The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Textron (type certificate previously held by Beechcraft Corporation) Models F90, 65-90, 65-A90, B90, C90, H90 (T-44A), E90, 65-A90-1 (JU-21A, U-21A, RU-21A, RU-21D, U-21G, RU-21H), 65-A90-2 (RU-21B), 65-A90-3 (RU-21C), 65-A90-4 (RU-21E, RU-21H), 99, 99A, 99A (FACH), A99, A99A, B99, C99, 100, A100 (U-21F), and B100 airplanes. The NPRM published in the Federal Register on July 29, 2020 (85 FR 45545).

The NPRM was prompted by Textron receiving reports of fatigue cracks in the lower forward wing fitting on two airplanes. Investigation revealed that installing washer P/N 90-380058-1 on the wing bolt will cause a premature torque indication. This washer may have been installed as part of kit 101-4024-3 on Models F90, 65-90, 65-A90, B90, C90, H90 (T-44A), E90, 65-A90-1 (JU-21A, U-21A, RU-21A, RU-21D, U-21G, RU-21H), 65-A90-2 (RU-21B), 65-A90-3 (RU-21C), 65-A90-4 (RU-21E, RU-21H), 99, 99A, 99A (FACH), A99, A99A, B99, C99, 100, A100 (U-21F), and B100 airplanes, or as part of kit 90-4077-1 on Models 65-90, 65-A90, 65-A90-1 (JU-21A, U-21A, RU-21A, RU-21D, U-21G, RU-21H), 65-A90-2 (RU-21B), 65-A90-3 (RU-21C), 65-A90-4 (RU-21E, RU-21H), B90, C90, and E90 airplanes. Under-torque of the wing bolt causes a reduced clamping force that changes the load path reacted by the RH and LH lower forward wing fitting.

In the NPRM, the FAA proposed to require a one-time inspection for the presence of washer P/N 90-380058-1 on the LH and RH lower forward wing bolt and, if applicable, removing washer P/N 90-380058-1, inspecting the wing fitting, bolt, and nut, replacing the wing fitting if it is cracked, and replacing the washer with washer P/N 90-380019-1. This condition, if not addressed, could result in fatigue cracks that lead to failure of the forward lower wing fitting, wing separation, and loss of airplane control.

The FAA received one comment from an individual commenter. The following presents the comment received on the NPRM and the FAA's response to the comment.

An individual commenter requested that the AD identify the applicable airplanes by serial number. The commenter stated that on the Beech Model C90A serial number LJ‐1450 airplane, the lower front wing connections are designed as shear fittings with shear bolts, and therefore the washers are not affected. The FAA disagrees. The AD, as proposed, clearly lists the applicable airplane models and serial numbers. The FAA responded to the commenter by email and advised that the AD, as proposed, would not apply to the Model C90A. A copy of the comment and the FAA's response is in the AD docket.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products.

The FAA reviewed Beechcraft Mandatory Service Letter MTL-57-01, Revision 1, dated September 19, 2018. The service information contains procedures for a one-time inspection for the presence of washer P/N 90-380058-1 on the LH and RH lower forward wing bolt and, if applicable, removing washer P/N 90-380058-1; inspecting the wing fitting, bolt, and nut; replacing the wing fitting if it is cracked; and replacing the washer with washer P/N 90-380019-1. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The service information specifies inspecting within 200 flight hours or 12 months, whichever occurs earlier. This AD would require inspecting within the next 200 flight hours or 12 months, whichever occurs later.

The service information applies to Models A100A and A100C airplanes, and to Model F90 with S/N LA-1. This AD would not apply to these airplanes because they do not have an FAA type certificate.

This AD would apply to military Models T-44A, JU-21A, RU-21A, RU-21B, RU-21C, RU-21D, RU-21E, RU-21H, U-21A, U-21F, U-21G, and FACH airplanes, because these models have a civil counterpart that is subject to the unsafe condition. The service information does not apply to all of these military models.

The FAA estimates that this AD will affect 1,319 airplanes of U.S. registry.

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

The FAA estimates the following costs to do any necessary replacements that would be required based on the results of the inspection. The FAA has no way of determining the number of airplanes that might need these replacements:

The FAA has included all known costs in this cost estimate. According to the manufacturer, however, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected operators.

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

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

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

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

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

(2) 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.

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2020-0226-E, dated October 16, 2020 (referred to after this as “the MCAI”), to address an unsafe condition for the specified products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-1104.

The FAA is issuing this AD because the agency has determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

The FAA reviewed Hoffmann Propeller GmbH & Co. KG Service Bulletin SB E53, Rev. B, dated October 14, 2020. This service information specifies procedures for visual and NDT inspections of the propeller hub for cracks. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in ADDRESSES .

This AD requires amending the existing AFM with abnormal propeller vibration instructions. This AD also requires visual inspection and NDT inspection of the propeller hub and, depending on the results of the inspections, replacement of the propeller hub with a part eligible for installation. This AD also requires replacement of the propeller hub before exceeding 30 years since the date of manufacture or within 30 days after the effective date of this AD, whichever occurs later.

EASA AD 2020-0226-E, dated October 16, 2020, applies to Hoffmann HO-V 72 propellers with propeller hub HO-V 72 ( ) ( )-( )-( ) that have been used or are expected to be used for aerobatic maneuvers. This AD applies to all Hoffmann model HO-V 72 propellers regardless of their use.

EASA AD 2020-0226-E, dated October 16, 2020, defines the life of the propeller hub as 30 years since the first installation on the airplane. This AD defines the life of the propeller hub as 30 years since the date of manufacture because the installation history of the propeller might be unknown.

The FAA considers this AD interim action. This unsafe condition is still under investigation by the manufacturer and, depending on the results of that investigation, the FAA may consider further rulemaking action.

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq. ) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without providing notice and seeking comment prior to issuance. Further, section 553(d) of the APA authorizes agencies to make rules effective in less than thirty days, upon a finding of good cause.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies foregoing notice and comment prior to adoption of this rule. During a scheduled inspection, a crack was found by an operator on a propeller hub. A second crack was found on another propeller hub during an unscheduled inspection by an operator after abnormal vibrations occurred in-flight. Hoffmann Propeller immediately issued service information instructing operators to visually inspect the hub for cracks before the next flight while the cause of the cracks are under investigation.

A crack in the propeller hub can result in the loss of a propeller blade, resulting in an imbalance in the entire engine which can render the aircraft uncontrollable. The FAA considers a crack in the propeller hub an urgent safety issue that requires an immediate action to avoid potential loss of the airplane. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B). In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forego notice and comment.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include the docket number FAA-2020-1104 and Project Identifier MCAI-2020-01421-P at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, 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 final rule because of 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 received, without change, to https://www.regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this final rule.

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 AD 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 AD, 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 AD. Submissions containing CBI should be sent to Michael Schwetz, Aviation Safety Engineer, Boston ACO Branch, FAA, 1200 District Avenue, Burlington, MA 01803. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because FAA has determined that it has good cause to adopt this rule without prior notice and comment, RFA analysis is not required.

The FAA estimates that this AD affects 35 propellers installed on airplanes of U.S. registry.

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

The FAA estimates the following costs to do any necessary replacement that would be required based on the results of the inspections. The agency has no way of determining the number of aircraft that might need this replacement:

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies Class D and Class E airspace at Helena Regional Airport, Helena, MT, to ensure the safety and management of Instrument Flight Rules (IFR) operations at the airport.

The FAA published a notice of proposed rulemaking in the Federal Register (85 FR 59700; September 23, 2020) for Docket No. FAA-2020-00810 to modify Class D and Class E airspace at Helena Regional Airport, Helena, MT. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. One comment, that is not germane to the proposed airspace action, was received.

Class D, E2, E4, and E5 airspace designations are published in paragraphs 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11E, dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11E, Airspace Designations and Reporting Points, dated July 21, 2020, and effective September 15, 2020. FAA Order 7400.11E is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11E lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations part 71 modifies the Class D airspace at Helena Regional Airport, Helena, MT. The action modifies the Class D airspace by adding extensions to the east and west of the airport, to properly contain IFR departures to 700 feet above the surface. The airspace area is described as follows: That airspace extending upward from the surface to and including 6,400 feet within a 4.4-mile radius of the airport, and within 2 miles each side of the 091° bearing from the airport, extending from the 4.4-mile radius to 5.2 miles east of the airport, and within 2 miles each side of 292° bearing from the airport, extending from the 4.4-mile radius to 5.8 miles west of Helena Regional Airport. This Class D airspace area is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement. This action also modifies the Class E airspace, designated as a surface area, to be coincident with the new Class D dimensions. The airspace area is as follows: That airspace extending upward from the surface within a 4.4-mile radius of the airport, and within 2 miles each side of the 091° bearing from the airport, extending from the 4.4-mile radius to 5.2 miles east of the airport, and within 2 miles each side of 292° bearing from the airport, extending from the 4.4-mile radius to 5.8 miles west of Helena Regional Airport. This Class E airspace area is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.

Additionally, this action establishes Class E airspace, designated as an extension to a Class D or Class E surface area. This airspace area is designed to contain IFR aircraft descending below 1,000 feet above the surface. The airspace area is described as follows: That airspace extending upward from the surface within an area bounded by a line beginning at lat. 46°34′18.57″ N, Long. 111°51′30.319″ W, to lat. 46°38′5.89″ N, Long. 111°51′24.53″ W, to lat. 46°37′12.53″ N, Long. 111°45′24.67″ W, to lat. 46°32′22.72″ N, Long. 111°46′31.44″ W, to lat. 46°33′24.13″ N, Long. 111°54′20.01″ W, then counter-clockwise along. the 4.4-mile radius of the airport to lat. 46°34′20.01″ N, Long. 111°53′22.03″ W, then to the point of beginning, and within an area bounded by a line beginning at lat. 46°38′39.95″ N, Long. 112°06′47.50″W, to lat. 46°36′47.49″ N, Long. 112°07′53.41″ W, to lat. 46°37′22.52″ N, Long. 112°11′37.80″ W, to lat. 46°39′19.40″ N, Long. 112°10′58.64″ W, then to the point of beginning west of Helena Regional Airport.

Further, this action modifies the Class E airspace extending upward from 700 feet above the surface. The action properly sizes the airspace to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. The airspace area is described as follows: That airspace extending upward from 700 feet above the surface within an 8.3-mile radius of the airport, and within 1 mile each side of the 103° bearing from the airport, extending from the 8.3-mile radius to 10.7 miles east of the airport, and within 1.8 miles each side of the 281° bearing from the airport, extending from the 8.3-mile radius to 18.1 miles west of Helena Regional Airport. This action also modifies the Class E airspace extending upward from 1,200 feet above the surface to properly contain IFR aircraft transitioning to/from the terminal and en route environments. The airspace area is described as follows: That airspace extending upward from 1,200 feet above the surface within a 36-mile radius of Helena Regional Airport. The action also removes the Helena VORTAC and all references to the VORTAC from the Class D, E2, and E5 legal descriptions. The navigational aid is not needed to define the airspace. Removal of the navigational aid allows the airspace to be defined from a single reference point which simplifies how the airspace is described. The action also updates the airport's geographic coordinates to match the FAA database. The coordinates should read lat. 46°36′24″ N, Long. 111°59′0.0″ W. Additionally, the term “Airport/Facility Directory” in the last sentence of the Class D and Class E2 airspace legal descriptions is outdated, the term is updated to “Chart Supplement”. FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

I. Rulemaking Background

Much of the background information presented here also appears in the preamble to the Department's Notice of Proposed Rulemaking on Defining Unfair and Deceptive Practices published on February 28, 2020. 1 We have presented background information again here to assist the public in understanding the issues involved.

The Department's authority to regulate unfair and deceptive practices in air transportation or the sale of air transportation is found at 49 U.S.C. 41712 (“Section 41712”) in conjunction with its rulemaking authority under 49 U.S.C. 40113, which states that the Department may take action that it considers necessary to carry out this part, including prescribing regulations. Section 41712 gives the Department the authority to investigate and decide whether an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice in air transportation or the sale of air transportation. Under Section 41712, after notice and an opportunity for a hearing, the Department has the authority to issue orders to stop an unfair or deceptive practice. A different statute, 49 U.S.C. 46301, gives the Department the authority to issue civil penalties for violations of Section 41712 or for any regulation issued under the authority of Section 41712.

On February 24, 2017, President Trump signed Executive Order 13777, Enforcing the Regulatory Reform Agenda, which requires each Federal agency to establish a Regulatory Reform Task Force to evaluate existing regulations, and make recommendations for their repeal, replacement, or modification. As part of this process, the Department is directed to seek input and assistance from entities significantly affected by its regulations. On October 1, 2017, the Department issued a Notice of Regulatory Reform seeking written input from the public on existing regulations and other actions that are good candidates for repeal, replacement, or modification. 2 In response to the Notice, Airlines for America (A4A), an airline trade association, urged the Department to adopt policies defining unfairness and deception in Section 41712 consistent with principles articulated in Federal Trade Commission (FTC) and Federal court precedent interpreting those terms. 3 A4A also urged the Department to adopt various procedures which would, in its view, ensure that the Department's enforcement and rulemaking activities were rooted in fairness, due process, and an adequate factual foundation.

On December 27, 2019, the Department issued a comprehensive update and consolidation of its procedural requirements for the Department's rulemaking and enforcement actions. 4 This update reflects the Department's policy that regulations should be straightforward and clear, incorporate best practices for economic analyses, and provide for appropriate public participation. 5 It also reflects the Department's policy that enforcement actions should satisfy principles of due process and remain lawful, reasonable, and consistent with Administration policy. 6

On February 28, 2020, the Department published an NPRM proposing to define the terms “unfair” and “deceptive” found in Section 41712, the Department's aviation consumer protection statute. The NPRM also proposed a series of amendments to the Department's aviation consumer protection procedures with respect to both regulation and enforcement. The proposals were issued to provide greater clarity, transparency, and due process in future aviation consumer protection rulemakings and enforcement actions.

By way of background, the Department described the origin of section 41712 and explained how it was modeled on Section 5 of the Federal Trade Commission (FTC) Act. The Department explained that while Section 5 vests the FTC with broad authority to prohibit unfair or deceptive practices in most industries, Congress granted the Department the exclusive authority to prohibit unfair or deceptive practices of air carriers and foreign air carriers. The Department noted that DOT and FTC share the authority to prohibit unfair or deceptive practices by ticket agents in the sale of air transportation.

Next, the Department explained that in December 1980, the FTC issued a Policy Statement to Congress, which articulated general principles drawn from FTC decisions and rulemakings that the Commission applies in enforcing its mandate to address unfairness under the FTC Act. 7 These principles were applied in FTC enforcement cases and rulemakings, and approved by reviewing Federal courts. 8 The FTC explained that unjustified consumer injury is the primary focus of the FTC Act. This concept contains three basic elements. An act or practice is unfair where it: (1) Causes or is likely to cause substantial injury to consumers; (2) cannot be reasonably avoided by consumers; and (3) is not outweighed by countervailing benefits to consumers or to competition. The FTC also considers public policy, as established by statute, regulation, or judicial decisions, along with other evidence in determining whether an act or practice is unfair.

These principles are now reflected in the FTC Act itself. In 1994, Congress enacted 15 U.S.C. 45(n), which states that the FTC shall have no enforcement authority or rulemaking authority to declare an act or practice unfair unless it is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. Congress further provided in Section 45(n) that the FTC could rely on public policy, along with other evidence, for making a determination of unfairness, but public policy may not be the primary basis of its decision.

Next, the Department explained that in 1983, the FTC issued a Policy Statement on Deception. 9 Like the 1980 Policy Statement on Unfairness, the 1983 Policy Statement clarified the general principles that the FTC applies in enforcing its mandate to address deception under the FTC Act. As explained in the Policy Statement, an act or practice is deceptive where: (1) A representation, omission, or practice misleads or is likely to mislead the consumer; (2) a consumer's interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and (3) the misleading representation, omission, or practice is material.

In the NPRM, the Department proposed to adopt definitions of “unfair” and “deceptive” that echo FTC precedent. The Department explained that adopting these definitions would simply codify existing practice and would not reflect a change of policy, because the Department's Office of Aviation Consumer Protection (formerly known as the Office of Aviation Enforcement and Proceedings), a unit within the Office of the General Counsel that enforces aviation consumer protection requirements, has often explicitly relied on those definitions in its enforcement orders.

Next, the Department proposed a set of procedural rules that would govern the Department's future discretionary rulemaking and enforcement efforts in the area of aviation consumer protection. With respect to rulemaking actions, the Department proposed three measures. First, future rulemakings declaring certain practices to be “unfair” or “deceptive” would use the Department's proposed definitions of those terms. 10 In prior rulemakings, the Department tended to make a conclusory statement that a practice was unfair or deceptive and did not provide its reasoning for that conclusion. In arriving at these conclusions that certain practices were unfair or deceptive, DOT employed the same definitions that are set forth in this rule, though that analysis was done informally at the Department and not further described in rule preambles.

Second, future discretionary rulemakings would be subject to a hearing procedure. Specifically, if the Department proposes that a practice was unfair or deceptive in a rulemaking, and that rulemaking raised scientific, technical, economic, or other factual issues that are genuinely in dispute, then interested parties may request an evidentiary hearing to gather evidence on those disputed issues of fact. Third, future rulemakings would explain the Department's basis for finding a practice to be unfair or deceptive.

With respect to enforcement, the Department proposed three measures. First, when taking enforcement action against an airline or ticket agent for unfair or deceptive practices, the Department would use the proposed definitions of “unfair” and “deceptive” set forth above (unless a specific regulation issued under the authority of section 41712 applied to the practice in question, in which case the terms of the specific regulation would apply). Second, in future enforcement actions, the Department would provide the airline or ticket agent with the opportunity to be heard and to present mitigating evidence. This final rule codifies the longstanding practice of allowing regulated entities to present mitigating evidence during the course of informal DOT enforcement actions. In a typical enforcement action, the Office of Aviation Consumer Protection issues an investigation letter to an airline or ticket agent, seeking information about the extent and nature of the violations. During that process, the Office also allows airlines and ticket agents to present mitigating evidence ( e.g., that consumer harm was low, or that the airline or ticket agent has taken steps to mitigate the harm to consumers). While the rule now makes this process explicit, we do not expect an expansion in its usage; instead, we expect that it will continue unchanged after the issuance of this final rule. Third, in future enforcement orders, if a specific regulation does not apply to the practice in question, the Department would explain the basis for its finding that a practice was unfair or deceptive. The Department is of the view that these measures generally codify existing practice.

In addition, the Department solicited comment on related matters. For example, the Department asked whether the term “practice” should be defined. The Department also noted that it relies on its general unfair and deceptive practices authority in certain specialized areas ( e.g., privacy, frequent flyer programs, and air ambulance service) and asked whether the proposed general definitions of “unfair” or “deceptive” were sufficient to provide stakeholders sufficient notice of what constitutes an unfair or deceptive practice in these or other subject areas.

The comment period for the NPRM was originally scheduled to expire on April 28, 2020. However, in response to a request by consumer advocacy organizations, the comment period was extended to May 28, 2020.

The Department received a total of 224 comments by the end of the comment period. Approximately 180 comments were filed by individual consumers, who almost uniformly opposed the NPRM. Individual consumers typically did not comment on any specific provision, but instead opposed the NPRM as a whole, viewing it as a weakening of aviation consumer protection. Many consumers noted with disapproval that the NPRM was initiated at the request of airlines, which in their view engage in practices that are anti-consumer.

Consumer advocacy organizations  11 and two FTC Commissioners  12 generally opposed the proposals on the ground that they were either unnecessary or weakened consumer protection. Four Senators and one Member of Congress  13 urged the Department to discontinue the NPRM for many of the same reasons identified by consumer advocates and the FTC Commissioners.

Airline associations, individual airlines, and a nonprofit public policy organization  14 broadly supported the proposals in the NPRM on the ground that they provided greater transparency and due process in the Department's rulemaking and enforcement activities. Airlines also suggested that the Department adopt additional provisions, which will be discussed in greater detail below.

Travel agent representatives and a large travel agency  15 generally supported the NPRM for the reasons expressed by airlines; however, they opposed the proposal to adopt hearing procedures relating to discretionary aviation consumer protection rulemakings.

We will discuss the comments in further detail below.

Consumer advocacy organizations generally recognized that the proposed definitions of “unfair” and “deceptive” mirror the FTC's interpretation of those terms. They argued, however, that the Department should not limit itself to those specific definitions. They contended that the flexibility of undefined terms serves as a deterrent to engaging in practices that do not fit within the proposed definitions, but which may nevertheless be unfair or deceptive.

They argued that this flexibility is especially important in the field of air transportation because the Airline Deregulation Act (ADA) prohibits States from regulating the unfair and deceptive practices of airlines. They contended that outside of the field of aviation, State consumer protection laws serve as a backstop to the FTC's authority, and that many consumer protection agencies take aggressive and successful action under State law with respect to practices that would not qualify as unfair or deceptive under the FTC's definitions. They also observed that because of ADA preemption, relief in court is generally limited to Federal class-actions or small claims. Consumer organizations concluded that the FTC definitions may be used for guidance, but should not be transformed into regulatory text.

FTC Commissioner Chopra urged the Department not to adopt the FTC's definitions, for many of the reasons identified by consumer advocacy organizations. He also raised several additional concerns. First, he argued that after the FTC adopted its Policy Statement on Unfairness in 1980, the Commission's “number of enforcement actions and rulemakings plummeted, leaving a vacuum that hobbled development of the law.”  16 Commissioner Chopra also argued that “the key planks undergirding the FTC's unfairness definition—competitive markets, consumer choice, and a de-emphasis on public policy—are poorly suited to airline regulation,” because the aviation market is not competitive, in his view, and because the Transportation Code affirmatively requires the Secretary to emphasize certain public policies. 17 He also argued that the proposed definitions do not adequately take these policies into account.

Airlines and travel agents supported the proposed definitions, arguing that they provide much-needed transparency and predictability to regulated industries. Southwest Airlines argued that the lack of clear definitions has led DOT to overreach in certain past rulemakings and enforcement actions. Southwest also argued that the third prong of the unfairness definition ( i.e., that the harm of the practice “is not outweighed by countervailing benefits to consumers or to competition”) correctly reflects departmental policy to place “maximum reliance on competitive market forces and on actual and potential competition.”  18 Spirit Airlines suggested that the proposed definition of “deceptive,” which currently refers to misleading a singular “consumer” acting reasonably under the circumstances, should be written in the plural to reflect that the practice must be misleading to “consumers” in the aggregate. Travel agents argued that because DOT and FTC share jurisdiction over them, it is important for the two regulatory standards to be harmonious.

Section 1a(11) of the Commodity Exchange Act (CEA or Act)  1 defines the term “commodity pool operator” as any person  2 engaged in a business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise, and who, with respect to that commodity pool, solicits, accepts, or receives from others, funds, securities, or property, either directly or through capital contributions, the sale of stock or other forms of securities, or otherwise, for the purpose of trading in commodity interests. CEA section 1a(10) defines a “commodity pool” as any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests. 3 CEA section 4m(1) generally requires each person who satisfies the CPO definition to register as such with the Commission. 4 With respect to CPOs, the CEA also authorizes the Commission, acting by rule or regulation, to include within or exclude from the term “commodity pool operator” any person engaged in the business of operating a commodity pool if the Commission determines that the rule or regulation will effectuate the purposes of the CEA. 5

Additionally, CEA section 4(c), in relevant part with respect to the Final Rule, provides that the Commission, to promote responsible economic or financial innovation and fair competition, by rule, regulation, or order, after notice and opportunity for hearing, may exempt, among other things, any person or class of persons offering, entering into, rendering advice, or rendering other services with respect to commodity interests from any provision of the Act. 6 CEA section 4(c) authorizes the Commission to grant exemptive relief if the Commission determines, inter alia, that the exemption would be consistent with the “public interest.”  7

To provide an exemption pursuant to section 4(c) of the Act with respect to registration as a CPO, the Commission must determine that the agreements, contracts, or transactions undertaken by the exempt CPO should not require registration, and that the exemption from registration would be consistent with the public interest and the Act. 8 The Commission must further determine that the agreement, contract, or transaction will be entered into solely between appropriate persons, and that it will not have a material adverse effect on the ability of the Commission or any contract market to discharge its regulatory or self-regulatory duties under the Act. 9 The term “appropriate person” as used in CEA section 4(c) includes “a commodity pool formed or operated by a person subject to regulation under the Act.”  10 The Commission has previously interpreted the clause “subject to regulation under the Act” as including persons who are exempt from registration or excluded from the definition of a registration category. 11

Part 3 of the Commission's regulations governs the registration of intermediaries engaged in the offering and selling of, and the provision of advice concerning, all commodity interest transactions. Commission regulation 3.10 establishes the procedure that intermediaries, including CPOs, must use to register with the Commission, 12 and also sets forth certain exemptions from registration. 13 In particular, Commission regulation 3.10(c)(3)(i), discussed in further detail below, provides, inter alia, that a person engaged in the activity of a CPO, commodity trading advisor (CTA), or introducing broker (IB), in connection with any commodity interest transaction executed bilaterally or made on or subject to the rules of any designated contract market (DCM) or swap execution facility (SEF), is not required to register as a CPO, CTA, or IB (relief referred to herein as the 3.10 Exemption), provided that:

1. The person is located outside the United States, its territories, and possessions (the United States or U.S.);

2. The person acts only on behalf of persons located outside the United States; and

3. The commodity interest transaction is submitted for clearing through a registered FCM. 14

Commission regulation 3.10(c)(2)(i) provides a similar exemption from registration for a person located outside the United States acting as an FCM. 15

A person acting in accordance with the 3.10 Exemption remains subject to the antifraud provisions of, inter alia, CEA section 4 o, 16 but is otherwise not required to comply with those provisions of the CEA or Commission regulations applicable to any person registered in the relevant intermediary capacity, 17 or persons required to be so registered. 18 Of particular relevance to the amendments adopted herein regarding non-U.S. CPOs, the 3.10 Exemption provides that it is available to non-U.S. CPOs whose activities, in connection with any commodity interest transaction executed bilaterally or made on or subject to the rules of any DCM or SEF, are confined to acting on behalf of offshore commodity pools. 19 This exemption was first adopted in 2007 (2007 Final Rule) and was based on a long-standing no-action position articulated by the Commission's Office of General Counsel in 1976. 20

In adopting the 2007 Final Rule, the Commission agreed with commenters who cited its longstanding policy of focusing “`customer protection activities upon domestic firms and upon firms soliciting or accepting orders from domestic users of the futures markets.' ”  21 The Commission further stated that the protection of non-U.S. customers of non-U.S. firms may be best deferred to foreign regulators. 22 The Commission noted its understanding that, pursuant to the terms of the 3.10 Exemption, “[a]ny person seeking to act in accordance with any of the foregoing exemptions from registration should note that the prohibition on contact with U.S. customers applies to solicitation as well as acceptance of orders.”  23 Moreover, the Commission stated that, “[if] a person located outside the U.S. were to solicit prospective customers located in the U.S. as well as outside of the U.S., these exemptions would not be available, even if the only customers resulting from the efforts were located outside the U.S.”  24

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)  25 amended the definitions of “commodity pool operator” and “commodity pool” in the CEA to include those persons operating collective investment vehicles that engage in swaps, 26 which resulted in an expansion of the universe of persons captured within both statutory definitions. 27 When combined with the rescission of Commission regulation 4.13(a)(4) in 2012, 28 an increasing number of non-U.S. CPOs were required to either register with the Commission, or claim an available exemption or exclusion with respect to the operation of their commodity pools, regardless of whether such pools were offshore or offered to U.S. participants.

