The 2020 Addendum (2 CFR part 200, subpart F, appendix XI) adds 5 new COVID-19 programs and updates 9 current programs for COVID-19 related compliance requirements. Consistent with the President's Management Agenda, Cross Agency Priority (CAP) goal number 8, “Results-Oriented Accountability for Grants,” Federal awarding agencies are encouraged to begin a paradigm shift in grants management from one heavy on compliance to a balanced approach that includes establishing measurable program and project goals and analyzing data to improve results. To that end, the 2020 Addendum continues the reduction of the compliance areas for auditor review in part 2, Matrix from a maximum of twelve to six, which was first implemented in the 2019 Supplement, and requires a review for performance reporting, where applicable.

The 2020 Addendum also includes an increased emphasis on transparency related requirements, including a requirement for auditor's to review the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting requirements for the COVID-19 programs included in this Addendum, where applicable. In addition, these requirements apply to all programs for audits with fiscal year-ending after September 30, 2020.

The purpose of this final rule is to revise the NRC's export and import regulations in part 110 of title 10 of the Code of Federal Regulations (10 CFR), “Export and Import of Nuclear Equipment and Material,” to include the United Kingdom (U.K.) as a country eligible to receive certain small quantities of special nuclear material under a general license, and to add the U.K. to the list of countries whose export license applications do not require Executive Branch or Commission level reviews for certain exports of source material or low-enriched uranium. In light of the impending U.K. departure from the European Union and European Atomic Energy Agency (EURATOM), this final rule is necessary to conform the NRC's regulations with U.S. Government foreign policy and preserve existing provisions for nuclear exports to the U.K., upon the entry into force of the new civil nuclear cooperation agreement between the U.S. and the U.K.

The U.S. Department of State has requested that the NRC update its regulations in 10 CFR part 110 to meet the commitment made by the U.S. Government to the U.K. Government to prepare for entry into force of the new U.S.-U.K. 123 Agreement. The two Governments plan to bring the U.S.-U.K. 123 Agreement into force when the U.K. is no longer covered by the U.S. civil nuclear cooperation agreement with the European Atomic Energy Community (EURATOM). During the negotiations of the U.S.-U.K. 123 Agreement, the U.S. Government committed to take the necessary steps to ensure a seamless continuation of close nuclear cooperation with the U.K. Fulfilling this commitment will require current nuclear export regulatory and policy understandings to remain in place for U.S. companies exporting nuclear material to the U.K. after entry into force of the U.S.-U.K. 123 Agreement. As a result, the U.S. Department of State requested that the NRC amend §§ 110.21(b)(3), 110.40(b)(3), and 110.41(a)(6) to meet a U.S. Government foreign policy objective and to provide confidence that the regulatory status quo between the U.K. and the U.S. will be maintained.

The NRC has determined that revising §§ 110.21(b)(3), 110.40(b)(3), and 110.41(a)(6) to include the U.K. after EURATOM in the requirements for these sections, is consistent with current U.S. law and policy, and will pose no unreasonable risk to the public health and safety or to the common defense and security of the U.S. Further, the revisions are essential to preserve the current provisions for export to the U.K. once the U.S.-U.K. 123 Agreement enters into force.

This final rule revises §§ 110.21(b)(3), 110.40(b)(3), and 110.41(a)(6) to include the U.K. after EURATOM in the requirements for these sections.

Because this rule involves a foreign affairs function of the U.S., the notice and comment provisions of the Administrative Procedures Act do not apply (5 U.S.C. 553(a)(1)), and good cause exists to make this rule immediately effective upon publication. The effective date for those entities who receive actual notice of this rule is the date of receipt of this rule.

The NRC has determined that this final rule is the type of action described in 10 CFR 51.22(c)(1), which categorically excludes from environmental review any amendments to 10 CFR part 110. Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this rule.

This final rule does not contain new or amended information collection requirements that are subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Existing requirements were approved by the Office of Management and Budget (OMB) under approval number 3150-0036.

The NRC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the document requesting or requiring the collection displays a currently valid OMB control number.

This final rule revises §§ 110.21(b)(3), 110.40(b)(3), and 110.41(a)(6) to include the U.K. after EURATOM, and is necessary to maintain the existing regulatory status quo for nuclear exports to the U.K. upon the entry into force of a new U.S.-U.K. 123 Agreement. The addition of the U.K. in § 110.21(b)(3) will continue to allow for the return of uranium-235, in the form of uranium hexafluoride heels in cylinders, to suppliers in the U.K. under an NRC general license. Adding the U.K. in § 110.40(b)(3) preserves the current regulation that excludes Commission review for exports of source material or low-enriched uranium to EURATOM or Japan for enrichment up to 5 percent in the isotope uranium-235. Lastly, adding the U.K. in § 110.41(a)(6) preserves the current regulation that excludes Executive Branch review for exports of source material or low-enriched uranium to EURATOM or Japan for enrichment up to 5 percent in the isotope uranium-35. There is no alternative to amending the regulations for the export and import of nuclear equipment and material. This final rule is expected to have no changes in the information collection burden or cost to the public.

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883).

The NRC has determined that a backfit analysis is not required for this rule, because these amendments do not include any provisions that would impose backfits as defined in 10 CFR chapter I.

This final rule is a rule as defined in the Congressional Review Act (5 U.S.C. 801-808). However, the Office of Management and Budget has not found it to be a “major rule” as defined by that act.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting the following amendments to 10 CFR part 110:

This document announces changes to the maximum amount of each civil money penalty (CMP) within the OCC's jurisdiction to administer to account for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (the 1990 Adjustment Act), 1 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Adjustment Act). 2 Under the 1990 Adjustment Act, as amended, Federal agencies must make annual adjustments to the maximum amount of each CMP they administer. The Office of Management and Budget (OMB) is required to issue guidance to Federal agencies no later than December 15 of each year providing an inflation adjustment multiplier ( i.e., the inflation adjustment factor agencies must use) applicable to CMPs assessed in the following year. The agencies are required to publish their CMPs, adjusted pursuant to the multiplier provided by OMB, by January 15 of the applicable year.

To the extent an agency has codified a CMP amount in its regulations, the agency would need to update that amount by regulation. However, if an agency has codified the formula for making the CMP adjustments, then subsequent adjustments can be made solely by notice. 3 In 2018, the OCC published a final regulation to remove the CMP amounts from its regulations, while updating those amounts for inflation through the notification process. 4

On December 23, 2020, the OMB issued guidance to affected agencies on implementing the required annual adjustment, which included the relevant inflation multiplier. 5 The OCC has applied that multiplier to the maximum CMPs allowable in 2020 for national banks and Federal savings associations as listed in the 2020 CMP notification  6 to calculate the maximum amount of CMPs that may be assessed by the OCC in 2021. 7 There were no new statutory CMPs administered by the OCC during 2020.

The following charts provide the inflation-adjusted CMPs for use beginning on January 1, 2021, pursuant to 12 CFR 19.240(b) and 109.103(c)(2) for conduct occurring on or after November 2, 2015:

On October 11, 2018, the president signed into law the Orrin G. Hatch-Bob Goodlatte Music Modernization Act, H.R. 1551 (“MMA”). 1 Title I of the MMA, the Musical Works Modernization Act, substantially modifies the compulsory “mechanical” license for making and distributing phonorecords of nondramatic musical works under 17 U.S.C. 115. 2 It does so by switching from a song-by-song licensing system to a blanket licensing regime that becomes available on January 1, 2021 (the “license availability date”), and is administered by a mechanical licensing collective (“MLC”) designated by the Copyright Office (“Office”). 3 Among other things, the MLC is responsible for “[c]ollect[ing] and distribut[ing] royalties” for covered activities, “[e]ngag[ing] in efforts to identify musical works (and shares of such works) embodied in particular sound recordings and to identify and locate the copyright owners of such musical works (and shares of such works),” and “[a]dminister[ing] a process by which copyright owners can claim ownership of musical works (and shares of such works).”  4 It also must “maintain the musical works database and other information relevant to the administration of licensing activities under [section 115].”  5

The MMA enumerates several regulations that the Office is specifically directed to promulgate to govern the new blanket licensing regime, and Congress invested the Office with “broad regulatory authority”  6 to “conduct such proceedings and adopt such regulations as may be necessary or appropriate.”  7 The MMA specifically directs the Office to promulgate regulations related to the MLC's creation of a database to publicly disclose musical work ownership information and identify the sound recordings in which the musical works are embodied. 8 As discussed more below, the statute requires the public database to include various types of information, depending upon whether a musical work has been matched to a copyright owner. 9 For both matched and unmatched works, the database must also include “such other information” “as the Register of Copyrights may prescribe by regulation.”  10 The database must “be made available to members of the public in a searchable, online format, free of charge,”  11 and its contents must also be made available “in a bulk, machine-readable format, through a widely available software application,” to certain parties, including blanket licensees and the Office, free of charge, and to “[a]ny other person or entity for a fee not to exceed the marginal cost to the mechanical licensing collective of providing the database to such person or entity.”  12

In addition, the legislative history contemplates that the Office will “thoroughly review[ ]”  13 policies and procedures established by the MLC and its three committees, which the MLC is statutorily bound to ensure are “transparent and accountable,”  14 and promulgate regulations that “balance[ ] the need to protect the public's interest with the need to let the new collective operate without over-regulation.”  15 Congress acknowledged that “[a]lthough the legislation provides specific criteria for the collective to operate, it is to be expected that situations will arise that were not contemplated by the legislation,” and that “[t]he Office is expected to use its best judgement in determining the appropriate steps in those situations.”  16 Legislative history further states that “[t]he Copyright Office has the knowledge and expertise regarding music licensing through its past rulemakings and recent assistance to the Committee[s] during the drafting of this legislation.”  17 Accordingly, in designating the MLC as the entity to administer the blanket license, the Office stated that it “expects ongoing regulatory and other implementation efforts to . . . extenuate the risk of self-interest,” and that “the Register intends to exercise her oversight role as it pertains to matters of governance.”  18 Finally, as detailed in the Office's prior notifications and notice of proposed rulemaking, while the MMA envisions the Office reasonably and prudently exercising regulatory authority to facilitate appropriate transparency of the collective and the public musical works database, the statutory language as well as the collective's structure separately include elements to promote disclosure absent additional regulation. 19

Against that backdrop, on September 24, 2019, the Office issued a notification of inquiry (“September NOI”) seeking public input on a variety of aspects related to implementation of title I of the MMA, including issues regarding information to be included in the public musical works database ( e.g., what additional categories of information might be appropriate to include by regulation), as well as the usability, interoperability, and usage restrictions of the database ( e.g., technical or other specific language that might be helpful to consider in promulgating regulations, discussion of the pros and cons of applicable standards, and whether historical snapshots of the database should be maintained to track ownership changes over time). 20 In addition, the September NOI sought public comment on any issues that should be considered relating to the general oversight of the MLC. 21

In response, many commenters emphasized the importance of transparency of the public database and the MLC's operations, and urged the Office to exercise expansive and robust oversight. 22 Given these comments, on April 22, 2020, the Office issued a second notification of inquiry, 23 and on September 17, 2020, the Office issued a notice of proposed rulemaking (“NPRM”), 24 both soliciting further comment on these issues. In response to the NPRM, the comments overall were positive about the proposed rule, expressing appreciation for the Office's responsiveness to stakeholder comments. 25

Having reviewed and considered all relevant comments received in response to both notifications of inquiry and the NPRM, and having engaged in transparent ex parte communications with commenters, the Office is issuing an interim rule regarding the categories of information to be included in the public musical works database, as well as the usability, interoperability, and usage restrictions of the database. The Office is also issuing interim regulations related to ensuring appropriate transparency of the mechanical licensing collective itself. Except as otherwise discussed below, the proposed rule is being adopted for the reasons discussed in the NPRM. The Office has determined that it is prudent to promulgate this rule on an interim basis so that it retains some flexibility for responding to unforeseen complications once the MLC launches the musical works database. 26 In doing so, the Office emphasizes that adoption on an interim basis is not an open-ended invitation to revisit settled provisions or rehash arguments, but rather is intended to allow necessary modifications to be made in response to new evidence or unforeseen issues, or where something is otherwise not functioning as intended.

The interim rule is intended to grant the MLC flexibility in various ways instead of adopting requirements that may prove overly prescriptive as the MLC administers the public database. For example, and as discussed below, the interim rule grants the MLC flexibility in the following ways:

• To label fields in the public database, as long as the labeling takes into account industry practice and reduces the likelihood of user confusion.

• To include non-confidential information in the public database that is not specifically identified by the statute but the MLC finds useful, including information regarding terminations, performing rights organization (“PRO”) affiliation, and DDEX Party Identifier (DPID). 27

• To allow songwriters, or their representatives, to have songwriter information listed anonymously or pseudonymously.

• To select the most appropriate method for archiving and maintaining historical data to track ownership and other information changes in the public database.

• To select the method for displaying data provenance information in the public database.

• To determine the precise disclaimer language for alerting users that the database is not an authoritative source for sound recording information.

• To develop reasonable terms of use for the public database, including restrictions on use.

• To block third parties from bulk access to the public database based on their attempts to bypass marginal cost recovery or other unlawful activity with respect to the database.

• To determine the initial format in which the MLC provides bulk access to the public database, with a six-month extension to implement bulk access through application programming interfaces (“APIs”).

• To determine how to represent processing and distribution times for royalties disclosed in the MLC's annual report.

The MLC must establish and maintain a free-of-charge public database of musical work ownership information that also identifies the sound recordings in which the musical works are embodied, 28 a function expected to provide transparency across the music industry. 29 The Office appreciates that the MLC “is working on launching the public search window on the website that will allow members of the public to search the musical works database in January [2021],” and that the MLC “anticipates launching the bulk data program to members of the public in January”  30 (discussed more below).

As noted in the NPRM, the statute and legislative history emphasize that the database is meant to benefit the music industry overall and is not “owned” by the collective itself. 31 The MLC acknowledges this, stating that “the data in the public MLC musical works database is not owned by the MLC or its vendor,” and that “data in this database will be accessible to the public at no cost, and bulk machine-readable copies of the data in the database will be available to the public, either for free or at marginal cost, pursuant to the MMA.”  32 The Alliance for Recorded Music (“ARM”), Recording Academy, and Songwriters Guild of America (“SGA”) & Society of Composers & Lyricists (“SCL”) praised the Office for addressing the issue of data ownership, with ARM “encourag[ing] the Office to make this point explicit in the regulations.”  33 In light of these comments, and the statute and legislative history, the interim rule confirms that data in the public musical works database is not owned by the mechanical licensing collective or any of its employees, agents, consultants, vendors, or independent contractors.

The statute requires the MLC to include various types of information in the public musical works database. For musical works that have been matched ( i.e., the copyright owner of such work (or share thereof) has been identified and located), the statute requires the public database to include:

In other words, the statute requires the database to include varying degrees of information regarding the musical work copyright owner (depending on whether the work is matched), but for both matched and unmatched works, identifying information for sound recordings in which the work is embodied ( i.e., sound recording name, featured artist, sound recording copyright owner, producer, ISRC, and other information commonly used to assist in associating sound recordings with musical works). For both matched and unmatched works, the Register of Copyrights may prescribe inclusion of additional fields by regulation.”  37 The “Register shall use its judgement to determine what is an appropriate expansion of the required fields, but shall not adopt new fields that have not become reasonably accessible and used within the industry unless there is widespread support for the inclusion of such fields.”  38

In considering whether to prescribe the inclusion of additional fields beyond those statutorily required, the Office focused on fields that the record indicates would advance the goal of the public database: Reducing the number of unmatched musical works by accurately identifying musical work copyright owners so they can be paid what they are owed under the section 115 statutory license. 39 At the same time, the Office is mindful of the MLC's corresponding duties to keep confidential business and personal information secure and inaccessible; for example, data related to computation of market share is contemplated by the statue as sensitive and confidential. 40 Recognizing that a robust musical works database may contain many fields of information, the interim rule establishes a floor of required information that users can reliably expect to access in the public database, while providing the MLC with flexibility to include additional data fields that it finds helpful. 41 Stakeholder comments regarding the types of information to include (or exclude) are discussed by category below.

I. Background

The purpose of this final rule is to adopt a new standard for certain transactions concerning Part D-covered drugs prescribed to Part D-eligible individuals under the Part D e-prescribing program. Under this final rule, Part D plan sponsors will be required to support version 2017071 of the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard for four electronic Prior Authorization (ePA) transactions, and prescribers will be required to use that standard when performing ePA transactions for Part D-covered drugs they wish to prescribe to Part D-eligible individuals. Part D plans, as defined in 42 CFR 423.4, include Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug Plans (MA-PDs); Part D sponsor, as defined in 42 CFR 423.4, means the entity sponsoring a Part D plan, MA organization offering a MA-PD plan, a Programs of All-Inclusive Care for the Elderly (PACE) organization sponsoring a PACE plan offering qualified prescription drug coverage, and a cost plan offering qualified prescription drug coverage. The ePA transaction standard will provide for the electronic transmission of information between the prescribing health care professional and Part D plan sponsor to inform the sponsor's determination as to whether or not a prior authorization (PA) should be granted. The NCPDP SCRIPT standard version 2017071 was adopted as a Part D e-prescribing program standard for certain defined transactions in the April 16, 2018 final rule (83 FR 16440) titled “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program” that became effective June 15, 2018.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 104-191) was enacted on August 21, 1996. Title II, Subtitle F, of HIPAA requires covered entities—health plans, health care providers that conduct covered transactions, and health care clearinghouses—to use the standards HHS adopts for certain electronic transactions. The standards adopted by HHS for purposes of HIPAA are in regulations at 45 CFR part 162.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) was enacted on December 8, 2003. It amended Title XVIII of the Social Security Act (the Act) by redesignating Part D as Part E and inserting a new Part D to establish a voluntary prescription drug benefit program. As part of that program, section 1860D-4(e) of the Act, as added by the MMA, required the adoption of Part D e-prescribing standards for electronic prescriptions and prescription-related transactions between Part D plan sponsors, providers, and pharmacies. The Secretary's selection of standards is informed by the National Committee on Vital and Health Statistics (NCVHS), an advisory committee that gives advice to the Secretary in accordance with the Federal Advisory Committee Act, including regarding implementation of the administrative simplification provisions of HIPAA. Under section 1860D-4(e)(4)(B) of the Act, NCVHS develops recommendations for Part D e-prescribing standards, in consultation with specified groups of organizations and entities. These recommendations are then taken into consideration when developing, adopting, recognizing, or modifying Part D e-prescribing standards. The statute further requires that the selection of standards be designed, to the extent practicable, so as not to impose an undue administrative burden on prescribers or dispensers, but to be compatible with standards established under Part C of title XI of the Act (the HIPAA standards), comport with general health information technology standards, and permit electronic exchange of drug labeling and drug listing information maintained by the Food and Drug Administration and the Library of Medicine.

The standards adopted by CMS for purposes of the Part D e-prescribing program are in regulations at 42 CFR 423.160. Part D plan sponsors are required to support the Part D e-prescribing program transaction standards, and providers and pharmacies that conduct electronic transactions for which a program standard has been adopted must do so using the adopted standard. (For additional information about the MMA program authority, see the February 4, 2005 proposed rule (70 FR 6256).)

The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (Pub. L. 115-271), hereinafter referred to as the “SUPPORT Act,” was enacted on October 24, 2018. Section 6062 of the SUPPORT Act amended section 1860D-4(e)(2) of the Act to require the adoption of transaction standards for the Part D e-prescribing program to ensure secure ePA request and response transactions between prescribers and Part D plan sponsors no later than January 1, 2021. Such transactions are to include an ePA request transaction for prescribers seeking an ePA from a Part D plan sponsor for a Part D-covered drug for a Part D-eligible individual, as well as an ePA response transaction for the Part D plan sponsor's response to the prescriber. A facsimile, a proprietary payer portal that does not meet standards specified by the Secretary or an electronic form are not treated as electronic transmissions for the purposes of ePA requests. The ePA standards adopted under this authority are to be adopted in consultation with the NCPDP or other standards development organizations the Secretary finds appropriate, as well as other stakeholders.

Finally, the SUPPORT Act also authorized the adoption of ePA transaction standards for Part D-covered drugs prescribed to Part D-eligible individuals “notwithstanding” any other provision of law.

In 2000, the Secretary adopted HIPAA transaction standards for the “referral certification and authorization transaction”. The term “referral certification and authorization transaction” is defined at 45 CFR 162.1301 as the transmission of any of the following: (1) A request from a health care provider to a health plan for the review of health care to obtain an authorization for the health care; (2) a request from a health care provider to a health plan to obtain authorization for referring an individual to another health care provider; and (3) a response from a health plan to a health care provider to a request described in (1) or (2). The first HIPAA standard adopted for this transaction was version 4010 of the X12 278 (65 FR 50371, August 17, 2000). In 2003, the Secretary adopted another standard, the NCPDP version 5.1, for retail pharmacy drug referral certification and authorization transactions, and specified that version 4010 of the X12 278 was to be used only for dental, professional, and institutional referral certification and authorization transactions. (For more detailed information, see the February 20, 2003 Federal Register (68 FR 8398).) Still, as of 2003, the Secretary had not adopted a standard for ePA for medications specifically.

In 2004, NCPDP formed a multi-industry, multi-Standards Development Organization (SDO) ePA Task Group to evaluate existing ePA standards and promote standardized ePA, with a focus on the medication context. The Task Group considered the X12 278 standard, but determined that there were certain gaps in the X12 278 standard that made the standard difficult to use for ePA for medications, including that the standard was unable to support attachments for PA determinations, did not incorporate free text in certain fields, and did not at the time allow functionality for real-time messaging. As a result of these findings, the Task Group wrote a letter to the HHS Secretary stating that the X12 278 standard offered limited support for ePA for medications.

On January 16, 2009, the Secretary adopted later versions of the HIPAA transaction standards, requiring NCPDP Telecommunications D.0 instead of NCPDP 5.1, and version 5010 instead of version 4010 of the X12 278 for referral certification and authorization transactions (74 FR 3326). These standards are specified at 45 CFR 162.1302(b)(2).

In the meantime, the industry continued to work to develop and test alternative ePA transaction standards for use in the medication context. Such work led NCPDP to develop what would ultimately become its first standard to support ePA. In a May 15, 2014, letter to the HHS Secretary, NCVHS stated that they had received a letter from the NCPDP recommending its SCRIPT Standard Version 2013101 as a standard for carrying out medication ePA transactions. (For more information see, https://ncvhs.hhs.gov/wp-content/uploads/2014/05/140515lt2.pdf .) In support of this recommendation, NCVHS reported that NCPDP investigators tasked with reviewing the X12 278 standards (the 278 v4010 or v5010) for medication ePA transactions found impediments. These impediments were grounded in the standards having been designed for requests for review and corresponding responses for the ePA of health care services (such as for procedures/services and durable medical equipment), resulting in an inability to facilitate medication ePA. NCPDP also noted the lack of widespread use of the X12 278 transaction in the medication ePA context as evidence of its inadequacy for this purpose.

