the question or the expected answer advanced the jurisdiction's duty to AFFH or was relevant to the needs of the jurisdiction. This uniform, process-based approach discouraged innovation, allowed the process to substitute for actual results, and made it difficult to evaluate and compare jurisdictions over time. Jurisdictions can advance fair housing in ways that HUD officials cannot predict because HUD lacks the extensive localized knowledge of State or local officials. The inherent nature of fitting jurisdictions into pre-determined categories and methods rather than evaluating jurisdictions based on results and achievements could discourage innovation and inhibit HUD's ability to evaluate a jurisdiction's improvement.

Finally, the completion of the AFH required grantees to use specific data sets and HUD-provided tools, including extensive mapping data, locally available data, and data from various interest groups. The goal behind the assessment tools was to assist in compiling this information, but the scope of the task of providing quality tools proved difficult for HUD, given the wide variety of circumstances to which they applied from jurisdiction to jurisdiction, and the absence of a discrete statutory objective. For local jurisdictions, the tool was difficult to learn and operate and did not include all factors that jurisdictions deemed relevant, such as low-income housing tax credit supported projects. For PHAs and states, no tools were ever provided because of the challenge in developing appropriate data sets for both relatively large and small geographies, i.e., states and particular housing developments.

While the 2015 rule was not fully implemented, HUD determined that the results from the limited roll-out (summarized above) were sufficient to cease further implementation. HUD therefore concluded that a new approach was required. 20 On August 16, 2018, HUD published an Advance Notice of Proposed Rulemaking at 83 FR 40713, asking for the public's input on changes that would: (1) Minimize regulatory burden while more effectively aiding program participants to meet their legal obligations; (2) create a process that is focused primarily on accomplishing positive results, rather than on performing analysis of community characteristics; (3) provide for greater local control and innovation; (4) seek to encourage actions that increase fair housing choice, including through greater housing supply; and (5) more efficiently utilize HUD resources.

HUD received over 700 public comments in response. Many expressed support for the 2015 final rule and urged HUD to continue to implement its requirements. These commenters cited the need for a way to enforce the AFFH requirement and cited the significant use of resources and public input that went into the creation of the 2015 rule. These commenters found the early results of the rule “promising” and believed that improving the tools would ease the burdens and improve the process.

However, a large number of commenters opposed the 2015 rule. Some objected to the idea entirely, citing concerns for local control of zoning. Others felt that the requirements of the rule were too onerous, specifically the level of public participation needed and the scope of data that program participants were required to address. Commenters asked that program participants and PHAs be given broader discretion in their planning. Multiple commenters suggested that instead of the 2015 rule's approach, HUD should find ways to use the AFFH process to provide incentives to increase housing supply and remove restrictive zoning regulations.

HUD has considered these comments and suggestions in the development of this proposed rule.

HUD seeks to further both the spirit and the letter of the Fair Housing Act. Housing discrimination still takes place, and many jurisdictions continue to allow known barriers to fair housing—such as burdensome governmental processes, the concentration of substandard housing stock in specific areas, or restrictions based on the source of a tenant's income—to exist.

HUD intends this regulation to promote and provide incentives for innovations in the areas of affordable housing supply, access to housing, and improved housing conditions. This is part of HUD's ongoing effort to improve regulations to allow and encourage innovative solutions to the housing problems facing America today. For example, there have been significant improvements in housing design and production products, as demonstrated in new designs for manufactured housing and reduced-size housing. Jurisdictions have also chosen to adopt changes in zoning laws that promote housing for the local workforce. Jurisdictions have amended historic preservation laws to permit redesign of buildings that are ill-suited for its community members with disabilities. Jurisdictions are promoting the provision of housing adjacent to transportation centers. As jurisdictions examine and discuss obstacles to fair housing, HUD anticipates such obstacles can, in part, be addressed through innovative approaches to design and building codes and the elimination of unnecessary fees and other regulatory barriers. HUD will spotlight jurisdictions achieving such new solutions, but will not mandate or prescribe specific actions.

Therefore, HUD is proposing a new process to evaluate each jurisdiction's efforts to AFFH that not only allows HUD to enforce civil rights requirements effectively but also empowers individual jurisdictions to develop new approaches to AFFH and share with their peer jurisdictions what has worked and what has not. This approach will allow HUD to target its resources where they are most needed while enabling jurisdictions to measure their progress, understand their successes or failures, and continue to improve their efforts, without a mandate from HUD on exactly what steps to take. This approach would allow HUD to highlight best practices and create a repository of ideas by drawing out the diffuse knowledge about fair housing held by local actors and encouraging policy experimentation. HUD hopes to leverage this knowledge by studying the best housing opportunity results across the country and encouraging jurisdictions to adopt best practices.

This approach allows and provides incentives to local actors who know best the fair housing needs of their communities to take steps to further their particularized goals. As the Supreme Court stated in Inclusive Communities, while discussing the purpose of the Fair Housing Act, HUD should not “second-guess which of two reasonable approaches” should be taken or “force housing authorities to reorder their priorities” unnecessarily. 21 The Fair Housing Act “does not decree a particular vision of urban development.”  22 HUD aims to take this into account and allow for the flexibility and innovation necessary to best further fair housing nationwide, recognizing that fair housing is an especially difficult and complex policy area because of the competing considerations that go into promoting fair housing and other valid governmental priorities.

By proposing to reward jurisdictions that are performing well in their AFFH efforts and improving in ways that will benefit entire communities, HUD will provide incentives to both jurisdictions and the general public to find ways to help local jurisdictions improve their AFFH efforts. By increasing the number of people who benefit from an expansion of fair and affordable housing, HUD expects that a larger share of the local community will be motivated to participate in local discussions on how to AFFH and what strategies are best suited for the locality. Such incentives may encourage citizens and local businesses to participate in important local housing debates when they otherwise may have sat on the sidelines. HUD believes that having buy-in from a broad range of citizens and businesses in a community will result in a stronger AFFH effort and help reduce housing discrimination.

HUD also recognizes that government policies, even when well-intentioned, can have negative results. This proposed policy of encouraging local experimentation is a recognition of the difficulties of crafting a top-down approach. HUD does not expect this proposed rule to be the final word on how recipients of HUD funding can AFFH. Rather, HUD anticipates that this will be the beginning of a flexible approach, consistent with constitutional mandates and statutory requirements, as HUD and jurisdictions gain additional evidence about what works and does not work to facilitate the advancement of fair housing.

HUD believes that fair housing choice exists when a jurisdiction can foster the broad availability of affordable housing that is decent, safe, and sanitary and does so without housing discrimination. To that end, HUD is proposing to evaluate how program participants are carrying out their AFFH obligation as a threshold matter by using a series of data-based measures to determine whether a jurisdiction (1) is free of adjudicated fair housing claims; (2) has an adequate supply of affordable housing throughout the jurisdiction; and (3) has an adequate supply of quality affordable housing. Jurisdictions that score highly using these metrics (or through improvements over a 5-year cycle) would be eligible for various incentives in HUD programs. HUD would focus remedial resources and potential regulatory enforcement actions on the lowest performers.

All program participants included in the consolidated plan process would be required to examine their own circumstances to determine how best to address their AFFH performance. HUD is proposing to modify the regulatory requirements of jurisdictions' certifications that they will AFFH by requiring the jurisdictions to commit, in the certification, to taking specific steps to address obstacles to fair housing choice. As a result of HUD's proposal to include these commitments as part of the consolidated plan, jurisdictions would consult with all relevant stakeholders to develop AFFH commitments tailored to the needs and situations of the jurisdiction. HUD expects that jurisdictions would then be able to share with others, through HUD and otherwise, what worked and what did not work, allowing jurisdictions to learn from one another as they develop new approaches. PHAs would be required to participate in the development of this certification through their participation in the consolidated plan process; this participation and their own accompanying AFFH certification would be how PHAs fulfill their AFFH responsibilities.

The previous AFFH process—which required lengthy submissions that averaged 204 pages but stretched as long as 832 pages  23 —risked violating the organizational management maxim that if everything is a priority, nothing is a priority. In contrast, HUD believes that simplifying AFFH requirements would aid program participants in meeting their statutory civil rights obligations. It would also help HUD target its enforcement and technical assistance for jurisdictions receiving CDBG funds so that HUD's efforts are directed where they are needed most. This would allow jurisdictions to focus on their most important fair housing goals so that the jurisdiction could achieve more of their aims, instead of trying to execute too many goals to be successful. By having jurisdictions focus on fewer elements, it would be easier for the public to provide relevant information and feedback, better enabling jurisdictions to take those contributions from the public into consideration.

HUD welcomes comments on all aspects of the proposed rule and its potential impacts. However, there are areas where HUD is seeking very specific feedback on the proposal. These specific requests for comments are embedded in the preamble discussion.

The current regulation defines AFFH as “taking meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity, replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws.”  24

HUD proposes changing the definition of AFFH to “advancing fair housing choice within the program participant's control or influence.” HUD is proposing a definition of “fair housing choice” to be allowing “individuals and families [to] have the opportunity and options to live where they choose, within their means, without unlawful discrimination related to race, color, religion, sex, familial status, national origin, or disability.”  25 Fair housing choice would consist of three components:

(1) Protected choice, meaning the absence of discrimination.

(2) Actual choice, meaning not only that affordable housing options exist (as defined by the jurisdiction based on the needs and resources of that jurisdiction), but that the information and resources are available to enable informed choices. This is intended to encourage jurisdictions to provide public education about fair housing, the protected classes, and the resources available to protected class members to protect their right to fair housing.

(3) Quality choice, meaning that the available and affordable housing is decent, safe, and sanitary, and, for persons with disabilities, accessible as required under civil rights laws.

This revised definition of AFFH would avoid a federal government directive for local action that does not align with the statutory directive or that goes go beyond the authority of subject jurisdictions. It would also alleviate the unintended consequences of discouraging the use of federal assistance in communities that need additional help instead of restrictions. It would provide a more tailored approach that would take into account local issues and concerns by allowing local jurisdictions to create custom approaches based on their unique circumstances.

In addition, the revised definition would make it clear that fair housing is based on fair housing choice. Fair housing involves combatting discrimination across all the classes protected by the Fair Housing Act: color, religion, sex, disability, familial status, and national origin. Finally, the revised AFFH definition would emphasize that a jurisdiction can AFFH in a variety of ways, according to the needs and means of the local community.

The revised definition does not affect the responsibility of jurisdictions to comply with other relevant federal requirements and civil rights law.

Each jurisdiction that submits a consolidated plan must submit a certification that it will AFFH. Currently, the certification consists of a statement that the jurisdiction will AFFH, but it does not specify the exact way the jurisdiction intends to AFFH. HUD is proposing to expand the certification so that the jurisdiction would commit to addressing at least three fair housing choice obstacles or goals over the next five years. By including AFFH planning as part of the consolidated plan process, HUD proposes to incorporate the public participation requirements of the consolidated plan, without imposing an additional burden on jurisdictions. PHAs, already required to participate in the consolidated plan process, would be required to certify, in every applicable annual plan, that they have consulted with the jurisdiction on how to satisfy their obligations to AFFH. This participation and certification would fulfill their AFFH responsibilities.

Each jurisdiction would be required to submit at least three measurable, concrete goals it plans on reaching in the upcoming years or obstacles to fair housing choice it plans to address, within its scope of influence, to increase fair housing choice. HUD would expect these submissions to provide a brief and direct explanation of how pursuing each goal or alleviating each obstacle would further fair housing choice in their jurisdiction. HUD would review these goals or obstacles for completeness and verify they use concrete and measurable standards, but HUD would not require that the goals cover specific areas or reach certain thresholds. Jurisdictions may consider additional data other than what was used for the comparison metrics in deciding what steps to take, but they would be required to provide a narrative justification for the decisions and goals. The certification would not have to address all fair housing obstacles or identify every effort the jurisdiction would take, but it should identify crucial or material efforts that the jurisdiction would reasonably expect to undertake over the next five years.

Question for Comment 1: Is three the appropriate number of goals a jurisdiction should submit? If not, what would be a more suitable number? Would a higher number more appropriately hold jurisdictions accountable to AFFH without imposing an undue burden?

Question for Comment 2: How should HUD balance requiring overly prescriptive standards with ensuring integrity for data sources that support such goals?

The certification would be informed by the nature of the program participant, its geographic scope, its size, and its financial, technical and managerial resources. The goals or obstacles identified in the certification would not need to be based on any HUD-prescribed mode of analysis, such as examining a statistical analysis of housing patterns, using any specified data set, or reflecting original research or commissioned expert opinions, but they should reflect the practical experience and local insights of the program participant in conducting its ordinary housing-related operations, both with HUD funding and other programmatic efforts.