As discussed further below, on July 27, 2016, the Commission proposed to amend Commission regulation 3.10(c) (2016 Proposal) revising the conditions under which the exemption from intermediary registration would apply. 29 Generally, the 2016 Proposal would permit a foreign located person acting in the capacity of an FCM, IB, CTA, or CPO, to utilize an exemption from registration as such, provided that the foreign located person, in connection with any commodity interest transaction, acts solely on behalf of (1) other foreign located persons, or (2) international financial institutions (IFIs, which were further defined in the 2016 Proposal's proposed Commission regulation (c)(6)). The proposed amendments provided an exemption from registration without regard to whether such foreign located person cleared the commodity interest transaction. 30 In response to the 2016 Proposal, the Commission received six comments, most of which were supportive of those proposed amendments. 31 The Commission, however, did not finalize the 2016 Proposal at that time.

In 2018, the Commission proposed, among other changes to its part 4 regulations, adding a new exemption from CPO registration to Commission regulation 4.13 (2018 Proposal) that would formally incorporate the relief provided by CFTC Staff Advisory 18-96 (Advisory 18-96) in the Commission's CPO regulatory provisions. 32 In the 2018 Proposal, the Commission noted that the proposed exemption based on Advisory 18-96 was intended to be claimed on a pool-by-pool basis, and stated that “[t]his characteristic would effectively differentiate the [proposed exemption] from the relief currently provided” under the 3.10 Exemption. 33 The Commission received several comments regarding the 2018 Proposal's discussion of the differences between the proposed amendment to Commission regulation 4.13 and the existing 3.10 Exemption. 34

For instance, one commenter noted that the 3.10 Exemption “is widely relied on around the world by non-U.S. managers of offshore funds that are not offered to U.S. investors but that may trade in the U.S. commodity interest markets.”  35 This commenter further noted that “CPO registration for these offshore entities with global operations is not a viable option[,]” due to the logistical and regulatory issues involved. 36 Another commenter stated that, “it is critical to bear in mind that the Commission . . . to our knowledge has never addressed, the separate and distinct question of whether an offshore CPO may rely on Rule 3.10(c)(3)(i) with respect to some of its offshore pools in combination with relying on other exemptions with respect to its other pools.”  37 Several other commenters expressed similar views and requested that the Commission affirm CPOs' ability to claim the 3.10 Exemption on a pool-by-pool basis and to rely upon that exemption in addition to other exemptions, exclusions, or registration. 38

In 2019, the Commission withdrew the portion of the 2018 Proposal related to adopting the relief provided in Advisory 18-96 as a CPO registration exemption, and, in light of the comments received in response to its discussion of the 3.10 Exemption, undertook an inquiry as to whether the 3.10 Exemption should be amended to respond to the current CPO space and the issues articulated by commenters. 39 Based on the foregoing experience and history, and in consideration of the increasingly global nature of the commodity pool space, the Commission proposed certain amendments to the 3.10 Exemption on May 28, 2020, which were subsequently published in the Federal Register on June 12, 2020 (2020 Proposal). 40

The 2020 Proposal consisted of several proposed amendments to the 3.10 Exemption. Specifically, the Commission proposed amendments to the 3.10 Exemption such that non-U.S. CPOs may rely on that relief on a pool-by-pool basis. 41 The Commission also proposed an amendment confirming that the 3.10 Exemption, as revised, may be utilized along with other exemptions or exclusions available to CPOs generally, or CPO registration. 42 The Commission further proposed a conditional safe harbor for non-U.S. CPOs who, by virtue of a pool's structure, cannot represent with absolute certainty that there are no U.S. participants in their operated offshore pool. 43 Finally, the Commission also proposed to provide an exception from the 3.10 Exemption's prohibition on U.S. participants, such that a U.S. controlling affiliate could provide initial capital to an offshore pool operated by its affiliated non-U.S. CPO without being considered a U.S. participant in that offshore pool. 44 In addition to the substantive amendments to the 3.10 Exemption proposed for the first time as part of the 2020 Proposal, the Commission also reopened the comment period associated with the 2016 Proposal for a period of 60 days. 45

After considering all of the comments received, and for the reasons stated by the Commission herein, the Commission is amending Commission regulation 3.10(c), in a manner generally consistent with the 2016 and 2020 Proposals, with certain adjustments resulting from commenters' suggestions and after additional consideration of the proposed regulatory text. The Commission will first generally summarize the public comments received addressing both the 2016 and 2020 Proposals. Then, in addition to the rulemaking history of Commission regulation 3.10(c) set forth above, the Commission will briefly explain the 2016 Proposal, respond to all of the relevant public comments received, and detail the amendments derived from the 2016 Proposal adopted in the Final Rule. 46 The Commission will then discuss the remaining 2020 Proposal amendments with respect to non-U.S. CPOs operating offshore pools pursuant to the 3.10 Exemption, summarize the 3.10 Exemption amendments being adopted, respond to the relevant public comments received, and explain the substance and rationale of any adjustments in approach from the 2020 Proposal to what the Commission is adopting in the Final Rule today. 47 Finally, the Commission will explain its efforts to reconcile proposed amendments from both the 2016 and 2020 Proposals, which includes a non-substantive reorganization of Commission regulation 3.10(c). 48

The Commission requested comment generally on all aspects of the 2020 Proposal, and specifically asked questions about potential additional conditions or limitations to the proposed relief that might be incorporated during finalization. 49 The comment period for the 2020 Proposal, along with the reopened comment period for the 2016 Proposal, expired on August 11, 2020, and the Commission received four relevant comment letters: One from an individual, one from a foreign intergovernmental organization, one submitted jointly by five industry professional and trade associations (collectively, the Industry Groups), and one submitted by an asset manager that operates globally. 50 Two of those comment letters also provided new or additional comments with respect to the 2016 Proposal. 51 Finally, Commission staff also hosted one ex parte meeting to discuss aspects of the 2020 Proposal with an Industry Group. 52

The comments received by the Commission were, in general, strongly supportive of the 2020 Proposal. 53 Commenters largely agreed with the proposed amendments, positing that, if adopted, the 2020 Proposal “would simplify compliance by eliminating the potential need for the CFTC to require registration and oversight of non-U.S. CPOs whose pools have no U.S. investors.”  54 The Industry Groups also “applaud[ed] the Commission's actions in turning its attention to the increasingly global nature of the asset management space and proposing rule changes that will better align the express terms of its regulations with both the Commission's policy goals and current global practices.”  55 Although offering support for the 2020 Proposal overall, commenters also suggested additional regulatory edits with respect to several specific issues raised by that release, and provided responses to the questions posed by the Commission. 56

As noted above, the Commission requested comment generally on the 2020 Proposal, but also posed several targeted questions about potential additional conditions for the proposed exception regarding the initial capital contributions of U.S. controlling affiliates in a non-U.S. CPO's offshore pool (Affiliate Contribution Exception). 57 In addition to commenting generally on the 2020 Proposal, the Industry Groups submitted the sole comment letter specifically responding to those questions. The Industry Groups stated that they do not support additional conditions on the Affiliate Contribution Exception, and that they believe such limitations “would not provide any additional protection to U.S. investors, customers, or the U.S. commodity interest markets.”  58 For instance, the Commission queried whether the Affiliate Contribution Exception should more explicitly be intended for “seeding purposes,” including whether it should “be conditioned on the investment being limited in time to one, two, or three years, after which time the investments of the controlling affiliate must be reduced to a de minimis amount of the pool's capital, such as 3 or 5 percent?”  59 Alternatively, the Industry Groups suggested a defined “purpose” for affiliate contributions, “for the purpose of establishing, or providing ongoing support to, the pool.”  60

Regarding the nature of controlling affiliates, the Commission also queried whether the Affiliate Contribution Exception should “be limited to entities or persons that are otherwise financial institutions that are regulated in the United States to provide investor protections?”  61 The Commission additionally inquired whether the Affiliate Contribution Exception should “only be available to U.S. controlling affiliates regulated by the Securities and Exchange Commission, a federal banking regulator, or an insurance regulator?”  62 The Industry Groups stated that they do not believe any benefit would result from “limiting the affiliates that contribute capital to regulated entities” because it would further introduce the Commission “into the decision-making process for commercial decisions and resource allocation of global organizations,” and “also prevent the use of common practices for this type of funding, including holding companies and trust companies.”  63 One commenter also stated that a U.S. affiliate should not be required to “be regulated in the United States in order to qualify” for the Affiliate Contribution Exception. 64

The Commission also noted in the 2020 Proposal that one of the rationales behind the Affiliate Contribution Exception is the affiliate's likely ability to demand that the non-U.S. CPO provide it with information necessary to assess the offshore pool's operations and performance. 65 Because it may not be possible to ascertain with certainty whether such information must be provided to a U.S. controlling affiliate under laws applicable to the non-U.S. CPO, the Commission queried in the 2020 Proposal whether the Affiliate Contribution Exception should be “conditioned on there being an obligation on the non-U.S. CPO that is legally binding in its home jurisdiction to provide the U.S. controlling affiliate with information regarding the operation of the offshore pool by the affiliated non-U.S. CPO?”  66 The Industry Groups noted that “an organization's decision to contribute capital to support the operations of an offshore CPO is a commercial business decision, not an investment decision of the type that Part 4 information addresses.”  67 Therefore, the Industry Groups stated, there is “no need for the Commission to determine what type of information global business organizations will need to exercise their business judgment in this regard or for the Commission otherwise to intervene in the organization's decision-making process.”  68 The Commission did not receive any comments supporting the additional limitations for which the Commission specifically solicited public feedback in the 2020 Proposal.

In addition to reopening the comment period with respect to the 2016 Proposal, the Commission queried specifically whether Commission regulation 3.10 should require commodity interest transactions of foreign located persons or IFIs that are required or intended to be cleared on a registered derivatives clearing organization (DCO) to be submitted for clearing through an FCM registered in accordance with section 4d of the Act, unless such foreign located person or IFI is itself a clearing member of such registered DCO. 69 As mentioned above, the Commission received two additional comments relevant to the 2016 Proposal as a result of the reopening of the 2016 Proposal's comment period. After a brief explanation of the 2016 Proposal, the Commission will discuss and address these additional comments, along with the public comments originally received in 2016, and outline the Final Rule amendments resulting from the 2016 Proposal below.

At the time the 2016 Proposal was published, and until the Final Rule's amendments become effective, Commission regulation 3.10(c)(2)-(c)(3) generally provides an exemption from registration, subject to specific conditions, for certain foreign located persons acting as intermediaries (collectively, Foreign Intermediaries) with respect to persons also located outside the U.S., even though such transactions may be executed bilaterally, or on or subject to the rules of a DCM or SEF. 70 With respect to activities involving commodity interest transactions executed bilaterally, or made on or subject to the rules of any DCM or SEF, Commission regulation 3.10(c)(3)(i) provides an exemption from registration as a CPO, CTA, or IB, where the person is a foreign located person, acting only on behalf of other foreign located persons, and the commodity interest transaction is submitted for clearing through a registered FCM. 71 Commission regulation 3.10(c)(2)(i) currently provides a similar exemption from registration for any Foreign Intermediary acting as an FCM. 72

Pursuant to the 2016 Proposal, the Commission proposed to amend Commission regulations 3.10(c)(2) and (c)(3) to revise the conditions under which those exemptions from registration would apply. 73 Specifically, the 2016 Proposal's amendments would permit a Foreign Intermediary to be eligible for an exemption from registration, if the Foreign Intermediary, in connection with a commodity interest transaction, only acts on behalf of (1) foreign located persons, or (2) IFIs, 74 without regard to whether such persons or institutions clear such commodity interest transaction. 75 It was the Commission's intention in 2016—and remains so now—to promulgate regulations consistent with its longstanding policy of focusing its customer protection activities upon domestic firms, and upon firms soliciting or accepting orders from domestic participants. 76

In response to the 2016 Proposal, the Commission originally received six comments  77 and subsequently received two additional comments, 78 as a result of reopening the comment period pursuant to the 2020 Proposal. AIMA, CME, MFA, and the Industry Groups commented that the 2016 Proposal would improve market efficiency and increase liquidity in U.S. markets by eliminating the regulatory burden associated with Commission registration imposed on Foreign Intermediaries acting solely on behalf of other foreign located persons. 79 In particular, MFA also commented that foreign located persons would generally not have any expectation that a Foreign Intermediary would be subject to Commission oversight. 80 The CME also noted that the proposed amendments would positively impact the likelihood of productive cooperation concerning the regulation of derivatives across all jurisdictions going forward. 81 One individual commented that Foreign Intermediaries should be required to register with the Commission no matter the circumstance. 82 The other individual did not address the 2016 Proposal in any manner. Regarding the two additional comment letters received after the 2020 Proposal, the Industry Groups and ESM were both strongly supportive of the Commission finalizing amendments from the 2016 Proposal; additionally, ESM requested that it be explicitly included in the definition of “international financial institution.”  83

After considering all of the comments, the Commission is finalizing its amendments to Commission regulation 3.10(c) from the 2016 Proposal, with two modifications. First, the Commission originally proposed to amend the language of the exemptions to remove the requirement that any commodity interest transaction shall be submitted for clearing through a registered FCM. 84 In doing so, the Commission recognized that not all commodity interest transactions are subject to a clearing requirement under the CEA or Commission regulations, or even available for clearing by any DCO. 85 However, by removing the clearing condition, the Commission inadvertently failed to reiterate that those transactions that are required to be cleared must be cleared by a clearing member of the relevant DCO. The proposed removal of such language may have had the unintended consequence of leading some market participants to misconstrue the Commission's purpose as an intention to permit unregistered foreign located persons to become clearing members on a DCO to clear commodity interest transactions on behalf of customers that were also foreign located persons. Thus, the Final Rule provides that the exemptions from registration in Commission regulation 3.10(c) are conditioned on (1) clearing on a DCO any commodity interest transaction that is required or intended to be cleared on a registered DCO; and (2) an additional requirement that such transactions must be cleared through a registered FCM, unless the Foreign Intermediary's customer is a clearing member of the relevant DCO.

Second, the Commission is modifying the definition of “international financial institution” proposed in 2016 to be consistent with the definition of U.S. person recently adopted by the Commission in its final cross-border rules for swap dealers (SDs) and major swap participants (MSPs) (Cross-Border Final Rule), which generally excludes IFIs from the definition of U.S. person. 86 Consistent with the Cross-Border Final Rule, the Commission is defining the term “international financial institutions” in Commission regulation 3.10(c) to include the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, the IFIs that are defined in 22 U.S.C. 262r(c)(2), those institutions that are defined as “multilateral development banks” in the European Union's regulation on “OTC derivatives, central counterparties and trade repositories,”  87 their agencies and pension plans, and any other similar international organizations, and their agencies and pension plans. 88

The IFI definition adopted by the Final Rule also includes two additional institutions identified in CFTC Staff Letters 17-34  89 and 18-13. 90 In CFTC Staff Letter 17-34, Commission staff provided relief from CFTC margin requirements to swaps between SDs and ESM, 91 and in CFTC Staff Letter 18-13, Commission staff identified the North American Development Bank as an additional entity that should be considered an IFI for purposes of applying the SD and MSP definitions. 92 The Commission concludes that it is appropriate to include these two entities in the IFI definition adopted by the Final Rule because the status of both entities as multinational organizations formed for public purposes is the same as that of the other already identified IFIs. Therefore, new Commission regulation 3.10(c)(1)(iii) lists specific IFIs, with these two additions. The IFI definition also includes a catch-all for “any other similar international organizations, and their agencies and pension plans,” which the Commission intends to extend the definition to any of the entities discussed above that are not explicitly listed in the definition.

As the Commission recognized in the 2016 Proposal, IFIs are operated to satisfy public purposes and have as their members sovereign nations from around the world. Although such institutions may have headquarters or another significant presence in the United States, the Commission recognizes that the unique attributes and multinational status of these institutions do not warrant treating them as domestic persons for purposes of the intermediary registration exemptions in Commission regulation 3.10(c). The status of IFIs as multinational member agencies leads the Commission to recognize a need to mitigate restraints on the ability of IFIs to enter into transactions in all member countries in conjunction with promoting global economic development and fulfilling other public purposes. The Commission has determined that this purpose is better served by defining “international financial institution” to be consistent with the Cross-Border Final Rule because the list of IFIs as proposed in the 2016 Proposal was limited to a specified list and may have required amendment from time to time.

The 2020 Proposal would amend the 3.10 Exemption such that non-U.S. CPOs could avail themselves of the relief thereunder on a pool-by-pool basis, by specifying that the availability of the 3.10 Exemption would be determined by whether all of the participants in a particular offshore commodity pool are located outside the United States. 93 The Commission stated its preliminary belief that this amendment would appropriately focus Commission oversight on those pools that solicit and/or accept persons located in the United States as pool participants. 94 The Commission further noted several developments in the pooled investment space since the original adoption of the 3.10 Exemption that, in the Commission's preliminary opinion, also supported the amendments in the 2020 Proposal. 95 Specifically, the Commission observed that Congress in 2010, through the Dodd-Frank Act, expanded the Commission's jurisdiction to include swaps and rolling spot retail foreign exchange transactions, and that, when combined with the rescission or revision of certain CPO exemptions and exclusions, this expanded authority resulted in a significant increase in the number of entities captured within the definition of CPO. 96

In considering the propriety of the pool-by-pool exemption set forth in the 2020 Proposal, the Commission also noted the increasing globalization of the commodity pool industry, observing that, in contrast with the pool industry at the time of the original adoption of Commission regulation 3.10(c)(3)(i), several of today's largest CPOs, when measured by assets under management, are located outside the United States. 97 The Commission noted further that these larger CPOs typically operate many different commodity pools simultaneously, including some pools for U.S. investors and other pools for investors outside of the United States. 98 Therefore, the Commission preliminarily concluded that the 3.10 Exemption should be amended to reflect the Commission's regulatory interests in such an integrated international investment management environment, which the Commission preliminarily believed would be accomplished through the 2020 Proposal. 99

The Commission received one comment explicitly addressing the proposed pool-by-pool availability of the 3.10 Exemption in the 2020 Proposal. 100 The Industry Groups stated their strong support for “the revised structure of the 3.10 Exemption that the Commission has proposed, which clearly and expressly provides for reliance on the exemption on a pool-by-pool basis.”  101 The Industry Groups further stated their agreement with the Commission's preliminary belief that the proposed amendments “ `better reflect the current state of operations of CPOs' and more clearly align the text of the rule with the Commission's policy goals.”  102 They also noted their belief that “[t]he intention to permit an exempt or registered non-U.S. offshore CPO to rely on the 3.10 Exemption on a pool-by-pool basis is crystal clear, both in the language of the proposed amendment and the Release.”  103

After considering the comments received, the Commission has determined to finalize the 2020 Proposal so that non-U.S. CPOs may utilize the 3.10 Exemption for their offshore commodity pools on a pool-by-pool basis. As such, the Commission is amending the 3.10 Exemption for non-U.S. CPOs, as proposed, to specify that its availability would be determined, in part, by whether all of the participants in a particular offshore pool are foreign located persons. 104 Permitting non-U.S. CPOs to rely upon the relief provided by the 3.10 Exemption on a pool-by-pool basis will further allow the Commission to focus its resources on the oversight of CPOs operating pools offered and sold to participants located in the U.S., i.e., the Commission's primary customary protection mandate. Therefore, the Commission concludes that the Final Rule properly tailors the 3.10 Exemption to address the increasingly global nature of the investment management space since 2007, without compromising the Commission's mission of protecting U.S. pool participants and effectively regulating CPOs managing U.S. assets.

For the reasons stated above, the Commission determines that amending the 3.10 Exemption to provide relief from registration to non-U.S. CPOs for their offshore pools on a pool-by-pool basis is an appropriate exercise of its exemptive authority under CEA section 4(c). The persons involved in the transactions subject to the exemptive relief provided herein are “appropriate persons,” as discussed in the 2020 Proposal, because the term “appropriate person” as used in CEA section 4(c) includes “a commodity pool formed or operated by a person subject to regulation under the Act.”  105 The Commission has previously interpreted the clause “subject to regulation under the Act” as including persons who are exempt from registration or excluded from the definition of a registration category. 106 Consistent with its preliminary belief in the 2020 Proposal, the Commission believes that clearly enabling non-U.S. CPOs to avoid the additional organizational complexity associated with separately organizing their offshore and domestic facing commodity pool businesses may result in more non-U.S. CPOs undertaking to design and offer pools for persons in the United States. Moreover, this could, in turn, result in a greater diversity of commodity pools offered and/or sold to persons in the United States, and this increased competition amongst commodity pools and their CPOs could broadly foster additional innovation in the commodity pool space, already one of the more dynamic sectors regulated by the Commission. Further, this potential for increased competition and variation in commodity pools and CPOs resulting from the Final Rule will further promote the vibrancy of the U.S. commodity interest markets.

The Commission concludes that the amendments adopted herein will not have a material adverse effect on the ability of the Commission or any DCM to discharge their duties under the Act, because non-U.S. CPOs relying on the 3.10 Exemption, as amended by the Final Rule, with respect to their offshore commodity pools will remain subject to the statutory and regulatory obligations imposed on all participants in the U.S. commodity interest markets. 107 This conclusion is consistent with section 4(d) of the Act, which provides that any exemption granted pursuant to CEA section 4(c) will not affect the authority of the Commission to conduct investigations in order to determine compliance with the requirements or conditions of such exemption or to take enforcement action for any violation of any provision of the Act or any rule, regulation or order thereunder caused by the failure to comply with or satisfy such conditions or requirements. 108 Further, to the extent a non-U.S. CPO operates both offshore and domestic commodity pools, these amendments to the 3.10 Exemption do not restrict or negatively affect the Commission's statutory and regulatory authority applicable to the commodity pool and intermediary activities of the non-U.S. CPO involving persons located in the United States. Rather, this aspect of the Final Rule simply reflects the Commission focusing its regulatory resources on U.S. pool participants and the firms soliciting them for trading commodity interests, which are squarely within its customer protection mandate. 109 Finally, under the Final Rule, the Commission retains the authority to take enforcement action against any non-U.S. CPO claiming the 3.10 Exemption based on its activities within the U.S. commodity interest markets, consistent with the Commission's authority regarding market participants generally.

As discussed above, the Commission proposed that the 3.10 Exemption for non-U.S. CPOs be available on a pool-by-pool basis. Consistent with those proposed amendments, and to address the concerns articulated by commenters to the 2018 Proposal, 110 the Commission also proposed to explicitly provide that a non-U.S. CPO may claim the 3.10 Exemption for its offshore pool(s), while such non-U.S. CPO also claims another registration exemption or regulatory exclusion with respect to other pools it operates, e.g., the de minimis exemption under Commission regulation 4.13(a)(3), 111 an exclusion from the CPO definition under Commission regulation 4.5, 112 or registers with respect to such pools. 113 As noted in the 2020 Proposal and confirmed by the responsive comments received, the Commission understands that this practice is known colloquially as the ability to “stack” exemptions.

