The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2020-0788; Product Identifier 2020-NM-091-AD” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this NPRM based on those comments.

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

Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to the person identified in the FOR FURTHER INFORMATION CONTACT section. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0110R1, dated May 27, 2020; and EASA AD 2020-0111R2, dated June 16, 2020 (“EASA AD 2020-0110R1” and “EASA AD 2020-0111R2”) (also referred to as “the Mandatory Continuing Airworthiness Information,” or “the MCAI”); to correct an unsafe condition for all Airbus SAS Model A300 series airplanes and Airbus SAS Model A300-600 series airplanes.

This proposed AD was prompted by reports of cracking at hole location #10 on the LH side of FR4. The FAA is proposing this AD to address fatigue cracking, which could result in reduced structural integrity of the fuselage. See the MCAI for additional background information.

EASA AD 2020-0110R1 describes procedures for repetitive special detailed inspections for discrepancies ( i.e., cracking) of the fuselage internal structure at certain frames, windshield frame lower section and closing panel, fuselage skin lap joint, and center wing bottom skin internal angle; and applicable corrective actions (repairing discrepancies).

EASA AD 2020-0111R2 describes procedures for repetitive special detailed inspection for discrepancies of the outer wing bottom skin internal joint plate, outer wing bottom skin, fuselage internal structure at certain frames, and windshield frame lower section and closing panel; and applicable corrective actions (repairing discrepancies).

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

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

This proposed AD would require, accomplishing the actions specified in EASA AD 2020-0110R1 and EASA AD 2020-0111R2 described previously, as incorporated by reference. Any differences with EASA AD 2020-0110R1 and EASA AD 2020-0111R2 are identified as exceptions in the regulatory text of this AD.

For the action specified in paragraph (4) of EASA AD 2020-0110R1, the compliance times vary depending on airplane configuration, inspection type, and inspection results. The initial compliance times for the inspections vary between before the accumulation of 18,500 flight cycles and 24,500 flight cycles since the first flight of the airplane. The repetitive intervals for the inspections vary between 1,500 flight cycles and 12,600 flight cycles, depending on inspection results. See Airbus Service Bulletin A300-53-0265, Revision 6, dated July 2, 2012, for more information.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2020-0110R1 and EASA AD 2020-0111R2 will be incorporated by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2020-0110R1 and EASA AD 2020-0111R2 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD.

Service information specified in EASA AD 2020-0110R1 and EASA AD 2020-0111R2 that is required for compliance with EASA AD 2020-0110R1 and EASA AD 2020-0111R2 will be available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0788 after the FAA final rule is published.

The FAA estimates that this proposed AD affects 118 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

Estimated Costs for Required Actions Labor cost Parts cost Cost per

The FAA has received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.

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

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

The FAA has determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

Under ERISA, an employee benefit plan (whether a pension plan or a welfare plan) must be sponsored by an employer, by an employee organization, or by both. Section 3(5) of ERISA defines the term “employer” for this purpose as “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan, and includes a group or association of employers acting for an employer in such capacity.” These definitional provisions of ERISA have been interpreted as permitting a multiple employer plan (MEP) to be established or maintained by a cognizable, bona fide group or association of employers that is controlled by the employer members and that acts in the interests of its employer members to provide benefits to their employees. 1 This approach is based on the premise that the person or group that maintains the plan is tied to the employers and employees that participate in the plan by some common economic or representational interest or genuine organizational relationship unrelated to the provision of benefits. The Department of Labor (Department) has taken steps, through a final rule on “association retirement plans” at 29 CFR 2510.3-55, to clarify and expand the types of arrangements that can be treated as multiple employer plans under Title I of ERISA. The final rule did not, however, extend to so-called “open MEPs.”  2

A primary goal of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), 3 authorizing of pooled employer plans was to remove possible barriers to the broader use of multiple employer plans. Among other things, the SECURE Act amended section 3(2) of ERISA and added section 3(43) to ERISA to authorize a new type of ERISA-covered defined contribution pension plan—a “pooled employer plan” operated by a “pooled plan provider”—in which multiple unrelated employers will be able to participate without the need for any commonality among the participating employers or other genuine organizational relationship unrelated to participation in the plan, thus enabling a type of open MEP. By allowing most of the administrative and fiduciary responsibilities of sponsoring a retirement plan to be transferred to a “pooled plan provider,” the pooled employer plan can offer employers, especially small employers, a way of offering their employees a workplace retirement savings option with reduced burdens and costs compared to sponsoring their own separate retirement plan. New section 3(44) of ERISA establishes requirements for “pooled plan providers,” including a requirement to register with the Department and the Department of the Treasury (Treasury Department) before beginning operations as a pooled plan provider. The effective date for these provisions allows “pooled employer plans” to begin operating on January 1, 2021.

Under section 3(2) of ERISA, a pooled employer plan is treated for purposes of ERISA as a single plan that is a multiple employer plan. A “pooled employer plan” is defined in section 3(43) as a plan that is an individual account plan established or maintained for the purpose of providing benefits to the employees of two or more employers; that is a qualified retirement plan or a plan funded entirely with individual retirement accounts (IRA plan); and the terms of which must meet certain requirements set forth in the statute. 4 Specifically, the terms of the plan must satisfy the following requirements:

• Designate a pooled plan provider and provide that the pooled plan provider is a named fiduciary of the plan;

• designate one or more trustees (other than an employer in the plan) to be responsible for collecting contributions to, and holding the assets of, the plan, and require the trustees to implement written contribution collection procedures that are reasonable, diligent, and systematic;

• provide that each employer in the plan retains fiduciary responsibility for the selection and monitoring, in accordance with ERISA fiduciary requirements, of the person designated as the pooled plan provider and any other person who is designated as a named fiduciary of the plan, and the investment and management of the portion of the plan's assets attributable to the employees of that employer (or beneficiaries of such employees) in the plan to the extent not delegated to another fiduciary by the pooled plan provider and subject to the ERISA rules relating to self-directed investments;

• provide that employers in the plan, and participants and beneficiaries, are not subject to unreasonable restrictions, fees, or penalties with regard to ceasing participation, receipt of distributions, or otherwise transferring assets of the plan in accordance with applicable rules for plan mergers and transfers;

• require the pooled plan provider to provide to employers in the plan any disclosures or other information that the Secretary of Labor may require, including any disclosures or other information to facilitate the selection or monitoring of the pooled plan provider by employers in the plan;

• require each employer in the plan to take any actions that the Secretary of Labor or pooled plan provider determines are necessary to administer the plan or to allow for the plan to meet the ERISA and Internal Revenue Code (Code) requirements applicable to the plan, including providing any disclosures or other information that the Secretary of Labor may require or which the pooled plan provider otherwise determines are necessary to administer the plan or to allow the plan to meet such ERISA and Code requirements; and

• provide that any disclosure or other information required to be provided to participating employers may be provided in electronic form and will be designed to ensure only reasonable costs are imposed on pooled plan providers and employers in the plan.

The fidelity bonding requirements in ERISA section 412 apply to fiduciaries and other persons handling the assets of a pooled employer plan but the maximum bond amount for each such plan official is $1,000,000 as compared to the $500,000 maximum that applies in the case of other ERISA-covered plans that do not hold employer securities. 5

A “pooled plan provider” with respect to a pooled employer plan is defined in ERISA section 3(44) to mean a person that meets the following requirements:

• Is designated by the terms of the plan as a named fiduciary under ERISA, as the plan administrator, and as the person responsible to perform all administrative duties (including conducting proper testing with respect to the plan and the employees of each employer in the plan) that are reasonably necessary to ensure that the plan meets the Code requirements for tax-favored treatment and the requirements of ERISA and to ensure that each employer in the plan takes actions as the Secretary or the pooled plan provider determines necessary for the plan to meet Code and ERISA requirements, including providing to the pooled plan provider any disclosures or other information that the Secretary may require or that the pooled plan provider otherwise determines are necessary to administer the plan or to allow the plan to meet Code and ERISA requirements;

• acknowledges in writing its status as a named fiduciary under ERISA and as the plan administrator;

• is responsible for ensuring that all persons who handle plan assets or are plan fiduciaries are bonded in accordance with ERISA requirements; and

• registers as a pooled plan provider.

The SECURE Act specifies that the Secretary may perform audits, examinations, and investigations of pooled plan providers as may be necessary to enforce and carry out the purposes of the provision. The SECURE Act also directs the Department to issue such guidance as it determines appropriate to carry out the pooled employer plan and pooled plan provider provisions, including guidance (1) to identify the administrative duties and other actions required to be performed by a pooled plan provider, and (2) that provides, in appropriate cases involving a noncompliant employer, for transfer of plan assets attributable to employees of the noncompliant employer (or beneficiaries of such employees) to a plan maintained only by that employer (or its successor), to a tax-favored retirement plan for each individual whose account is transferred, or to any other arrangement that the Department determines is appropriate, and for the noncompliant employer (and not the plan with respect to which the failure occurred or any other employer in the plan) to be liable for any plan liabilities attributable to employees of the noncompliant employer (or beneficiaries of such employees), except to the extent provided in the guidance. An employer or pooled plan provider is not treated as failing to meet a requirement of guidance issued by the Secretary if, before the issuance of such guidance, the employer or pooled plan provider complies in good faith with a reasonable interpretation of the provisions to which the guidance relates.

The SECURE Act also provides that the Form 5500 annual return/report of employee benefit plan (Form 5500) filing for a multiple employer plan subject to section 210 of ERISA, including a pooled employer plan, must include a list of the employers in the plan, a good faith estimate of the percentage of total contributions made by such employers during the plan year, the aggregate account balances attributable to each employer in the plan (determined as the sum of the account balances of the employees of each employer and the beneficiaries of such employees) and, with respect to a pooled employer plan in particular, the identifying information for the person designated under the terms of the plan as the pooled plan provider. In addition, the provision authorizes the Department to prescribe simplified reporting for pooled employer plans that cover fewer than 1,000 participants, but only if no single employer in the plan has 100 or more participants covered by the plan.

The SECURE Act does not limit the class of persons who can act as pooled plan providers, but it is expected that financial services companies (such as insurance companies, banks, trust companies, consulting firms, record keepers, and third-party administrators) will be the primary sponsors of pooled employer plans. As noted above, however, section 3(44) does require as a condition of being a pooled plan provider that the person “registers as a pooled plan provider with the Secretary, and provides to the Secretary such other information the Department may require, before operations as a pooled plan provider.”  6

In the Department's view, the statutory purpose of the registration requirement is to provide the Department with sufficient information regarding persons acting as pooled plan providers to engage in effective monitoring and oversight of this new type of ERISA retirement plan. Although the Department does not have specific details as to how pooled employer plans authorized under the SECURE Act will be structured or operated, the Department has assumed that they may be similar to other currently operating multiple employer plans. Additionally, there may be challenges associated with these new types of multiple employer plans that the Department, the Treasury Department, or IRS, as the federal agencies charged with oversight of private-sector pension plans, may need to address. The SECURE Act expressly provides that participating employers will retain certain residual fiduciary responsibilities, including for the selection and oversight of the pooled plan provider and the plan's other named fiduciaries. This raises concerns that the potential for inadequate employer oversight of the activities of a pooled employer plan and its plan fiduciaries and other service providers may be greater than for other plans sponsored by an employer because the nature of the plan involves participating employers passing along more responsibility to the pooled plan provider than they do in other plan arrangements.

The registration process and requirements must enable the Department to identify pooled plan providers when they begin operating and effectively oversee their actions and the pooled employer plans they operate. While pooled plan providers will be required to file Forms 5500 for the pooled employer plans they operate, Forms 5500 generally are not filed until seven to nine-and-a-half months after the end of the plan year. 7 In the absence of appropriate detail in the registration statement, a pooled plan provider could begin operating multiple plans with hundreds or thousands of participants and millions of dollars without the agencies having any information about the pooled employer plans for almost two years.

In determining how best to implement the statutory registration requirement, the Department considered a number of alternatives with respect to any registration statement requirement including whether it must be filed when the provider begins operations in anticipation of operating one or more pooled employer plans, when it begins operating each individual pooled employer plan, or both. The Department also does not believe that the SECURE Act provisions preclude or were intended to preclude the Department from imposing reasonable ongoing reporting requirements to enable the Department to effectively oversee pooled plan providers and the pooled employer plans they operate. Therefore, as discussed in more detail below, relying on the language in the SECURE Act requiring a registration statement as well as on its broad authority under section 505 of ERISA to prescribe regulations, 8 including forms, to enable the Department to carry out its statutory oversight mission, the Department has chosen the structure set out in the proposal.

The proposal would require an initial registration filing and supplemental filings to report changes in the information in the initial filing, information about each specific pooled employer plan before initiation of operations, and information on specified reportable events, time-sensitive knowledge of which are important for the Department, the Treasury Department, and the IRS to carry out oversight and for participating employers to be able to exercise their fiduciary duties of selection and monitoring. The proposal would require a final filing once the last pooled employer plan has been terminated and ceased operations.

The Department believes that the initial registration, supplemental filing, and final filing requirements, when combined with the Form 5500 annual reporting requirements, will give the Department the timely access to pooled plan provider information needed to fulfill the monitoring and oversight tasks the SECURE Act placed on the agencies and would be less burdensome and less costly for pooled plan providers and pooled employer plans than some alternatives that were considered. The Department is also proposing to establish a new EBSA form—EBSA Form PR (Pooled Plan Provider Registration) (Form PR)—as the required filing format for pooled plan provider registrations as a way to facilitate compliance with the regulatory registration requirements. Filing the proposed Form PR is intended to satisfy the respective requirements under Title I of ERISA and the Code to register with both the Department and the Treasury Department.

This proposed rule is expected to be an Executive Order (E.O.) 13771 deregulatory action. Details on the estimated effects of this proposed rule can be found in the economic analysis.

Specifically, as described above, the SECURE Act expressly provides a requirement to register as a pooled plan provider and a separate authorization for the Department to require reporting of other information. The SECURE Act did not include specific content requirements for the pooled plan provider registration. The Department is proposing that the first part of the process be an initial “registration” filing of basic identifying information about the pooled plan provider and some information, for example, about its structure, affiliated service providers, marketing activities, and pending legal or regulatory proceedings. The second part is a supplemental filing requirement intended to provide the agencies, participating employers and employees, and the public information about reportable events, which would include any change in the information filed as part of the initial registration and also significant financial and operational events related to the pooled plan provider and the pooled employer plans it sponsors.

For purposes of the initial registration, the Department proposes to define “beginning operations as a pooled plan provider” to mean publicly marketing pooled plan provider services or publicly offering a pooled employer plan. In the Department's view, an important purpose of the requirement to register before beginning operations as a pooled plan provider is to provide the Department, the Treasury Department, the IRS, prospective employer customers, and the public with notice and relevant information about the pooled plan provider. Accordingly, the initiation of public marketing services as a pooled plan provider or publicly offering one or more pooled employer plans are important registration triggers. The Department does not intend to require registration as a result of preliminary business activities, such as establishing the business organization, creating a business plan, obtaining necessary licenses or entering into contracts with subcontractors or partners, obtaining an federal employer identification number, or actions and communications designed to evaluate market demand in advance of publicly marketing pooled plan provider services or publicly offering one or more pooled employer plans.

As noted above, the SECURE Act left it to the agencies' discretion to establish specific content requirements for the pooled plan provider registration. In developing this proposal, the Department focused on information needed by the agencies to identify, contact, and engage in timely oversight of pooled plan providers, as well as on the information that the Department could post on its website that would provide employers considering participating in a pooled employer plan, participating employees, covered employees, and other interested stakeholders the ability to identify, contact, and do some due diligence on pooled plan providers. The Department also considered the content requirements of other registration requirements under federal and state securities laws for investment advisers and broker-dealers. For example, among other information, registrations require disclosures of identifying and contact information, background information about the registrant's business, information about relevant management policies, names of executives and general partners, relevant legal proceedings and previous violations, and relevant negative information, such as legal problems or other business events or trouble that would be of consequence to users of the registration information. The Department also focused on minimizing the administrative burden and expense involved for pooled plan providers and the pooled employer plans they operate.

Based on those considerations, the Department is proposing that a prospective pooled plan provider would need to file the following information 30 to 90 days before beginning operations as a pooled plan provider:

1. Legal Business Name and any Trade Name (Doing Business As).

2. Federal Employer Identification Number (EIN). An EIN is a nine-digit employer identification number (for example, 00-1234567) that has been assigned by the IRS. Entities that do not have an EIN may apply for one on Form SS-4, Application for Employer Identification Number. The Form SS-4 is available by calling 1-800-829-4933 or going to the IRS website at https://www.irs.gov/pub/irs-pdf/fss4.pdf. EIN data is important for accurately identifying registrants and cross-referencing information reported about the registrant on other filings, such as the Form 5500 filed by the pooled employer plans operated by the registrant.

3. Business Telephone. We expect that pooled plan providers, like many or most existing 401(k) providers, will operate a call center designed to handle inquiries from employers interested in or already participating in a pooled employer plan as well as participants and beneficiaries covered by plans operated by the registrant. The separate requirement to provide contact information for the registrant's principal compliance officer gives the Department and others with compliance concerns a means of contacting a responsible person at the registrant. The business telephone number requirement is focused mainly on including in the public Form PR data that the Department will post on its website a way for interested/participating employers and covered employees to contact the pooled plan provider for information. As such, we are soliciting comments on whether this data element should allow a call center number to be reported as the business telephone number.

4. Business Mailing Address.

5. Address of any public website or websites of the pooled plan provider or any affiliates to be used to market any such person(s) as a pooled plan provider to the public or to provide public information on the pooled employer plan operated by the pooled plan provider. The Department believes this information will be useful in the Department's oversight of pooled plan providers and will also assist employers performing due diligence in selecting and monitoring pooled employer plans. The Department also expects that most pooled plan providers will have such websites, and believes that having information on such websites provides an alternative to requiring more information to be submitted as part of the registration process.

6. The name, mailing address, telephone number, and email address for the primary compliance officer of the pooled plan provider. The Department believes it is important that it, as well as participating employers and covered employees, have an effective means of communicating with a responsible person at the pooled plan provider regarding compliance questions or concerns. The Department is proposing that the registration include an email address for the compliance officer, but solicits comments on whether alternative or additional means of contacting the compliance offer should be included in the registration.

7. The agent for service of legal process for the pooled plan provider, and the address at which process may be served on such agent, and in addition, a statement that service of legal process may be made upon the pooled plan provider. The proposal would allow either a person or a process service company to be identified as the agent for service of legal process.

8. The approximate date when pooled plan operations are expected to commence. The SECURE Act requires that the registration must be filed before the pooled plan provider begins operations. Accordingly, this data element is important to enable the Department to ensure compliance with the SECURE Act requirement. As noted elsewhere, the Department is proposing that the registration be filed not more than 90 or less than 30 days before the pooled plan provider begins operations.

9. A description of administrative and investment services that will be offered or provided by the pooled plan provider, including identification of any affiliates expected to have a role in the provision of those administrative and investment services, and a description of the roles of such affiliates. For this purpose, the term “affiliates” includes all persons who are treated as a single employer with the person intending to be a pooled plan provider under section 414(b), (c), (m), or (o) of the Code and are expected to provide services to pooled employer plans sponsored by the pooled plan provider, and any officer, director, partner, employee, or relative (as defined in section 3(15) of the Act) of such person; and any corporation or partnership of which such person is an officer, director, or partner. Information regarding when various plan services will be provided by the pooled plan provider or any affiliate will assist the Department and prospective participating employers evaluate the pooled plan provider and whether there are potentials for conflicts of interest with respect to the operations or investments of any pooled employer plans to be operated by the provider.

10. A statement disclosing any federal or state criminal conviction related to the provisions of services to, operation of, or investments of, any employee benefit plan against the pooled plan provider, or any officer, director, or employee of a pooled plan provider, if the conviction, or related term of imprisonment served, is within ten years of the date of the registration. In the Department's view, this data element focuses on relevant legal proceedings, previous violations, and relevant negative information that will be useful in the Department's oversight of pooled plan providers. For example, under ERISA section 411, the Department is responsible for ensuring disqualified parties do not serve in positions or capacities prohibited under the statute. Although this question is intentionally presented without all the technical provisions and specifications in section 411 of ERISA, that statutory provision prohibits individuals convicted of disqualifying crimes from serving in plan-related capacities during or for a period of 13 years after such conviction or the end of imprisonment, whichever is later, subject to some provisions allowing that period to be shortened. 9 This data would also assist employers performing due diligence in selecting and monitoring pooled employer plans. The Department solicits comments on whether civil judgments should be included here, and if, so whether the requirement with respect to civil judgments should be further limited to just certain types of civil judgments, e.g., those involving claims of fraud or dishonesty with fraud or dishonesty defined similarly to those terms in the fidelity bonding provisions in ERISA section 412 and the Department's implementing regulations.

11. A statement disclosing any ongoing criminal, civil, or administrative proceedings related to the provisions of services to, operation of, or investments of any employee benefit plan, in any court or administrative tribunal by the federal or state government or other regulatory authority against the pooled plan provider or any officer, director, or employee of the pooled plan provider. As with the information on criminal convictions, this data element focuses on relevant legal proceedings, previous violations, and relevant negative information that will be useful in the Department's oversight of pooled plan providers and will also assist employers performing due diligence in selecting and monitoring pooled employer plans.

Before the pooled plan provider initiates operations of a pooled employer plan, the proposal would require the pooled plan provider to submit a supplemental filing with the name, trustee identification information, and EIN for the plan. The timing of this requirement arises from Code section 413(e)(3), which provides that the requirements to be a pooled plan provider (including the requirement to register with the Secretary of the Treasury before beginning operations as a pooled plan provider) must be satisfied “with respect to any plan.”

The proposal would also require additional filings for (i) any changes in the previously reported registration information and (ii) specified events affecting either the pooled plan provider or a plan it sponsors that may signal financial problems or other circumstances that could potentially put the pensions of covered employees at risk. 10 These supplemental filings would provide important information to the Department, the Treasury Department, and the IRS to help them protect plan participants and beneficiaries and conduct more effective monitoring and oversight of pooled employer plans and pooled plan providers. Without this kind of timely information, the agencies would typically not learn of risks to a pooled employer plan until the plan files a Form 5500, possibly many months after the event and when opportunities for protecting plan participants from financial injury have been missed. Reporting changes in the previously filed registration information also will help the Department ensure that the information regarding pooled plan providers posted on its website and available to the public is up to date. Otherwise the Department, employers, and the public would have to rely on outdated information until a Form 5500 was filed for the plan and then would need to compare the registration information with the subsequently filed information about pooled plan providers in Forms 5500 submitted by the pooled plan provider on behalf of the pooled employer plans the providers operate and have to rely on outside sources to determine which information is correct.

Therefore, pooled plan providers would need to disclose certain changes in a supplemental filing within 30 days of the occurrence of the change. These changes are:

1. Any change in the registration information previously reported by the pooled plan provider. In the Department's view, it is important that the registration information it has, and that it posts on its website, be accurate and up to date. The Department intends that the filing system for the pooled plan provider registrations will enable registrants submitting a supplemental filing to complete the basic identifying information regarding the registrant and update only those parts of the registration with a change in the required information.

2. Any one of the following changes in circumstances of the pooled plan provider:

(i) Significant change in the corporate or business structure of the pooled plan provider, e.g., merger, acquisition. As noted above, the Department considered other registration regimes in developing this proposal, and some included data collections regarding business events or trouble that would be of consequence to users of the registration information. In the Department's view, a significant change in the pooled plan provider's corporate structure could have consequences that affect the pooled employer plans as well as participating employers and covered employees and could also give rise to possible conflicts of interest that would not have existed in the absence of the transaction.