Despite these findings and NCPDP recommendation to NCVHS, we did not pursue proposing the NCPDP SCRIPT Standard Version 2013101 as a Part D eRx program standard for medication ePA transactions because it was contrary to the HIPAA requirements, which continued to require use of the X12 278 standard. Similarly, when NCPDP wrote to CMS on May 24, 2017 to recommend the adoption of its NCPDP SCRIPT Standard Version 2017071, we were unable to consider it for the Part D e-Rx program due to the HIPAA transaction standards in effect at that time.

Of note, the Part D e-Rx program's authorizing statute requires the selection of Part D standards that are compatible with the HIPAA standards. See section 1860D-4(e)(2)(C) of the Act. However, given the new authority under the SUPPORT Act, we believe we now have authority to adopt Part D eRx ePA transaction standards “notwithstanding” any other provision of law, if such proposals are framed in consultation with stakeholders and the NCPDP or other standard setting organizations the Secretary finds appropriate. See section 1860D-4(e) of the Act, as amended by section 6062 of the SUPPORT Act. We believe that this provision explicitly authorizes us to require the use of an ePA standard in the Part D context that is different from the HIPAA standard, as long as it is for use in the ePA of Part D-covered drugs prescribed to a Part D-eligible individuals.

As previously described, Part D plan sponsors are required to establish electronic prescription drug programs that comply with the e-prescribing standards adopted under the Part D e-prescribing program's authorizing statute. There is no requirement that prescribers or dispensers implement eRx. However, prescribers and dispensers who electronically transmit and receive prescription and certain other information regarding covered drugs prescribed for Medicare Part D-eligible beneficiaries, directly or through an intermediary, are required to comply with any applicable standards that are in effect.

As of January 1, 2020, prescribers and dispensers are required to use the NCPDP SCRIPT standard, Implementation Guide Version 2017071, for the communication of the same prescription or prescription-related information between prescribers and dispensers for the transactions for which prior versions of the NCPDP SCRIPT standard were adopted, as well as a handful of new transactions named at § 423.160(b)(2)(iv). For more information, see the April 16, 2018 final rule (83 FR 16635) and for a detailed discussion of the regulatory history of the Part D e-prescribing standards see the November 28, 2017 proposed rule (82 FR 56437).

While not currently adopted as part of the Part D eRx standard, the NCPDP SCRIPT standard version 2017071 includes 4 transaction standards that will enable prescribers to initiate, request, and review the 4 response transactions from Part D plan sponsors at the time of the patient's visit. These eight response transactions include: The PA initiation request/response, PA request/response, PA appeal request/response, and PA cancel request/response. As noted previously, historically we were unable to name this ePA transaction standard as a Part D e-prescribing program standard. Prior to the passage of the SUPPORT Act, the Part D program was required to adopt standards that were compatible with the HIPAA standards, and HIPAA covered entities are currently required to use the X12 278 to conduct referral certification and authorization transactions between health plans and health care providers.

All Part D plans, as defined under § 423.4, including PDPs, MA-PDs, PACE Plans offering qualified prescription drug coverage, or Cost Plans offering qualified prescription drug coverage, may use approved PA processes to ensure appropriate prescribing and coverage of Part D-covered drugs prescribed to Part D-eligible individuals. We review all PA criteria as part of the formulary review process. In framing our PA policies, we encourage PDP and MA-PD sponsors to consistently utilize PA for drugs prescribed for non-Part D covered uses and to ensure that Part D drugs are only prescribed when medically appropriate. Non-Part D covered uses may be indicated when the drug is frequently covered under Parts A or B as prescribed and dispensed or administered, is otherwise excluded from Part D coverage, or is used for a non-medically accepted indication. (For more information, see the Medicare Prescription Drug Manual, chapter 6, section 30.2.2.3.) Part D sponsors must submit to CMS utilization management requirements applied at point of sale, including PA.

We may also approve PA for prescriptions when the Part D plan desires to manage drug utilization, such as when step therapy is required, when it needs to establish whether the utilization is a continuation of existing treatment that should not be subject to the step therapy requirements, or to ensure that a drug is being used safely or in a cost-effective manner. Formulary management decisions must be based on scientific evidence and may also be based on pharmaco-economic considerations that achieve appropriate, safe, and cost-effective drug therapy.

The PA process has historically been handled via facsimile exchange of information or telephone call, and only recently via payer-specific web portals. However, stakeholders testifying to NCVHS generally agree that there is a need to move to a user-friendly, real-time ePA for use by prescribers. Minutes from NCVHS meetings can be accessed at https://ncvhs.hhs.gov/meetings-meeting/all-past-meetings/. Therefore, we believe the adoption of an ePA standard for the Part D eRx program will improve patient access to required medications.

In order to meet the SUPPORT Act's mandate to adopt an ePA transaction standard for the Part D-covered drugs prescribed to Part D-eligible individuals, CMS identified ePA transaction standards currently available for use by pharmacies and prescribers. These included the X12 278 and NCPDP Telecommunications D.0 standards, the NCPDP SCRIPT standard version 2017071, and earlier versions of the NCPDP SCRIPT standard. We quickly ruled out the use of older NCPDP SCRIPT standards based on the improvements incorporated in the current HIPAA Administrative Simplification transaction standards and our assessment of the enhanced functionality available in the NCPDP SCRIPT standard version 2017071.

Then we considered the needs of the Part D eRx program; the functionalities offered by the remaining two sets of standards; NCVHS recommendations, stakeholder recommendations based on their experience developing, vetting, evaluating, revising, and using the standards constructed by the respective Standards Development Organizations (SDOs) including NCPDP, the burden on stakeholders to use the standards, the security offered by the standards; and the current EHR capabilities of the industry in order to estimate the potential burden each standard will impose if it were to be adopted in the Part D context.

The NCPDP Telecommunications D.0 standard was designed to be a standard for insurance companies to approve claims, and, to our knowledge, is only used in “pharmacy to plan” transactions. We found that it does not include all of the content fields that may be relevant to ePA for medications, and had understood that it does not have the ability to support transmission of information in real time. Then we considered the X12 278 standard. The X12 278 is already used as the HIPAA standard for referral certification and PA for dental, professional and institutional transactions, and retail pharmacy drugs transactions, respectively.

Based on review of NCPDP's testimony and the letters received from NCVHS, we had found that the NCPDP and its participant organizations have historically concluded (and presented to NCVHS via testimony at hearings) that the X12 278 standard is not adequate to enable ePA in the medication e-prescribing context because it does not support “real-time” medication e-prescribing, meaning a prescriber seeking an ePA determination during the patient encounter. We understood that this was due to the content logic of the standard not having the technical capabilities to allow for next question logic, which allows the prescriber to determine medication alternatives and determine within minutes if the medication will be authorized or if a coverage determination is required. In addition, we found that the fields, transaction messaging, and software functioning were not structured to include information relevant to ePA, and contained mandatory questions that were unnecessary for medication ePA. Unfortunately, we also found that prescribers are unable to customize these fields as may be needed for medication ePA.

These findings were largely based on NCPDP's 2016 written testimony to NCVHS, which is available via this web link: https://www.ncvhs.hhs.gov/wp-content/uploads/2016/01/Part-2-Attachments-NCPDP-WrittenOnly.pdf. The NCPDP testimony urged the exemption of medication transactions from the X12 278 standard. The testimony also advocated for NCPDP's May 24, 2017 recommendation to adopt the NCPDP SCRIPT Standard Version 2017071 for ePA transactions in the HIPAA context, with a 24-month implementation time period due to the extensive coding required by health IT developers and Part D plans to implement the change.

Although NCPDP's recommendation was to adopt this standard for all HIPAA transactions, the Department did not elect to make the suggested changes to the HIPAA Administrative Simplification transaction standards. Based on conversations with the industry, our own assessment of the standard, and under the authority provided by Congress to require the use of a standard for Part D ePA notwithstanding any other provision of law, we concluded that the potential benefits of adopting user-friendly ePA for the Part D eRx program outweigh any difficulties that may arise by virtue of Part D using a different standard than the rest of the industry.

More specifically, we concluded that the NCPDP SCRIPT standard version 2017071 would support an electronic version of today's PA process by providing standardized information fields that are relevant for medication use, mandatory questions, transaction messaging, and standardized ePA data elements and vocabulary for exchanging the PA questions and answers between prescribers and payers, while also allowing the payers to customize the wording of the questions using free form fields. Although the X12 278 standard has standard information fields, mandatory questions, transaction messaging, and standardized data element and values, we believed those fields were more relevant to use in dental, professional, and institutional requests for review and response, and would not be conducive to medication ePA. Since the X12 278 standard does not allow payers to customize the wording of questions, we believe it would be difficult for parties to decide how to fill out the fields. In contrast, we found that NCPDP SCRIPT Standard version 2017071 was specifically designed to support medication ePA. The standard supports features that minimize what the prescriber is asked, creating a customized experience based on earlier answers or data automatically pulled by their EHR system. These features would reduce the amount of time a prescriber or their staff spend reviewing and responding to the ePA questions. We understood that this functionality exists in most EHR systems, and can be customized based on what information is requested by the plans. We found great value in this potential to automate the collection of data required for ePA from data available within most EHR systems.

Furthermore, unlike the X12 278 standard, NCPDP SCRIPT standard version 2017071 supports solicited and unsolicited models. A solicited model occurs when the prescriber notifies the payer that they wish to initiate the PA process to determine if an authorization is needed for the patient and their desired medication. The prescriber requests guidance as to what information will be required for an ePA request for a particular patient and medication. The payer then responds either with a description of the information required, or an indication that a PA is not required for that patient and medication. An unsolicited model can be used when the information generated in this first interchange of the solicited model is not required. In such a case, the prescriber presumes or knows that an authorization will be required based on past experience or other knowledge, anticipates what the payer needs, and submits the needed information.

We also found that while X12 278 uses Electronic Data Interchange (EDI) syntax, the NCPDP SCRIPT standard version 2017071 uses XML syntax. XML helps to ensure the security of transactions through the encryption of personal health information and through use of XML transaction processing. XML is a newer syntax that provides for an easier interaction among different formats and is more easily readable between disparate systems and when system issues arise. By contrast, EDI is an older syntax more commonly used when there are fewer companies that conduct standard interactions among one another.

Based on this evaluation of the candidate standards, coupled with the recommendations from NCPDP, CMS concluded that the NCPDP SCRIPT standard version 2017071 was the most appropriate standard to propose for the Part D eRx program.

We explicitly recognized that this final rule would not change the ePA transaction standards that will be used outside of the Part D context. We did not believe that it would be problematic to use one standard for Part D and another standard outside of Part D, because we believed that the industry was already equipped to use different standards for different health plans and programs.

Finally, we considered whether adopting the NCPDP SCRIPT standard version 2017071 for Part D ePA would create any difficulties if an individual had multiple forms of drug coverage or wished to pay cash for a prescription. The SUPPORT Act specifies that the adopted standard shall be applicable for ePA of Part D-covered drugs prescribed to Part D-eligible individuals, but it stops short of requiring that the prescribed drug be paid for by the Part D plan. Thus, even if a prescriber were to use the NCPDP SCRIPT standard version 2017071 to seek Part D ePA, the beneficiary's right to pay for the drug directly, or to use non-Part D coverage to pay for the drug would be unaffected. However, we noted that the prescriber may not use the NCPDP SCRIPT standard version 2017071 to seek ePA with non-Part D plans. We expected that their EHR's eRx function would be capable of using the appropriate HIPAA standard or that they may use alternative means to seek PA outside of the Part D context. Furthermore, where a patient has both a Part D plan and a supplementary payer, the NCPDP SCRIPT standard version 2017071 could be used to process the Part D ePA transactions in real time, with the subsequent claims processing transactions made in the usual manner if the prescription is filled. Thus, we believed our proposal would not be overly burdensome for regulated parties, even if beneficiaries seek to use their non-Part D coverage or elect to self-pay.

However, in recognition of patient rights, we also noted that while the prescriber can use the NCPDP SCRIPT standard version 2017071 for all Part D-covered drugs prescribed to Part D-eligible individuals, it should refrain from doing so in instances in which the patient specifically requests that the Part D benefits not be accessed.

As a result of these observations and our understanding that most of the industry is able to support NCPDP SCRIPT standard version 2017071 using their current EHRs, we believed that requiring plans to support, and prescribers to use the NCPDP SCRIPT standard version 2017071 ePA transactions when prescribing Part D-covered drugs to Part D-eligible individuals will not impose an undue administrative burden on plans, prescribers or dispensers. Therefore, based on its inherent features designed to accommodate prescriptions, we believed that the NCPDP SCRIPT standard version 2017071, which includes the following ePA transaction capabilities, would be the best available option to support ePA between prescribers and payers for Part D covered drugs prescribed to Part D-eligible individuals:

We believed finalization of the ePA transaction proposals would enable the electronic presentation of ePA questions and responses using secure transactions.

The SUPPORT Act states that the Secretary must adopt, and a Part D sponsor's electronic prescription program must implement the adopted ePA by January 1, 2021. As of January 1, 2020, plans will already be required to use the NCPDP SCRIPT 2017071 standard for certain Part D-specified transactions, so we believed that giving plans an additional year to add ePA to that list of other NCPDP SCRIPT 2017071 transactions would not be overly burdensome and would ensure that the SUPPORT Act was implemented as required.

In addition, the SUPPORT Act, allows us to finalize the adoption of an ePA standard for Part D-covered drugs to Part D-eligible individuals notwithstanding any other provision of law. Furthermore, we noted our belief that our proposal, if finalized, being later in time, more specific, and authorized by the SUPPORT Act, would prevail in a conflict of law analysis.

Therefore, we proposed adding § 423.160(b)(7) which would require Part D plans' support the noted NCPDP SCRIPT standard version 2017071 ePA transactions beginning on January 1, 2021, and that prescribers use that standard when conducting ePA for Part D-covered drugs prescribed to Part D-eligible individuals by the same date. This applies to the following list of ePA transactions:

We welcomed comments on the proposed adoption of the NCPDP SCRIPT standard version 2017071 for these ePA transactions for Part D covered drugs prescribed to Part D eligible individuals. We also solicited comments regarding the impact of the proposed transactions and the proposed effective date on industry and other interested stakeholders, including whether the implementation of these NCPDP SCRIPT standard version 2017071 ePA transactions for use by prescribers and plans in the Part D program would impose an additional burden on the industry as a whole. We were also interested in hearing input as to whether implementation of the proposed transactions would constitute a significant change for Part D sponsors, such that a January 1, 2021 implementation date would not be feasible. We also sought comment on strategies to mitigate burden in order to support successful adoption of this policy, should it be finalized. We also sought comment on any additional ways that we can support plans if they were to be required to transition to the ePA standard by the proposed 2021 deadline. Finally, we solicited comments on the alternatives considered for the proposed rule.

In the June 19, 2019 Federal Register (84 FR 28450), we published the proposed rule that would, if finalized, establish a new ePA transaction standard for the Part D e-prescribing program as required by SUPPORT Act. We received 53 timely pieces of correspondence in response to the June 2019 proposed rule. Commenters included Part D sponsors, beneficiaries, beneficiary advocacy groups, pharmacy benefit managers (PBMs), pharmaceutical manufacturers, pharmacies, IT vendors, and other interested parties. Of the comments received, most commenters supported the rule. Summaries of the public comments, our responses to those public comments, and our final policies are set forth as follows.

Comment: Many commenters supported the proposed rule, stating that the standard is already used in the industry, and that any encouragement to use it for ePA will help streamline the PA process.

Response: We thank commenters for their support and agree that ePA will likely help streamline the PA process in the Part D eRx program context.

Comment: A few commenters expressed their dissatisfaction with having to perform PAs so often and stated that providers should be paid to perform PA.

Response: While we appreciate commenters' concerns, the use of PA is outside the scope of this rule. This final rule is limited to establishing the means by which ePA will be conducted in the Part D eRx program context, not the frequency of PAs or provider reimbursement. However, we note that as a part of the agency's Patients Over Paperwork initiative, 1 we are working towards improving the prior-authorization process, and solicited comment on ways to do so in the June 11, 2019, Request for Information; Reducing Administrative Burden to Put Patients Over Paperwork (84 FR 27070). We also solicited comment on how to improve prior authorization in Medicare fee-for-service through our Request for Information on the Future of Program Integrity issued in October 2019.

Comment: A number of commenters provided comments relating to the proposed January 1, 2021, implementation date. Some of these commenters stated that the January 1, 2021 deadline was achievable. However, other commenters encouraged a later deadline for implementation or the use of enforcement discretion for the first 2 years. The reasons given for the requested delay include a desire to focus on the requirement for Part D plans to implement a prescriber real time benefit tool (RTBT) by January 1, 2021 (84 FR 23832) and to allow more time for development and testing. One commenter requested that we allow 24 months after the publication of the final rule for implementation: 12 months for development and testing and 12 months for providers to adopt software updates.

Response: We are sympathetic to commenters requesting a longer period in which to implement these requirements, especially in light of the toll that the current public health emergency (PHE) related to the 2019 Novel Coronavirus Disease (COVID-19) is taking on the industry, our prescriber RTBT requirement, and the need to test the technology before use. However, as noted in the proposed rule and previously in this final rule, the SUPPORT Act established the deadline by which we are required to implement this program standard. The SUPPORT Act requires that the Part D eRx program “provide for the secure electronic transmission of . . . a prior authorization request . . .” by January 1, 2021. In light of this mandate and the benefits of encouraging ePA, including increased interoperability between parties and a decrease in time spent performing prior authorizations, we are allowing Part D sponsors to use NCPDP SCRIPT 2017071 for prior authorizations beginning January 1, 2021. In an attempt to balance the statutory mandate and the benefits of use of this standard with the concerns of the commenters requesting more time and the burden on Part D plans in light of the current PHE, we are only requiring use of the standard beginning January 1, 2022. We believe that the January 1, 2022 deadline affords sufficient time to ensure compliance with this rule. Although we understand the request for a 24-month implementation timeframe, we believe that the implementation date in this final rule appropriately balances the benefits of adoption of the standard and the time needed to ensure compliance. We also note that this is only a requirement for Part D plans—not providers—so we do not believe that the additional 12 months for providers to adopt updates needs to be accounted for in the implementation timeframe. As a result of our decision to delay requiring use of the standard until January 1, 2022, we do not anticipate using enforcement discretion.

As discussed later in this final rule, we are finalizing proposed § 423.160(b)(7) as § 423.160(b)(8). Additionally, to effectively finalize the implementation date changes, we are restructuring the regulation text at § 423.160(b)(8). As finalized, paragraph (b)(8)(i) allows for use of the NCPDP SCRIPT standard by January 1, 2021, and paragraph (b)(8)(ii) requires use of the standard by January 1, 2022. Accordingly, we have redesignated proposed paragraphs (b)(7)(i) through (iv), which list the covered electronic prior authorization transactions, as paragraphs (b)(8)(i)(A) through (D).

Comment: Some commenters stated that although they applaud implementing the NCPDP SCRIPT standard version 2017071 ePA transactions for Part D, they believe that it should be acceptable for all pharmacy transactions. The reasons commenters gave for this were their belief that the SCRIPT standard is the most appropriate standard for all pharmacy transactions, regardless of payer or inclusion in Part D, and that using two standards for the same workflow will cause an unnecessary burden.

Response: We thank the commenters for their support for implementing this rule, and appreciate their feedback. However, suggestions regarding the use of these standards outside of the Part D eRx program are outside the scope of this rule. This final rule implements section 6062 of the SUPPORT Act, which requires the program to provide for the secure electronic transmission of Part D drugs for a Part D eligible individual enrolled in a Part D plan. As such, electronic transmissions outside of the Part D context go beyond the scope of this rule.

Although we are sympathetic to concerns about having to support two standards within the same workflow, we are unable to remedy this issue within the scope of this final rule, which implements section 6062 of the SUPPORT Act. We believe that having the two standards is consistent with Congress' intent when promulgating this section of the SUPPORT Act, since the statutory mandate only extended to providing for electronic transmissions in Part D.

Comment: A commenter requested that CMS either issue clarifying guidance in the final rule to indicate that HIPAA's Referral Certification and Authorization standards do not apply to ePA transactions for prescription drugs, or name the NCPDP SCRIPT standard version 2017071 as the HIPAA standard for ePA transactions for prescription drugs. The commenter stated that the ASC X12 prior authorization transaction named under HIPAA is for medical benefits and is not effective for the exchange of information related to prior authorizations of products covered under a pharmacy benefit.

Response: We are unable to do as requested. Suggestions regarding the use of these standards outside of the Part D eRx program are outside the scope of this rule. This final rule implements section 6062 of the SUPPORT Act, which requires the program to provide for the secure electronic transmission of Part D drug for a Part D eligible individual enrolled in a Part D plan. As such, electronic transmissions outside of the Part D context go beyond the scope of this rule.

Comment: Several commenters stated that CMS should allow and encourage other ePA standards, such as the Fast Healthcare Interoperability Resources (FHIR) standard promulgated by the standards development organization Health Level 7 (HL7). This standard supports application programming interfaces (APIs), and encouraged us to adopt these standards for other eRx contexts.

Response: Although we appreciate this feedback, these comments are outside the scope of this rule. The proposed rule only covered our proposals to implement the SUPPORT Act's mandate to implement an ePA standard under Part D. At this time, the suggested standard and application programming interfaces are not used to support most pharmacy transactions. We will continue to monitor the development, maturity, and industry adoption of HL7 FHIR standards for future rulemaking.

In addition, to the extent the commenters were suggesting the adoption of more broadly applicable standards outside of the Part D eRx program, section 6062 of the SUPPORT Act, which this rule implements, only allows for the use of an ePA standard that is different from the HIPAA standard if it is for a Part D covered drug prescribed to a Part D eligible individual. Other ePA medication transactions outside of Part D are still governed by HIPAA standards.

Comment: Some commenters requested more guidance surrounding the use of PA generally, including information about PA processing times allowed under Part D and how PAs interact with subregulatory guidance for Medicare health and drug programs.

Response: Although we appreciate commenters' interest in learning more about use of PA in the Medicare programs, these comments are not within the scope of this rule. As previously mentioned, the sole purpose of this rule is to implement the SUPPORT Act's mandate that requires our adoption of a new standard for ePA in the Part D eRx program. However, we would note that PA is a key component of utilization management under a Part D plan, and consistent with § 423.153, we would further remind commenters that each Part D plan is required to review the effectiveness of its utilization management policies and systems. Such review should include ensuring the prevention of over-utilization and under-utilization of prescribed medications. To the extent that automation of the PA function will allow plans to improve their ongoing monitoring of utilization management programs through enhanced reporting, they should use that improved functioning. In addition, as coverage of drugs that undergo a PA constitutes a coverage determination, such determinations are subject to all applicable coverage determination standards, timelines, and requirements.