HUD recognizes that jurisdictions may find many ways to advance fair housing that HUD officials cannot predict. Developing approaches to AFFH is a particularly difficult policy area, because a jurisdiction must consider competing factors within the jurisdiction that affect how best to AFFH, and State or local officials have the localized knowledge to balance those considerations. Therefore, HUD is not proposing to require that jurisdictions carry out specific steps to AFFH. This approach would allow jurisdictions to act as they deem necessary to achieve their results while allowing HUD to avoid micromanaging localities, “decree[ing] a particular vision of urban development,”  26 or “second-guess[ing] which of two reasonable approaches” a jurisdiction should take. 27 It would preserve flexibility for jurisdictions to take action based on the needs, interests, and means of the local community, and respects the proper role and expertise of state and local authorities.

Question for Comment 3: What, if any, aspects of the proposed rule and other policies not in the proposed rule, would motivate jurisdictions to more meaningfully engage in the AFFH planning process and make progress on the goals of the local AFFH plan?

However, HUD anticipates that jurisdictions may look to common ways to increase fair housing choice in their jurisdictions. HUD proposes including a non-exhaustive list in the regulation of conditions that HUD considers to be common barriers to fair housing choice. HUD would consider a goal to take concrete steps toward alleviating or improving one of these listed conditions as a justified method of affirmatively furthering fair housing, and therefore jurisdictions would not need to include an explanation of why the jurisdiction is pursuing solutions to these barriers. While the proposed list would serve as a resource for jurisdictions in identifying potential obstacles or goals, HUD is not requiring jurisdictions to choose from these barriers when developing their certifications. HUD seeks input on what specific barriers may be categorized as “common” and thus should be included in the list.

HUD recognizes the broad sweep of the AFFH obligation, its nature which defies easy quantification, and its susceptibility to widely diverging but reasonable interpretations. In analyzing the statutory direction within the context of the Fair Housing Act and other applicable laws as a whole, HUD does not expect that program participants would be able to immediately and completely address each impediment which they identify. Further, the purpose of these goals would not be to bind the jurisdiction to a certain course of action. Rather, these goals would be intended to provide HUD with an explanation of how the jurisdictions plans to AFFH so that HUD can review the jurisdiction's actions to determine whether, in HUD's assessment, the jurisdiction is making a sufficient effort to AFFH.

Although not expressly included on HUD's proposed examples of common barriers (because they are generally legitimate and widely vary), jurisdictions should feel free to examine their State or local zoning laws and may determine that modifying these provisions is how they can best AFFH. HUD anticipates that program participants may undertake these types of actions because commenters stated that, outside of market forces, there are a number of structural barriers that could reduce the availability of housing overall, keeping housing prices high. For instance, cities may have zoning laws that restrict the ability of owners to build higher-density housing, or they may have elaborate housing production processes that result in would-be developers not getting the best use out of their land. One commenter noted that parties who would like to build more housing might face multiple layers of bureaucracy, each with their own interests and levels of expertise, such as city planning departments, citizen zoning boards, historical commissions, public hearings, state environmental review boards, and city rental licensing departments. 28

HUD considers changes to zoning laws to be a useful and appropriate tool to further fair housing choice. Jurisdictions are free to choose to undertake changes to zoning or land-use policies as one method of complying with the AFFH obligation; however, no jurisdiction may have their certification questioned because they do not choose to undertake zoning changes. HUD believes this is consistent with section 105(c)(1) of the Cranston-Gonzalez National Affordable Housing Act, 29 which prohibits HUD from disapproving consolidated plans because a jurisdiction adopts or continues zoning ordinances or land-use policies.

One commenter cited data that found that the “overall cost of housing in the United States is at least $3.4 trillion higher than it would be absent zoning regulations” and US GDP is about $2 trillion below its potential due to restrictive land-use regulations. 30 According to one study cited by a commenter, “regulation imposed by all levels of government (whether local, state or federal) accounts for 32.1 percent of the cost of an average multifamily development.”  31 Numerous research studies provide supporting evidence of the commenters' statements concerning the adverse impacts of restrictions on affordability and availability. A HUD report (2005) describes evidence from multiple studies indicating that regulating development increases the cost of housing. The estimated impact on prices varies by type of regulation studied and the context of the real estate market, and ranges from 10 to 50 percent. 32 A more extensive and critical review of published research (Quigley and Rosenthal, 2005) finds that “a number of credible papers seem to bear out theoretical expectations” that reducing the supply of developable land will raise housing prices. 33 Sophisticated empirical research in the last decade has produced more convincing evidence that there is a direct link between regulation and housing affordability (Gyourko and Molloy, 2015). 34 The impact of constraining development reaches beyond local housing and land markets. There is a macroeconomic cost of limiting housing production in the most productive cities. One study (Hsieh and Moretti, 2019) found that the misallocation of labor due to restrictive housing regulations lowered US economic growth by 36 percent from 1964 to 2009. 35 Jurisdictions may examine their State or local laws, regulations, and government structure and determine that modifying these structural barriers to affordable housing is how they can best AFFH.

Jurisdictions with high levels of deteriorated or low-quality housing may decide that they wish to focus on improving those measures. The jurisdiction could work to convince the local PHA to prioritize the rehabilitation of its units, or it could decide that the best way to spend flexible funds is to improve local housing conditions.

Question for Comment 4: Are there other factors, in addition to the ones listed in this proposed regulation, which are generally considered to be inherent barriers to fair housing?

Question for Comment 5: Should any of the factors listed as inherent barriers to fair housing be revised or removed? Should there be different inherent barriers for States than for other jurisdictions?

Question for Comment 6: What process should HUD undertake for updating the list in regulations, and how frequently should these updates occur?

Finally, under the proposed rule, documentation used in the preparation of the AFFH certification would not need to be provided to HUD. However, such information would have to be retained and available for inspection by HUD according to the record retention requirements of the consolidated plan.

To provide a way for jurisdictions to measure their progress in affirmatively furthering fair housing over time, and to allow HUD to verify that jurisdictions are taking actions and not just making plans, HUD is proposing a system that would use publicly available metrics to score and rank the CDBG-receiving jurisdictions that submit a consolidated plan that year. By using public data, HUD intends to create a “dashboard” that would allow jurisdictions to anticipate where they would rank and therefore plan ahead accordingly. This dashboard will further encourage engagement by allowing a jurisdiction to know exactly where it stands. These rankings would allow HUD to objectively determine a jurisdiction's success in providing quality affordable housing without adjudicated adverse fair housing findings. This ranking system, while useful in helping HUD evaluating compliance with the jurisdiction's requirement to AFFH, would not reflect a determination that the jurisdiction has complied with the Fair Housing Act.

The proposed rule recognizes that jurisdictions face different challenges including tight or slack housing supply, job growth or decline, and shifts in population growth or decline. These different indicators would influence jurisdictions' choices in promoting fair housing choice. A jurisdiction with high job growth and a tight housing market would have different priorities and abilities than a jurisdiction with job declines and a very open housing market. Both would also be different from a jurisdiction with high job growth but a commensurate growth in the availability of housing that keeps housing prices more affordable.

HUD's proposed regulation would compare jurisdictions receiving CDBG funds and submitting a consolidated plan with other similarly situated jurisdictions, taking into account the factors discussed above, to be developed for the final rule. HUD is also considering using different data sets for different categories of jurisdictions.

The regulatory text is intended to be a broad outline of the specific data measures included in the comparison metric. HUD plans to publish a notice for public comment identifying the specific sources of data and the method for creating a jurisdiction's metric score when this rule is finalized.

Question for Comment 7: What are the appropriate economic and population size/growth/decline market conditions categories of local CDBG-receiving jurisdictions that submit consolidated plans? Should there be different categories of States, as well? How many categories should there be?

Question for Comment 8: Given the intentions of HUD for specific types of data discussed more fully below, are there specific data that HUD should use for certain categories and not for others?

Question for Comment 9: What process should HUD undertake for updating the metrics, scoring, weighting, and other components, and how frequently should these updates occur?

Under the proposed rule, HUD would only determine and compare metrics for jurisdictions that submit consolidated plans because they receive CDBG funds. This would allow HUD to rely on the geographic boundaries used by the CDBG program and to focus its resources on the jurisdictions that are likely receiving the most funding from HUD.

Question for Comment 10: Should HUD also rank non-CDBG jurisdictions that still submit consolidated plans? What are the potential obstacles or problems with those rankings?

To determine each jurisdiction's success at furthering fair housing choice, HUD would develop a scoring system based on quantitative data generated by publicly available datasets, such as data from the United States Census Bureau, including the American Community Survey, the United States Post Office, and HUD-generated data. These data would seek to represent how well a jurisdiction is providing affordable, quality housing free of violations of the Fair Housing Act and related statutes. HUD would create the scoring system using data related to affordable housing availability, the jurisdiction's housing quality, and adjudicated complaints of violations of the Fair Housing Act or related statutes. HUD would re-evaluate the data set periodically and adjust them through further notice and comment.

One of the key ways HUD would confirm that program participants fulfill their AFFH responsibilities would be to reward only jurisdictions that are free of material civil rights violations. HUD recognizes that jurisdictions have multiple layers of civil rights enforcement, including state Attorneys General, Fair Housing Initiative Programs, the United States Department of Justice (“DOJ”), and HUD. HUD proposes to take all these methods of enforcement into account in determining a jurisdiction's civil rights record.

HUD proposes to include a yes or no indicator of whether the jurisdiction has an adversely adjudicated fair housing complaint brought by or on behalf of HUD or by the DOJ against the jurisdiction in the previous 5 years. By limiting this indicator to adverse determinations following adjudication, HUD would protect jurisdictions by only penalizing them on this indicator after they have had an opportunity for a hearing and full finding of facts. Jurisdictions with any such adjudicated violations within the previous 5 years would not be eligible for any benefits otherwise available to high-performing jurisdictions.

Question for Comment 11: Are there other methods (aside from a yes or no indicator) for incorporating the complaints into the dashboard? Are there other data points HUD should include in this measure?

Question for Comment 12: HUD is concerned that taking into account adversely adjudicated civil rights cases that were not brought by HUD or DOJ will encourage jurisdictions to settle civil rights claims rather than risk an adverse ruling that would affect the jurisdiction's standing with HUD. HUD seeks comment on whether, and if so how, it could take these cases into account without unduly influencing civil rights litigation.

Question for Comment 13: Are there circumstances in which a jurisdiction should not be held accountable for a negatively adjudicated complaint against a PHA? Are there ways to take adjudications against a PHA into account without penalizing the entire jurisdiction?

Fair housing choice requires not only the absence of discrimination but the existence of realistic housing options. 36 As stated by Senator Walter Mondale in support of the Fair Housing Act, protection against discrimination does not itself “overcome the economic problem of those who could not afford to purchase the house of their choice.”  37 Ultimately, he continued, “the laws of supply and demand will take care of who moves into what house in which neighborhood.”  38 Members of protected classes often find their access to fair housing choice limited by economic factors brought on by a lack of affordable housing.

Affordable housing can advance the goal of providing members of protected classes with access to the neighborhoods of their choice. Some protected class members may want to stay in their neighborhood to maintain access to deep community support systems or proximity to their job. Others who want to leave their neighborhood would benefit from reduced housing costs that make it easier for them to move. Encouraging policies that increase overall access to affordable housing allows residents to gain from improvements to housing conditions in their own neighborhood while providing flexibility to jurisdictions on how to achieve that affordability.

Increasing the availability of affordable housing in a community would help low-income families. However, studies have demonstrated that single-parent households, elderly households, and households of color are more likely to be cost-burdened by housing. 39 Increasing overall affordability will, therefore, help members of protected classes maximize their ability to live where they choose. Having a supply of affordable housing that is sufficient to meet the needs of a jurisdiction's population is crucial to enabling families to live throughout the jurisdiction and promoting fair housing for all protected classes, so HUD is proposing to include data in the comparison metrics to evaluate a jurisdiction based on its availability of affordable housing. To do this, HUD is considering using metrics such as housing prices, fair market rents, the burden housing costs place on very-low- to moderate-income families, the ability of tenants with housing choice vouchers to access housing throughout the jurisdiction, and the existence of excess housing choice voucher reserves showing a failure to fully take advantage of voucher funding available to the jurisdiction.

Question for Comment 14: Are there other data points HUD should use to measure affordability as it relates to fair housing choice? If so, what considerations are needed in using this data to ensure an accurate measure?

Question for Comment 15: What data sources may enable HUD to measure the extent to which residents are living in neighborhoods of their choice, consistent with their means?

Question for Comment 16: With any of the data mentioned above, are there any factors, such as disparities in average income or job growth, for which HUD should control, to ensure that analysis of the data set is an accurate measure of access to fair and affordable housing?

Question for Comment 17: Another idea HUD is considering is ranking jurisdictions based on “by right” land use or the amount of additional burden local regulations place on the housing market by unduly increasing housing costs. Do such measures exist? How could HUD work to create one?

Question for Comment 18: Are there other measures that HUD could use or create to encourage the creation of additional housing that is affordable throughout a jurisdiction?