Absent the finalization of this amendment, the 3.10 Exemption would not have a provision that expressly contemplates its simultaneous use with other exemptions or exclusions available under other Commission regulations. This contrasts with the language in Commission regulation 4.13(f), for example, which states that the filing of a notice of exemption from registration under that section will not affect the ability of a person to qualify for exclusion from the definition of the term “commodity pool operator” under § 4.5 in connection with its operation of another trading vehicle that is not covered under § 4.13. 114 In the 2020 Proposal, the Commission stated its preliminary belief that non-U.S. CPOs relying on the 3.10 Exemption should have the ability to rely on other regulatory exemptions or exclusions that they qualify for, just like any other CPO. 115 The Commission noted that it independently developed the terms under which CPOs of U.S. commodity pools may claim registration relief, and the fact that a non-U.S. CPO operates both offshore and U.S. commodity pools does not undermine the rationale providing the foundation for other regulatory relief available to CPOs generally. 116 The Commission therefore preliminarily concluded that a non-U.S. CPO relying upon the 3.10 Exemption for one or more of its offshore pools should not, by virtue of that reliance, be foreclosed from utilizing other relief generally available to CPOs of U.S. pools. 117

The Commission received one comment regarding the ability to combine the 3.10 Exemption with either registration or other available CPO exemptions or exclusions. The Industry Groups strongly supported this aspect of the 2020 Proposal because it “clearly and expressly provides for reliance on the [3.10 E]xemption on a pool-by-pool basis and also, in a separate provision, expressly acknowledges the ability to combine or `stack' exemptions.”  118 They did, however, suggest removing from the proposed amendment the specific references to Commission regulations 4.13 and 4.5, so as to better align the provision with the Commission's stated intentions in the 2020 Proposal, i.e., to permit the 3.10 Exemption to be broadly combinable with other available exemptions or exclusions, or registration. 119

After considering the comments received, and for the reasons stated in the 2020 Proposal, the Commission is adopting the proposed amendment permitting the 3.10 Exemption to be maintained concurrently with CPO registration and/or other exemptions or exclusions otherwise available to the claiming non-U.S. CPO. The Commission agrees that it is not necessary for the exclusions and exemptions available under Commission regulations 4.5 and 4.13 to be explicitly enumerated therein. Although the relief provided by Commission regulations 4.5 and 4.13 is the predominant means by which commodity pools are operated without the registration of a CPO, those provisions are not the sole source of such relief available to CPOs for their pools. Therefore, the Final Rule adopts the provision permitting the “stacking” of the 3.10 Exemption with either registration or other available relief from CPO regulation by the Commission, without the specific references to Commission regulations 4.5 and 4.13. 120

The 2020 Proposal also proposed a safe harbor for non-U.S. CPOs that have taken reasonable actions designed to minimize the possibility that participation units in the operated offshore pool are being offered or sold to persons located in the United States. The Commission understands that some non-U.S. CPOs may not be able to represent with absolute certainty that they are acting only on behalf of foreign located persons invested in their offshore pools, as such non-U.S. CPOs may not have complete visibility into the ultimate beneficial ownership of their offshore pool participation units. Pursuant to the proposed safe harbor, a non-U.S. CPO would be permitted to engage in the U.S. commodity interest markets on behalf of an offshore pool for which it cannot represent with absolute certainty that all of the pool participants are offshore, as required by the 3.10 Exemption, provided that such non-U.S. CPO meets the following conditions:

1. The offshore pool's offering materials and any underwriting or distribution agreements include clear, written prohibitions on the offshore pool's offering to participants located in the United States and on U.S. ownership of the offshore pool's participation units;

2. The offshore pool's constitutional documents and offering materials: (a) Are reasonably designed to preclude persons located in the United States from participating therein, and (b) include mechanisms reasonably designed to enable the non-U.S. CPO to exclude any persons located in the United States who attempt to participate in the offshore pool notwithstanding those prohibitions;

3. The non-U.S. CPO exclusively uses non-U.S. intermediaries for the distribution of participations in the offshore pool;

4. The non-U.S. CPO uses reasonable investor due diligence methods at the time of sale to preclude persons located in the United States from participating in the offshore pool; and

5. The offshore pool's participation units are directed and distributed to participants outside the United States, including by means of listing and trading such units on secondary markets organized and operated outside of the United States, and in which the non-U.S. CPO has reasonably determined participation by persons located in the United States is unlikely.

With respect to this proposed safe harbor, the Commission stated its preliminary expectation that a non-U.S. intermediary would include a non-U.S. branch or office of a U.S. entity, or a non-U.S. affiliate of a U.S. entity, provided that the distribution takes place exclusively outside of the United States. 121

The Commission also stated its preliminary belief that satisfying the criteria of the proposed safe harbor would serve as an indication that a non-U.S. CPO is exercising sufficient diligence with respect to those circumstances within its control to minimize the possibility of engaging with persons located in the United States concerning the offered offshore pool. 122 Moreover, the Commission stated its preliminary belief that, if a non-U.S. CPO meets the five factors in the proposed safe harbor, the likely absence of U.S. participants is sufficiently ensured so as to allow reliance on the 3.10 Exemption. 123 As with any of the Commission's other registration exemptions available to CPOs generally, the Commission expressed in the 2020 Proposal its expectation that non-U.S. CPOs claiming the 3.10 Exemption would maintain adequate documentation to demonstrate compliance with the terms of the safe harbor. 124

The Commission received only one comment regarding the proposed safe harbor. The commenter supported it, saying that “[t]he proposed safe harbor provides adequate provisions that will simplify compliance with no loss of regulatory amenity.”  125

Accordingly, upon consideration of the comments, and consistent with the rationale expressed in the 2020 Proposal, the Commission is adopting the safe harbor as proposed. The Commission believes, as it did in the 2020 Proposal, that this amendment is an appropriate exercise of the Commission's exemptive authority under CEA section 4(c). The persons involved in the transactions subject to the exemptive relief provided herein are “appropriate persons,” as discussed in the 2020 Proposal, because the term “appropriate person” as used in CEA section 4(c) includes “a commodity pool formed or operated by a person subject to regulation under the Act.”  126 The Commission has previously interpreted the clause “subject to regulation under the Act” as including persons who are exempt from registration or excluded from the definition of a registration category. 127 This safe harbor may promote responsible economic or financial innovation and fair competition in the U.S. commodity interest markets generally, thereby increasing their vibrancy and liquidity. 128 The safe harbor adopted herein permits a non-U.S. CPO of an offshore pool, by taking defined steps designed to mitigate the risk of U.S. participation in the offshore pool, to continue to qualify for the 3.10 Exemption, and thus, avoid being regulated both by its regulatory authority in its home jurisdiction and by the Commission. This effectively places the non-U.S. CPO on an equal footing with those domestic CPOs solely regulated by the Commission because each is generally subject to a single, appropriate regulatory regime with respect to the operation of its commodity pools. Additionally, the presence and activity of additional offshore pools with trading strategies developed outside the United States creates a diversity of viewpoint in the U.S. commodity interest markets, which could encourage innovation and competition by domestic CPOs as well.

The Pension Benefit Guaranty Corporation (PBGC) administers the pension plan termination insurance program under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). PBGC's regulation on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) sets forth (in subpart B) the methods for valuing plan benefits of terminating single-employer plans covered under title IV. Guaranteed benefits and benefit liabilities under a plan that is undergoing a distress termination must be valued in accordance with subpart B of part 4044. In addition, when PBGC terminates an underfunded plan involuntarily pursuant to ERISA section 4042(a), it uses the subpart B valuation rules to determine the amount of the plan's underfunding.

Under § 4044.51(b) of the asset allocation regulation, early retirement benefits are valued based on the annuity starting date, if a retirement date has been selected, or the expected retirement age, if the annuity starting date is not known on the valuation date. Sections 4044.55 through 4044.57 set forth rules for determining the expected retirement ages for plan participants entitled to early retirement benefits. Appendix D of part 4044 contains tables to be used in determining the expected early retirement ages.

Table I in appendix D (Selection of Retirement Rate Category) is used to determine whether a participant has a low, medium, or high probability of retiring early. The determination is based on the year a participant would reach “unreduced retirement age” ( i.e., the earlier of the normal retirement age or the age at which an unreduced benefit is first payable) and the participant's monthly benefit at unreduced retirement age. The table applies only to plans with valuation dates in the current year and is updated annually by PBGC to reflect changes in the cost of living, etc.

Tables II-A, II-B, and II-C (Expected Retirement Ages for Individuals in the Low, Medium, and High Categories respectively) are used to determine the expected retirement age after the probability of early retirement has been determined using Table I. These tables establish, by probability category, the expected retirement age based on both the earliest age a participant could retire under the plan and the unreduced retirement age. This expected retirement age is used to compute the value of the early retirement benefit and, thus, the total value of benefits under the plan.

This document amends appendix D to replace Table I-20 with Table I-21 to provide an updated correlation, appropriate for calendar year 2021, between the amount of a participant's benefit and the probability that the participant will elect early retirement. Table I-21 will be used to value benefits in plans with valuation dates during calendar year 2021.

PBGC has determined that notice of, and public comment on, this rule are impracticable, unnecessary, and contrary to the public interest. PBGC's update of appendix D for calendar year 2021 is routine. If a plan has a valuation date in 2021, the plan administrator needs the updated table being promulgated in this rule to value benefits. Accordingly, PBGC finds that the public interest is best served by issuing this table expeditiously, without an opportunity for notice and comment, and that good cause exists for making the table set forth in this amendment effective less than 30 days after publication to allow the use of the proper table to estimate the value of plan benefits for plans with valuation dates in early 2021.

PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866 and Executive Order 13771.

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

In consideration of the foregoing, 29 CFR part 4044 is amended as follows:

You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import provisions. This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA, which would include the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, pursuant to 40 CFR 721.20, any persons who export or intend to export a chemical substance that is the subject of this rule are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

The docket includes information considered by the Agency in developing the proposed and final rules. The docket for this action, identified by docket identification (ID) number EPA-HQ-OPPT-2019-0650, is available at https://www.regulations.gov and at the Office of Pollution Prevention and Toxics Docket (OPPT Docket), Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPPT Docket is (202) 566-0280. Please review the visitor instructions and additional information about the docket available at https://www.epa.gov/dockets.

Due to the public health emergency, the EPA Docket Center (EPA/DC) and Reading Room is closed to visitors with limited exceptions. The staff continues to provide remote customer service via email, phone, and webform. For the latest status information on EPA/DC services and docket access, visit https://www.epa.gov/dockets.

EPA is finalizing SNURs under TSCA section 5(a)(2) for chemical substances which were the subject of PMNs P-18-58, P-18-126, P-18-199, P-18-367, P-19-158, and P-19-164. These SNURs require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use to notify EPA at least 90 days before commencing that activity.

Previously, in the Federal Register of February 24, 2020 (85 FR 10364) (FRL-10004-90), EPA proposed SNURs for these chemical substances. More information on the specific chemical substances subject to this final rule can be found in the Federal Register document proposing the SNURs. The docket includes information considered by the Agency in developing the proposed and final rules, including the public comments received on the proposed rules that are described in Unit IV.

TSCA section 5(a)(2) (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four TSCA section 5(a)(2) factors listed in Unit III.

General provisions for SNURs appear in 40 CFR part 721, subpart A. These provisions describe persons subject to the rule, recordkeeping requirements, exemptions to reporting requirements, and applicability of the rule to uses occurring before the effective date of the rule. Provisions relating to user fees appear at 40 CFR part 700. Pursuant to 40 CFR 721.1(c), persons subject to these SNURs must comply with the same SNUN requirements and EPA regulatory procedures as submitters of PMNs under TSCA section 5(a)(1)(A). In particular, these requirements include the information submission requirements of TSCA sections 5(b) and 5(d)(1), the exemptions authorized by TSCA sections 5(h)(1), 5(h)(2), 5(h)(3), and 5(h)(5) and the regulations at 40 CFR part 720. Once EPA receives a SNUN, EPA must either determine that the significant new use is not likely to present an unreasonable risk of injury or take such regulatory action as is associated with an alternative determination before manufacture or processing for the significant new use can commence. If EPA determines that the significant new use is not likely to present an unreasonable risk, EPA is required under TSCA section 5(g) to make public, and submit for publication in the Federal Register , a statement of EPA's findings.

TSCA section 5(a)(2) states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

• The projected volume of manufacturing and processing of a chemical substance.

• The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.

• The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.

• The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

In determining what would constitute a significant new use for the chemical substances that are the subject of these SNURs, EPA considered relevant information about the toxicity of the chemical substances, and potential human exposures and environmental releases that may be associated with the substances, in the context of the four bulleted TSCA section 5(a)(2) factors listed in this unit. During its review of these chemicals, EPA identified certain conditions of use that are not intended by the submitters, but reasonably foreseen to occur. EPA is designating those reasonably foreseen conditions of use as well as certain other circumstances of use as significant new uses.

By this rule, EPA is establishing certain significant new uses which have been claimed as CBI subject to Agency confidentiality regulations at 40 CFR part 2 and 40 CFR part 720, subpart E. Absent a final determination or other disposition of the confidentiality claim under 40 CFR part 2 procedures, EPA is required to keep this information confidential. EPA promulgated a procedure to deal with the situation where a specific significant new use is CBI, at 40 CFR 721.1725(b)(1) and has referenced it to apply to other SNURs.

Under these procedures a manufacturer or processor may request EPA to determine whether a specific use would be a significant new use under the rule. The manufacturer or processor must show that it has a bona fide intent to manufacture or process the chemical substance and must identify the specific use for which it intends to manufacture or process the chemical substance. If EPA concludes that the person has shown a bona fide intent to manufacture or process the chemical substance, EPA will tell the person whether the use identified in the bona fide submission would be a significant new use under the rule. Since most of the chemical identities of the chemical substances subject to these SNURs are also CBI, manufacturers and processors can combine the bona fide submission under the procedure in 40 CFR 721.1725(b)(1) with that under 40 CFR 721.11 into a single step.

If EPA determines that the use identified in the bona fide submission would not be a significant new use, i.e., the use does not meet the criteria specified in the rule for a significant new use, that person can manufacture or process the chemical substance so long as the significant new use trigger is not met. In the case of a production volume trigger, this means that the aggregate annual production volume does not exceed that identified in the bona fide submission to EPA. Because of confidentiality concerns, EPA does not typically disclose the actual production volume that constitutes the use trigger. Thus, if the person later intends to exceed that volume, a new bona fide submission would be necessary to determine whether that higher volume would be a significant new use.

EPA received one anonymous public comment on the proposed rule that was not relevant or specific to any particular SNUR in the proposed rule. EPA is not responding to the comment and made no changes for the final rule based on the comment.

EPA is establishing significant new use and recordkeeping requirements for chemical substances in 40 CFR part 721, subpart E. In Unit IV. of the proposed SNUR, EPA provided the following information for each chemical substance:

• PMN number.

• Chemical name (generic name, if the specific name is claimed as CBI).

• Chemical Abstracts Service (CAS) Registry number (if assigned for non-confidential chemical identities).

• Basis for the SNUR.

• Potentially useful information.

• CFR citation assigned in the regulatory text section of this final rule.

The regulatory text section of these rules specifies the activities designated as significant new uses. Certain new uses, including production volume limits and other uses designated in the rules, may be claimed as CBI.

During review of the PMNs submitted for the chemical substances that are the subject of these SNURs and as further discussed in Unit IV. of the proposed rule, EPA identified certain other reasonably foreseen conditions of use in addition to those conditions of use intended by the submitter. EPA has preliminarily determined that the chemical under the intended conditions of use is not likely to present an unreasonable risk. However, EPA has not assessed risks associated with the reasonably foreseen conditions of use. EPA is designating these conditions of use as well as certain other circumstances of use as significant new uses. As a result, those significant new uses cannot occur without going through a separate, subsequent EPA review and determination process associated with a SNUN.

EPA is issuing these SNURs because the Agency wants:

• To have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing or processing a listed chemical substance for the described significant new use.

• To be obligated to make a determination under TSCA section 5(a)(3) regarding the use described in the SNUN, under the conditions of use. The Agency will either determine under section 5(a)(3)(C) that the significant new use is not likely to present an unreasonable risk, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified as relevant by the Administrator under the conditions of use, or make a determination under TSCA section 5(a)(3)(A) or (B) and take the required regulatory action associated with the determination, before manufacture or processing for the significant new use of the chemical substance can occur.

• To be able to complete its review and determination on each of the PMN substances, while deferring analysis on the significant new uses proposed in these rules unless and until the Agency receives a SNUN.

Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Inventory. Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at https://www.epa.gov/tsca-inventory.

To establish a significant new use, EPA must determine that the use is not ongoing. The chemical substances subject to this rule were undergoing premanufacture review at the time of signature of the proposed rule and were not on the TSCA inventory. In cases where EPA has not received a notice of commencement (NOC) and the chemical substance has not been added to the TSCA Inventory, no person may commence such activities without first submitting a PMN. Therefore, for the chemical substances subject to these SNURs EPA concluded at the time of signature of the proposed rule that the designated significant new uses were not ongoing.

EPA designated February 3, 2020 (the date of web posting of the proposed rule) as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach is to ensure that a person cannot defeat a SNUR by initiating a significant new use before the effective date of the final rule.

Persons who began commercial manufacture or processing of the chemical substances for a significant new use identified on or after that date will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons would have to first comply with all applicable SNUR notification requirements and EPA would have to take action under section 5 allowing manufacture or processing to proceed.

EPA recognizes that TSCA section 5 does not require development of any particular new information ( e.g., generating test data) before submission of a SNUN. There is an exception: If a person is required to submit information for a chemical substance pursuant to a rule, Order or consent agreement under TSCA section 4, then TSCA section 5(b)(1)(A) requires such information to be submitted to EPA at the time of submission of the SNUN.

In the absence of a rule, Order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. Unit IV. of the proposed rule lists potentially useful information for all SNURs listed here. Descriptions are provided for informational purposes. The potentially useful information identified in Unit IV. of the proposed rule will be useful to EPA's evaluation in the event that someone submits a SNUN for the significant new use. Companies who are considering submitting a SNUN are encouraged, but not required, to develop the information on the substance, which may assist with EPA's analysis of the SNUN.

EPA strongly encourages persons, before performing any testing, to consult with the Agency pertaining to protocol election. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h).

The potentially useful information described in Unit IV. of the proposed rule may not be the only means of providing information to evaluate the chemical substance associated with the significant new uses. However, submitting a SNUN without any test data may increase the likelihood that EPA will take action under TSCA sections 5(e) or 5(f). EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:

• Human exposure and environmental release that may result from the significant new use of the chemical substances.

According to 40 CFR 721.1(c), persons submitting a SNUN must comply with the same notification requirements and EPA regulatory procedures as persons submitting a PMN, including submission of test data on health and environmental effects as described in 40 CFR 720.50. SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40 and 721.25. E-PMN software is available electronically at https://www.epa.gov/reviewing-new-chemicals-under-toxic-substances-control-act-tsca.

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket for this rulemaking.

Additional information about these statutes and Executive Orders can be found at https://www.epa.gov/laws-regulations-and-executive-orders.

This action establishes SNURs for new chemical substances that were the subject of PMNs. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011).

According to PRA,44 U.S.C. 3501 et seq., an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable.

The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques, to the Director, Regulatory Support Division, Office of Mission Support (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.

Pursuant to RFA section 605(b), 5 U.S.C. 601 et seq., I hereby certify that promulgation of this SNUR would not have a significant adverse economic impact on a substantial number of small entities. The requirement to submit a SNUN applies to any person (including small or large entities) who intends to engage in any activity described in the final rule as a “significant new use”. Because these uses are “new,” based on all information currently available to EPA, it appears that no small or large entities presently engage in such activities. A SNUR requires that any person who intends to engage in such activity in the future must first notify EPA by submitting a SNUN. Although some small entities may decide to pursue a significant new use in the future, EPA cannot presently determine how many, if any, there may be. However, EPA's experience to date is that, in response to the promulgation of SNURs covering over 1,000 chemicals, the Agency receives only a small number of notices per year. For example, the number of SNUNs received was seven in Federal fiscal year (FY) 2013, 13 in FY2014, six in FY2015, 12 in FY2016, 13 in FY2017, and 11 in FY2018. Only a fraction of these were from small businesses. In addition, the Agency currently offers relief to qualifying small businesses by reducing the SNUN submission fee from $16,000 to $2,800. This lower fee reduces the total reporting and recordkeeping of cost of submitting a SNUN to about $10,116 for qualifying small firms. Therefore, the potential economic impacts of complying with this SNUR are not expected to be significant or adversely impact a substantial number of small entities. In a SNUR that published in the Federal Register of June 2, 1997 (62 FR 29684) (FRL-5597-1), the Agency presented its general determination that final SNURs are not expected to have a significant economic impact on a substantial number of small entities, which was provided to the Chief Counsel for Advocacy of the Small Business Administration.

Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by this action. As such, EPA has determined that this action does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of UMRA sections 202, 203, 204, or 205 (2 U.S.C. 1501 et seq. ).

This action will not have federalism implications because it is not expected to have a substantial direct effect on 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999).

This action will not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes, significantly or uniquely affect the communities of Indian Tribal governments, and does not involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175 (65 FR 67249, November 9, 2000), do not apply to this action.

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

This action is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001), because this action is not a significant regulatory action under Executive Order 12866.

In addition, since this action does not involve any technical standards, NTTAA section 12(d), 15 U.S.C. 272 note, does not apply to this action.

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898 (59 FR 7629, February 16, 1994).

This action is subject to the CRA (5 U.S.C. 801 et seq. ), and EPA will submit a rule report containing this rule and other required information to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, for the reasons stated in the preamble, 40 CFR chapter I is amended as follows:

In FR Doc. 2020-19637 of September 18, 2020 (85 FR 58432) there were a number of technical and typographical errors that are identified and corrected in the Correction of Errors section of this correcting document. The corrections in this correcting document are applicable to discharges occurring on or after October 1, 2020, as if they had been included in the document that appeared in the September 18, 2020 Federal Register .

On the following pages: 58435 through 58436, 58448, 58451, 58453, 58459, 58464, 58471, 58479, 58487, 58495, 58506, 58509, 58520, 58529, 58531 through 58532, 58537, 58540 through 58541, 58553 through 58556, 58559 through 58560, 58580 through 58583, 58585 through 58588, 58596, 58599, 58603 through 58604, 58606 through 58607, 58610, 58719, 58734, 58736 through 58737, 58739, 58741, 58842, 58876, 58893, and 58898 through 58900, we are correcting inadvertent typographical errors in the internal section references.

On page 58596, we are correcting an inadvertent typographical error in the date of the MedPAR data used for developing the Medicare Severity Diagnosis-Related Group (MS-DRG) relative weights.

On pages 58716 and 58717, we are correcting inadvertent errors in the ICD-10-PCS procedure codes describing the BAROSTIM NEO® System technology.

On pages 58721 and 58723, we are correcting inadvertent errors in the ICD-10-PCS procedure codes describing the Cefiderocol technology.

On page 58768, due to a conforming change to the Rural Floor Budget Neutrality adjustment (listed in the table titled “Summary of FY 2021 Budget Neutrality Factors” on page 59034) as discussed in section II.B. of this correcting document and the conforming changes to the Out-Migration Adjustment discussed in section II. D of this correcting document (with regard to Table 4A), we are correcting the 25th percentile wage index value across all hospitals.

On page 59006, in the discussion of Medicare bad debt policy, we are correcting inadvertent errors in the regulatory citations and descriptions.

On pages 59031 and 59037, we are correcting inadvertent typographical errors in the internal section references.

We are correcting an error in the version 38 ICD-10 MS-DRG assignment for some cases in the historical claims data in the FY 2019 MedPAR files used in the ratesetting for the FY 2021 IPPS/LTCH PPS final rule, which resulted in inadvertent errors in the MS-DRG relative weights (and associated average length-of-stay (LOS)). Additionally, the version 38 MS-DRG assignment and relative weights are used when determining total payments for purposes of all of the budget neutrality factors and the final outlier threshold. As a result, the corrections to the MS-DRG assignment under the ICD-10 MS-DRG GROUPER version 38 for some cases in the historical claims data in the FY 2019 MedPAR files and the recalculation of the relative weights directly affected the calculation of total payments and required the recalculation of all the budget neutrality factors and the final outlier threshold.

In addition, as discussed in section II.D. of this correcting document, we made updates to the calculation of Factor 3 of the uncompensated care payment methodology to reflect updated information on hospital mergers received in response to the final rule. Factor 3 determines the total amount of the uncompensated care payment a hospital is eligible to receive for a fiscal year. This hospital-specific payment amount is then used to calculate the amount of the interim uncompensated care payments a hospital receives per discharge. Per discharge uncompensated care payments are included when determining total payments for purposes of all of the budget neutrality factors and the final outlier threshold. As a result, the revisions made to the calculation of Factor 3 to address additional merger information directly affected the calculation of total payments and required the recalculation of all the budget neutrality factors and the final outlier threshold.

We made an inadvertent error in the Medicare Geographic Classification Review Board (MGCRB) reclassification status of one hospital in the FY 2021 IPPS/LTCH PPS final rule. Specifically, CCN 050481 is incorrectly listed in Table 2 as reclassified to its geographic “home” of CBSA 31084. The correct reclassification area is to CBSA 37100. This correction necessitated the recalculation of the FY 2021 wage index for CBSA 37100 and affected the final FY 2021 wage index with reclassification. The final FY 2021 IPPS wage index with reclassification is used when determining total payments for purposes of all budget neutrality factors (except for the MS-DRG reclassification and recalibration budget neutrality factor and the wage index budget neutrality adjustment factor) and the final outlier threshold.

Due to the correction of the combination of errors listed previously (corrections to the MS-DRG assignment for some cases in the historical claims data and the resulting recalculation of the relative weights and average length of stay, revisions to Factor 3 of the uncompensated care payment methodology, and the correction to the MGCRB reclassification status of one hospital), we recalculated all IPPS budget neutrality adjustment factors, the fixed-loss cost threshold, the final wage indexes (and geographic adjustment factors (GAFs)), the national operating standardized amounts and capital Federal rate. Therefore, we made conforming changes to the following:

• On page 59034, the table titled “Summary of FY 2021 Budget Neutrality Factors”.

• On page 59037, the estimated total Federal capital payments and the estimated capital outlier payments.

• On page 59040, the calculation of the outlier fixed-loss cost threshold, total operating Federal payments, total operating outlier payments, the outlier adjustment to the capital Federal rate and the related discussion of the percentage estimates of operating and capital outlier payments.

• On page 59042, the table titled “Changes from FY 2020 Standardized Amounts to the FY 2021 Standardized Amounts”.