Comment: A commenter requested clarification about whether the proposed rule, if finalized, would ban prescribers from conducting PA using non-electronic means or whether it would only require prescribers to use the NCPDP SCRIPT standard version 2017071 ePA transactions if they intend to process PA via electronic means. Another commenter believed that naming the NCPDP SCRIPT standard version 2017071 ePA transactions was premature given the challenges inherent in the practice of rural medicine, which can be impacted by limited or inconsistent technological capabilities.

Response: This rule only requires plans support the NCPDP SCRIPT standard version 2017071. Prescribers who elect to conduct PA electronically in the Part D eRx context will be required to do so using the adopted standards. Prescribers remain free to use non-electronic means of conducting PA, and Part D plans are still required to accept prior authorization requests via existing means, such as via facsimile (FAX).

Comment: A commenter requested that CMS adopt the same electronic prescribing standards used for prescribers to communicate with Prescription Drug Management Program (PDMP) databases. The commenter did not identify the standard generally used by PDMPs.

Response: We did not consider the standard the commenter alluded to because without knowing the details of the standard generally used by PDMPs we are unable to assess whether it was or was not a standard considered for Part D eRx ePA. We appreciate the commenter's concerns about interoperability, but we are unable to delay naming of the proposed transactions while we evaluate the degree to which PDMPs may or may not be using the NCPDP SCRIPT standard version 2017071 or some alternative. Due to the statutory deadline to implement ePA in the Part D eRx program, we needed to select a standard that is ready for use in ePA transactions.

Comment: Another commenter urged CMS to allow voluntary use of other standards if mutually agreed upon between trading partners.

Response: We would like to emphasize that this rule proposed the NCPDP SCRIPT standard version 2017071 ePA transactions in part because health plans are already required to support use of that same version of the standard for other transactions beginning January 1, 2020, in accordance with the April 2018 final rule. As the ePA transactions are part of version 2017071 of the NCPDP SCRIPT standard, we do not believe it would be advisable to allow voluntary use of a different version of the NCPDP SCRIPT standard as that would require all trading partners to support different versions of the standard at the same time in order to comply with Part D program requirements, which we believe would impose unnecessary burden. CMS will consider proposing use of future updates to the NCPDP SCRIPT standard in future Part D e-prescribing rules as the need arises.

In order to ensure that ePA permeates across the industry for Part D and that multiple Part D stakeholders can participate in it, we believe that one Part D ePA standard should be used rather than simply allowing any stakeholder to use his/her preferred standard.

In addition, based on our analysis of available standards that led to our proposing to adopt the NCPDP SCRIPT standard version 2017071 for ePA under Part D, we question how many trading partners would wish to support the added cost and complexity of using ePA transactions drawn from an entirely different standard. Requiring consistent use of the same ePA standards throughout the Part D eRx program also ensures all plans and prescribers serving Part D eligible patients are able to conduct ePA transactions with one another.

Comment: One commenter noted that although they do not disagree with our characterization of the X12 278 transaction as the wrong type of standard for this transaction, they did alert us to the fact that the X12 278 transaction can now be used in real-time transactions, in addition to batched transactions.

Response: We thank the commenter for alerting us to this new development, and have consequently amended the statement in the background section to clarify that the X12 278 standard was not a real-time transaction in 2004.

Comment: A commenter disagreed with our statement that the SCRIPT transaction can determine whether the beneficiary's plan requires a PA for a given transaction, stating that the standard is not designed to determine whether prior authorization is required for a given transaction.

Response: We thank the commenter for this correction. We have not included this statement in the background section of this final rule.

Comment: A commenter expressed concern that this final rule would conflict with the information blocking and certification requirements from the March 4, 2019, Office of the National Coordinator for Information Technology (ONC) notice of proposed rulemaking (NPRM) (84 FR 7424), should it be finalized. Another commenter urged HHS to incorporate the NCPDP ePA transaction standard into future certification editions from ONC.

Response: In ONC's May 1, 2020 final rule titled “21st Century Cures Act: Interoperability, Information Blocking, and the ONC Health IT Certification Program” (ONC 21st Century Cures Act final rule), ONC finalized policies which directly align with the standard adopted in this final rule that supports ePA transactions and standards (85 FR 25642). Specifically, the ONC 21st Century Cures Act final rule adopted the NCPDP SCRIPT standard version 20170701 for Health IT Modules seeking certification to the § 170.315(b)(3) electronic prescribing criterion under the ONC Health IT Certification Program. The ONC 21st Century Cures Act final rule also adopted the ePA transactions in the NCPDP SCRIPT standard version 2017071 as optional for the updated §  170.315(b)(3) electronic prescribing criterion (85 FR 25685). As noted in the 21st Century Cures Act final rule, ONC believes the adoption of the ePA transactions included in version 2017071 of the NCPDP SCRIPT standard as optional transactions within this certification criteria supports alignment between the health IT certification program and Part D ePA policy.

We also note that CMS published the Patient Access and Interoperability final rule (85 FR 25510) concurrently with ONC's 21st Century Cures Act final rule on May 1, 2020. The CMS final rule requires certain payers, such as such as MA plans and Medicaid and CHIP programs, to make enrollee electronic health information held by the payer available through application programming interfaces (APIs) conformant to HL7 FHIR and other API standards that ONC adopted in 45 CFR 170.215.

Neither rule finalized a standard for conduct of ePA, nor did they require ePA be conducted through APIs conformant with the FHIR standard. The purpose of the current rule is to encourage the exchange of electronic health information by naming a standard suitable to support ePA by January 1, 2021. We will continue to monitor efforts within the health IT industry to support electronic prescribing transactions through emerging standards such as HL7 FHIR and technologies like APIs and will consider such developments in future rulemaking.

Comment: A commenter expressed concern that this rule would conflict with the CMS Interoperability and Patient Access proposed rule that was issued on March 4, 2019 (84 FR 7610), should it be finalized. In CMS Interoperability and Patient Access proposed rule, we noted that in June 2018, in support of the Da Vinci project (a private-sector initiative led by Health Level 7 (HL7), the CMS Medicare FFS program began: (1) Developing a prototype Documentation Requirement Lookup Service for the Medicare FFS program and (2) populating it with the list of items/services for which prior authorization is required by the Medicare FFS program (84 FR 7613).

Response: This rule can be finalized, as proposed, without conflicting with the CMS Interoperability and Patient Access final rule (85 FR 25510) which did not require payers to develop a prototype Documentation Requirement Lookup Service (DRLS). The DRLS was described in the proposed rule as work CMS was doing related to HL7 FHIR standards. We believe that the listing of items or services for purposes of a DRLS, as encouraged by CMS, is separate and distinct from requiring that a certain standard be used for ePA transactions for prescribers. This rule would require only the latter in the Part D eRx program context. Although CMS has recently proposed a rule requiring payers to use DRLS (85 FR 82586), this requirement does not extend to Part D. As a result, we continue to believe that this is separate and distinct from the requirements of this final rule.

Comment: A few commenters questioned whether pharmacies would be permitted to actively use the NCPDP SCRIPT standard version 2017071 transactions for ePAs performed on behalf of a beneficiary enrolled in Part D. One of these commenters stated that pharmacies that serve beneficiaries in long term care (LTC) settings would benefit from using the ePA transactions. They noted that applicable state laws permit dispensers to fulfill the terms of a prior authorization and suggest that we change the verbiage of the proposed regulation to allow “dispensers (as applicable)” to the parties required to use the NCPDP SCRIPT standard version 2017071 ePA transactions adopted in this final rule.

Response: We appreciate the commenters' concerns. However, this rule does not seek to change the current regulation with regard to who may request a PA on behalf of the beneficiary. Under our regulation at § 423.566(c), a pharmacy cannot request a coverage determination on behalf of an enrollee, unless the pharmacy is the enrollee's appointed representative. We believe that changing who may request a PA is outside the scope of the proposed rule. However, we will take the suggestion under advisement.

Comment: A commenter requested that CMS use this regulation as an opportunity to implement other provisions of the SUPPORT Act, such as section 2003 of the SUPPORT Act requiring the use of e-prescribing for opioids.

Response: We understand the importance of ensuring that all provisions of the SUPPORT Act are implemented. However, what is suggested in this comment is outside the scope of this rule, as the proposed rule only sought to implement section 6062 of the SUPPORT Act—not the entirety of the Act.

Comment: A commenter noted that the proposed NCPDP SCRIPT standard does not in itself prepopulate National Drug Codes (NDCs), rather NDCs are prepopulated by eRx and EHR systems if they are capable of doing so and set up to pre-fill such fields with known values.

Response: Upon re-evaluation we now understand that these NDCs are indeed completed by eRx and EHR systems with certain capabilities that are set up to do this work. During our initial research we had seen that the NDCs were widely prepopulated and incorrectly attributed this to the NCPDP SCRIPT standard. We appreciate this correction. In light of this understanding, we believe that the promulgation of a single standard electronic ePA for Part D-covered drugs prescribed to Part D-eligible individuals will encourage any remaining eRx and EHR vendors that do not offer the functionality to prepopulate NDCs to begin to do so, and continue to follow the NCPDP SCRIPT implementation guide.

Comment: A commenter clarified that the NCPDP Telecommunications standard D.0 is, indeed, a real time transaction.

Response: We appreciate the opportunity to further explain our assertions in the proposed rule. As the commenter states, the NCPDP Telecommunications D.0 standard is, indeed, a real time standard. However, because it is designed as a transaction between the pharmacy and the plan, it does not allow a prescriber to transmit information necessary to satisfy a prior authorization in real time. In practical terms when a drug is subject to prior authorization the Telecommunications standard conveys a real-time rejection to the pharmacy but leaves the prescriber unaware of the rejection, and unable to convey information to the plan which would satisfy the terms of the PA. To our knowledge, the NCPDP SCRIPT standard version 2017071 remains the only mechanism by which a prescriber can satisfy the terms of a prior authorization electronically in real time.

Comment: One commenter recommended that we amend our regulation text so that it states that the prescription-related information flows between prescribers and Part D sponsors, rather than prescribers and dispensers, which is what we stated in the proposed rule.

Response: We thank the commenter for the correction and have amended the text accordingly.

Comment: A commenter noted that since the May 2019 final rule amended the regulation text to include § 423.160(b)(7), the proposed rule should have been amended to include a new § 423.160(b)(8).

Response: We appreciate this comment and are finalizing the proposal in § 423.160(b)(8).

Comment: A commenter noted that some of the citations to the HIPAA standards at section 1860D-4(e)(4) of the Act and the new SUPPORT Act mandate at section 1860D-4(e)(2)(E)(ii)(III) of the Act were incorrect.

Response: We have revised the preamble to correct the citations noted by the commenter.

After review and consideration of the comments received, and for the reasons discussed herein and in the proposed rule, we are finalizing our proposed revision, with the following modifications:

• We are finalizing proposed § 423.160(b)(7) as § 423.160(b)(8).

• We are restructuring the final regulation text to permit Part D sponsors to use the standard beginning January 1, 2021 at § 423.160(b)(8)(i), but not require its use until January 1, 2022 at § 423.160(b)(8)(ii).

• We are redesignating proposed § 423.160(b)(7)(i) through (iv) which list the covered electronic prior authorization transactions, as § 423.160(b)(8)(i)(A) through (D) in this final rule.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ), we are required to provide 60-day notice in the Federal Register and solicit public comment before a “collection of information” requirement is submitted to the Office of Management and Budget (OMB) for review and approval. For the purposes of the PRA and this section of the preamble, collection of information is defined under 5 CFR 1320.3(c) of the PRA's implementing regulations.

In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues:

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

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

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

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

Our June 19, 2019 (84 FR 28450) proposed rule solicited public comment on each of the required issues under section 3506(c)(2)(A) of the PRA for our proposed information collection requirements, burden, and assumptions. Two comments were received. A summary of the comments is set out in this section of the document in this section of this rule along with our response.

The following changes will be submitted to OMB for approval under control number 0938-TBD (CMS-10755). Please note that our proposed rule indicated that the changes would be submitted under control number 0938-0763 (CMS-R-262). However, based on internal review we have since determined that the changes should be set out under a new collection of information request. Importantly, the new collection of information request (0938-TBD; CMS-10755) has no effect on our proposed and final requirements and burden estimates. Rather, we are simply changing the location of those requirements and burden estimates. Please note that OMB will issue the new control number when ready. In the meantime it is to be determined (or “TBD”). The new collection of information request's CMS identification number (CMS-10755) is not subject to change.

This rule implements section 6062 of the SUPPORT Act, which requires the adoption of technical standards for the Part D e-prescribing program to help ensure secure ePA requests and response transactions. Specifically, this final rule amends the Prescription Drug Benefit program (Part D) regulations to require under § 423.160(b)(8) that Part D plan sponsors (hereinafter, “Part D plans” or “plans”) have the technical capability to support the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard version 2017071 when performing ePA for Part D-covered drugs prescribed to Part D-eligible individuals. While this final rule will not impact the PA criteria which Part D plans have in place, the electronic process will make the PA process less burdensome for plans and prescribers. Prescribers who are currently capable of using an electronic prescribing software likely already have access to the ePA transaction standards, and would be expected to generally be able to access the transactions without cost. As ePA is implemented, the current system of manual processing (fax and phone calls) will fade in the Part D context since plans will be able to use the adopted standard, and incentivize their prescribers to conduct ePA. We expect that prescribers will be more likely to conduct ePA now that this less burdensome standard is currently available to them.

We estimate a one-time cost for plans to implement the necessary changes to support the ePA transactions within NCPDP SCRIPT standard version 2017071. After consulting with industry stakeholders, we have concluded that implementing or building the type of logic which will allow systems engineers to produce the interactive logic which the NCPDP SCRIPT standard requires can vary based on how the PA criteria are currently documented, but $6,500 is the approximate average cost as the cost varies based on the size and expertise of the plan. The $6,500 figure includes only the plan's internal costs including labor, initial development and programming, and systems support to transform each of its CMS-approved PA criteria from a free flowing manual process suitable for telephonic or facsimile communication with a clinical professional into a 2017071-compliant step-by-step query process that can be adapted for use by programmers. Based on our internal data, we estimate that this rule will apply to 774 plans. We estimate that only 2 percent (or 15) of the plans (774 plans × 0.02) do not already have the internal ePA process capabilities that will be required to build the logic to support NCPDP SCRIPT standard version 2017071's ePA transactions. In that regard we estimate a one-time implementation cost of approximately $100,000 (15 plans × $6,500/plan) or $33,000 annually when factoring in OMB's 3-year approval period, which is required for all new Paperwork Reduction Act activities ($100,000/3 years). We are annualizing the one-time estimate since we do not anticipate any additional burden after the 3-year approval period expires.

Based on our informal conversations with the industry, we believe that the ongoing cost that plans will incur to process ePA transactions range from $1.20 to $2.85 per transaction, which varies based on vendor and volume. Based on internal CMS data, for the 774 plans we estimate that 560,430 PAs are performed every year and that each authorization requires two individual transactions, one for receiving and one for responding. Using $2.03 as the average cost per transaction ([$1.20 + $2.85]/2) we estimate $4.06 per authorization ($2.03/transaction × 2 transactions/authorization). In aggregate we project an ongoing transaction (both receiving and responding) cost of $2,275,346 annually ($4.06/authorization × 560,430 authorizations) for all plans.

With regard to current practice, 98 percent (or 15) of the plans (774 plans × 0.02) already have the capacity to process automated PAs. However, when they perform these processes manually, they spend an average of $10.00/fax PA for 549,221.4 authorizations (560,430 authorizations × 0.98) at a cost of $5,492,214 (549,221 PAs × $10.00/PA). The remaining 15 plans that rely on phone or fax and manual review spend an average of $25.00/manual PA for 11,209 authorizations (560,430 authorizations × 0.02) at a cost of $280,225, (11,209 PAs × $25.00/PA). In this regard the transaction cost for the current practice is approximately $5,729,439 ($5,492,214 + $280,225).

In addition, we believe that there will be added savings due to fewer appeals being processed. We estimate that 900 appeals are processed annually due to mistakes emanating from the use of manual PA, including missing PA information and the PAs not being received by the correct party. We believe that these appeals would be eliminated, since ePA requires input of all necessary information for the transactions to be processed and provides a secure means of delivery to the recipients. We estimate that it costs $101.63 to process each of these appeals based on the 1.25 hours at $69.72/hr that it takes a quality officer at each organization to process the appeal and the cost of sending the appropriate notices, which would lead to a savings to plans of $91,467 (900 appeals × $101.63). When we add this savings to the $3,454,093 already saved, we project a total annual savings of $3,454,560 ($3,454,093 + $91,467). This figure differs slightly from the estimate that was set out in our June 19, 2019 proposed rule. That rule had inadvertently excluded the savings emanating from the revised number of appeals. In addition, the rule had overestimated the amount of plans that would need to make changes to implement the standard and the burden to implement it. We are correcting that oversight in this final rule.

Since this final rule only requires plans, and not prescribers, to implement the standard, we are not estimating costs that assume prescribers will transition to this standard. As a result, we did not include the aforementioned transaction costs and appeals savings in our tabulation of the final costs of implementing this rule. Therefore, we believe that the final cost of this rule will be the $100,000 for plans to implement this standard. As indicated, we received public comments related to the PRA. The following summarizes the comments and provides our response:

Comment: A commenter requested that CMS include the burden to physicians. Another commenter expressed concern about the potential costs to practices to switch to the new standard, and requested that we bar EHR vendors from passing on additional transaction costs to providers or patients. Another commenter stated that they believe our assumption incorrectly assumed that a provider's electronic prescribing software already has support for all NCPDP SCRIPT transactions.

Response: We thank commenters for the information about other factors that we should consider when estimating the implementation costs for providers to implement a new standard. However, we clarify that this rule imposes requirements only on Part D plans—if physicians elect to utilize ePA in the Part D program context, they will be required to do so using the adopted standard, but they are free to conduct PA through other means. We believe our proposed rule incorrectly included prescriber costs in our estimates. We have removed these estimates from the calculations on this final rule. While we understand the potential costs for providers and EHR vendors to pass on transaction costs to providers or plans, we do not have the statutory authority to regulate EHRs. As previously mentioned, this final rule implements section 1860D-4(e)(2)(E) of the Act requiring that the program provide for the secure electronic transmission of prior authorization requests and responses. However, this section of the Act does not expand CMS's authority to allow the agency to regulate EHR vendors or specify who may bear the cost of implementing the transaction. As a result, we are not able to adopt this commenter's suggestion that we bar EHR vendors from passing on transactions costs to providers or patients.

Comment: A commenter requested that CMS revise its estimates to account for ongoing maintenance costs associated with ePA.

Response: We acknowledged in the proposed rule that there would be a cost associated with maintenance of systems to support electronic prior authorizations. These costs are included in our ongoing methodology which, based on our research, we estimated to range from $1.20 to $2.85 per transaction for a total of $2.27 million. Since commenters did not provide specific feedback on the veracity of this estimate, we will finalize the estimates as initially presented.

This rule implements provisions of the SUPPORT Act, which require the adoption of transaction standards for the Part D program that will help ensure secure electronic PA request and response transactions. Specifically, this final rule amends the Prescription Drug Benefit program (Part D) regulations to require that Part D sponsors have the technical capability to support the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard version 2017071 when performing electronic Prior Authorization (ePA) for Part D-covered drugs prescribed to Part D-eligible individuals.

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

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). This rule does not reach the economic threshold and thus is not considered a major rule.

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $7.5 million to $38.5 million annually. Individuals and states are not included in the definition of a small entity. We are not preparing an analysis for the RFA, because we have determined, and the Secretary certifies, that this final rule will not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined, and the Secretary certifies, that this rule will not have a significant impact on the operations of a substantial number of small rural hospitals.

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

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

If regulations impose administrative costs on reviewers, such as the time needed to read and interpret this final rule, then we should estimate the cost associated with regulatory review. There are currently 774 PD contracts (excluding PACE organizations, since they are not affected by this regulation)). We assume each entity will have one designated staff member who will review the entire rule. Other assumptions are possible and will be reviewed after the calculations, in this section of this rule.

Using the wage information from the Bureau of Labor Statistics (BLS) for medical and health service managers (code 11-9111), we estimate that the cost of reviewing this final rule is $107.38 per hour, including fringe benefits and overhead costs ( http://www.bls.gov/oes/current/oes_nat.htm ). Assuming an average reading speed, we estimate that it will take approximately 12.5 hours for each person to review this final rule. For each entity that reviews the rule, the estimated cost is therefore, $1,342 (12.5 hours × $107.38). Therefore, we estimate that the total cost of reviewing this final rule is $1,342,000 ($1,342 × 1,000 reviewers).

Note that this analysis assumed one reader per contract. Some alternatives include assuming one reader per parent entity. Using parent organizations instead of contracts will reduce the number of reviewers to approximately 500 (assuming approximately 250 parent organizations), and this will cut the total cost of reviewing in half. The argument for this is that a parent organization might have local reviewers; even if that parent organization has several contracts that might have a reader for each distinct geographic region, to be on the lookout for effects of provisions specific to that region.

Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017 (82 FR 9339, February 3, 2017). It has been determined that this rule does not impose more than a de minimis costs; and thus, is not a regulatory action for purposes of E.O. 13771.

As stated previously, section 6062 of the SUPPORT Act requires the adoption of technical standards for the Part D program that will ensure secure ePA request and response transactions no later than January 1, 2022, and allows for Part D sponsors to begin using the standard by January 1, 2021. We are codifying requirements at § 423.160, which require plans to support the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard version 2017071 by January 1, 2022 when performing ePA for Part D-covered drugs prescribed to Part D-eligible individuals. This final rule has the following impacts.

Entities affected by the PA processes include pharmacies receiving ePAs from providers and filling the prescription, prescribers who use ePA, the Medicare Part D Program, Part D plans, EHR vendors who need to modify their products, and the Promoting Interoperability Programs, for any Part D prescribers in these programs. Information about what programs are included in the Medicare Promoting Interoperability Programs is available via this web link: https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/index.html?redirect=/EHRincentiveprograms. We do not anticipate any impacts to the Medicare program, beneficiaries, or other stakeholders.

There are three primary aspects of the provision that could affect its cost and the amount saved. The most immediate cost comes from the one-time implementation cost for the few EHR vendors that need to need to change their programming to use two standards; the NCPDP SCRIPT standard version 2017071 for Part D ePA and the HIPAA standard for other contexts. Based on our conversations with EHR vendors, we believe that it will take the EHR vendors approximately 200 developing hours and 800 programming hours to enable the EHRs to utilize two standards.

We also estimated what it will cost plan sponsors to implement this standard. After consulting with industry stakeholders, we have concluded that implementing or building to the SCRIPT standard can vary, but $6,500 is the approximate amount per plan and $100,000 is the approximate amount for the industry. We estimate that only 2 percent of the 774 plans will have to make changes to their ePA process to implement the NCPDP SCRIPT standard version 2017071 ePA transactions, which gives us an approximate one time implementation cost of $100,000 (15 * $6,500).

We considered requiring the adoption of the standard by January 1, 2021 to ensure that this important mandate was implemented quickly. However, we want to help ensure that plans have as much time to comply with the statutory mandate as possible.