Gains generated by widespread affordable housing are not meaningful unless that affordable housing is decent, safe, and sanitary. Without quality affordable housing, members of protected classes will face practical limitations in their housing choices.

Individuals living in poor quality housing experience an increase in chronic illness, 40 respiratory diseases, 41 and injuries. 42 Overcrowding can increase the transmissions of disease and psychological distress. 43 These negative effects can be particularly harmful and long-lasting to children. 44 Dilapidated or abandoned housing stock may also foster crime. 45

Persistent health problems can also make it difficult for individuals to obtain and maintain employment, threatening their ability to maintain self-sufficiency. This can be particularly acute for individuals with physical disabilities and older adults, for whom deteriorating or inaccessible housing creates a much higher risk of injury.

HUD is considering using worst-case housing needs data, which documents lack of kitchen facilities and adequate plumbing and overcrowding, to determine how well a jurisdiction is encouraging a supply of housing that is of sufficient quality. HUD would also like to consider the prevalence of housing with lead-based paint hazards that cause health issues and the quality of housing in jurisdictions according to HUD REAC inspection scores.

Question for Comment 19: Are there other data points HUD should include to measure housing conditions as they relate to fair housing? If so, are there any additional considerations in using those data points necessary to ensure an accurate measure?

Question for Comment 20: With any of the data mentioned above, should there be additional considerations to ensure that the data set is an accurate measure?

HUD believes that the best way to further fair housing is to encourage collaboration and cooperation among all stakeholders within a jurisdiction, including government, PHAs, nonprofits, and private owners. This rule proposes to provide benefits to both jurisdictions and the entities within jurisdictions that, as demonstrated by comparison metrics, are successful with their AFFH efforts. In addition, this rule would empower HUD to concentrate its assistance and regulatory enforcement resources on the lowest AFFH performers.

Within each category, HUD proposes to determine the jurisdictions that are outstanding AFFH performers, and grantees and applicants for funding located within those jurisdictions would be eligible for various benefits for the following 2 years. As more fully described below, HUD proposes that the benefits vary according to the program involved, but may include preference points on Notices of Funding Availability (NOFAs) or eligibility to receive additional program funds due to reallocations of recaptured appropriated funds and other forms of regulatory relief.

Beginning with the second consolidated plan cycle after the effective date of the rule, HUD also proposes to determine which jurisdictions had the greatest improvement in their metrics over the past five years. The most improved jurisdictions would also be eligible for benefits given to outstanding AFFH performers (if not otherwise already an outstanding AFFH performer).

Question for Comment 21: How should HUD determine ranking of high and low AFFH performers? Should a baseline percentage be used (for example, the top 20 percent and bottom 20 percent), or should some other ranking be used (for example, a “natural break” in the distribution where there is a material distinction between jurisdictions)? If a percentage, what is the appropriate percentage, and why? Would it be appropriate to set a percentage and then allow the Secretary to deviate from that baseline when the data warrants it? What would be the effects of using each type of approach?

Question for Comment 22: Should there be two tiers of rewards for high performing jurisdictions, such as “outstanding” and “high pass,” where “outstanding” performers received regulatory relief and extra funding, while “high pass” performers received just one category of relief, such as extra funding? What would be the effects of such an approach?

Question for Comment 23: Should HUD reward improvement in a jurisdiction before the first 5-year cycle is complete? If so, how should HUD determine progress between consolidated plan submissions, and what possible benefits should be available?

HUD is interested in determining which jurisdictions are the most effective at meeting their AFFH obligations. HUD believes that, by identifying top performers, other similarly situated jurisdictions can learn from these top performers and may be able to replicate successful practices. By identifying such top performers, HUD would be able to reward and provide incentives to jurisdictions that make significant efforts to address housing discrimination. This jurisdiction-driven approach would also allow the top performers to serve as a model for HUD in designing future programs and fair housing efforts.

HUD is proposing to reward outstanding AFFH performers through advantages in grant competitions. While many funding programs are based on a statutory formula, there are numerous grant programs, including Choice Neighborhood Planning and Implementation Grants, Jobs-Plus, lead-based paint reduction programs, ROSS and FSS programs, and the Fair Housing Initiative Program, where it may be appropriate to award points in the competition to applicants that are within outstanding AFFH jurisdictions. In the development of each competitive NOFA, HUD proposes to consider whether it is appropriate to use the grant funding to provide a benefit to potential recipients in an outstanding AFFH jurisdiction.

In addition to potential NOFA bonuses, HUD would, in the development of future demonstration programs, consider whether the demonstration should prioritize participants in outstanding AFFH jurisdictions. Programs that may fall into this category include new designations of PHAs as Moving to Work (MTW) agencies, priorities for conversions of assistance under the Rental Assistance Demonstration (RAD) program, or selection for participation in mobility demonstrations.

HUD is also considering whether outstanding AFFH jurisdictions should be eligible for various forms of regulatory relief, either from the AFFH process itself or as part of the larger programmatic regulatory requirements. HUD is also open to seeking additional statutory flexibility to reward outstanding AFFH jurisdictions.

Question for Comment 24: Are there other rewards that HUD should consider for outstanding AFFH performers? Are there statutory or regulatory changes that HUD should pursue to increase the availability of such rewards?

Question for Comment 25: Are there specific forms of regulatory relief that HUD should consider for outstanding AFFH performers?

If a jurisdiction falls in the bottom ranking, HUD proposes to consider the accuracy of the jurisdiction's AFFH certification under 24 CFR 91.5. The jurisdiction would have the opportunity to respond in writing to provide additional information to demonstrate that they are affirmatively furthering fair housing to the best of their ability. This demonstration may include evidence that the jurisdiction has taken concrete and measurable steps for improvement, additional information about specific obstacles faced in achieving AFFH goals, structural and systematic reasons for lack of movement in the comparison metrics, or other information the jurisdiction believes relevant.

If HUD, following existing procedures, were to determine that the additional information provided by the jurisdiction is sufficient, HUD proposes to accept the certification. However, if the additional information was deemed insufficient, HUD proposes to reject the AFFH certification of the jurisdiction and to follow the procedures under 24 CFR 91.500 to provide the jurisdiction with the specific steps the jurisdiction must follow for HUD to accept the certification. Such steps may include additional public participation requirements for the development of the next AFFH certification or specific remedies for deficiencies HUD has discovered as part of the review process. If a jurisdiction continues to be unable to provide adequate assurances that it will AFFH, HUD proposes that the grant may be withheld.

Question for Comment 26: Are there other remedies HUD should consider requiring of jurisdictions who are not improving in their comparison metrics?

Just as with outstanding or improved AFFH performers, HUD is also very interested in identifying which jurisdictions may need further assistance in meeting their AFFH obligations. HUD believes that a jurisdiction that is struggling to improve on the neutral metrics, or falls significantly below its peers, may be a jurisdiction that needs help in other areas of compliance, as well. Therefore, HUD proposes to use the identification of the lowest performers in AFFH to target its resources in many areas, such as grant administration and regulatory oversight, not just in civil rights enforcement.

HUD's intent is not to punish pioneering jurisdictions for creative AFFH strategies that turn out not to be effective. HUD recognizes that sometimes unsuccessful efforts are just as important to learning as successful efforts. HUD would encourage jurisdictions to share lessons learned from unsuccessful efforts and successful efforts alike. HUD also expects that the annual report process would encourage jurisdictions to regularly consider whether their action plans are promoting change in the right direction and, if not, proposes to allow the jurisdictions a chance to recalibrate and change course. This would help create a cycle of accountability that allows jurisdictions to highlight successes, analyze failures, and course-correct, if necessary.

Question for Comment 27: HUD is seeking input on possible mechanisms for sharing information across jurisdictions regarding the success of efforts to AFFH, and the extent to which any such mechanisms should become requirements of the regulation.

If a jurisdiction were to believe that an error, such as a failure to consider a relevant factor or a statistical anomaly, has resulted in the jurisdiction being improperly ranked, the jurisdiction would be able to respond to HUD by identifying the error and requesting a recalculation of the comparison metrics, or consideration of a factor which was not adequately accounted for in the comparison metrics. HUD would review the jurisdiction's response and, if HUD determines it necessary, recalculate the jurisdiction's ranking without impacting the rankings of others.

HUD recognizes that AFFH efforts may take time to realize results, but jurisdictions are encouraged to still work to AFFH on a consistent basis throughout their consolidated plan cycles. In the years between 5-year plans, jurisdictions would need to submit, in their annual performance reports under 24 CFR 91.520, annual progress updates to the goals or obstacles they submitted in their most recent AFFH certification. HUD is also proposing to add an AFFH component to the annual performance review conducted by HUD. This review would not be intended to substitute HUD's judgment for the judgment of the jurisdiction. Instead, under HUD's rational basis review, HUD would accept performance reports under 24 CFR 92.520, where the steps taken are each rationally related to the goal and obstacles identified in the jurisdiction's AFFH certification. This language is intended to follow the judicial definition of rational basis review closely. 46

HUD believes that this level of review would provide the proper level of oversight without undue interference. HUD recognizes that affirmatively furthering fair housing is a necessarily complicated area implicating various policy concerns. Unlike enforcement actions for discrimination, HUD is seeking only to confirm that jurisdictions are fulfilling their statutory duty and will trust, in the absence of evidence to the contrary, that a jurisdiction's preferred method of affirmatively furthering fair housing is a valid method of fulfilling its statutory duty. The Fair Housing Act does not mandate that jurisdictions be second-guessed for the reasonable choices they make. The Supreme Court in Inclusive Communities said that the Fair Housing Act is not a means of second-guessing the reasonable choices of jurisdictions. 47 A higher level of scrutiny would invite second-guessing. This level of scrutiny also encourages experimentation and prevents HUD from substituting its judgment for that of local jurisdictions. HUD recognizes that some jurisdictions will pioneer methods of advancing fair housing, which may not always succeed but nevertheless should not be punished for their ingenuity.

Jurisdictions would not be expected to address every goal or obstacle every year. However, under the proposed rule, HUD would expect that jurisdictions would, over the course of a 5-year period, follow through on all their commitments in their AFFH certification by taking some steps towards each of the goals in the AFFH certification.

Following the same procedures as amendments to the consolidated plan, jurisdictions would be able to amend or change their goals if they discover a material barrier to achieving the goal or a reason why that goal is no longer the best means to AFFH. HUD would review these reports for completion and to verify that jurisdictions used concrete and measurable standards. HUD would not make a qualitative assessment of such reports.

This rule seeks to tailor AFFH requirements applicable to PHAs while still verifying that PHAs are fulfilling their AFFH obligations. PHAs are already required to participate in the development of the consolidated plan actively. This rule would emphasize this requirement and establish that a PHA is generally required to AFFH only in its programs and in the areas under its direct control, and to certify that it will AFFH. A PHA would not be required to submit a certification detailing AFFH goals and obstacles. However, a PHA would be required to certify that it has consulted with the local jurisdiction on AFFH and would AFFH in its programs and in areas under its direct control. If a PHA has been subject to a HUD letter of finding or an adjudicated negative finding in a complaint brought by HUD or DOJ, finding a violation of the Fair Housing Act in the last two years, then HUD proposes that the PHA must include with its certification an explanation of what steps the PHA has taken and is taking to resolve the violation.

Question for Comment 28: As discussed above concerning jurisdictions, HUD is concerned that taking into account adversely adjudicated civil rights cases which were not brought by HUD or DOJ will unduly encourage PHAs to settle civil rights claims rather than risk an adverse ruling affecting the PHA's standing with HUD. HUD seeks comment on whether, and if so how, it could take these cases into account without unduly influencing civil rights litigation.

Question for Comment 29: What should cooperation between PHAs and consolidated plan jurisdictions look like?

Question for Comment 30: How should this rule balance the need for PHA engagement and contribution to an area's AFFH requirements while not creating requirements that may be overly burdensome?

Pursuant to Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the Executive Order. Executive Order 13563 (Improving Regulations and Regulatory Review) directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. HUD believes that this proposed rule would empower local jurisdictions to determine how to AFFH rather than mandating that jurisdictions act on specific policies, and thus create a regulatory process that empowers individual jurisdictions to act on local determinations of need and within local budgetary and resource constraints.

The proposed rule has been determined to be a “significant regulatory action,” as defined in section 3(f) of Executive Order 12866, but not economically significant. The docket file is available for public inspection online at www.regulations.gov .

Executive Order 13771, entitled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017. This proposed rule is expected to be an E.O. 13771 deregulatory action. While the burden in creating a consolidated plan is expected to increase slightly as the jurisdiction prepares a Fair Housing Report, the overall burden on the jurisdiction is greatly lessened because the lengthy Assessment of Fair Housing (AFH), with its separate community engagement and reporting requirements, would be eliminated under this proposal. Jurisdictions would be able to determine their actions to AFFH based on their capacity and needs, allowing jurisdictions to avoid burdensome requirements beyond their abilities.