On page 59039, we are correcting a typographical error in the total cases from October 1, 2018 through September 31, 2019 used to calculate the average covered charge per case, which is then used to calculate the charge inflation factor.

On pages 59047 through 59048, in our discussion of the determination of the Federal hospital inpatient capital-related prospective payment rate update, due to the recalculation of the GAFs as well as corrections to the MS-DRG assignment for some cases in the historical claims data and the resulting recalculation of the relative weights and average length of stay, we have made conforming corrections to the capital Federal rate, the incremental budget neutrality adjustment factor for changes in the GAFs, and the outlier threshold (as discussed previously). As a result of these changes, we also made conforming corrections in the table showing the comparison of factors and adjustments for the FY 2020 capital Federal rate and FY 2021 capital Federal rate. As we noted in the final rule, the capital Federal rate is calculated using unrounded budget neutrality and outlier adjustment factors. The unrounded GAF/DRG budget neutrality factors and the unrounded outlier adjustment to the capital Federal rate were revised because of these errors. However, after rounding these factors to 4 decimal places as displayed in the final rule, the rounded factors were unchanged from the final rule.

On page 59057, we are making conforming changes to the fixed-loss amount for FY 2021 site neutral payment rate discharges, and the high cost outlier (HCO) threshold (based on the corrections to the IPPS fixed-loss amount discussed previously).

On pages 59060 and 59061, we are making conforming corrections to the national adjusted operating standardized amounts and capital standard Federal payment rate (which also include the rates payable to hospitals located in Puerto Rico) in Tables 1A, 1B, 1C, and 1D as a result of the conforming corrections to certain budget neutrality factors and the outlier threshold previously described.

On pages 59062, 59070, 59074 through 59076, and 59085 we are correcting inadvertent typographical errors in the internal section references.

On pages 59064 through 59071, 59073 and 59074, and 59092 and 59093, in our regulatory impact analyses, we have made conforming corrections to the factors, values, and tables and accompanying discussion of the changes in operating and capital IPPS payments for FY 2021 and the effects of certain IPPS budget neutrality factors as a result of the technical errors that lead to changes in our calculation of the operating and capital IPPS budget neutrality factors, outlier threshold, final wage indexes, operating standardized amounts, and capital Federal rate (as described in section II.B. of this correcting document). These conforming corrections include changes to the following tables:

• On pages 59065 through 59069, the table titled “Table I—Impact Analysis of Changes to the IPPS for Operating Costs for FY 2021”.

• On pages 59073 and 59074, the table titled “Table II—Impact Analysis of Changes for FY 2021 Acute Care Hospital Operating Prospective Payment System (Payments per discharge)”.

• On pages 59092 and 59093, the table titled “Table III—Comparison of Total Payments per Case [FY 2020 Payments Compared to Final FY 2021 payments]”.

On pages 59076 through 59079, we are correcting the discussion of the “Effects of the Changes to Uncompensated Care Payments for FY 2021” for purposes of the Regulatory Impact Analysis in Appendix A of the FY 2021 IPPS/LTCH PPS final rule, including the table titled “Modeled Uncompensated Care Payments for Estimated FY 2021 DSHs by Hospital Type: Uncompensated Care Payments ($ in Millions)*—from FY 2020 to FY 2021” on pages 59077 and 59078, in light of the corrections discussed in section II.D. of this correcting document.

We are correcting the errors in the following IPPS tables that are listed on pages 59059 and 59060 of the FY 2021 IPPS/LTCH PPS final rule and are available on the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

The tables that are available on the internet have been updated to reflect the revisions discussed in this correcting document.

Table 2—Case-Mix Index and Wage Index Table by CCN-FY 2021 Final Rule. As discussed in section II.B. of this correcting document, CCN 050481 is incorrectly listed as reclassified to its home geographic area of CBSA 31084. In this table, we are correcting the columns titled “Wage Index Payment CBSA” and “MGCRB Reclass” to accurately reflect its reclassification to CBSA 37100. This correction necessitated the recalculation of the FY 2021 wage index for CBSA 37100. Also, the corrections to the version 38 MS-DRG assignment for some cases in the historical claims data and the resulting recalculation of the relative weights and ALOS, corrections to Factor 3 of the uncompensated care payment methodology, and recalculation of all of the budget neutrality adjustments (as discussed in section II.B. of this correcting document) necessitated the recalculation of the rural floor budget neutrality factor which is the only budget neutrality factor applied to the FY 2021 wage indexes. Because the rural floor budget neutrality factor is applied to the FY 2021 wage indexes, we are making corresponding changes to the wage indexes listed in Table 2. In addition, as also discussed later in this section, because the wage indexes are one of the inputs used to determine the out-migration adjustment, some of the out migration adjustments changed. Therefore, we are making corresponding changes to some of the out-migration adjustments listed in Table 2. Also, as discussed in section II.A of this correcting document, we made a conforming change to the 25th percentile wage index value across all hospitals. Accordingly, we are making corresponding changes to the values for hospitals in the columns titled “FY 2021 Wage Index Prior to Quartile and Transition”, “FY 2021 Wage Index With Quartile”, “FY 2021 Wage Index With Quartile and Cap” and “Out-Migration Adjustment”. We also updated footnote number 6 to reflect the conforming change to the 25th percentile wage index value across all hospitals.

Table 3.—Wage Index Table by CBSA—FY 2021 Final Rule. As discussed in section II.B. of this correcting document, CCN 050481 is incorrectly listed in Table 2 as reclassified to its home geographic area of CBSA 31084 instead of reclassified to CBSA 37100. This correction necessitated the recalculation of the FY 2021 wage index for CBSA 37100. Also, corrections to the version 38 MS-DRG assignment for some cases in the historical claims data and the resulting recalculation of the relative weights and ALOS, corrections to Factor 3 of the uncompensated care payment methodology, and the recalculation of all of the budget neutrality adjustments (as discussed in section II.B. of this correcting document) necessitated the recalculation of the rural floor budget neutrality factor which is the only budget neutrality factor applied to the FY 2021 wage indexes. Because the rural floor budget neutrality factor is applied to the FY 2021 wage indexes, we are making corresponding changes to the wage indexes and GAFs of all CBSAs listed in Table 3. Specifically, we are correcting the values and flags in the columns titled “Wage Index”, “GAF”, “Reclassified Wage Index”, “Reclassified GAF”, “State Rural Floor”, “Eligible for Rural Floor Wage Index”, “Pre-Frontier and/or Pre-Rural Floor Wage Index”, “Reclassified Wage Index Eligible for Frontier Wage Index”, “Reclassified Wage Index Eligible for Rural Floor Wage Index”, and “Reclassified Wage Index Pre-Frontier and/or Pre-Rural Floor”.

Table 4A.— List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2021 Final Rule. As discussed in section II.B. of this correcting document, CCN 050481 is incorrectly listed in Table 2 as reclassified to its home geographic area of CBSA 31084 instead of reclassified to CBSA 37100. This correction necessitated the recalculation of the FY 2021 wage index for CBSA 37100. Also, corrections to the version 38 MS-DRG assignment for some cases in the historical claims data and the resulting recalculation of the relative weights and ALOS, corrections to Factor 3 of the uncompensated care payment methodology, and the recalculation of all of the budget neutrality adjustments (as discussed in section II.B. of this correcting document) necessitated the recalculation of the rural floor budget neutrality factor which is the only budget neutrality factor applied to the FY 2021 wage indexes. As a result, as discussed previously, we are making corresponding changes to the FY 2021 wage indexes. Because the wage indexes are one of the inputs used to determine the out-migration adjustment, some of the out migration adjustments changed. Therefore, we are making corresponding changes to some of the out-migration adjustments listed in Table 4A. Specifically, we are correcting the values in the column titled “FY 2021 Out Migration Adjustment”.

Table 5.—List of Medicare Severity Diagnosis-Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay—FY 2021. We are correcting this table to reflect the recalculation of the relative weights, geometric average length-of-stay (LOS), and arithmetic mean LOS as a result of the corrections to the version 38 MS-DRG assignment for some cases in the historical claims data used in the calculations (as discussed in section II.B. of this correcting document).

Table 7B.—Medicare Prospective Payment System Selected Percentile Lengths of Stay: FY 2019 MedPAR Update—March 2020 GROUPER Version 38 MS-DRGs. We are correcting this table to reflect the recalculation of the relative weights, geometric average LOS, and arithmetic mean LOS as a result of the corrections to the version 38 MS-DRG assignment for some cases in the historical claims data used in the calculations (as discussed in section II.B. of this correcting document).

Table 18.—FY 2021 Medicare DSH Uncompensated Care Payment Factor 3. For the FY 2021 IPPS/LTCH PPS final rule, we published a list of hospitals that we identified to be subsection (d) hospitals and subsection (d) Puerto Rico hospitals projected to be eligible to receive uncompensated care interim payments for FY 2021. As stated in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58834 and 58835), we allowed the public an additional period after the issuance of the final rule to review and submit comments on the accuracy of the list of mergers that we identified in the final rule. Based on the comments received during this additional period, we are updating this table to reflect the merger information received in response to the final rule and to revise the Factor 3 calculations for purposes of determining uncompensated care payments for the FY 2021 IPPS/LTCH PPS final rule.

We are revising Factor 3 for all hospitals to reflect the updated merger information received in response to the final rule. We are also revising the amount of the total uncompensated care payment calculated for each DSH-eligible hospital. The total uncompensated care payment that a hospital receives is used to calculate the amount of the interim uncompensated care payments the hospital receives per discharge; accordingly, we have also revised these amounts for all DSH-eligible hospitals. These corrections will be reflected in Table 18 and the Medicare DSH Supplemental Data File. Per discharge uncompensated care payments are included when determining total payments for purposes of all of the budget neutrality factors and the final outlier threshold. As a result, these corrections to uncompensated care payments impacted the calculation of all the budget neutrality factors as well as the outlier fixed-loss cost threshold. In section IV.C. of this correcting document, we have made corresponding revisions to the discussion of the “Effects of the Changes to Medicare DSH and Uncompensated Care Payments for FY 2021” for purposes of the Regulatory Impact Analysis in Appendix A of the FY 2021 IPPS/LTCH PPS final rule to reflect the corrections discussed previously and to correct minor typographical errors.

The files that are available on the internet have been updated to reflect the corrections discussed in this correcting document.

Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rulemaking in the Federal Register before the provisions of a rule take effect. Similarly, section 1871(b)(1) of the Act requires the Secretary to provide for notice of the proposed rulemaking in the Federal Register and provide a period of not less than 60 days for public comment. In addition, section 553(d) of the APA, and section 1871(e)(1)(B)(i) of the Act mandate a 30-day delay in effective date after issuance or publication of a rule. Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from the notice and comment and delay in effective date APA requirements; in cases in which these exceptions apply, sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act provide exceptions from the notice and 60-day comment period and delay in effective date requirements of the Act as well. Section 553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an agency to dispense with normal rulemaking requirements for good cause if the agency makes a finding that the notice and comment process are impracticable, unnecessary, or contrary to the public interest. In addition, both section 553(d)(3) of the APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid the 30-day delay in effective date where such delay is contrary to the public interest and an agency includes a statement of support.

We believe that this correcting document does not constitute a rule that would be subject to the notice and comment or delayed effective date requirements. This document corrects technical and typographical errors in the preamble, addendum, payment rates, tables, and appendices included or referenced in the FY 2021 IPPS/LTCH PPS final rule, but does not make substantive changes to the policies or payment methodologies that were adopted in the final rule. As a result, this correcting document is intended to ensure that the information in the FY 2021 IPPS/LTCH PPS final rule accurately reflects the policies adopted in that document.

In addition, even if this were a rule to which the notice and comment procedures and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document into the final rule or delaying the effective date would be contrary to the public interest because it is in the public's interest for providers to receive appropriate payments in as timely a manner as possible, and to ensure that the FY 2021 IPPS/LTCH PPS final rule accurately reflects our policies. Furthermore, such procedures would be unnecessary, as we are not altering our payment methodologies or policies, but rather, we are simply implementing correctly the methodologies and policies that we previously proposed, requested comment on, and subsequently finalized. This correcting document is intended solely to ensure that the FY 2021 IPPS/LTCH PPS final rule accurately reflects these payment methodologies and policies. Therefore, we believe we have good cause to waive the notice and comment and effective date requirements. Moreover, even if these corrections were considered to be retroactive rulemaking, they would be authorized under section 1871(e)(1)(A)(ii) of the Act, which permits the Secretary to issue a rule for the Medicare program with retroactive effect if the failure to do so would be contrary to the public interest. As we have explained previously, we believe it would be contrary to the public interest not to implement the corrections in this correcting document because it is in the public's interest for providers to receive appropriate payments in as timely a manner as possible, and to ensure that the FY 2021 IPPS/LTCH PPS final rule accurately reflects our policies.

In FR Doc. 2020-19637 of September 18, 2020 (85 FR 58432), we are making the following corrections:

1. On page 58435, third column, third full paragraph, line 1, the reference, “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

2. On page 58436, first column, first full paragraph, line 10, the reference, “section II.G.9.c.” is corrected to read “section II.F.9.c.”.

3. On page 58448, lower half of the page, second column, first partial paragraph, lines 19 and 20, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

4. On page 58451, first column, first full paragraph, line 12, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

5. On page 58453, third column, third full paragraph, line 13, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

6. On page 58459, first column, fourth paragraph, line 3, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

7. On page 58464, bottom quarter of the page, second column, partial paragraph, lines 4 and 5, the phrase “and section II.E.15. of this final rule,” is corrected to read “and this final rule,”.

8. On page 58471, first column, first partial paragraph, lines 12 and 13, the reference, “section II.E.15.” is corrected to read “section II.D.15.”.

9. On page 58479, first column, first partial paragraph:

a. Line 6, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

b. Line 15, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

10. On page 58487, first column, first full paragraph, lines 20 through 21, the reference, “section II.E.12.b.” is corrected to read “section II.D.12.b.”.

11. On page 58495, middle of the page, third column, first full paragraph, line 5, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

12. On page 58506:

a. Top half of the page, second column, first full paragraph, line 8, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

b. Bottom half of the page:

(1) First column, first paragraph, line 5, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

(2) Second column, third full paragraph, line 5, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

13. On page 58509:

a. First column, last paragraph, last line, the reference, “section II.E.2.” is corrected to read “section II.D.2.”.

b. Third column, last paragraph, line 5, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

14. On page 58520, second column, second full paragraph, line 22, the reference, “section II.E.11.” is corrected to read “section II.D.11.”.

15. On page 58529, bottom half of the page, first column, last paragraph, lines 11 and 12, the reference, “section II.E.12.a.” is corrected to read “section II.D.12.a.”.

16. On page 58531:

a. Top of the page, second column, last paragraph, line 3, the reference, “section II.E.4.” is corrected to read “section II.D.4.”.

b. Bottom of the page, first column, last paragraph, line 3, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

17. On page 58532, top of the page, second column, first partial paragraph, line 5, the reference, “section II.E.4.” is corrected to read “section II.D.4.”.

18. On page 58537:

a. Second column, last paragraph, line 6, the reference, “section II.E.11.c.5.” is corrected to read “section II.D.11.c.(5).”.

b. Third column, fifth paragraph:

(1) Lines 8 and 9, the reference, “section II.E.11.c.1.” is corrected to read “section II.D.11.c.(1).”.

(2) Line 29, the reference, “section II.E.11.c.1.” is corrected to read “section II.D.11.c.(1).”.

19. On page 58540, first column, first partial paragraph, line 19, the reference, “section II.E.13.” is corrected to read “section II.D.13.”.

20. On page 58541, second column, first partial paragraph, lines 9 and 10, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

21. On page 58553, second column, third full paragraph, line 20, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

22. On page 58554, first column, fifth full paragraph, line 1, the reference, “section II.E.13.” is corrected to read “section II.D.13.”.

23. On page 58555, second column, fifth full paragraph, lines 8 and 9, the reference, “section II.E.13.” is corrected to read “section II.D.13.”.

24. On page 58556:

a. First column, first partial paragraph, line 5, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

b. Second column, first full paragraph:

(1) Line 6, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

(2) Line 38, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

25. On page 58559, bottom half of the page, third column, first full paragraph, line 21, the reference, “section II.E.12.c.” is corrected to read “section II.D.12.c.”.

26. On page 58560, first column, first full paragraph, line 14, the reference, “section II.E.16.” is corrected to read “section II.D.16.”.

27. On page 58580, third column, last paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

28. On page 58581:

a. Middle of the page:

(1) First column, first paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

(2) Third column, last paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

b. Bottom of the page, third column, last paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

29. On page 58582:

a. Middle of the page:

(1) First column, first paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

(2) Third column, first full paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

b. Bottom of the page, second column, first full paragraph, lines 2 and 3, the reference, “in section II.E.13. of this final rule,” is corrected to read “this final rule,”.

30. On page 58583:

a. Top of the page, second column, last paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

b. Bottom of the page:

(1) First column, last paragraph, line 3, the reference, “in section II.E.13. of this final rule,” is corrected to read “this final rule,”.

(2) Third column, last paragraph, line 3, the reference, “section II.E.13. of this final rule,” is corrected to read “this final rule,”.

31. On page 58585, top of the page, third column, last paragraph, lines 3 and 4, the reference, “in section II.E.13. of this final rule,” is corrected to read “this final rule,”.

32. On page 58586:

a. Second column, last partial paragraph, line 4, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

b. Third column:

(1) First partial paragraph:

(a) Lines 12 and 13, the reference, “in section II.E.2.b. of this final rule,” is corrected to read “this final rule,”.

(b) Lines 20 and 21, the reference, “in section II.E.8.a. of this final rule,” is corrected to read “this final rule,”.

(2) Last partial paragraph:

(a) Line 3, the reference, “section II.E.4. of this final rule,” is corrected to read “this final rule,”.

(b) Line 38, the reference, “section II.E.7.b. of this final rule,” is corrected to read “this final rule,”.

33. On page 58587:

a. Top of the page, second column, partial paragraph, line 7, the reference, “section II.E.8.a. of this final rule,” is corrected to read “this final rule,”.

b. Bottom of the page:

(1) Second column, last partial paragraph, line 3, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

(2) Third column, first partial paragraph, line 1, the reference, “section II.E.8.a.” is corrected to read “section II.D.8.a.”.

34. On page 58588, first column:

a. First full paragraph, line 3, the reference, “section II.E.4.” is corrected to read “section II.D.4.”.

b. Third full paragraph, line 3, the reference, “section II.E.7.b.” is corrected to read “section II.D.7.b.”.

c. Fifth full paragraph, line 3, the reference, “section II.E.8.a.” is corrected to read “section II.D.8.a.”.

35. On page 58596:

a. First column:

(1) First full paragraph, line 1, the reference, “section II.E.5.a.” is corrected to read “section II.D.5.a.”.

(2) Last paragraph, line 5, the reference, “section II.E.1.b.” is corrected to read “section II.D.1.b.”.

c. Second column, first full paragraph, line 14, the date “March 31, 2019” is corrected to read “March 31, 2020”.

36. On page 58599, first column, second full paragraph, line 1, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

37. On page 58603, first column:

a. First partial paragraph, line 13, the reference, “section II.G.1.a.(2).b.” is corrected to read “section II.F.1.a.(2).b.”.

b. Last partial paragraph, line 21, the reference, “section II.G.1.a.(2).b.” is corrected to read “section II.F.1.a.(2).b.”.

38. On page 58604, third column, first partial paragraph, line 38, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

39. On page 58606:

a. First column, second partial paragraph, line 13, the reference, “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

b. Second column:

(1) First partial paragraph, line 3, the reference, “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

(2) First full paragraph:

(a) Line 29, the reference, “section II.G.8.” is corrected to read “section II.F.8.”.

(b) Line 36, “section II.G.8.” is corrected to read “section II.F.8.”.

e. Third column, first full paragraph:

(1) Lines 4 and 5, the reference, “section II.G.9.b.” is corrected to read section “II.F.9.b.”.

(2) Line 13, the reference “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

40. On page 58607:

a. First column, first full paragraph:

(1) Line 7, the reference, “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

(2) Line 13, the reference, “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

c. Second column, first partial paragraph:

(1) Line 20, the reference, “section II.G.9.c.” is corrected to read “section II.F.9.c.”.

(2) Line 33, the reference, “section II.G.9.c.” is corrected to read “section II.F.9.c.”.

41. On page 58610:

a. Second column, last partial paragraph, lines 1 and 16, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

b. Third column, first partial paragraph:

(1) Line 6, the reference, “section II.G.1.a.(2).b.” is corrected to read “section II.F.1.a.(2)b.”

(2) Lines 20 and 21, the reference, “section II.G.1.a.(2)b.” is corrected to read “section II.F.1.a.(2)b.”.

42. On page 58716, first column, second full paragraph, lines 14 through 19, the phrase, “with 03HK0MZ (Insertion of stimulator lead into right internal carotid artery, open approach) or 03HL0MZ (Insertion of stimulator lead into left internal carotid artery, open approach)” is corrected to read “with 03HK3MZ (Insertion of stimulator lead into right internal carotid artery, percutaneous approach) or 03HL3MZ (Insertion of stimulator lead into left internal carotid artery, percutaneous approach).”.

43. On page 58717, first column, first partial paragraph, line 5, the phrase, “with 03HK0MZ or 03HL0MZ” is corrected to read “with 03HK3MZ or 03HL3MZ.”

44. On page 58719:

a. First column, last partial paragraph, line 12, the reference, “section II.G.8.” is corrected to read “section II.F.8.”.

b. Third column, first partial paragraph, line 15, the reference, “section II.G.8.” is corrected to read “section II.F.8.”.

45. On page 58721, third column, second full paragraph, line 17, the phrase, “XW03366 or XW04366” is corrected to read “XW033A6 (Introduction of cefiderocol anti-infective into peripheral vein, percutaneous approach, new technology group 6) or XW043A6 (Introduction of cefiderocol anti-infective into central vein, percutaneous approach, new technology group 6).”.

46. On page 58723, second column, first partial paragraph, line 14, the phrase, “procedure codes XW03366 or XW04366” is corrected to read “procedure codes XW033A6 or XW043A6.”

47. On page 58734, third column, second full paragraph, line 26, the reference, “section II.G.9.b.” is corrected to read “section II.F.9.b.”.

48. On page 58736, second column, first full paragraph, line 27, the reference, “II.G.9.b.” is corrected to read “II.F.9.b.”.

49. On page 58737, third column, first partial paragraph, line 5, the reference, “section II.G.1.d.” is corrected to read “section II.F.1.d.”.

50. On page 58739, third column, first full paragraph, line 21, the reference, “section II.G.8.” is corrected to read “section II.F.8.”.

51. On page 58741, third column, second partial paragraph, line 17, the reference, “section II.G.9.a.” is corrected to read “section II.F.9.a.”.

52. On page 58768, third column, first partial paragraph, line 3, the figure “0.8465” is corrected to read “0.8469”.

53. On page 58842, second column, first full paragraph, lines 19 and 35, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

54. On page 58876, first column, first full paragraph, line 18, the reference, “section II.E.” is corrected to read “section II.D.”.

55. On page 58893, first column, second full paragraph, line 5, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

56. On page 58898, third column, first full paragraph, line 9, the reference, “section II.E.” is corrected to read “section II.D.”.

57. On page 58899, third column, first full paragraph, line 24, the reference, “section II.E.1.” is corrected to read “section II.D.1.”.

58. On page 58900, first column, third paragraph, line 26, the reference, “section II.E.” is corrected to read “section II.D.”.

59. On page 59006, second column, second full paragraph:

a. Line 4, the regulation citation, “(c)(3)(i)” is corrected to read “(c)(1)(ii)”.

b. Line 12, the regulation citation, “(c)(3)(ii)” is corrected to read “(c)(2)(ii)”.

c. Lines 17 and 18, the phrase “charged to an uncollectible receivables account” is corrected to read, “recorded as an implicit price concession”.

1. On page 59031:

a. First column:

(1) First full paragraph, line 7, the reference, “section “II.G.” is corrected to read “section II.E.”.

(2) Second partial paragraph, lines 26 and 27, the reference, “section II.G.” is corrected to read “section II.E.”.

b. Second column, first partial paragraph:

(1) Line 5, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

(2) Line 22, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

2. On page 59034, at the top of the page, the table titled “Summary of FY 2021 Budget Neutrality Factors” is corrected to read:

3. On page 59037, second column:

a. First full paragraph, line 4, the phrase “(estimated capital outlier payments of $429,431,834 divided by (estimated capital outlier payments of $429,431,834 plus the estimated total capital Federal payment of $7,577,697,269))” is corrected to read: “(estimated capital outlier payments of $429,147,874 divided by (estimated capital outlier payments of $429,147,874 plus the estimated total capital Federal payment of $7,577,975,637))”

b. Last partial paragraph, line 8, the reference, “section II.E.2.b.” is corrected to read “section II.D.2.b.”.

4. On page 59039, third column, last paragraph, lines 18 and 19, the phrase “9,519,120 cases” is corrected to “9,221,466 cases”.

5. On page 59040:

a. Top of the page, third column:

(1) First partial paragraph:

(a) Line 9, the figure “$29,051” is corrected to read “$29,064”.

(b) Line 11, the figure “$4,955,813,978” is corrected to read “$4,951,017,650”

(c) Line 12, the figure “$92,027,177,037” is corrected to read “$91,937,666,182”.

(d) Line 26, the figure “$29,108” is corrected to read “$29,121”.