(ii) Initiation of bankruptcy, receivership, or other insolvency proceeding for the pooled plan provider or an affiliate, or ceasing all operations as a pooled plan provider. It is important for both participating employers and the agencies charged with oversight of pooled plan providers and pooled employer plans to have information about insolvency proceedings as soon as is reasonably practicable to make sure that the interests of participants and beneficiaries are protected. The Department already has a REACT project whose aim is to respond in an expedited manner to protect the rights and benefits of plan participants when the plan sponsor faces severe financial hardship or bankruptcy and the assets of the employee benefit plan are in jeopardy. Under REACT, when a company has declared bankruptcy, the Department's goal is to take immediate action to (1) ascertain whether there are plan contributions which have not been paid to the plans' trust, (2) advise all affected plans of the bankruptcy filing, and (3) provide assistance in filing proofs of claim to protect the plans, the participants, and the beneficiaries. EBSA also attempts to identify the assets of the responsible fiduciaries and evaluate whether a lawsuit should be filed against those fiduciaries to ensure that the plans are made whole and the benefits secured. The Department expects that it will either expand the REACT program or establish a similar program specifically designed for pooled plan providers and pooled employer plans, and this supplemental reportable event information would be important.

(iii) Receiving written notice of the initiation of any administrative or enforcement action in any court or administrative tribunal by any federal or state governmental agency or other regulatory authority against the pooled plan provider or any officer, director, or employee of the pooled plan provider, related to the provision of services to, operation of, or investments of any pooled employer plan. Timely knowledge of such actions will help the agencies fulfill their oversight functions and also assist prospective and existing participating employers properly carry out their duties under the SECURE Act provisions with respect to selection and monitoring of pooled employer plans. For purposes of the registration, employees of the pooled plan provider would include employees of the pooled employer plan, but only those who handle assets of the plan within the meaning of section 412 of ERISA or who are responsible for the operations or investments.

(iv) Receiving written notice of a finding of fraud or dishonesty by federal or state court or a federal or state governmental agency related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan against the pooled plan provider or any officer, director, or employee of the pooled plan provider. As with information regarding actions by governmental agencies or other regulatory authorities against the provider, information about court or governmental agency findings of fraud or dishonesty in connection with the provision of services to, operation of, or investments of any employee benefit plan is important for agency oversight and for participating employers with respect to their duties under the SECURE Act provisions regarding selection and monitoring of the pooled employer plans.

(v) Receiving written notice of the filing of any federal or state criminal charges related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan against the pooled plan provider or any officer, director, or employee of the pooled plan provider Such actions, too, are relevant to the selection and monitoring obligations of participating employers, and while ERISA section 411 bars serving as an ERISA fiduciary following a wide range of crimes, this information is limited to those criminal charges related to the provision of services to, operation of, or investments of any pooled employer or other employee benefit plan.

The Department intends that the filing system for registrations, similar to that for the Form 5500, will allow pooled plan providers the ability to file corrections and amendments of their registration and reportable event filings. The Department does not believe that it would be appropriate to read the SECURE Act in a way that would result in inadvertent or good faith errors in registrations resulting in a failure to register and a consequent nullification of the person's status as a person authorized to act as a pooled plan provider. Thus, under the proposal, inadvertent or good faith errors and omissions in a filing's content generally would not be treated as a failure to register, provided that a corrected or amended filing is submitted within a reasonable period of the discovery of the error or omission. If only correcting information previously reported, such as if an incorrect name was entered for an affiliate of the pooled plan provider, a person would indicate on the form that the filing is an amended filing, not a supplemental filing.

Further, the Department expects at a later date to propose new questions on the Form 5500 that would ask whether a pooled plan provider filed its registration statement with the Secretary, including any required updates, and to report the electronic confirmation number provided to the pooled plan provider at the time that the registration was received. These would be similar to the questions currently on the Form 5500 that require reporting by multiple employer group health plans about their compliance with registration and reporting requirements on the Form M-1 (Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs)). The questions would provide the Department, the Treasury Department, the IRS, participating employers, and other stakeholders with information that would allow them to connect the Form PR registration with the Form 5500 for all pooled employer plans operated by the registrant.

As proposed, if a pooled plan provider has ceased operating all pooled employer plans and has filed a supplemental reportable event filing to indicate that the last pooled employer plan for which it served as the pooled plan provider has been terminated and ceased operating, the provider would be required to file a final registration filing. For this purpose, a plan would be treated as terminated and having ceased operations when a resolution has been adopted terminating the plan, all assets under the plan (including insurance/annuity contracts) have been properly distributed to the participants and beneficiaries or legally transferred to the control of another plan, and when a final Form 5500 has been filed for the plan. The final Form PR filing would be due within 30 days of the filing of the last final Form 5500 for the last pooled employer plan the provider operates. A single combined filing may be used both to report that the last pooled employer plan operated by the provider has been terminated and ceased operating and to serve as the final Form PR filing by the pooled plan provider. The final filing is intended to assist the Department's maintenance of an accurate database of persons serving as pooled plan providers and provision of accurate public information about pooled plan providers to employers, participants, beneficiaries, and other interested persons.

This proposal also includes a provision to require electronic filing of all pooled plan provider registrations with the Department. The Department believes that regular mail is not the most efficient or cost-effective way to file and process these notices and statements. Because the internet is widely accessible to persons who file these notices and statements, the Department expects that persons interested in being pooled plan providers will find electronic filing easier and more cost-effective than paper filing. The submission process would also assist pooled plan providers by ensuring that all of the required information would be included in the registration before the electronic filing could be completed through the internet site. In addition, as previously mentioned, the process would provide an electronic registration confirmation receipt to the pooled plan provider. Electronic filing should also facilitate the disclosure of the information to participating employers, covered participants and beneficiaries, and other interested members of the public. Once a registration statement is filed, the data would be posted on the Department's website and be available to the public. Thus, the Department believes that filers and data users all stand to benefit from electronic filing in ways that are consistent with the goals of the E-Government Act of 2002. 11

The Department plans to use the same system and registration process for filing the pooled plan provider registration that plan administrators currently use, and that pooled plan providers will use, to file the Form 5500 for employee benefit plans, including pooled employer plans.

Under ERISA Section 505, in addition to having the authority to prescribe such regulations the Department determines may be necessary or appropriate to carry out the provisions of Title I of ERISA, the Department has the authority to prescribe forms. Pursuant to that authority, the Department is proposing a new EBSA form—Form PR. The proposed form and the accompanying instructions would be the required filing format for pooled plan provider registrations and would facilitate the regulatory registration requirements proposed in this document. The proposed form and instructions are attached as Appendix A.

The pooled plan provider registration form and instructions, like other Department forms, will undergo OMB review under the Paperwork Reduction Act of 1995 (PRA), and be assigned an OMB Control number prior to being published for use. The volume of pooled plan provider registration filings is unknown but as discussed in detail in the regulatory impact analysis, the Department assumes for purposes of this proposal that fewer than 5,000 persons will register initially as pooled plan providers.

As noted above, the SECURE Act requires pooled plan providers to register with the Department as well as with the Treasury Department and the IRS. The Department coordinated with those agencies to develop this proposal. They have advised that filing the registration statement with the Department, including the supplemental statement identifying a pooled employer plan for which the pooled plan provider is acting in that capacity prior to the initiation of operations of each such plan, will also satisfy the Code requirement to register as a pooled plan provider with respect to that plan. The Department will continue to consult with the Treasury Department and the IRS in connection with their development of the pooled plan provider registration requirements and filing process.

The Department invites comments from interested persons on all facets of the proposed rule. Commenters are free to express their views not only on the specific provisions of the proposal as set forth in this document, but on other issues germane to the subject matter of the proposal. The Department also requests comment on the following questions:

1. Is the definition of “beginning operations as a pooled plan provider,” which determines whether initial registration is required, appropriate in scope? Should the definition exclude marketing and solicitation efforts so that the initial registration is tied solely to beginning operation of a pooled employer plan? Should the deadlines for filing an initial registration be nearer to the date of actual public marketing activities if the pooled plan provider intends only to engage in marketing and solicitation efforts, and will not enroll any employer or employee in a pooled employer plan until at least 30 days after initial registration?

2. Are there any additional classes of information or types of reportable events that should be included in the registration requirement?

3. Is there a more efficient or effective way of collecting reportable event information that would reduce administrative burdens and expenses?

4. Could the burden associated with the collection of reportable event information be reduced by better aligning the collection with other disclosure requirements for pooled plan providers?

5. Are there other federal or state filings for insurance companies, banks, and other financial institutions, such as the Form ADV (or similar Securities and Exchange Commission (SEC) or State registration forms) for financial advisors, on which the Department could rely as an alternative source of information about pooled plan providers and the plans they operate?

6. Are there particular forms or numbers ( e.g., Form ADV, SEC registration number, Central Registration Depository number, or National Association of Insurance Commissioners Code) that could be referenced in the registration that would, with nominal burden, help employers find more information about pooled plan providers and compare providers across platforms of available information?

7. Should the disclosure of “ongoing criminal, civil, or administrative proceedings related to the provisions of services to, operation of, or investments of any employee benefit plan by the pooled plan provider” be expanded? For example, would disclosing settlements of fiduciary liability claims against pooled plan providers with the Department or PBGC, including settlements under ERISA § 206(d)(4)(A)(iii), assist employers performing due diligence in selecting and monitoring pooled employer plans?

Comments should be submitted in accordance with the instructions at the beginning of this document. The Department believes that 30 days will afford interested persons an adequate amount of time to analyze the proposed rule and submit comments.

Summary —The SECURE Act was enacted to expand retirement savings. Section 101 of the SECURE Act amends section 3(2) of ERISA to eliminate the commonality of interest requirement for establishing certain individual account plans, or “pooled employer plans,” that meet specific requirements. Among these requirements, such plans must designate a “pooled plan provider” to serve as a named fiduciary and as the plan administrator. Further, section 101 of the SECURE Act requires pooled plan providers to register with the Department and the Treasury Department before beginning operations. The statute expressly provides a separate authorization for the Department to require additional information.

The Department has examined the effects of this rule as required by Executive Order 12866, 12 Executive Order 13563, 13 the Congressional Review Act, 14 Executive Order 13771, 15 the Paperwork Reduction Act of 1995, 16 the Regulatory Flexibility Act, 17 section 202 of the Unfunded Mandates Reform Act of 1995, 18 and Executive Order 13132. 19

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, 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 costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.

Under Executive Order 12866, “significant” regulatory actions are subject to review by the Office of Management and Budget (OMB). 20 Section 3(f) of the Executive Order defines a “significant regulatory action” as an action that is likely to produce a rule that does any of the following:

(1) Has an annual effect on the economy of $100 million or more in any one year, or adversely and materially affects a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as “economically significant”);

(2) creates a serious inconsistency or otherwise interferes with an action taken or planned by another agency;

(3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

A full regulatory impact analysis must be prepared for major rules with economically significant effects (for example, $100 million or more in any one year), and OMB reviews “significant” regulatory actions. OMB determined that this rule is not economically significant within the meaning of section 3(f)(1) of the Executive Order but is significant under 3(f)(4). Therefore, the Department has provided an assessment of the potential costs, benefits, and transfers associated with this proposed rule. In accordance with the provisions of Executive Order 12866, OMB has reviewed this proposed rule.

As added by the SECURE Act, section 3(44) of ERISA requires a person to register as a pooled plan provider with the Secretary, and provide other information the Secretary may require, before operating a pooled employer plan. These proposed rules respond to the direction given to the Secretary in the SECURE Act and provide the requirements for registering with the Secretary.

The required information allows the Department to identify pooled plan providers so that it may monitor their actions. While the Form 5500, which pooled plan providers will also be required to file, collects such information, Form 5500 reporting is generally unavailable for more than 18 months after a plan starts. The SECURE Act's registration requirements give the Department more immediate access to pooled plan provider information, allowing it to observe how this new market develops and assess the need for further guidance.

The goal of the SECURE Act is to increase retirement savings, in particular by expanding the options for small employers to participate in multiple employer plans. The Department expects this expansion to produce administrative savings and new investment opportunities for many small employers. Section 101 of the SECURE Act allows commercial service providers to serve as the plan administrator and a named fiduciary of defined contribution pension plans of more than one unrelated employer. Expanding the ways in which service providers and employers may craft and join multiple employer plans should reduce costs and administrative burdens for participating employers. Rather than sponsoring individual plans with separate Form 5500 filing and audit requirements, a single Form 5500 filing by the pooled plan provider would satisfy the annual reporting requirement for all the participating employers. Pooled plan providers would be both a named fiduciary and plan administrator for the pooled employer plan, and they would be required to register with the Department before operating any such plans.

The Department has identified certain existing entities that it believes would be most likely to serve as pooled plan providers. For example, recordkeepers that currently administer retirement plans may be well positioned to serve as pooled plan providers and some recordkeepers have affiliated entities that may seek to provide investment alternatives and services to the plan. Similarly, many Professional Employer Organizations (PEOs) have served as plan administrators and would likely have little trouble taking on the role of pooled plan provider. Further, insurance companies have expressed interest in serving as pooled plan providers and some have prior experience providing similar services. Chambers of Commerce have connections with employers, but many are small with few full-time staff. Also, few Chambers of Commerce have sponsored MEWAs. While retirement plan advisors such as broker-dealers and registered investment advisers are also plausible candidates, the Department believes that many would be reluctant to assume the named fiduciary and plan administrator roles. Entities such as registered investment advisors may likely be more comfortable serving as section 3(38) investment managers for the pooled plan providers.

Given these assumptions, the Department currently estimates that roughly 3,200 unique entities will initially register to serve as pooled plan providers. Recordkeepers and plan administrators of existing defined contribution plans are most likely to enter the market, followed by PEOs, direct annuity writers, chambers of commerce, and plan advisors.

The SECURE Act requirement that pooled plan providers first register with the Department before beginning operations alerts regulators to the presence and intent of new entities. Registering allows potential pooled plan providers access to this newly created market. These registrations would require contact information, links to any websites containing marketing information for any pooled employer plan(s) established by the provider, the date operations are expected to commence, and a description of the provider's services and affiliates. These registrations will be publicly available and will provide a complete list of registered pooled plan providers. In addition, the supplemental filing requirement ensures that providers update their initial filing to report material changes relevant to the pooled plan provider's and participating employers' fiduciary duties (including, for example, inception of bankruptcy and litigation, criminal, or regulatory enforcement actions against the pooled plan provider). This will help provide transparency regarding the provider's management and business practices, allowing employers to better survey the market when choosing a pooled plan provider or deciding whether to continue to rely on an existing provider and the Department and Treasury Department to carry out their statutory oversight duties.

In the Department's view, the statutory purpose of the registration requirement is to provide the Department with sufficient information regarding entities acting as pooled plan providers to engage in effective monitoring and oversight of this new type of ERISA retirement plan. As discussed above, the potential for inadequate employer oversight of the activities of a pooled employer plan and its plan fiduciaries and other service providers may be greater than for other plans sponsored by an employer because the nature of the plan involves participating employers passing along more responsibility to the pooled plan provider than they do in other plan arrangements. The proposed information collection, which has been kept limited to minimize burden, will enable the Department to fulfill its oversight responsibilities. Links to any websites containing marketing information for any pooled employer plan(s) established by the provider, the date operations are expected to commence, a description of the provider's services and affiliates, and material changes relevant to the pooled plan provider's fiduciary duties (including, for example, bankruptcy, litigation, and criminal or regulatory enforcement actions) all serve to help with monitoring and oversight.

As stated above, the SECURE Act amended ERISA to remove possible barriers to the broader use of multiple employer plans. This objective was accomplished primarily by allowing multiple unrelated employers to participate in an open MEP called a pooled employer plan that does not require commonality among participating employers or a genuine organizational relationship unrelated to participation in the plan. By allowing most of the administrative and fiduciary responsibilities of sponsoring a retirement plan to be transferred to pooled plan providers, pooled employer plans provide employers with an option to provide a workplace retirement plan to their employees with reduced burdens and costs compared to sponsoring their own separate single employer retirement plan. Consequently, more plan formation and broader availability of workplace retirement plans should occur, especially among small employers.

The Department is uncertain of the number of pooled employer plans that could be created based on the proposed rule, the number of employers that will participate in such plans, and the number of participants and beneficiaries that will be covered by them. The Department is confident, however, that some pooled employer plans will come into existence.

It is possible that each pooled plan provider that registers will offer at least one new pooled employer plan and larger pooled plan providers may offer more than one new pooled employer plan. As is the case with multiple employer plans generally, some pooled employer plans may be large or very large in terms of participating employers, others medium in size, and some may even be small, although small pooled employer plans would seem to lack the attraction and efficiency of the economies of scale that could exist for larger pooled employer plans.

The effects on coverage are somewhat uncertain because of the possibility of at least some zero-sum gain. Some new pooled employer plans will attract participating employers that currently do not offer retirement savings opportunities to their employees. The result in this situation would be a net coverage increase in this country and retirement security would be improved to some extent for the employees of these participating employers. 21 At the same time, however, the Department expects that some existing retirement plans, most likely those of small single employer plan sponsors, could terminate or otherwise cease to operate in their current form and merge into pooled employer plans. A dominant influence in this direction would be the administrative cost savings and other operational efficiencies that come with economies of scale. The Department has repeatedly acknowledged the potential benefits that could inure to small employers and their employees if they join together in a multiple employer plans and similar cooperative arrangements. 22 For different reasons, though, it also is possible that some existing multiple employer plans, such as those structured under 29 CFR 2510.3-55 (Association Retirement Plans or “ARPs”), could convert to pooled employers plans. 23 Conversions of this type might occur, for example, if an ARP were to conclude that restrictions under section 3(5) of ERISA, such as the geographic limitations imposed pursuant to 29 CFR 2510.3-55(b)(2) or the substantial employment function test for bona fide professional employer organization arrangements in 2510.3-55(c)(1), were disadvantageous or inefficient relative to the conditions for being a pooled employer plan. The total number of defined contribution plans, therefore, could decrease as a result of these mergers and conversions; however, net coverage ( i.e., the number of total defined contribution plan participants) could increase, because (1) participants in plans that merge or convert into pooled employer plans would continue to be covered under a retirement plan, and (2) some employers that do not currently provide their employees with retirement plan access would join pooled employer plans and their employees would count as newly-covered participants.

Pooled employer plans generally would benefit from scale advantages that small businesses do not currently enjoy, and the Department expects that such plans will pass some of the attendant savings onto participating employers and participants. Large scale may create two distinct economic advantages for pooled employer plans. First, as scale increases, marginal costs for pooled employer plans would diminish and pooled plan providers would spread fixed costs over a larger pool of member employers and employee participants, creating direct economic efficiencies. Second, asset managers commonly offer proportionately lower prices, relative to assets invested, to larger investors, under so-called tiered pricing practices resulting in decreased expense ratios based on the aggregate amount of money invested by a single pooled employer plan.

For example, larger plans tend to have lower fees overall. 24 Generally, small plans with 10 participants are paying approximately 50 basis points more than plans with 1,000 participants. 25 Small plans with 10 participants are paying about 90 basis points more than large plans with 50,000 participants. Grouping small employers together into a pooled employer plan could facilitate savings through administrative efficiencies and sometimes through price negotiation (market power). The degree of potential savings may be different for different types of administrative functions, e.g., scale efficiencies can be very large with respect to asset management, and may be smaller, but still meaningful, with respect to functions such as marketing, distribution, asset management, recordkeeping, and transaction processing.

Other potential benefits of the expansion of MEPs through the creation of pooled employer plans could include: (1) Increased economic efficiency as small businesses can more easily compete with larger companies in recruiting and retaining workers due to a competitive employee benefit package, (2) enhanced portability for employees that leave employment with an employer to work for another employer participating in the same pooled employer plan, and (3) higher quality data (more accurate and complete) reported to the Department on the Forms PR and 5500. The Department requests comments regarding such potential benefits.

The costs most directly associated with this rule are those of preparing and submitting the registration statement. The PRA section of this document, below, discusses these costs in detail. The estimated cost is $688,000 in the first year and $72,400 in subsequent years. 26 The perpetual time horizon annualized cost is $106,100 in 2016 dollars, using a seven percent discount percent rate, discounted from 2016. Other indirect costs may ensue, depending on the extent of pooled employer plan formation, as well as the extent of conversions, mergers, and contractions among existing plans. The extent of these actions is unknown at this time; in other words, such additional costs are highly uncertain. With respect to any new pooled employer plan, these indirect costs would relate to pooled plan provider complying with the requirements of the SECURE Act that are not codified by this proposed regulation.

Several potential transfers could occur as a result of this proposed rule. To the extent the formation of pooled employer plans leads employers that previously sponsored a retirement plans to terminate or freeze these plans, or leave another group plan like an ARP, and join a pooled employer plan, there may be a transfer if the pooled employer plan utilizes different service providers and asset types than the terminated plan. A similar transfer might occur in cases where employers who previously did not offer their employees a retirement plan join a pooled employer plan. Employees of these employers may have been saving for retirement previously in different ways, such as through an IRA, which would have different service providers. Service providers that specialize in providing services to pooled employer plans or are affiliated with a pooled plan provider might benefit at the expense of other providers who specialize in providing services to small plans or IRAs. Those different service providers would experience gains or losses of income or market share.

The rule could also result in asset transfers if pooled plan providers invest in different types of assets than plans that merge or convert to pooled employer plans. For example, small plans tend to rely more on mutual funds, while larger plans have greater access to other types of investment vehicles such as bank common collective trusts and insurance company pooled separate accounts, which allow for specialization and plan specific fees. This movement of assets could see profits move from mutual funds to other types of investment managers.

Finally, the Code generally gives tax advantages to certain retirement savings over most other forms of savings. 27 Consequently, all else being equal, workers who are saving money in tax qualified retirement savings vehicles generally can enjoy higher lifetime consumption and wealth than those who does not. The magnitude of the relative advantage generally depends on the worker's tax bracket, the amount contributed to the plan, the timing of contributions and withdrawals, and the investment performance of the assets in the account. Workers that do not contribute to a qualified retirement savings vehicle due to lack of access to a workplace retirement plan do not reap this relative advantage. This rule would likely increase the number of American workers with access to tax-qualified workplace retirement plans, which would spread this financial advantage to some people who are not currently receiving it. If access to retirement plans and savings increase as a result of this rule, a transfer will occur flowing from all taxpayers to those individuals receiving tax preferences as a result of new and increased retirement savings.

As is evident from the foregoing, the exact magnitude of the potential transfers is uncertain at this stage, as is the precise identities of the transferors and transferees. Much depends on the number of pooled employer plans that eventually come into existence, the extent of plan consolidation, the number of employers that begin participating anew in pooled employer plans and the savings habits of the employees of these employers (who might have heretofore been saving through an IRA). And a major influence on each of these factors will be, among other things, the nature, extent and timing of the regulatory intervention needed to implement the SECURE Act, as well as the general state of the economy. The Department specifically solicits comments and data on the potential magnitude of these transfers and the associated costs and benefits.

While the Department has identified types of service providers that it believes will be well positioned to act as pooled plan providers, it is unclear how many will choose to enter the market and whether they will do so in the first year of enactment or in later years. The Department has based its assumptions on discussions with stakeholders and articles on emerging markets. The Department invites comments on which and how many entities are likely to register as pooled plan providers.