The following table summarizes overall costs for this rule. The cost comes from implementing the new standard.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR part 423 as set forth below:

On April 10, 2020, FEMA published a temporary final rule in the Federal Register allocating certain health and medical resources for domestic use, so that these resources may not be exported from the United States without explicit approval by FEMA. 1 The rule aids the response of the United States to the spread of Coronavirus Disease 2019 (COVID-19) by ensuring that certain health and medical resources are appropriately allocated for domestic use. On April 21, 2020, FEMA published a notification of exemptions to the rule. 2 With the continued goal of ensuring that these resources are appropriately allocated for domestic use, FEMA extended the date through which the allocation in the temporary final rule would be in effect, including the exemptions published on April 21, 2020, and modified the list of covered materials under the rule to reflect domestic supply needs as of August 10, 2020. 3 FEMA is now further extending and modifying this rule to reflect current domestic supply needs of health and medical resources to promote the national defense. The temporary final rule, as extended and modified, will remain in effect until June 30, 2021, unless sooner modified or terminated by the Administrator.

COVID-19 is a communicable disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), that was first identified as the cause of an outbreak of respiratory illness that began in Wuhan, Hubei Province, People's Republic of China. On January 30, 2020, the Director-General of the World Health Organization (WHO) declared that the outbreak of COVID-19 is a Public Health Emergency of International Concern under the International Health Regulations. 4 The following day, the Secretary of Health and Human Services (HHS) declared COVID-19 a public health emergency under Section 319 of the Public Health Service (PHS) Act. 5 On March 11, 2020, the WHO declared COVID-19 a pandemic. On March 13, 2020, the President issued a Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak under sections 201 and 301 of the National Emergencies Act, 50 U.S.C. 1601 et seq., and consistent with section 1135 of the Social Security Act, 42 U.S.C. 1320b-5. 6 On March 13, 2020, the President declared a nationwide emergency under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, authorizing FEMA to provide assistance for emergency protective measures to respond to the COVID-19 pandemic. 7 FEMA subsequently issued 57 major disaster declarations in response to COVID-19, including for every State, 5 territories, the Seminole Tribe of Florida, and the District of Columbia. 8

Within the United States, widespread transmission of COVID-19 has occurred. Widespread transmission of COVID-19 has resulted and will continue to result in large numbers of people needing medical care at the same time. Public health and healthcare systems have become overwhelmed in some areas, with elevated rates of hospitalizations and deaths, as well as elevated demand for PPE, including the PPE covered by this rule. Due to a surge in confirmed COVID-19 cases and hospitalizations in October, November, and December 2020, 9 domestic supply of the allocated PPE has not kept pace with demand and is not anticipated to do so. Additionally, given the high rate of influenza vaccination administrations in 2020, 10 along with the recent developments in COVID-19 vaccines and vaccine trials, 11 the projected domestic supply of syringes and hypodermic needles is not expected to meet demand.

FEMA is extending and modifying this temporary final rule as part of its response to the COVID-19 pandemic. The rule is issued pursuant to the following authorities, among others:

• The Defense Production Act of 1950, as amended (“DPA” or “the Act”), and specifically sections 101 and 704 of the Act, 50 U.S.C. 4511, 4554;

• Executive Order 13909, 85 FR 16227 (Mar. 23, 2020);

• Executive Order 13911, 85 FR 18403 (Apr. 1, 2020);

• Department of Homeland Security (DHS) Delegations, including DHS Delegation Number 09052 Rev. 00, “Delegation of Defense Production Act Authority to the Administrator of the Federal Emergency Management Agency” (Jan. 3, 2017) and DHS Delegation Number 09052 Rev. 00.1, “Delegation of Defense Production Act Authority to the Administrator of the Federal Emergency Management Agency” (Apr. 1, 2020); and

• The Presidential Memorandum on Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use (Apr. 3, 2020). 12

Under subsection 101(a) of the Act, 50 U.S.C. 4511(a), the President may (1) require that performance under contracts or orders (other than contracts of employment) which the President deems necessary or appropriate to promote the national defense shall take priority over performance under any other contract or order, and, for the purpose of assuring such priority, require acceptance and performance of such contracts or orders in preference to other contracts or orders by any person he finds to be capable of their performance. The President may also (2) allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as the President shall deem necessary or appropriate to promote the national defense. FEMA refers to these authorities as relating to “priority ratings” and “allocation,” respectively.

Under subsection 101(b) of the Act, 50 U.S.C. 4511(b), the President may not use the aforementioned authorities to control the general distribution of any material in the civilian market unless the President finds (1) that such material is a scarce and critical material essential to the national defense, and (2) that the requirements of the national defense for such material cannot otherwise be met without creating a significant dislocation of the normal distribution of such material in the civilian market to such a degree as to create appreciable hardship.

Under subsection 101(d) of the Act, 50 U.S.C. 4511(d), the head of each Federal agency to which the President delegates authority under section 101 of the Act (1) shall issue, and annually review and update whenever appropriate, final rules, in accordance with 5 U.S.C. 553, that establish standards and procedures by which the priorities and allocations authority under section 101 is used to promote the national defense, under both emergency and nonemergency conditions; and (2) as appropriate and to the extent practicable, consult with the heads of other Federal agencies to develop a consistent and unified Federal priorities and allocations system.

On March 18, 2020, the President signed Executive Order 13909, which (among other things) contained a finding that health and medical resources needed to respond to the spread of COVID-19, including personal protective equipment and ventilators, meet the criteria specified in section 101(b) of the Act (50 U.S.C. 4511(b)). 13

On March 27, 2020, the President signed Executive Order 13911, which (among other things) delegated to the Secretary of Homeland Security, the President's authority under section 101 of the Act with respect to health and medical resources needed to respond to the spread of COVID-19 within the United States. The Executive Order provides that the Secretary of Homeland Security may use the authority under section 101 of the Act to determine, in consultation with the heads of other executive departments and agencies as appropriate, the proper nationwide priorities and allocation of health and medical resources, including by controlling the distribution of such materials (including applicable services) in the civilian market, for responding to the spread of COVID-19 within the United States. 14 The Secretary of Homeland Security has redelegated the Secretary's DPA authorities to the FEMA Administrator. See DHS Delegation Number 09052, Rev. 00 (Jan. 3, 2017) and DHS Delegation Number 09052, Rev. 00.1 (Apr. 1, 2020).

Additionally, on April 3, 2020, the President signed a Memorandum on Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use (the Memorandum). The Memorandum reaffirmed the delegations and findings contained in Executive Orders 13909 and 13911, including that health and medical resources needed to respond to the spread of COVID-19, including personal protective equipment (PPE), meet the criteria specified in section 101(b) of the Act, i.e., that (1) such material is a scarce and critical material essential to the national defense, and (2) that the requirements of the national defense for such material cannot otherwise be met without creating a significant dislocation of the normal distribution of such material in the civilian market to such a degree as to create appreciable hardship. The Memorandum identified certain categories of PPE materials that the Secretary of HHS had previously designated as “scarce or threatened” for purposes of section 102 of the DPA, and further stated that to ensure that these materials remain in the United States for use in responding to the spread of COVID-19, it is the policy of the United States to prevent domestic brokers, distributors, and other intermediaries from diverting such PPE materials overseas.

In furtherance of such policy, the President directed the Secretary of Homeland Security, through the FEMA Administrator, and in consultation with the Secretary of HHS, to use any and all authority available under section 101 of the Act to allocate to domestic use, as appropriate, the five types of PPE identified in the Memorandum. On April 10, 2020, FEMA executed this direction by issuing the allocation order as a temporary final rule pursuant to the Memorandum, and with the authority delegated to the Secretary of Homeland Security in E.O. 13911 and re-delegated to the FEMA Administrator. 15 The temporary final rule was modified and extended on August 10, 2020, to ensure certain health and medical resources were appropriately allocated for domestic use. 16

Finally, on May 13, 2020, FEMA published an interim final rule to establish standards and procedures by which the priorities and allocations authority under section 101 is used to promote the national defense, under both emergency and nonemergency conditions. 17

As the COVID-19 pandemic continues in the United States, the FEMA Administrator, in consultation with other agencies as appropriate, has determined that FEMA must continue to allocate some materials contained in the August 10, 2020, temporary final rule for domestic use, and to incorporate other health and medical resources due to changes in domestic supply and demand, surges in the number of confirmed COVID-19 cases and deaths in the United States, forecasts anticipating the increased number of COVID-19 cases and deaths, the current and projected volume of influenza vaccination doses, and future COVID-19 vaccination predictions. FEMA has determined, consistent with the Memorandum and FEMA's authorities under section 101 of the DPA, that it is appropriate to designate, with modification, the PPE previously designated and to include syringes and hypodermic needles (whether distributed separately or attached together) to ensure domestic supply is able to meet the continuing demand for these materials. In short, FEMA has determined that the original temporary final rule must be extended, and the list of covered materials under such rule must be modified.

Consistent with the authority delegated to the Secretary of Homeland Security in E.O. 13911 and re-delegated to the FEMA Administrator, FEMA now issues this temporary final rule to extend and modify the allocation order.

Following consultation with the appropriate Federal agencies; pursuant to the President's direction; and as an exercise of the Administrator's priority order, allocation, and regulatory authorities under the Act, the Administrator has determined that the April 10, 2020, temporary final rule (“covered materials”) shall be extended temporarily, and that the list of scarce and critical materials identified in such temporary final rule shall be modified to reflect current domestic needs. The materials identified in this rule will continue to be allocated for domestic use and may not be exported from the United States without explicit approval by FEMA. See 44 CFR 328.102(a).

The rule is necessary and appropriate to promote the national defense with respect to the covered materials because the domestic need for them exceeds the supply. Under this temporary final rule extension, before any shipments of such covered materials may leave the United States, U.S. Customs and Border Protection (CBP) will continue to detain the shipment temporarily, during which time FEMA will determine whether to return for domestic use, issue a rated order for, or allow the export of part or all of the shipment under section 101(a) of the Act, 50 U.S.C. 4511(a). FEMA will continue to make such a determination within a reasonable time of being notified of an intended shipment and will make all decisions consistent with promoting the national defense. See 44 CFR 328.102(b). FEMA will work to review and make determinations quickly and will endeavor to minimize disruptions to the supply chain.

In determining whether it is necessary or appropriate to promote the national defense to purchase covered materials, or allocate materials for domestic use, FEMA may continue to consult other agencies and will consider the totality of the circumstances, including the following factors: (1) The need to ensure that such items are appropriately allocated for domestic use; (2) minimization of disruption to the supply chain, both domestically and abroad; (3) the circumstances surrounding the distribution of the materials and potential hoarding or price-gouging concerns; (4) the quantity and quality of the materials; (5) humanitarian considerations; and (6) international relations and diplomatic considerations.

This extension to the rule continues the eleven exemptions that the Administrator has determined to be necessary or appropriate to promote the national defense. See 44 CFR 328.102(d).

Specifically, the Administrator has determined that FEMA will not purchase covered materials from shipments made by or on behalf of U.S. manufacturers with continuous export agreements with customers in other countries since at least January 1, 2020, so long as at least 80 percent of such manufacturer's domestic production of covered materials, on a per item basis, was distributed in the United States in the preceding 12 months. The Administrator decided that this exemption is necessary or appropriate to promote the national defense because it would limit the impact of this order on pre-existing commercial relationships, in recognition of the importance of these commercial relationships to the international supply chain, and for humanitarian reasons, in consideration of the global nature of the COVID-19 pandemic. If FEMA determines that a shipment of covered materials falls within this exemption, such materials may be transferred out of the United States without further review by FEMA, provided that the Administrator may waive this exemption and fully review shipments of covered materials subject to this exemption for further action by FEMA, if the Administrator determines that doing so is necessary or appropriate to promote the national defense. FEMA may develop additional guidance regarding which exports are covered by this exemption and encourages manufacturers to contact FEMA with specific information regarding their status under this exemption.

On April 21, 2020, FEMA published notification of 10 additional exemptions to the original temporary final rule. 18 These exemptions will remain in effect for the new effective period of this rule, subject to the Administrator's discretion to waive, modify, or terminate such exemptions at any time in the future. The Administrator has determined that it continues to be necessary and appropriate to promote the national defense to exempt these categories of covered materials from the requirements of 44 CFR 328.102(a) and (b). The Administrator may establish, in his discretion, additional exemptions that he determines are necessary or appropriate to promote the national defense and will announce any such exemptions by notice in the Federal Register .

FEMA will continue to implement this rule with the cooperation and assistance of other U.S. Government agencies, including CBP, and will work with manufacturers, brokers, distributors, exporters, and shippers to ensure that the applicable requirements are carried out. Any covered materials intended for export may be detained by CBP while FEMA conducts its review of the shipment. FEMA will review the shipment and provide notification as soon as possible regarding the disposition of the covered materials under this order, provided that any goods that have been detained by CBP and are subsequently made subject to a DPA-rated order will be consigned to FEMA pending further distribution or agency direction. FEMA may provide additional guidance regarding the application of any exemptions to this temporary final rule, as appropriate.

FEMA is modifying the original temporary final rule's authority citation to include both DHS Delegation Number 09052, Rev. 00 (Jan. 3, 2017) and DHS Delegation Number 09052, Rev. 00.1 (Apr. 1, 2020), and to update the formatting of other citations previously included. FEMA is making a number of non-substantive revisions throughout part 328 to correct formatting errors and improve clarity and readability. FEMA is also modifying the original temporary final rule at § 328.101 to reflect the appropriate statutory language from section 101 of the Act. FEMA is further modifying § 328.103(a) to update the designation of covered materials under the rule. FEMA is further clarifying the types of PPE surgical masks subject to the allocation order and is adding specific syringes and hypodermic needles (whether distributed separately or attached together). The continued allocation of certain PPE materials reflects current domestic demand, as indicated by the number of open requests for such materials from State, local, Tribal, and territorial (SLTT) jurisdictions. Specifically—

• FEMA is continuing the designation of Surgical N95 Filtering Facepiece Respirators as covered materials. Surgical N95 respirators for medical use are still subject to high demand within the United States, and supply is not expected to catch up with demand at this time given the current forecasts of increases in confirmed cases and hospitalizations.

• FEMA is continuing the designation of PPE surgical masks as covered materials due to the continued inability of domestic supply to meet current demands, with modification. In the original temporary final rule, FEMA designated “PPE surgical masks, including masks that cover the user's nose and mouth and provide a physical barrier to fluids and particulate materials.” This temporary final rule clarifies the existing language regarding the PPE surgical masks subject to this order. As revised, 44 CFR 328.103(a)(2) now specifically designates PPE surgical masks as described by 21 CFR 878.4040, including masks that cover the user's nose and mouth providing a physical barrier to fluids and particulate materials that meet fluid barrier protection standards pursuant to ASTM F 1862  19 and to Class I or Class II flammability tests under CPSC CS 191-53, 20 NFPA Standard 702-1980, 21 or UL 2154 standards. 22 As of December 9, 2020, FEMA had open requests for over 13 million surgical masks from SLTT jurisdictions.

• FEMA is also continuing the designation of PPE nitrile gloves as covered materials with one minor edit to clarify the specific types of gloves subject to the order. There is still a significant shortage of nitrile gloves. As of December 9, 2020, FEMA had open requests for over 168 million nitrile gloves from SLTT jurisdictions.

• FEMA is continuing the designation of Level 3 and 4 Surgical Gowns and Surgical Isolation Gowns that meet all of the requirements in ANSI/AAMI PB70  23 and ASTM F2407-06  24 and are classified by Surgical Gown Barrier Performance based on AAMI PB70. At this time, domestic supply is not meeting demand. As of December 9, 2020, FEMA had open requests for over 1.2 million of these gowns from SLTT jurisdictions.

• FEMA is adding designations for specific syringes and hypodermic needles (whether distributed separately or attached together) to the covered materials list. The designated materials are piston syringes and hypodermic needles that are either: Piston syringes that allow for the controlled and precise flow of liquid as described by 21 CFR 880.5860, that are compliant with ISO 7886-1:2017, 25 and use only Current Good Manufacturing Practice (CGMP) processes;  26 or hypodermic single lumen needles as described by 21 CFR 880.5570 that have engineered sharps injury protections as described in the Needlestick Safety and Prevention Act. 27 Due to the current high rate of influenza vaccine administration, in conjunction with the development of COVID-19 vaccines, the projected domestic supply of these materials is not anticipated to meet demand. As of the week of December 4, 2020, more than 189.4 million influenza vaccine doses had been distributed in the United States for this influenza season  28 compared to the 2019-2020 influenza season, where approximately 174.5 million influenza vaccine doses were distributed for the entire season, 29 representing an increase of over 14.9 million vaccine doses so far in the 2020-2021 influenza season. A record number of influenza vaccine doses is being produced and distributed this influenza season, and production and distribution will occur over a longer period of time as a result, 30 further reducing the domestic supply of syringes. Additionally, as of December 22, 2020, the United States has authorized for emergency use two COVID-19 vaccines, with multiple other vaccines in large clinical trials. 31 As of December 16, 2020, the United Kingdom and Canada have also already approved the use of one vaccine for COVID-19. 32 As vaccination efforts expand, FEMA anticipates that these materials will be in short supply.

Consistent with the DPA and the original temporary final rule, FEMA may continue to conduct such investigations and issue such requests for information as may be necessary for the enforcement of the Act, including this rule. See 44 CFR 328.104(a); see also section 705 of the Act, 50 U.S.C. 4555; Executive Order 13911, 85 FR 18403 (Apr. 1, 2020). FEMA may seek an injunction or other order whenever, in the Administrator's judgment, a person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of the Act or any rule or order issued thereunder. See 44 CFR 328.104(b); see also section 706 of the Act, 50 U.S.C. 4556. In addition to an injunction, failure to comply fully with this rule is a crime punishable by a fine of not more than $10,000 or imprisonment for not more than one year, or both. See 44 CFR 328.104(c); see also section 103 of the Act, 50 U.S.C. 4513. In addition, pursuant to 18 U.S.C. 554, whoever fraudulently or knowingly exports or sends from the United States, or attempts to export or send from the United States, any merchandise, article, or object contrary to any U.S. law or regulation, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise, article, or object, prior to exportation, knowing the same to be intended for exportation contrary to any U.S. law or regulation, faces up to 10 years' imprisonment, a fine, or both, if convicted.

At any point in time, and to the extent consistent with United States policy, the FEMA Administrator may determine additional materials to be subject to this allocation order. Upon a determination under section 101(b) of the DPA that an additional material is a scarce and critical material essential for national defense, and that being allocated to domestic use under this allocation order is the only way to meet national defense requirements without significant disruption to the domestic markets, the Administrator will include these additional materials in this allocation order, and will provide notification of this decision through publication in the Federal Register .

Agency rulemaking is generally governed by the agency rulemaking provisions of the Administrative Procedure Act (APA). See 5 U.S.C. 553. Such provisions generally require that, unless the rule falls within one of a number of enumerated exceptions, or unless another statute exempts the rulemaking from the requirements of the APA, FEMA must publish a notice of proposed rulemaking in the Federal Register that provides interested persons an opportunity to submit written data, views, or arguments, prior to finalization of regulatory requirements. Section 553(b)(B) authorizes a department or agency to dispense with the prior notice and opportunity for public comment requirement when the agency, for “good cause,” finds that notice and public comment thereon are impracticable, unnecessary, or contrary to the public interest.

This rule is exempt from the APA under section 709(a) of the Act, 50 U.S.C. 4559(a). Instead, this rule is issued subject to the provisions of section 709(b). Pursuant to section 709(b)(2) of the Act, the Administrator has concluded, based on the facts related to the COVID-19 pandemic, that, with respect to this temporary final rule, urgent and compelling circumstances continue to make compliance with the notice and comment requirements of section 709(b)(1) of the Act, 50 U.S.C. 4559(b)(1), impracticable. The COVID-19 pandemic continues to grow worldwide. The World Health Organization reports over 71.5 million cases and over 1.6 million deaths in 220 countries as of December 15, 2020. 33 The severity of the pandemic has increased significantly in the United States in recent months, with surges of up to 244,007 new cases in a single day. 34 The United States now leads the world in the total number of COVID-19 cases and deaths  35 and the Centers for Disease Control and Prevention (CDC) estimates the number of confirmed cases and deaths in the United States will continue to increase. 36 As a result of the surge in U.S. confirmed cases and deaths, demand for PPE used to treat patients with the disease has increased and the domestic supply has been unable to keep pace. As explained above, FEMA continues to have a high volume of open requests for the specific types of PPE listed in this allocation order and anticipates this volume will increase given the COVID-19 forecasts from the CDC. The historic increase in the number of influenza vaccine doses manufactured and distributed this influenza season combined with the authorization for emergency use of vaccines for COVID-19 and the demand for the same by those who wish to be vaccinated against the disease means the projected domestic supply of syringes and hypodermic needles will not meet demand in the upcoming months. 37 If final regulations become necessary, an opportunity for public comment will be provided for not less than 30 days before such regulations become final, pursuant to section 709(b)(2)(C) of the Act, 50 U.S.C. 4559(b)(2)(C).

Furthermore, the same facts that warrant waiver under section 709(b)(2) of the Act would constitute good cause for FEMA to determine, under the APA, that notice and public comment thereon are impractical, unnecessary, or contrary to the public interest, and that the temporary final rule should become effective immediately upon publication in the Federal Register . The exigent need for this rule is related to the COVID-19 pandemic.

Although the Federal Government, along with State and local governments, have taken preventative and proactive measures to slow the spread of COVID-19, and to treat those affected, the current surge of confirmed COVID-19 cases and deaths within the Nation's communities is straining the Nation's healthcare systems. It is imperative that health and medical resources needed to respond to the spread of COVID-19, including the PPE and other health and medical resources affected by this rule, continue to be allocated for domestic use as appropriate. Given the evolving nature of this pandemic, the current surge in confirmed COVID-19 cases and deaths, and the frequently changing supply of and demand for the health and medical resources needed to combat it, full public notice and comment proceedings are impracticable. As explained earlier in the preamble, the volume of requests for certain health and medical resources continues to outpace domestic supply. FEMA is continuously monitoring SLTT jurisdictions' demand for these scarce and critical health and medical resources and is taking this immediate action to continue to ensure that such resources are appropriately allocated for domestic use to continue to combat the current surge of confirmed COVID-19 cases and deaths, the forecasted increase in both, and the projected shortages of supplies to ensure the effective distribution of influenza vaccine doses and COVID-19 vaccine doses for those who wish to be vaccinated against these diseases.

In short, given the national and international emergency caused by COVID-19 and the current surge of confirmed cases and deaths, FEMA finds that urgent and compelling circumstances have made it impracticable and contrary to the public health—and, by extension, the public interest—to delay these implementing regulations until a full public notice-and-comment process is completed. Based on current needs, this temporary final rule modification and extension is needed to appropriately allocate scarce and critical materials for domestic use. Specifically, FEMA seeks to continue designation of certain PPE materials with minor modifications based on current demand and to add other health and medical resources based on projected domestic supply not meeting demand.