Under the Medicare Quality Payment Program, an eligible clinician who participates in an Advanced Alternative Payment Model (APM) and meets the applicable payment amount or patient count thresholds for a performance year is a Qualifying APM Participant (QP) for that year. An eligible clinician who is a QP for a year based on their performance in a QP Performance Period earns a 5 percent lump sum APM Incentive Payment that is paid in a payment year that occurs 2 years after the QP Performance Period. The amount of the APM Incentive Payment is equal to 5 percent of the estimated aggregate payments for covered professional services furnished by the QP during the calendar year immediately preceding the payment year.

The Centers for Medicare & Medicaid Services (CMS) has identified those eligible clinicians who earned an APM Incentive Payment in CY 2020 based on their CY 2018 QP status.

When CMS disbursed the CY 2020 APM Incentive Payments, CMS was unable to verify current Medicare billing information for some QPs and was therefore unable to issue payment. In order to successfully disburse the APM Incentive Payment, CMS is requesting assistance in identifying current Medicare billing information for these QPs.

CMS has compiled a list of QPs we have identified as having unverified billing information. These QPs, and any others who anticipated receiving an APM Incentive Payment but have not, should follow the instructions to provide CMS with updated billing information at the following web address: https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1112/2020%20APM%20Incentive%20Payment%20Notice.pdf.

On September 17, 2020, we published the Medicare Program; Alternative Payment Model (APM) Incentive Payment Advisory for Clinicians—Request for Current Billing Information for Qualifying APM Participants (85 FR 57980), where we announced that submissions would need to be received no later than November 13, 2020. In this updated advisory we are extending this deadline, and submissions would need to be received no later than December 13, 2020.

If you have any questions concerning submission of information through the website, please contact the QPP Help Desk at 1-866-288-8292.

The Administrator of the Centers for Medicare & Medicaid Services (CMS), Seema Verma, having reviewed and approved this document, authorizes Lynette Wilson, who is the Federal Register Liaison, to electronically sign this document for purposes of publication in the Federal Register .

Subject to certain exceptions, the Administrative Procedure Act (“APA”), 5 U.S.C. 551 et seq., mandates that rules imposing new obligations on regulated parties must go through notice-and-comment rulemaking. See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 302 (1979). This is true regardless of whether agencies frame these rules as sub-regulatory guidance. See, e.g., Iowa League of Cities v. EPA, 711 F.3d 844, 875 (8th Cir. 2013); Gen. Elec. Co. v. EPA, 290 F.3d 377, 385 (D.C. Cir. 2002). The APA's procedural requirements sound in notions of good governance. See, e.g., Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 741 (1996). Agencies can generally issue interpretive rules and statements of policy without conducting notice-and-comment rulemaking, 1 although such sub-regulatory guidance lacks the force and effect of law, and cannot bind regulated parties. See, e.g., Shalala v. Guernsey Mem'l Hosp., 514 U.S. 87, 99 (1995).

To promote the appropriate issuance and use of guidance documents, and consistent with the requirements of Executive Order 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents,” 84 FR 55,235 (Oct. 15, 2019), the United States Department of Health and Human Services (“HHS” or “the Department”) proposed regulations that set forth good guidance practices. This good guidance practices rule is one component of the Department's broader regulatory reform initiative. 2 The final rule is designed to increase accountability, improve the fairness of guidance issued by the Department, guard against unlawful regulation through guidance, and safeguard the important principles underlying the United States administrative law system.

In the August 20, 2020 Federal Register (85 FR 51,396), HHS published a proposed rule titled “Department of Health and Human Services Good Guidance Practices” (hereinafter, “Good Guidance Practices proposed rule”). In response to the publication of that proposed rule, HHS received 88 comments from industry trade organizations, patient advocacy groups, providers, health insurers, manufacturers, a law firm, and members of the public. HHS published a correction to this proposed rule on August 26, 2020 (85 FR 52,515) updating certain proposed effective dates. In the following sections of this final rule, HHS includes a summary of the provisions of the August 20, 2020 proposed rule, the public comments received, HHS's responses to the comments, and any changes made to the regulatory text as a result.

Comment: Several commenters viewed the 30-day comment period (which began on August 17, 2020, the day that the Federal Register publicly displayed the proposed rule) as too short, and they requested a longer comment period.

Response: HHS respectfully disagrees with these commenters and continues to view a 30-day comment period as adequate for this notice of proposed rulemaking. The proposed rule, at only six pages in the Federal Register , is not lengthy. Neither the APA nor any other statute requires a longer comment period for the proposed rule. Instead, the APA merely requires that “[a]fter notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation.” This standard was met here. Indeed, the fact that the Department received 88 comments from a broad cross-section of interested parties, including many trade organizations representing numerous stakeholders, confirms that the public had ample time to participate in this rulemaking.

HHS proposed to add 45 CFR 1.1, stating that the requirements to be established pursuant to the proposed rule would apply to all guidance documents issued by all components of the Department, except for the Food and Drug Administration (“FDA”), which has its own good guidance practices regulations that the Secretary plans to amend to conform those regulations to the requirements of Executive Order 13891. FDA currently operates under a set of good guidance practices regulations, see 21 CFR 10.115, as required by the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 371(h), but no other division within HHS operates under a similar set of regulations.

Comment: One commenter urged HHS to amend FDA's good guidance practices regulations to be consistent with the requirements in the proposed rule.

Response: HHS agrees. The Secretary still plans to amend FDA's good guidance practices regulations, issued as required by the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 371(h), to conform to the requirements of Executive Order 13891. However, such amendments have not proceeded in parallel with the Department's broader regulation. Accordingly, in order to avoid significant disparities between the rules around guidance that apply to FDA and the rest of the Department, this final rule clarifies that FDA must comply with all requirements implemented in this HHS Good Guidance Practices final rule—to the extent not already incorporated in the FDA good guidance practices regulations—until the Secretary issues a final rule amending FDA's good guidance practices regulations. Primary provisions of this Good Guidance Practices final rule that are not already incorporated into FDA's good guidance practices include, but are not limited to, the requirement that guidance documents issued after the effective date of this rule include a disclaimer clarifying that the contents do not have the force and effect of law (unless the FDCA or other statute authorizes the issuance of binding guidance), as well as the information fields specified at 45 CFR 1.3(a)(3)(iii); the requirement that all significant guidance documents be issued only following a public notice and comment period (unless an exemption applies); that all guidance documents be included in the HHS guidance repository and if not, they will be considered rescinded; and that all FDA guidance documents shall be subject to the petition process at 45 CFR 1.5.

Comment: One commenter suggested that the final rule exempt Centers for Medicare & Medicaid Services (CMS) guidance documents from being within the rule's scope, just as HHS had proposed to exempt FDA guidance documents from the scope of the rule.

Response: HHS declines to exempt CMS guidance documents from the scope of the Good Guidance Practices final rule. No division of the Department will be operating in a manner inconsistent with the important protections contained in this final rule. As HHS explained in the proposed rule, FDA has long operated under its own set of good guidance practices regulations, and as this final rule clarifies, FDA will be subject to the requirements of this Good Guidance Practices final rule until the Secretary amends FDA's own good guidance practices regulations to conform to the requirements of Executive Order 13891.

HHS is finalizing the proposed scope of this rule but clarifying that until the Secretary amends FDA's own good guidance practices regulations, FDA will be subject to the requirements in this Good Guidance Practices final rule. After the Secretary amends FDA's good guidance practices regulations, this rule will, as proposed, apply to all guidance documents issued by HHS except for guidance documents issued by FDA.

HHS proposed that the HHS Good Guidance Practices regulations would apply to all guidance documents and proposed to define the term “guidance document” as any Department statement of general applicability which is intended to have future effect on the behavior of regulated parties and which sets forth a policy on a statutory, regulatory, or technical or scientific issue, or an interpretation of a statute or regulation. In the proposed rule, HHS explained that the contents of a transmission, rather than its format, dictates whether it would constitute a guidance document; guidance would not need to be in the form of a formal written document to constitute a “guidance document.” The hallmark of guidance is that it includes statements of general applicability intended to govern the future behavior of regulated parties. Thus, HHS proposed that agency releases of technical or scientific information by itself would not constitute guidance unless the release also contains a policy on, or related to, technical or scientific information that is intended to affect the future behavior of regulated parties. However, HHS clarified that the Good Guidance Practices regulations would not require HHS to justify the quality of information; regulated parties and other stakeholders should use existing mechanisms to address the quality of information contained in documents issued by HHS.

Materials directed to government employees or agency contractors, rather than regulated parties, would also generally not constitute guidance within the meaning of this proposed rule. Similarly, most agency statements communicating news updates about the agency would not constitute guidance. Agency statements of specific applicability—such as advisory or legal opinions directed to particular parties about circumstance-specific questions; notices regarding particular locations, facilities, or products; and correspondence with individual persons or entities, including congressional correspondence or notices of violation—would also generally not be “guidance.”

HHS proposed that certain categories of documents would be excluded from the term guidance document: Rules promulgated pursuant to notice and comment under 5 U.S.C. 553 or similar statutory provisions; rules exempt from rulemaking requirements under 5 U.S.C. 553(a); rules of agency organization, procedure, or practice; decisions of agency adjudications under 5 U.S.C. 554 or similar statutory provisions; internal guidance directed to the Department or other agencies that is not intended to have substantial future effect on the behavior of regulated parties; internal executive branch legal advice or legal opinions addressed to executive branch officials; legal briefs and other court filings; grant solicitations and awards; or contract solicitations and awards.

HHS proposed that whether a document would be exempt as a rule of agency organization, procedure, or practice is a functional test. Documents that are designed to shape the behavior of the Department would be exempt; documents designed to shape the behavior of regulated parties would be considered guidance if they also set forth a policy on a statutory, regulatory, or technical or scientific issue, or an interpretation of a statute or regulation.

Pre-enforcement rulings, which are formal written communications applying the law to a specific set of facts (as opposed to making statements of general applicability) would also not constitute guidance documents under the proposed rule. Examples include letter rulings, advisory opinions directed to a specific party, and no-action letters. But material embedded within an advisory opinion or similar letter that otherwise satisfies the definition of “guidance document” would still be guidance for purposes of this rule. If a document addressed to specific individuals nonetheless contains a statement of general applicability setting forth a relevant policy or interpretation that is intended to have future effect by guiding the conduct of other regulated parties, then the document would be a guidance document.

Consistent with its existing responsibilities, HHS proposed that the HHS Office of the General Counsel (“OGC”), after discussing with senior officials within the Department, would make the legal determination of whether a document is excluded from the term “guidance document” and whether a purported guidance document is, in fact, a legislative rule that must go through notice-and-comment rulemaking. OGC would continue to determine whether certain guidance relating to Medicare should nonetheless go through notice-and-comment rulemaking as a result of the Supreme Court's decision in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019).

HHS received the following comments on the proposed definition of “guidance document.”

Comment: Several commenters thought that the definition of “guidance” as materials “intended to have future effect” was too vague and confusing because it would be difficult to determine the Department's “intent” in its issuance of a document in order for affected parties to determine whether it is intended to govern the future behavior of regulated parties. Some commenters also noted that regulated parties may also rely on internal agency documents in guiding their future conduct, and thus these documents should not be exempt from being considered “guidance documents.” A small number of commenters suggested that rather than use the phrase “sets forth a policy,” the definition of guidance document should say “sets forth an expectation.”

Response: The phrase “intended to have future effect” is not a subjective test of an agency official's thought processes, but rather, is an objective test to be applied when reviewing the face of a guidance document. For example, a document satisfies this standard when it provides information in a manner that can be reasonably interpreted as designed to encourage regulated entities to voluntarily take certain actions. This definition is consistent with the Office of Management and Budget's (“OMB's”) longstanding definition of guidance as “an agency statement of general applicability and future effect . . . that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue,” where “future effect” means the “intended . . . impacts due to voluntary compliance with a guidance document.” See OMB Bulletin 07-02, “Agency Good Guidance Practices,” 72 FR 3432, 3434-35 (Jan. 25, 2007). HHS has no basis for believing that regulated parties have found this definition confusing in the past and therefore is incorporating a very similar definition in this final rule. It believes that the phrase “sets forth an expectation” is captured by the phrase “intended to have future effect.” HHS agrees with the commenters who noted that internal agency documents can sometimes constitute guidance documents if they are designed to guide the conduct not just of agency officials, but also regulated parties, and it reiterates that whether a document is properly considered a “guidance document” under this rule is a functional test.

Comment: Several commenters thought that the definition of “guidance” was too vague and confusing, because categorization of a statement as guidance rests not on the format, but on the content of the communication, such that they believed that “guidance” could be contained “within nonguidance.” These commenters also asserted that the final rule should require OGC to publicly release its analyses of whether a document is a guidance document, “nonguidance document” or “nonguidance” within a guidance document. A few commenters stated that the definition of “guidance” is too vague because the proposed rule did not explain how the term “guidance document” will be defined in the context of Medicaid, CHIP, and other programs administered by CMS.

Response: HHS clarifies that guidance is not embedded in “nonguidance.” Rather, if a document that would generally fall outside of the definition of guidance, e.g., a document of specific applicability, such as an advisory opinion, contains a statement of general applicability setting forth a relevant policy or interpretation that is intended to govern the future behavior of regulated parties—in other words, contains guidance—then the entire document would constitute a guidance document under this rule. As a result, there is no need to designate certain parts of documents as guidance and other parts “nonguidance.” See also 85 FR at 51,397 (“If a document addressed to specific individuals nonetheless contains a statement of general applicability setting forth a relevant policy or interpretation that is intended to have future effect by guiding the conduct of other regulated parties, then the document would be a guidance document.” (emphasis added)). With respect to the suggestion that HHS OGC publicly post its analysis of whether material constitutes “guidance,” HHS declines to incorporate this requirement. Whether material constitutes “guidance” is a legal question and as such, HHS OGC's internal analyses of these questions will generally be privileged and confidential. Furthermore, HHS OGC does not have the resources to prepare formal written analyses of every single document that potentially constitutes guidance. If an interested party has a question about whether a document is properly considered guidance, the interested party could petition the agency under the process set forth in § 1.5, and HHS OGC will work with the relevant operating division to prepare a non-privileged public response.

HHS believes the proposed rule provided sufficient information about how the Department proposed to define the term “guidance document.” It was not feasible for HHS, in the proposed rule preamble, to specifically articulate how the term “guidance document” will be applied in each program implemented by HHS. Further, this proposed term builds on OMB's longstanding definition of guidance document and OMB's Final Bulletin on Agency Good Guidance Practices, to which HHS cited in the preamble to the proposed rule. See 85 FR at 51,396. This context, in combination with HHS's own preamble discussion about the term, provided commenters with significant detail about the proposed definition.

Comment: A few commenters asked HHS to clarify the meaning of the term “regulated party” within the definition of “guidance document.” One commenter asked that HHS clarify that “regulated parties” include States or state agencies.

Response: “Regulated party” is a broad term that covers any person or entity that is subject, or potentially subject, to the regulatory authority of any division of HHS. HHS agrees that States and state agencies can be “regulated parties” for purposes of this rule, such as in the context of guidance documents relating to the Medicaid program.

Comment: One commenter asked HHS to limit the definition of “guidance document” to written materials. This commenter also asked HHS to clarify that discussions of technical advisory groups are not “guidance.”

Response: HHS declines to limit the definition of “guidance document” to written materials. As we explained in the proposed rule, citing to OMB's 2007 “Agency Good Guidance Practices” (72 FR 3432), the definition of “guidance document” encompasses all guidance materials, such as videos, in any format. HHS is reiterating that, consistent with the 2007 OMB Bulletin, the “definition of `guidance document' encompasses all guidance materials, regardless of format.” Id. at 3434. Divisions of HHS commonly issue communications with regulated parties through website and blog entries and social media posts. Using such means of communicating with the public can offer benefits to HHS, including more effective outreach to interested parties; however, such electronic communications may often satisfy the definition of “guidance document,” and therefore would be subject to all of the requirements in this final rule, including that they cannot purport to impose binding new obligations on regulated entities. It would be arbitrary, and ultimately undermine the important procedural protections of this rule, if HHS were required to follow certain processes for written materials, but not to follow those same requirements for non-written or non-printed materials, even where they transmitted the same information to regulated parties. However, HHS agrees with the commenter that discussions of technical advisory groups do not constitute guidance because the statements are from members of the public and, thus, are not “agency statements.”

Comment: A few commenters asked HHS to clarify that guidance from HHS to agency contractors is “guidance” under the rule. Another commenter asked HHS to revise the rule to require its contractors to also be obligated to adhere to HHS good guidance practices.

Response: Materials sent from HHS to agency contractors, such as technical directions, are generally not “guidance” under the rule, unless the content is designed to guide the conduct of regulated parties. Documents issued by HHS to agency contractors can be guidance documents if they include interpretive rules or policies that are of general applicability, particularly if they are also intended to serve a broader audience in addition to contractors, such as CMS Rulings. However, CMS Rulings, like all guidance documents, must still comply with procedural requirements imposed by the APA and Section 1871 of the Social Security Act.

Comment: Several commenters asked HHS to clarify whether particular types of documents are guidance documents, such as Paperwork Reduction Act materials, the Medicaid Managed Care Rate Development Guide, PDP Bid Instructions, guidance documents directed to Medicare Accrediting Organizations, the State Operations Manual, the PACE Manual, the Qualified Health Plan Issuer Application Instructions, the October 31, 2019 memorandum from OMB implementing Executive Order 13891 (“October 31, 2019 OMB Memo”), MLN Matters documents, Frequently Asked Questions (“FAQs”), documents issued by Medicare Administrative Contractors (“MACs”), OIG advisory opinions, and preambles to proposed and final regulations.

Response: This Rule does not affect HHS's obligations under the Paperwork Reduction Act. The Paperwork Reduction Act requires that when an agency seeks to collect information from ten or more persons, 44 U.S.C. 3501, the agency must, subject to certain exceptions, submit the collection of information to OMB's Office of Information and Regulatory Affairs (OIRA) for clearance and must publish the proposed information collection in the Federal Register for public comment. 44 U.S.C. 3506, 3507. Whether a document containing a collection of information under the Paperwork Reduction Act is also “guidance” under this Rule, as opposed to a purely factual collection of information, depends on the content of the document. Similarly, we would evaluate Paperwork Reduction Act clearance documents and Federal Register notices based on their contents to assess whether they constitute guidance, although we do not expect that they would be guidance.

The Medicaid Managed Care Rate Development Guide, PDP Bid Instructions, guidance documents directed at Medicare Accrediting Organizations, the State Operations Manual, the PACE Manual, and the Qualified Health Plan Issuer Application Instructions are all “guidance documents” within the meaning of this rule, because they set forth a policy on a statutory, regulatory, or technical or scientific issue, or an interpretation of a statute or regulation, and they are designed to have future effect on the behavior of regulated parties. HHS cannot opine on whether the October 31, 2019 OMB Implementing Memo is “guidance” under the HHS rule. That is because this final rule only applies to statements issued by HHS, and OMB, not HHS, issued that memorandum. MLN Matters documents and HHS-issued FAQs are the type of blog posts and web statements that will generally constitute guidance. Instructions from MACs are not “Department statements” and, thus, are not guidance documents. OIG advisory opinions are generally not considered guidance because they are designed to contain statements of specific, rather than general, applicability. Since the inception of the advisory opinion process, in accordance with Section 1128D(b)(4)(A) of the Social Security Act, OIG has taken the view that all advisory opinions issued under this statute are legally binding on the Department (including the OIG) and the requestor, but only with respect to the specific conduct of the particular requestor, and that no third parties are bound nor may they rely on an advisory opinion. HHS and OIG have concluded that the advisory opinions OIG has issued prior to the issuance of this final rule are not guidance. Preambles to proposed and final regulations are generally considered to be guidance, because they inform the interpretation of the text of a regulation. See, e.g., Tex. Children's Hosp. v. Azar, 315 F. Supp. 3d 322, 334 (D.D.C. 2018);  3 but see Natural Res. Def. Council v. E.P.A., 559 F.3d 561, 564-65 (D.C. Cir. 2009) (“While preamble statements may in some unique cases constitute binding, final agency action susceptible to judicial review, this is not the norm.” (internal citation omitted)). We are finalizing the definition of “guidance document” as proposed.

In the proposed rule, HHS proposed to classify certain guidance documents as “significant guidance documents,” which HHS proposed to define as a guidance document that is likely to lead to an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities; create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights or obligations of recipients thereof; or raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles of Executive Order 12866, “Regulatory Planning and Review.” In the proposed rule, HHS explained that to calculate whether a guidance document is likely to have an annual effect on the economy of $100 million or more, HHS would be required to assess the benefits, costs, or transfer impacts imposed by that guidance document; as part of this analysis, any benefit, cost or transfer occurring in any consecutive twelve-month period would be compared against the $100 million threshold. Future cost savings would not be used to offset upfront costs. In performing these analyses, HHS further explained in the proposed rule that the Department would recognize that guidance documents are not legally binding and, therefore, not all regulated parties would necessarily conform their behavior to the recommendations set forth in the guidance, and furthermore, that the benefits, costs, and transfers may have been accounted for when HHS issued an underlying regulation, if any.

In the proposed rule, HHS explained that it anticipated that only a subset of guidance documents would satisfy the proposed rule's definition of a significant guidance document. This is because to qualify as guidance, as opposed to a legislative rule, a document must reflect, implement, interpret, or describe a legal obligation imposed by a pre-existing, external source or advise the public prospectively of the manner in which the agency intends to exercise a discretionary power. It is HHS's presumption that a guidance document that HHS deems significant is actually a legislative rule that must go through notice-and-comment rulemaking. HHS shall make all initial decisions as to whether a guidance document is significant, and OMB shall make all final determinations. If a significance determination requires a legal conclusion regarding HHS's governing statutes or regulations, however, OMB cannot reach legal conclusions on behalf of HHS.

HHS received the following comments on the proposed definition of “significant guidance document.”

Comment: Several commenters thought that the definition of “significant guidance” was confusing and unclear because it does not provide a clear explanation for how costs related to significant guidance would be calculated and provided no discussion of standards, methodologies, or other criteria to determine whether guidance is “significant.” One commenter specifically suggested that the test for inconsistencies with the planned actions of other agencies and the novel legal issues test be eliminated from the definition of “significant guidance,” because these tests would impose a burdensome cross-agency review of all sub-regulatory guidance. Other commenters supported the proposed definition of “significant guidance.”

Response: HHS appreciates the comments. The definition of “significant guidance” is modeled after the major-rule test from the Congressional Review Act. See 5 U.S.C. 804(2). For example, to determine whether guidance is significant because it will likely result in an annual effect on the economy of $100 million or more, HHS will use the well-established test for making that same determination under the Congressional Review Act, as noted in the proposed rule. The other criteria for determining whether guidance is significant are also specified in the proposed rule, and some of these criteria also have some overlap with the Congressional Review Act's definition of major rule. Specifically, guidance is significant if it adversely affects in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities; creates a serious inconsistency or otherwise interferes with an action taken or planned by another agency; materially alters the budgetary impact of entitlements, grants, user fees, or loan programs or the rights or obligations of recipients thereof; or raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles of Executive Order 12866, “Regulatory Planning and Review.” HHS believes the Department has discretion in assessing these factors and that these types of assessments are well within the Department's expertise to make. HHS respectfully disagrees that the criteria relating to novel legal issues or the planned actions of other agencies would require a cross-agency review of all sub-regulatory guidance. OMB—which has an excellent overview of guidance and regulatory issues across all agencies—will make all final decisions on the significant guidance determination and will help identify guidance documents that could trigger this criterion. If an interested party believes that the Department has incorrectly categorized a guidance document as non-significant, the interested party may utilize the petition process set forth at § 1.5.

Comment: Several commenters asserted that the proposed definitions of “guidance document” and “significant guidance” provided insufficient information to allow for effective comment.

Response: HHS respectfully disagrees with these comments. HHS received a diverse set of comments on various aspects of the proposed definitions of “guidance document” and “significant guidance document,” as summarized above and below, which confirms that the Department provided the public with sufficient information about its proposals to permit comment on the proposed definitions. See Nuvio Corp. v. FCC, 473 F.3d 302, 310 (D.C. Cir. 2006) (citing comments received as evidence that notice of proposed rulemaking “gave interested parties a reasonable opportunity . . . to present relevant information on the central issues”); see also, e.g., Ne. Md. Waste Disposal Auth. v. EPA, 358 F.3d 936, 952 (D.C. Cir. 2004); Appalachian Power Co. v. EPA, 135 F.3d 791, 816 (D.C. Cir. 1998) (per curiam); Stringfellow Mem'l Hosp. v. Azar, 317 F. Supp. 3d 168, 187 (D.D.C. 2018).

Comment: One commenter suggested that HHS expand the definition of “significant guidance” to include any guidance that sets forth an initial interpretation of a statutory or regulatory requirement or changes such an interpretation. Another commenter suggested that HHS expand the definition of “significant guidance” to include any guidance that requires states to revise their statutes or regulations.

Response: HHS appreciates the first commenter's suggestion. However, HHS believes this would significantly expand the set of documents categorized as “significant guidance” and may prove unworkable. HHS will consider potentially expanding the category of significant documents in the future, as the Department gains more experience implementing this final rule. HHS also declines to include within “significant guidance” any instructions that require states to revise their statutes or regulations. Guidance documents cannot impose new binding obligations on any entity. As a result, if a document purported newly to require states to revise a statute or regulation, such a purported instruction could not, by definition, be guidance. Guidance documents may, however, restate and discuss binding statutory or regulatory requirements, but should, when doing so, provide the citation for the applicable statutory or regulatory requirement.

Comment: Several commenters concluded that any document categorized as “significant” is in fact a legislative rule that must go through the APA notice-and-comment rulemaking process. Another commenter expressed concern that significant guidance will be viewed as permissibly being able to impose binding new obligations on regulated parties.