Section 101 of the SECURE Act requires pooled plan provides to register with the Department and provide such other information as the Secretary may require before beginning operations as a pooled plan provider. The Department seeks to include information that would prove useful, while minimizing costs. The Department requests comments on whether (1) any required information does not satisfy this condition or (2) it should require other information to be included in the registration whose benefits would outweigh any administrative burden.

Section 101 of the SECURE Act requires pooled plan providers to register with the Secretary and provide such other information as the Secretary may require, before beginning operations as a pooled plan provider. The Department considered several alternative forms of information to be included that are discussed below.

The Department could have required fewer data elements, such as contact information only, including address and email. While slightly less burdensome than the proposed requirements, requiring fewer data elements would provide substantially less information to the Department, which would impede its ability to fulfill its critical oversight role of protecting participants and plan assets. Employers also would receive less information to survey the market when choosing a pooled plan provider or deciding whether to continue to rely on an existing provider.

The Department considered requiring pooled plan providers to file a registration for each pooled employer plan. This would have required pooled plan providers to file multiple similar filings. The Department did not choose this option, because it would have required pooled service providers to make multiple filings while providing minimal additional benefits.

The Department also considered not requiring pooled service providers to make supplemental filings. While this option would have been less burdensome than the chosen option, it would have provided less information to the Department and interested employers. Requiring pooled service providers to report updated information to the Department can provide key information the Department needs to fulfill its oversight role. Therefore, the Department determined that the benefits of requiring supplemental filings justified any additional cost that pooled plan providers would incur to furnish the updated information.

As part of its continuing effort to reduce paperwork and respondent burden, the Department conducts a preclearance consultation program to allow the general public and federal agencies to comment on proposed and continuing collections of information in accordance with the PRA. 28 This helps to ensure that the public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.

Currently, the Department is soliciting comments concerning the proposed information collection request (ICR) included in the registration requirements for pooled plan providers. To obtain a copy of the ICR, contact the PRA addressee shown below or go to http://www.RegInfo.gov.

The Department has submitted a copy of the proposed rule to the Office of Management and Budget (OMB) in accordance with 44 U.S.C.3507(d) for review of its information collections. The Department and OMB are particularly interested in comments that address the following:

• Evaluate whether the collection of information is necessary for the functions of the agency, including whether the information will have practical utility;

• Evaluate the accuracy of the agency's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;

• Enhance the quality, utility, and clarity of the information to be collected; and

• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology ( e.g., permitting electronically delivered responses).

Comments should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503 and marked “Attention: Desk Officer for the Employee Benefits Security Administration.” Comments can also be submitted by fax at (202) 395-5806 (this is not a toll-free number), or by email at OIRA_submission@omb.eop.gov. OMB requests that comments be received within 30 days of publication of the proposed rule to ensure their consideration.

PRA Addressee: Address requests for copies of the ICR to G. Christopher Cosby, Office of Policy and Research, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Room N-5718, Washington, DC 20210. The PRA Addressee may be reached by telephone at (202) 693-8410 or by fax at (202) 219-5333. (These are not toll-free numbers.) ICRs also are available at http://www.RegInfo.gov ( http://www.reginfo.gov/public/do/PRAMain ).

The SECURE Act requires a person to register as a pooled plan provider with the Secretary, and provide other information the Secretary may require, before beginning operations. This information collection contains the requirements to register with the Secretary under section 3(44) of the Act. The information collection will utilize the EFAST 2 electronic filing system that pooled plan providers will use to file the Form 5500 required to be filed on behalf of the pooled employer plan the provider operates. The proposed Form PR and Instructions that appear in Appendix A are included as part of the information collection request.

The Department has designed a two-part approach for this requirement. The first consists of a simple registration of contact information, links to marketing websites, and a description of services and the role of any affiliates. Pooled plan providers must electronically register with the Department at least 30 days, but not more than 90 days, before beginning operations. The information included should be collected by the pooled plan provider during its normal course of business, so collection should not require additional effort by the administrator. Therefore, the Department estimates that compiling and submitting the initial registration information will take about 45 minutes and impose no additional costs on the administrator. To limit costs, a pooled plan provider needs to file only one registration regardless of the number of pooled employer plans it operates, provided that a supplemental statement is filed identifying each pooled employer plan before the initiation of operations of the plan as a pooled employer plan. Assuming roughly 3,200 pooled plan providers, the Department estimates a burden of 2,425 hours, with an equivalent cost of $402,000, in the first year. 29

If the pooled plan provider does not begin operating any new pooled employer plans, does not change its use of affiliates or other related parties to provide services or its contact information, or does not experience any material changes in condition set forth in the proposal, it may go for a period of years without needing to supplement its registration. The Department anticipates that this will be the case with many pooled plan providers.

The supplemental filing requirement is similar to, although more limited than, filers' obligations with respect to the Form M-1, which requires entities to submit additional filings to document material changes. Approximately seven percent of entities filing a Form M-1 in 2017 submitted an additional filing after undergoing a material change. Assuming pooled plan providers will behave in a similar manner, the Department expects roughly 230 pooled plan providers to submit supplemental filings documenting material changes annually, including in the first year.

The supplemental filing amends the original registration to include employer identification numbers (EINs) and contact information for pooled employer plans that begin operations, cease operations, or experience material changes relevant to the pooled plan provider's fiduciary duties (including, for example, bankruptcy, litigation, and criminal or regulatory enforcement actions). Accordingly, the Department estimates the supplemental filing would take 30 minutes for pooled plan providers to submit. The Department does not believe, however, that the pooled plan provider would incur any additional costs beyond the labor costs necessary to collect and submit this information. The Department estimates that there will be 3,460 filings under the second part of this requirement in the first year, imposing a burden of 1,730 hours, with an equivalent cost of $287,000. 30

In subsequent years, the Department believes that the percentage of pooled plan providers reporting beginning or ceasing operations of pooled employer plans will roughly parallel the experience of Form M-1 filers. Approximately 14 percent of Form M-1 filers indicated they began operations in 2017, while six percent indicated they ceased operations. 31 Assuming pooled plan providers behave in a similar manner, the Department expects an additional 650 registrations related to beginning or ceasing operations annually in subsequent years. 32 These filings require an hour burden of 324 hours with an equivalent cost of nearly $54,000 in subsequent years.

The estimated total burden of this information collection is 4,155 hours, with an equivalent cost of $688,000, in the first year and 437 hours, with an equivalent cost of $72,400, in subsequent years. 33

The Department expects a large number of pooled plan providers to file the first part of registrations in the initial year, and significantly fewer to file in subsequent years as the market stabilizes. Incidents of filing updated and amended registration statements are expected to increase after the first year, as pooled employer plans enter and exit the market, change service providers, and change pooled employer plan offerings.

A summary of paperwork burden estimates follows:

Type of Review: New collection.

Agency: Employee Benefits Security Administration, U.S. Department of Labor.

Title: Registration requirements to serve as a pooled plan provider to pooled employer plans.

OMB Control Number: 1210-NEW.

Affected Public: Businesses or other for-profits.

Estimated Number of Respondents: 1,660 3-year average (3,233 first year, 873 subsequent years).

Estimated Number of Annual Responses: 2,813 3-year average (6,693 first year, 873 subsequent years).

Frequency of Response: Occasionally.

Estimated Total Annual Burden Hours: 1,676 3-year average (4,155 first year, 437 subsequent years).

Estimated Total Annual Burden Cost: 0.

The Regulatory Flexibility Act (RFA)  34 imposes certain requirements with respect to federal rules that are (1) subject to the notice and comment requirements of section 553(b) of the Administrative Procedure Act  35 and (2) likely to have a significant economic impact on a substantial number of small entities. Unless an agency determines that a proposal is not likely to have a significant economic impact on a substantial number of small entities, section 603 of the RFA requires the agency to present an initial regulatory flexibility analysis of the proposed rule. The Department has determined that this proposed rule, which would require prospective pooled plan providers to register with the Department prior to beginning operations, is not likely to have a significant economic impact on a substantial number of small entities. Therefore, the Department certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities. The Department estimates that only about eight percent of the potential market will decide to be a pooled plan provider and be subject to the rule. Each of these entities would incur an estimated cost of $124 to register and $83 to update the registration if needed. Below is justification for this determination.

Section 101 of the SECURE Act requires pooled plan providers to register with the Department, the Treasury Department, and the IRS. As noted above, the Treasury Department and the IRS have indicated that filing the registration statement with the Department will also satisfy the Code's registration requirement. The required information under the proposal would allow regulators to identify and monitor pooled plan providers. While some of the required information may be found in the Form 5500, which pooled plan providers will also be required to file on behalf of each participating employer plan they operate, this reporting is not available for more than 18 months after the pooled plan providers begin operating, and would not necessarily include some important information regarding the pooled plan providers themselves, such as bankruptcy filings, or the commencement of any criminal, civil, or administrative proceedings in any court or administrative tribunal by the federal or state government or other regulatory authority against the pooled plan provider related to the provisions of services to, operation of, or investments of, any employee benefit plan. Requiring pooled plan providers to register gives both the agencies and the public, including participating employers, more immediate access to the information for monitoring purposes, and enables the agencies to monitor how this new market develops and assess whether further guidance is needed.

The Department has identified certain existing entities that it believes would be most likely to serve as pooled plan providers. For example, recordkeepers that currently administer retirement plans are well positioned to serve as pooled plan providers. Similarly, many PEOs have served as plan administrators and would likely have little trouble taking on the role of pooled plan provider. Further, many insurers have expressed interest in serving as pooled plan providers. While retirement plan advisors such as broker-dealers and registered investment advisors are also plausible candidates, the Department believes that many would be reluctant to assume the named fiduciary and plan administrator roles. Entities such as registered investment advisors may likely be more comfortable serving as section 3(38) investment managers for the pooled plan providers.

Given these assumptions, the Department estimates that roughly 3,200 unique entities will initially register to serve as pooled plan providers. Recordkeepers and plan administrators of existing defined contribution pension plans are most likely to enter the market, followed by PEOs, chambers of commerce, and plan advisors.

While the Department does not have complete information on which of these entities meet the Small Business Administration's definition of a small entity, many of these entities likely are small. The Department estimates that about half of current recordkeepers and plan administrators currently serving DC plans would register to become pooled plan providers. Other types of providers will likely comprise a smaller share of entities that register. Overall, the Department estimates that about eight percent of the universe of entities the Department has identified as well-suited to serve as pooled plan providers are likely to register. The table below includes both large and small entities. The Department cannot estimate with specificity the distribution by size of the providers that will choose to become pooled plan providers although most of the providers in these service categories meet the Small Business Administration definition of small entities, however if the percentages in the footnote are applied to the number of affected entities in the table below, about 2,600 businesses could be small businesses. 36

The Department estimates that it would take the average pooled plan provider with a labor rate of $165.63 only 45 minutes to register, at an expense of $124.23, because the information necessary is readily available through the normal course of business. 37 Pooled plan providers submit the filing only when data elements change, the administrator begins or ceases operations for any pooled employer plan, or the pooled plan provider undergoes a material change. The supplemental filing will require an estimated 30 minutes to complete, at an expense of $82.82. As with the initial registration, the required information for the supplemental filing is readily available. The cost to file both a registration and a supplemental filing in a single year would be $207.16, which would be less than one percent of revenues if a business had more than $20,700 in revenues. The Department lacks complete data to determine the number of firms that do not meet this revenue threshold. Available data suggests that 15 percent of possibly affected firms have revenues less than $100,000. 38

To further show how small a $207 burden is, note that a one-person firm consisting of an individual with a labor rate of $165.63 would need to only work 125 hours to have revenue of $20,700. That same individual working 2,000 hours, a standard work year, would produce revenue of $331,260 resulting in $207.16 being significantly less than once percent of revenue.

The proposed rule would not conflict with any relevant federal rules. Section 101 of the SECURE Act requires pooled plan providers to register both with the Department and with the Treasury Department and the IRS; the proposed Form PR would satisfy the requirements under both Title I of ERISA and the Code. The statute expressly provides a separate authorization for the Departments to require additional information.

Title II of the Unfunded Mandates Reform Act of 1995 requires each federal agency to prepare a written statement assessing the effects of any federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by state, local, and tribal governments, in the aggregate, or by the private sector. 39 For purposes of the Unfunded Mandates Reform Act, as well as Executive Order 12875, this proposal does not include any federal mandates that the Department expects would result in such expenditures by state, local, and tribal governments, or the private sector. 40 This rule simply requires prospective pooled plan providers to register with the Department.

Executive Order 13132 outlines fundamental principles of federalism, and requires that federal agencies adhere to specific criteria when formulating and implementing policies that have “substantial direct effects” on the states, the relationship between the national government and states, or on the distribution of power and responsibilities among the various levels of government. 41 Federal agencies promulgating regulations that have federalism implications must first consult with state and local officials, then describe in the preamble to the final rule the extent of their consultation and the nature of the officials' concerns.

In the Department's view, these proposed regulations would not have federalism implications because they would not have direct effects on the states, on the relationship between the national government and the states, nor on the distribution of power and responsibilities among various levels of government. This proposed rule simply requires private companies that intend to offer pooled employer plans to register with the Department.

The Department welcomes input from states regarding this assessment.

For the reasons stated in the preamble, the Department of Labor proposes to amend 29 CFR part 2510 as follows:

The Form PR is used to report information for a person or entity that intends to serve as a pooled plan administrator to pooled employer plans within the meaning of sections 3(44) and 3(43) of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and 29 CFR 2510. 3-44.

You must file the Form PR electronically. You cannot file a paper Form PR by mail or other delivery service. Your Form PR will be initially screened electronically. For more information, see the instructions for Electronic Filing Requirement and the Form PR filing system at [insert correct web address/hyperlink].

If you have any questions (such as whether you are required to file this report) or if you need any assistance in completing this report, please call the EBSA Form PR help desk at 202-693-XXXX.

Any person who wishes to serve as a pooled plan provider to one or more pooled employer plans must file Form PR (Registration Statement of Pooled Plan Provider) with the Department of Labor. See ERISA sections 3(43) and 3(44) enacted by the Setting Every Community Up for Retirement Enhancement Act of 2019, Division O of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94) (December 20, 2019).

Note. “Person” for these purposes includes corporations, partnerships, and sole proprietorships.

Section 3(44) of ERISA establishes requirements for “pooled plan providers,” including a requirement that a person wishing to so act must register with the Department of Labor and the Department of the Treasury. The effective date for these provisions allows “pooled employer plans” to begin operating on January 1, 2021.

Under section 3(2) of ERISA, a pooled employer plan is treated for purposes of ERISA as a single plan that is a multiple employer plan. A “pooled employer plan” is defined in section 3(43) as a plan: (1) That is an individual account plan established or maintained for the purpose of providing benefits to the employees of two or more employers, (2) that is a qualified retirement plan or a plan funded entirely with individual retirement accounts (IRA plan), and (3) the terms of the plan must meet certain requirements set forth in the statute. 42 Specifically, the terms of the plan must—

• designate a pooled plan provider and provide that the pooled plan provider is a named fiduciary of the plan;

• designate one or more trustees (other than an employer in the plan) to be responsible for collecting contributions to, and holding the assets of, the plan, and require the trustee(s) to implement written contribution collection procedures that are reasonable, diligent, and systematic;

• provide that each employer in the plan retains fiduciary responsibility for the selection and monitoring, in accordance with ERISA fiduciary requirements, of the person designated as the pooled plan provider and any other person who is also designated as a named fiduciary of the plan, and, to the extent not otherwise delegated to another fiduciary by the pooled plan provider (and subject to the ERISA rules relating to self-directed investments), the investment and management of the portion of the plan's assets attributable to the employees of that employer (or beneficiaries of such employees) in the plan;

• provide that employers in the plan, and participants and beneficiaries, are not subject to unreasonable restrictions, fees, or penalties with regard to ceasing participation, receipt of distributions, or otherwise transferring assets of the plan in accordance with applicable rules for plan mergers and transfers;

• require the pooled plan provider to provide to employers in the plan any disclosures or other information that the Secretary of Labor may require, including any disclosures or other information to facilitate the selection or any monitoring of the pooled plan provider by employers in the plan, and require each employer in the plan to take any actions that the Secretary of Labor or pooled plan provider determines are necessary to administer the plan or to allow for the plan to meet the ERISA and Code requirements applicable to the plan, including providing any disclosures or other information that the Secretary of Labor may require or that the pooled plan provider otherwise determines are necessary to administer the plan or to allow the plan to meet such ERISA and Code requirements;, and

• provide that any disclosure or other information required to be provided to participating employers may be provided in electronic form and will be designed to ensure only reasonable costs are imposed on pooled plan providers and employers in the plan.

The fidelity bonding requirements in ERISA section 412 apply to fiduciaries and other persons handling the assets of a pooled employer plan, but the maximum bond amount for each such plan official is $1,000,000 as compared to the $500,000 maximum that applies in the case of other ERISA-covered plans that do not hold employer securities. See 29 CFR 2550.412-1, 29 CFR part 2580; see also Field Assistance Bulletin 2008-04 (providing a general description of statutory and regulatory requirements for bonding).

A “pooled plan provider” with respect to a pooled employer plan is defined in ERISA section 3(44) to mean a person that:

• Is designated by the terms of the plan as a named fiduciary under ERISA, as the plan administrator, and as the person responsible to perform all administrative duties (including conducting proper testing with respect to the plan and the employees of each employer in the plan) that are reasonably necessary to ensure that the plan meets the Code requirements for tax-favored treatment and the requirements of ERISA and to ensure that each employer in the plan takes actions as the Secretary or the pooled plan provider determines necessary for the plan to meet Code and ERISA requirements, including providing to the pooled plan provider any disclosures or other information that the Secretary may require or that the pooled plan provider otherwise determines are necessary to administer the plan or to allow the plan to meet Code and ERISA requirements;

• acknowledges in writing its status as a named fiduciary under ERISA and as the plan administrator;

• is responsible for ensuring that all persons who handle plan assets or are plan fiduciaries are bonded in accordance with ERISA requirements; and

• registers as a pooled plan provider.

Filing a true, complete, and correct registration statement, including any required updates, satisfies the requirement under section 3(44) of ERISA to register as a pooled plan provider with the Department of Labor. See section 3(44) of ERISA for other requirements.

You must file your initial registration statement no earlier than 90 days and no later than 30 days before beginning operations as a pooled plan provider. See 29 CFR 2510.3-44(b)(1).

For this purpose, “beginning operations as a pooled plan provider” means publicly marketing services as a pooled plan provider or offering a pooled employer plan. See 29 CFR 2510.3-44(b)(6).

Before the initiation of operations of a plan as a pooled employer plan with respect to a particular plan, you must supplement your registration statement with the name and EIN for the pooled employer plan, and the name, address, and EIN for the trustee for the plan. If an entity's first operations as a pooled plan provider will be with respect to a particular plan, the supplemental information required regarding each plan may be combined with the entity's initial registration.

You must also supplement your registration statement within 30 days of any changes to previously reported information or of the occurrence of the reportable events described below.

See 29 CFR 2510.3-44(b)(3). You should amend your registration statement within 30 days of discovering an error on your statement, but no later than the date for filing a Form 5500 Annual Return/Report of Employee Benefit Plan (Form 5500), where identifying information about the pooled plan provider, any pooled employer plans it administrators, or any trustees for those plans would conflict with the information required on the Form 5500.

The Form PR must be filed electronically with the Department of Labor by going to [insert correct title/hyperlink]. Your entries must be in the proper format in order for the electronic system to process your filing. For example, if a question requires you to enter a numerical account number, you cannot enter a word.

To reduce the possibility of correspondence and penalties:

• Complete all lines on the Form PR unless otherwise specified.

• Do not enter “N/A” or “Not Applicable” on the Form PR unless specifically permitted.

• “Yes” or “No” questions on the Form PR cannot be left blank, unless specifically permitted. Answer either “Yes” or “No,” but not both.

Do not enter social security numbers in response to questions asking for an employer identification number (EIN). Because of privacy concerns, the inclusion of a social security number on the Form PR or on an attachment that is open to public inspection may result in the rejection of the filing.

To correct errors and/or omissions on a previously filed Form PR, submit a completed Form PR indicating the filing is an amended report in Part I.

You are not permitted to act as a pooled plan provider unless you electronically file and sign a registration statement in accordance with the Department's regulation at 29 CFR 2510.3-44 and these instructions. You may be liable for breaches of fiduciary duty under ERISA and other state and federal law violations, including for misrepresentation regarding status as a pooled plan provider. The failure to file an update would not automatically result in a conclusion that, by operation of law, the pooled employer plans administered by the pooled plan provider would no longer be single plans and instead, a group of individual plans that use the same arrangement for operating their plans.

Identifying Information and EIN: You must use the same identifying information for the pooled plan provider on Form PR, including name and EIN, on the Form 5500 for each plan the pooled plan provider administers.

A person filing to satisfy the conditions of section 3(44) of ERISA and 29 CFR 2510.3-44 must sign this registration statement, indicating that the contents are true and correct to the best of the signer's knowledge. If the pooled plan provider does not electronically sign a filing, the filing status will indicate that there is an error with the filing. With respect to the initial registration, if it is unsigned, the filing will not constitute the required registration statement for such provider to operate a pooled employer plan.

The pooled plan provider or, if the pooled plan provider is an entity, a person authorized to sign on behalf of the pooled plan provider must electronically sign the Form PR submitted to the electronic filing system.

The Form PR must be filed electronically and signed. To obtain an electronic signature, go to [ insert correct web address/hyperlink ] and register as a signer. You will be provided with a UserID and PIN. Both the UserID and PIN are needed to sign the Form PR. The system will prevent the submission of any filing that does not include all required information. A completed filing will generate an online receipt. The pooled plan provider must keep a copy of the receipt as part of the plan's records as required by section 107 of ERISA.

If you have questions about using or completing the Form PR, please contact the Form PR Help Desk at [ insert telephone number ].

Important: “Yes/No” questions must be marked “Yes” or “No,” but not both. “N/A” is not an acceptable response unless expressly permitted in the instructions to that line.

Part I—Filing Type. Check the appropriate box to indicate filing type.

Initial filing. This is the registration statement for a person that intends to serve as a pooled plan provider to pooled employer plans. Only one registration must be filed for each person intending to act as a pooled plan provider, regardless of the number of pooled employer plans it operates.

Supplemental reportable event filing. This is to report any reportable event information additional to the initial or the most recent supplemental filing. This includes identifying each plan the pooled plan provider establishes and certain changes in the pooled plan provider's status.

Check “Supplemental Filing” and on Line 6 check the box to identify whether you are reporting information about a new pooled employer plan, a change in information previously reported, e.g., a change in the pooled plan provider's address since the last filing or the identification of a new affiliate providing services to the pooled employer plans operated by the pooled plan provider, or other change in circumstances. If you are correcting a mistake in a previous filing of the Form PR, check the “Amended” filing box.

Note. The information reported on the Form PR regarding the pooled plan provider and any affiliates providing services to the pooled employer plans operated by the pooled plan provider and on the Forms 5500 filed by the pooled plan provider, as plan administrator on behalf of the pooled employer plans it operates, must match. A mismatch could result in Form 5500 correspondence.

Amended filing. Check “amended filing” only if you are correcting information previously reported on a Form PR you filed; for example, you entered an incorrect name for an affiliate of the pooled plan provider.