The previously approved information collections for the AFFH Local Government and PHA and Assessment Tools (2529-0054 and 2529-0055, respectively) had a total, combined 665,862 burden hours for all respondents. This was due to the extensive nature of the tools and the additional public meeting requirements to complete an AFH. HUD has already temporarily withdrawn the Local Government Assessment Tool, and this proposed rule would make that removal permanent. By fully incorporating the proposed AFFH process into the existing consolidated plan process, HUD expects that the AFFH process will result in only 10 hours per response, or a total of 12,660 total hours, a significant reduction from the previous process requirements.

The proposed rule significantly reduces the reporting burden for jurisdictions in the formulation of AFFH strategies, reducing costs by an estimated $23.7 million per year. Under the proposed rule, HUD would measure jurisdictions' progress toward their identified AFFH goals through publicly available data focused on the availability and quality of affordable housing, reward high performing jurisdictions with unspecified incentives, and provide technical assistance to low performing jurisdictions. Qualitatively, if the metrics and incentives are effective in influencing jurisdictions' behavior, availability, and quality of affordable housing options should increase as Federal and local resources are devoted to such activities.

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

This proposed rule is a policy document that sets out fair housing and nondiscrimination standards. Accordingly, under 24 CFR 50.19(c)(3), this proposed rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ).

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The undersigned certifies that this rule would not have a significant economic impact on a substantial number of small entities.

This rule proposes to strengthen the way in which HUD and its program participants meet the requirement under the Fair Housing Act to take affirmative steps to further fair housing. The preamble identifies the statutes and executive orders that address this requirement and that place responsibility directly on certain HUD program participants, specifically, local governments, states, and PHAs, underscoring that the use of federal funds must promote housing choice and open communities. Although local governments, states, and PHAs must affirmatively further fair housing independent of any regulatory requirement imposed by HUD, HUD recognizes its responsibility to provide leadership and direction in this area, while preserving local determination of fair housing needs and strategies.

This rule primarily focuses on establishing a regulatory framework by which program participants may more effectively report how they meet their statutory obligation to affirmatively further fair housing. This rule builds on the statutory requirements to affirmatively further fair housing in conjunction with the development of consolidated plans for state and local governments and PHA Plans for PHAs and, in doing so, provides for all program participants to comply with their statutory requirements in a cost-efficient and effective manner.

Jurisdictions submitting consolidated plans do so usually because they receive State or Entitlement CDBG funds. In order to be an entitlement jurisdiction, the jurisdiction must be a principal city of a metropolitan statistical area, be a metropolitan city with a population of at least 50,000, or be a qualified urban county with a population of at least 200,000. This rule would change the certification requirements for PHAs in their annual plans to require that PHAs certify they will participate in the development of the consolidated plan. This participation will naturally be shaped by the needs and resources of the PHA.

As discussed more fully in the “Executive Order 13771, Regulatory Costs” section, above, and in the proposed regulatory impact analysis (RIA), the rule proposes to reduce the administrative burden on program participants in preparing and submitting an AFFH certification to HUD as compared to the current AFH process. The proposed rule would do this by fully incorporating the AFFH process into the consolidated plan process and allowing jurisdictions to determine how to AFFH based on their unique combination of resources, economic situations, and local needs.

Nevertheless, HUD is sensitive to the fact that the uniform application of requirements on entities of differing sizes may place a disproportionate burden on small entities. HUD, therefore, is soliciting alternatives for compliance from small entities as to how these small entities might comply in a way less burdensome to them.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements contained in this proposed rule have been approved by OMB under the Paperwork Reduction Act and assigned OMB control number 2506-0117 (Consolidated Plan, Annual Action Plan & Annual Performance Report). The collection requirement will be amended to reflect the altered burden contained in this proposed rule.

HUD anticipates that the impact of this rule on document preparation time is reduced from the burden that it may otherwise be because the rule integrates the AFFH requirements with the consolidated and PHA planning processes. Additionally, states, local governments, and PHAs are already required to prepare written AFFH plans, undertake activities to overcome identified barriers to fair housing choice, and maintain records of the activities and their impacts. The principal differences imposed by this proposed rule would be that the program participants are no longer required to create plans based on specified data but would instead be permitted to determine how to AFFH based on their local needs and available resources. In addition, because the AFFH process is wholly incorporated into the existing consolidated and PHA planning processes, local governments, states, and PHAs would not have to establish additional AFFH procedures.

HUD published a notice on May 23, 2018, temporarily withdrawing the information collection in OMB Control Number 2529-0054, the Assessment Tool for Local Governments. This proposed rule makes that removal permanent, along with the removal of the Assessment Tool for PHAs, OMB Control Number 2529-0055.

The burden of the information collections in this proposed rule is estimated as follows:

In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments from members of the public and affected agencies concerning the information collection requirements in the proposed rule regarding:

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

(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;

(3) Whether the proposed collection of information enhances the quality, utility, and clarity of the information to be collected; and

(4) Whether the proposed information collection minimizes the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology ( e.g., permitting electronic submission of responses).

Interested persons are invited to submit comments regarding the information collection requirements in this rule. Under the provisions of 5 CFR part 1320, OMB is required to make a decision concerning this collection of information between 30 and 60 days after the publication date. Therefore, a comment on the information collection requirements is best assured of having its full effect if OMB receives the comment within 30 days of the publication. This time frame does not affect the deadline for comments to the agency on the proposed rule, however. Comments must refer to the proposed rule by name and docket number (FR-6123) and must be sent to:

HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503, Fax number: 202-395-6947

and

Colette Pollard, HUD Reports Liaison Officer, Department of Housing and Urban Development, 451 7th Street SW, Room 2204, Washington, DC 20410

Interested persons may submit comments regarding the information collection requirements electronically through the Federal eRulemaking Portal at http://www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the http://www.regulations.gov website can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4; approved March 22, 1995) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments, and on the private sector. This rule does not impose any Federal mandates on any state, local, or tribal government, or on the private sector, within the meaning of the UMRA.

Accordingly, for the reasons described in the preamble, HUD proposes to amend 24 CFR parts 5, 91, 92, 570, 574, 576, 903, 905 as follows:

Background

On September 10, 2019, the Treasury Department and the IRS published in the Federal Register (84 FR 47455) a notice of proposed rulemaking (REG-125710-18) proposing revisions to the rules in §§ 1.382-2 and 1.382-7 (September 2019 proposed regulations). These rules would affect the determination of net built-in gains and losses and recognized built-in gains and losses under section 382(h) that, in turn, affect the limitation under section 382 on net operating losses and disallowed business interest expense under section 163(j).

Proposed §§ 1.382-2(b)(4) and 1.382-7(g)(1), as set forth in the September 2019 proposed regulations, provided that the September 2019 proposed regulations would apply to ownership changes that occur after the date the Treasury decision adopting the September 2019 proposed regulations as final regulations is published in the Federal Register . As noted in part II of the Background in the September 2019 proposed regulations, section V of Notice 2003-65 (2003-2 C.B. 747) provides that taxpayers may rely on either of two safe harbor approaches for applying section 382(h) to an ownership change “prior to the effective date of temporary or final regulations under section 382(h).”

Taxpayers and practitioners have expressed concern that the applicability date set forth in the September 2019 proposed regulations would impose a significant burden on taxpayers evaluating and negotiating business transactions, due to their uncertainty regarding when those transactions will close and when the September 2019 proposed regulations will be finalized. As a result, taxpayers and practitioners have requested transition relief with regard to ownership changes caused by pending transactions. In connection with this request, taxpayers and practitioners also have expressed concern that transition relief limited to transactions for which a binding agreement is in effect on or before the applicability date of final regulations would be inadequate, because pending transactions regularly are modified or delayed prior to closing.

As explained more fully in the Explanation of Provisions, this notice of proposed rulemaking modifies the applicability dates for the September 2019 proposed regulations by withdrawing the text of proposed §§ 1.382-2(b)(4) and 1.382-7(g), as set forth in the September 2019 proposed regulations, and proposing revised applicability dates.

To address the concerns raised by taxpayers and practitioners, the Treasury Department and the IRS are withdrawing the text of proposed §§ 1.382-2(b)(4) and 1.382-7(g) contained in the September 2019 proposed regulations. In its place, the Treasury Department and the IRS are proposing the revised applicability date text set forth in proposed §§ 1.382-2(b)(4) and 1.382-7(g) as contained in this notice of proposed rulemaking.

The Treasury Department and the IRS do not intend there to be any gap between the date on which taxpayers can no longer rely on Notice 2003-65 and the date on which the final regulations are applicable. Other than in the case of the two exceptions described in parts II and III of this Explanation of Provisions, the applicability date of the final regulations will be 30 days after the date the Treasury decision containing such regulations is published in the Federal Register (delayed applicability date). As provided in this proposed regulation, Notice 2003-65 will remain applicable to ownership changes to which the final regulations do not apply.

The first exception to the delayed applicability date relates to the rule in proposed § 1.382-7(d)(5), which provides that certain carryforwards of business interest expense disallowed under section 163(j) would not be treated as recognized built-in losses under section 382(h)(6)(B) if such amounts were allowable as deductions during the five-year recognition period set forth in section 382(h)(7)(A). This rule eliminates the possible duplicative application of section 382 to certain disallowed business interest expense carryforwards. Due to the noncontroversial nature of this rule, the Treasury Department and the IRS have determined that proposed § 1.382-7(d)(5) should be finalized before the remainder of the rules in the September 2019 proposed regulations, and that taxpayers should be allowed to retroactively apply this rule. To that end, the Treasury Department and IRS expect that proposed § 1.382-7(d)(5) will be finalized as part of the Treasury decision that finalizes the proposed section 163(j) regulations (see 83 FR 67490) and taxpayers will be permitted to apply the rule to prior periods. The Treasury Department and the IRS continue to actively study the remainder of the rules in the September 2019 proposed regulations.

Under the transition relief provisions proposed in this notice of proposed rulemaking, the final regulations would not apply to certain ownership changes that occur after the delayed applicability date. As discussed in part I of this Explanation of Provisions, the delayed applicability date will be 30 days after the date these regulations are published in the Federal Register . In order for an ownership change after the delayed applicability date to qualify for transition relief, the ownership change must occur immediately after an owner shift or equity structure shift that occurs:

(1) Pursuant to a binding agreement in effect on or before the delayed applicability date and at all times thereafter;

(2) Pursuant to a specific transaction described in a public announcement made on or before the delayed applicability date;

(3) Pursuant to a specific transaction described in a filing with the Securities and Exchange Commission submitted on or before the delayed applicability date;

(4) By order of a court (or pursuant to a plan confirmed, or a sale approved, by order of a court) in a title 11 or similar case (as defined in section 382(l)(5)(F)), provided that the taxpayer was a debtor in a case before such court on or before the delayed applicability date; or

(5) Pursuant to a transaction described in a private letter ruling request submitted to the IRS on or before the delayed applicability date.

The relevant owner shift or equity structure shift must be a specific, identifiable transaction. For example, a stock buyback pursuant to an announced, on-going program would not qualify.

Taxpayers may continue to rely on Notice 2003-65 with respect to any ownership change qualifying for transition relief, even though the Notice will be obsoleted on the delayed applicability date. However, a taxpayer may choose to apply the final regulations to such an ownership change.

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

Pursuant to the Regulatory Flexibility Act (RFA), 5 U.S.C. chapter 6, the Treasury Department and the IRS hereby certify that these proposed regulations will not have a significant economic impact on a substantial number of small entities. This proposed rule is limited to revising the proposed applicability date of proposed regulations under section 382(h) of the Internal Revenue Code that were published in the Federal Register (84 FR 47455) on September 10, 2019. Based on the narrow scope of corporate transactions covered by the proposed regulations' delayed applicability rules, the Treasury Department and the IRS have determined that these proposed regulations are unlikely to affect a substantial number of small entities and are unlikely to have a significant economic impact on any small entities affected.

The Treasury Department and the IRS invite comments on any impact that these regulations would have on small entities.

Pursuant to section 7805(f), this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The Treasury Department and the IRS appreciate the comments that taxpayers and practitioners already have provided regarding the September 2019 proposed regulations and encourage taxpayers and practitioners to provide comments on the proposed regulations contained in this notice of proposed rulemaking. In particular, the Treasury Department and the IRS request comments on whether taxpayers should be permitted to apply the final regulations to ownership changes occurring before the applicability date and what restrictions, if any, should be placed on such retroactive application.

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the Treasury Department and the IRS as prescribed in this preamble under the ADDRESSES heading. All comments will be available at http://www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place of the public hearing will be published in the Federal Register.

Notice 2003-65 is published in the Internal Revenue Bulletin (or Cumulative Bulletin) and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at http://www.irs.gov.