Response: HHS appreciates the commenters' concerns. As explained in the preamble to the proposed rule, HHS expects significant guidance documents to be relatively few, because as these commenters note, many issuances satisfying one of the significant guidance document criteria may also impose binding new obligations and as such, are legislative rules that must go through the APA's notice-and-comment rulemaking process. Interested parties who believe that HHS has incorrectly classified a legislative rule as a significant guidance document may utilize the petition process set forth in § 1.5.

HHS disagrees that significant guidance documents will be viewed as authorized to impose binding new obligations on regulated parties. These guidance documents, like all other guidance documents, will be posted to the HHS guidance repository, which will carry a disclaimer reiterating that all documents contained therein do not impose any new binding obligations unless authorized by law to do so. In addition, any significant guidance documents issued after this rule is finalized will generally include on their face the disclaimer set forth at § 1.3, which reiterates that such documents “do not have the force and effect of law and are not meant to bind the public in any way.”

HHS finalizes the definition of “significant guidance” as proposed.

In the proposed rule, HHS defined “issued” to mean a distribution of information to the public that HHS initiated or sponsored. However, HHS clarified that if a document directed solely to Department employees must be made publicly available under law or agency disclosure policies, for example posted on an agency website as the result of multiple requests under the Freedom of Information Act, the document would not be considered to be issued.

HHS received one comment on the definition of “issued”:

Comment: A commenter expressed concern that the proposed definition of “issued” excluded documents directed solely to government employees or agency contractors, explaining that CMS and others have attempted to use instructions to contractors to impose binding requirements on Medicare Advantage plans through audit and other enforcement activities.

Response: As HHS explained in the proposed rule, whether something is a guidance document is a functional test. Documents ostensibly directed at government employees or agency contractors but that are designed to, or are used to, shape the behavior of regulated parties will be considered guidance if they also set forth a policy on a statutory, regulatory, or technical or scientific issue, or an interpretation of a statute or regulation.

HHS is finalizing the definition of “issued” as proposed.

HHS proposed to define “guidance repository” to mean an online electronic database containing or linking to guidance documents, and proposed that the Department's primary guidance repository could link to subsidiary guidance repositories.

Comment: One commenter asked HHS to clarify that the online electronic database would be publicly available and free to access.

Response: HHS clarifies that by “online,” the final rule refers to a publicly available internet portal that is not behind a paywall.

Comment: A few commenters commended FDA's pre-existing guidance website for its functionality and utility and expressed a desire for the HHS guidance repository to become more user-friendly.

Response: HHS is glad that regulated parties have found FDA's guidance website to be useful. We note that FDA's guidance website has been operational for far longer than the HHS guidance repository, and HHS will consider incorporating additional functionality elements in the future, as the Department gains more experience with administering the guidance repository.

HHS finalizes the definition of “guidance repository” as proposed.

In the proposed rule, HHS proposed that, unless otherwise authorized by statute, HHS may not issue any guidance document that establishes legal obligations not reflected in duly enacted statutes or regulations lawfully promulgated under them, and may not use any guidance document for purposes of requiring persons or entities outside HHS to take any action or to refrain from taking any action beyond what is already required by the terms of an applicable statute or regulation. HHS explained that this is an existing legal obligation but that the Department proposed to codify this requirement in order to ensure consistent compliance with these important legal principles.

HHS also proposed a process for issuing guidance that would formalize guardrails designed to ensure that guidance documents are appropriately issued and used. HHS proposed that after November 16, 2020, each guidance document issued by HHS, or any of its components, would be required specifically to state that it is a “guidance” document and use the following language, unless the guidance is authorized by law to be binding: “The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically incorporated into a contract. This document is intended only to provide clarity to the public regarding existing requirements under the law.” HHS proposed that no guidance document issued by HHS would be able to direct parties outside the federal government to take or refrain from taking action, except when restating—with citations to statutes, regulations, or binding judicial precedent—mandates contained in a statute or regulation.

In the proposed rule, HHS also proposed to require that each guidance document issued by HHS or any component of HHS after November 16, 2020, must also include the following information: (1) The activities to which, and the persons to whom, the guidance applies; (2) the date HHS issued the guidance document; (3) a unique agency identifier; (4) a statement indicating whether the guidance document replaces or revises a previously issued guidance document and, if so, identifying the guidance document that it replaces or revises; (5) a citation to the statutory provision(s) and/or regulation(s) (in Code of Federal Regulations format) that the guidance document is interpreting or applying; and (6) a short summary of the subject matter covered in the guidance document. For guidance documents issued before November 16, 2020, HHS proposed that the Department would not retrospectively revise those guidance documents to include the information listed in this paragraph. HHS further clarified that any guidance document issued in conjunction with one or more other agencies would nonetheless be required to comply with all requirements that would be applicable if the guidance document were issued solely by HHS.

HHS proposed to apply additional procedures to significant guidance documents. HHS would submit all significant guidance documents to OIRA for review under Executive Order 12866 prior to issuance. Significant guidance documents would be required to comply with applicable requirements for significant regulatory actions, as set forth in executive orders, except that only economically significant guidance documents would require a separate Regulatory Impact Analysis. The Secretary, on a non-delegable basis, would have to approve any significant guidance document before the Department issues it. HHS specifically requested comments as to whether the Secretary should instead have the limited authority to delegate approval of guidance documents to the Deputy Secretary, and whether the Secretary should be required to approve certain non-significant guidance documents prior to publication.

HHS proposed that, prior to issuing any significant guidance document, HHS must offer a public notice and comment period of at least 30 days. HHS would be required to publish a public notice in both the Federal Register and the guidance repository. This notice would list the end of the comment period, provide information about where the public may access a copy of the proposed significant guidance document, and include how written comments may be submitted on the proposed significant guidance document and an internet website where those comments may be reviewed by the public. When issuing the significant guidance document, HHS would be required to review all comments received and publish an easily accessible public response to major concerns raised. Cf., e.g., New Lifecare Hosps. of Chester Cty. LLC v. Azar, 417 F. Supp. 3d 31, 43-44 (D.D.C. 2019) (discussing APA standard for agency responses to public comments during notice-and-comment rulemaking).

Under the proposed rule, HHS could elect not to conduct a comment period if it were to find that notice and public comment are impracticable, unnecessary, or contrary to the public interest. The Secretary, as the individual approving the significant guidance document, would be required to make this finding, and the significant guidance document would have to incorporate the finding and a brief statement of reasons in support of such finding. In addition, a significant guidance document could be exempted from any other requirement otherwise applicable to significant guidance documents if the Secretary of HHS and the Administrator of OIRA were to agree that exigency, safety, health, or other compelling cause warrants the exemption.

HHS also proposed that it would seek from OIRA, as appropriate, categorical determinations that classes of guidance presumptively do not qualify as significant. Any guidance satisfying such a categorical exemption presumptively need not comply with the requirements of § 1.3(b) but would need to comply with all other requirements applicable to guidance documents. OIRA may request to review guidance documents within a categorical exemption and may nonetheless conclude that a guidance document that is presumptively not significant is in fact significant.

HHS received the following comments on the proposed process for issuing guidance documents:

Comment: Several commenters stated that the APA exempts guidance documents from the notice-and-comment requirements of 5 U.S.C. 553, and that the Congressional Review Act, 5 U.S.C. Sections 801-808, also does not require guidance to go through notice and comment procedures. They assert that HHS fails to explain the statutory basis authorizing it to apply notice and comment requirements to guidance documents.

Response: The APA requires that agencies must publish notice of a proposed rulemaking and give the public the opportunity to participate, usually by submitting comments, prior to issuing the rule. See 5 U.S.C. 553(b). Subsection 553(b) exempts interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice from the notice and comment requirement, unless otherwise required by statute. However, it does not prohibit agencies from using additional procedures for rules that would otherwise be exempt from notice and comment procedures. The Supreme Court has recognized that the APA provides a statutory floor, not a ceiling, on the administrative procedures an agency may choose to adopt when promulgating legislative rules or issuing guidance. See Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 524 (1978) (“Agencies are free to grant additional procedural rights in the exercise of their discretion . . . .”).

HHS has previously adopted procedures above the APA floor. In 1971, then-Health Education and Welfare Secretary Richardson announced that, despite the exemption in the APA, the department would no longer consider matters relating to public property, loans, grants, benefits, and contracts exempt from notice and comment rulemaking (36 FR 2532 (Feb. 5, 1971)), and the courts have enforced the requirement that these programs use notice and comment rulemaking ever since. See, e.g., Humana of S.C. v. Califano, 590 F.2d 1070, 1084 (D.C. Cir. 1978) (discussing waiver of benefit exemption and application of mandatory rulemaking procedures). See generally Service v. Dulles, 354 U.S. 363, 388 (1957) (where agency had adopted regulations governing decision committed to the Secretary's discretion by statute, failure to apply agency regulations was illegal).

Similarly, nothing in the Congressional Review Act precludes the adoption of additional procedures for guidance documents, nor does using these procedures affect whether any particular guidance is also a rule subject to the Congressional Review Act.

The requirements within this final rule are well within the authority provided by the APA and the Congressional Review Act. HHS does not need additional statutory authority to provide notice and solicit public comments on significant guidance documents, or to apply any of the other procedures implemented by this final rule.

Comment: Several commenters noted that the Congressional Review Act requires agencies to submit certain guidance documents to Congress, even if they are exempt from notice and comment rulemaking. The commenters expressed concern that the proposed rule did not mention these requirements and did not explicitly discuss congressional review of significant guidance.

Response: The Congressional Review Act requires agencies to give Congress notice whenever they issue rules, 5 U.S.C. 801(a)(1)(A), which the Congressional Review Act defines to include interpretive rules and policy statements if they are “designed to implement, interpret, or prescribe law or policy,” 5 U.S.C. 551, as incorporated by 5 U.S.C. 804(3). The Congressional Review Act authorizes OIRA to make a determination whether a rule is a “major rule” under the Congressional Review Act. 5 U.S.C. 804(2). For rules determined by OIRA to be “major rules,” agencies must generally provide advance notice to Congress. 5 U.S.C. 801(a)(3). Section 1.2 of this final rule incorporates and extends the major rule test from the Congressional Review Act in the definition of “significant guidance.” Section 1.3(b)(2)(i) of the final rule requires the Department to submit significant guidance to OIRA for review. To the extent that a guidance document is also a “rule” subject to the Congressional Review Act, this final rule does not purport to change or modify the Congressional Review Act's requirements for Congressional notification.

Comment: Several commenters pointed to what they perceived to be important questions left open by the proposed rule, such as whether HHS has an obligation to consider and respond to comments and how stakeholder input would be considered or integrated into proposed significant guidance.

Response: As HHS explained in the preamble to the final rule, HHS does have an obligation to consider all comments and to respond not to each individual comment, but rather to all major concerns raised. See 85 FR at 51,398 (“HHS would be required to review all comments received and publish an easily accessible public response to major concerns raised.”). This is a familiar standard for the Department and commenters. Cf. Envtl. Def. Fund v. E.P.A., 922 F.3d 446, 458 (D.C. Cir. 2019) (describing obligation under the APA to respond to major substantive comments during notice-and-comment rulemaking). Accordingly, HHS clarifies that the Department will consider comments timely submitted during a comment period and, as appropriate, modify a significant guidance document based upon stakeholder feedback in a manner similar to the process the Department uses for reviewing and incorporating feedback during the APA notice-and-comment rulemaking process.

Comment: Several commenters asked whether significant guidance issued through a notice-and-comment process could be rescinded without notice and comment.

Response: HHS will not use a notice-and-comment process for rescinding significant guidance documents. As the proposed rule explained, significant guidance documents are a subset of guidance documents, and the Department can rescind a guidance document by not posting it, or not maintaining its posting, on the HHS guidance repository. With the limited exception of certain Medicare guidance for which notice-and-comment rulemaking is required under Section 1871 of the Social Security Act, the Department is under no obligation to rescind significant guidance documents through a notice-and-comment process simply because the Department elected to apply such a process to the issuance of the significant guidance document. See Vermont Yankee, 435 U.S. at 524, 543-44; Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 101 (2015). HHS notes that if, after the effective date of this final rule, rescinded guidance is replaced by a new guidance document, the replacement guidance must contain a reference to the rescinded guidance, and, if significant, the replacement guidance would itself be subject to notice and comment.

Comment: A few commenters expressed concern that the proposed notice-and-comment process for significant guidance documents would be too cumbersome, and it would inhibit the Department's ability to timely issue significant guidance documents, particularly in circumstances such as during public health emergencies. Other commenters expressed strong support for the proposed notice-and-comment process, indicating that they welcomed the opportunity to participate in the development of significant guidance documents. Some of these commenters suggested that the Department should offer a longer comment period, such as 60 days instead of 30 days, in order to ensure robust public participation. Other commenters expressed support for the proposed exceptions to the notice-and-comment process, under which HHS could elect not to conduct a comment period if it were to find that notice and public comment are impracticable, unnecessary, or contrary to the public interest. Some of these commenters asked HHS to provide specific examples of when the Secretary might invoke this exceptions process. A couple of commenters recommended that HHS implement a process for soliciting public feedback about whether a guidance document is significant.

Response: HHS appreciates the comments and agrees that the benefits of receiving stakeholder input on significant guidance documents generally outweigh any administrative costs or incremental delays. A 30-day comment period generally strikes the right balance between competing needs, namely, the Department's interest in promptly issuing significant guidance and the public's interest in having sufficient time to offer thorough feedback. Nonetheless, HHS also agrees with the commenters who voiced support for the exceptions process. HHS plans to use this exceptions process when needed, as the Department acknowledges that certain circumstances, such as public health emergencies, may make it appropriate to invoke this exceptions process.

HHS does not plan to solicit public feedback as to whether a guidance document is significant. First, this would further lengthen the process of issuing a significant guidance document, which may make it more difficult for the Department to timely issue relevant guidance. HHS also believes that the criteria for a guidance document being “significant” require an assessment of factors that lie within the unique expertise of the Department and OMB. And finally, as indicated in the preamble to the proposed rule, OMB will make all final determinations as to whether a guidance document is significant. If HHS concludes in the future that public feedback on any question relating to significant guidance would be helpful, HHS may issue a Request for Information.

Comment: A couple commenters suggested specific documents that HHS should work with OMB to categorize as presumptively exempt from being considered significant guidance, and furthermore, that HHS provide a notice and comment process for categories of documents that are being contemplated for exemption.

Response: HHS will consider seeking public feedback through a future request for information as to categories of documents that should qualify for an exemption. OMB will make final determinations as to the categories of documents that are considered presumptively exempt.

Comment: Several commenters claimed that the proposed rule failed to address joint guidance issued by multiple agencies. Other commenters asked HHS to carefully coordinate with other agencies when jointly issuing guidance, in order to avoid legal and operational challenges for regulated parties.

Response: HHS respectfully disagrees that the proposed rule did not address guidance jointly issued by multiple agencies. In the preamble to the proposed rule, HHS stated, “Any guidance issued in conjunction with one or more other agencies would nonetheless be required to comply with all requirements that would be applicable if the guidance document were issued solely by HHS.” 85 FR at 51,398. HHS agrees that coordination with other agencies when jointly issuing guidance will be important. HHS has significant experience, in particular working with the Department of Labor, the Department of Agriculture, and the Department of the Treasury, on jointly issued guidance. HHS will continue to work closely with other agencies when issuing guidance to minimize any procedural complications that could affect regulated parties.

Comment: Several commenters criticized the disclaimer HHS proposed to apply to all guidance documents issued after the final rule. These commenters stated that the disclaimer's statement that each guidance document “has no legal effect” has the potential to be confusing to regulated entities and members of the public. This is because, for example, regulated entities may believe they can ignore HHS guidance documents and substitute their own interpretations of regulations in place of the Department's interpretations. One commenter stated that the disclaimer is confusing because it is not clear whether regulated parties will need to conduct their own legal analysis to determine whether a guidance document is “authorized by law.” A few commenters asked whether significant guidance documents must include the disclaimer, and how HHS plans to incorporate the disclaimer into non-written guidance materials such as video clips or make them searchable. Other commenters expressed strong support for the disclaimer requirement. Two commenters, while expressing support for the disclaimer, suggested that HHS should modify the proposed text, because they believe that the second sentence of the proposed disclaimer appears to suggest that guidance documents are binding because they purport to provide clarity regarding existing requirements under the law.

Response: The proposed disclaimer is correct as a matter of law and is unlikely to be confusing. As a result of the notice, the public and regulated entities will have greater clarity about the role and implications of guidance documents when they are informed through the disclaimer that guidance documents cannot impose binding legal obligations above and beyond such legal obligations that are imposed by statute or regulation. Because the APA forbids agencies from imposing binding obligations on regulated parties through sub-regulatory guidance, unless authorized by law, regulated parties have always been free to choose not to adhere to interpretive rules set forth in guidance documents. However, they do so at their own risk, because guidance documents often provide important insight into how HHS interprets, and applies, its statutes and regulations. Regulated parties that take actions inconsistent with HHS's interpretive statements in guidance documents may be violating underlying statutory or regulatory obligations. HHS clarifies that regulated parties do not need to undertake their own legal analyses to determine whether any provision of law authorizes binding guidance documents: If a provision of law does authorize HHS to issue binding guidance documents, then the guidance document will not include the disclaimer stating that it lacks the force and effect of law. See § 1.3(a)(3)(i) of the final rule, stating that guidance documents must include the specified disclaimer, “unless the guidance is authorized by law to be binding.”

HHS does not believe that the second sentence in the proposed disclaimer text (“This document is intended only to provide clarity to the public regarding existing requirements under the law.”) suggests that guidance documents are binding. The first sentence clearly states that the contents of the document “do not have the force and effect of law.” Thus, the “existing requirements under the law” must arise from other sources that do have the force and effect of law, namely, validly enacted statutes and regulations.

HHS clarifies that significant guidance documents must include the proposed disclaimer. All guidance documents issued after the final rule's effective date must include the disclaimer, and significant guidance documents are a subset of guidance documents. HHS will also include this disclaimer on non-written forms of guidance documents, such as videos. HHS will do so in a format appropriate to the medium, for example, in a guidance video, HHS might include an audio voiceover or a textual statement. If an operating division issues a non-written guidance document, the operating division is also responsible for creating a searchable transcript of that non-written guidance document and uploading it to the guidance repository.

Comment: A couple of commenters expressed the concern that this Good Guidance Practices rule will inhibit informal agency communications with regulated parties, such as CMS stakeholder engagement calls.

Response: HHS does not intend for this rule to adversely impact informal agency communications with regulated parties. Many of these communications do not constitute guidance, because they involve the application of laws to a regulated party's specific factual circumstances. However, where an HHS operating division provides information that satisfies the definition of “guidance document,” HHS expects that information also to be posted to the guidance repository. This will ultimately inure to the benefit of regulated parties, because a broader set of entities will now have access to the guidance.

Comment: One commenter opposed the proposed additional rules relating to the issuance and use of guidance documents, explaining that it had not seen a pattern of overreach by HHS, through its guidance documents, that would justify the additional proposed rules.

Response: The rule is not being promulgated as a remedy for overreach. HHS believes that the Good Guidance Practices rule will improve its guidance practices and help to ensure that it acts in a fair, transparent, and lawful manner.

Comment: Commenters generally expressed support for the inclusion of the proposed six categories of information on all guidance documents issued after the final rule. Some commenters suggested that HHS should include these six information categories on all guidance documents, even those issued before the implementation date of the final rule. Some commenters also suggested that HHS also add to the required categories of information the effective date of the guidance document, and furthermore, that HHS make guidance documents effective only after a reasonable implementation period.

Response: HHS appreciates the commenters' support. Unfortunately, HHS does not currently have the resources to add the six categories of information to all of the thousands of guidance documents in the guidance repository that were issued before the effective date of this final rule. Accordingly, HHS finalizes its proposal to only apply this requirement prospectively, to guidance documents issued after the effective date of this final rule.

HHS also finalizes the set of six categories of information, without adding any additional information fields, such as the guidance document's effective date. Generally, a guidance document will be effective as of the date it is issued, which is one of the six information categories that must be included in all guidance documents issued after this final rule's effective date. If a guidance document has a different effective date, HHS expects the issuing operating division will make that clear in the guidance document. HHS always strives to issue guidance documents in a timely manner, so that regulated parties can take HHS's views into account, but it believes that imposing a particular delay in effective date for guidance documents is outside the scope of the proposed rule. Nonetheless, HHS does not believe that issuing such a requirement in future rulemaking is necessary, given that guidance documents cannot impose binding new obligations.

Comment: A few commenters expressed concern as to the statement in the proposed disclaimer that guidance documents “are not meant to bind the public in any way, unless specifically incorporated into a contract.” A couple of these commenters explained that many federal healthcare programs involve mandatory contracts with CMS, and CMS often includes in these contracts a general covenant to abide by all sub-regulatory guidance that CMS has issued in the past or may issue in the future. Another commenter requested that HHS modify this portion of the disclaimer to clarify that it only applies to a legally enforceable contract, rather than an opt-in agreement that simply memorializes a party's decision to participate in a certain program and abide by the program's laws and regulations.

Response: HHS agrees that so-called “catchall” clauses that generically purport to bind the signatory to all guidance ever issued by the Department do not fall within this exception, because the guidance materials are not “specifically” incorporated into the contract. If the government intends for a guidance document incorporated into a contract by reference to have independent legal basis, the government must make that intention clear through unambiguous language. For example, if a contract states that Medicare Advantage organizations must operate “in compliance with the requirements of this contract and applicable Federal statutes, regulations, and policies ( e.g., policies as described in the Call Letter, Medicare Managed Care Manual, etc.),” the signatory must comply with CMS call letters and the Medicare Managed Care Manual, because these sub-regulatory materials are specifically referenced in the contract. However, the contract does not make compliance with any other sub-regulatory guidance issued by HHS legally binding. This narrow exception applies to the same extent to contracts categorized as opt-in agreements. HHS also clarifies that grants are analogous to contracts for purposes of this rule and the Department can accordingly also render guidance documents binding on grantees by specifically incorporating them into the grant agreement.

Comment: Several commenters asked HHS to clarify the intersection between the Good Guidance Practices rule and the Department's obligations under Social Security Act Section 1871, as interpreted by the Supreme Court in Allina Health Services. One commenter suggested that the Department amend proposed § 1.3(a)(1) expressly to acknowledge the Supreme Court's decision in Allina Health Services. This commenter also noted that Section 1871 of the Social Security Act further imposes requirements on HHS that the Department is currently not satisfying, namely, to “publish in the Federal Register , not less frequently than every 3 months, a list of all manual instructions, interpretative rules, statements of policy, and guidelines of general applicability which—(A) are promulgated to carry out this subchapter, but (B) are not published pursuant to subsection (a)(1) and have not been previously published in a list under this subsection.” See 42 U.S.C. 1395hh(c)(1) (Section 1871(c)(1) of the Social Security Act).

Response: In the preamble to the proposed rule, HHS noted that “OGC would continue to determine whether the contents of certain guidance relating to Medicare” must go through notice-and-comment as a result of the Supreme Court's decision in Allina Health Services, but that “[s]uch guidance documents would still need to meet all applicable requirements” of the Good Guidance Practices rule. 85 FR at 51,397. HHS clarifies that some substantive legal standards otherwise qualifying as “guidance documents” under this rule may also be subject to notice-and-comment obligations imposed by Section 1871. If so, the substantive legal standards must comply both with the obligations imposed by Section 1871 and the requirements in this final rule. Thus, for example, following publication in proposed and final rules, consistent with Section 1871, HHS would post the guidance document to the guidance repository.

HHS believes § 1.3(a)(1) accurately describes its obligations under Section 1871 and the APA as proposed, and declines to amend it. Section 1.3(a)(1) states, “Under the Administrative Procedure Act, the Department may not issue any guidance document that establishes a legal obligation that is not reflected in a duly enacted statute or in a regulation lawfully promulgated under a statute.” Even if an interpretive rule qualifies as a substantive legal standard that is subject to notice-and-comment obligations under Section 1871, as an interpretive rule, it cannot “establish[ ] a legal obligation.” Nothing in this Good Guidance Practices rule purports to override or alter the statutory obligations imposed on HHS with respect to the Medicare program under Section 1871.

HHS acknowledges that it has not been fully complying with the requirements of Social Security Act Section 1871(c)(1) and commits to moving into full compliance with this requirement.

Comment: A few commenters expressed support for the proposal that only the Secretary (on a non-delegable basis) can approve significant guidance documents. HHS did not receive any comments as to whether the Secretary should be required to approve certain non-significant guidance documents prior to publication.

Response: We appreciate the commenters' support and agree that the Secretary should be required to approve, on a non-delegable basis, all significant guidance documents. The Department has also concluded that the Secretary should approve certain guidance documents that have the potential to materially impact the Department's work, even though their consequences external to the Department do not cause them to be considered “significant.” Accordingly, the Secretary must also approve, on a non-delegable basis, all non-significant guidance documents that he determines will either (1) implicate, including potentially impede, any policy matter of priority to the Secretary, or (2) where one operating division's proposed non-significant guidance document may create a serious inconsistency, or otherwise interfere, with an action taken or planned by another operating division or the Office of the Secretary.

HHS finalizes the process for issuing guidance documents, including significant guidance documents, as proposed, except to specify that the effective date of the rule will be 30 days after publication of this final rule. HHS is also defining two types of non-significant guidance documents that the Secretary must review on a non-delegable basis.

In the proposed rule, HHS proposed to make its guidance documents available to the public through the internet, by establishing a guidance repository on the HHS website at www.hhs.gov/guidance. HHS proposed that by November 16, 2020, the Department would be required to have posted to the guidance repository all guidance documents in effect that were issued by any component of the Department, and that the guidance repository must be fully text searchable.