The measures described in this rule are being issued on a temporary basis. This temporary final rule with modification remains in effect until June 30, 2021, unless sooner modified or terminated by the Administrator.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, and public health and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as any regulatory action that is likely to result in a regulation that may (1) have an annual effect on the economy of $100 million or more, or adversely affect in a material way 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) create a serious inconsistency or otherwise interfere 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) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The Office of Management and Budget has designated this temporary final rule as an economically significant regulatory action. Given that the temporary final rule is a significant regulatory action, FEMA proceeds under the emergency provision of Executive Order 12866, section 6(a)(3)(D) based on the need for immediate action, as described above, to ensure these health and medical resources are appropriately allocated for domestic use.

The Regulatory Flexibility Act (RFA) generally requires that when an agency issues a proposed rule, or a final rule that the agency issues under 5 U.S.C. 553 after being required by that section or any other law to publish a general notice of proposed rulemaking, the agency must prepare a regulatory flexibility analysis that meets the requirements of the RFA and publish such analysis in the Federal Register . 5 U.S.C. 603, 604.

This is neither a proposed rule, nor a final rule that the agency has issued under 5 U.S.C. 553 after being required by that section or any other law to publish a general notice of proposed rulemaking. This is a temporary final rule issued without a prior proposed rule, under the separate authority of the Defense Production Act of 1950. Accordingly, a regulatory flexibility analysis is not required.

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act), 2 U.S.C. 1532, requires that covered agencies prepare a budgetary impact statement before promulgating a 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 in 1995 dollars, updated annually for inflation. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires covered agencies to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. DHS has determined that this rule is not expected to result in expenditures by State, local, and Tribal governments, or by the private sector, in that amount in any one year. This rule imposes no requirements on State, local, and Tribal governments and, therefore, cannot require them to expend any funds, let alone in excess of the threshold. To the extent that this rule affects the private sector, it only prohibits conduct, namely certain exports. It does not require any private sector expenditures within the meaning of the Unfunded Mandates Act. Further, the rule is excluded from the Unfunded Mandates Act under 2 U.S.C. 1532(a) and 1503(4) and (5).

Under the National Environmental Policy Act of 1969 (NEPA), as amended, 42 U.S.C. 4321 et seq., an agency must prepare an environmental assessment or environmental impact statement for any rulemaking that significantly affects the quality of the human environment. FEMA has determined that this rulemaking does not significantly affect the quality of the human environment and consequently has not prepared an environmental assessment or environmental impact statement.

Rulemaking is a major Federal action subject to NEPA. Categorical exclusion A3 included in the list of exclusion categories at Department of Homeland Security Instruction Manual 023-01-001-01, Revision 01, Implementation of the National Environmental Policy Act, Appendix A, issued November 6, 2014, covers the promulgation of rules, issuance of rulings or interpretations, and the development and publication of policies, orders, directives, notices, procedures, manuals, and advisory circulars if they meet certain criteria provided in A3(a-f). This temporary final rule meets Categorical Exclusion A3(a), “Those of a strictly administrative or procedural nature”.

This rule has been reviewed under Executive Order 13132, Federalism, 64 FR 43255 (August 4, 1999). That Executive order imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. DHS has determined that this temporary final rule 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. Furthermore, there are no provisions in this rule that impose direct compliance costs on State and local governments. Accordingly, DHS is not providing the additional analysis as the rule does not warrant additional analysis under Executive Order 13132.

Under the Congressional Review Act (CRA), 5 U.S.C. 801-808, before a rule can take effect, the Federal agency promulgating the rule must: Submit to Congress and to the Government Accountability Office (GAO) a copy of the rule; a concise general statement relating to the rule, including whether it is a major rule; the proposed effective date of the rule; a copy of any cost-benefit analysis; descriptions of the agency's actions under the Regulatory Flexibility Act and the Unfunded Mandates Reform Act; and any other information or statements required by relevant Executive orders.

FEMA has sent this rule to the Congress and to GAO pursuant to the CRA. The Office of Information and Regulatory affairs has determined that this rule is a “major rule” within the meaning of the CRA. As this rule contains FEMA's finding for good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, there is not a required delay in the effective date. See 5 U.S.C. 808.

This final rule is organized as follows:

For access to docket FMCSA-2016-0341 to read background documents and comments received, go to http://www.regulations.gov at any time, or to Dockets Operations at U.S. Department of Transportation, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590-0001, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. To be sure someone is there to help you, please call (202) 366-9317 or (202) 366-9826 before visiting Dockets Operations.

In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.

The FAST Act requires FMCSA to address its rulemaking and petitions procedures. Specifically, section 5202 provides requirements for the Agency to follow regarding the development of proposed rulemakings [49 U.S.C. 31136(f)-(h)]. Section 5204 also directs the Agency to be more transparent to the public regarding how FMCSA prioritizes and defines petitions.

The APA (5 U.S.C. 551-706) established procedures for all Federal agencies to use in developing rules and regulations. It also established the standards that allow the public to participate in a rulemaking as well as the opportunity to petition the Federal government for the issuance, amendment, or repeal of a rule. The APA authorizes changes to 49 CFR part 389, beyond what is required by the FAST Act.

DOT's regulatory procedures, codified at 49 CFR part 5, also describe how persons may petition a departmental Operating Administration, like FMCSA, for a new rulemaking, an exemption from an existing rule, or a retrospective review. These departmental procedures apply unless a statute or an Operating Administration's regulations or procedures provide alternate procedures for processing petitions. FMCSA's procedures are housed in 49 CFR part 389, and are the subject of this rulemaking.

FMCSA published a notice of proposed rulemaking (NPRM) on August 7, 2017 (82 FR 36719) that proposed several changes to the regulatory procedural requirements found in 49 CFR part 389. These changes fell into the three general categories outlined below, and are explained in further detail in the section-by-section analysis.

FMCSA proposed new rulemaking provisions required by the FAST Act where the Agency must consider undertaking a negotiated rulemaking or an ANPRM for all major rules regarding commercial motor vehicle (CMV) safety. However, the FAST Act allows the Administrator to waive this requirement in instances where those tools would be impracticable, unnecessary, or contrary to the public interest. Additionally, the NPRM proposed to adopt the definition of a “major rule” from the Congressional Review Act (5 U.S.C. 804). FMCSA would use this definition to determine whether an ANPRM or negotiated rulemaking process is necessary.

Prior to this final rule, FMCSA regulations for submitting petitions (49 CFR part 389) included no regulatory definition of a petition. Section 5204 of the FAST Act defines the term petition. It includes requests for: A new regulation; a regulatory interpretation or clarification; or a determination by FMCSA that a regulation should be modified or eliminated for one of several enumerated reasons prescribed in section 5204. FMCSA proposed including this definition in part 389.

Additionally, the NPRM proposed a new process for filing and addressing petitions. These changes were proposed to clarify FMCSA's procedures for rulemaking, and to make editorial changes.

Finally, FMCSA proposed to add a definition for written or in writing that would include electronic documentation.

Under FMCSA's direct final rulemaking (DFR) procedures in effect at the time of the NPRM, if the Agency received a notice of intent (NOI) to file an adverse comment, the DFR would be withdrawn, even if the comment that was eventually filed did not meet the definition of an adverse comment found in 49 CFR 389.39(b). The NPRM proposed to change this requirement. Upon receiving an NOI to file an adverse comment, the Agency would extend the comment period rather than withdraw the DFR, allowing the commenter additional time to file the comment. Once FMCSA received the comment, the Agency would determine whether it was adverse. If it was an adverse comment, FMCSA would withdraw the DFR; however, if it did not meet the definition of adverse comment in § 389.39(b), the Agency would move forward with the DFR. If the same or another commenter submitted an NOI at the end of the extended comment period, FMCSA would determine, on a case-by-case basis, whether to extend the comment period again, withdraw the DFR, or proceed with the DFR using only the comments already received.

FMCSA received comments from 10 commenters: The National Federation of Independent Business (NFIB); the National Rural Electric Cooperative Association (NRECA); the National Tank Truck Carriers (NTTC); the American Fuel and Petrochemical Manufacturers (AFPM); the Transportation Trades Department of the AFL-CIO; an individual, Mr. Max Miller; the New York University School of Law (NYU); the National School Transportation Association (NSTA); and two anonymous commenters. Generally, all commenters were supportive of the rule, though some suggested additional regulatory changes.

Two commenters were overall supportive of the rule, stating that the proposed changes would make the rulemaking process more efficient and alleviate confusion. In addition, the changes to the DFR procedures provide the Agency greater flexibility.

AFPM supports the definition of a “major rule” and the provisions requiring advance or negotiated rulemakings for major rules.

One anonymous commenter appeared to copy and paste a partial section of Executive Order 13783, Promoting Energy Independence and Economic Growth, which is outside the scope of this rulemaking.

Another anonymous commenter stated that FMCSA should expand on the Digital Accountability and Transparency Act, which was enacted to link Federal agency spending to Federal program activities so that taxpayers and policymakers can more effectively track Federal spending. That comment is outside the scope of this rulemaking.

NFIB and NYU both suggested changes to the definition of petition. NFIB said the definition should be revised to include FMCSA's constitutional obligation to receive petitions for the redress of grievances. Secondly, FMCSA should receive petitions for any reason when it comes to issuance, amendment, or repeal of FMCSA rules. NYU stated that the definition of petition should be revised because it is too narrowly focused on “burdensome” rules. NYU also stated that FMCSA should provide additional details on its online petition docket such as including links to the text of the original petitions and timetables for responses to them.

NYU also provided recommendations from the Administrative Conference of the United States (ACUS), Recommendations 2014-6, Petitions for Rulemaking. NYU recommended that the Agency should explain how it will coordinate consideration of petitions with other processes used to determine Agency priorities; explain what type of data and arguments are most useful for petitioners to provide to aid FMCSA's evaluation; expand on its openness to new evidence by facilitating communication between Agency personnel and petitioners; and invite public comment on petitions as appropriate.

FMCSA does not limit the scope of stakeholders' petitions for rulemaking. The purpose of the final rule is to implement the FAST Act provisions regarding petitions for rulemaking. The First Amendment right to petition for redress of grievances is available at any time on any issue. FMCSA notes that in addition to petitions for rulemaking, departmental regulations provide that interested persons may file petitions for DOT to issue an exemption from any requirements of a rule or perform a retrospective review of an existing rule. 1 However, this final rule is specific to petitions for rulemaking concerning FMCSA's regulations.

FMCSA does not agree that the proposed definition of petition, as defined in the FAST Act, narrowly focuses only on “burdensome” rules. The definition provides perspective on what petitions should focus on. The fact that the first part in the definition is a request for “a new regulation” without any constraints around it, means that Congress is not focused on only removing “burdensome” rules.

With respect to NYU's comment, FMCSA agrees that the Agency should provide more transparent and timely information on the status of petitions that have been filed. While FMCSA has not made any changes to the regulatory text, the Agency currently provides information concerning the status of petitions via its website, https://www.fmcsa.dot.gov/petitions. Interested parties can review information on petitions that have been submitted, the date the Agency acknowledged the petition, and the date of Agency decisions and rulemaking actions initiated in response to the petitions. The Agency is committed to continuing to provide such information in the future.

FMCSA has already implemented many of the ACUS recommendations, such as coordinating within FMCSA offices on the prioritization of petitions, and the Agency already invites public comment on petitions as appropriate.

NTTC stated that FMCSA's proposed definition of written or in writing includes any method of electronic documentation such as email, but that an email address was not included in proposed § 389.31. FMCSA should specify an email address or submission form for electronic petitions for rulemaking to be consistent with the definition of written or in writing.

NTTC also stated that in proposed § 389.31(a), FMCSA should add the words “interpret or clarify,” between “amend,” and “withdraw.” AFPM supported the definition of a petition, but noted that including “a regulatory interpretation or clarification” in the definition would change the scope of the current regulations, with potentially “negative impacts on FMCSA's ability to provide needed guidance in a timely manner to stakeholders.” Additionally, AFPM stated that the NPRM did not include FAST Act requirements from section 5204(a)(1)-(5) for transparency, incorporating process timelines, and petition prioritization.

FMCSA currently accepts petitions submitted electronically and agrees that petitioners should be able to submit petitions electronically. FMCSA has provided explicit procedures for stakeholders to use for electronically submitting petitions in § 389.31 and in § 389.35. Petitions should be submitted by mail to the Administrator or electronically by using www.regulations.gov.

Despite AFPM's concern about its effect, the term “a regulatory interpretation or clarification” is one of the elements of the statutory definition of petition in section 5204(c) and cannot be omitted.

FMCSA is aware of the requirements on the processing of petitions imposed by section 5204(a)(1)-(5) of the FAST Act. FMCSA determined that inclusion of these requirements in the regulations would make future changes more difficult if alternate methods prove to be more efficient or transparent. However, the Agency will provide more information in the future, once it determines the best path forward to ensure maximum transparency.

NFIB requested that FMCSA revise § 389.21 to allow itself to solicit comments in a language other than English, should the need arise.

NFIB also stated that FMCSA should permit commenters to incorporate by reference laws referred to in the comment, instead of requiring submission of copies of such materials.

FMCSA does not see a need to add regulatory text to allow submission of comments in a language other than English. Should the need arise for comments in another language, the Federal Register document soliciting those comments can make such an exception.

With regard to incorporation by reference, FMCSA can readily obtain copies of State or Federal statutes or regulations mentioned in comments. However, it would be in the petitioners' best interest to quote or provide copies of any other material essential to their argument.

NFIB stated that FMCSA should eliminate confusion about when a rule is a final rule in § 389.29. The commenter said that if a final rule is prepared and submitted to the Administrator for consideration, and then, if appropriate, to the Office of Management and Budget (OMB), it is not a final rule.

NYU stated that FMCSA should consider comments to ANPRMs on benefits as well as costs.

The Transportation Trades Department of the AFL-CIO objected to the FAST Act mandates requiring an ANPRM or negotiated rulemaking for all major rules, but recognized the Agency has limited discretion. However, this commenter believed the Agency could make some changes, and suggested the following:

(1) Additional clarification of the term “significant adverse effect,” which the commenter believes is vague;

(2) Additional consideration on how FMCSA plans to ensure that major regulations are promulgated in a timely manner; and

(3) Judicious use of the waiver provisions, for example where review of a major rule by the Office of Information and Regulatory Affairs (OIRA) took more than 100 days.

NFIB should note that the changes proposed in § 389.29 are about the various offices within FMCSA that prepare final rules as opposed to a select few FMCSA offices. The process for preparing final rules and submitting them to the Administrator, and if necessary OMB, was codified in the CFR in 1970 and amended in 1988. Although a final rule is not legally binding until its effective date, FMCSA drafts the document with the intent of making it final. The term final rule is therefore appropriate.

FMCSA agrees with NYU and has added the term “benefits” to the regulatory text of § 389.13(b)(1)(iii).

Regarding AFL-CIO's comments:

(1) FMCSA will continue to interpret the terms within the definition of “major rule” as it has done when interpreting 5 U.S.C. 804, using guidance provided by OIRA, the Small Business Administration (SBA), and the Department of Transportation;

(2) FMCSA will continue to use its prioritization tools to ensure that delays in rulemaking proceedings do not impose or prolong safety risks; and

(3) FMCSA acknowledges that the example provided by the commenter may present a scenario where use of the waiver provision would be necessary, but the Agency cannot commit to any specific use of the waiver at this time. The Administrator will determine, on a case-by-case basis whether to rely upon the waiver for any particular rulemaking proceeding.

Since the publication of the NPRM, DOT published a final rule on Administrative Rulemaking, Guidance, and Enforcement Procedures, 2 which applies to FMCSA's rulemaking procedures. These DOT procedures also require the publication of ANPRMs for the Department's costliest rulemakings ( i.e., those rulemakings considered to be either “economically significant” or “high impact”). 3 FMCSA anticipates that if a rule is a “major rule,” then it would likely also qualify as an “economically significant” or “high impact” rulemaking, as defined by the Department's procedures at 49 CFR 5.17(a). FMCSA's publication of an ANPRM for these “major rules” would thus satisfy both the requirements of the FAST Act, FMCSA's procedures in part 389, and DOT's procedures in part 5. Unlike FMCSA's part 389 procedures, the ANPRM requirement found in DOT procedures, however, may only be waived by the Secretary of Transportation, the Department's Regulatory Reform Officer, Regulatory Reform Task Force, or unless otherwise required by law.

AFPM did not object to the change to the Notice of Intent/Direct Final Rule (NOI/DFR) procedures in § 389.39 but questioned the need to make the change. It contended that the proposal was not adequately discussed in the NPRM and did not follow the DFR procedures of other DOT modes.

FMCSA is not including any changes to the Direct Final Rule procedures in § 389.39 in today's final rule. Since the publication of the NPRM, the Department's final rule on Administrative Rulemaking, Guidance, and Enforcement Procedures  4 revised all direct final rule procedures to ensure consistency across DOT Operating Administrations, including FMCSA's procedures at 49 CFR part 389. In that final rule, the Department removed language that requires FMCSA to withdraw a direct final rule if a notice of intent to file an adverse comment is received; instead, withdrawal is required only upon the actual receipt of an adverse comment. Individuals who intend to file an adverse comment, but do not have enough time to do so, may instead ask to extend the comment period of a direct final rule so that they may have more time to file an adverse comment.

The FMCSRs, and any exceptions to the FMCSRs, apply only within the United States (and, in some cases, United States territories). Motor carriers and drivers are subject to the laws and regulations of the countries they operate in, unless an international agreement states otherwise. Drivers and carriers should be aware of the regulatory differences amongst nations.

Throughout part 389, FMCSA will change the term “rule making” to “rulemaking” for consistency.

FMCSA adds new definitions of major rule, petition, and written or in writing to § 389.3.

FMCSA slightly revises the definition of major rule to ensure that the term “geographic area” is not modified by the terms “Federal, state, or local government agencies.” The Agency believes this matches the intent of the statutory definition found in the CRA. This change is not intended to create a new category of rules that might be deemed major under the CRA but not major under the FMCSA regulations, or vice versa. In applying this definition, FMCSA will adhere to the same guidance used to determine whether a rule is major under the CRA.

In § 389.13, FMCSA redesignates the existing text as paragraph (a) and adds paragraphs (b)(1) through (c).

Paragraph (a) is revised to align the FMCSA regulations with the DOT final rule on Administrative Rulemaking, Guidance, and Enforcement Procedures, 5 which requires that the Office of the Secretary approve all new FMCSA rulemakings.

Paragraph (b) of § 389.13 and its subparagraphs include the advanced public participation requirements from section 5202 of the FAST Act. Additionally, based on comments to the NPRM, the term “benefits” has been added to further describe the type of information FMCSA would like to receive if a proposed rule is likely to lead to the promulgation of a major rule. Paragraph (c) includes the waiver provision for bypassing the advanced public participation requirements in certain cases, and a cross reference to the DOT requirements for economically significant and high-impact rules, found in 49 CFR 5.17.

The title of § 389.15 and § 389.15(a) are changed by removing the space between “rule” and “making.”

FMCSA revises § 389.21 to include directions on how comments should be submitted. The Agency removes the text regarding incorporation by reference because it is not relevant to the topic of comment submission. FMCSA also renames the section heading “Submission of written comments” to reflect this change.

In § 389.29, FMCSA makes minor changes to the text to clarify the procedure followed when the Agency finalizes a rule.

In § 389.31(a), the word “repeal” is replaced with “withdraw” to more accurately describe the removal of a regulation. In paragraph (b)(1) the word “duplicate” is replaced with “writing” to make use of and follow the definition of this term in § 389.3. This change reflects that the Agency no longer requires duplicate submissions. As a result of comments to the NPRM, FMCSA adds the terms “interpret” and “clarify” to § 389.31(a) to more accurately describe when an interested person may petition the Administrator.

In § 389.31(b)(1), FMCSA added a means for persons wishing to submit petitions electronically to do so.

In § 389.35(a), FMCSA added a means for persons wishing to submit petitions electronically to do so.

This final rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563 (76 FR 3821, Jan. 21, 2011). In addition, this rule is not significant within the meaning of DOT regulations (49 CFR 5.13(a)). Accordingly, OMB has not reviewed it under that Order.

This rule is procedural in nature, primarily impacting FMCSA's process for promulgation of regulations. Therefore, there are no costs associated with this final rule.

Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” does not apply to this action because it is not a significant regulatory action, as defined in section 3(f) of Executive Order 12866.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq. ) requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and 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. 6 Accordingly, DOT policy requires an analysis of the impact of all regulations on small entities, and mandates that agencies strive to lessen any adverse effects on these businesses.

As FMCSA believes there are no costs associated with this rule, the Agency does not expect this final rule to have a significant economic impact on a substantial number of small entities. Consequently, I certify that the action would not have a significant economic impact on a substantial number of small entities.

In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, FMCSA wants to assist small entities in understanding this final rule so that they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the final rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance; please consult the FMCSA point of contact, Mr. Steven LaFreniere, listed in the For Further Information Contact section of this final rule.

Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business Administration's Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of FMCSA, call 1-888-REG-FAIR (1-888-734-3247). DOT has a policy regarding the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. Specifically, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $168 million (which is the value equivalent of $100 million in 1995, adjusted for inflation to 2019 levels) or more in any one year. As the final rule is procedural in nature and is not expected to result in any costs at the societal level, it would likewise not impose costs to State, local, or Tribal governments.

This final rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Any changes to existing collections are de minimis.

A rule has implications for federalism under section 1(a) of Executive Order 13132 if it has “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” FMCSA has determined that this final rule does not have substantial direct costs on or for States, nor does it limit the policymaking discretion of States. Nothing in this document preempts any State law or regulation. Therefore, this final rule does not have sufficient federalism implications to warrant the preparation of a Federalism Impact Statement.

This final rule meets applicable standards in sections 3(a) and 3(b) (2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, Apr. 23, 1997), requires agencies issuing “economically significant” rules, if the regulation also concerns an environmental health or safety risk that an agency has reason to believe may disproportionately affect children, to include an evaluation of the regulation's environmental health and safety effects on children. The Agency determined this final rule is not economically significant. Therefore, no analysis of the impacts on children is required. In any event, the Agency does not anticipate that this regulatory action would in any respect present an environmental or safety risk that could disproportionately affect children.

FMCSA reviewed this final rule in accordance with Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, and has determined it does not effect a taking of private property or otherwise have taking implications.

Section 522 of title I of division H of the Consolidated Appropriations Act, 2005, enacted December 8, 2004 (Pub. L. 108-447, 118 Stat. 2809, 3268, 5 U.S.C. 552a note), requires the Agency to conduct a privacy impact assessment (PIA) of a regulation that will affect the privacy of individuals. This final rule does not require the collection of personally identifiable information.

The Privacy Act (5 U.S.C. 552a) applies only to Federal agencies and any non-Federal agency which receives records contained in a system of records from a Federal agency for use in a matching program.