The principal authors of this notice of proposed rulemaking are Jonathan R. Neuville of the Office of Associate Chief Counsel (Corporate) and Kevin M. Jacobs, formerly of the Office of Associate Chief Counsel (Corporate). However, other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, under the authority of 26 U.S.C. 382(h)(3)(B)(ii), 382(m), and 7805, §§ 1.382-2(b)(4) and 1.382-7(g) of the notice of proposed rulemaking (REG-125710-18) published in the Federal Register on September 10, 2019 (84 FR 47455) are withdrawn.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

Concurrent with this proposed rule, MSHA is publishing a separate, substantially identical direct final rule in the Final Rules section of this Federal Register edition. The concurrent publication of these documents will speed notice and comment rulemaking under 30 U.S.C. 811 and the Administrative Procedure Act (see 5 U.S.C. 553) should the Agency decide to withdraw the direct final rule. All interested parties who wish to comment should comment at this time because MSHA does not anticipate initiating an additional comment period.

MSHA has determined that notice and public comment are unnecessary because the rule imposes no new requirements; it simply clarifies the application of MSHA's existing standards to technologies developed after the standards were promulgated. If MSHA does not receive significant adverse comments on or before February 13, 2020, the Agency will publish notification in the Federal Register no later than March 16, 2020, confirming the effective date of the direct final rule.

In the event the direct final rule is withdrawn because of significant adverse comments, the Agency will proceed with this proposed rulemaking by addressing the comments received and publishing a final rule. The comment period for this proposed rule runs concurrently with that of the direct final rule. Any comments received under this proposed rule will be treated as comments regarding the direct final rule. Likewise, significant adverse comments submitted to the direct final rule will be considered as comments to this proposed rule. The Agency will consider such comments in developing a subsequent final rule.

A detonator is a device containing a detonating charge that is used to initiate an explosion reliably, at a specified time, and, as applicable, in a prescribed sequence. There are three types of detonators primarily used in blasting operations in MNM mines. These are non-electric, electric, and electronic detonators. A non-electric detonator is designed to initiate explosions without the use of electric wires. A non-electric detonator includes devices that use detonating cords, shock-tube systems or safety fuse detonators, or a combination of these.

An electric detonator uses electrical currents to initiate detonation. Electrical currents from the detonator's lead wires or connectors ignite an electric match which in turn ignites a pyrotechnic delay element that initiates the base charge. The pyrotechnic delay element burns at an approximated rate. The length and composition of the pyrotechnic delay element control the approximate rate of burn and thus the timing. Since the approximate rate of burn is subject to variation, the timing accuracy of electric detonators is affected. Electric detonator systems typically include a blasting machine that delivers the electrical current to the detonator. Circuit testers, such as a blaster's galvanometer, are used to check the continuity and resistance of the individual detonator and the entire electric circuit. 1

In contrast to electric detonators, electronic detonator systems do not have a pyrotechnic delay element. Electronic detonator systems are designed to use electronic components to transmit a firing signal with validated commands and secure communications to each detonator, and a detonator cannot be initiated by other means.

Typically, each detonator has a microchip to control sequence timing and an integrated circuit chip and a capacitor, internal to each detonator, to control the initiation time. Electronic detonators enable exact time delays between blasts to ensure the blast energy is used to break rock, reducing fugitive energy loss in the form of vibrations.

Unlike non-electric and electric systems, electronic detonators are uniquely designed by each manufacturer, which requires that these devices be used according to manufacturers' instructions. Because these electronic detonator systems require password log-ins, operators must authorize persons to initiate the detonations, which minimizes the potential for accidental misuse.

Based on MSHA's experience with the electronic detonator systems it has reviewed, 2 the Agency has found that electronic detonator systems have a number of advantages compared to non- electric and electric systems, including greater operator control to limit their use to authorized personnel, more precise timing, reduced vibrations, and a reduced sensitivity to stray electrical currents and radio frequencies.

MSHA's existing standards in 30 CFR parts 56 and 57, Subpart E, focus on hazards associated with transporting, maintaining, using, or working near explosive materials, including detonators.

Since 1979, MSHA standards have defined detonators to mean any device containing a detonating charge that is used to initiate an explosive such as electric blasting caps and non-electrical instantaneous or delay blasting caps. At the time these standards were issued, MSHA believed that the definition provided for the automatic inclusion of new detonators as they developed. Metal and Nonmetal Mine Safety; New and Revised Definitions and Safety and Health Standards for Explosives, 44 FR 48535, 48538 (August 17, 1979).

On January 18, 1991, MSHA revised the definition of detonators in §§ 56.6000 and 57.6000 (56 FR 2072) to clarify that the definition does not include detonating cords and that the detonators may be either “Class A” (explosives that include devices that constitute a maximum shipping hazard) or “Class C” (explosive devices that may contain Class A explosives, but in restricted quantities) as classified by the Department of Transportation (DOT) in 49 CFR 173.53 and 173.100. 3

Since MSHA published these rules, advancements in computer and micro-processing technology have led to electronic timing of detonations. On September 28, 2004, MSHA issued Program Information Bulletin (PIB) No. P04-20, Electronic Detonators and Requirements for Shunting and Circuit Testing, to respond to stakeholder inquiries concerning how to apply the MSHA requirements for shunting and circuit testing to electronic detonators. In PIB No. P04-20, MSHA reported results of the Agency's evaluation of two electronic detonator systems. MSHA found that the systems contained their own integral elements for shunting and circuit testing, which met the Agency's existing standards for shunting and circuit testing when used as recommended by the manufacturers. Since issuing PIB No. P04-20, MSHA has evaluated several other electronic detonator systems and has determined that these systems also contain their own integral elements for shunting and circuit testing that meet the intended MSHA requirements when these systems are used according to the manufacturers' instructions. Existing MSHA standards require operators to adhere to manufacturers' instructions for all detonation systems, including new systems. See 30 CFR 56.6308 and 57.6308; 56 FR 2072, 2081.

On February 28, 2008, the Small Business Administration (SBA) selected MSHA's explosives standards for regulatory review pursuant to its Small Business Regulatory Review and Reform Initiative  4 which was designed to identify existing federal rules that small business stakeholders believe should be reviewed and reformed. The MSHA reform nomination, discussed in the SBA's February 2008 report, stated that MSHA should update its existing explosive standards to be consistent with modern mining industry standards. The report further noted industry concerns that MSHA's existing standards do not address fundamental aspects of explosive safety, such as electronic detonation. On July 30, 2008, SBA also testified before the House Subcommittee on Regulations, Healthcare, and Trade that SBA's Office of Advocacy had met with nominated agencies to discuss the importance of reviewing and reforming the identified rules. 5

In 2018, the Agency announced its intent to review existing regulations to assess compliance costs and reduce regulatory burden. As part of this review, MSHA sought stakeholders' assistance in identifying those regulations that could be repealed, replaced, or modified without reducing miners' safety or health. MSHA published on its website, https://www.msha.gov/provide-or-view-comments-msha-regulations-repeal-replace-or-modify , a notice that the Agency is seeking assistance in identifying regulations for review. All comments are posted on the Agency's website.

As a result of this solicitation, MSHA received comments from the Institute of Makers of Explosives (IME) requesting that MSHA modernize its standards to “properly address” electronic detonators. IME noted that electronic detonators have been used by the industry for over two decades and provide a “sophisticated level of safety and security,” and recommended several regulatory modifications to both coal and MNM standards. Specifically, IME proposed changes to §§ 56.6000 and 57.6000, the definition of “Detonator;” 56.6310, Misfire waiting period; 57.6407, Circuit testing; 57.6604, Precautions during storms; 75.1310, Explosives and blasting equipment; and 77.1303, Explosives, handling and use.

For this proposed rulemaking, MSHA addresses the use of electronic detonators in MNM surface and underground mines and modifies §§ 56.6000 and 57.6000, the definition of “Detonator;” 56.6310 and 57.6310, Misfire waiting period; 56.6407 and 57.6407, Circuit testing; and 57.6604, Precautions during storms. MSHA is amending certain portions of the explosives standards to include electronic detonators. However, the other explosives standards in Subparts E in 30 CFR parts 56 and 57 continue to apply to electronic detonators.

For those electronic detonator systems that the Agency has reviewed, MSHA agrees with IME that electronic detonators provide a working environment that is as safe or safer for miners compared to non-electric and electric detonators because they provide for greater control of a blast. 6 MSHA believes that recognizing electronic detonator systems as distinct from electric detonators will eliminate confusion over certain regulatory requirements. For example, §§ 56.6401 and 57.6401 and §§ 56.6407 and 57.6407 require that electric detonators be shunted and tested to provide protection against premature detonation caused by extraneous current flowing through portions of the circuit as they are prepared. Operators use a galvanometer or other instrument to test electric circuits to determine whether an individual series circuit is continuous, to locate broken wires and connections, and to avoid introducing excessive current to the circuit. 56 FR 2082-83.

However, the elect electronic detonator systems that MSHA has reviewed contain their own integral elements for shunting and circuit testing that exceed the safety protections in MSHA's requirements when the systems are used according to the manufacturer's instructions. These systems, typically, are designed with an integrated circuit and a capacitor system internally wired to each electronic detonator, which isolates the base charge from the wires leading to the internal capacitors and microchip, making shunting unnecessary.

In addition, based on MSHA's experience, the Agency has found that electronic detonator systems inherently provide more protection than MSHA's shunting and circuit testing standards do for electric detonators because electronic detonator systems communicate digitally to each detonator and are designed to prevent interference from stray currents and other electromagnetic interference. Additionally, electronic detonators are less likely to be misused because they cannot be fired simply by a battery or by other routine electric sources.

Under proposed §§ 56.6000 and 57.6000, the definition for Detonator would be modified by adding the words “electronic detonators,” before the word “electric” in the second sentence of the paragraph. Also, in proposed § 56.6000 a comma would be added after the word “caps” in the second sentence.

The proposed change to §§ 56.6000 and 57.6000, Detonator, would modernize the definition by including electronic detonators. The proposed addition of a comma in § 56.6000 is for clarity and would conform with the definition of Detonator in § 57.6000.

Sections 56.6310 and 57.6310 require that in the event of a misfire while blasting, personnel should wait a specific time period based on the type of detonator being used before entering the blast area for safety.

Under proposed §§ 56.6310 and 57.6310, a new paragraph (c) would be added that would require a 30 minute waiting period, or for the manufacturer-recommended time, whichever is longer, in the event of a misfire while blasting with an electronic detonator.

MSHA believes that waiting at least 30 minutes before entering a blast area if electronic detonators are involved in a misfire provides personnel an adequate amount of time to analyze the circumstances of the misfire and to develop a plan of action to safely enter the blast area. In MSHA's experience, this waiting period is consistent with industry-recommended standards. 7 In the event that an electronic detonator manufacturer recommends more than a 30-minute waiting period if a misfire occurs using its electronic detonators, MSHA proposes to require that persons must follow the manufacturer's recommended wait time before entering the blast area. This is consistent with §§ 56.6308 and 57.6308, requiring persons to follow manufacturer's instructions for using detonation systems.

Sections 56.6407 and 57.6407 require that blasting circuits be tested to ensure the circuits are properly wired. Under proposed § 56.6407(a) and (c), the words “or electronic” would be added to paragraphs (a) and (c). In addition, under proposed § 57.6407(a)(3) and (b)(2), the words “or electronic” would be added to paragraphs (a)(3) and (b)(2).

A blasting galvanometer is used to test electric detonator circuits to prevent misfires by determining whether an individual series circuit is continuous and by locating broken wires and connections. A blasting galvanometer or other appropriate type of testing equipment is used to avoid introducing excessive current into the circuit. This differs from the electronic detonator systems the Agency has reviewed because these systems have a means for circuit testing incorporated into their designs. The Agency anticipates that other electronic detonator systems MSHA has not reviewed also have integral circuit testing mechanisms. While revising the standard would clarify that the circuit-testing requirement applies to electronic detonator systems, the Agency believes that most or all electronic detonator systems already comply with this safety standard. The proposed changes are not intended to require that electronic detonator systems with integral circuit testing be tested additionally with a galvanometer or other outside mechanism.

Under § 57.6604, underground electrical blasting operations must be suspended during the approach and progress of an electrical storm. Electromagnetic fields and stray currents can be generated from lightning. Higher energy levels of electromagnetic interference and stray current are generally disruptive or damaging to electronic equipment. Based on MSHA's experience with the electronic detonators it has examined, electronic detonator systems and technologies generally have the base charge isolated from the wires leading to the internal capacitors and microchip providing built-in protection from interference from electromagnetic fields and stray current. However, MSHA is aware that an electromagnetic pulse such as lightning strikes traveling through underground mines by paths such as air lines, water lines, and conductive ore bodies, can damage all types of detonators and equipment and cause misfires. Therefore, under proposed § 57.6604(b), the words “electronic or” would be added after the word “Underground.”