HHS proposed that any web page in the guidance repository that contains guidance documents would clearly indicate that any guidance document previously issued by the Department would no longer be in effect and would be considered rescinded if it is not included in the guidance repository by November 16, 2020. All web pages in the guidance repository containing guidance documents would also state that the guidance documents contained therein “lack the force and effect of law, except as authorized by law or as specifically incorporated into a contract” and “the Department may not cite, use, or rely on any guidance that is not posted on the guidance repository, except to establish historical facts.” HHS proposed that if the Department would like to reinstate a rescinded guidance document not posted to the guidance repository by November 16, 2020, the Department would be able to do so only by following all requirements applicable to newly issued guidance documents.

HHS proposed that guidance documents issued after November 16, 2020 would be required to comply with all applicable requirements in § 1.3, Requirements for Department Issuance and Use of Guidance Documents. HHS would be required to post a new or amended guidance document to the guidance repository within three business days of the date on which that guidance document was issued. For significant guidance documents issued after November 16, 2020, HHS would be required to post proposed versions of significant guidance documents to the guidance repository as part of the notice-and-comment process. The Department shall clearly indicate the end of each significant guidance document's comment period and the mechanisms by which members of the public may submit comments on the proposed significant guidance document. The Department would also be required to post online all HHS responses to major concerns raised in public comments.

HHS received the following comments relating to the proposed guidance repository:

Comment: Some commenters strongly supported the creation of the guidance repository and the enhanced transparency, accountability, and fairness that they believe would come with the requirement that HHS post all operative guidance materials to the guidance repository. Some of these commenters pointed out that, under the Department's existing processes, it is often not apparent when HHS issues guidance documents, and it is challenging to stay abreast of the Department's constantly evolving guidance documents.

However, other commenters criticized the proposed requirement that any guidance document not posted to the guidance repository by November 16, 2020, would be considered rescinded, and that HHS could not cite, use, or rely on such guidance documents except to establish historical facts. These commenters argued that the proposed process for rescinding guidance documents decreased agency transparency as compared to the status quo, rather than increasing it. Some commenters also expressed concern that HHS did not have sufficient time to come into compliance with the rule and transfer to the guidance repository all guidance documents that the Department intends to keep in effect, and that HHS should delay the effective date of the final rule. Due to the concern that HHS may accidentally rescind guidance documents by unintentionally omitting them from the guidance repository, several commenters recommended that HHS create a grace period during which time regulated parties could provide inadvertently omitted guidance documents to HHS for posting, without those guidance documents being considered rescinded. A couple commenters suggested that HHS should give a 30-day grace period for any guidance document that is rescinded, before it is treated as being rescinded. Some commenters further stated that it would be confusing to the public and regulated entities if a guidance document appears on an HHS website but is not included in the repository. Other commenters asked HHS to clarify what regulated entities should do if they are unsure as to whether a guidance document is still valid. A few commenters recommended that HHS create a guidance repository housing all rescinded guidance documents, and that where a guidance document replaces another guidance document, the new guidance document should link to the old guidance document being replaced.

Response: HHS believes that the requirement that any guidance document be posted to the guidance repository or otherwise be considered rescinded will improve upon existing levels of transparency and ultimately will decrease confusion. Currently, it is difficult for regulated parties definitively to ascertain what set of guidance documents HHS views as operative and what guidance documents they are expected to consider. This uncertainty carries its own confusion and causes a lack of transparency. The guidance repository will allow regulated parties to identify the complete set of guidance materials potentially applicable to their conduct. Nor does the fact that HHS can rescind a guidance document by not posting it to the guidance repository diminish existing levels of transparency. With the limited exception of certain Medicare guidance for which notice-and-comment rulemaking is required under Section 1871 of the Social Security Act, and thus a notice-and-comment process is required to rescind them, HHS is free to elect to stop relying on or using a guidance document, including without soliciting public feedback. But currently, the public has no way to know that HHS has decided to withdraw a guidance document, unless HHS chooses to make a specific announcement. Operating divisions remain free to announce when they are rescinding or replacing a guidance document, and we encourage operating divisions to do so. But regardless of whether they do, under the new process, the public will also be able to know that HHS has rescinded a guidance document, because the guidance document will not appear in, or will cease to appear in, the guidance repository.

Posting a comprehensive list of all guidance documents HHS is rescinding and providing a justification for each guidance document the Department is rescinding would impose a significant burden on HHS, for the simple fact that the Department currently lacks a comprehensive list of all guidance documents it has issued. Prior to the issuance of Executive Order 13891, few agencies were required to house all of their guidance documents in a single location. This regulation and Executive Order 13891 are intended to address a symptom of the current problem—the Department issues guidance documents in various media without ever transparently aggregating those materials. HHS has undertaken significant efforts to locate all of its guidance documents and include them in the repository, to help remedy the difficulties previously faced by regulated parties who were unable to ascertain all potentially applicable guidance materials. The rule provides additional clarity over the status quo, because where a guidance document issued after the effective date of this final rule replaces an existing document, the guidance document must indicate that it “replaces or revises a previously issued guidance document” and “identify the guidance document that it replaces or revises.” 45 CFR 1.3(a)(3)(iii)(D).

Following the issuance of Executive Order 13891, HHS has been working to implement the guidance repository before it issued the August 20, 2020 Notice of Proposed Rulemaking, and HHS does not believe that an additional delay in the effective date, beyond the 30 days incorporated into this final rule, is warranted. 4 The Department acknowledges that it may erroneously rescind a guidance document because it has failed to identify and upload the guidance document to the guidance repository by the effective date of this rule. However, both HHS and regulated parties effectively have a 30-day grace period before any guidance documents become rescinded as a result of HHS erroneously omitting them from the guidance repository. This is because this final rule will go into effect 30 days after publication. HHS encourages regulated parties to review the guidance documents posted on the guidance repository and notify HHS of guidance documents that may have been inadvertently omitted. Please email the Department at good.guidance@hhs.gov or contact the issuing component of HHS. To the extent a guidance document appears on an HHS website but is not contained in the guidance repository, this should not be confusing: under this final rule, the guidance document is considered rescinded. However, this inconsistency may be a sign that HHS inadvertently failed to upload that guidance document to the guidance repository, and, as discussed in further detail below, HHS can remedy this mistake by issuing the guidance consistent with the procedures in this rule.

Comment: Several commenters also stated that HHS should provide the public with an opportunity to weigh in on what guidance documents should be rescinded. These commenters generally recommended that HHS publish the criteria it will apply when deciding to rescind guidance documents. Some commenters also requested that HHS post a justification for every guidance document that the Department rescinds.

Response: HHS currently has discretion to rescind a guidance document without soliciting public feedback and, indeed, without even providing notice to regulated parties. The proposed rule was not intended to alter the Department's existing authority to rescind guidance documents without engaging in a public comment process, although, as described above, the proposed rule would ensure that regulated parties, by searching the guidance repository, can identify when guidance documents are or are not considered operative. HHS currently lacks the resources to draft publicly issued justifications for every guidance document that the Department rescinds. And, as previously explained, HHS cannot compile a list of guidance documents that potentially may be rescinded, or a justification for why they are being rescinded. HHS will post all guidance documents that it intends to continue to use to the guidance repository, and it will not so post guidance documents that are outdated, or that HHS otherwise no longer intends to use.

Comment: A few commenters asked HHS to provide notification, for those who choose to opt into receiving such notifications, of when the Department posts new guidance documents to the guidance repository and when HHS rescinds a guidance document.

Response: HHS currently lacks the resources to implement this process. It will consider adding this requested functionality in the future. However, the guidance repository allows users to sort by “Issue Date,” i.e., the date on which the guidance document was issued. This will allow users to review the subset of most recently issued guidance documents.

Comment: A couple of commenters suggested that HHS maintain a repository of rescinded guidance documents, and that where a guidance document replaces another guidance document, the new guidance document should link to the replaced guidance document.

Response: HHS currently lacks the resources to implement either suggestion. In particular and as discussed above, the Department currently lacks a comprehensive list of all guidance documents it has issued. HHS will consider a future guidance repository of guidance documents rescinded after the effective date of the final rule. Regardless, for these guidance documents, regulated parties will be able to ascertain if a rescinded guidance is replaced by a new guidance document, because the replacement guidance will be required to contain a reference to the rescinded guidance.

Comment: A few commenters asked HHS to clarify the effect of HHS rescinding a guidance document. One commenter asked HHS to clarify that if a guidance document's rescission has substantive effect, that the effect will be prospective only. One commenter suggested that HHS incorporate a “hold harmless” provision in the final rule, which would guarantee regulated entities that they would not be penalized if they rely on a guidance document that has been rescinded due to not being included in the guidance repository.

Response: If HHS rescinds a guidance document, the Department may not cite, use, or rely on that guidance document, except to establish historical facts. Guidance documents reflect the Department's interpretations and policies during the time period that they are in effect. Because guidance documents cannot impose binding legal obligations on regulated entities independent of obligations imposed by duly enacted statutes or regulations, the consequences of rescinding a guidance document should generally be minimal. See Mortgage Bankers, 575 U.S. at 103 (explaining that interpretive rules cannot change the regulation or statute they interpret). Because guidance documents generally cannot impose any new binding obligations, there rarely should be circumstances where entities adopt practices consistent with a guidance document that is subsequently rescinded and, as a result, are in noncompliance with the law and subject to penalty. Accordingly, HHS sees no need for inclusion of a “hold harmless” clause in the final rule.

Comment: A couple commenters stated that the process for reinstating rescinded guidance is vague, impractical, time consuming, creates uncertainty, and will inhibit access to guidance documents. Other commenters claimed that rescinding guidance would create confusion, because it could be interpreted by some as a reversion to a different policy than the one explained in the rescinded guidance.

Response: HHS respectfully disagrees with these commenters. As explained in the proposed rule, to reinstate a rescinded guidance document, HHS will merely need to use the same process that it will use for all guidance documents newly issued after the effective date of this final rule. That process, for all but the generally small number of significant guidance documents, merely requires HHS to include a disclaimer and six information fields in the guidance document, and to ensure that the content adheres to pre-existing legal obligations under the APA. This process is not overly burdensome for the Department, and if an operating division wants to re-issue guidance, it can, and will, readily do so. HHS believes that some of the commenters' concerns stem from misunderstandings about guidance documents. Guidance documents cannot alter legal obligations, and therefore whether a guidance document is rescinded should not create any confusion about a regulated party's legal obligations—they remain the same. If a regulated party is confused about whether an operating division is altering its interpretation of a statute or regulation, the regulated party should reach out to the relevant operating division to ask for clarification.

Comment: A few commenters suggested that HHS continue to post guidance materials to operating division-specific websites, in addition to posting those same materials to the guidance repository. A couple commenters further suggested that guidance materials on operating division websites link to the guidance document in the guidance repository.

Response: HHS currently lacks the resources to provide the requested cross-linking between guidance documents on operating division websites and on the guidance repository. However, HHS will continue to post guidance documents on operating division websites, in parallel with posting those materials to the guidance repository. In general, the posting of guidance documents to the guidance repository is not intended to, and will not, alter or otherwise disrupt the posting of guidance documents to operating division websites.

HHS finalizes the requirements relating to the guidance repository as proposed, except to specify that the effective date of the rule will be 30 days after publication of this final rule.

In the proposed rule, HHS proposed that any interested party would be able to petition HHS to withdraw or modify any particular guidance document. Such petitions would include requests to determine whether

• A guidance document, no matter how styled, imposes binding obligations on parties beyond what is required by the terms of applicable statutes and/or regulations.

• An HHS component is using a guidance document to create additional legal obligations beyond what is required by the terms of applicable statutes and/or regulations.

• HHS is improperly exempting a guidance document from the procedures set forth in the proposed rule.

As part of this petition process, HHS proposed that the interested party would be able to ask HHS to remedy the deficiency relating to the use or contents of the guidance document by modifying or withdrawing the guidance document. 5 HHS notes that the remedy for a successful petition commonly may be modification or withdrawal of a guidance document, and HHS is not waiving the presentment and exhaustion requirements for claims arising under the Medicare statute, including claims for payment and coverage. Any such claim that an interested party asserts is related to the guidance document that is the subject of a petition under this section must still move through the existing administrative process for that claim, including exhaustion.

HHS proposed that petitions must be addressed to HHS in writing, and the guidance repository would include clear instructions to members of the public regarding how to petition for review of guidance, including how such petitions can be submitted, and an HHS office responsible for coordinating such requests.

HHS proposed that, in order to facilitate transparency and avoid duplication of work, HHS would publish all responses to petitions for guidance review in a designated section of its online guidance repository. If HHS were to receive multiple similar petitions within a short time period, HHS proposed that the Department could aggregate those petitions and respond to them in a single response, so long as all petitions were responded to within the appropriate time period. It further proposed that HHS must respond to all petitions within 90 business days of the date on which the petition was received. The time period to respond would be suspended if HHS were to need to request additional information from the person who submitted the petition or to consult with other stakeholders. Under the proposed rule, HHS's response to any such petition would be considered final agency action reviewable in court, because it would mark the consummation of HHS's decision-making process and legal consequences flow from the response to the petition. See, e.g., Appalachian Power Co. v. E.P.A., 208 F.3d 1015, 1022 (D.C. Cir. 2000) (defining reviewable agency action).

HHS received the following comments relating to the proposed petition process.

Comment: Several commenters supported the proposed petition process. Other commenters were concerned that the petition process might delay the issuance of guidance documents or that the petition process would be too burdensome on the Department. A couple of commenters stated that the petition process would create uncertainty and confusion, because regulated parties would feel as though they cannot rely on guidance that could be rescinded at any time, and furthermore, the ability of “any interested party” to use the proposed petition process would give almost anyone the opportunity to undermine guidance documents. A few commenters suggested that the petition process should only apply to guidance documents issued after the effective date of the final rule; others conversely asked HHS to clarify that the petition process does apply to guidance documents issued before the effective date of the final rule. One commenter asked HHS to clarify that petitions can be filed whenever an interested party identifies a perceived issue with a guidance document.

Response: HHS appreciates the commenters' support and agrees in particular with the commenter who characterized the petition process as “key to policing compliance with the principles” set forth in this Good Guidance Practices rule. HHS does not believe that the proposed petition process would delay or otherwise impact the issuance of guidance documents. This is because the petition process is only available to challenge guidance documents that have already been issued, and guidance documents will remain in effect throughout the petition process, unless and until HHS issues a petition response concluding that a guidance document should be modified or rescinded. HHS believes that the 90-business-day period in which to respond to petitions provides sufficient time to accommodate petition responses alongside the work of issuing new guidance documents, without unduly straining HHS resources and delaying the issuance of new guidance documents.

HHS agrees that the term “interested party” is broad, and extends to more than merely regulated parties, however, HHS does not think that the petition process will undermine the utility of the Department's guidance documents: HHS can currently rescind guidance documents at any time; therefore, it does not believe that the petition process would undermine the extent to which regulated parties feel comfortable looking to guidance documents for HHS's current views on the subjects covered by such documents.

HHS clarifies that the petition process can be applied to any HHS guidance document, regardless of when HHS issued that guidance document, so long as the guidance document is in effect at the time the petition is filed. HHS also clarifies that interested parties can file a petition at any time. In other words, regulated parties are under no obligation to file a petition within a certain time period.

Comment: One commenter asked HHS to clarify the standard that HHS will use to grant a petition. This commenter also suggested that HHS clarify that the final rule requires the Department to clearly grant or deny the requested remedy and include a rationale for the decision. One commenter asked HHS to clarify that the petition process can be used to challenge a guidance document that HHS initially treated as non-significant and assert that it should actually be categorized as significant.

Response: Under § 1.5(a)(1)-(3), as finalized in this rulemaking, interested parties can petition HHS and assert one of three bases for the petition:

• The substance of an HHS guidance document is unlawful, i.e., the guidance document purports to impose binding new obligations on regulated parties.

• While the substance of an HHS guidance document may be lawful, a division of HHS is using or interpreting the guidance document unlawfully, i.e., to impose binding new obligations on regulated parties.

• HHS is improperly exempting a guidance document from the requirements in the Good Guidance Practices rule.

HHS clarifies that § 1.5(a)(3) allows interested parties to challenge a guidance document that HHS initially treated as non-significant, thereby improperly exempting that guidance document from this rule's requirements for significant guidance documents.

HHS will respond to a petition, generally by agreeing either to modify or withdraw the challenged guidance document or documents, modify its application or treatment of the challenged guidance document or documents, or declining to take any action. If HHS agrees with the petitioner that a guidance document is substantively unlawful, is being used unlawfully, or is being improperly exempted from the requirements of this rule, then HHS will take actions that bring the Department's conduct, and the guidance documents, into compliance with all legal obligations, including this Good Guidance Practices regulation. HHS agrees that the proposed § 1.5(e) is insufficiently clear about what is required in HHS's response to a petition. Accordingly, in finalizing § 1.5(e), HHS modifies the text to clarify that the Department's petition response must state whether the Department agrees or disagrees with the petition; the Department's rationale for such position; and if the Department agrees that the petitioner has identified an unlawful action, that the Department must remedy the unlawful action.

Comment: A few commenters asked HHS to give regulated parties an opportunity to respond to or comment on petitions.

Response: In order to streamline the petition process and ensure a prompt response within the 90-business-day time limit, HHS will not accept comments on petitions from third parties.

Comment: Some commenters asked HHS to clarify that guidance documents would remain in effect during the petition process, while other commenters suggested that HHS clarify that guidance documents will be held in abeyance, and viewed as not in effect, pending the Department's response to a petition.

Response: The initiation of a petition regarding a particular guidance document or documents will have no immediate impact on those guidance documents. Instead, only if HHS agrees with the petitioner that the guidance document(s) at issue in the petition are unlawful will HHS modify or rescind the guidance document(s). Temporarily withdrawing, or holding in abeyance, guidance documents every time they are the subject of a petition would be extraordinarily disruptive to regulated parties and the Department.

Comment: Several commenters suggested that HHS shorten the time period to respond to a petition to less than 90 business days. A couple of commenters suggested a longer time period in which to respond. Several commenters suggested that HHS place a time limit on the extent to which the Department can suspend this 90-day clock when consulting with stakeholders. A couple of commenters asked HHS to implement consequences for failing to follow the procedures in this rule, including the petition response time.

Response: HHS finalizes the 90-business-day time period. This strikes the right balance between ensuring that HHS has sufficient time to thoughtfully respond to petitions and seeking to issue petition responses relatively promptly. HHS does not limit the time period during which the Department can suspend the 90-day clock when consulting with stakeholders or incorporating any specific penalty for non-compliance with the procedures in this rule. However, HHS believes that in these circumstances, regulated parties could have a cause of action under the APA for delayed or withheld agency action.

Comment: One commenter stated that this Good Guidance Practices rule is unnecessary, because regulated parties today can file APA challenges if an agency purports to impose binding obligations through guidance.

Response: HHS agrees that regulated parties currently may have a cause of action under the APA if the Department were to purport to impose binding obligations through guidance documents, unless authorized by law. This Good Guidance Practices rule seeks to enhance the Department's practices with respect to guidance, including by creating a central guidance repository that will allow regulated parties to search for potentially relevant guidance documents.

Comment: One commenter asked that HHS publish not just its responses to petitions, but also the petitions themselves.

Response: HHS will publish in the guidance repository petition requests alongside petition responses.

Comment: A few commenters asked HHS to clarify that the petition process does not affect the availability of other legal causes of action, including those under the APA, and in particular, that filing a petition with HHS is not a threshold requirement for a judicial challenge relating to a guidance document.

Response: HHS agrees that the petition process does not create an administrative exhaustion requirement or affect the availability of other legal causes of action. In some circumstances, Article III jurisdiction may exist to challenge a guidance document or use of a guidance document, even without a prior petition. The petition process is available for those who would like to engage administratively with the Department, and may provide an avenue to resolve issues without the need for litigation.

Comment: One commenter asked HHS to accept petitions alleging that the Department of Justice or a qui tam relator has used a guidance document inappropriately.

Response: HHS declines to incorporate this proposal; HHS will only accept petitions relating to its own conduct. HHS acknowledges that some actors outside of HHS, such as qui tam relators, could use a guidance document inappropriately, in a manner that attempts to impose binding new obligations on regulated parties. However, HHS lacks the authority to grant a remedy with respect to the conduct of the Department of Justice or qui tam relators. HHS suggests that in these circumstances, regulated parties file a petition with HHS seeking clarification as to the appropriate scope of the guidance document at issue. HHS also notes that such use of guidance documents by the Department of Justice is inconsistent with the January 25, 2018 Memorandum from then-Associate Attorney General Rachel Brand, “Limiting Use of Agency Guidance Documents In Affirmative Civil Enforcement Cases,” and should be brought to the attention of Department of Justice leadership.

Comment: One commenter suggested that when HHS aggregates similar petitions filed within a “short” time of one another, HHS should define “short” as 14 calendar days and should require a reasoned response to every substantive issue raised by each of the aggregated petitions.

Response: HHS respectfully declines to adopt a rigid time period for when HHS can aggregate responses to similar petitions filed within a short time period. However, each response to a petition must satisfy the 90-business-day time limit (subject to any permissible tolling); this requirement will serve as a natural time limit on the extent to which HHS can aggregate petition responses.

Comment: One commenter suggested that HHS incorporate an express judicial reviewability clause in the final rule's regulation text.

Response: The regulation text governs HHS's own actions. HHS cannot directly confer Article III jurisdiction through statements in regulation text. Accordingly, HHS does not agree that adding such a clause in the final rule's regulation text would alter the rule.

HHS finalizes the petition process in § 1.5 as proposed, with clarifying edits to § 1.5(e).

HHS examined the effects of this rule as required by E.O. 12866, “Regulatory Planning and Review,” 58 FR 51,735 (Oct. 4, 1993), E.O. 13563, “Improving Regulation and Regulatory Review,” 76 FR 3821, (Jan. 21, 2011), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” direct agencies to assess all costs and benefits of available regulatory alternatives and, if the regulation is necessary, to select regulatory approaches that maximize net benefits. A Regulatory Impact Analysis must be prepared for major rules with economically significant effects. The Department has determined that this rulemaking is not a significant regulatory action under these Executive Orders. In addition, the Department does not anticipate that this rulemaking will impose measurable costs on regulated parties. This final rule describes agency processes for issuing guidance and responding to petitions regarding guidance that allegedly is inappropriate or is being used inappropriately. Implementation of this final rule will require HHS expenditures to create and maintain the guidance repository, along with employing a new process for the review of significant guidance documents and for the review of guidance documents which are the subject of a petition for review. For 2020, HHS expended approximately $2.4 million to develop the guidance repository. HHS expected annual costs for 2021 and 2022 to be about $1 million. However, the Department expects benefits to accrue as a result of the streamlined and clarified process for issuing guidance documents. The Department anticipates that the public, and, in particular, regulated parties, will benefit from greater efficiencies and more transparency in how the Department operates and regulates. The Office of Management and Budget (OMB) has reviewed this rule.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs has determined that this final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Section 202(a) of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532(a), requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year.” In 2019, that threshold was $154 million. HHS does not expect this rule to exceed the threshold.

This final rule is neither a regulatory nor a deregulatory action under Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” 82 FR 9339 (Feb. 3, 2017), because this rule is estimated to impose no more than de minimis costs on regulated entities.

The Department has examined the economic implications of this final rule as required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. The RFA and the Small Business Regulatory Enforcement and Fairness Act of 1996 (Pub. L. 104-121), which amended the RFA, require HHS to analyze options for regulatory relief of small businesses. If a rule has a significant economic effect on a substantial number of small entities, the Secretary must specifically consider the economic effect of the rule on small entities and analyze regulatory options that could lessen the impact of the rule. The Department considers a rule to have a significant impact on a substantial number of small entities if the rule has at least a three percent impact on revenue on at least five percent of small entities. The Department anticipates that this final rule will allow small entities to operate more efficiently, by increasing the transparency of government regulation. As a result, the Department has determined, and the Secretary certifies, that this final rule does not have a significant impact on a substantial number of small entities.

Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 10, 1999), establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirement costs on State and local governments or has federalism implications. The Department has determined that this final rule does not impose such costs or have any federalism implications.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the Department has reviewed this final rule and has determined that it does not create new collections of information.

ACF publishes this interim final rule under the authority granted to the Secretary of Health and Human Services (the Secretary) by sections 641(a), 641(c), and 644(c), of the Head Start Act, as amended by the Improving Head Start for School Readiness Act of 2007 (Pub. L. 110-134).

The Improving Head Start for School Readiness Act of 2007 (the 2007 Reauthorization) of the Head Start Act (the Act) required ACF to establish a system for determining whether Head Start (including Early Head Start) grantees are delivering high-quality and comprehensive services to the children and families they serve. In 2011, ACF issued a regulation (76 FR 70009) to establish the Designation Renewal System (DRS) to meet this requirement. Under the DRS, all Head Start grants were transitioned from indefinite to 5-year grant periods, and any grant that meets one or more of seven specified conditions during the 5-year project period is subject to an open competition for continued funding. Any Head Start grant that does not meet one of the seven DRS conditions becomes eligible for a new noncompetitive 5-year grant. The Act lays out the types of data that must be considered as part of these DRS determinations. Three of the seven conditions of the DRS were revised through a final rule published on August 28, 2020. Due to the ongoing 2019 Novel Coronavirus (COVID-19) pandemic, the ability of ACF to collect all data on grants required for making determinations under the DRS has been severely impaired. This issue is described further in the following paragraph. Furthermore, there may be major disasters, emergencies, or PHEs in the future that similarly impact ACF's ability to collect all information required for making DRS determinations.