The E-Government Act of 2002, Public Law 107-347, 208, 116 Stat. 2899, 2921 (Dec. 17, 2002), requires Federal agencies to conduct a PIA for new or substantially changed technology that collects, maintains, or disseminates information in an identifiable form.

No new or substantially changed technology would collect, maintain, or disseminate information due to this final rule. Therefore, FMCSA did not conduct a PIA.

The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this final rule.

FMCSA has analyzed this final rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agency has determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. The Administrator of OIRA has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

This final rule does not have Tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards ( e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) are standards that are developed or adopted by voluntary consensus standards bodies. This final rule does not use technical standards. Therefore, FMCSA did not consider the use of voluntary consensus standards.

FMCSA analyzed this rule for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321, et seq. ) and determined this action is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement under FMCSA Order 5610.1 (69 FR 9680, Mar. 1, 2004), Appendix 2, paragraph 6.x. The Categorical Exclusion (CE) in paragraph 6.x. addresses regulations implementing procedures for the issuance, amendment, revision and rescission of Federal motor carrier regulations ( e.g., the establishment of procedural rules that would provide general guidance on how the agency manages its notice-and-comment rulemaking proceedings, including the handling of petitions for rulemakings, waivers, exemptions, and reconsiderations, and how it manages delegations of authority to carry out certain rulemaking functions.) The content in this rule is covered by this CE and the final action would not have any effect on the quality of the environment.

Executive Order 13783 directs executive departments and agencies to review existing regulations that potentially burden the development or use of domestically produced energy resources, and to appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources. In accordance with Executive Order 13783, DOT prepared and submitted a report to the Director of OMB that provides specific recommendations that, to the extent permitted by law, could alleviate or eliminate aspects of agency action that burden domestic energy production. This final rule was not identified by DOT under Executive Order 13783 as potentially causing or alleviating unnecessary burdens on domestic energy production.

In consideration of the foregoing, FMCSA amends 49 CFR chapter III, part 389 to read as follows:

Background

At the end of fishing year 2019, the Northeast Multispecies fishery experienced significant unexpected economic harm from the effects of state health and travel restrictions due to COVID-19, in combination with disruptions to fishery markets, which resulted in reduced prices for groundfish and a limitation of fishing opportunity. Because these impacts occurred at the end of the fishing year, this loss of fishing opportunity prevented or limited industry participants from capitalizing on investments in quota and Days-at-Sea (DAS) prior to the start of the new fishing year on May 1, 2020.

On July 2, 2020, the New England Fishery Management Council sent NMFS a letter requesting an emergency action to mitigate these significant adverse economic impacts to the groundfish fishery. The Council recommended that through an emergency action, NMFS should:

• Allow sectors to carry over more than 10 percent of their unused fishing year 2019 Annual Catch Entitlement (ACE) into fishing year 2020 for Gulf of Maine (GOM) haddock, Georges Bank (GB) haddock, American plaice, and witch flounder;

• Allow common pool vessels to carryover unused leased-in DAS from fishing year 2019 to fishing year 2020;

• Allow de minimis carryover of fishing year 2019 ACE to be more than one percent of the fishing year 2020 sector sub-ACL for all stocks with carryover; and

• Reopen the post-year sector ACE trading window for fishing year 2019.

After considering the Council's request, NMFS is implementing some, but not all, of the requested emergency action provisions. For the reasons outlined below as justification for an emergency action, this action increases maximum carryover of fishing year 2019 sector ACE for GOM haddock, GB haddock, and American plaice and allows for unused leased-in DAS to be carried over from fishing year 2019 into fishing year 2020 by common pool vessels. This action does not increase maximum carryover of fishing year 2019 sector ACE for witch flounder, increase de minimis carryover of fishing year 2019 ACE, or reopen the post-year sector ACE trading window for fishing year 2019.

Carryover regulations at 50 CFR 648.87(b)(1)(i)(C) allow each groundfish sector to carry over an amount of unused ACE equal to 10 percent of the sector's original ACE for each stock (except for GB yellowtail flounder) that is unused at the end of the fishing year into the following fishing year. However, the total unused sector ACE being carried over, plus the overall ACL, cannot exceed the ABC for the following year. If this were to occur, sector carryover provisions require us to adjust the maximum ACE carryover down from 10 percent to an amount that prevents total potential catch from exceeding the ABC. The final adjustment to the maximum carryover possible for each sector is based on final fishing year catch for the sectors and each sector's total unused allocation; and is proportional to the cumulative Percent Sector Contributions of permits participating in the sector.

This action revises the ACE carryover regulations to increase the maximum amount of ACE for GOM haddock, GB haddock, and American plaice that may be carried over by groundfish sectors from fishing year 2019 into fishing year 2020. The maximum amount of unused 2019 sector ACE for these stocks carried over into fishing year 2020 will not allow catch to exceed the 2020 ABC for each stock ( i.e., the 2020 ABC will be equal to the overall ACL plus the maximum carryover number). The revised carryover cap is a percentage of each sector's original ACE for each stock (Table 1).

This action does not make any changes to the sector ACE carryover provisions for witch flounder. Witch flounder is overfished, in a rebuilding plan, and has an unknown overfishing status and Overfishing Limit (OFL). The July 2020 National Standard 1 Technical Guidance for Designing, Evaluating, and Implementing Carry-over and Phase-in Provisions does not recommend applying carryover or phase-in provisions for stocks that have an unspecified OFL. Though carryover of ACE for witch flounder is already permitted by the sector implementing regulations, increasing the maximum amount of carryover for the stock above 10 percent would increase risk of overfishing.

DAS carryover regulations at § 648.82(a)(1) allow limited access vessels that have unused, unleased DAS available at the end of a fishing year to carry over a maximum of 10 DAS into the following fishing year. These measures are intended to promote safety by reducing risk and increasing flexibility while not compromising the conservation impact of the DAS program. The regulations at § 648.82(a)(1) and (k)(4)(iii) do not allow us to adjust the maximum DAS carryover, nor do they authorize us to allow the carryover of unused leased-in DAS.

This action revises the DAS carryover regulations to allow common pool vessels with unused leased-in DAS at the end of fishing year 2019 to carry those DAS into fishing year 2020, even if doing so would result in a vessel carrying over more than 10 DAS into the fishing year. This action does not revise the regulations to allow any additional carryover of unused allocated DAS.

Regulations at § 648.87(b)(1)(i)(C)( 2 ) set de minimis carryover at one percent of the overall sector sub-ACL in the fishing year in which carryover would be harvested. If the overall ACL for a particular stock is exceeded, the allowed carryover, minus the de minimis amount, would be counted against the sector's ACE for the purposes of determining an overage subject to a sector accountability measure that requires payback.

This action does not increase de minimis carryover for sectors above one percent as requested by the Council because it would not address a recent, unforeseen event or recently discovered circumstance as required by the criteria for an emergency action published in the Federal Register on August 21, 1997, 62 FR 44421, as well as subsequent guidance. De minimis carryover is only triggered by an overage of the overall ACL for a stock. No such overage has occurred in fishing year 2020 to trigger de minimis carryover, and we do not currently anticipate any overages. This action is putting in place measures to address the opposite problem arising from travel and health restrictions, the fishing industry's inability to fully utilize available ACE. Further, there are no immediate benefits from changing the de minimis carryover provision at this time that would outweigh the value of advance notice, public comment, and deliberative consideration of the impacts.

In the beginning of each fishing year, there is a 2-week period for sectors to address any overages from the prior fishing year by transferring ACE to or from other sectors. This 2-week period generally takes place in early July, once final catch information is available to each sector. Sectors are only allowed to transfer ACE to balance an overage, or transfer out quota to assist another sector in balancing its overage. The Council requested that we consider reopening the post-year sector ACE trading window in order to allow sectors to optimize individual sector carryover amounts for fishing year 2020.

This action does not reopen the post-year sector ACE trading window for fishing year 2019. Reopening the post-year trading window would complicate and delay implementation of this emergency action, without significant benefit to sectors as a whole. It would not result in an increase in the overall amount of carryover that could occur, and any ACE carried over from fishing year 2019 to fishing year 2020 can already be traded without limitation in fishing year 2020, without requiring a reopening of the fishing year 2019 trading window.

Reopening the 2019 post-fishing year trading window could potentially result in increases in individual sector carryover amounts, but this is not guaranteed given that sectors are not obligated to trade. It would not increase the overall amount of carryover available to the sectors because we have already calculated the maximum amount of overall carryover by stock that could be allowed for fishing year 2020 without exceeding a stock's ABC. Further, we have already calculated an increased percentage per sector that may be carried over from fishing year 2019 to fishing year 2020.

NMFS' policy guidelines for the use of emergency rules (62 FR 44421; August 21, 1997) specify the following three criteria for emergency actions: (1) The emergency results from recent, unforeseen events or recently discovered circumstances; (2) the emergency presents serious conservation or management problems in the fishery; and (3) the emergency can be addressed through emergency regulations for which the immediate benefits outweigh the value of advance notice, public comment, and deliberative consideration of the impacts on participants to the same extent as would be expected under the normal rulemaking process. NMFS' policy guidelines further provide that emergency action is justified for certain situations where emergency action would prevent significant direct economic loss, or to preserve a significant economic opportunity that otherwise might be foregone. NMFS has determined that extending portions of the carryover provisions in the Northeast Multispecies Fishery Management Plan meets the criteria for emergency action for the reasons outlined below.

The emergency results from recent, unforeseen events or recently discovered circumstances. Towards the end of the 2019 fishing year (March 2020), state health mandates and travel restrictions were implemented in response to the COVID-19 pandemic. These restrictions and mandates contributed to market and supply chain disruptions while also making it difficult for vessels to make fishing trips. This reduced or prevented fishing opportunities. Further, market prices dropped substantially. These impacts were unforeseen during the development of Framework Adjustment 59 that included measures for the 2020 fishing year that began on May 1, 2020.

The emergency presents serious conservation or management problems in the fishery. As described above, unforeseen health mandates and travel restrictions during the last months of fishing year 2019 disrupted vessel business plans, fishing practices and markets. This caused revenues for the groundfish fishery to decline due to abnormally low ex-vessel prices that fell below production costs and lost investment in quota that could not be landed by the end of the 2019 fishing year. Health mandates and travel restrictions additionally prevented or limited common pool vessels from using leased-in DAS, which resulted in lost revenue when the vessels were unable to carry them over into fishing year 2020. Increasing ACE carryover of certain stocks into fishing year 2020 and allowing common pool vessels to carryover unused leased-in DAS will help mitigate negative impacts to the industry, prevent additional economic loss to industry participants, shoreside businesses, and fishing communities, and help offset lost fishing opportunities at the end of fishing year 2019.

The emergency can be addressed through emergency regulations for which the immediate benefits outweigh the value of advanced notice, public comment, and deliberative consideration of the impacts on participants to the same extent as would be expected under the normal rulemaking process. The Council has the authority to develop a management action to increase the maximum of 2019 carryover and allow carryover of unused leased-in DAS. However, an emergency action can be developed and implemented by NMFS more swiftly than a Council action through the public meeting and rulemaking procedures. If the normal Council Framework Adjustment and regulatory process is used to revise the carryover provisions, it would take not be possible for the revised provisions to be implemented prior to the end of the fishing year.

Implementing these measures well in advance of the end of this fishing year will allow vessels more operational flexibility. Timely availability of additional ACE carryover or DAS should provide fishermen with operational flexibility to increase fishing effort within seasonal demands and variations, or to lease out available ACE or DAS to others who may effectively use it. Fully capitalizing on this carryover requires time to plan and adapt to current market and seasonal conditions. Any delay of this action reduces the length of time during which industry could choose to use additional ACE or DAS that have been carried over from fishing year 2019 into fishing year 2020. If the action is not implemented in a timely way well before the end of fishing year 2020, industry participants would be likely unable or less able to effectively use the increased carryover.

The Assistant Administrator for Fisheries, NOAA, has determined that this rule is necessary to respond to an emergency situation and is consistent with the national standards and other provisions of the Magnuson-Stevens Act and other applicable laws. The rule may be extended for a period of not more than 186 days as provided under section 305(c)(3)(B) of the Magnuson-Stevens Act.

The Assistant Administrator Fisheries, NOAA, finds that it would be impracticable and contrary to the public interest to provide for prior notice and an opportunity for public comment. This action is intended to mitigate the impact of lost investment in quota and DAS due to health mandates and major disruptions to markets at the end of fishing year 2019. The action increases maximum ACE carryover for some stocks and allows carryover of unused leased-in DAS by the common pool, allowing industry to use the carried over quota and DAS in fishing year 2020 at a time of their choosing. Any delay of this action reduces the length of time during which industry could benefit from increased ACE or DAS that have been carried over. If the action is not implemented in a timely way well before the end of fishing year 2020, industry participants would be unable to use the increased carryover. Given this, a delay in the implementation of this action could result in additional negative impacts to industry participants and fishing communities. As a result, prior notice and the opportunity for public comment, pursuant to authority set forth at U.S.C. 553(b)(B), would be impracticable and contrary to the public interest. Data supporting the additional ACE carryover were available only recently in October. This action could not be implemented prior to the availability of that data, even though the Council request for an emergency action was received in July.

Similarly, the need to implement these measures in a timely manner for the above reasons constitutes good cause under authority contained in 5 U.S.C. 553(d)(3), to make the rule effective immediately upon publication in the Federal Register .

This action is being taken pursuant to the emergency provision of MSA and is exempt from OMB review.

This rule is an Executive Order 13771 deregulatory action.

This temporary rule for an emergency action is exempt from the procedures of the Regulatory Flexibility Act because the rule is issued without opportunity for prior notice and opportunity for public comment.

This temporary rule for an emergency action contains no information collection requirements under the Paperwork Reduction Act of 1995.

In the interest of receiving public input on this action, the SIR analyzing this action will be made available to the public and this temporary final rule solicits public comment.

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows:

NMFS published a final rule on December 11, 2020 (853 FR 79880) that established the 2021-2022 harvest specifications and management measures for groundfish taken in the U.S. exclusive economic zone off the coasts of Washington, Oregon, and California. That final rule is effective January 1, 2021.

The December 11, 2020 final rule defined the boundaries of the commercial non-trawl rockfish conservation area (RCA) south of 34°27′ north latitude (N lat.) for limited entry fixed-gear vessels as 100 fathoms (fm) to 125 fm. The same rule defined the boundaries of the commercial non-trawl RCA south 34°27′ N lat. for open-access vessels as 100 fm to 150 fm. The correct boundaries for the commercial non-trawl RCA south of south of 34°27′ N lat. for both limited entry fixed-gear and open-access vessels is 100 fm to 150 fm.

This correction is consistent with the Council recommendation for the 2021-2022 groundfish harvest specifications and is a minor correction to correctly implement the Council intent in their final action taken at the June 2020 Council meeting.

In FR. Doc. 2020-27142 at 85 FR 79880 in the issue of December 11, 2020, on page 79922, in amendatory instruction 16, Table 2 (South) to part 660, subpart E, is corrected to read as follows:

The coastal pelagic species (CPS) fishery in the U.S. exclusive economic zone (EEZ) off the West Coast is managed under the CPS Fishery Management Plan (FMP). The Pacific Fishery Management Council (Council) developed the FMP pursuant to the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801 et seq. The six species managed under the CPS FMP are Pacific sardine, Pacific mackerel, jack mackerel, northern anchovy (northern and central subpopulations), market squid, and krill. The CPS FMP is implemented by regulations at 50 CFR part 660, subpart I. As required by the Magnuson-Stevens Act, the CPS FMP and its implementing regulations are consistent with the Act's 10 National Standards. Among other things, the National Standards require that conservation and management measures “prevent overfishing while achieving, on a continuing basis, the optimum yield (OY) from each fishery” (National Standard 1) and “be based upon the best scientific information available” (National Standard 2). 1

Management unit stocks in the CPS FMP are classified under three management categories: Active, monitored, and prohibited harvest species. Stocks in the active category (Pacific sardine and Pacific mackerel) are managed under catch limits that are set periodically or annually based on regular stock assessments. Fisheries for these stocks have biologically significant levels of catch, or biological or socioeconomic considerations requiring this type of relatively intense harvest management procedure. In contrast, stocks in the monitored category (jack mackerel, northern anchovy, and market squid  2 ) are managed under multi-year catch limits and annual quantitative or qualitative reviews of available abundance data without regular stock assessments or required annual adjustments to target harvest levels. This is in part due to the fact that fisheries for monitored stocks do not have biologically significant catch levels and, therefore, do not require intensive harvest management to ensure overfishing is prevented. Allowable catches for stocks in the monitored stock category are set well below maximum sustainable yield (MSY) levels to ensure overfishing does not occur. As a result, monitored stocks have been adequately managed by tracking landings and examining available abundance indices. In contrast, the annual catch limits (ACLs) for stocks in the active category are set much closer to their respective overfishing limit (OFL)/MSY levels due to the higher certainty in their OFLs. Species in both categories may be subject to management measures such as catch allocation, gear regulations, closed areas, or closed seasons. For example, trip limits and a limited entry permit program apply to all CPS finfish. The prohibited harvest species category is comprised only of krill, which is subject to a complete prohibition on targeting and retention.

In September 2011, NMFS approved Amendment 13 to the CPS FMP, which modified the framework process used to set and adjust fishery specifications and for setting ACLs and accountability measures (AMs). Amendment 13 conformed the CPS FMP with the 2007 amendments to the Magnuson-Stevens Act and the Magnuson-Stevens Act National Standard 1 guidelines at 50 CFR 600.310, which for the first time required ACLs be established for management unit species (with exceptions). Specifically, Amendment 13 maintained the existing reference points and the primary harvest control rules for the monitored stocks (jack mackerel, northern anchovy, and market squid), including the large uncertainty buffer built into the acceptable biological catch (ABC) control rule for the finfish stocks. Amendment 13 established a management framework under which the OFL for each monitored stock is set equal to its existing MSY value, if available, and ABC values are set at 25 percent of the OFL to provide a 75 percent scientific uncertainty buffer. It was recognized at the time that these OFLs would be uncertain, therefore the Council's Scientific and Statistical Committee (SSC) recommended that a large uncertainty buffer be used ( i.e., 75 percent reduction) to prevent overfishing. ACLs are then set either equal to or lower than the ABC; annual catch targets (ACTs), if deemed necessary, can be set less than or equal to the ACL, primarily to account for potential management uncertainty.

Compared to the management framework for stocks in the active category, which uses annual estimates of biomass to calculate annual harvest levels, the ACLs for the monitored finfish stocks are not based on annual estimates of biomass or any single estimate of biomass. As described previously, ACLs for monitored finfish are set at the ABC levels, which are no higher than 25 percent of the OFL. OFLs are set equal to estimates of MSY—an estimate that is intended to reflect the largest average fishing mortality rate or yield that can be taken from a stock over the long term (if available) or set based on a stock-specific method if deemed more appropriate. Although the control rules and harvest policies for monitored CPS stocks are simpler than the active category control rules, the inclusion of a large non-discretionary buffer between the OFL and ABC both protects the stock from overfishing and allows for a relatively small sustainable harvest. In recognition of the low fishing effort and landings for these stocks, the Council chose this type of management framework for some finfish stocks in the FMP because it has proven sufficient to prevent overfishing while allowing for sustainable annual harvests, even when the year-to-year biomasses of these stocks fluctuate. This management framework comports with Magnuson-Stevens Act's National Standard 1 guidelines, which provide Councils the jurisdiction to develop ABC control rules and risk policies according to their fishery management objectives (ecological, economic, and social) for the respective FMP. The extent of risk aversion the Council decides is based on social, economic, biological, and ecological factors. To comply with the Magnuson-Stevens Act's National Standard 1 guidelines, the Council's ABC must account for scientific uncertainty in the OFL and, at a minimum, their ABC risk policy must provide at least a 50 percent chance of preventing overfishing when the stock's catch is equal to the ABC. Although this ABC control rule is not subject to this rulemaking, NMFS has determined that the ABC control rule for the central subpopulation of northern anchovy (hereafter referred to as “central anchovy”) appropriately takes into account uncertainty in its OFL level. Additionally, the central anchovy fishery is subject to strict catch accounting and monitoring, therefore the fishery is able to be closed before exceeding the ABC level further ensuring that overfishing does not occur.

Although the allowable catch levels are not required to be adjusted each year for stocks in the monitored category, the Council's Coastal Pelagic Species Management Team is required by regulation to provide the Council an annual Stock Assessment and Fishery Evaluation report, which documents significant trends or changes in the resource, marine ecosystems, and fishery over time, and assesses the relative success of existing State and Federal fishery management programs (see 50 CFR 600.315(d)). 3 The report documents trends in landings, changes in fishery dynamics and available population, and biological information for all CPS stocks and is available for Council review each November. The purpose of this report is to provide the Council the ability to react to the best scientific information available and propose new catch limits if and when changes to management are needed to prevent overfishing or achieve the OY. A similar process is used for other stocks managed throughout the U.S. for which catch limits are not adjusted annually.

On October 26, 2016, NMFS published a final rule (hereafter referred to as the “2016 Rule”) (81 FR 74309) that established ACLs and, where necessary, other reference points ( i.e., OFL and ABC) for stocks in the monitored category of the CPS FMP. The 2016 Rule included an ACL of 25,000 mt for central anchovy. 4 As described earlier in Background on CPS Management for Monitored Stocks ACLs for the monitored finfish stocks are not based on annual estimates of biomass or any single estimate of biomass. Accordingly, the OFL for central anchovy established in Amendment 13 to the CPS FMP was set equal to the long-term MSY estimate previously established in Amendment 8 to the CPS FMP. This long-term MSY estimate was calculated based on biomass estimates from 1964-1990 (Conrad 1991  5 ). In accordance with the ABC control rule for monitored stocks, the ABC was then reduced to 25,000 mt by a precautionary 75 percent buffer to account for scientific uncertainty in the OFL, which is primarily tied to the population volatility of small pelagic fishes. This buffer and resulting ABC were recommended by the Council's SSC and approved by the Council (see 16 U.S.C. 1852(g)). 6 The ACL was set equal to the ABC at 25,000 mt because there was no additional management uncertainty to justify setting the ACL lower than the ABC.

Oceana subsequently challenged the 2016 Rule in Oceana v. Ross, et al., Case No. 16-CV-06784-LHK (N.D. Cal.) (hereafter referred to as “ Oceana I” ), in part, because a recent publication at the time, MacCall et al. 2016  7 (hereafter referred to as the “MacCall publication”), purported that recent biomass levels (2009-2011) had been below the ACL implemented in the 2016 Rule and remained low in 2015. In approving the ACL for the 2016 Rule, NMFS considered this information, but ultimately rejected the low biomass estimates in the MacCall publication despite their being the only estimates for the more recent time period, because NMFS determined that the biomass estimates were not credible estimates for the entire central anchovy stock. The primary rationale for NMFS making this determination was that multiple public scientific reviews by NMFS and other outside scientists, including the Council's SSC, had determined that the statistical method used in the MacCall publication to calculate adult anchovy biomass from counts of anchovy eggs and larvae was not suitable for estimating the total abundance of anchovy (which is necessary in this context for calculating an OFL) and that using data from only a portion of the California Cooperative Fisheries Investigation (CalCOFI) survey also does not allow for estimating total anchovy biomass. The reason for this latter point is that the spatial scale of the data used does not encompass the entire population range of central anchovy. The authors of the MacCall publication themselves reported high uncertainty in the estimates and cautioned against using them as independent measures of biomass. Additionally, at the time of the 2016 Rule, the actual anchovy catch by the fishery in certain years had exceeded the publication's biomass estimate for those years, reinforcing NMFS' determination that the estimates were not reliable.