The Agency believes that most or all electronic detonator systems are designed to minimize or eliminate the possibility that lightning could initiate a blast; many systems may not be capable of being initiated by lightning. In addition, to the extent these systems are capable of being initiated by lightning, MSHA believes that operators already have been applying these requirements to electronic detonator systems through manufacturers' directions and accepted industry practices. MSHA believes the proposed revision will have little or no actual impact on operators' existing practices and simply eliminates ambiguity in the requirements under § 57.6604(b).

Executive Orders (E.O.) 12866 and 13563

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

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

MSHA has assessed the costs and benefits of the changes and has determined that there are no costs associated with this proposed rule. Currently, electronic detonators have been used by the mining industry for more than 20 years and account for at least 15 percent of the blast initiation systems used in the U.S. in all industries. 8 As part of the Agency's regulatory reform efforts, MSHA received comments from industry representatives supporting the proposed changes. This proposed rule codifies activity already undertaken by the mining industry regarding electronic detonators. This proposed rulemaking is a deregulatory action under E.O. 13771 in its effects.

This proposed rule will not increase or decrease the costs or benefits associated with the use of electronic detonators; however, this action would eliminate ambiguity about detonator options in the application of existing requirements so that mine operators would be able to use their resources more efficiently when making business decisions.

Among other things, this proposed rule clarifies the nonapplicability of certain MSHA standards to electronic detonating systems. For example, while the new “circuit testing” standard now makes clear that the standard contemplates electronic detonating systems as well as electric detonators, the preamble clarifies that most or all of these electronic systems inherently comply and that, therefore, the specific actions operators must take when using electric detonators generally need not be taken for electronic detonating systems. Likewise, while this proposed rulemaking does not directly address MSHA's shunting standards, the preamble clarifies that, while those standards require operators to take specific actions when using electric detonators, they are not applicable to inherently compliant electronic detonating systems. Through these clarifications, MSHA would ensure the safety advantages offered by the use of electronic detonators are available to mine operators, including greater operator control to limit use to authorized personnel, more precise timing, reduced vibrations, and a reduced sensitivity to stray electrical currents and radio frequencies. Furthermore, consistent with the directive in E.O. 13777, this proposed rule would update outdated regulations and accommodate technological advances.

Under E.O. 12866, a significant regulatory action is one meeting any of a number of specified conditions, including the following: Having an annual effect on the economy of $100 million or more, creating a serious inconsistency or interfering with an action of another agency, materially altering the budgetary impact of entitlements or the rights of entitlement recipients, or raising novel legal or policy issues. MSHA has determined that the proposed rule is “other significant” under E.O. 12866.

MSHA has concluded that the requirements of the proposed rule would be both technologically and economically feasible because the proposed requirements are already generally accepted industry practices for the use of electronic detonators.

Pursuant to the Regulatory Flexibility Act (RFA) of 1980, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), MSHA has analyzed the compliance cost impact of the proposed rule on small entities. Based on that analysis, MSHA certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities because it does not impose any new costs. Therefore, the Agency is not required to develop an initial regulatory flexibility analysis.

The Paperwork Reduction Act (PRA) provides for the Federal government's collection, use, and dissemination of information. The goals of the PRA include minimizing paperwork and reporting burdens and ensuring the maximum possible utility from the information that is collected (44 U.S.C. 3501). There are no information collections associated with this proposed rule.

MSHA has reviewed the proposed rule under the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501 et seq. ). MSHA has determined that this proposed rule does not include any federal mandate that may result in increased expenditures by State, local, or tribal governments; nor would it increase private sector expenditures by more than $100 million (adjusted for inflation) in any one year or significantly or uniquely affect small governments. Accordingly, the Unfunded Mandates Reform Act of 1995 requires no further Agency action or analysis. Since the proposed rule does not cost over $100 million in any one year, the proposed rule is not a major rule under the Unfunded Mandates Reform Act of 1995.

The proposed rule does not have “federalism implications” because it would not “have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Accordingly, under E.O. 13132, no further Agency action or analysis is required.

The proposed rule does not implement a policy with takings implications. Accordingly, under E.O. 12630, no further Agency action or analysis is required.

The proposed rule was written to provide a clear legal standard for affected conduct and was carefully reviewed to eliminate drafting errors and ambiguities, so as to minimize litigation and undue burden on the Federal court system. Accordingly, the proposed rule meets the applicable standards provided in section 3 of E.O. 12988, Civil Justice Reform.

This proposed rule does not have “tribal implications” because it would not “have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.” Accordingly, under E.O. 13175, no further Agency action or analysis is required.

Executive Order 13211 requires agencies to publish a statement of energy effects when a rule has a significant energy action that adversely affects energy supply, distribution or use. MSHA has reviewed this proposed rule for its energy effects because the proposed rule applies to the metal and nonmetal mining sector. MSHA has concluded that it is not a significant energy action because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Accordingly, under this analysis, no further Agency action or analysis is required.

MSHA has thoroughly reviewed the proposed rule to assess and take appropriate account of its potential impact on small businesses, small governmental jurisdictions, and small organizations. MSHA has determined and certified that the proposed rule does not have a significant economic impact on a substantial number of small entities.

For the reasons set out in the preamble, and under the authority of the Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006, MSHA proposes to amend chapter I of title 30 of the Code of Federal Regulations as follows:

The revisions and addition read as follows:

The revisions and addition read as follows:

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background, Purpose, and Legal Basis

Recurring marine events within the Seventh Coast Guard District are currently listed in 33 CFR 100.701, Table to § 100.701. The process for amending the table ( e.g. adding or removing marine events) is lengthy and inefficient since it includes recurring marine events for seven different COTP zones within the Seventh District. To expedite and simplify the rule-making process for new marine events/special local regulations, COTP's resorted to creating individual rules rather than amending the Table to § 100.701.

This rule serves two purposes: (1) Create a table of recurring marine events/special local regulations occurring solely within the COTP St. Petersburg Zone, and (2) consolidate into that table marine events/special local regulations previously established outside of Table to § 100.701. The proposed new table would facilitate management of and public access to information about marine events within the COTP St. Petersburg Zone.

The Coast Guard proposes this rulemaking under authority in 46 U.S.C. 70041.

This rule proposes to make the following changes:

1. Establish 33 CFR 100.703 Special Local Regulations; Marine Events Within the Captain of the Port St. Petersburg Zone;

2. Remove the existing marine events/special local regulations listed in Table to § 100.701(c) under COTP Zone St. Petersburg; Special Local Regulations to proposed new § 100.703, Table to § 100.703;

3. Delete the existing special local regulation in § 100.717 for the “Annual Fort Myers Beach Offshore Grand Prix; Fort Myers, FL” because it is no longer held;

4. Delete the existing special local regulation in in § 100.718 for the “Annual Suncoast Kilo Run; Sarasota Bay, Sarasota, FL” because it is no longer held;

5. Move the existing special local regulation in § 100.720 for the event, “Suncoast Super Boat Grand Prix, Gulf of Mexico; Sarasota, FL” to proposed new § 100.703, Table to § 100.703, and delete existing § 100.720;

6. Move the existing special local regulation in § 100.721 for the event, “Clearwater Super Boat National Championship, Gulf of Mexico; Clearwater Beach, FL”, to proposed new § 100.703, Table to § 100.703, and delete existing § 100.721;

7. Move the existing special local regulation in § 100.722 for the event, “Bradenton Area Riverwalk Regatta, Manatee River; Bradenton, FL” to proposed new § 100.703, Table to § 100.703, and delete existing § 100.722;

8. Delete the existing special local regulation in § 100.728 for the event, “Hurricane Offshore Classic, St. Petersburg, FL” because it is no longer held;

9. Move the existing special local regulation in § 100.734 for the event, “Annual Gasparilla Marine Parade; Hillsborough bay, Tampa, FL” to proposed new § 100.703, Table to § 100.703, and delete existing § 100.734;

10. Move the existing special local regulation in § 100.735 for the event, “Annual OPA World Championships, Gulf of Mexico; Englewood Beach, FL” to proposed new § 100.703, Table to § 100.703, and delete existing § 100.735;

11. Delete the existing special local regulation in § 100.736 for the event, “Annual Fort Myers Beach air show” because it is no longer held;

12. Delete the existing special local regulation in § 100.740 for the event, “Annual Offshore Super Series Boat Race” because it is no longer held;

13. Add new event, “Gulfport Grand Prix, Gulfport, FL” to proposed new § 100.703, Table to § 100.703, Line 3;

14. Add new event, “St. Pete Beach Grand Prix of the Gulf, St. Pete Beach, FL” to proposed new § 100.703, Table to § 100.703, Line 4;

15. Add new event, “Battle of the Bridges, Venice, FL” to proposed new § 100.703, Table to § 100.703, Line 6; and

16. Add new event, “Roar Offshore, Fort Myers Beach, FL” to proposed new § 100.703, Table to § 100.703, Line 8.

The marine events as listed in proposed new Table to proposed new § 100.703, Table to § 100.703 are scheduled to occur over a particular time during each month each year. Exact dates are intentionally omitted since calendar dates for a specific events change from year to year. Once dates for a marine event are known, the Coast Guard will notify the public of its intent to enforce the special local regulation through various means including a Notice of Enforcement published in the Federal Register , Local Notice to Mariners, and Broadcast Notice to Mariners.

We developed this proposed 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 NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM 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 special local regulations. These areas are limited in size and duration, and usually do not affect high vessel traffic areas. Moreover, the Coast Guard would provide advance notice of the regulated areas to the local maritime community via Notice of Enforcement published in the Federal Register , by Local Notice to Mariners, Broadcast to Mariners via VHF-FM marine channel 16, and the rule would allow vessels to seek permission to enter the regulated 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 proposed rule would 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 IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

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 proposed 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. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would 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 proposed 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 proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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 proposed rule has implications for federalism or Indian tribes, please contact 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 proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, 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 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 proposed rule involves the establishment of special local regulations for recurring marine events within the COTP St. Petersburg Zone. Normally such actions are categorically excluded from further review under paragraphs L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Memorandum for Record supporting this determination is available in the docket where indicated in ADDRESSES . We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

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.

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, see DHS's Correspondence System of Records notice (84 FR 48645, September 26, 2018).

Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that website's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR parts 100 as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking, FCC 19-102, adopted on November 22, 2019 and released on November 25, 2019. The complete text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW, Room CY-A257, Washington, DC 20554. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to FCC504@fcc.gov or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). The complete text of the order also is available on the Commission's website at https://www.fcc.gov.

1. The Commission oversees a number of critical support programs, including the Universal Service Fund (USF) programs, the Telecommunications Relay Services (TRS) programs, and the National Deaf-Blind Equipment Distribution Program (NDBEDP). Part of the Commission's role in overseeing these programs is protecting them from fraud, waste, and abuse. One important way the Commission does this is by identifying and barring from participation those who have abused or are likely to abuse these programs. This is why the Commission has, for its USF programs, implemented rules that suspend or debar those convicted of or found civilly liable for certain misconduct related to these programs.

2. While these rules have positive effects, this proceeding explores whether there is more that the Commission can do. Specifically, we propose to adopt new rules consistent with the Office of Management and Budget Guidelines to Agencies on Government Debarment and Suspension (Nonprocurement) (the Guidelines). The Guidelines provide additional tools—adopted by a number of other federal agencies across the government—that could enhance the Commission's ability to root out bad actors from participation in its support programs. If adopted, these measures could not only help the Commission to fulfill its responsibility of ensuring that the USF and TRS funds are well managed, efficient, and fiscally responsible, but may also assist us in bridging the digital divide by ensuring that fund expenditures, including support for expanded broadband deployment, are directed in the first instance to good actors who will use them only for their intended purpose. For these reasons, this document proposes to adopt new rules consistent with the Guidelines in lieu of the Commission's current rules, and to apply these new rules to the four USF programs, as well as to the Commission's TRS programs  1 and to the NDBEDP. 2

3. Most federal agencies have implemented the Guidelines—either wholesale or with modifications. The Commission stands apart from these agencies with its own rules for reasons that are largely historical. In 2003, when the Commission adopted its own suspension and debarment rules for certain USF programs, independent regulatory agencies like the Commission were expressly excluded from coverage under the Guidelines for Nonprocurement Debarment and Suspension that preceded the current Guidelines. 3 But when OMB adopted in 2005 the interim final changes to what have become known as the Guidelines, OMB modified this long-standing definition to remove the exclusion for independent agencies. As a result, independent regulatory agencies such as the Commission may participate in the government-wide suspension and debarment system by adopting the Guidelines. With that history in mind, we here briefly summarize these two debarment mechanisms and explain some of the key differences between them.

4. The Commission's current rules addressing suspension and debarment apply only to the USF programs. 4 In general, these rules cover a relatively narrow range of conduct and are clear-cut, mandatory, and virtually self-executing. The rules are non-discretionary and require the Commission to suspend or disbar any “person”  5 convicted (by plea or judgment) of, or found civilly liable for, the “attempt or commission of criminal fraud, theft, embezzlement, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice and other fraud or criminal offense arising out of activities associated with or related to the schools and libraries support mechanism, the high-cost support mechanism, the rural health care support mechanism, and the low-income support mechanism.” A suspension or debarment of an entity applies to all organizational units of the entity unless the order specifies otherwise. A suspension immediately excludes a person from activities related to the USF programs, but only for a temporary period pending completion of the debarment proceedings. The debarment runs for the period specified by Commission order, generally three years.