Final filing. Once an entity has terminated operations as a pooled plan provider, including having ceased operating all pooled employer plans, the pooled plan provider must file a final supplemental filing. For purposes of the Form PR, a pooled employer plan would be treated as terminated and having ceased operations for this purpose when a resolution has been adopted terminating the plan, all assets under the plan (including insurance/annuity contracts) have been distributed to the participants and beneficiaries or legally transferred to the control of another plan, and when a final Form 5500 Return/Report has been filed for the plan. The final filing would be due within 30 days of the filing of the last final Form 5500 for the last pooled employer plan the provider operates. A single combined filing may be used to report both that the last pooled employer plan operated by the provider has been terminated and ceased operating and as the final Form PR filing for the pooled plan provider.

Caution: Each pooled employer plan operated by the pooled plan provider must have met the conditions for the filing of a final Form 5500 and such return/report must have been filed for each pooled employer plan operated by the pooled plan provider before the pooled plan provider can submit a final filing. See Instructions for the Form 5500.

Part II—Registration Information.

Make sure to use the same identifying information as you use for other state and federal registration and reporting requirements.

Line 1a. Enter the legal name of the person (person includes both individuals and entities) registering as the pooled plan provider. If the person uses a “trade” or “doing business as” name, also enter that name (both the legal and trade (d/b/a) name).

Line 1b. Enter a telephone number where participating employers will be able to reach the pooled plan provider. This does not preclude the pooled plan provider from also providing to participating employers a separate, dedicated telephone contact number for a particular pooled employer plan.

Line 1c. If the pooled plan provider and/or an affiliate uses one or more public websites to market such person as a pooled plan provider to the public or to provide participating employers (regardless of whether there is a registration requirement for full access) with information about the pooled employer plans in which they participate, enter the address(es) of such website(s) here.

Line 1d. Enter the business mailing address (include room, apt., suite No., and street; or P.O. Box, city or town, state, and ZIP code).

Line 1e. You must enter the Employer Identification Number (EIN) the pooled plan provider obtained from the Internal Revenue Service (IRS). You must use the same EIN number as the pooled plan provider uses for other federal and state filings, including with the IRS and the U.S. Securities and Exchange Commission (SEC). You must also use this EIN in the plan administrator field for all Forms 5500 filed for the pooled employer plans administered by the pooled plan provider.

Do not enter social security numbers in response to questions asking for an employer identification number (EIN). Because of privacy concerns, the inclusion of a social security number or any portion thereof on the Form PR may result in the rejection of the filing.

Persons wishing to act as pooled plan providers that are without an EIN must apply for one as soon as possible. The EBSA does not issue EINs. To apply for an EIN from the IRS:

• Mail or fax Form SS-4, Application for Employer Identification Number, obtained at https://www.irs.gov/pub/irs-pdf/fss4.pdf.

• See https://www.irs.gov/forms-pubs/about-form-ss-4 for additional information. The EIN is issued immediately once the application information is validated. (The online application process is not yet available for corporations with addresses in foreign countries.)

Lines 1f, 1g, and 1h. Enter the name, mailing address, telephone number, and email address for the primary compliance officer of the pooled plan provider.

Line 1i. Enter the full name of the agent for service of legal process and the address at which process may be served on the agent.

Line 2. Enter the approximate date the pooled plan provider expects to begin operating pooled employer plan(s). (Use MM/DD/YYYY format.)

Caution: The date entered here must be no earlier than 90 and no later than 30 days before the date of filing this registration statement.

Line 3. For each plan service or investment product listed in Lines 3a through 3f, indicate whether the pooled plan provider will use itself or an affiliate to operate the plan. Complete as many entries as necessary.

For purposes of the Form PR, the term affiliate includes all persons who are treated as a single employer with the person intending to be a pooled plan provider under section 414(b), (c), (m), or (o) of the Internal Revenue Code and are expected to provide services to pooled employer plans sponsored by the pooled plan provider, and any officer, director, partner, employee, or relative (as defined in section 3(15) of the Act) of such person; and any corporation or partnership of which such person is an officer, director, or partner.

Note. The pooled plan provider must serve as the named fiduciary and acknowledge in writing its status as such. The pooled plan provider must acknowledge that it is the plan administrator and responsible for the administration of each pooled employer plan and acknowledge in writing its status as such.

Line 4a. You must answer Line 4a; you may not leave it blank. Answer “Yes,” if there have been any criminal convictions, terms of imprisonment served, or civil judgments against the pooled plan provider or any officer, director, or employee of the pooled plan provider, in the 10 years preceding the registration related to the provision of services to, operation of, or investments of any employee benefit plan in any criminal, civil, or administrative enforcement proceeding by a federal or state agency or other regulatory authority in any federal or state court or administrative tribunal. If you answer “Yes,” you must complete all the elements in Line 4b. For purposes of responding to the Form PR, employees of the pooled plan provider include employees of the pooled employer plan, but only those who handle assets of the plan within the meaning of section 412 of ERISA or who are responsible for the operations or investments.

Line 5a. You must answer Line 5a; you may not leave it blank. Answer “Yes,” if there any pending criminal, civil, or administrative enforcement proceeding, related to the provisions of services to, operation of, or investments of any employee benefit plan, by a federal or state agency or other regulatory authority in any federal or state court or administrative tribunal against the pooled plan provider or any officer, director, or employee of the pooled plan provider. If you answer “Yes,” you must complete elements in Line 5b.

Part III—Supplemental Reportable Event Information.

You must supplement your registration statement by reporting information about each pooled employer plan before beginning operations as a pooled employer plan. You must also supplement your registration statement by reporting any change in the information previously reported or other change in pooled plan provider circumstances within 30 days of the occurrence of the change or of the reportable events described below. You may file a single supplement to your Form PR to report multiple simultaneous changes, e.g., beginning to operate two or more pooled employer plans, or to report a change that applies to the pooled plan provider with respect to all pooled employer plans it operates.

Line 6. Type of Supplemental Information. Check the box to identify whether Part III includes information about a new pooled employer plan, any change in information previously reported, or a change in pooled plan provider circumstances. Make sure that all the information in the Form PR you are submitting is up to date.

To correct information in a previously filed Form PR, check the “Amended” filing box, along with correcting the information.

Line 7. Pooled Employer Plan Information. Complete as many repeating entries as necessary to identify each pooled employer plan that the pooled plan provider begins operating. In elements a and b, respectively, enter the name and EIN for each pooled employer plan. In elements c(1) and c(2), respectively, enter the name, address and the EIN for the trustee(s) for the pooled employer plans operated by the pooled plan provider. In element c(3) enter the date the plan began operating as a pooled employer plan. Complete as many repeating entries as needed to identify all pooled plans administered by the registrant pooled plan provider and their trustees. In element c(4) enter the date the plan terminated and ceased operating as a pooled employer plan.

Caution: You must use the same names, EINs, and other identifying information provided regarding any pooled employer plan as is provided on the Forms 5500 for such plans. Failure to use consistent identifying information on this form and the Forms 5500 for any pooled employer plan for which you serve as the pooled plan provider could result in correspondence from the Department of Labor or the Internal Revenue Service.

Line 8. Change in Pooled Plan Provider Circumstances. Check the appropriate box(es) and enter all the requested information. Use as many repeating entries to enter all the required information. For example, if more than one action has been initiated, complete an entry for each action.

Line 8a. If there has been a merger between the pooled plan provider and another entity, enter the date of the merger and identify the parties involved in the transaction.

Line 8b. If there has been an acquisition by or of the pooled plan provider, enter the date of the acquisition and identify the parties to the transaction.

Line 8c. If the pooled plan provider (or any affiliates) involved in the operations of or providing services to the pooled employer plan files for bankruptcy or receivership of the pooled plan provider enter date of filing, enter name of court where action is proceeding, and enter caption and docket number for the proceeding.

Line 8d. Enter the date the pooled plan provider ceased operations.

Line 8e. You must complete Line 8e upon receiving written notice that there has been an initiation of any administrative enforcement action in any court or administrative tribunal by any federal or state government agency or other regulatory authority against the pooled plan provider or any officer, director, or employee of the pooled plan provider, related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan.

Line 8f. You must complete Line 8f upon receiving written notice of a finding by a federal or state court or governmental agency of fraud or dishonesty against the pooled plan provider or any officer, director, or employee of the pooled plan provider, related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan.

Line 8g. You must complete Line 8g upon learning that any criminal charges have been filed in any federal or state court against the pooled plan provider or any officer, director, or employee of the pooled plan provider, related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan.

We ask for the information on this form to carry out the law as specified in ERISA sections 3(43) (29 U.S.C. 1002(43)) and 3(44) (29 U.S.C. 1002(44)). You are required to give us the information if you wish to operate as a pooled plan provider. We need it to determine whether the pooled plan provider is eligible to operate as such under ERISA and the Code. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books and records relating to a form or its instructions must be retained as long as their contents may become material in the administration of the Internal Revenue Code or are required to be maintained pursuant to ERISA.

Generally, filings on Form PR (Registration Statement for Pooled Plan Providers) are open to public inspection and are subject to publication on the internet. You are not required to respond to this collection of information unless it displays a current, valid OMB control number. The average time needed to complete and file the form is estimated below. These times will vary depending on individual circumstances.

The estimated average time to complete are as follows:

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to: U.S. Department of Labor, Office of Policy and Research, Attention: PRA Official, 200 Constitution Avenue NW, Room N-5711, Washington, DC 20210 and reference Form PR (Registration Statement for Pooled Plan Providers). Do not send this form to this address. The forms and schedules must be filed electronically. See How To File-Electronic Filing Requirement.

The USDA, Forest Service is proposing revisions to its Oil and Gas Resources (36 CFR part 228, subpart E) regulations. Acting under established legal authorities, the Forest Service manages the surface-disturbing aspects of oil and gas leasing and operations on national forests and grasslands. Revisions to existing USDA regulations governing Federal oil and gas resource management are being pursued at this time for several reasons. The existing regulations were first promulgated in 1990 with a minor modification in 2007 to reflect revisions to the Forest Service and U.S. Department of Interior, Bureau of Land Management (Bureau of Land Management) joint rule, the Onshore Oil and Gas Order No. 1 (see 43 CFR 3164.1). Updating the regulations will afford an opportunity to address statutory and other requirements enacted since 1990 and modernize existing procedures to streamline processes and promote efficiency.

This rulemaking only affects Federal oil and gas resources on National Forest System lands, it does not affect nonfederal ( i.e. reserved and outstanding private) oil and gas resources. Some lands that the Forest Service acquires are subject to previously reserved or outstanding rights (See Forest Service Manual Chapters 5470, 2830 and 2710). Reserved rights are legal rights in property that the seller retains at the time the property is conveyed to the United States. Reserved rights may be made subject in the deed of conveyance to the Secretary of Agriculture's rules and regulations. When reserved rights are made subject to the Secretary's rules and regulations, the exercise of reserved rights generally requires a special use authorization, a plan of operation, or some other appropriate legal authorization. Outstanding rights, sometimes called valid existing rights (VERs), are legal rights in property owned by third parties other than the United States' grantor. Outstanding rights are those rights which have been severed and purchased by third parties before the United States' acquisition. The United States has limited control over outstanding rights except to prevent undue degradation or nuisance to adjacent surrounding National Forest System land.

The proposed rule would contribute to increasing efficiencies in managing Federal oil and gas activities and would help the Agency achieve its strategic goal to deliver benefits to the public. The Agency is proposing the revision of its existing regulations to clarify internal processes related to oil and gas leasing and approving operations, clarify oil and gas operators' responsibility to protect natural resources and the environment, clarify the Agency's procedures regarding inspections and compliance, and update material noncompliance procedures to reflect existing agency practices and better reflect requirements of law. The changes to 36 CFR part 228 require minor conforming changes to regulations at 36 CFR parts 214 and 261.

The proposed changes would not materially alter the basic responsibility of either the Agency or of oil and gas operators on NFS lands. The proposed changes aim to clarify procedures, reduce redundancy and promote consistency with other existing rules such as Onshore Order 1. For example, one notable proposed change aims to simplify the administrative process the Agency follows to determine which lands are open to leasing, reducing the amount of time it takes the Agency to make these decisions while at the same time maintaining all environmental and human health and safety protections of the current rule. Another proposed change would simplify the compliance process in Agency inspections, which is projected to result in better management and protection of surface resources.

The intent of these proposed changes is to streamline and reduce redundancies to improve agency efficiency and better align Forest Service regulations with those used by the Bureau of Land Management. The Bureau of Land Management is the federal agency primarily responsible for managing federally-owned minerals, including those underlying National Forest System lands. The Forest Service and the Bureau of Land Management jointly manage leasing and operations when oil and gas activities involve National Forest System lands, and oftentimes project proponents operate on lands managed by each agency. Subject to specific provisions as further noted herein, the Secretary of the Interior has the final decision whether to issue oil and gas leases on Federal lands, including National Forest System lands. Better alignment is most practically achieved by the Forest Service aligning its single subpart regulation with the multiple components of the Bureau of Land Management's more extensive oil and gas regulations in 43 CFR, subchapter C, parts 3000 through 3190.

Congress has long recognized the importance of the mineral resources located on lands within the National Forest System and has repeatedly made special provisions for the administration and development of these minerals. The Forest Service manages the surface-disturbing aspects of oil and gas leasing and operations on national forests and grasslands. The Agency seeks to ensure that development of subsurface resources is carried out in a manner that will minimize the impact on these surface resources.

Congress passed the Mineral Leasing Act of 1920 (30 U.S.C. 181, et seq. ) directing that disposal of Federal oil and gas resources would be subject to a leasing system. Initially, under the Mineral Leasing Act, the Department of the Interior did not have to obtain the consent of the Forest Service to offer oil and gas leases on National Forest System lands. That was changed with the Federal Onshore Oil and Gas Leasing Reform Act of 1987 (Pub. L. 100-203, the Reform Act), which amended the Mineral Leasing Act of 1920, and established that the Department of the Interior may not issue any lease on National Forest System Lands reserved from the public domain `over the objection of' the USDA, Forest Service. The Reform Act also revised leasing procedures, and gave the Department of Agriculture specific authority to approve surface uses related to oil and gas exploration and development on National Forest System lands.

In 1947, Congress enacted legislation governing leasing on acquired National Forest System lands (Mineral Leasing Act for Acquired Lands of 1947, 30 U.S.C. 351-359). This Act applies to acquired National Forest System lands ( e.g. those lands added to the National Forest System by the Weeks Act of 1911 or the Bankhead Jones Farm Tenant Act of 1937). The Mineral Leasing Act for Acquired Lands authorized the Secretary of the Interior to lease oil and gas deposits on acquired National Forest System lands “under the same conditions as contained in the leasing provisions of the mineral leasing laws” upon obtaining the consent of the Secretary of Agriculture, 30 U.S.C. 352. The Act also required the Secretary of the Interior to include in such leases any conditions prescribed by the Secretary of Agriculture to “insure the adequate utilization of the lands for the primary purposes for which they have been acquired or are being administered . . .”.

In 2005, Congress directed Federal agencies to streamline and reduce timeframes for processing proposals to lease and conduct oil and gas operations on Federal lands. See Energy Policy Act of 2005 (Pub. L. 109-58), Subtitle F, sections 361, 362, and 390.

It is in the national interest to promote clean and safe development of our Nation's vast energy resources while preserving the surface resources of national forests and grasslands. To that end, the Forest Service seeks to facilitate orderly development of Federal oil and gas resources in an environmentally sound manner. The proposed regulatory revisions are consistent with those goals.

The Mineral Leasing Act directs that no permit to drill may be granted without the analysis and approval by the Secretary of Agriculture of a Surface Use Plan of Operations (SUPO) covering proposed surface-disturbing activities within a lease area on National Forest System lands. In 2007, the Forest Service and the Bureau of Land Management jointly established coordination procedures for review and analysis of permits to drill, including the SUPO portion, in Onshore Order 1.

The Mineral Leasing Act also specifies requirements for inspections and compliance, and consequences of noncompliance, for approvals to operate on National Forest System lands. The proposed rule would streamline these requirements and would clarify consequences for an operator found to be noncompliant on National Forest System lands.

The proposed rule would also clarify the procedures that the Forest Service follows to require an operator to take corrective actions if operations are found to be out of compliance with approved SUPOs, including establishing a formal option to refer instances of continued noncompliance to the Bureau of Land Management. The proposed rule would retain operator requirements for emergency abatement when the Agency acts to remedy emergency situations such as fires or spills to which the operator cannot or will not respond. The proposed rule would also revise the Agency's material noncompliance proceedings by streamlining the process and reflecting consequences defined in the Mineral Leasing Act.

Executive Order 13783 on March 28, 2017, Promoting Energy Independence and Economic Growth (E.O. 13783), declared that it is in the national interest to promote clean and safe development of the Nation's energy resources while avoiding regulatory burdens that unnecessarily encumber energy production. E.O. 13783 indicates that development of these energy resources is essential to ensuring the Nation's geopolitical security. Section 2 of E.O. 13783 directs agencies to review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law. As directed, agencies submitted reports to the Office of Management and Budget recommending specific actions that, to the extent permitted by law, could alleviate or eliminate aspects of agency policy that burden domestic energy production. In its report, the USDA identified revisions to the 36 CFR part 228, subpart E, regulation as appropriate to meet the intent of the E.O.

There are currently 5,490 Federal oil and gas leases covering about 4.2 million acres (about 2%) of National Forest System lands. Approximately 2,700 of these leases, covering 1.6 million acres across 39 national forests and grasslands, have producing Federal oil or gas operations, and the footprint of actual operations comprises a small percentage (less than 10% percent) of that. There are 3,165 wells producing oil or natural gas operating on these leases. In 2018, production from these wells was over 25 million barrels of oil and gas products (0.6% of the nation's total), and over 117 million cubic feet of natural gas (0.3% of the nation's total). The production was valued at over $1.7 billion and returned approximately $207 million in royalties to the U.S. Treasury.

The Agency also anticipates that new and updated interpretive guidance for implementing the proposed regulations will be developed and set out in the Agency's directive system in 2021. For example, the Agency intends to update guidance related to proposed revisions for the Agency's leasing consent decision, Guidance may also include clarification of terms not explicitly defined but nonetheless important to execution of these regulations. The Agency also expects that public comment on this proposed rulemaking could help inform necessary updates and additions to the manual or handbook directive system.

The Agency published an advance notice of proposed rulemaking in the Federal Register on September 13, 2018 (83 FR 46458), inviting public input on key issues regarding implementation of existing regulations and other areas of concern. The public comment period occurred from September 13 to October 15, 2018, and served as the scoping period for the environmental analysis. The Forest Service received 91 responses.

Fifty-seven public comments included statements of general opposition, and twenty-three included statements of general support for the proposed rule. The remainder expressed neither opposition nor support.

Stated reasons for general opposition include the destruction of national forests and natural resources for financial or political interests; inadequate protection of human and environmental health; adverse impacts to recreation opportunities and tourism; and unsustainable reliance on fossil fuels.

Stated reasons for general support include the generation of revenue; large existing demands for oil and gas; decreases in regulatory burden on the oil and gas industry; promotion of domestic energy production; and creation of a simplified process leading to quicker leasing decisions and elimination of duplication with the Bureau of Land Management.

Comments expressed both support and opposition to streamlining and process reform. Supporters noted a need to address a Forest Service backlog in leasing decisions and provide an efficient National Environmental Policy Act (NEPA) process, while opponents believe that the existing process provides efficient analysis and decision-making. Some commenters stated that the Forest Service should retain authority of leasing decisions and abide by stewardship responsibilities when managing oil and gas resources.

Commenters noted and gave opinions on other areas where they believed that the Forest Service could make improvements. Their comments included the following: The Forest Service should not rely upon old documents (such as the 1989 Bureau of Land Management Uniform Format for Oil and Gas Lease Stipulations, and Onshore Order 1) to review oil and gas leasing activities; the Forest Service should seek to reduce timelines for Endangered Species Act Section 7 consultation; and the Forest Service should complete leasing analyses in conjunction with land management planning.

Some respondents noted streamlining the process for coordination between the Bureau of Land Management and Forest Service, or consolidating decisions under one agency, would improve efficiency. Commenters continued to express concerns surrounding Forest Service organizational capacity to implement efficient decisions, including apparent disconnects between Forest Service staff titles and day-to-day responsibilities. This leads to proponents being confused about whom to contact for a particular issue. Respondents also expressed concern that the Forest Service staff lacks understanding of processes and requirements related to the oil and gas regulations; that there are insufficient staff to efficiently complete tasks, leading to outdated leasing analyses; and that there is a need for the Forest Service to create strategies to solve staffing challenges prior to updating regulations. Respondents recommended that the Agency expand use of third-party consultants to prepare NEPA documents.

Regarding the intent to update the process for considering requests for waivers, exceptions, or modifications to lease stipulations, some commenters expressed opposition to waivers, exceptions, and modifications to permits, or stated that any revisions must continue to ensure environmental protection, monitoring, reporting, inspections, and compliance. Other commenters questioned whether the process duplicates work and decisions of the Bureau of Land Management.

On the topic of clarifying procedures for review and approval of SUPOs, some commenters expressed support for clarification of procedures to ensure a consistent format for review and approval. However, some commenters stated that existing regulations already provide a simple, clear process for review and approval of SUPOs, and that new revisions could result in insufficient review and increase potential for environmental impact.

Respondents noted that the Forest Service should clarify what is required of the Forest Service and the Bureau of Land Management in conducting “analysis and approval” of a surface-use plan. Other respondents recommended clarifying procedures to include maintaining public participation and objection opportunities; implementing deadlines and expiration dates for the approval process; improving coordination between the Forest Service and the Bureau of Land Management on SUPO processing and encouraging applicant support during processing; continuing to implement the surface use requirements in § 228.108 and NEPA review requirements in § 228.107; and using categorical exclusions for oil and natural gas activities.

With respect to the Forest Service's intent to update regulations addressing the operator's responsibility to protect natural resources and the environment, several comments expressed concern that changes to existing regulations would reduce operator obligations to protect the environment. Respondents suggested that specific requirements and best practices in 36 CFR 228.108 should remain in place, or be strengthened, to protect surface resources. Commenters suggested that the Forest Service describe environmental responsibilities of the Forest Service, the Bureau of Land Management and the operator; that the Forest Service add language regarding operator responsibility to comply with Secretary of the Interior standards for cultural resource protection; and, that the Forest Service not place restrictions on development to protect migratory birds or their habitat. One commenter expressed the view that the regulation changes must not impact drilling activities.

Public comments received in response to the ANPR can be found on the http://www.regulations.gov. Search on Docket ID: FS-2018-0053.

This rule proposes updates to the existing Forest Service regulations governing Federal oil and gas resource management to reflect requirements of legislation and Executive orders enacted since 1990. This rule proposes revisions based on Agency experience implementing existing regulations, and seeks to better align these regulations with established joint Forest Service and the Bureau of Land Management Onshore Order 1 (see 43 CFR 3164.1), and the Bureau of Land Management's independent regulations (43 CFR part 3100), where it may be appropriate and applicable.

The proposed rule would clarify and streamline the processes for identifying National Forest System lands open for leasing, while emphasizing an operator's responsibilities for compliance, and would clarify management steps that the Forest Service may take when operators do not comply with Forest Service regulations. The proposed rule would also aim to unify Forest Service regulations with those of the Bureau of Land Management regarding sundry notices and instances of bonding. The proposed rule would clarify the applicability of the existing procedures in Onshore Order 1 by which the Bureau of Land Management and the Forest Service jointly respond to operating proposals.