The Court found, however, that the 2016 Rule for central anchovy, including the ACL it established, violated the Magnuson-Stevens Act and the Administrative Procedure Act (APA). The Court also found that the values for the OFL and ABC on which the ACL was based were arbitrary and capricious because, in the Court's determination, they were outdated. In particular, the Court found that, “the OFL, ABC, and ACL are arbitrary and capricious because Plaintiff has presented substantial evidence that the OFL, ABC, and ACL are not based on the best scientific information available.” The Court also found that, “it was arbitrary and capricious for the Service to fail to consider whether the OFL, ABC, and ACL still prevented overfishing in light of their direct reliance on a [maximum sustainable yield] estimate from a 1991 study that evidence in the administrative record indicated was out of date.” On January 18, 2018, the Court granted Oceana's motion for summary judgment. On January 18, 2019, the Court granted Oceana's motion to enforce the judgment and ordered NMFS to promulgate a new rule in compliance with the Magnuson-Stevens Act and the APA by April 18, 2019.

As a result of the Court's decision in Oceana I, which vacated the 2016 Rule, NMFS was charged with determining and implementing a new OFL, ABC and ACL unilaterally ( i.e., outside of the Council process). In determining these new reference points, NMFS considered the District Court's opinion, which indicated that the vacated reference points were not reflective of recent biomass levels. This conclusion was despite the fact that the vacated 2016 reference points were set using long-term information and thus were representative of the long-term population structure and variability of central anchovy. To address the Court's concern, NMFS examined ways to use recent abundance estimates in the 2019 Rule (84 FR 25196). However, NMFS also determined that a new OFL and ABC that significantly deviated from the management approach set in the CPS FMP for stocks in the monitored category would not be in accordance with the CPS FMP. After reviewing various methods and data, NMFS determined that with the limited time available to analyze more complex approaches for setting new reference points, the most appropriate path for setting an OFL for central anchovy in accordance with the CPS FMP was to use an approach similar to the one used by the Council and approved by NMFS for developing an OFL and ABC for the northern subpopulation of northern anchovy (NSNA) in 2010. This method had been previously approved by the Council's SSC and NMFS and would allow the use of recent biomass estimates.

Consistent with the approach used to set NSNA reference points, the OFL, ABC, and ACL set in the 2019 Rule were based on averaging three of the four estimates of relative abundance for central anchovy available from recent NMFS surveys and a recent estimate of the rate of fishing mortality for central anchovy at MSY or E MSY . 8 The three abundance estimates NMFS used were from NMFS' 2016 and 2018 acoustic-trawl method (ATM) surveys, which were 151,558 mt and 723,826 mt respectively, and NMFS' 2017 daily egg production method (DEPM) survey, which was 308,173 mt. NMFS excluded from further consideration a fourth available abundance estimate, an ATM estimate for 2017, because the ATM survey in the summer of 2017 was focused on the northern portion of the U.S. West Coast as well as the west coast of Vancouver Island, British Columbia, Canada, and was not designed to sample the complete range of central anchovy. The principal objectives of that survey were to gather data on the northern stock of Pacific sardine and, to some extent, the NSNA, and therefore the survey chose not to sample south of Morro Bay, California, which is an area where central anchovy are typically found.

The fishing mortality rate estimate was from an analysis that the Southwest Fisheries Science Center (SWFSC) completed in 2016 as part of an effort examining minimum stock size thresholds for CPS. For potentially deriving an E MSY , this analysis used the most current time-series data available, which comes from the last model-based stock assessment for central anchovy completed for formal management purposes (Jacobson et al. 1995  9 ). This analysis produced estimates of F MSY based on eight alternative models. NMFS used the average of the four best fitting models from that work to calculate an E MSY of 0.239. This methodology resulted in an OFL of 94,290 mt, an ABC of 23,573 mt, and an ACL of 23,573 mt.

In determining whether to use the previously described abundance estimates to develop the reference points for the 2019 Rule, NMFS considered scientific reviews presented to the Council at its April 2018 meeting, 10 which stated that ATM estimates cannot be considered absolute estimates of biomass and should not be used to directly inform management on their own. Specifically, these reviews concluded that, unless ATM estimates are used as a data source in an integrated stock assessment model, two things would need to occur before they could be used to directly inform management: (1) Addressing the area shoreward of the survey that is not sampled; and (2) conducting a management strategy evaluation to determine the appropriate way to incorporate an index of abundance into a harvest control rule. However, NMFS was comfortable at that time with using the ATM estimates from 2016 and 2018, because they represent recent information on the stock and can be considered minimum estimates of the total stock size, and using these estimates in a time series to set an OFL, in combination with reducing the OFL by 75 percent to set the ABC and ACL, would prevent overfishing. Therefore, NMFS determined that using these ATM estimates in the manner described earlier represented use of the best scientific information available for determining the reference points in the 2019 Rule and took the concerns previously expressed by the Court into account.

In determining whether the new reference points were based on the best scientific information available and that the best scientific information available supported that they would prevent overfishing, NMFS again considered the data in the MacCall publication, as well as other existing data sources, including a publication by Thayer et al. 2017  11 (hereafter referred to as the “Thayer publication”), historical estimates of biomass from the last stock assessment NMFS completed for central anchovy in 1995, and more recent estimates of relative abundance from NMFS' ATM and DEPM surveys. Additionally, by this time NMFS also had a better understanding of the anomalous oceanographic conditions that had occurred between 2013-2016 that had caused major shifts in fish distributions during that time. 12

After NMFS' second review and consideration of the MacCall publication and its results, NMFS found that it was not the best scientific information available on historical and recent abundance, nor on annual changes in abundance over time. NMFS maintained that the flaws identified in the 2016 review rendered the biomass estimates as unreliable and too uncertain. NMFS also found the Thayer publication was not the best scientific information available for determining appropriate 2019 reference points because the Thayer publication used the same methodology as the MacCall publication to calculate biomass estimates, and so suffered from the same deficiencies. NMFS concluded that its own, more recent estimates of abundance, which contained high and low abundance estimates, constituted the best scientific information available for setting 2019 reference points and preventing overfishing. Oceana once again challenged the OFL, ABC, and ACL established in the 2019 Rule, in Oceana v. Ross, et al., Case No. 19-CV-03809-LHK (N.D. Cal.) (hereafter referred to as “ Oceana II” ). The Court ultimately vacated the 2019 Rule, finding that: (1) NMFS failed to discredit the evidence put forth by Oceana ( i.e., the MacCall and Thayer publications); (2) the OFL, ABC, and ACL were not based on the best scientific information available and therefore violated National Standard 2; and (3) the 2019 Rule violated National Standard 1's requirement to prevent overfishing. The Court also concluded that, based on the record presented of the 2019 Rule, the MacCall and Thayer publications constituted the best scientific information available regarding recent anchovy abundance estimates and anchovy population fluctuations and that the OFL, ABC, and ACL set in the 2019 Rule were therefore arbitrary and capricious because they did not account for this best scientific information available. The Court further concluded that NMFS' dismissal of McCall and Thayer was arbitrary and capricious because it is “so implausible that it could not be ascribed to a difference in view or the product of the agency's expertise.” The Court pointed specifically to one of the reasons NMFS had cited for dismissing McCall and Thayer; namely, that Thayer is unreliable because it updated MacCall's estimate for 2015 but failed to correct its estimates for 2009-2014. Finally, the Court concluded that, “the fact that NMFS calculated unchanging OFL, ABC, and ACL values for an indefinite period of time based on data from 2016 to 2018 (years in which the anchovy population was drastically increasing) demonstrates that NMFS did not consider the best scientific information available from MacCall and Thayer.”

On September 2, 2020, in Oceana II, the U.S. District Court for the Northern District of California vacated and remanded to NMFS the May 31, 2019 final rule (hereafter referred to as the “2019 Rule”) (84 FR 25196) setting the OFL, ABC, and ACL for central anchovy. The Court ordered NMFS to promulgate a new rule in compliance with the Magnuson-Stevens Act and the APA within 120 days of the Court's order. As described above, NMFS had issued the 2019 Rule pursuant to a 2018 decision from the same Court in Oceana I, in which the Court had vacated the ACL established in a 2016 final rule. NMFS provided additional background information on Oceana I and Oceana II in the preamble to the proposed rule (85 FR 73446).

NMFS is issuing this rule in accordance with the Court's order in Oceana II to promulgate a new rule in compliance with the Magnuson-Stevens Act and the APA. To ensure compliance, NMFS is setting an OFL, ABC, and ACL for central anchovy in accordance with the CPS FMP and in a manner that will protect the stock from overfishing and accommodate the needs of fishing communities. Although NMFS is issuing this rule and revising the values from the 2019 Rule as required by the Oceana II order, NMFS has appealed that order to the Ninth Circuit Court of Appeals. If the Court of Appeals reverses the decision in Oceana II, then NMFS will reinstate the reference points from the 2019 Rule through a notice in the Federal Register .

Although reference points implemented in this rule are similar to those previously vacated, NMFS has determined that they are based on the best scientific information available and that the best scientific information available shows that they will prevent overfishing, in compliance with National Standard 1. In making this determination, NMFS carefully reviewed and considered estimates of abundance from the MacCall and Thayer publications. The purpose of this review was to determine whether those estimates could or should be considered the best scientific information available regarding recent anchovy abundance estimates and anchovy population fluctuations. NMFS also looked at other historical and recent anchovy biomass estimates that had been previously determined to be the best scientific information available on anchovy biomass for years that the MacCall and Thayer publications also calculated estimates.

As stated earlier, for multiple reasons, previous reviews by NMFS and other independent scientists determined that the abundance estimates from the MacCall publication do not represent the best scientific information available for annual estimates of total central anchovy population. Specifically, NMFS and other outside scientists had valid concerns regarding the method used to try to estimate the total abundance of all adult (or spawning adult) anchovy in any one year from counts of anchovy eggs and larvae from only a portion of the California coast where anchovy are found and without using biological information collected from adult anchovy that same year. These conclusions are documented in a report from a May 2016 workshop  13 that included CPS experts from around the world, as well as in an October 2016 report  14 from NMFS scientists. Both of these reports were also subsequently endorsed by the Council's independent scientific review body ( i.e., the SSC).

In light of the Court's finding in Oceana II that, based on the record at the time, the MacCall and Thayer publications constituted the best scientific information available regarding recent anchovy abundance estimates and anchovy population fluctuations, NMFS re-examined the conclusions of the previously discussed 2016 scientific reviews of those publications. Specifically, NMFS reviewed the results of the May 2016 workshop, which was focused on anchovy and the data available to assess the status of the population. This workshop included experts from around the world on coastal pelagic species and was held as a direct result of the MacCall publication, as well as other evidence at the time that anchovy abundance was likely low ( e.g., Leising et al. 2015  15 ). The focus of the workshop was to review the available information on the abundance of anchovy and provide recommendations for conducting stock assessments or other ways of estimating total anchovy abundance that could be used for management, as well as to potentially provide input to the Council on the status of anchovy for their upcoming November 2016 meeting. One of the conclusions of this workshop was that although information on the total abundance of anchovy did not currently exist, and the best way to assess the population would be through a full stock assessment that integrates multiple data sources, there was nevertheless value in attempting to turn trends from eggs and larvae information from the CalCOFI survey into estimates of total anchovy abundance. This approach, called DEPM-lite, was viewed as an extension of the approach used by the MacCall publication, but with an attempt to correct for various issues identified in the calculations contained in the MacCall publication. Between May 2016 and October 2016, NMFS scientists attempted to correct for some of the technical issues originally expressed at the May 2016 workshop. Ultimately, however, NMFS scientists determined that the technical weaknesses could not be overcome and that it would be inappropriate to expand the egg and larval data from CalCOFI into adult biomass in the manner done in the MacCall publication. NMFS presented this analysis to the Council at its November 2016 meeting, 16 and the Council's SSC agreed with NMFS' analysis of the technical weaknesses. 16 Specifically, the SSC stated:

After this review, NMFS remains confident that those scientific reviews from 2016 were thorough and unbiased and finds no reason to disagree with their logic or conclusions.

Although the previously-discussed technical rationale is sound in concluding that neither the MacCall publication nor the Thayer publication using the same methods is the best scientific information available, NMFS acknowledges that those publications contain the only explicit biomass estimates from 2009-2014. NMFS also acknowledges that those publications show that the stock during that time decreased to a very low level and that the “drastic anchovy population fluctuations” contained in the publications “are only (emphasis added) documented by MacCall (2016) and Thayer et al. (2017).” NMFS notes that it has never disputed whether the anchovy population was relatively low during the 2009-2014 time period, at least in the core CalCOFI region; rather, NMFS disputes whether the population was as low as the flawed MacCall and Thayer estimates suggest and whether the adult population was as high as reported in the year preceding the purported decline. The methodological concerns with the MacCall and Thayer publications, combined with the additional uncertainty added by instances of combined fishery catches and predator consumption estimates (Warzybok et al. 2018)  17 well exceeding MacCall and Thayer estimates for some years, have led NMFS to consistently conclude that the year-specific estimates in the MacCall and Thayer publications are not appropriate to use as independent measures for determining reference points for central anchovy and whether those reference points will prevent overfishing.

The authors of the MacCall and Thayer publications themselves cautioned against using their annual estimates as independent measures, stating, “. . . . therefore estimates for recent single years are imprecise and should not be used individually for interpretation.” Because of this, the Thayer publication suggests looking at the average of the last 4 years (2012-2015) provided in that publication, which is 24,300 mt, as evidence of the extremely low level of the stock. In 2018, however, as a result of newer data, the authors of the Thayer publication revised their estimated biomass for 2015, 18 which increased the 4-year average for 2012-2015 to approximately 46,000 mt. While 46,000 mt may still be considered relatively low, that low average is driven mainly by the anomalously low 2012 and 2013 estimates of 9,400 mt and 7,500 mt, respectively. It is also worth noting that 2013 is the year in which fishery catches of central anchovy exceeded the Thayer publication estimate of 7,500 mt—in other words, fishermen actually caught more anchovy than Thayer had estimated even existed. The estimates for the other years in Thayer's 4-year average were the 2014 estimate of 75,300 mt and the revised 2015 estimate of 92,100 mt. NMFS originally raised the point of the revised 2015 estimate to the Court because it changed the narrative of how low the stock may have been, and for how long, and the importance of having accurate estimates, not, as the Court suggested, because it made other estimates unreliable.

During the preparation of the proposed rule, NMFS again examined the MacCall and Thayer publications to ensure their complete consideration in making a determination on appropriate new reference points for central anchovy and whether they would prevent overfishing. Specifically, NMFS freshly reviewed the publications' annual estimates to determine whether, notwithstanding the high degree of uncertainty NMFS has previously determined those estimates contain, they should be relied on as evidence of both: (1) Anchovy abundance for the extraordinarily low years for which NMFS does not have comparable competing estimates; and (2) anchovy population fluctuations for the recent large annual changes in biomass.

As part of this review, NMFS compared overlapping estimates of biomass from the 1961-1994 time series of spawning stock biomass produced in NMFS' 1995 central anchovy stock assessment and recent NMFS ATM and DEPM estimates with estimates in the 1951-2017 Thayer publication's time series. The referenced NMFS stock assessment had been subject to a formal scientific review and determined to be the best scientific information available on the biomass of central anchovy. Although NMFS does not have alternative or competing estimates for 2009-2014, the years in which the Thayer publication estimated historically low anchovy abundance, NMFS does have competing estimates for 24 other years between 1961 and 2017. For these overlapping years, NMFS can find no reason that the estimates from the MacCall or Thayer publications should be considered the best scientific information available over existing NMFS estimates. In comparing the estimates for the historical time period (pre-1994), NMFS found that the average per-year difference in biomass estimates between Thayer and NMFS' estimates is over 550,000 mt, with the largest difference in any given year being nearly 1.8 million mt. The significant differences in these comparable estimates raises additional valid concerns about the reliability of the estimates found in the MacCall and Thayer publications, and further supports NMFS' rationale for concluding that, for those years for which data only exist from the MacCall and Thayer publications, that data cannot be considered the best scientific information available for making determinations about catch limits for anchovy.

A primary reason for the discrepancy between NMFS' estimates and the MacCall and Thayer estimates is likely the various methodological issues with the calculations found in those publications, which are described earlier in this preamble. These methodological issues are best highlighted when looking at the discrepancy in the estimates for 2017. In 2017, NMFS scientists estimated the spawning biomass of central anchovy to be 308,173 mt using DEPM. The Thayer publication's spawning biomass estimate for this same year is 1,169,400 mt—a difference of more than 860,000 mt. The DEPM method used by NMFS, like the method used in the MacCall and Thayer publications, uses egg and larval data; however, unlike the method used in the MacCall and Thayer publications, the DEPM method uses information from adult fish and eggs and larvae from the same year, and therefore does not need to expand egg and larval data into adult biomass using biological data from a different time period (which in the case of MacCall and Thayer, was the 1980s). This method of expansion was the primary technical flaw identified with the MacCall and Thayer methodology, rendering the estimates from those publications unreliable for estimating total biomass. NMFS' 2017 DEPM estimate does not suffer from this same deficiency because it is a direct calculation derived using reproductive information from adult fish collected in the same year and same ship-based survey as the egg and larval information.

By using biological data from adult fish and eggs collected in the same year, as NMFS did in 2017, there was no need to expand the egg data into estimates of biomass-based adult information from a different time period, as done in the MacCall and Thayer publications. In addition, the 2017 DEPM estimate developed by NMFS was derived using egg data from more than just the core CalCOFI region, as was used in the MacCall and Thayer publications. The survey data used for this estimate was from north of San Francisco, California, to San Diego, California, and therefore covered the majority of the U.S. range of central anchovy. By comparison, the northern extent of the CalCOFI data used in the MacCall and Thayer estimates is near Point Conception, California, which is well south of San Francisco, and therefore includes less than half of the coastline covered in the NMFS survey. Despite using survey data from a larger region and using a scientifically-validated method to calculate the biomass of small pelagics, NMFS' biomass estimate for 2017 was nevertheless over 860,000 mt lower than the Thayer estimate for that year. This degree of difference in abundance can have a large impact when explicit values are needed to calculate reference points like is being done through this action. Which is why previous scientific reviews of the estimates in MacCall and Thayer stated that although they provided information on trends or relative abundance levels, they should not be used as total estimates. For example, if NMFS were to replace the 2017 estimate used in this rulemaking with that from the Thayer publication it would result in a nearly 13,000 mt difference in the ABC calculation.

These discrepancies in comparable data from both the historical and recent estimates, as well as the other biological and technical issues stated above, render the estimates from MacCall and Thayer unreliable as a measure of the actual population size of central anchovy. These estimates are therefore not the best scientific information available on the historical annual biomass estimates of anchovy in any given year to be used for management purposes. However, even if NMFS were to consider the 1951-2015 time series from MacCall and Thayer as best scientific information available for the annual abundance of central anchovy, which it does not, NMFS notes that during that 57-year time frame over which the MacCall and Thayer publications presented biomass estimates, the biomass only dropped below 100,000 mt 15 times, or 26 percent of the time, and more importantly, only stayed below 100,000 mt for more than one year twice over those 57 years: Once during the referenced 2009-2015 time period and once during the early 1950s. NMFS notes further, however, that for the period of purported low abundance in the early 1950s, catch of central anchovy in one of those years was over double the estimated biomass and three times greater in another. Therefore, those biomass estimates are likely underestimated. Given the infrequency of such low biomass, NMFS' proposed referenced points would have at least a 50 percent chance of preventing overfishing over the long term. 19

As noted previously, the Court ordered NMFS to promulgate a new rule within 120 days of its September 2, 2020, order. NMFS therefore determined that, with such limited time available to develop and analyze more complex approaches for setting these reference points, the most appropriate path at this time for setting an OFL for central anchovy in accordance with the CPS FMP is to use the same method as in the 2019 Rule, however updated with the most recent information on the current status of central anchovy, the SWFSC's 2019 ATM estimate (810,634 mt). This approach included averaging four estimates of relative abundance for central anchovy available from recent NMFS surveys and a recent estimate of the rate of fishing mortality for central anchovy at MSY or E MSY . 20 The four abundance estimates NMFS used were from NMFS' 2016, 2018, and 2019 ATM surveys, which were 151,558 mt, 723,826 mt, and 810,634 mt respectively, and NMFS' 2017 DEPM survey, which was 308,173 mt. The fishing mortality rate estimate was from an analysis that the Southwest Fisheries Science Center (SWFSC) completed in 2016 as part of an effort examining minimum stock size thresholds for CPS. For potentially deriving an E MSY , this analysis used the most current time-series data available, which comes from the last model-based stock assessment for central anchovy completed for formal management purposes (Jacobson et al. 1995). 21 This analysis produced estimates of F MSY based on eight alternative models. NMFS used the average of the four best fitting models from that work to calculate an E MSY of 0.239. More information on the selection of this data and the calculations is provided in the preamble to the proposed rule.

In making this decision, NMFS considered the Court's two primary findings in Oceana II : That the McCall and Thayer publications constituted the best scientific information available and that NMFS's 2019 ACL would not prevent overfishing in all years, based on the evidence presented to the Court at that time. NMFS thoroughly reviewed the data in these two publications during the preparation of the proposed rule and this final rule, and has determined that they do not constitute the best scientific information available for setting or determining appropriate reference points for central anchovy. Additionally, even if NMFS were to consider that information as best scientific information available, it would not change NMFS' determination that the data we have used, in combination with the CPS FMP's ABC control rule risk policy for stocks in the monitored category, result in reference points that are consistent with the dual mandates of National Standard 1 (preventing overfishing while achieving, on a continue basis, OY) and other Magnuson-Stevens Act provisions.

The 2019 method for calculating reference points results in an OFL of 119,153 mt and an ABC of 29,788 mt. Although previous ACLs for northern anchovy have been set equal to the calculated AC level, for this action NMFS is implementing an ACL less than the ABC level at 25,000 mt. Although there is no management uncertainty that requires reducing the ACL from the ABC, prior environmental analyses have only analyzed an ACL up to 25,000 mt, which is also the Council's previous determination of OY for the stock.