5. Proceedings begin with a notice of suspension and proposed debarment issued by the Commission. The person subject to the suspension and proposed debarment has 30 days from the earlier of receipt of notice or publication in the Federal Register to challenge the Commission's action. The Commission must make a final ruling, overturning the original decision only in light of “extraordinary circumstances,” no later than 90 days after receipt of a petitioner's arguments. While a suspension or debarment is in effect, the Commission may, on motion by the affected party or sua sponte, reverse such a finding or limit its effect in light of extraordinary evidence. The default period for debarment is three years, though the Commission may, if it serves the public interest, set a longer period at the beginning or extend the period during which it is in effect.

6. The Guidelines establish the framework for a government-wide debarment and suspension system for nonprocurement programs. 6 The Guidelines generally provide for suspension or debarment based on a range of misconduct. This range includes not only convictions of or civil judgments for fraud or certain criminal offenses, but also violations of the requirements of public transactions “so serious as to affect the integrity of an agency program” (including willful or repeated violations). 7 In addition, the Guidelines provide that suspension or debarment could be warranted for “[f]ailure to pay a single substantial debt, or a number of outstanding debts . . . owed to any Federal agency. . . .” Finally, the Guidelines provide the discretion to suspend or debar for “[a]ny other cause of so serious or compelling a nature that it affects [the party's] present responsibility.”

7. Suspensions under the Guidelines have prospective but immediate effect, and debarments are effective following a 30-day opportunity for a party to respond to a debarment notice. Once effective, an action to suspend or debar serves to automatically exclude the suspended or debarred party from new covered transactions government-wide, whether in procurement or nonprocurement programs or activities. For ongoing activities, “a participant may continue to use the services of an excluded person as a principal” if the participant was “using the services of that person in the transaction before the person was excluded.” The participant also has the option of discontinuing the excluded person's services and finding an alternative provider.

8. The Commission's rules differ from the Guidelines in several key respects. The Commission's rules are clear-cut and mandatory, with little room for discretion and a targeted focus on a narrow set of misconduct; the Guidelines, by contrast, address a broader range of misconduct and provide federal agencies with substantial discretion to suspend and debar entities based on consideration of numerous factors. Here, we briefly review some of the key differences between these two debarment mechanisms.

9. First, the rules differ in scope and reach. While the Commission's rules apply only to its four USF programs, the Guidelines broadly cover all nonprocurement transactions (unless otherwise modified by agency-specific rules) including subsidies, grants, loans, or other “payments for specified uses.” The Guidelines also reach further down the supply chain, requiring that, before a primary tier participant enters into a covered transaction with another person at the next lower tier—for example, a subcontractor—the participant must verify that the person with whom it intends to do business is not excluded or disqualified. 8

10. Second, the Guidelines provide greater discretion to agencies in determining which entity to debar and for what misconduct. As described above, the Guidelines consider a broader range of misconduct than the Commission's rules. They also do not require a prior court judgment or conviction. Thus, in contrast to the FCC's current rules, suspension or debarment actions under the Guidelines do not have to await completion of criminal or civil proceedings. 9 The Guidelines also allow an agency to impute conduct from an individual to an organization; from an organization to an individual or between individuals; or from one organization to another. Thus, action could be taken against an organization, not just a principal, or the reverse, in appropriate circumstances.

11. Third, the Guidelines provide greater flexibility in fashioning the terms of a suspension or debarment. The Guidelines afford a federal agency substantial discretion to suspend, based on adequate evidence, or debar, based on a preponderance of evidence, as determined in the discretion of the designated suspending or debarring official. The Guidelines also give a suspending official “wide discretion” to determine whether immediate action is necessary to protect the public interest.” As a result, an agency may immediately prevent the suspended party from entering into additional transactions under its programs. The Guidelines also allow an agency head to grant an “exception” to allow an excluded person to participate in a particular transaction.

12. Fourth, the Guidelines establish a government-wide debarment system. While determinations under the Commission's rules apply only to the Commission, the Guidelines provide for a government-wide system with reciprocity among federal agencies that adopt rules consistent with the Guidelines. This means that a party that has been suspended or debarred by another agency and placed on the government-wide System for Award Management Exclusions (commonly known as the “SAM Exclusions”) maintained by the General Services Administration (GSA)  10 would be barred from participation in covered transactions unless an exception were granted for good cause by the agency head. 11 To effect this reciprocity, the Guidelines impose affirmative disclosure requirements on “participants” in government programs or other covered transactions. 12 Before entering into a covered transaction, participants must notify the agency if they are presently excluded or disqualified. Those who are excluded from government programs will be listed on the System for Award Management Exclusions. In addition, primary tier participants ( i.e., generally those participants who transact business directly with a federal agency) must advise the agency whether they have been convicted of certain offenses within three years, indicted, or terminated from public transactions. Further, under the Guidelines, a federal agency must check to see whether a person is excluded or disqualified before entering directly into a covered transaction or approving a principal in that transaction, and before approving any lower tier participant or principal thereof (if agency approval is required).

13. This is not an exhaustive list of the differences between the Guidelines and the Commission's rules. We strongly encourage interested parties to review the OMB Guidelines, which can be found at 2 CFR part 180, in addition to this document.

14. We propose to adopt new rules consistent with the Guidelines. Doing so would impose the following new mechanisms and obligations, among others: (1) New procedural requirements that would allow the agency to respond quickly to evidence of misconduct through a suspension mechanism prior to any debarment, while providing for a later evidentiary proceeding that will permit the Commission to consider a broader range of wrongful conduct than is now considered; (2) requirements that program participants confirm that those with whom they do business are not already excluded or disqualified from government activities; and (3) reciprocity within the Government-wide system preventing a party that is suspended or debarred by another agency from participation in covered Commission transactions unless the Commission grants an exception for good cause. We seek comment on this proposal.

15. We propose to adopt new debarment and suspension rules for several reasons. First, adopting the Guidelines would allow the Commission to take remedial action before the issuance of a judgment or conviction, based on a broader range of factors. As explained above, under our current rules suspension and debarment are triggered only by a final conviction or civil judgment showing malfeasance arising from or related to USF programs. The Commission's current rules allow an entity to be subject to a Notice of Apparent Liability (NAL) supported by substantial evidence, or to enter into an executed Consent Decree with an admission of liability. However, even undisputed evidence supporting an NAL or Consent Decree, no matter how egregious, would not constitute sufficient grounds for a suspension or debarment under our rules, which require a judgment or conviction related to USF programs. In addition, many False Claims Act lawsuits arising from alleged wrongdoing in USF programs settle before final judgment, removing those cases from the reach of the Commission's suspension and debarment rules. Even if a conviction or civil judgment is pursued for malfeasance in a USF program, the litigation typically takes many years, and our current rules preclude a suspension or debarment while litigation is pending. Thus, while the Commission anticipated that the mandatory nature of the current debarment rules would be a strong tool to prevent fraud in the USF programs, the narrow trigger for suspension and debarment appears to be a significant constraint on the Commission's authority to protect the USF through those rules, in contrast to the more flexible approach under the Guidelines. 13 Finally, as noted above, malfeasance in other government programs or even criminal convictions outside the realm of the USF are not factors that the Commission may consider under the current rules. These and other limitations on our suspension and debarment procedures would be eliminated by adopting new rules consistent with the Guidelines.

16. Second, the Guidelines require that persons make advance disclosures regarding their exclusion or disqualification status prior to entering into covered transactions with federal agencies and participants in federal programs. More specifically, a person who enters into a covered transaction with a federal agency must disclose: Whether they are presently excluded or disqualified; recent convictions, civil judgments, indictments, or civil charges; and recent defaults on public transactions. Lower tier transactions ( e.g., between a program participant and a consultant) require only a disclosure of exclusion or disqualification status. These disclosures afford participants in transactions more information by which to evaluate whether it is appropriate or prudent to do business with the person making the unfavorable disclosures.

17. Third, under the Guidelines, the Commission would have authority, like other government agencies, to evaluate the wrongful or fraudulent conduct of companies or individuals in other dealings with the government, and to use the possibility of government-wide, rather than program-specific, suspension or debarment as a deterrent to bad actors. In contrast, under the Commission's current rules, even a company or individual debarred government-wide for criminal or other unlawful conduct currently could not be barred from participation in the Commission's USF programs without a prior judgment or conviction related to a USF program. Furthermore, a party suspended or debarred from the USF programs under our current rules could still participate in other Commission programs such as TRS or NDBEDP; bid for procurement contracts with the Commission; and participate in both procurement and nonprocurement programs with other government agencies.

18. We seek comment on the analysis above. Would adopting suspension and debarment rules consistent with the Guidelines offer the benefits described? Are there costs associated with adopting such rules—for example, that broader rules allowing for more agency greater discretion might be create regulatory uncertainty or be more difficult to administer—that might outweigh these benefits? Would adopting these rules result in unintended consequences not discussed here? We seek comment on these questions, as well as our proposal to adopt suspension and debarment rules consistent with the Guidelines.

19. Following the practice of other agencies, we propose to adopt rules consistent with the Guidelines by reference to the codified Guidelines, and to supplement the Guidelines through FCC-specific regulations, including rules addressing those matters for which the Guidelines give each agency discretion. We note that other federal agencies have adopted the bulk of the Guidelines with limited changes, and we propose to do the same here. In the remainder of this document, we propose supplemental rules and seek comment on how to implement the Guidelines in a manner that accommodates concerns that may be unique to the Commission's programs.

20. Our supplemental proposals fall into three areas. First, we propose to apply the suspension and debarment rules to a broader category of entities than are now covered, by defining “covered transactions” as including conduct taken by participants in the USF and TRS programs and the NDBEDP, and by including as covered transactions additional tiers of contracts involving contractors, subcontractors, suppliers, consultants, or their agents or representatives that are participating in these programs. For the reasons discussed below, we propose that all other agency programs or transactions be exempted from the rules at this time.

21. Second, we propose to adopt requirements that program participants confirm that those with whom they do business are not already excluded or disqualified from government activities. We note that such confirmation is consistent with the Guidelines and many entities who participate in federal grant programs or seek federal contracts should already be familiar with the process. We also seek comment on possible exceptions and how to implement the principle of reciprocity, which would prevent a party that is suspended or debarred by another agency from participation in covered Commission transactions.

22. Third, again consistent with the Guidelines, we propose new procedural requirements that would allow the agency to respond quickly to evidence of misconduct through a suspension mechanism, while providing for an evidentiary proceeding, evaluating a broader range of wrongful conduct than is now considered, 14 prior to any disbarment.

23. We seek comment on these supplemental proposals. We also seek comment generally on any policies or procedures that we should adopt if we were to implement the Guidelines, and in particular what procedures would be “consistent with the [OMB] guidance.” We seek comments about any other changes to our rules that might be appropriate should we choose to adopt rules consistent with the Guidelines, including our proposed supplemental rules, particularly any conforming changes that may be necessary, including modifications of forms for Commission programs, inclusion of additional certifications, and such other changes that may be necessary or helpful in implementing any new suspension and debarment rules. In particular, we seek comment on any changes required with respect to our rules for the contents of applications to participate in competitive bidding to receive auctioned support through covered transactions.

24. We also invite comment on the experiences of other agencies responsible for overseeing large programs that have applied the Guidelines. Have other agencies adopted the Guidelines largely intact, or are modifications commonly adopted so that suspension and debarment processes reflect the unique nature of the programs and missions the agencies oversee? Are there lessons learned by other agencies that could inform the Commission's adoption of expanded suspension and debarment rules consistent with the Guidelines?

25. While this document focuses on areas where we propose to supplement or deviate from the Guidelines, interested parties who believe the Commission should consider other changes to the Guidelines in its supplemental regulations should set forth their proposals, and the rationales supporting the proposed change, with specificity.

26. Generally. The Guidelines define “non-procurement transactions” as “any transaction, regardless of type (except procurement contracts),” including but not limited to grants, cooperative agreements, scholarships, fellowships, contracts of assistance, loans, loan guarantees, subsidies, insurances, payments for specified uses, and donation agreements. Notwithstanding this definition, the Guidelines provide flexibility to agencies to determine which non-procurement transactions should be covered by their suspension and debarment rules. For example, the Guidelines specifically exclude from their scope any non-procurement transaction that is exempted by a federal agency's regulation. The Guidelines also exclude by default any “permit, license, certificate, or similar instrument issued as a means to regulate public health, safety, or the environment,” unless a federal agency specifically designates it to be a covered transaction.