The proposed rule would incorporate the content of § 228.110, Indemnification, in the existing regulations into § 228.105, Responsibilities of Operators, of the proposed rule, thereby reducing the number of sections by one. The proposed rule would also, reorder, renumber and re-title various sections that would result in the following organization of the regulations:

The proposed rule would not change the scope and applicability from the existing rule. The changes or additions to the section are proposed to improve readability, clarity, and provide specific reference to the applicability of the Bureau of Land Management regulations at 43 CFR parts 3160 and 3170 and onshore orders to Federal oil and gas leasing and subsequent lease operations. The proposed rule would include references to the applicable legal framework and the role of the Secretary of Agriculture in implementing those statutes and would revise the language in paragraph (a) for readability and include specific language regarding lessees and operators. The proposed rule would revise paragraph (b) to describe that the rule applies to National Forest System lands concerning Federal oil and gas leases, and to operations conducted thereon, and to explicitly inform the public that the rule would not apply to oil and gas activity conducted as part of a non-Federal mineral right. The proposed rule would revise paragraph (c) to incorporate the applicability of the joint Forest Service and Bureau of Land Management rule, Onshore Order 1. The proposed rule would reference applicability of other Bureau of Land Management requirements such as its regulations at 43 CFR part 3100, Onshore Oil and Gas orders other than No. 1, and the Bureau of Land Management-issued Notices to Lessees and Operators. The proposed rule would replace the term `leasehold' with `lease' or `agreement' as appropriate to better reflect the Bureau of Land Management terminology regarding oil and gas leasing.

The proposed rule would add, remove, and revise some terms in the existing regulations to provide greater clarity. The proposed changes would benefit the regulated community, the Forest Service, and the Bureau of Land Management with a more harmonious set of definitions between the agencies' regulations.

The proposed rule would retain as is or with minor wording changes to improve clarity the following definitions: Acquired lands; authorized Forest Service officer; consent; infrastructure or facilities; lease; lessee; material noncompliance; National Forest System lands; Notices to Lessees and Operators; Onshore Oil and Gas Order; Operations; Operator; substantial modification; and Surface Use Plan of Operations.

The proposed rule would add the following terms and their definitions to provide functionality to proposed regulation text and improve consistency with the Bureau of Land Management terms: Agreement; Conditions of Approval; Final Abandonment Notice; lease notice; Master Development Plan; Master Surface Use Plan of Operations; Reasonably Foreseeable Development Scenario; stipulation; Sundry Notice; and Waiver, Exception or Modification.

The proposed rule would remove the definitions of the following terms, because they are redundant, lack applicability to the rule, or do not merit a stand-alone definition due to limited use or no special meaning beyond the plain English usage within the regulation: Leasehold; operating right; operating rights owner; person; transfer; and transferee.

The proposed rule would move the content of the existing § 228.102 regarding leasing analysis and decisions to § 228.103. The proposed rule would move the requirements for Issuance of Onshore Orders and Notices to Lessees and Operators from § 228.105 in the existing regulations to this section. The proposed rule would then combine procedures for the Chief of the Forest Service to issue onshore oil and gas orders into paragraph (a) and those for issuing Notices to Lessees and Operators into paragraph (b). The proposed rule would make editorial changes to the text for clarity and readability.

The Leasing Analysis and Consent Decision section addresses development of a nationwide schedule for leasing analyses in coordination with the Bureau of Land Management, the components of a leasing analysis, the components of a leasing decision, the ability of the Forest Service to withdraw its consent prior to the Bureau of Land Management conducting a lease sale, and notification of how stakeholders may appeal a leasing consent decision.

The proposed rule would remove reference to the former post-decisional appeal process (36 CFR part 217) because it has been rendered obsolete by subsequent regulations. The proposed change remedies the outdated reference and provides direction to 36 CFR part 219, subpart B, which is the codified sole process by which the public may file objections seeking predecisional administrative review for proposed projects and activities implementing land management plans and documented with a Record of Decision (ROD) or Decision Notice (DN). (78 FR 18481)

The proposed rule would streamline the approach that the Agency follows to identify lands open to leasing and stipulations to protect surface resources on lands open to leasing by establishing that the Forest Service has one decision point. That being consent to leasing made at the completion of the leasing analysis. This approach better aligns the Forest Service leasing availability analysis methods with those followed by the Bureau of Land Management. The proposed rule would also clearly state that the Forest Service may withdraw its consent to lease prior to the Bureau of Land Management conducting a lease sale.

The proposed rule would remove references to other laws and regulatory requirements, particularly with respect to complying with NEPA and the Endangered Species Act and their implementing regulations, in favor of letting those laws and regulations speak for themselves and to reduce likelihood that direction could be confused in the future if other regulations change. While several citations to specific laws and regulations have been removed, the Forest Service and lessees must still comply with all applicable laws and regulations.

Paragraph (a) of § 228.103 would modernize language regarding scheduling leasing analyses. The existing regulation references scheduling analyses within 6 months of April 20, 1990 and calls for an annual update of the schedule. The proposed rule would remove reference to a specific date, emphasize coordination between National Forests and Grasslands and the Bureau of Land Management for scheduling, inform the public that the agencies would consider public interest in leasing, and would require an annual update to the schedule. The changes would help align the efforts of Forest Service and the Bureau of Land Management with each other and interested parties in conducting leasing analyses.

Paragraph (b) of § 228.103 would define the required components of a leasing consent analysis. The proposed rule maintains the same components of analysis but provides additional direction on cooperation with the Bureau of Land Management, development of alternatives, and use of stipulations. These requirements would include clarifying how stipulations must be designed to carry out provisions of the Energy Policy Act of 2005 (42 U.S.C. 15922) to ensure that lease stipulations are applied consistently, coordinated between agencies, and only as restrictive as necessary to protect the resource for which the stipulations are applied. This section would incorporate parts of the existing § 228.102(b) and (c). The leasing consent analysis process proposed in the rule would direct that the Forest Service will make a single decision identifying lands on which the Agency would consent to the Bureau of Land Management's offering oil and gas leases for the affected National Forest System lands. The existing regulation directs an administrative review by the Forest Service at the time that specific lands, which have already been subject to an area or forest-wide leasing analysis, are being scheduled for leasing by the Bureau of Land Management. This is not a second, more detailed analysis, but a validation review verifying that oil and gas leasing of the specific lands has been adequately addressed in a NEPA document and is consistent with the applicable land management plan. The proposed rule would remove this largely duplicative administrative procedure. The existing regulation's flexible approach to the sequence or timing of Forest Service consent determinations has sometimes caused confusion among government personnel and the public. The proposed regulation settles on a specific point in the process in which Forest Service consent will be determined allowing uniformity of practice that should eliminate such confusion. The proposed rule includes a provision that would allow the Forest Service to withdraw its consent at any time prior to a Bureau of Land Management lease sale.

Paragraph (c) of § 228.103 would carry forward the components of a leasing consent decision from the existing regulations but is renamed “Leasing Consent Decision.” The paragraph would clarify that the Forest Service has one decision point in the process and would clearly define the required components of the Forest Service decision: Which lands are open to leasing and under what conditions (standard lease terms and conditions or added stipulations); and which lands are closed through exercise of management direction, statute, regulation, or withdrawal.

Paragraph (d) clarifies the notification to the Bureau of Land Management of a consent decision.

The proposed rule would eliminate content in § 228.102(e) of the existing regulation that discusses leasing decisions for specific lands as authorizing specific lands for lease. This existing language has been subject to litigation. For example, the Forest Service's interpretation of the existing leasing analysis and consent process set out in § 228.102(c), (d), and (e) has been disputed in litigation, such as the trilogy of Wyoming Outdoor Council rulings ( Wyoming Outdoor Council v. U.S. Forest Service, 981 F.Supp. 17 (D.D.C. 1997), aff'd, 165 F.3d 43 (D.C. Cir 1999); Wyoming Outdoor Council v. Dombeck, 148 F.Supp.2d 1 (D.D.C. 2001); Wyoming Outdoor Council v. Bosworth, 284 F.Supp.2d 81 (D.D.C. 2003)). A more recent and ongoing case, Center for Biological Diversity v. USFS, No. 2:17-cv-372, 2020 WL 1429569 (S.D. Ohio Mar. 13, 2020), addresses the Agency's analysis and consent process, including whether Forest Service consent can be withdrawn. The proposed rule seeks to simplify the overall process by settling on a specific point in the process in which Forest Service consent will be determined, allowing uniformity of practice. The Agency anticipates that new interpretive guidance for implementing the leasing consent decision will be developed and set out in the Agency's manual or handbook directive system in 2021.

Finally, paragraph (e) of the proposed rule would codify the existing practice that the Forest Service could withdraw its consent decision prior to a Bureau of Land Management lease sale.

The proposed rule would add direct reference regarding the applicability of procedures in Onshore Order 1 for requesting waivers or exceptions from or modifications to a lease stipulation (see proposed regulation text in § 228.104). The proposed rule would direct the Forest Service to provide notice to the Bureau of Land Management on its determination as to whether to grant or deny a request for a waiver, exception, or modification. The existing regulation directs notification to both the Bureau of Land Management and operator. As the administrator of Federal leases, the appropriate notification to the operator is from the Bureau of Land Management. The proposed rule would remove obsolete references to administrative appeal regulations that are no longer in use, in deference to the Agency's existing administrative appeal regulations at 36 CFR part 214 and the Agency's objection procedures at 36 CFR part 219.

The existing regulation requires the Forest Service to consult with other agencies when considering a waiver, exception or modification to a lease stipulation included at the other agency's request. Examples of instances when this might occur would be if the Forest Service include a stipulation that restricted occupancy in the vicinity of an electrical transmission line operated by a Federal power authority, or a stipulation to protect a special status wildlife species required by the U.S. Fish and Wildlife Service.

The proposed rule would move the content of the existing § 228.105 to § 228.102. The proposed rule would move the content of the existing § 228.108 to § 228.105 and re-title it Responsibilities of Operators. To improve efficient implementation of the regulations, the proposed rule would generally revise the content to not duplicate requirements in Onshore Order 1; readers will be referred to Onshore Order 1 as applicable.

The proposed rule would retain requirements from the existing regulations in paragraphs (g), (i), and (j)(2), place them in paragraph (a), and reorder them for readability. Paragraph (a) of the proposed rule would reinforce existing practices for operators to maximize use of existing roads and utility corridors in planning and constructing new infrastructure and report to the Forest Service any spills, blowouts, fires, or personal injuries that are reported to the Bureau of Land Management under its requirements.

Paragraph (b) of the proposed rule would require the operator to comply with all other applicable state and Federal statutes and regulations. Paragraph (c) of the proposed rule would require the operator to allow the Forest Service access to its operations for compliance inspection purposes. Paragraph (d) of the proposed rule would inform the operator of existing requirements that it would be responsible for obtaining Forest Service permits for uses of National Forest System lands and resources not otherwise included in a Surface Use Plan of Operation, most notably for uses outside an operator's lease area. Paragraph (e) of the proposed rule would maintain the requirement that the operator shall conduct its activities in a manner that avoids the cause or minimizes the spread of fire.

The proposed rule would move § 228.110 in the existing regulation to paragraph (f) of this section and retitle it Liability. The proposed rule would maintain the same conditions of liability to the United States for injury, loss, or damage, including fire suppression costs incurred by the government resulting from the operator and all lessees' activities.

The proposed rule would revise language clarifying the applicability of the requirements in Onshore Order 1 when an operator submits a Surface Use Plan of Operation and would address use of Master Development Plans and Master Surface Use Plans of Operation. The Bureau of Land Management is principally responsible to track applications for operations on Federal oil and gas leases and does so through a database called the Automated Fluid Minerals Support System (AFMSS). The Forest Service has access to AFMSS to track Surface Use Plans of Operation and Master Surface Use Plans of Operation. The proposed rule revises paragraph (c) to emphasize the need for operators to include in their applications a description of infrastructure or facilities to the extent known that would be used to support their operations such as pipelines or roads, and whether it would be within the boundaries of a lease or agreement, or outside lease or agreement boundaries. The proposed rule would remove paragraph (d), which uses terminology that is inconsistent with the Bureau of Land Management regulations and would instead clarify Sundry Notices in § 228.108.

The proposed rule would rename and reduce the number of paragraphs in this section. The proposed rule would improve references to Onshore Order 1, including the timeframes established in the Order for agency response. The proposed rule would remove obsolete references to Agency administrative appeal procedures since they are no longer in use, in deference to the Agency's existing administrative appeal regulations at 36 CFR part 214 and the Agency's objection procedures at 36 CFR part 219. The proposed rule would remove § 228.107(e), which uses terminology that is inconsistent with the Bureau of Land Management's regulations and would instead clarify Sundry Notices in § 228.108.

The proposed rule would move the content of the existing § 228.108 to § 228.105, Responsibility of Operator. The proposed rule would rename this section Sundry Notices replacing references to supplemental plans in §§ 228.106 and 228.107 of the existing regulations. This would remove language inconsistent with the Bureau of Land Management regulations and align the proposed rule with the Bureau of Land Management procedures. New content regarding sundry notices would include that the operator must follow the Bureau of Land Management procedures for submitting a sundry notice and that Forest Service approval of a sundry notice would be required if the notice proposed surface-disturbing activities. The proposed rule would clarify that surface-disturbing activities may be subject to environmental analysis. The new content is informative of compliance with existing requirements.

The proposed rule maintains the same bond requirement as the existing rule but provides additional instruction to Forest Service managers and operators with regard to clarity and consistency with Onshore Order 1. The proposed rule would make general clarifications and editorial corrections for readability. The proposed rule clarifies how the Forest Service would coordinate with the Bureau of Land Management if an operator chooses to increase its Bureau of Land Management bond to cover additional bonding required by the Forest Service for surface reclamation purposes. The Forest Service's experience in managing Federal oil and gas resources since the existing regulations were promulgated in 1990 indicates that in many cases the Bureau of Land Management lease bonds are insufficient to support surface reclamation needs if a lessee or operator defaults. The proposed rule retains language for the Forest Service to exercise its authority under the Mineral Leasing Act to ensure adequate financial assurance is in place to reclaim surface disturbance. The proposed rule would add language that describes what factors authorized Forest Service officers would consider when determining if Bureau of Land Management lease bonds are adequate. The proposed rule would retain language to the effect that the operator may increase the Bureau of Land Management performance bond or post a separate surface reclamation bond with Forest Service when the Forest Service determines additional bonding is necessary. The proposed rule would add paragraph (d) to clarify methods for posting bonds, and paragraph (e) to clarify methods for releasing a Forest Service-held surface reclamation bond.

The proposed rule would move the content of the existing § 228.110 to paragraph (f) of § 228.105, Responsibilities of Operator, and rename it Liability. The proposed rule would place the content from the existing § 228.111 in this section. The proposed rule would make editorial clarifications.

The proposed rule would move the content of the existing § 228.111, except paragraph (c), to § 228.110. The proposed rule would move the content of the existing paragraph (c) to § 228.105(b), Responsibility of Operator, and simplify it to reference Compliance with Other Statutes. The proposed rule would place the content of the existing § 228.112 in this section. The proposed rule would reorder and rename the paragraphs in this section and make editorial corrections to clarify the Agency's responsibility to inspect operations for compliance with terms of applicable approvals and the regulations in this subpart.

The proposed rule would move the content of the existing section to § 228.111. The proposed rule would also move the content of the existing § 228.113 to this section. The proposed rule would reorder, rename, and revise the paragraphs in this section. The proposed rule would streamline the procedures that the Agency would use to notify an operator of issues concerning noncompliance with the terms of approvals or the regulations in this subpart. The proposed rule would streamline these procedures by moving from a two-step process to a one-step process. The proposed rule would clarify when the Agency would either engage the Bureau of Land Management to take action under 43 CFR part 3163, refer a noncompliance action to law enforcement, or refer a noncompliance issue to the Agency's material noncompliance proceedings. The proposed rule would clarify an operator's opportunity to correct issues of noncompliance and would clarify an operator's appeal opportunities. The proposed rule would update the methods for notifying operators of noncompliance issues by including electronic means of notification.

The proposed rule would move the content of the existing section to § 228.112, and move the content of § 228.114 to this section. The proposed rule would revise, reorder, and rename the paragraphs in this section. The proposed rule would streamline the procedures that the Agency would follow when determining if an operator would be in material noncompliance with reclamation or other requirements or standards and would better reflect the requirements and consequences established in the Mineral Leasing Act. The 1990 procedures for oil and gas material noncompliance proceedings were designed to be consistent with other debarment procedures that are now defunct, thus prompting the need to revise these procedures.

The proposed rule would move the content of the existing section to § 228.113; move the content of § 228.115 to this section; retitle this section; and revise it to make the timeframes consistent with the timeframes in the Bureau of Land Management's direction and Onshore Order 1. The proposed rule would remove internal direction regarding posting decisions, which is addressed in the Agency's NEPA regulations.

The proposed rule would move the content of the existing section to § 228.114, and retitle it Information Collection Requirements. The proposed rule would include statements regarding Office of Management and Budget requirements from the existing § 228.115.

The proposed rule identifies minor, non-substantive changes to two other regulations for purposes of conforming with the modifications that would be made to 36 CFR part 228, subpart E.

In 36 CFR 214.4(b)(3), which specifies the decisions that are appealable under part 214, the phrase “request to supplement a surface use plan of operation” would be changed to “request for surface use portion of sundry notice” to track language in the proposed rule. The proposed rule would add two additional appealable decisions: (1) Requests for a waiver or exemption from, or modification to an oil and gas lease stipulation, and (2) requests for an extension of the time period for taking action in response to a notice of noncompliance.

In 36 CFR 261.2, which includes definitions applicable to the Agency's law enforcement regulations, the definition of “operating plan” would be changed by replacing the phrase “supplemental surface use plan of operation” with “surface use portion of a sundry notice.”

E.O. 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) will review all significant regulatory actions. The Office of Information and Regulatory Affairs has determined that this proposed rule is significant pursuant to section 3(f) of E.O. 12866. Therefore, a Regulatory Impact Analysis (RIA) analyzing the costs and benefits of the proposed regulation is needed to comply with E.O. 12866. The potential benefits and costs, as well as distributional impacts, associated with the proposed rule were analyzed to fulfill the RIA requirements, consistent with E.O.12866 and OMB Circular A-4.

The RIA considers costs and benefits associated with updates, modifications, or clarifications to different sections of 36 CFR part 228, subpart E, as they relate to key procedural steps for oil and gas leasing and permitting on National Forest System lands. Changes in costs and benefits are discussed in a primarily qualitative manner due to the challenges with quantifying costs and benefits at a programmatic level. Quantitative proxies are used when feasible to help describe the potential frequency or magnitude of activities and corresponding costs affected by the proposed rule.

The direct benefits of the proposed rule are reduced costs and time spent on identifying available lease areas, approving operations, and addressing compliance actions, including costs and time incurred by the Agency as well as by proponents engaged in or pursuing oil and gas operations on National Forest System lands. Indirect benefits can result from expedited access to leasable oil and gas resources on National Forest System lands, including time-valued oil and gas revenue or returns to operators as well as time-valued bids, lease rentals, and royalties paid by operators to the Federal Government and public.

The proposed rule is not expected to have a significant or measurable impact on rates of oil and gas production on National Forest System lands; oil and gas prices and other market factors are likely to drive future changes in growth of development and production. Because of minimal impacts to production, the proposed rule is equally unlikely to have significant distributional impacts on job or income contributions from oil and gas activities on National Forest System lands.

The total or aggregate net benefits associated with the proposed rule cannot be quantified but are likely to be small or slightly more than the estimated agency cost savings of $100,000 to $200,000 per year. The Regulatory Impact Analysis is available with the supporting documents at http://www.regulations.gov.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs has determined that this rule is not a major rule as defined by 5 U.S.C. 804(2). Findings in the Regulatory Impact Analysis for the proposed rule indicate that it is unlikely to have significant impacts on job or income contributions from oil and gas activities on National Forest System lands. Therefore, the revised regulation is not classified as major.

The proposed rule was reviewed under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The proposed rule is not expected to have a measurable effect (positive or negative) on oil and/or gas supply or distribution. The Agency regulation does not make decisions about which lands are open or closed to leasing and subsequent development, but instead manages the process. The proposed rule should streamline the oil and gas leasing process and should clarify processing procedures for the Surface Use Plan of Operation portion of an Application for Permit to Drill on National Forest System lands. The streamlining should reduce time and costs of permitting or leasing.

The proposed rule is not expected to have a significant adverse effect on the supply, distribution, or use of energy; on competition or prices; or on other agency actions related to energy. The proposed rule is not expected to raise novel issues regarding adverse effects on energy. The proposed rule is therefore not expected to be a significant energy action or to require a statement of energy effects, consistent with OMB guidance for implementing E.O. 13211.

The Agency has reviewed this proposed rule under U.S. Department of Agriculture procedures and Executive Order (E.O.) 13771, Reducing Regulation and Controlling Regulatory Costs, issued January 30, 2017. The Office of Management and Budget has reviewed this proposed rule and designated it as significant per E.O. 12866. E.O. 13771 requires that agencies account for the incurred costs that a significant regulatory action may have on the public and offset such costs with the removal of two other significant regulatory actions.

The total or aggregate net benefits associated with the proposed rule cannot be quantified; however, they are expected to be small or slightly more than the estimated agency cost savings of $100,000 to $200,000 per year for leasing analysis and processing expressions of interest. Thus, the proposed rule is considered a deregulatory action per E.O.13771.

The Agency prepared a programmatic environmental assessment (PEA) to determine whether this proposed rule would have a significant impact on the quality of the human environment under the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq. ) The PEA describes and analyzes two alternatives: The Proposed Rule (Proposed Action) and continuing with the existing regulations (No Action). The PEA is available for review with the supporting documents for this proposed regulation at http://www.regulations.gov. If the final PEA supports a Finding of No Significant Impact for the rule, the preparation of an environmental impact statement pursuant to the NEPA would not be required.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications (including regulations, legislative comments or proposed legislation, and other policy statements or actions) that 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. To ensure tribal perspectives are heard and fully considered during rulemaking, the Agency contacted all federally recognized Indian tribes and Alaska Native Corporations in accordance with E.O. 13175, (Consultation and Coordination with Indian Tribal Governments); USDA Departmental Regulation 1350-02 (Tribal Consultation, Coordination and Collaboration); and Forest Service Handbook 1509.13, Chapter 10 (Consultation with Indian tribes and Alaska Native Corporations). The Agency initiated formal consultation on the rulemaking by contacting the Indian tribes and Alaska Native Corporations by mail.

The consultation period began in September 2018 and will continue until the close of the comment period on the proposed rule. Consultation materials included the advance notice of proposed rulemaking, briefing documents that outline possible revisions of the existing regulations and the reasons why these changes are being proposed, and a list of frequently asked questions. As consultation continues, the Agency will also provide Indian tribes and Alaska Native Corporations with the proposed rule.

So far, the consultation process has included two in-person regional tribal consultation meetings in the Forest Service's Southwest Region: One was held on October 29, 2018, in Albuquerque, New Mexico, and the other on October 31, 2018 in Flagstaff, Arizona. During the October 31, 2018 consultation meeting, the Hopi Tribe requested additional face-to-face consultation with the Regional Forester. The Agency also received written comments from the Hopi Tribe and the Rincon Band of Luiseno Indians by letter and from the Federated Indians of Graton Rancheria by email. Most comments stated that the tribes will be provided additional review and comment once the Agency releases the proposed rule, as part of the consultation process. The Agency will continue to conduct government-to-government consultation on the rule until the close of the public comment period on the proposed rule.