Therefore, this interim final rule adds a new section to the HSPPS regulation under Part 1304 Subpart B, Designation Renewal. This new section, § 1304.17, establishes parameters by which ACF may make a designation renewal determination when certain federally declared emergencies prevent collection of all normally required data. As with COVID-19, a major disaster or emergency declared by the President under section 401 or 501 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170 and 5191) or another PHE declared by the Secretary of Health and Human Services (HHS) under section 319 of the Public Health Service Act (42 U.S.C. 247d) may necessitate extended, unanticipated program closures or temporary shifts to different program models or service delivery mechanisms, which can make certain monitoring or data collection activities unsafe, impossible, and/or invalid. In these situations, ACF may lack certain required data to make designation renewal determinations. In cases where a grantee's 5-year grant is ending and all required data are not available due to the impacts of a federally declared disaster or emergency, § 1304.17 allows ACF to still determine if an open competition is required, or if the grant may be renewed noncompetitively based on the conditions for which ACF has data. Without § 1304.17, ACF would not be able to make DRS determinations, which could result in the loss of critical Head Start services in impacted communities.

On January 31, 2020, Health and Human Services Secretary Alex M. Azar II (the Secretary) determined that a PHE exists retroactive to January 27, 2020, 1 under section 319 of the Public Health Service Act (42 U.S.C. 247d), in response to COVID-19, and on April 21, 2020, the Secretary renewed, effective April 26, 2020, the determination that a PHE exists. 2 On July 23, 2020, the Secretary again renewed this determination that a PHE exists, effective July 25, 2020. 3 The Secretary renewed this determination on October 2, 2020, effective October 23, 2020. On March 13, 2020, the President declared that the COVID-19 pandemic in the United States constitutes a national emergency, 4 beginning March 1, 2020.

The current PHE requires urgent action on the part of ACF to establish a process by which ACF will meet the requirements of the Act to make designation renewal determinations while ensuring the safety of Head Start program staff, children, and families. As a cohort of Head Start grants approach the end of their 5-year grant periods during the on-going COVID-19 pandemic, ACF must make a determination under the DRS for these grantees to either receive a new 5-year grant non-competitively or to require an open competition. Extended program closures due to the PHE have made, and continue to make, it impossible for ACF to collect certain data elements relevant to the seven DRS conditions and required as part of designation renewal determinations. In the absence of a DRS determination, these communities could be left without any Head Start services during a particularly challenging time for the children and families Head Start programs serve. To ensure children and families do not lose access to Head Start services during a federally declared disaster or emergency, now and in the future, this interim final rule is needed to quickly establish the process by which DRS determinations will be made under these circumstances.

Ensuring the health and safety of Head Start staff, children, and families is of utmost importance. This IFR directly supports that goal, while establishing a process for ACF to meet the requirements of the Act to make designation renewal determinations during the COVID-19 pandemic and certain other federally declared disasters or emergencies. It is critically important that ACF implements this IFR as quickly as possible. Due to the ongoing PHE, ACF finds good cause to waive notice and comment rulemaking as ACF believes it would be impracticable and contrary to the public interest for it to undertake normal notice and comment rulemaking procedures, as that would delay giving ACF the flexibility to make DRS determinations with the data available and to ensure the continuity of critical Head Start services in impacted communities. For the same reasons, because ACF cannot afford any delay in effectuating this IFR, ACF finds good cause to waive the 30-day delay in the effective date and, moreover, to make this IFR applicable as of publication.

Since its inception in 1965, Head Start has been a leader in helping children from low-income families reach kindergarten more prepared to succeed in school. Through the 2007 Reauthorization, Congress required HHS to ensure these children receive the highest quality services possible. In support of that requirement, the 2007 Reauthorization directed the Secretary to establish the Designation Renewal System (DRS) to (1) identify Head Start grantees delivering a high-quality and comprehensive Head Start program that could receive funding noncompetitively for a 5-year period and grantees not delivering a high-quality and comprehensive Head Start program that will be required to compete for continued funding, and (2) transition all grants from indefinite grants to 5-year grant periods. Congress required that decisions about which grantees would have to compete be based on budget and fiscal management data (including annual audits), program monitoring reviews, classroom quality—and in particular teacher-child interactions—as measured by a valid and reliable research-based observational instrument, and other program information.

In 2011, HHS published a final rule to establish the DRS that included seven conditions. Grants that met one or more of the seven conditions would have their funding subject to an open competition for the next 5-year grant period. Grantees that did not meet a condition became eligible to receive a new noncompetitive 5-year grant. Following the transition of all grants from indefinite to 5-year project periods and considering available data and research, a 2020 final rule  5 revised the DRS and made changes to three of the seven DRS conditions. Effective November 9, 2020, Head Start grants that meet one or more of the following seven conditions under the DRS are subject to an open competition: (1) Two or more deficiencies under section 641A(c)(1)(A), (C), or (D) of the Act; (2) failure to establish, use, and analyze children's progress on agency-established school readiness goals; (3) scores below competitive thresholds in any of the three domains of the Classroom Assessment Scoring System: Pre-K (CLASS); (4) revocation of a license to operate a center or program; (5) suspension from the program; (6) debarment from receiving federal or state funds or disqualification from the Child and Adult Care Food Program (CACFP); and/or (7) either an audit finding of being at risk for failing to continue as a “going concern,” or two or more audit findings of material weakness or questioned costs associated with its Head Start funds in audit reports submitted to the Federal Audit Clearinghouse (in accordance with section 647 of the Act) for a financial period within the current project period.

The notice and comment process for the 2020 final rule predated the COVID-19 pandemic. In the 2019 notice of proposed rulemaking on the DRS, HHS did not propose any flexibilities within the DRS to make designation renewal determinations in the absence of certain data related to the seven conditions due to a federally declared major disaster, emergency, or PHE. Therefore, these flexibilities could not be included in the DRS final rule that was published on August 28, 2020.

All Head Start grants now operate on a 5-year project period. As a cohort of Head Start grants conclude their 5-year grant period, ACF must make a determination whether grants may be renewed noncompetitively or if they will be subject to an open competition. The Act requires ACF to consider a number of factors in making a designation renewal determination. As described previously, a federally declared major disaster or emergency or PHE can make it unsafe or impossible to collect some of these required data on grants. In particular with the COVID-19 pandemic, ACF has been, and continues to be, unable to collect data from a valid, reliable, research-based, observational measure of classroom quality as required by the Act. The reasons for this are further elaborated in the following paragraph. It is possible that future disasters or emergencies could also preclude ACF from collecting other required data elements necessary for DRS determinations.

ACF meets the requirement in the Act to use a valid, reliable, research-based, observational measure of classroom quality as part of DRS determinations through the administration of the Classroom Assessment Scoring System: Pre-K (CLASS). The CLASS measures the quality of teacher-child interactions on a seven-point scale in three areas or domains: Emotional Support, Classroom Organization, and Instructional Support. As part of the established ACF monitoring process for Head Start grantees, trained reviewers administer the CLASS on-site in a sample of Head Start classrooms for each grant. The scores for each classroom within a grant are then averaged to create grant-level scores. If a grant receives an average CLASS score below the following competitive thresholds for any of the three CLASS domains, the grant is designated for competition under the DRS: A 5 for Emotional Support, 5 for Classroom Organization, and 2.3 for Instructional Support. 6 Each year, ACF schedules a subset of Head Start grantees for CLASS reviews, depending on where in the 5-year project period each grant is. The completion of these CLASS reviews within a certain window of time is critical to ensure ACF can complete the necessary subsequent steps for each grant, to determine and notify the grantee of their status as either competitive or non-competitive under the DRS with sufficient time prior to the end of their current 5-year project period to run the necessary competitive processes.

In March 2020, ACF made the decision to temporarily suspend the administration of CLASS reviews in Head Start classrooms due to the COVID-19 PHE. At that time, ACF was concerned about jeopardizing the health and safety of Head Start children and staff by sending outside observers into Head Start classrooms to conduct CLASS reviews. Many Head Start classrooms across the country closed due to increased health and safety concerns amid the spread of COVID-19. Due to the evolving nature of the COVID-19 pandemic, ACF has been uncertain about the ability to resume CLASS reviews during the 2020-2021 program year. Therefore, in an information memorandum directed to Head Start and Early Head Start grantees published on September 24, 2020, ACF announced the decision to suspend all CLASS reviews for the 2020-2021 program year. 7

There are multiple factors that informed this decision. First, as the impacts of the COVID-19 pandemic are very different in different parts of the country, Head Start programs must make locally determined decisions regarding whether they can safely operate in-person services for children and families. Programs that do not operate in-person services for a period of time are, instead, providing some type of remote or virtual services for enrolled children and families. The CLASS tool was not originally designed to conduct observations of virtual interactions between teachers and children, and the research on such use of the tool is very limited. Therefore, if a program is closed for in-person services for an extended period due to the pandemic, and even if the program is providing virtual services, ACF cannot conduct CLASS reviews of virtual teaching for monitoring and oversight purposes with those programs.

Second, as previously alluded, for Head Start programs that are providing in-person services to children and families during part or all of the 2020-2021 program year, ACF is not able to send additional outside individuals into classrooms to conduct CLASS observations without increasing the risk of exposing Head Start children and staff to the virus. This is consistent with best practice guidance from the Centers for Disease Control and Prevention on safely providing child care in group settings during the COVID-19 pandemic. 8

Finally, ACF expects that Head Start services may look very different during the 2020-2021 program year due to the COVID-19 pandemic and the PHE. Therefore, ACF strongly believes the CLASS instrument would not capture an accurate picture of teacher-child interactions during this program year. For instance, due to the fact that some programs will likely be operating virtual services for part or all of their enrollment, and this might change throughout the program year, there is a lot of uncertainty for ACF around the availability of a sufficient sample size for CLASS observations for any given grantee.

In addition, ACF expects that in-person classroom interactions and activities may not be `typical' during the 2020-2021 program year, as the result of modifications made for the safety of children, families, and staff. For example, classrooms will likely have smaller group sizes and more individual time for children to allow for physical distancing (as opposed to small and large group time, which are usually common in early childhood classrooms). Staff and children will likely be wearing masks, and a key part of accurate CLASS observations depends on the observer being able to observe the reactions of the children to their teacher during an observation period.

Furthermore, ACF expects child attendance will be lower than normal during the 2020-2021 program year, whether out of parental fear of sending their children back to in-person Head Start settings due to possible exposure to the virus, or out of proactive measures taken by the program to reduce classroom group sizes. For these reasons, ACF believes the scores a grantee would receive on a CLASS review during this unusual time would be systematically different from, and not representative of, program learning environments that are more typically observed throughout the 5-year grant period.

While ACF strongly believes it is still important to promote high-quality learning environments for all children served in Head Start, the health and safety of children and staff during this PHE, as well as the appropriate use of the CLASS tool, are also paramount considerations for ACF. Therefore, ACF has made the determination that a valid and reliable observational instrument that assesses classroom quality as required by the Act does not exist during the current PHE, so ACF cannot fulfill this requirement during this time. The implementation of this IFR provides ACF the flexibility to proceed with DRS determinations in the absence of CLASS data that is the result of the ongoing PHE. This IFR also provides this flexibility for a federally declared major disaster, emergency, or PHE in the future, which could also impact the administration of CLASS or the collection of other data elements necessary for making DRS determinations. The flexibility will allow ACF to ensure the continuity of critical Head Start services for the nation's most vulnerable children and families. As stated previously, ensuring high quality classroom learning environments for enrolled children is still an important priority for ACF. ACF offers a wealth of training and technical assistance (TTA) resources to promote quality improvement in classroom learning environments and teacher-child interactions, including materials on the Early Childhood Learning Knowledge Center website, interactive webinars and learning modules, and online opportunities for grantees to share and learn about best practices with other grantees. ACF also funds a regional TTA system, which includes individualized support from regional specialists for grantees on an as-needed basis and at the discretion of each ACF region.

In summary, the provision established in § 1304.17 allows ACF to make designation renewal decisions with the data available when the determination must be made in order to ensure the continuity of Head Start services, even if certain federally declared emergencies or disasters preclude ACF from collecting all of the data required in the Head Start Act. This flexibility ensures the safety of Head Start staff, children, and families and the continuity of Head Start services.

The Regulatory Flexibility Act (RFA), see 5 U.S.C. 605(b) as amended by the Small Business Regulatory Enforcement Fairness Act, requires federal agencies to determine, to the extent feasible, a rule's impact on small entities, explore regulatory options for reducing any significant impact on a substantial number of such entities, and explain their regulatory approach. The term “small entities,” as defined in the RFA, comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. Under this definition, some Head Start grantees may be small entities. HHS considers a rule to have a significant impact on a substantial number of small entities if it has at least a 3 percent impact on revenue on at least 5 percent of small entities. However, the Secretary certifies, under 5 U.S.C. 605(b), as enacted by the RFA (Pub. L. 96-354), that this rule will not have a significant impact on a substantial number of small entities. During a major disaster or emergency or PHE—such as COVID-19—in which ACF is not able to collect all data elements required for DRS determinations and must exercise the flexibility set forth in § 1304.17 of the HSPPS, ACF expects there to be fewer grantees in competition for the relevant competition cycles. Therefore, ACF does not expect there to be a significant impact on a substantial number of small entities. However, ACF invites comments on this IFR if any member of the public believes their business, organization, or governmental jurisdiction qualifies as a small entity and that the actions set forth in this IFR would have a significant economic impact on that small entity.

The Unfunded Mandates Reform Act of 1995 (UMRA), see 2 U.S.C. 1501 et seq., was enacted to avoid imposing unfunded federal mandates on state, local, and tribal governments, or on the private sector. Section 202 of UMRA requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any one year of $100 million in 1995 dollars, updated annually for inflation. In 2020, that threshold is approximately $156 million. This rule does not contain mandates that will impose spending costs on state, local, or tribal governments in the aggregate, or on the private sector, in excess of the threshold.

Section 654 of the Treasury and General Government Appropriations Act of 1999 requires federal agencies to determine whether a policy or regulation may negatively affect family well-being. If the agency determines a policy or regulation negatively affects family well-being, then the agency must prepare an impact assessment addressing seven criteria specified in the law. ACF believes it is not necessary to prepare a family policymaking assessment, see Public Law 105-277, because the action it takes in this interim final rule will not have any impact on the autonomy or integrity of the family as an institution. However, ACF invites public comment on whether the actions set forth in this interim final rule would have a negative effect on family well-being.

Executive Order 13132 requires federal agencies to consult with state and local government officials if they develop regulatory policies with federalism implications. Federalism is rooted in the belief that issues that are not national in scope or significance are most appropriately addressed by the level of government close to the people. This rule will not have substantial direct impact on the states, on the relationship between the federal government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this action does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

The Congressional Review Act (CRA) allows Congress to review “major” rules issued by federal agencies before the rules take effect, see 5 U.S.C. 802(a). The CRA defines a major rule as one that has resulted, or is likely to result, in (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, or innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets, see 5 U.S.C. Chapter 8. This action is not a major rule because it will not have such effect.

The Paperwork Reduction Act of 1995, Public Law 104-13, seeks to minimize government-imposed burden from information collections on the public. In keeping with the notion that government information is a valuable asset, it also is intended to improve the practical utility, quality, and clarity of information collected, maintained, and disclosed.

The Paperwork Reduction Act defines “information” as any statement or estimate of fact or opinion, regardless of form or format, whether numerical, graphic, or narrative form, and whether oral or maintained on paper, electronic, or other media (5 CFR 1320.3(h)). This includes requests for information to be sent to the government, such as forms, written reports and surveys, recordkeeping requirements, and third-party or public disclosures (5 CFR 1320.3(c)). This action does not include any new information collection requirements or changes to existing information collection requirements.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 is supplemental to, and reaffirms the principles, structures, and definitions governing regulatory review as established in, Executive Order 12866, emphasizing the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule (1) having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting 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) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any 1 year), and an “economically significant” regulatory action is subject to review by the Office of Management and Budget. ACF does not expect this to be a significant rule.

Executive Order 13771, entitled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017 (82 FR 9339, February 3, 2017) and requires that the costs associated with significant new regulations “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” This rulemaking is not expected to be subject to the requirements of Executive Order 13771 because it would result in no more than de minimis costs.

This regulatory action is necessary to provide ACF the flexibility to make determinations under the Head Start DRS, even in the absence of all required data, if this lack of data is due to a major disaster or emergency or PHE. The on-going PHE due to COVD-19 has prevented ACF from conducting on-site observations of grantees with the CLASS tool (an observational measure of the quality teacher-child interactions in the classroom), which is required by regulation. Data from these observations provide one piece of information for determining whether a Head Start grant can be renewed non-competitively or must compete with other potential applicants for continued funding. Several grants (60) whose five year project periods are ending in FY 2022 would typically have their CLASS reviews completed by ACF as part of the federal monitoring process sometime during FY 2020 or FY 2021. However, due to the PHE, ACF has not conducted CLASS reviews since March 2020 and has decided not to conduct any future CLASS reviews until at least the fall of 2021. So these 60 grants whose five year project periods are nearing completion do not yet have CLASS data as part of federal monitoring. Without this regulatory action, CLASS reviews for these 60 grants would have to be conducted in the fall of 2021, and several other decisions must be made by ACF after the CLASS reviews are completed, but before funding can be renewed either competitive or non-competitively. Therefore, having to conduct CLASS reviews for these grants so late in their project periods creates a strong risk of the project periods expiring before ACF can complete the grant renewal process for these 60 grants. This puts the Head Start services for enrolled children and families at great risk in the impacted service areas.

There are approximately 2,200 grants in Head Start. Absent this final rule, it is estimated that 60 or 3 percent of all Head Start grants will require CLASS reviews to be conducted in FY 2022 for renewal determinations that must also be made in FY 2022. CLASS reviews would need to be conducted to acquire the necessary data to make renewal determinations as described in the Head Start Act and the Head Start Program Performance Standards. Typically, CLASS reviews cost about $8,500 per grant to the federal government. This primarily includes the cost of travel, lodging, and wages for CLASS reviewers. The total baseline cost of the 60 CLASS reviews in FY 2022 is estimated at $510,000.

Across all Head Start grants, ACF estimates that approximately 13 percent of grants meet the CLASS condition of the DRS and are, therefore, required to compete for continued funding. If ACF applies this percentage to the 60 grants lacking CLASS data due to the COVID-19 pandemic, this results in an estimate of approximately 8 of these 60 grants that would be required to compete for continued funding due to low CLASS scores if they did have CLASS data available.

The cost for competition associated with completing a competitive application is estimated at $3,097 per applicant. This assumption includes 60 hours per competitive application at a cost of approximately $51.62 per hour in staff time (ACF multiplies an hourly wage of approximately $25.81 by two to account for fringe benefits). Applications would likely be completed by a combination of the Head Start Assistant Director and other managers in an early childhood program ( i.e., Child Development Manager or Family and Community Partnership Manager). The average hourly wage for these positions is based on the U.S. Bureau of Labor Statistics Job Code 11-9031. ACF multiplies $3,097 per applicant by sixteen to account for the eight incumbent grantees applying for funds as well as eight non-incumbent applicants for those service areas. This results in a baseline estimated cost of $49,552 for these eight grantees to complete competitive applications in FY 2022 if they did in fact have to compete, as well as eight additional applicants. The total baseline cost for conducting CLASS reviews for these 60 grants and for competition associated with 8 of these 60 grants is $559,552. With this final rule, these baseline costs would not apply and are therefore cost savings in this analysis.

With this final rule, those eight grantees that would have been required to compete in FY 2022 would instead need to complete an annual grant application for a new annual award. ACF assumes it takes approximately 33 hours of staff time to complete a non-competitive application. Using the same assumptions as above for hourly wage, ACF estimates it costs approximately $1,703 per grant to complete a non-competitive application. ACF multiplies this by eight grants, which results in a total cost of approximately $13,624 for these grantees to complete a non-competitive continuation application in FY 2022. Taking this cost into account, the total cost savings associated with this final rule is approximately $545,928. This includes cost savings to those entities that are not existing Head Start grantees as there would be no funding opportunity to which they would submit a competitive application.

A qualitative opportunity cost for this new rule is fewer opportunities for entities that are not existing Head Start grantees to be able to compete and potentially grow as an early childhood provider in their community, for the eight communities where grants were not designated for competition due to potentially low CLASS scores. There is also the qualitative cost of children continuing to be served by grantees which may be providing lower quality classroom learning environments that would have led to competition. However, ACF believes there is an added benefit of existing grantees still receiving DRS determinations in a timely manner and not experiencing undue stress around the status of their grant, particularly in the midst of COVID-19 when continuity of Head Start services for children and families is critically important. Additionally, these grantees would be able to continue to access and receive support from OHS through OHS' extensive training and technical assistance system, to facilitate continued quality improvement in classroom quality care and service provision for children and families.

ACF does not believe there will be a significant economic impact from this regulatory action since the flexibility in this interim final rule will only be exercised when necessary. A federally declared major disaster, emergency, or PHE that limits the ability of ACF to collect all data necessary to assess programs for DRS determinations, such as the COVID-19 PHE, are rare and, therefore, ACF anticipates this flexibility will rarely be exercised. ACF also anticipates that this flexibility will be exercised in more localized disasters in the future that affect a very small subset of grantees.

This RIA analyzes a one-year time horizon covering FY 2022. In the coming years, ACF anticipates very few grants being impacted by the provision in this interim final rule. However, ACF also recognizes it is difficult to predict future potential emergencies or disasters when ACF may need to again exercise the flexibility laid out in this regulatory provision, resulting in uncertainty around potential costs and cost savings. ACF invites public comment on the reasonableness of the assumptions in this regulatory impact analysis.

ACF conducts an average of five tribal consultations each year for those tribes operating Head Start and Early Head Start. The consultations are held in four geographic areas across the country: Southwest, Northwest, Midwest (Northern and Southern), and Eastern. The consultations are often held in conjunction with other tribal meetings or conferences, to ensure the opportunity for most of the 150 tribes that operate Head Start and Early Head Start programs are be able to attend and voice their concerns about issues regarding service delivery. ACF completes a report after each consultation, and then compiles a final report that summarizes the consultations and submits the report to the Secretary at the end of the year. ACF invites public comment on this interim final rule if there are concerns specific to Native communities and programs.

For the reasons discussed in the preamble, ACF amends 45 CFR part 1304 as follows:

The Gulf reef fish fishery, which includes red snapper, is managed under the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico (FMP). The FMP was prepared by the Gulf of Mexico Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

The final rule implementing Amendment 40 to the FMP established two components within the recreational sector fishing for Gulf red snapper: The private angling component, and the Federal for-hire component (80 FR 22422, April 22, 2015). Amendment 40 also allocated the red snapper recreational ACL (recreational quota) between the components and established separate seasonal closures for the two components. On February 6, 2020, NMFS implemented Amendments 50 A-F to the FMP, which delegated authority to the Gulf states (Louisiana, Mississippi, Alabama, Florida, and Texas) to establish specific management measures for the harvest of red snapper in Federal waters of the Gulf by the private angling component of the recreational sector (85 FR 6819, February 6, 2020). These amendments allocate a portion of the private angling ACL to each state, and each state is required to constrain landings to its allocation.

As described at 50 CFR 622.23(c), a Gulf state with an active delegation may request that NMFS close all, or an area of, Federal waters off that state to the harvest and possession of red snapper by private anglers. The state is required to request the closure by letter to NMFS, providing dates and geographic coordinates for the closure. If the request is within the scope of the analysis in Amendment 50A, NMFS publishes a notice in the Federal Register implementing the closure for the fishing year. Based on the analysis in Amendment 50A, Texas may request a closure of all Federal waters off the state to allow a year-round fishing season in state waters. As described at 50 CFR 622.2, “off Texas” is defined as the waters in the Gulf west of a rhumb line from 29°32.1′ N Lat., 93°47.7′ W long. to 26°11.4′ N Lat., 92°53′ W long., which line is an extension of the boundary between Louisiana and Texas.

On November 20, 2020, NMFS received a request from the Texas Parks and Wildlife Department (TPWD) to close the EEZ off Texas to the red snapper private angling component during the 2021 fishing year. Texas requested that the closure be effective from January 1 through May 31, 2021. NMFS has determined that this request is within the scope of analysis contained within Amendment 50A, which analyzed the potential impacts of a closure of all Federal waters off Texas when a portion of the Texas quota may still be landed and is consistent with the Reef Fish FMP. As explained in Amendment 50A, Texas intends to maintain a year-round fishing season in state waters during which a part of Texas' ACL could be caught.

Therefore, the red snapper recreational private angling component in the Gulf EEZ off Texas will close at 12:01 a.m., local time, on January 1, 2021, until 12:01 a.m., local time, on June 1, 2021. This closure applies to all private-anglers (those on board vessels that have not been issued a valid charter vessel/headboat permit for Gulf reef fish) regardless of which state they are from or where they intend to land. Once the EEZ off Texas opens on June 1, 2021, TPWD will continue to monitor private recreational landings, and if necessary, will request that NMFS again close the EEZ in 2021 to ensure the Texas regional management area ACL is not exceeded.

On and after the effective dates of these closures in the EEZ off Texas, the harvest and possession red snapper in the EEZ off Texas by the private angling component is prohibited and the bag and possession limits for the red snapper private angling component in the closed area is zero.

The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of Gulf red snapper and is consistent with the FMP, the Magnuson-Stevens Act, and other applicable laws.

This action is taken under 50 CFR 622.23(c) and is exempt from review under Executive Order 12866.

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

This action is based on the best scientific information available. The Assistant Administrator for NOAA Fisheries (AA) finds that the need to implement this action to close the Federal private angling component of the red snapper recreational sector in the EEZ off Texas constitute good cause to waive the requirements to provide prior notice and opportunity for public comment on this temporary rule pursuant to the authority set forth in 5 U.S.C. 553(b)(B), because such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule implementing the area closure authority and the state-specific private angling ACLs has already been subject to notice and comment, and all that remains is to notify the public of the closure. Such procedures are contrary to the public interest because a failure to implement the closure immediately may result an overage of the Texas ACL and less access to red snapper in state waters.