27. If the Commission implements the Guidelines, should all transactions covered by the OMB definitions be included within the suspension and debarment regime? Are there additional types of transactions that should be included in addition to the examples provided in the Guidelines? Are there additional program-specific clarifications that should be made—for example, should the Commission clarify that Lifeline enrollment representatives who enroll individuals in the Lifeline program are executing covered transactions because enrollment is required before the service provider can claim a subsidy, or is that sufficiently clear from the Guidelines? Conversely, are there specific Commission nonprocurement transactions or programs that should be exempted from coverage?  15 For example, are there some programs or activities that should be exempted because remedies other than suspension or debarment ( e.g., license revocation) may be more appropriate? Commenters should identify specific transactions that should be included as covered transactions or exempted from the proposed suspension and debarment rules and provide the rationale for that recommendation.

28. USF, TRS, and NBDEDP as covered transactions. The Commission's primary permanent nonprocurement programs are the USF and TRS programs. In 2018, disbursements totaled $8.33 billion for USF programs and $1.4 billion  16 for TRS. We propose that all transactions under the USF and TRS programs be considered covered transactions under any new rules, as well as transactions under the NDBEDP, and that all other Commission transactions be exempt from those rules. 17 We tentatively conclude that application of the suspension and debarment rules to these programs will improve the sustainability of their funding for the benefit of those whom the programs serve. We seek comment on this proposal, as well as this tentative conclusion. More specifically, under the TRS programs and NDBEDP, the Commission grants TRS and NDBEDP participants authorization to provide services and equipment pursuant to certifications and reimburses TRS providers and NDBEDP certified programs for services and equipment provided to beneficiaries. We invite comment on the benefits of applying the suspension and debarment rules to the TRS programs and to the NDBEDP.

29. General exemption for all other transactions, including authorizations and licenses. The Guidelines primarily, but not exclusively, focus on transactions that involve a transfer of Federal funds to a non-Federal entity. 18 The Guidelines also exclude by default from the definition of “covered transaction” any “permit, license, certificate, or similar instrument issued as a means to regulate public health, safety, or the environment,” unless a federal agency specifically designates it to be a covered transaction. Consistent with the framework in the Guidelines, we propose to exclude all transactions other than those involving the USF, TRS, and NDBEDP from the scope of our proposed rules, such as applications for section 214 authorizations, equipment authorizations, and broadcast and spectrum licenses issued by the Commission. The Communications Act of 1934, as amended (Communications Act) and the Commission's implementing regulations govern the qualifications of applicants for such licenses and authorizations and the standards for revocation of the same. Similarly, we propose to exclude all transactions to or from licensees and those with spectrum usage rights (excluding, of course, those USF, TRS, and NDBEDP transactions where such an entity happens to be a participant), such as incentive auction payments or repacking payments. 19 Such payments should not be “covered transactions” that might be stopped by suspension or debarment rules as the public interest is best served by facilitating spectrum usage right relinquishments or repacking in such circumstances—and the statutes and rules regarding the collection of any outstanding debts still apply and provide more appropriate remedies to protect these payments. 20 We seek comment on this proposal.

30. The Guidelines, unless otherwise expanded by agency rule, apply to two categories of transactions: A “primary tier between a federal agency and a person”; and a “lower tier, between a participant in a covered transaction and another person.” Both primary tier and lower tier participants must disclose whether they, or any of their principals, are excluded or disqualified. Primary tier participants, however, must also disclose to the federal agency certain convictions, civil judgments, indictments, other criminal or civil charges, or defaults on public transactions of the participant or any of their principals.

31. Agencies have some discretion within the parameters of the Guidelines to designate primary versus lower tier participants, and to expand the tiers that would be considered to be “lower tier.”  21 In this section, we propose to designate certain actors in the USF and TRS programs and the NDBEDP as primary tier participants, and others as lower tier participants. We also propose, consistent with the Guidelines, to designate certain entities who do not directly contract with the primary tier participant (for example, subcontractors) as lower tier participants if they meet certain criteria. 22 Before we do so, however, we set forth our proposals on what would constitute a “principal.”

32. Definition of “ principal .” The Guidelines define “principal” to mean (a) an “officer, director, owner, partner, principal, investigator, or other person . . . with management or supervisory responsibilities” or (b) a “consultant or other person, whether or not employed by the participant or paid with Federal funds, who (1) [i]s in a position to handle Federal funds; (2) [i]s in a position to influence or control the use of those funds; or (3) [o]ccupies a technical or professional position capable of substantially influence the development or outcome of an activity [in a transaction].” The Guidelines further state that an agency may “[i]dentify specific examples of types of individuals who would be `principals' under the Federal agency's nonprocurement programs and transactions, in addition to the types of individuals specifically identified above.”

33. We propose that in addition to those persons defined as principals under the Guidelines, the term “principal” shall also mean “any person who has a critical influence on, or substantive control over, a covered transaction, whether or not employed by the participant.” Persons who may have a critical influence on, or substantive control over, a covered transaction could include without limitation: management and marketing agents, accountants, consultants, investment bankers, engineers, attorneys, and other professionals who are in a business relationship with participants in connection with a covered transaction under an FCC program. 23 We propose this expansion of the definition to ensure that all persons who have substantial influence on or control over a covered transaction may be considered “principals” even if they do not satisfy any of the three prongs in the Guidelines. For example, a person that causes violations of rules applicable to a party's competitive bidding evaluation might not be “influenc[ing] the development or outcome of an activity required to perform the covered transaction”, yet that person could merit a debarment. This broadened definition of “principal” would afford the Commission the authority to consider such conduct. Commenters should identify any other categories of persons who should be considered “principals” in addition to those discussed above.

34. Primary and lower tier participants for the USF and TRS programs and the NDBEDP—summary. Our proposed designations for the programs are summarized in the chart below.

DoD is seeking information from experts and interested parties in Government and the private sector that will assist in the development of a revision to the DFARS to implement 10 U.S.C. 2322a, which was added by section 871 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91). Section 10 U.S.C. 2322a requires that, as part of any negotiation for an acquisition of noncommercial computer software, the Secretary of Defense consider to the maximum extent practicable during the appropriate time in the life cycle, all the noncommercial and related materials necessary to meet the needs of the agency. As a result, any noncommercial computer software or related materials identified should be acquired to the extent appropriate.

DoD is hosting a public meeting to obtain the views of experts and interested parties in Government and the private sector regarding amending the DFARS to implement statutory amendments and revise policies and procedures for acquisition of all noncommercial computer software, related data and documentation, and associated license rights. DoD also seeks to obtain information on the potential increase or decrease in public costs or savings that would result from such amendments to the DFARS.

Registration: To facilitate security screening and entry to the PLCC, individuals wishing to attend the public meeting must register by close of business on the date listed in the DATES section of this document, by sending the following information via email to osd.dfars@mail.mil:

(1) Full name.

(2) Valid email address.

(3) Valid telephone number.

(4) Company or organization name.

(5) Whether the individual is a U.S. citizen.

(6) The date of the public meeting the individual wishes to attend.

(7) Whether the individual intends to make a presentation, and, if so, the individual's title.

Building Entry: Upon receipt of an email requesting registration, the Defense Acquisition Regulations System will provide notification to the Pentagon Force Protection Agency (PFPA) that the individual is requesting approval for entry to the PLCC on the date provided. PFPA will send additional instructions to the email address provided in the request for registration. The registrant must follow the instructions in the PFPA email in order to be approved for entry to the PLCC; failure to follow the instructions in the PFPA email may result in the registrant being restricted from entry to the Pentagon to attend the public meeting.

One valid government-issued photo identification card ( i.e., driver's license or passport) will be required in order to enter the building.

Attendees are encouraged to arrive at least 45 minutes prior to the start of the meeting to accommodate security procedures.

Public parking is not available at the PLCC.

Presentations: If you wish to make a presentation, please submit an electronic copy of your presentation to osd.dfars@mail.mil no later than the registration date listed in the DATES section of this document. Each presentation should be in PowerPoint to facilitate projection during the public meeting and should include the presenter's name, organization affiliation, telephone number, and email address on the cover page. Please submit presentations only and cite “Public Meeting, DFARS Technical Data Rights Cases” in all correspondence related to the public meeting. There will be no transcription at the meeting. The submitted presentations will be the only record of the public meeting and will be posted to the following website at the conclusion of the public meeting: https://www.acq.osd.mil/dpap/dars/technical_data_rights.html.

Special accommodations: The public meeting is physically accessible to persons with disabilities. Requests for reasonable accommodations, sign language interpretation, or other auxiliary aids should be directed to Valencia Johnson, telephone 571-372-6099, by no later than the registration date listed in the DATES section of this document.

The TTY number for further information is: 1-800-877-8339. When the operator answers the call, let the operator know the agency is the Department of Defense and the point of contact is Valencia Johnson at 571-372-6099.

An initial draft of the proposed revisions to the DFARS to implement section 871 of the NDAA for FY 2018 is available in the Federal eRulemaking Portal at http://www.regulations.gov, by searching for “DFARS Case 2018-D018”, selecting “Open Docket Folder” for RIN 0750-AK87, and viewing the “Supporting Documents”. The following is a summary of DoD's proposed approach and the feedback DoD is seeking from industry and the public.

A. Requirement for consideration of certain matters during acquisition of noncommercial computer software. The primary proposed changes to implement 10 U.S.C. 2322a would revise DFARS 227.7203-2. The requirements of subsection (a) of 10 U.S.C. 2322a are added to DFARS 227.7203-2(b) to require that, to the maximum extent practicable, the Government's needs determinations must address the acquisition at appropriate times in the life cycle of all computer software, related data, and associated license rights necessary to meet the Government's needs for specific computer software life cycle activities ( e.g., reproducing, building, recompiling, testing, and deploying the software).

The requirements of subsection (b) of 10 U.S.C. 2322a are proposed to be added as a new paragraph (6) under DFARS 227.7203-2(c), to require that noncommercial computer software or data required to be delivered as a result of the considerations addressed during the needs determination (as revised at 227.7203-2(b)), to the extent appropriate, includes:

• Computer software delivered in a digital format compatible with applicable computer programs on relevant system hardware; and

• All necessary external or additional computer software or data, along with all necessary license rights; or

• Delivery of sufficient information to support maintenance and understanding of interfaces and software revision history, along with all necessary license rights, if the necessary external or additional computer software or data will not be delivered.

The proposed implementation of these new requirements includes adaptations of the statutory language intended to take advantage of existing DFARS defined terms and nomenclature, and to better support the implementation of the statutory objectives in DoD acquisitions. For example, although the statute focuses on detailed aspects of the delivery requirements for noncommercial computer software, the proposed DFARS revisions also recognize that the Government must consider and acquire appropriate license rights in order to utilize those deliverables. Accordingly, references to “necessary license rights” or “associated license rights” are included throughout the proposed implementation.

Additionally, the proposed revisions use the established DFARS defined term “computer program” in place of the statutory reference to “working computer software system binary files,” and add a new definition for the term “data.” The new definition for the term “data” is proposed for inclusion in DFARS 227.001, and is an adaptation of the definition of that term in FAR 52.227-14(a). As a result, the definition of “technical data” at DFARS 252.227-7013(a)(15), 252.227-7015(a)(5), and 252.227-7018(a)(20) is revised slightly to avoid an inconsistent use of the term “data.”

The proposed revisions also add appropriate cross-references to the new proposed implementing coverage. For example, a new paragraph was added to DFARS 227.7202-1(d), so that factors identified in 227.7203-2(b) and (c), when adapted as appropriate, are considered for commercial computer software and computer software documentation. In addition, DFARS 239.101 is revised to add a reference to the coverage of noncommercial computer acquisitions in 227.7203.

B. Section 813 Panel Final Report of the Government-Industry Advisory Panel on Technical Data Rights.

The proposed revisions to DFARS 227.7203-2 also address concerns raised in the Final Report of the Government-Industry Advisory Panel on Technical Data Rights (Section 813 Panel) submitted to the Congressional Defense Committees in mid-November 2018. For example, the 813 Panel's Tension Point Paper No. 27, “Failure to Define and Order CDRLs (Reliance on Deferred Ordering and DAL to Obtain Data),” emphasizes the importance of the Government identifying its data needs early in the program life cycle, and a preference for upfront ordering of data rather than relying on mechanisms such as deferred ordering pursuant to DFARS 252.227-7027. The paper suggests that the Government's approach to data ordering should be consistent with the program's intellectual property strategy, which should be developed and updated to account for potential changes in the life cycle sustainment plan.

C. Seeking Public Comment on Additional Topics.

In addition to seeking public comment on the substance of the draft DFARS revisions, DoD is also seeking information regarding any corresponding change in the burden, including associated costs or savings, resulting from contractors and subcontractors complying with the draft revised DFARS implementation. More specifically, DoD is seeking information regarding any anticipated increase or decrease in such burden and costs relative to the burden and costs associated with complying with the current DFARS implementing language.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This advance notice of proposed rulemaking is not subject to E.O. 13771.