The USDA's Office of Tribal Relations (OTR) has assessed the impact of this rule on Indian tribes and has determined that this rule has tribal implications that require continued communication efforts to determine if further tribal consultation under E.O. 13175 is required. To date, as part of their regulatory review process noted above, the Forest Service has engaged in various outreach efforts to American Indian and Alaska Native tribes, villages, and Corporations regarding the development of this proposed rule and the ongoing tribal cooperation in this process. If further consultation is required or otherwise appropriate, the Forest Service will work with the USDA's Office of Tribal Relations to ensure that meaningful consultation is provided.

The Agency considered the impacts of the proposed rule on small entities, consistent with requirements of the Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Flexibility Enforcement Fairness Act of 1996 (SBREFA), and Executive Orders 13272 and 13563 (Proper Consideration of Small Entities in Agency Rulemaking). Under the RFA, whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effects of the rule on small entities ( i.e., small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of the agency certifies the rule will not have a significant economic impact on a substantial number of small entities. Small entities potentially impacted by the proposed rule include small businesses (firms) involved in oil and gas extraction operations (North American Industry Classification System (NAICS) 211111), drilling oil and gas wells (NAICS 213111), and support activities for oil and gas operations (NAICS 213112). The proposed rule does not affect the terms, conditions, and stipulation of existing leases. The proposed rule can impact businesses that express interest in or decide to bid on new leases, or otherwise decide to engage in oil and gas development and operations on National Forest System lands currently under lease or that may come under lease in the future. The proposed rule provides both direct and indirect benefits to small businesses depending on whether the business holds leases or provides drilling and other support services.

There were 328 different firms operating oil and gas producing wells on National Forest System lands as of September 2018, of which 316 (96 percent) are estimated to be small businesses based on the Small Business Administration (SBA) small business criterion of 1,250 employees for NAICS 211111. The proposed rule will primarily impact a subset of operators that express interest in leasing National Forest System land or apply for permits to drill new wells on National Forest System lands in the future. As an estimate for the subset of affected small businesses, the Forest Service used the average of 35 Surface Plans of Operation for new wells that were approved annually, from 2013—2017, and assumed each new Surface Use Plan of Operations is submitted by a different firm (which is unlikely and provides a high side estimate). Other aspects of the proposed rule will likely go unnoticed by operators. For example, compliant operators will likely experience no affects from proposed procedures that the Agency will follow to monitor for compliance. For comparison to the effect on 35 small businesses annually, the estimated number of small firms associated with the oil and gas extraction sector (NAICS 211111) for the nation is approximately 5,600. The percent of small businesses affected by the proposed rule on an annual basis is projected to be small (35 of 5,600 is less than 1 percent).

The aggregate impact of the proposed rule, compared to baseline regulatory conditions, is expected to be positive for a majority of the entities involved in oil and gas leasing, development and operations on National Forest System lands, as noted in the Regulatory Impact Analysis. Provisions of the proposed rule are expected to reduce the times for reviewing and approving leases and permits, thereby saving operator costs and expediting opportunities for production and revenue. Exceptions might include cases where some operators may be faced with increases in reclamation bond amounts or have to apply for special use authorizations; however, these situations arise only when operators are not in full compliance with existing regulations. Based on the evidence summarized above, the proposed rule is expected to increase opportunities for net benefits to small entities on average. The number of small entities that would be impacted is not likely to be substantial. We therefore certify that this rule will not have a significant economic impact on a substantial number of small entities indicating that an initial regulatory flexibility analysis is not required

More information on the RFA and SBREFA determination is available with the supporting documents for this proposed regulation at http://www.regulations.gov. The Agency acknowledges that the analysis took place prior to the COVID-19 pandemic-induced recession and its impact on oil and gas markets. Because the expected impacts on small businesses are expected to be very small, difficult to quantify, and beneficial, we do not expect updated data on oil and gas markets or Forest Service production and development activity to change the overall conclusion and certification. However, the Agency intends to use the most current data available in its analyses prior to finalizing the rule. The Agency is seeking public comment specific to this analysis, and public comment on what effect the COVID-19 pandemic may have on the proposed revisions to the regulation.

The Agency considered this proposed rule under the requirements of Executive Order 13132, Federalism. The Agency has concluded that the rule conforms to the federalism principles set out in this Executive Order. It will not impose any compliance costs on the States and will not have substantial direct effects on the States or the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, the Agency has determined that no further assessment of federalism implications is necessary.

This rule has been analyzed in accordance with the principles and criteria contained in Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, and it has been determined that the rule does not pose the risk of a taking of protected private property. This rule affects management of Federal oil and gas resources and does not apply to privately held oil and gas rights.

This rule complies with the requirements of Executive Order 12988. More specifically, this rule meets the criteria of section 3(a), which requires agencies to review all regulations to eliminate errors and ambiguity and to write all regulations to minimize litigation. This rule also meets the criteria of section 3(b)(2), which requires agencies to write all regulations in clear language with clear legal standards.

The Department considered impacts of the proposed rule on civil rights and environmental justice (pursuant to Executive Order 12898, February 16, 1994). The Civil Rights Impact Analysis prepared according to USDA DR 4300-4 and 5600-002 may be viewed with this proposed regulation's supporting documents at http://www.regulations.gov. No adverse or disproportionate impacts on civil rights or environmental justice to underrepresented populations, or to other U.S. populations or communities, are expected from the proposed rule.

Pursuant to Title II of the Unfunded Mandates Reform Act (UMRA) of 1995 (2 U.S.C. 1531-1538), the Agency has assessed the effects of the proposed rule on State, local, and Tribal governments, and on the private sector. This proposed rule would not compel the expenditure of $100 million or more by State, local, or Tribal governments, in the aggregate, or by the private sector. Therefore, this proposed rule is not subject to the requirements of section 202 and 205 of the UMRA.

This proposed rule contains a collection of information for which the Agency is seeking Office of Management and Budget (OMB) approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ). To accomplish the information collection approval, the Agency is currently seeking reinstatement of OMB Control No. 0596-0101, which has previously been approved for collection of information associated with the existing 36 CFR part 228, subpart E. The proposed rule does not establish any new information collection requirements not previously approved under OMB Control No. 0596-0101.

It is important to note that the information collection requirements of this subpart are supplemental to the Bureau of Land Management's various OMB information collection approvals for issuing and managing operations on Federal oil and gas leases. The following sections of proposed subpart E contain information requirements as defined in 5 CFR part 1320:

Section 228.104—Consideration of Requests to Waive, Except, or Modify Lease Stipulations. Under the Bureau of Land Management regulations at 43 CFR 3101.1-4, the Bureau of Land Management may waive, except, or modify a lease stipulation. For leases on National Forest System lands, the Bureau of Land Management must obtain approval from the Forest Service before granting such a request. Section 228(c) provides criteria for approval that the Authorized Forest Service officer must determine are in place to grant approval. The additional information collection burden estimate is for the extra time an operator would take to organize and focus its request to assist the Forest Service in its review and consideration for approval.

Section 228.106(a), (c), and (d)—Operator's Submission of Surface Use Plan of Operations. Where a well is located on National Forest System lands, the Forest Service must approve the Surface Use Plan of Operations included as part of an operator's Application for Permit to Drill (reference BLM Form 3160-3, OMB Control No. 1004-0136). The Agency estimates that there are no additional burden hours for an operator's submission of a Surface Use Plan of Operations on National Forest System lands versus lands managed by the Bureau of Land Management.

Section 228.109(e) Bond Release. This section would provide an operator the ability to seek an incremental reduction in the performance bond based on partial completion of the reclamation requirements of the approved Surface Use Plan of Operations. This is an information collection specific to subpart E regulations.

Section 228.110(a) Notice of Temporary Cessation of Operations. This section would require an operator to provide verbal notification followed by a written statement to the Forest Service if operations will be temporarily paused for a period of 45 days or more. This is an information collection specific to subpart E regulations.

Section 228.112(c) Extension of Deadline in Notice of Noncompliance. Under this section, when issued a notice of noncompliance an operator may request an extension of the deadline contained within the notice. In its request, an operator would provide the rationale for the needed delay for it to come into compliance. This is an information collection specific to subpart E regulations.

Section 228.113(b)(2)—Response to a Referral of Material Noncompliance. When the Agency determines that an operator has failed to remedy a state of noncompliance and is being referred to the Compliance Officer for a determination of material noncompliance, this section would inform an operator that it may submit a written response to the referral or request an oral presentation to the Compliance Officer. This is an information collection specific to subpart E regulations.

OMB Control Number: 0596-0101.

Title: Oil and Gas Resources, 36 CFR, Part 228, Subpart E.

Type of Review: Reinstatement without Change.

Respondents/Affected Public: Individuals and private sector businesses who wish to engage in activities on National Forest System lands pursuant to a Federal oil and gas lease.

Total Estimated Number of Annual Respondents: Approximately 50.

Total Estimated Number of Annual Responses: Approximately 70.

Estimated Completion Time per Response: Varies from 5 minutes to 2 hours, depending on activity, with weighted average of 0.2 hours per response.

Total Estimated Number of Annual Burden Hours: 14 hours.

In accordance with the Paperwork Reduction Act of 1995, we provide the public and other agencies with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.

We are soliciting comments on the proposed information collection request. We are especially interested in public comment addressing the following issues: (1) Is the collection necessary to the proper functions of the Agency; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Agency enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Agency minimize the burden of this collection on the respondents, including through the use of information technology.

Public input has informed the development of the rules, including through an advance notice of proposed rulemaking (ANPR). The Agency reiterates its request for public comments on any aspects of the proposed revisions to the rule. The Agency will carefully consider public comments in preparing the final rule.

Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to the Office of Management and Budget to approve this information collection request. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

Please see the ADDRESSES section for directions on where to submit comments for this information collection request.

Therefore, for the reasons set forth in the preamble, the Forest Service is proposing to amend parts 214, 228, and 261 of title 36 of the Code of Federal Regulations as follows:

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

The Administration is committed to ensuring Medicare beneficiaries have access to new cures and technologies that improve health outcomes. Section 6 of the October 3, 2019 Executive Order 13890 (E.O. 13890) “Executive Order on Protecting and Improving Medicare for Our Nation's Seniors,”  1 directs the Secretary to “propose regulatory and sub-regulatory changes to the Medicare program to encourage innovation for patients” including by “streamlining the approval, coverage, and coding process”. 2 The E.O. 13890 explicitly includes making coverage of breakthrough medical devices “widely available, consistent with the principles of patient safety, market-based policies, and value for patients.”  3 The E.O. also directs the Secretary to “clarify the application of coverage standards.”  4

We are responding directly to these directives by proposing a definition of the term “reasonable and necessary” to clarify coverage standards and proposing the Medicare Coverage of Innovative Technology (MCIT) pathway to accelerate the coverage of new, innovative breakthrough devices to Medicare beneficiaries. To date, the factors used in making “reasonable and necessary” determinations based on section 1862(a)(1)(A) of the Act have not been established in regulations for Medicare coverage purposes. The Secretary has authority to determine whether a particular medical item or service is “reasonable and necessary” under section 1862(a)(1)(A) of the Act. ( See Heckler v. Ringer, 466 U.S. 602, 617 (1984).) When making coverage determinations, our policies have long considered whether the item or service is safe and effective, not experimental or investigational, and appropriate. (For more information see the January 30, 1989 notice of proposed rulemaking (54 FR 4307)). These factors are found in Chapter 13 of the Medicare Program Integrity Manual (PIM) at section 13.5.4— Reasonable and Necessary Provisions in LCDs as instructions for Medicare contractors. We are proposing to codify in regulations the Program Integrity Manual definition of “reasonable and necessary” with modifications, including to add a reference to Medicare patients and a reference to commercial health insurer coverage policies. We propose that an item or service would be considered “reasonable and necessary” if it is—(1) safe and effective; (2) not experimental or investigational; and (3) appropriate for Medicare patients, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is—

• Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient's condition or to improve the function of a malformed body member;

• Furnished in a setting appropriate to the patient's medical needs and condition;

• Ordered and furnished by qualified personnel;

• One that meets, but does not exceed, the patient's medical need; and

• At least as beneficial as an existing and available medically appropriate alternative.

We also propose that an item or service would be “appropriate for Medicare patients” under (3) if it is covered in the commercial insurance market, except where evidence supports that there are clinically relevant differences between Medicare beneficiaries and commercially insured individuals. An item or service deemed appropriate for Medicare coverage based on commercial coverage would be covered on that basis without also having to satisfy the bullets listed above. We believe this definition is a significant step in meeting the E.O.'s directive to bring clarity to coverage standards. Stakeholders have expressed interest in codifying a definition of “reasonable and necessary” for many years. This proposed definition is familiar and functional, can satisfy that interest and meet the E.O.'s ask, while also aligning with the goals of MCIT by providing clarity and predictability for innovation, including for beneficiaries and innovators.

The proposed MCIT coverage pathway is specifically for Medicare coverage of devices that are designated as part of the Food and Drug Administration's (FDA) Breakthrough Devices Program (hereafter referred to as “breakthrough devices”) and are FDA market authorized. The MCIT pathway would be voluntary and device manufacturers would notify CMS if they want to utilize this coverage option.

We propose that national Medicare coverage under the MCIT pathway would begin immediately upon the date of FDA market authorization (that is, the date the medical device receives Premarket Approval (PMA); 510(k) clearance; or the granting of a De Novo classification request) for the breakthrough device. This coverage would occur unless the device does not have a Medicare benefit category or is otherwise excluded from coverage by statute (that is, the Medicare statute does not allow for coverage of the particular device.) This coverage pathway delivers on the Administration's commitment to give Medicare beneficiaries access to the newest innovations on the market, consistent with the statutory definitions of Medicare benefits. Because Medicare is a defined benefit program, devices that do not fit within the statutory definitions may not be considered for MCIT. As an example, medical equipment for home use by the beneficiary must be durable (that is, withstand repeated use) for it to be coverable by Medicare (as defined in statutes and regulations by the Secretary). At this time, we are limiting MCIT to medical devices because that is a category of products explicitly identified in E.O. 13890, and we have identified that breakthrough devices can experience variable coverage across the nation shortly after market authorization.

We propose this MCIT pathway because the prescribed statutory timeframes for the National Coverage Determination (NCD) process limit CMS' ability to institute immediate national coverage policies for new, innovative medical devices. NCDs and Local Coverage Determinations (LCD) take, on average, 9 to 12 months to finalize. Because of this length of time, there may be coverage uncertainty between the period of FDA market authorization and CMS finalization of an NCD or a Medicare Administrative Contractor's (MACs) finalization of an LCD. During this time period shortly after market authorization, MACs make coverage determinations on a case-by-case (individual beneficiary) basis, but those decisions do not usually establish agency policies for future claims because a case-by-case decision is for a particular beneficiary and their health circumstances.

Over the past few years, CMS has heard concerns from stakeholders that breakthrough devices are not automatically covered nationally by Medicare once they are FDA market authorized. Variation in coverage from one jurisdiction to another is also a concern. To date, 16 breakthrough devices have also been market authorized. The majority of these breakthrough devices (10 devices) experience variability in coverage for two reasons. One reason is because the breakthrough devices are coverable at MAC discretion, like many other item and services, on a case-by-case basis (that is, the breakthrough device may be covered for one patient, but not for another within the same jurisdiction). The other reason is because breakthrough devices are used by a hospital or other provider that operates under a bundled payment system (such as a diagnosis related group (DRG) system), so there may be no separate coverage policy for each item or service that may be included in the bundled payment. Another example of variable coverage is for one breakthrough device that is non-covered by a local policy in Florida, but coverable at MAC discretion on a case-by-case basis in other jurisdictions. One breakthrough device has national coverage through an NCD. One breakthrough device has uniform coverage because the same LCD has been adopted in all jurisdictions. There are three breakthrough devices that do not have a Medicare benefit category (for example, certain wearable devices); therefore, those breakthrough devices cannot be covered by the Medicare program.

In contrast to varied local coverage, the proposed MCIT would create a pathway for immediate national Medicare coverage of any FDA-market authorized breakthrough device if the device meets criteria outlined in this proposal.

We are also proposing to establish in regulations the factors we have historically used in making “reasonable and necessary” determinations under section 1862(a)(1)(A) of the Act, with some modification. To summarize, this section explains that Medicare payment may be made under part A or part B for any expenses incurred for items or services that are reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Thus, with some exceptions, section 1862(a)(1)(A) of the Act requires that an item or service be “reasonable and necessary” to be covered by Medicare. The courts have recognized that the Secretary has significant authority to determine whether a particular item or service is “reasonable and necessary.” ( Heckler v. Ringer, 466 U.S. 602, 617 (1984). See also, Yale-New Haven Hospital v. Leavitt, 470 F.3d 71, 84 (2d Cir. 2006); Kort v. Burwell, 209 F. Supp. 3d 98, 110 (D.C. 2016) (The statute vests substantial authority in the Secretary.)) So even though section 1862(a)(1)(A) of the Act limits the scope of Medicare coverage, the Secretary has discretion to revise his/her interpretation of the statute in order to ensure adequate coverage for items and services under Part A and Part B.

This proposal would provide national Medicare coverage for breakthrough devices that are FDA market-authorized and used consistent with the FDA approved or cleared indication for use (also referred to as the “FDA-required labeling”). 5 This device coverage under the MCIT pathway is reasonable and necessary under section 1862(a)(1)(A) of the Act because the device has met the unique criteria of the FDA Breakthrough Devices Program.

Under the proposed MCIT coverage pathway, CMS would coordinate with FDA and manufacturers as medical devices move through the FDA regulatory process for Breakthrough Devices to ensure seamless Medicare coverage on the date of FDA market authorization unless CMS determines those devices do not have a Medicare benefit category. The Breakthrough Devices Program is an evolution of the Expedited Access Pathway Program and the Priority Review Program (section 515B of the Federal Food, Drug, and Cosmetic Act (FD&C Act)), 21 U.S.C. 360e-3; see also final guidance for industry entitled, “Breakthrough Devices Program,” https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM581664.pdf ).

The FDA's Breakthrough Devices Program is not for all new medical devices; rather, it is only for those that the FDA determines meet the standards for breakthrough device designation. In accordance with section 3051 of the 21st Century Cures Act (21 U.S.C. 360e-3), 6 the Breakthrough Devices Program is for medical devices and device-led combination products that meet two criteria. The first criterion is that the device provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions. The second criterion is that the device must satisfy one of the following elements: It represents a breakthrough technology; no approved or cleared alternatives exist; it offers significant advantages over existing approved or cleared alternatives, including additional considerations outlined in the statute; or device availability is in the best interest of patients (for more information see 21 U.S.C. 360e-3(b)(2)). These criteria make breakthrough designated devices unique among all other medical devices. 7 The parameters of the breakthrough devices program focus on innovations for patients, in turn, MCIT, focuses on these breakthrough devices consistent with E.O. 13890 and in order to streamline coverage of innovative medical devices.

Currently, we utilize several coverage pathways for items and services, which includes medical devices. None of the coverage pathways described in this section offer immediate, predictable coverage concurrently with FDA market authorization like the proposed MCIT pathway would do. We summarize the other coverage pathways here to provide context for MCIT.

• National Coverage Determinations (NCDs): Section 1862(l)(6)(A) of the Act defines the term national coverage determination as “a determination by the Secretary with respect to whether or not a particular item or service is covered nationally under this title.” In general, NCDs are national policy statements published to identify the circumstances under which particular items and services will be considered covered by Medicare. Traditionally, CMS relies heavily on health outcomes data to make NCDs. Most NCDs have involved determinations under section 1862(a)(1)(A) of the Act, but NCDs can be made based on other provisions of the Act, and includes a determination that the item or service under consideration has a Medicare benefit category. The NCD pathway, which has statutorily prescribed timeframes, generally takes 9 to 12 months to complete. 8

• Local Coverage Determinations (LCDs): Medicare contractors develop LCDs based on section 1862(a)(1)(A) of the Act that apply only within their geographic jurisdictions. (Sections 1862(l)(6)(B) and 1869(f)(2)(B) of the Act.) MACs will not need to develop LCDs for breakthrough devices when they are nationally covered through MCIT.

The MACs follow specific guidance for developing LCDs for Medicare coverage in the CMS Program Integrity Manual, and in some instances, an LCD can also take 9 to12 months to develop (MACs must finalize proposed LCDs within 365 days from opening per Chapter 13—Local Coverage Determinations of the (PIM) 13.5.1). We note that the MCIT pathway will not alter the existing coverage standards in Chapter 13—Local Coverage Determinations of the PIM. 9 That chapter will continue to be used in making determinations under section 1862(a)(1)(A) of the Act for other items and services at the local level.

• Claim-by-claim Adjudication: In the absence of an NCD or LCD, MACs would make coverage decisions under section 1862(a)(1)(A) of the Act and may cover or not cover items and services on a claim-by-claim basis. The majority of claims are handled through the claim adjudication process.

• Clinical Trial Policy (CTP) NCD 310.1: The CTP pathway can be used for coverage of routine care items and services (but generally not the technology under investigation) in a clinical study that is supported by certain Federal agencies. The CTP coverage pathway was developed in 2000. 10 This coverage pathway has not generally been utilized by device manufacturers because they usually seek coverage of the device, which is not included in this pathway.

• Parallel Review: Parallel Review is a mechanism for FDA and CMS to simultaneously review the submitted clinical data to help decrease the time between FDA's approval of a premarket application or granting of a de novo classification and the subsequent CMS NCD. Parallel Review has two stages: (1) FDA and CMS meet with the manufacturer to provide feedback on the proposed pivotal clinical trial within the FDA pre-submission process; and (2) FDA and CMS concurrently review (“in parallel”) the clinical trial results submitted in the PMA, or De Novo request. FDA and CMS independently review the data to determine whether it meets their respective Agency's standards and communicate with the manufacturer during their respective reviews. This program is most successful for devices that have a significant amount of clinical evidence. (Candidates for parallel review would not be appropriate for simultaneous MCIT consideration.)

Even though CMS has multiple coverage pathways, at this time none are readily available to provide immediate national coverage for new breakthrough devices with a Medicare benefit category at the same time as FDA market authorization. Further, some of these new breakthrough devices are likely to have limited or developing bodies of clinical evidence because of the newness of the device; therefore, the MCIT pathway can support manufacturers that are interested in combining coverage with their own clinical study to augment clinical evidence of improved health outcomes, particularly for Medicare patients.

Given this summary of existing coverage pathways, we seek comment from the public regarding if any of these existing pathways should be modified to achieve the goals set out by E.O. 13890.

We propose that the MCIT pathway would provide immediate national coverage for breakthrough devices beginning on the date of FDA market authorization and continue for up to 4 years, unless we determine the device does not have a Medicare benefit category as determined by us as part of the MCIT pathway process. The MCIT pathway is voluntary (that is, manufacturers would affirmatively opt-in), and would be initiated when a manufacturer notifies CMS of its intention to utilize the MCIT pathway. (This notification process is described further in section III. of this proposed rule.) We would subsequently coordinate with the manufacturer regarding steps that need to be taken for MCIT implementation purposes. The frequency of subsequent engagement will be largely driven by whether the manufacturer has questions for CMS, or CMS and FDA. The timing of coverage will depend upon the timing of the FDA's market authorization decision. Engagements can take place in the form of in-person meetings, phone calls, emails, etc. We intend to put devices that are covered through the MCIT pathway on the CMS website so that all stakeholders will be aware of what is covered through the MCIT pathway. Manufacturers of breakthrough devices will not be obligated or mandated by CMS to conduct clinical studies during coverage under the proposed MCIT pathway. However, we seek comment as to whether CMS should require or incentivize manufacturers to provide data about outcomes or should be obligated to enter into a clinical study similar to CMS's Coverage with Evidence Development (CED) paradigm. 11 We are aware some manufacturers may be required by the FDA to conduct post market data collection as a condition of market authorization, and nothing in this proposed rule would alter that FDA requirement. Manufacturers are encouraged to develop the clinical evidence base needed for one of the other coverage pathways after the MCIT pathway ends. This evidence is encouraged not only for CMS and private commercial health insurer coverage policies but also to better inform the clinical community and the public generally about the risks and benefits of treatment. CMS encourages early manufacturer engagement, both before and after FDA market authorization, for manufacturers to receive feedback from CMS on potential clinical study designs and clinical endpoints that may produce the evidence needed for a definitive coverage determination after MCIT. This feedback would not involve CMS predicting specific coverage or non-coverage.