In the proposed rule, NMFS notified the public that the proposed reference points might change if finalized ATM estimates for 2015 and 2017 could be incorporated into the OFL calculation. Although a reexamination and review of an estimate for 2015 has begun, that process is still ongoing to determine whether one can be finalized and therefore NMFS was not able to consider it as part of this rulemaking. As part of this process NMFS is also reexamining its 2016 ATM estimate, however at this point in time the 2016 estimate used to calculate the OFL in this rulemaking is still considered best scientific information available for that calculation. With regards to 2017 information, NMFS determined it was appropriate to only use the DEPM estimate from 2017 as was done in the 2019 rule. Therefore, NMFS is implementing the OFL, ABC and ACL from the proposed rule of 119,153 mt, 29,788 mt, and 25,000 mt.

If the ACL is reached, the fishery will be closed until the beginning of the next fishing season. The NMFS West Coast Regional Administrator will publish a notification in the Federal Register announcing the date of any such closure.

The CPS FMP states that ACLs for stocks in the monitored stocks category are specified for multiple years until such time as the species becomes actively managed or new scientific information becomes available to warrant a change to them. However, in the proposed rule, NMFS solicited public comment on the potential to limit the effectiveness of the final rule to 3 or 4 years. Additionally, NMFS solicited public comment on the potential of setting a biomass threshold whereby the ACL would automatically be reduced if the anchovy population were to fall below that threshold for a certain period of time. After further review of these potential measures, and in consideration of the public comments received, NMFS has decided not to explicitly limit the effective period of the ACL or implement a minimum biomass threshold in this rule. The primary reason for this decision is that NMFS has determined that the OFL, in combination with the ABC and ACL finalized in this rule, are sufficient to prevent overfishing over the long term and are based on the best scientific information available.

Although NMFS is not implementing an explicit expiration of the ACL in this action, it is NMFS' expressed intent to work with the Council to have the reference points being implemented through this action be replaced by Council recommended ones sometime within the next two years. To accomplish this, NMFS intends to ask the Council to schedule an agenda item in the spring of 2022 to develop recommendations to NMFS. Under the timelines the Court imposed for promulgating both this rule and the 2019 Rule it replaced, it was not possible to thoroughly engage the Council in setting a multi-year ACL for this stock. Instead, NMFS had to develop and implement these actions unilaterally pursuant to the general Secretarial authority of the Section 305(d) of the Magnuson-Stevens Act (16 U.S.C. 1855(d)), without recommendation from the Council. NMFS views the Council process, both the public engagement and scientific review aspects, as important steps in determining and setting appropriate catch levels for a fishery. This is the expressed design and purpose of the Councils. Because of the compressed timelines under which NMFS had to promulgate both this rule and the 2019 Rule, the Council did not have the opportunity to conduct its normal public meeting process and make formal recommendations to NMFS. Additionally, the Council had limited time to review and provide feedback to NMFS on this rule or the 2019 Rule. The Council highlighted this time-constraint in their public comment on the 2019 Rule and during their November 2020 Council meeting where the proposed rule published mid-meeting, not allowing some advisory bodies to review and comment on the proposed rule, which led the Council to decline to provide public comments on this action. During both Council meetings the Council also generally expressed that they also would prefer that rulemakings such as this action go through the Council process instead of unilaterally by NMFS. Although NMFS cannot require the Council to take action over the next two years, NMFS intends to engage and work with the Council to move towards them taking their own action on this stock. Such a subsequent rule may not necessarily result in reference points that are different from those being implemented in this final rule, however they will have the benefit of having been recommended through the public Council process.

Related to NMFS' intention to work with the Council in the near future to develop a recommendation that would replace the reference points set through this action, is potential for new data and biological information on northern anchovy may become available over the next 6 to 18 months in the form of new or revised ATM estimates from 2015 and 2016, 22 as well as through a research stock assessment. NMFS expects that if any of this work is completed it will raise questions as to whether the reference points finalized through this action will need to be revised. Although NMFS will review this information to determine whether it warrants a revision to the reference points set through this rule, as stated above, NMFS believes that the Council process is the more appropriate arena for decisions on these reference points to be made. If and when available, NMFS will present this information to the Council to allow them to make such a decision. NMFS hopes that, given there will likely be questions as to potential revisions to the catch levels based on this new information, having the Council take action in the near term will reduce some uncertainty in terms of the timing of a potential change for the affected fishing industry that relies on a certain level of stability to be able to plan for the future and maintain certain markets.

NMFS' desire to have the Council replace this rule in the near future however, should not be seen as an indication that NMFS has any concerns about the ability of the reference points being implemented through this action to protect against overfishing in 2023 and beyond or an indication that a subsequent rule will necessarily result in reference points that are different than those being implemented in this final rule. As always, the decision to revise the reference points will be guided by the best scientific information available and compliance with Magnuson-Stevens Act and other applicable laws.

On November 18, 2020, NMFS published a proposed rule for this action and solicited public comments (85 FR 73446), with a public comment period that ended on December 3, 2020. NMFS received only two comment letters on the proposed rule, each containing multiple comments. One letter was submitted by the California Wetfish Producers Association (CWPA) and expressed support for the proposed reference points. The other letter one was submitted jointly by two environmental non-governmental organizations, Oceana and Earthjustice, and expressed concern over aspects of the proposed rule and its ability to prevent overfishing. NMFS notes that some components of the comment letter from Oceana and Earthjustice included recommendations to change the default ABC control rule for monitored stocks and the central anchovy management framework, but such measures were not within the scope of this rulemaking, and therefore NMFS did not respond to those comments. NMFS encourages Oceana and Earthjustice to continue bringing concerns over the central anchovy management framework to the Council. NMFS summarizes and provides responses to the relevant components of both comments below. NMFS made no changes to the proposed rule in response to the comments received.

Comment 1: The CWPA, a primary CPS industry representative, submitted a public comment in support of the proposed reference points for central anchovy and NMFS's process for their development. In regards to the potential additional management measures, the CWPA stated that they are not opposed to the concept of additional management measures for central anchovy, but feel those concepts should be developed stepwise through the Council process with scientific and stakeholder input as opposed to enforced via a unilateral action by NMFS.

Response: NMFS agrees that the appropriate process for making changes to anchovy management, including the additional management measures described in the proposed rule, is through the traditional Council process.

Comment 2: Oceana and Earthjustice stated that the proposed reference points were not set using the best scientific information available, and the rule therefore violates Magnuson-Stevens Act National Standard 2. Specifically, the commenters faulted NMFS for not using the biomass estimates from 2009-2014 that were published in the MacCall and Thayer publications, which the commenters contend constitute the best scientific information available for past populations sizes of central anchovy and fluctuations in those sizes from one year to the next. The commenters spent considerable time in their submission explaining why they believe NMFS' reasoning for not using the biomass estimates in the McCall and Thayer publications is baseless.

Response: NMFS used the best scientific information available to determine the OFL for central anchovy and the best scientific information available supports NMFS determination that the reference points, in particular the OFL and ABC, being set by this action are consistent with the dual mandates of National Standard 1 (preventing overfishing while achieving, on a continuing basis, OY) and other Magnuson-Stevens Act provisions. As described in the preamble of the proposed rule, NMFS disagrees that the MacCall and Thayer publications constitute the best scientific information available for setting central anchovy reference points or that they provide novel information on the biology or population dynamics of northern anchovy, factors that are already included in the risk policy of the ABC control rule, that invalidate the reference points set through this rule. NMFS has repeatedly stated that it agrees that the MacCall and Thayer biomass estimates are useful in that they demonstrate and support the general trend that NMFS has also observed in the naturally fluctuating central anchovy abundance; however, their high degree of uncertainty, which the commenter regularly points out in their comment letter, makes them inappropriate for use as single point biomass estimates in any given year upon which to base catch levels. As stated in the preamble to this rule however, out of a desire to be deferential to the Court's decision and to ensure full consideration of all the information, NMFS re-reviewed both MacCall and Thayer publications to evaluate whether their biomass estimates could be used to calculate new reference points or whether the information included in them somehow invalidated NFMS reference points. To this end, NMFS provided new, extensive analysis to better explain its decision to not use the MacCall and Thayer biomass estimates—see NMFS' 2020 Review of the MacCall and Thayer Publications in the preamble to the proposed rule and this final rule. After a thorough review and additional consultation with the SWFSC, NMFS has found rational basis for not using their biomass estimates, and has determined that the biomass estimates in these publications do not invalidate the references being set through this action. NMFS has instead determined that the best scientific information available for setting new reference points under the timeline provided by the Court, as well as to address the Court's concerns from Oceana I, is the SWFSC' recent ATM and DEPM abundance estimates described in the Final Reference Points section of this rule.

Contrary to Oceana and Earthjustice's assertion, these values were not chosen arbitrarily and include both relatively high and low abundance estimates. For example, the 2016 ATM estimate (151,558 mt) and the 2017 DEPM estimate (308,173 mt) are lower than 60 and 50 percent of the 57 years of biomass estimates in the Thayer publication, respectively. NMFS also points out that if we were to use the average from the biomass estimates provided in appendix I of Oceana and Earthjustice's comment letter (500,293 mt) it would result in an OFL of 119,570 mt; a value slightly higher than the OFL being implemented by NMFS.

Comment 3: Oceana and Earthjustice stated that the proposed reference points will not prevent overfishing over the long term without the implementation of additional management measures, and the rule therefore violates Magnuson-Stevens Act National Standard 1. Oceana and Earthjustice specifically stated that the proposed reference points should be effective for only one year, or at most two, and if the effective period is greater than one year, then NMFS should include a minimum biomass threshold below which the directed fishery is closed and the ACL is reduced.

Response: The commenters misunderstand the requirements of the Magnuson-Stevens Act and the intent of the National Standard 1 guidelines. Under Oceana and Earthjustice's premise, if NMFS sets a multi-year ACL, it must set a drastically low ACL simply because the stock dropped to low levels once in the last 63 years to ensure that over the next 63 years, there is a 100 percent chance that overfishing will never occur. The National Standard 1 guidelines state that, “the Council's risk policy for the ABC control could be based on an acceptable probability (at least 50 percent) that catch equal to the stock's ABC will not result in overfishing, but other appropriate methods can be used.” NMFS demonstrated in the preamble to the proposed rule and this final rule that the new reference points more than satisfy this legal requirement. As part of the commenters' claim that the reference points set through this rule will not prevent overfishing is a statement that central anchovy biomass frequently drops to less than 10 percent of long-term averages; however, based on the long-term average biomass estimate from the Thayer publication, the biomass only dropped below that long-term average in 9 over the 57-year time series, which does not seem to qualify as “frequently.” Therefore, even if NMFS were to consider the MacCall and Thayer biomass estimates as the best scientific information available for analyzing long-term trends in central anchovy abundance, the 25,000-mt ACL would still meet the mandates of Magnuson-Stevens Act standards. Furthermore, if the 1951-2015 published time series from MacCall and Thayer was used, NMFS notes that during that 57-year time frame over which the MacCall and Thayer publications presented biomass estimates, the biomass only dropped below 100,000 mt 15 times, or 26 percent of the time, and only stayed below 100,000 mt for more than one year twice over those 57 years: Once during the referenced 2009-2015 time period and once during the early 1950s. Although the ABC control rule used in this action is not subject to this rulemaking, it is NMFS' determination that the risk policy incorporated into that control rule, more than accounts for the infrequent potential for the stock to decline to such low levels.

Regarding Oceana and Earthjustice's specific requests for additional management measures, see the Potential Additional Management Measures section earlier in this preamble. Although NMFS solicited public comment on potential additional management measures, NMFS has determined that they are not necessary to prevent overfishing, for all the reasons stated in that section.

Comment 4: Oceana and Earthjustice stated that the reference points will not provide adequate forage for marine predators, including ESA-listed marine predators when central anchovy abundance is low.

Response: Per the Magnuson-Stevens Act's National Standard 1, NMFS must set catch limits such that the fishery achieves OY, which is defined as, “the greatest overall benefit to the Nation, particularly with respect to food production and recreational opportunities, and taking into account the protection of marine ecosystems.” The 119,153-mt OFL was already substantially reduced to an ABC of 29,788 mt because of the 75 percent scientific uncertainty buffer, which includes ecological considerations like predator consumption. The ABC was then further reduced to an ACL of 25,000 mt. NMFS reasonably determined that no further reduction to the ACL was necessary because there is no evidence that harvest up to the ACL over the long term will cause harm to anchovy predator species through prey removal. Central anchovy biomass is driven primarily by environmental conditions, not by the small commercial take in the central anchovy fishery. Oceana has in multiple instances claimed that NMFS's central anchovy reference points do not provide adequate forage for marine predators, yet has never presented any direct evidence that the small commercial fishery for central anchovy results in a lack of forage availability for any species, even in circumstances of low anchovy biomass. For example, there was no evidence of direct competition between the fishery and anchovy predators during the years Oceana and Earthjustice purport that the anchovy population was low. Although it is true that some predators in southern california experienced decreased food availability during the 2014-2015 time period, these predators, such as the Brown Pelican and California sea lions, neither of which are endangered species, have evolved explicit reproductive and foraging strategies in response to the natural fluctuations of their prey. NMFS notes that the time frame for which the commenters highlight adverse effects to some marine predators are the same years when highly unusual environmental conditions shifted many fish stocks out of their typical geographic range, as was the case for central anchovy in 2014 and 2015.

Much of Oceana and Earthjustice's commentary about ESA analysis addresses concerns beyond the scope of the proposed action. Relevant to this action, the commenters did not introduce any new scientific information that would require NMFS to reinitiate consultation under ESA. NMFS determined that these harvest specifications fall well within the scope of impacts to ESA-listed species, including listed marine predators, considered under prior consultations for the CPS FMP, and that fishing activities pursuant to this rule are not likely to jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS or result in the destruction or adverse modification of critical habitat of any such species.

Comment 5: Oceana and Earthjustice criticized NMFS' decision to base the proposed catch limits on biomass estimates from 2016-2019, claiming that NMFS purposefully omitted data from the previous 7 years of low abundance— i.e., MacCall and Thayer's biomass estimates from 2009-2014 and NMFS' own ATM estimate from 2015.

Response: After extensive scientific review and additional consultation with the SWFSC, NMFS has determined that the SWFSC's 2016, 2018, and 2019 ATM abundance estimates and 2017 DEPM abundance estimate constitute the best scientific information available for setting new central anchovy reference points that will prevent overfishing over the long term. The commenters are correct that NMFS omitted the SWFSC's draft 2015 ATM estimate and the 2009-2014 MacCall/Thayer biomass estimates. NMFS did not use the SWFSC's 2015 ATM estimate because that 2015 estimate was the SWFSC's first attempt at an ATM estimate for central anchovy, and that estimate did not complete NMFS' formal review process to be finalized. However, the SWFSC is currently reviewing a new 2015 estimate, which may make it available for use in a potential future revision to central anchovy reference points if finalized. NMFS has stated in many previous instances that NMFS has determined that biomass estimates from the MacCall and Thayer publications do not constitute the best scientific information available for setting new central anchovy reference points. The commenters are also correct that NMFS does not have its own 2009-2014 biomass estimates; NMFS stated this in the preamble to the proposed rule and this final rule. However, NMFS has enough information on the biology and historical population sizes of central anchovy to support its determination that the reference points in this rule can prevent overfishing. As NMFS has also repeatedly stated, the idea that the central anchovy population can go to very low levels and that its size can fluctuate are not new concepts: This type of biology is the reason the risk policy included in the ABC control rule for this stock and other similar stocks in the CPS FMP includes the unprecedented buffer that it has.

NMFS is issuing these regulations under Magnuson-Stevens Act 305(d), 16 U.S.C. 1855(d), without a recommendation from the Council. The reason for using this regulatory authority is because this final rule must be published under an extremely aggressive timeline ordered by the U.S. District Court for the Northern District of California, which does not allow for compliance with the framework provisions of the CPS FMP.

This final rule has been determined to not be significant for purposes of Executive Order 12866.

This final rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

A final regulatory flexibility analysis (FRFA) was prepared pursuant to 5 U.S.C. 604(a), and is included in this final rule. The FRFA incorporates the initial regulatory flexibility analysis (IRFA). NMFS did not receive any public comments on the IRFA or regulatory flexibility analysis (RFA) process. The FRFA describes the economic impact this final rule may have on small entities. The results of the analysis are stated below. A copy of this analysis is available from NMFS (see ADDRESSES ).

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a notification email to relevant stakeholders that also serves as small entity compliance guide (the guide) was prepared. Copies of this final rule are available from the West Coast Regional Office, and the guide, i.e., the notification letter, will be emailed to all stakeholders.

For RFA purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing ( see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide.

The action being implemented through this rule is the establishment of a new OFL, ABC, and ACL for the central anchovy subpopulation.

The small entities that would be affected by this action are primarily the vessels that harvest central anchovy as part of the West Coast CPS purse seine fleet. The average annual per vessel revenue in 2017 for the West Coast CPS finfish small purse seine fleet was below $11 million; therefore, all of these vessels are considered small businesses under the RFA. Because each affected vessel is a small business, this rule is considered to equally affect all of these small entities in the same manner. Therefore, this rule would not create disproportionate costs between small and large vessels/businesses. To evaluate whether this rule could potentially reduce the profitability of affected vessels, NMFS compared current and average recent historical landings to the proposed ACL ( i.e., the maximum fishing level for each year). The final ACL for central anchovy is 25,000 mt, which is slightly higher than the vacated ACL (23,573 mt). In 2019, approximately 10,162 mt of central anchovy were landed. The annual average harvest from 2010 to 2019 for central anchovy was approximately 7,950 mt. Central anchovy landings have been well below the proposed ACL in 8 of the past 10 years. Therefore, although the establishment of a new ACL for this stock is considered a new management measure for the fishery, this action should not result in changes in current fishery operations. As a result, the ACL implemented in this rule is unlikely to limit the potential profitability to the fleet from catching central anchovy and therefore would not impose significant economic impacts.

The central anchovy fishery is a component of the CPS purse seine fishery off the U.S. West Coast, which generally fishes a complex of species that also includes the fisheries for Pacific sardine, Pacific mackerel, jack mackerel, and market squid. Currently there are 58 vessels permitted in the Federal CPS limited entry fishery off California. Annually, 32 of these 58 CPS vessels landed anchovy in recent years.

CPS finfish vessels typically harvest a number of other species, including Pacific sardine, Pacific mackerel, and market squid, making the central anchovy fishery only one component of a multi-species CPS fishery. Therefore, the revenue derived from this fishery is only part of what determines the overall revenue for a majority of the vessels in the CPS fleet, and the economic impact to the fleet from the action cannot be viewed in isolation. CPS vessels typically rely on multiple species for profitability because abundance of the central anchovy stock, like the other CPS stocks, is highly associated with ocean conditions and seasonality. Variability in ocean conditions and season results in variability in the timing and location of CPS harvest throughout the year. Because each species responds to ocean conditions in its own way, not all CPS stocks are likely to be abundant at the same time. Therefore, as abundance levels and markets fluctuate, the CPS fishery as a whole has relied on a group of species for its annual revenues.

NMFS reviewed and evaluated options for other methods and data sources to update the estimate of MSY or develop a new long-term OFL. However, NMFS had limited time to fully review these types of methods; therefore, an alternative such as this was not fully developed. Additionally, this action maintains the management approach set in the FMP for stocks in the monitored category, which dictates how the OFL and ABC can be set, thereby limiting the alternatives for these values. The CPS FMP states that the ACL is set equal to the ABC or lower if determined necessary to prevent overfishing or for other OY considerations not already built into the ABC control rule. Although there is no management uncertainty that requires reducing the ACL from the ABC, prior environmental analyses have only analyzed an ACL up to 25,000 mt, which is also the Council's previous determination of OY for the stock. As previously stated, NMFS does not expect the proposed reduction in the ABC to negatively impact regulated fishermen, as the proposed ACL (25,000 mt) is higher than the vacated ACL (23,573 mt).

During the proposed rule stage, NMFS proposed the option of implementing a biomass threshold whereby, if the best scientific information available indicates the stock's abundance drops below this threshold, then the ACL would be automatically reduced. A reduced ACL resulting from the this type of management measure would have potential to impact regulated fishermen through a consequent reduction in fishing opportunity, but the extent of economic impact would depend on a variety of factors, including the percentage of the reduction. NMFS decided to not to implement this management measure because NMFS determined it was not necessary in order to prevent overfishing over the long term. Therefore, NMFS did not further analyze potential economic impacts from this type of management measure during the final rule stage.

Thus, no significant alternatives to this final rule exist that would accomplish the stated objectives of the applicable statutes while minimizing any significant economic impact of this final rule on the affected small entities. However, as stated above, this final rule is not expected to have a significant economic impact on the regulated fishermen.

This final rule contains no information collection requirements under the Paperwork Reduction Act of 1995.

For the reasons set out in the preamble, 50 CFR part 660 is amended as follows:

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council (Council) under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

Pursuant to the final 2020 and 2021 harvest specifications for groundfish in the GOA (85 FR 13802, March 10, 2020), NMFS closed directed fishing for Pacific cod in the GOA in accordance with § 679.20(d)(1)(iii) through December 31, 2021.

As of December 17, 2020, NMFS has determined that 5,590 metric tons (mt) in the Western Regulatory Area and 10,242 mt in the Central Regulatory Area of the GOA of Pacific cod TAC is available in 2021. This is based on the Council's December 2020 recommendation for the 2021 Pacific cod TAC in the GOA. NMFS issued an inseason adjustment to adjust the 2021 Pacific cod TAC to reflect the Council's recommendations (85 FR 83834, December 23, 2020). The adjusted 2021 Pacific cod TACs are sufficient to allow for directed fishing for Pacific cod by vessels using jig gear, vessels using pot gear, and catcher/processors (CPs) using hook-and-line gear in the Western Regulatory Area of the GOA. The adjusted 2021 Pacific cod TACs also are sufficient to allow for directed fishing for Pacific cod by vessels using jig gear, vessels using pot gear, catcher vessels using hook-and-line gear, and CPs using hook-and-line gear in the Central Regulatory Area of the GOA.

Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C), and (a)(2)(iii)(D), and to fully utilize the 2021 Pacific cod TAC in the Western Regulatory Area of the GOA, NMFS is terminating the previous closures and is opening directed fishing for Pacific cod by vessels using jig gear, vessels using pot gear, and CPs using hook-and-line gear.

Additionally, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C), and (a)(2)(iii)(D), and to fully utilize the 2021 Pacific cod TAC in the Central Regulatory Area of the GOA, NMFS is terminating the previous closures and is opening directed fishing for Pacific cod by vessels using jig gear, vessels using pot gear, catcher vessels less than 50 feet length overall (LOA) using hook-and-line gear, catch vessels greater than or equal to 50 feet LOA using hook-and-line gear, and CPs using hook-and-line gear.

This action will enhance the socioeconomic well-being of harvesters in this area. The Administrator, Alaska Region (Regional Administrator) considered the following factors in reaching this decision: (1) The adjusted 2021 Pacific cod TAC in the GOA and (2) the harvest capacity and stated intent on future harvesting patterns of vessels in participating in this fishery.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of directed fishing for Pacific cod in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of December 23, 2020.

Without this inseason adjustment, NMFS could not allow the fishery for Pacific cod in the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule.

Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until January 15, 2021.