In order to further the goals of E.O. 13890, CMS proposes to rely on FDA's breakthrough device designation and market authorization of those devices to define the universe of devices eligible for MCIT, except for those particular devices CMS determines do not have a Medicare benefit category or are statutorily excluded from coverage under Part A or Part B. In order to provide immediate national coverage to innovative medical devices, we propose to establish a time limit on how long a breakthrough device can be eligible for MCIT (that is, considered a breakthrough device for coverage purposes). MCIT has a time limit on newness similar to our New Technology Add-on Payment (NTAP) policy. Eligibility for the NTAP is also time limited and this time limit applies to all new technologies, including breakthrough devices, for which an application for additional payment is submitted. Additionally, the time-limited characteristic of MCIT will drive some manufacturers to leverage this period of coverage to demonstrate the value of their device in the competitive marketplace. The 4-year coverage period is particularly important for manufacturers of breakthrough devices that choose to further develop the clinical evidence basis on which the FDA granted marketing authorization. From our experience with clinical studies conducted as part of an NCD, 4 years is approximately the amount of time it takes to complete a study.

At the end of the 4-year MCIT pathway, coverage of the breakthrough device would be subject to one of these possible outcomes: (1) NCD (affirmative coverage, which may include facility or patient criteria); (2) NCD (non-coverage); or (3) MAC discretion (claim-by-claim adjudication or LCD). Manufacturers that are interested in a NCD are encouraged to submit a NCD request during the third year of MCIT to allow for sufficient time for NCD development. We seek public comment on whether CMS should open a national coverage analysis if a MAC has not issued an LCD for a breakthrough device within 6 months of the expiration date of the 4-year MCIT period.

In our analysis of the current coverage landscape to determine opportunities for innovation and efficiencies, we also considered modifying the coverage process for non-breakthrough devices (for example, PMAs because they are also new to the market), but ultimately determined that it was the unique characteristics of FDA designated breakthrough devices and their ability to serve unmet needs that resonated most with the E.O.'s direction to encourage innovation for patients. We also considered expedited coverage of newly market authorized and breakthrough devices when used in a clinical study.

We seek public comment on the proposed MCIT pathway, the considerations described, whether any of the existing coverage pathways should be modified to achieve the goals set out by the E.O., and alternatives to these proposals. We specifically seek public comment on whether the MCIT pathway should also include diagnostics, drugs and/or biologics that utilize breakthrough or expedited approaches at the FDA (for example, Breakthrough Therapy, Fast Track, Priority Review, Accelerated Approval)  12 or all diagnostics, drugs and/or biologics. We seek data to support including these additional item categories in the MCIT pathway. Also, we specifically seek manufacturer input on whether an opt-in or opt-out approach would work best for utilizing the MCIT pathway. We believe manufactures will welcome this new coverage pathway. We want to preserve manufacturers' business judgment and not assume which Medicare coverage pathway a given manufacturer of a breakthrough device would prefer (if any). Therefore, we have proposed an opt-in approach with an email to CMS to indicate affirmative interest in coverage. We are interested in whether an opt-out approach would be less burdensome for stakeholders. If so, we encourage public comment on a process for stakeholders to opt-out of MCIT that would not be burdensome. Also, we seek public comment on whether, once a manufacturer has opted-out of coverage, it can subsequently opt-in to MCIT.

As described in section I. of this proposed rule, the Secretary has authority to determine the meaning of “reasonable and necessary” under section 1862(a)(1)(A) of the Act. We are proposing to codify the longstanding Program Integrity Manual definition of “reasonable and necessary” into our regulations at 42 CFR 405.201(b), with modification. Under the current definition, an item or service is considered “reasonable and necessary” if it is (1) safe and effective; (2) not experimental or investigational; and (3) appropriate, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is—

• Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient's condition or to improve the function of a malformed body member;

• Furnished in a setting appropriate to the patient's medical needs and condition;

• Ordered and furnished by qualified personnel;

• One that meets, but does not exceed, the patient's medical need; and

• At least as beneficial as an existing and available medically appropriate alternative.

We solicit comments on sources of data that could be used to implement this policy, and whether CMS should make this information public and transparent. We seek public comment on the most appropriate source(s) for these coverage policies and the best way to determine which commercial plan(s) we would rely on for Medicare coverage.

We seek comment on whether beneficiaries, providers, innovators, or others wishing to gain coverage for an item or service demonstrate that the item or service is covered by at least one commercial insurance plan policy. If they can provide CMS with evidence of commercial coverage or if CMS or its MACs identify such coverage from its review of compilations of health insurance offerings or data from other sources, CMS would consider factor (3) to be satisfied.

We solicit comment on whether we should limit our consideration of commercial plan offerings or covered lives to a subset of the commercial market in the interest of simplicity, including looking at geographic subsets, subsets based on number of enrollees, subsets based on plan type (HMO, PPO, etc.), or other subsets of plans—including utilizing a singular plan. We also seek comment on whether, given considerations such the variation and distribution of coverage policies and access to innovations, we should only cover an item or service if it is covered for a majority, or a different proportion such as a plurality, of covered lives amongst plans or a majority, plurality, or some other proportion of plan offerings in the commercial market. (A plan offering is a contract an insurer offers to its enrollees, and a single insurance company may provide many different offerings.)

We also recognize that plan offerings may impose certain coverage restrictions on an item or service, e.g. related to clinical criteria, disease stage, or number and frequency of treatment. As greater access to innovative treatments provides beneficiaries with more opportunity to improve health and drive decisions, we would, when coverage is afforded on the basis of commercial coverage, adopt the least restrictive coverage policy for the item or service amongst the offerings we examine. However, given potential unreasonable or unnecessary utilization, we also solicit comment on whether we should instead adopt the most restrictive coverage policy. We are further considering, as another variation, that if coverage restrictions are largely similar and present across the majority of offerings, CMS would adopt these in its coverage policies. We note that such coverage restrictions include the basic requirement for medical necessity at the level of individual patients. Medicare will still only pay for an item or service received by a beneficiary if it is medically necessary for the beneficiary. We seek comment on whether, if we were to take this approach, we should instead use a proportion other than a majority, as low as any offering and as high as all offerings, as a sufficient threshold. As a final variation, we could defer, in the absence of an NCD or national policy, to the MACs to tailor the restrictions on coverage based on what they observe in the commercial market, just as we rely on MACs with regards to the current definition.

We further solicit comment on whether to grant coverage for an item or service to the extent it meets the first and second factors and the commercial coverage basis for the third factor. Under this approach, we would only use the current definition of “appropriate” from the current PIM when the exception for clinically relevant differences between Medicare beneficiaries and commercially insured individuals applies (or if the commercial coverage basis is determined by a proportion like a majority and there is insufficient commercial coverage information available). We note that referring to commercial coverage in this way may expand or narrow the circumstances under which we will cover a particular item or service and therefore solicit comment on whether, under such an approach, we should grandfather our current coverage policies for items and services. We also emphasize that the MACs will continue to make judgements in evaluating individual claims for reimbursement, such that a decision by CMS that an item or service is reasonable and necessary in general does not mean that it is reasonable and necessary in all circumstances with respect to individual claims for reimbursement.

We seek public comment on the most appropriate source(s) for these coverage policies. Further, under our proposal, each MAC would be responsible for reviewing commercial offerings to inform their LCDs or claim by claim decisions, which would include individual medical necessity decisions. We may also allow the MACs to develop approaches to address any or all of the considerations outlined above, parallel to their current practice of making coverage decisions in the absence of an NCD or national policy. We solicit comment on the best role of the MACs, along these lines or otherwise. We also solicit comment on whether the discretion to use the current criteria in the PIM when there is evidence to believe Medicare beneficiaries have different clinical needs should be exercised through the NCD process or in other ways, as well as what quantum of evidence should be sufficient.

In sum, we are proposing to define the term “reasonable and necessary” based on the factors currently found in the PIM, plus an alternative basis for meeting factor (3) based on any coverage in the commercial market. We are also soliciting comment on an alternative under whether an item or service satisfies the commercial coverage basis for factor (3) is determined by how it is treated across a majority of covered lives amongst commercial plan offerings, as well as an alternative whereby an item or service would be appropriate for Medicare patients to the extent it is covered in the commercial market. When evidence supports that differences between Medicare beneficiaries and commercially insured individuals are clinically relevant, we would rely on the criteria in the current PIM. We would continue relying on local administration of the program by MACs (including coverage on a claim by claim basis and LCDs) and maintain our discretion to issue NCDs based on the final rule.

We solicit comment on this proposed definition of reasonable and necessary, and alternatives outlined above, as well as other mechanisms or definitions we could establish for the term “reasonable and necessary”, and the merits and drawbacks associated with each, including the potential impact on Medicare program expenses or complexity. We may finalize any variation or outgrowth of the policies described in this proposal, or some combination of these options in lieu of or in conjunction with our proposed definition.

We are proposing that, under the proposed MCIT pathway, an item or service that receives a breakthrough device designation from the FDA would be considered “reasonable and necessary” under section 1862(a)(1)(A) of the Act because breakthrough devices have met the FDA's unique breakthrough devices criteria, and they are innovations that serve unmet needs. While other devices are still considered new to the market, for example, PMAs and even some 510(k)s, the devices designated by the FDA as breakthrough are representative of true innovations in the marketplace. This application of the “reasonable and necessary” standard in this way would ensure that the MCIT pathway can provide a fast-track to Medicare coverage of innovative devices that may more effectively treat or diagnose life-threatening or irreversibly debilitating human disease or conditions.

MCIT would improve healthcare for Medicare beneficiaries by providing national Medicare coverage for devices receiving the FDA breakthrough device designation, which are FDA market-authorized and used consistent with the FDA approved or cleared indication for use (also referred to as the “FDA required labeling”), 14 so long as the breakthrough device is described in an appropriate Medicare benefit category under Part A or Part B and is not specifically excluded by statute. We believe the criteria for qualification as a breakthrough device, as defined in section 515B(b) of the Food, Drug and Cosmetic Act (21 U.S.C. 360e-3(b)) is sufficient to satisfy the elements of the “reasonable and necessary” standard. The first breakthrough device designation criterion is that a device must “provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions” (21 U.S.C. 360e-3(b)(1)). The second criterion is that the device must satisfy one of the following elements: It represents a breakthrough technology; there are no approved or cleared alternatives; it offers significant advantages over existing approved or cleared alternatives, including additional considerations outlined in the statute; or availability of the device is in the best interest of patients (21 U.S.C. 360e-3(b)(2)). Thus, breakthrough devices are those that HHS has determined may provide better health outcomes for patients facing life-threatening or irreversibly debilitating human disease or conditions. We believe that a device meeting these criteria, once also FDA market authorized, is “reasonable and necessary” for purposes of Medicare coverage.

This proposed rule recognizes that the FDA market authorization of breakthrough devices warrants immediate coverage under the “reasonable and necessary” clause in section 1862(a)(1)(A) of the Act. We previously stated that FDA determinations were not controlling determinations for Medicare coverage purposes under section 1862(a)(1)(A) of the Act. (For more information see the January 30, 1989 Federal Register (54 FR 4307) (“FDA approval for the marketing of a medical device will not necessarily lead to a favorable coverage recommendation . . . ”) and the August 7, 2013 Federal Register (78 FR 48165) (“However, FDA approval or clearance alone does not entitle that technology to Medicare coverage.”) Under the Secretary's broad authority to interpret section 1862(a)(1)(A) of the Act ( supra section I.A.), we are revising our interpretation of the statute because of the practical concerns that our current standards have delayed access to a unique set of innovative devices that FDA has found to be safe and effective, and we believe are “reasonable and necessary” for purposes of Medicare coverage.

In light of E.O. 13890, the Secretary has determined that application of the current standards for making “reasonable and necessary” determinations may take too long following FDA market authorization of breakthrough devices. More importantly, the existing standard has not always provided Medicare beneficiaries adequate access to certain breakthrough medical devices when needed to improve health outcomes. We are proposing that breakthrough devices per se meet the reasonable and necessary standard in order to increase access and to reduce the delay from FDA market authorization to Medicare coverage.

We are proposing the MCIT pathway to deliver on the Administration's commitment to provide access to breakthrough devices to Medicare beneficiaries. The MCIT pathway provides up to 4 years of national coverage to newly FDA market authorized breakthrough devices. We are aware that this coverage may also facilitate evidence development on devices for the Medicare population because manufacturers can gather additional data on utilization of the device during the MCIT coverage period.

In § 405.601(a) we are proposing that the MCIT pathway is voluntary. Operationally, we propose that manufacturers of breakthrough devices notify CMS of their intention to elect MCIT shortly after receiving notice from the FDA of being granted the breakthrough device designation. Ideally, this notification would be sent to CMS within 2 weeks of receiving breakthrough designation. However, entities would not be penalized for notifying CMS after that time. Alternatively, submitting a notification to CMS shortly before or concurrently with the date of the FDA marketing submission should also afford CMS sufficient time to operationalize MCIT for the device. The CMS Coverage and Analysis Group would establish an email box for these inquires. This notification alerts CMS to offer guidance to manufacturers about the MCIT pathway and point to resources for coding and payment, which are key conversations to effectuate coverage upon FDA market authorization. We intend to utilize the existing coverage implementation processes to be prepared to offer coverage immediately upon the FDA market authorization.

In § 405.601(b), we propose the following definitions for the purposes of 42 CFR part 405. We propose to define “breakthrough device” as a medical device that receives such designation by the FDA (section 515B(d)(1) of the FD&C Act (21 U.S.C. 360e-3(d)(1))). We also propose to define, for the sake of clarity in the rule, that the acronym MCIT stands for Medicare Coverage of Innovative Technology.

In § 405.603(a) we propose that the pathway is available to devices that meet the definitions proposed in § 405.601. Based on the explicit mention of devices in E.O. 13890 and our interaction and feedback from stakeholders who expressed their concern that there is more uncertainty of coverage for devices than for other items and services (for example, diagnostics, drugs and biologics), this proposed policy is for devices only.

We propose in § 405.603(b) that the breakthrough devices that received FDA market authorization no more than 2 calendar years prior to the effective date of this subpart (the date the final rule is finalized) and thereafter will be eligible for coverage for claims submitted on or after the effective date of this rule. Claims for breakthrough devices with dates of service that occurred before the effective date of this rule would not be covered through MCIT. For example, a hypothetical breakthrough device that was FDA market authorized on October 1, 2018, and utilized on January 1, 2020 would not be eligible for coverage under MCIT because on January 1, 2020, the date of service, the final MCIT rule was not yet legally in effect. In contrast, a claim for utilization of the same hypothetical breakthrough device with a date of service on January 1, 2021 might be eligible for coverage if the claim occurred after the effective date of the rule (assuming that the effective date of the rule was prior to January 1, 2021). Breakthrough devices market authorized prior to the effective date of this rule will not be eligible for all 4 years of coverage. The 4-year period starts on the date of FDA market authorization. For example, a breakthrough device market authorized on October 1, 2018 would have claims covered through MCIT from the effective date of the final rule until October 1, 2022. If a manufacturer initially chooses to not utilize the MCIT pathway, and then chooses to do so some time after the breakthrough device's market authorization, coverage still only lasts 4 years from the date of FDA market authorization. We seek comment on this eligibility criterion for devices and specifically the 2 year lookback.

We propose in § 405.603(c) that to be part of the MCIT pathway, the device must be used according to its FDA approved or cleared indication for use. We propose that the device is only covered for use consistent with its FDA approved or cleared indication for use because that is the indication and conditions for use that were reviewed by the FDA and authorized for marketing. Data are unlikely to be available to support extending beyond the FDA required labeling for breakthrough devices on the date of marketing authorization. Use of the device for a condition or population that is not labeled (“off-label”) will not be covered as that use would not be FDA authorized. We specifically seek comment on whether off-label use of breakthrough devices should be covered and, if so, under what specific circumstances and/or evidentiary support.

In § 405.603(d) and (e), we additionally propose limitations to what is coverable under the Act. In § 405.603(e), we are proposing that if CMS has issued an NCD on a particular breakthrough device, that breakthrough device is not eligible for MCIT. We are proposing this because, once the device has been reviewed by CMS for the FDA required approved or cleared indication for use; CMS has made a coverage determination based on the available evidence for that technology. We believe this would happen rarely because breakthrough devices are new technologies that are not likely to have been previously reviewed through the NCD process. In § 405.603(f), we acknowledge that devices in the MCIT pathway may be excluded due to statute or regulation (for example, 42 CFR 411.15, Particular services excluded from coverage) and, like other items and services coverable by Medicare, the device must fall within the scope of a Medicare benefit category under section 1861 of the Act and the implementing regulations. If the device does not fall within a Medicare benefit category as outlined in the statute and implementing regulations, the device is not eligible for Medicare coverage; therefore, the device would not be eligible for the MCIT pathway.

We propose in § 405.605 that devices covered under the MCIT pathway are covered no differently from devices that are covered outside of MCIT. In other words, provided the items and services are otherwise coverable (that is, not specifically excluded and not found by CMS to be outside the scope of a Medicare benefit category), covered items and services could include the device, reasonable and necessary surgery to implant the device, if implantable, related care and services costs of the device (for example, replacing reasonable and necessary parts of the device such as a battery), and coverage of any reasonable and necessary treatments due to complications arising from use of the device. What the MCIT pathway offers compared to other pathways is predictable national coverage simultaneous with FDA market authorization that will generally last for a set time period.

The proposed MCIT pathway would support and accelerate beneficiary access to certain innovative devices. CMS encourages manufacturers that have breakthrough devices covered under MCIT to develop additional data for the healthcare community.

In § 405.607(a), we propose that the MCIT pathway for coverage would begin on the same date the device receives FDA market authorization. We propose this point in time to ensure there is no gap between Medicare coverage and FDA market authorization. This supports the MCIT pathway's focus of ensuring beneficiaries have a predictable access to new devices.

We propose in § 405.607(b)(1) that the MCIT pathway for breakthrough devices ends 4 years from the date the device received FDA market authorization. We propose this 4 year time period because it could allow manufacturers to develop clinical evidence and data regarding the benefit of the use of their device in a real world setting. For example, we believe 4 years would allow most manufacturers sufficient time to complete FDA required post-approval or other real-world data collection studies that may have been a condition of FDA market authorization. This assumption is based upon our historical experience with studies conducted through coverage with evidence development (CED). Further, this time period allows Medicare to support manufacturers that, whether required by the FDA or not, have an interest in better understanding the health outcomes of their device in the Medicare population, including impacts on patient-reported and longer-term outcomes.

Further, § 405.607(b) proposes reasons that the MCIT pathway may end prior to 4 years. This includes circumstances whereby the device becomes subject to an NCD, regulation, statute, or if the device can no longer be lawfully marketed.

In summary, the MCIT pathway would provide immediate Medicare coverage of newly FDA market authorized breakthrough devices for 4 years. We seek public comment on all of our proposals. In particular, we seek feedback on whether the proposed 4 year coverage period is sufficient. We also look to stakeholders and the public to determine the level of interest and expected use of the proposed MCIT pathway so the agency can begin to estimate the level of needed resources to support successful implementation. We are also seeking public comments on our proposal to codify in regulations the standards we have historically used in making reasonable and necessary decisions under Part A and Part B under section 1862(a)(1)(A) of the Act. After considering public comments we would prepare a final rule that we expect would be effective 60 days after publication of the final rule.

Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comment on each of the section 3506(c)(2)(A)-required issues for the following sections of this document that contain information collection requirements (ICRs).

To derive average costs, we used data from the U.S. Bureau of Labor Statistics' May 2018 National Occupational Employment and Wage Estimates for all salary estimates ( https://www.bls.gov/oes/current/oes131041.htm, released May 2019). In this regard, the table that follows presents the mean hourly wage, the cost of fringe benefits (calculated at 100 percent of salary), and the adjusted hourly wage.

As indicated, we are adjusting our employee hourly wage estimates by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and overhead costs vary significantly from employer to employer. Nonetheless, there is no practical alternative and we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method.

This proposed coverage pathway allows for a voluntary participation and therefore necessitates that manufacturers of breakthrough devices notify CMS of their intent to enter the MCIT pathway. Therefore, the burden associated with notifying CMS is the time and effort it would take for each of the organizations to send CMS an email or letter. We anticipate two MCIT pathway participants in the first year based upon the number of medical devices that received FY2020 NTAP and were non-covered in at least one MAC jurisdiction by LCDs and related articles.

We estimate notifying CMS of intent to participate in MCIT would involve 15 minutes at $69.72 per hour by a compliance officer. In this regard, we estimate 15 mins per notification at a cost of $17.43 per organization (0.25 hours × $69.72). In aggregate, we estimate 0.5 hours (0.25 hours × 2 submissions) at $34.86 ($17.43 × 2 submissions).

After the anticipated initial 2 submitters, over the next 3 years we expect 3 submitters in year 2, 4 submitters in year 3, and 5 submitters in year 4 to notify CMS of interested in the MCIT pathway. We expect this increase in submitters each year to level off at this point. In this regard, we estimate the same 0.25 hours per submission at a cost of $17.43 per organization. Similarly, in aggregate, we estimate, for year 2 (0.75 hours at $52.29 an hour), for year 3 (1.0 hour at $69.72 an hour), and for year 4 (1.25 hours at $87.15 an hour).

The proposed requirements and burden will be submitted to OMB under control number 0938-NEW.

We are requesting public comments on these information collection and recordkeeping requirements.

If you comment on these information collection and recordkeeping requirements, please do either of the following:

1. Submit your comments electronically as specified in the ADDRESSES section of this proposed rule; or

2. Submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget,

Attention: CMS Desk Officer, CMS-3372-P, Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.

Comments must be received on/by November 2, 2020.

This proposed rule makes Medicare coverage policy updates pursuant to the authority at section 1862(a)(1)(A) of the Act. We are using regulatory action per the October 3, 2019 “Executive Order on Protecting and Improving Medicare for Our Nation's Seniors” to address the increasing need for a swift Medicare coverage mechanism to allow beneficiaries across the nation to access breakthrough devices faster after FDA market authorization. This proposed rule addresses that need by establishing a coverage pathway that will allow immediate beneficiary access to FDA market authorized breakthrough devices.

We have examined the impact of this proposed rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017).

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). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This proposed rule does reach the economic threshold and thus is considered a major rule.

Regulatory alternatives to this proposed rule were to combine Medicare coverage with clinical evidence development under section 1862(a)(1)(E) of the Act, to take no regulatory action at this time, or to adjust the duration of the MCIT pathway. Combining coverage with clinical evidence development would have met the E.O. 13890 overarching goal of beneficiary access to breakthrough devices. However, this alternative did not meet the other E.O. 13890 aims of minimizing time between FDA market authorization and Medicare coverage and wide availability. The timing of coverage would depend upon the manufacturer being able to initiate a clinical study and the wide availability of coverage could be an issue if providers did not have the infrastructure necessary to participate in the clinical study. CMS chose to not to pursue combining coverage with evidence development for breakthrough devices because we wanted to meet the timing and wide availability aims of E.O. 13890. CMS also considered taking no regulatory action and trying to leverage the existing Medicare coverage pathways or proposing sub-regulatory policies to achieve the streamlined coverage process described in E.O. 13890. Taking no action would not have resulted in the desired national coverage and access envisioned in E.O. 13890 because, as described in this preamble, the existing coverage pathways do not consistently provide swift, national beneficiary access to innovative devices. As discussed elsewhere in the preamble, the nature of the problem being addressed by this proposed regulation is a potential delay between a milestone such as FDA market authorization and CMS coverage; as such, we request comment on a policy option of shortening of the duration of the MCIT pathway from the proposed 4 years to 1 year.

In addition to the alternatives just discussed, there are various possibilities regarding how to change the definition of “reasonable and necessary”—for example, whether to include a new aspect of the proposed definition that focuses on commercial insurance coverage practices. As noted earlier in the preamble, the goal of this revision is to expand coverage. However, the nuances of the definition would affect the magnitude of the impact and we request comment that would facilitate quantification of effects and comparison of alternatives at the final rule stage.

The impact of implementing the MCIT pathway is difficult to determine without knowing the specific technologies that would be covered. In addition, many of these technologies would be eligible for coverage in the absence of this rule, such as through a local or national coverage determination, so the impact for certain items may be the acceleration of coverage or adoption by just a few months. Furthermore, some of these devices would be covered immediately if the MACs decide to pay for them, which would result in no impact on Medicare spending for devices approved under this pathway. However, it is possible that some of these innovative technologies would not otherwise be eligible for coverage in the absence of this rule. Because it is not known how these new technologies would otherwise come to market and be reimbursed, it is not possible to develop a point estimate of the impact. In general, we believe the MCIT coverage pathway would range in impact from having no impact on Medicare spending, to a temporary cost for innovations that are adopted under an accelerated basis.

The decision to enter the MCIT pathway is voluntary for the manufacturer. Because manufacturers typically join the Medicare coverage pathway that is most beneficial to them, this would result in selection against the existing program coverage pathways (to what degree is unknown at this point). In addition, the past trend of new technology costing more than existing technology could lead to a higher cost for Medicare if this trend continued for technologies enrolling in the MCIT pathway. Nevertheless, new technology may also mitigate ongoing chronic health issues or improve efficiency of services thereby reducing some costs for Medicare.

In order to demonstrate the potential impact on Medicare spending, the CMS Office of the Actuary (OACT) developed three hypothetical scenarios that illustrate the impact of implementing the proposed MCIT pathway. Scenarios two and three assume that the device would not have been eligible for coverage in the absence of this proposed rule. (See Table 2) The illustration used the new devices that applied for a NTAP in FY 2020 as a proxy for the new devices that would utilize the MCIT pathway. The submitted cost and anticipated utilization for these devices was published in the Federal Register . 15 In addition, we assumed that two manufacturers would elect to utilize the MCIT pathway in the first year, three manufacturers in the second year, four manufacturers in the third year, and five manufacturers in the fourth year each year for all three scenarios. This assumption is based on the number of medical devices that received FY 2020 NTAP and were non-covered in at least one MAC jurisdiction by LCDs and related articles and our impression from the FDA that the number of devices granted breakthrough status is increasing. For the first scenario, the no-cost scenario, we assumed that all the devices would be eligible for coverage in the absence of the proposed rule. If the devices received payment nationally and at the same time then there would be no additional cost under this pathway. For the second scenario, the low-cost scenario, we assumed that the new technologies would have the average costs ($2,044) and utilization (2,322 patients) of similar technologies included in the FY 2020 NTAP application cycle. Therefore, to estimate the first year of MCIT, we multiplied the add-on payment for a new device by the anticipated utilization for a new device by the number of anticipated devices in the pathway ($2,044 × 2,322 × 2 = $ 9.5 million). For the third scenario, the high-cost scenario, we assumed the new technologies would receive the maximum add-on payment from the FY 2020 NTAP application cycle ($22,425) and the highest utilization of a device (6,500 patients). Therefore, to estimate for the first year of MCIT, we estimated similarly ($22,425 × 6,500 patients × 2 = $ 291.5 million). For subsequent years, we increased the number of anticipated devices in the pathway by three, four, and five in the last two scenarios until 2024. 16 In addition to not taking into account inflation, the illustration does not reflect any offsets for the costs of these technologies that would be utilized through existing authorities nor the cost of other treatments (except as noted). It is not possible to explicitly quantify these offsetting costs but they could substantially reduce or eliminate the net program cost. However, by assuming that only two to five manufacturers will elect MCIT coverage, we have implicitly assumed that, while more manufacturers could potentially elect coverage under MCIT, the majority of devices would have been covered under a different coverage pathway. Therefore, a substantial portion of the offsetting costs are implicitly reflected.

Based on this analysis, there is a range of potential impacts of the proposed MCIT coverage pathway as shown in Table 2. The difference between the three estimates demonstrates how sensitive the impact is to the cost and utilization of these unknown devices.

We believe the assumptions used in the three scenarios are reasonable to show the possible wide range of impacts for implementing this proposed pathway, in particular for a technology that would not have otherwise been eligible for coverage.

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Some hospitals and other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $7.5 million to $38.5 million in any 1 year. Individuals and States are not included in the definition of a small entity. We reviewed the Small Business Administration's Table of Small Business Size Standards Matched to North American Industry Classification System (NAICS) Codes to determine the NAICS U.S. industry titles and size standards in millions of dollars and/or number of employees that apply to small businesses that could be impacted by this rule. 17 We determined that small businesses potentially impacted may include surgical and medical instrument manufacturers (NAICS code 339112, dollars not provided/1,000 employees), Offices of Physicians (except Mental Health Specialists) (NAICS code 621111, $12 million/employees not provided), and Freestanding Ambulatory Surgical and Emergency Centers (NAICS code 621493, $16.5 million/employees not provided). During the first 4 years of MCIT, we anticipate approximately 14 surgical and medical instrument manufacturers may participate, and based off of U.S. Census data, the majority of this businesses type are small businesses with less than 1,000 employees (968 out of 1,093 businesses have less than 500 employees). 18 As such, this proposed rule would impact less than 5 percent of these businesses, and the revenue impact, if any, would not be negative. Rather, it would be a positive impact because MCIT would provide Medicare coverage (and subsequent payment) to providers who purchase the devices from these manufacturers. For Offices of Physicians (except Mental Health Specialists) and Freestanding Ambulatory Surgical and Emergency Centers that may be providing the breakthrough devices, the majority are small businesses with less than 1,000 employees (4,060 out of 4,385 and 160, 367 out of 161, 286 have less than 500 employees, respectively). 19 Given that we estimate, at most in the high-cost scenario, that 6,500 beneficiaries would utilize breakthrough devices through MCIT per year, and even if each beneficiary were to access services at only one of these small businesses (that is, no two beneficiaries used the same office or center), still less than 5 percent of these small businesses would be impacted by MCIT. As such, the revenue impact, if any, would not be negative, rather, it would be a positive impact because MCIT would provide Medicare coverage (and subsequent payment) to providers. Overall, this proposed rule results in a payment, not a reduction in revenue. We are not preparing a further analysis for the RFA because we have determined, and the Secretary certifies, that this proposed rule will not have a significant negative economic impact on a substantial number of small entities because small entities are not being asked to undertake additional effort or take on additional costs outside of the ordinary course of business through this proposed rule. Rather, for small entities that develop or provide breakthrough devices to patients, this proposed rule is a means for the device to be covered through the Medicare program, which does not detract from revenue and could be viewed as a positive economic impact. With the limited information we had to base this estimate, we solicit public comment on improvements to this estimate for the final rule.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined, and the Secretary certifies, that this proposed rule would not have a significant impact on the operations of a substantial number of small rural hospitals because small rural hospitals are not being asked to undertake additional effort or take on additional costs outside of the ordinary course of business through this proposed rule. Obtaining breakthrough devices for patients is at the discretion of providers. We are not requiring the purchase and use of breakthrough devices. Providers should continue to work with their patients to choose the best treatment. For small rural hospitals that provide breakthrough devices to their patients, this proposed rule is a means for the device to be covered through the Medicare program.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2020, that threshold was approximately $156 million. This proposed rule would have no consequential effect on State, local, or tribal governments or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this regulation does not impose any costs on State or local governments, the requirements of Executive Order 13132 are not applicable.

Executive Order 13771 (E.O. 13771), titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. This proposed rule, if finalized as proposed, is expected to impose no more than de minimis costs and thus be neither an E.O. 13771 regulatory action nor an E.O. 13771 deregulatory action.

In accordance with the provisions of Executive Order 12866, this proposed rule was reviewed by the Office of Management and Budget.

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below:

Under section 4(b)(3)(B) of the Act (16 U.S.C. 1531 et seq. ), we are required to make a finding whether or not a petitioned action is warranted within 12 months after receiving any petition that we have determined contains substantial scientific or commercial information indicating that the petitioned action may be warranted (“12-month finding”). We must make a finding that the petitioned action is: (1) Not warranted; (2) warranted; or (3) warranted but precluded. We must publish a notice of these 12-month findings in the Federal Register .

Section 4 of the Act (16 U.S.C. 1533) and the implementing regulations at part 424 of title 50 of the Code of Federal Regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Lists of Endangered and Threatened Wildlife and Plants (Lists). The Act defines “species” as any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature. The Act defines “endangered species” as any species that is in danger of extinction throughout all or a significant portion of its range (16 U.S.C. 1532(6)), and “threatened species” as any species that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range (16 U.S.C. 1532(20)). Under section 4(a)(1) of the Act, a species may be determined to be an endangered species or a threatened species because of any of the following five factors:

(A) The present or threatened destruction, modification, or curtailment of its habitat or range;

(B) Overutilization for commercial, recreational, scientific, or educational purposes;

(C) Disease or predation;

(D) The inadequacy of existing regulatory mechanisms; or

(E) Other natural or manmade factors affecting its continued existence.

These factors represent broad categories of natural or human-caused actions or conditions that could have an effect on a species' continued existence. In evaluating these actions and conditions, we look for those that may have a negative effect on individuals of the species, as well as other actions or conditions that may ameliorate any negative effects or may have positive effects.

We use the term “threat” to refer in general to actions or conditions that are known to or are reasonably likely to negatively affect individuals of a species. The term “threat” includes actions or conditions that have a direct impact on individuals (direct impacts), as well as those that affect individuals through alteration of their habitat or required resources (stressors). The term “threat” may encompass—either together or separately—the source of the action or condition or the action or condition itself. However, the mere identification of any threat(s) does not necessarily mean that the species meets the statutory definition of an “endangered species” or a “threatened species.” In determining whether a species meets either definition, we must evaluate all identified threats by considering the expected response by the species, and the effects of the threats—in light of those actions and conditions that will ameliorate the threats—on an individual, population, and species level. We evaluate each threat and its expected effects on the species, then analyze the cumulative effect of all of the threats on the species as a whole. We also consider the cumulative effect of the threats in light of those actions and conditions that will have positive effects on the species, such as any existing regulatory mechanisms or conservation efforts. The Secretary determines whether the species meets the definition of an “endangered species” or a “threatened species” only after conducting this cumulative analysis and describing the expected effect on the species now and in the foreseeable future.

The Act does not define the term “foreseeable future,” which appears in the statutory definition of “threatened species.” Our implementing regulations at 50 CFR 424.11(d) set forth a framework for evaluating the foreseeable future on a case-by-case basis. The term “foreseeable future” extends only so far into the future as the Service can reasonably determine that both the future threats and the species' responses to those threats are likely. In other words, the foreseeable future is the period of time in which we can make reliable predictions. “Reliable” does not mean “certain”; it means sufficient to provide a reasonable degree of confidence in the prediction. Thus, a prediction is reliable if it is reasonable to depend on it when making decisions.

It is not always possible or necessary to define foreseeable future as a particular number of years. Analysis of the foreseeable future uses the best scientific and commercial data available and should consider the timeframes applicable to the relevant threats and to the species' likely responses to those threats in view of its life-history characteristics. Data that are typically relevant to assessing the species' biological response include species-specific factors such as lifespan, reproductive rates or productivity, certain behaviors, and other demographic factors.

In considering whether a species may meet the definition of an endangered species or a threatened species because of any of the five factors, we must look beyond the mere exposure of the species to the stressor to determine whether the species responds to the stressor in a way that causes actual impacts to the species. If there is exposure to a stressor, but no response, or only a positive response, that stressor does not cause a species to meet the definition of an endangered species or a threatened species. If there is exposure and the species responds negatively, we determine whether that stressor drives or contributes to the risk of extinction of the species such that the species warrants listing as an endangered or threatened species. The mere identification of stressors that could affect a species negatively is not sufficient to compel a finding that listing is or remains warranted. For a species to be listed or remain listed, we require evidence that these stressors are operative threats to the species and its habitat, either singly or in combination, to the point that the species meets the definition of an endangered or a threatened species under the Act.

In conducting our evaluation of the five factors provided in section 4(a)(1) of the Act to determine whether the Big Cypress epidendrum ( Epidendrum strobiliferum ) and Cape Sable orchid ( Trichocentrum undulatum ) meet the definition of “endangered species” or “threatened species,” we considered and thoroughly evaluated the best scientific and commercial information available regarding the past, present, and future stressors and threats. We reviewed the petitions, information available in our files, and other available published and unpublished information. These evaluations may include information from recognized experts; Federal, State, and tribal governments; academic institutions; foreign governments; private entities; and other members of the public.

The species assessment forms for the Big Cypress epidendrum and Cape Sable orchid contain more detailed biological information, a thorough analysis of the listing factors, and an explanation of why we determined that these species do not meet the definition of an endangered species or a threatened species. This supporting information can be found on the internet at http://www.regulations.gov under the appropriate docket number (see ADDRESSES , above). The following are informational summaries for each of the findings in this document.

On April 20, 2010, we received a petition from the Center for Biological Diversity, Alabama Rivers Alliance, Clinch Coalition, Dogwood Alliance, Gulf Restoration Network, Tennessee Forests Council, and West Virginia Highlands Conservancy to list 404 aquatic, riparian, and wetland species, including the Big Cypress epidendrum and Cape Sable orchid, as endangered or threatened species under the Act. On September 27, 2011, we published 90-day findings for both species in the Federal Register (76 FR 59836), concluding that the petition presented substantial information indicating that listing the Big Cypress epidendrum and Cape Sable orchid may be warranted. This document constitutes our 12-month findings on the April 20, 2010, petition to list the Big Cypress epidendrum and Cape Sable orchid under the Act.

The Big Cypress epidendrum is an epiphytic, herbaceous plant with small white flowers in the Orchidaceae family. The species is found across the tropical Americas and the Caribbean, including in Collier County, Florida, United States, as well as in Mexico, Cuba, Dominica, Dominican Republic, Guadeloupe, Haiti, Jamaica, St. Vincent, Trinidad and Tobago, Guatemala, Belize, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Ecuador, Peru, Bolivia, Brazil, French Guiana, Surinam, Guyana, and Venezuela. The best available data suggest that the species' current range has not changed significantly from its historical range.

The Big Cypress epidendrum is a long-lived perennial with a typical orchid life cycle from seed to flowering plant. Mature Big Cypress epidendrum plants usually produce flowers in October and November, but they may flower at any time of the year; seed capsules have been observed on plants in March. All orchids produce capsules containing thousands of miniscule seeds that are dispersed by wind. The Big Cypress epidendrum can self-fertilize, but may also be pollinated by bees, flies, butterflies, and moths (Dressler 1990, p. 106; North American Orchid Conservation Center 2018).

For successful recruitment, the seed requires suitable host fungi to be present where they land. After successful germination on a suitable host tree, seedlings grow for several years before reaching maturity. The exact number of years to maturity is not known, but likely depends on resource availability (principally light and water). After approximately 10 years, adult plants may consist of many stems arising from leaf axils and the plant's base. Individual plant lifespan is unknown, but is likely many years to decades, due to continuous vegetative generation of pseudo-bulbs (sympodial growth).

In Florida, Big Cypress epidendrum plants are found in dense tangles high on the branches or trunks of canopy trees and occasionally standing dead wood (snags) in habitats classified as wooded slough and strand swamp. Slough and strand swamp habitats are broad, shallow channels with peat over mineral substrate, which are seasonally inundated with flowing water.

Outside of the United States, the Big Cypress epidendrum occurs in tropical hammocks, tropical rain forests, and lowland rainforests, up to 4,500 feet (ft) (1,371 meters (m)) in elevation. In Brazil, the species has been recorded in the following vegetation types: Riverine Forest and/or Gallery Forest, Inundated Forest, Terra Firme Forest, Seasonally Semideciduous Forest, Ombrophyllous Forest (Tropical Rain Forest), and Coastal Forest that are within the following biomes: Amazon Rainforest, Central Brazilian Savanna, and Atlantic Rainforest (Flora do Brasil 2020, entire).

Habitat elements that are important to the Big Cypress epidendrum include host trees with partial sun exposure in epiphytic microhabitats in swamps, rainforests, and cloud forests; nearly continual high humidity without freezing temperatures; and germinating seeds requiring the presence of symbiotic fungal species in order to grow to maturity.

The primary stressors affecting the Big Cypress epidendrum's biological status include habitat destruction and modification and hydrologic modification. Habitat destruction and modification are caused by changes in the host trees' forest structure occurring now and into the future through impacts from sea-level rise, such as salt water intrusion and inundation, and deforestation. However, the species' distribution and occurrences across a wide range (25 countries with at least 81 to 300 populations) within a variety of habitat types ensure that the Big Cypress epidendrum will not be in danger of extinction in the foreseeable future.

We carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to the Big Cypress epidendrum, and we evaluated all relevant factors under the five listing factors, including any regulatory mechanisms and conservation measures addressing these stressors.

Under the Act and our implementing regulations, a species may warrant listing if it is in danger of extinction or likely to become so in the foreseeable future throughout all or a significant portion of its range. We identified a concentration of threats acting on the Florida portion of the species' range. Sea-level rise affects the Florida population disproportionately compared to the rest of the species' range due to the population's proximity to the coast and occurrence in low-elevation areas, and is expected to reduce the amount of suitable habitat for the host trees. However, as explained in our species assessment form (available on http://www.regulations.gov under Docket No. FWS-R4-ES-2020-0043), we found no substantial information to indicate that the Florida portion of the species' range is a biologically significant portion of the range. Accordingly, we find there is no significant portion of the range that is endangered or likely to become endangered within the foreseeable future.

Our review of the best available scientific and commercial information indicates the Big Cypress epidendrum does not meet the definition of an endangered species or a threatened species in accordance with sections 3(6) and 3(20) of the Act. Therefore, we find that listing the Big Cypress epidendrum is not warranted at this time. A detailed discussion of the basis for this finding can be found in the Big Cypress epidendrum species assessment form and other supporting documents (see ADDRESSES , above).

Cape Sable orchid is an epiphytic, lithophytic (growing on rock substrate), or sometimes terrestrial herbaceous plant that is found across the tropical Americas and the Caribbean, including in Monroe County, Florida, United States, as well as in Cuba, Mexico, Jamaica, Saint Vincent and the Grenadines, Trinidad and Tobago, Belize, Guatemala, Honduras, Nicaragua, Colombia, Ecuador, Peru, Venezuela, French Guiana, Surinam, Guyana, and Brazil. The best available data suggest that the species' current range has not changed significantly from its historical range.

The Cape Sable orchid is a long-lived perennial with a typical orchid life cycle from seed to flowering plant. Mature Cape Sable orchid plants usually produce flowers from April through October. All orchids produce capsules containing thousands of miniscule seeds that are dispersed by wind.

For successful recruitment, the seed requires a suitable host fungus to be present where it lands. After successful germination on a suitable host substrate, seedlings grow for several years before reaching maturity. For this species, the exact number of years to maturity is not known, but likely depends on resource availability (principally light and water). Adult plants may consist of many stems arising from leaf axils and the plant's base. The species' life span is unknown, but is likely many years, due to new outgrowths on the stem.

In Florida, the Cape Sable orchid occurs as an epiphyte on the branches or trunks of canopy trees and occasionally standing dead wood (snags) primarily in buttonwood hammock and, to a small extent, in mangrove forest habitat. The species historically occurred in coastal berm and rockland hammock habitat. The Cape Sable orchid has not been observed growing on rock substrate in Florida.

Outside the United States, the Cape Sable orchid occurs in the understory of mesic hilly broadleaf forests, montane rain forests, and cloud forests, on tree trunks or rocks, or in leaf mold on limestone rocks at elevations from 30 to 3,100 ft (10 to 950 m).

Habitat elements that are important to the Cape Sable orchid include host trees with partial sun exposure in epiphytic microhabitats in swamps, rainforests, and cloud forests; nearly continual high humidity without freezing temperatures; and germinating seeds requiring the presence of symbiotic fungal species in order to grow to maturity.

The primary stressors affecting the Cape Sable orchid's biological status include habitat destruction and modification, hydrologic modification, insect damage, and poaching. Habitat destruction and modification are caused by changes in the host trees' forest structure occurring now and into the future through impacts from sea-level rise, such as salt water intrusion and inundation, and deforestation. The species' distribution and occurrences across a wide range (in 19 countries and 81 populations) within a variety of habitat types ensure that the Cape Sable orchid will not become in danger of extinction in the foreseeable future.

We carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to the Cape Sable orchid, and we evaluated all relevant factors under the five listing factors, including any regulatory mechanisms and conservation measures addressing these stressors.

Under the Act and our implementing regulations, a species may warrant listing if it is in danger of extinction or likely to become so in the foreseeable future throughout all or a significant portion of its range. We identified a concentration of threats acting on the Florida portion of the species' range. Sea-level rise affects the Florida population disproportionately compared to the rest of the species' range due to the population's proximity to the coast and occurrence in low-elevation areas, and is expected to reduce the amount of suitable habitat for the host trees. However, as explained in our species assessment form (available on http://www.regulations.gov under Docket No. FWS-R4-ES-2020-0044), we found no substantial information to indicate that the Florida portion of the species' range is a biologically significant portion of the range. Accordingly, we find there is no significant portion of the range that is endangered or likely to become endangered within the foreseeable future.

Our review of the best available scientific and commercial information indicates the Cape Sable orchid does not meet the definition of an endangered species or a threatened species in accordance with sections 3(6) and 3(20) of the Act. Therefore, we find that listing the Cape Sable orchid is not warranted at this time. A detailed discussion of the basis for this finding can be found in the Cape Sable orchid species assessment form and other supporting documents (see ADDRESSES , above).

We request that you submit any new information concerning the taxonomy of, biology of, ecology of, status of, or stressors to the Big Cypress epidendrum or Cape Sable orchid to the person specified under FOR FURTHER INFORMATION CONTACT , whenever it becomes available. New information will help us monitor these species and make appropriate decisions about their conservation and status. We encourage local agencies and stakeholders to continue cooperative monitoring and conservation efforts.

A list of the references cited in the petition finding are available on the internet at http://www.regulations.gov in the dockets provided above in ADDRESSES and upon request from the person specified under FOR FURTHER INFORMATION CONTACT .

The primary authors of this document are the staff members of the Species Assessment Team, Ecological Services Program.

The authority for this action is section 4 of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq. ).