Acronyms and Abbreviations. Frequently used acronyms and abbreviations are set forth below for reference.

DOE is responsible for authorizing exports of domestically produced natural gas—including LNG, compressed natural gas, and compressed gas liquid  1 —to foreign countries under section 3 of the NGA. 2 Under section 3(c) of the NGA, exports of natural gas to countries with which the United States has entered into a free trade agreement (FTA) requiring national treatment for trade in natural gas (FTA countries) are “deemed to be consistent with the public interest.”  3 Therefore, applications authorizing exports of natural gas to FTA countries must be granted “without modification or delay.”  4 Section 3(a) of the NGA governs exports to any other country with which trade is not prohibited by U.S. law or policy (non-FTA countries). 5 DOE, as affirmed by the U.S. Court of Appeals for the District of Columbia Circuit, has consistently interpreted NGA section 3(a) as creating a rebuttable presumption that a proposed export of natural gas is in the public interest. 6 Accordingly, DOE will conduct an informal adjudication and grant a non-FTA application unless DOE finds that the proposed exportation will not be consistent with the public interest. 7

Before reaching a final decision on a non-FTA application, DOE must also comply with the National Environmental Policy Act of 1969 (NEPA). 8 DOE's environmental review process under NEPA may result in the preparation or adoption of an environmental impact statement (EIS) or environmental assessment (EA) describing the potential environmental impacts associated with the application. 9 In other cases, DOE may determine that an application is eligible for a categorical exclusion from the preparation or adoption of an EIS or EA, pursuant to DOE's regulations implementing NEPA. 10

DOE's regulations implementing section 3 of the NGA are codified in 10 CFR part 590. In relevant part, any person applying to export natural gas from the United States or to amend an existing export authorization  11 is required to provide DOE with “a copy of all relevant contracts and purchase agreements”  12 and to identify any “contract volumes” related to the supply of natural gas to be exported. 13 DOE's regulations, however, do not address the terms of contracts for the supply or export of natural gas, or distinguish between types of export authorizations based on the contract term.

Because of the time, complexity, and expense of commercializing, financing, and constructing LNG export terminals, authorization holders typically apply to DOE for long-term authority to export LNG (or other types of natural gas) from their export facility to FTA and non-FTA countries. 14 Since 2010, DOE has issued more than 100 long-term authorizations approving the export of natural gas in the form of LNG, compressed natural gas, or compressed gas liquid to either FTA countries, non-FTA countries, or both under consolidated FTA and non-FTA orders. These long-term authorizations—which originally ranged in duration from 20 to 30 years (depending on the type of order) and which now may extend through the year 2050  15 —are supported by the authorization holders' natural gas supply and sales contracts that often have similarly lengthy terms. In the long-term orders issued to date, DOE specifies that the authorization holder is authorized to export the natural gas “pursuant to one or more long-term contracts (a contract greater than two years).”  16

In 2015, DOE received the first application requesting short-term (or “blanket”) authorization to export domestically produced LNG over a two-year period to both FTA and non-FTA countries under NGA section 3. 17 In the application, filed by Sabine Pass Liquefaction, LLC (Sabine Pass), Sabine Pass noted that it held (at that time) two long-term FTA orders and one long-term non-FTA order authorizing it to export domestically produced LNG from the Sabine Pass Liquefaction Project, then under construction in Cameron Parish, Louisiana. 18 Sabine Pass requested to export a subset of its total export volume approved under its long-term authorizations for the two-year period. Sabine Pass explained that, in anticipation of the start of liquefaction operations at the Liquefaction Project, it sought “to engage in short-term exports of LNG produced both prior to commercial operations as well as subsequent to commercial operations if and when appropriate market opportunities arise.”  19 Sabine Pass further stated that the requested short-term authorization would provide it with “enhanced operational flexibility and the ability to export produced LNG cargoes that may be rejected by customers under one or more long-term contracts.”  20

In January 2016, in DOE/FE Order No. 3767, DOE granted Sabine Pass's application to export LNG by vessel “on a short-term or spot market basis” from the Sabine Pass Liquefaction Project. 21 In evaluating the non-FTA portion of the application, DOE stated that it already had “conducted a full public interest review under NGA section 3(a)” for Sabine Pass's long-term non-FTA authorization. 22 Next, DOE noted that Sabine Pass was seeking only to export a non-additive portion of its total export volume over the two-year period. DOE found:

In the ordering paragraphs for Sabine Pass's short-term order, DOE specified that Sabine Pass was authorized to export the requested LNG “pursuant to transactions that have terms of no longer than two years.”  25 DOE also required that “[t]he volume of LNG authorized for export to non-FTA countries in this Order, when combined with the volume of LNG approved for export in [Sabine Pass's long-term non-FTA order] shall not exceed [the total approved non-FTA volume] during any consecutive 12-month period.”  26

Under this framework, DOE has issued 13 additional short-term authorizations to supplement one or more existing long-term authorizations for the same facility (or facilities) and authorization holder. To maintain this export authority, authorization holders are required to apply for new short-term orders—and DOE is required to process and review those applications—every two years. 27 Five of these short-term orders are currently active, including Sabine Pass's most recent short-term order issued in January 2020. 28 As indicated, each of these orders approves the requested short-term exports on a non-additive basis to the previously approved long-term exports for each authorization holder—meaning without any increase in the total export volume for the respective facility (or facilities).

Additionally, in every short-term order issued for non-FTA exports under NGA section 3(a), DOE has evaluated its obligations under NEPA. In each order, DOE determined that the approval of the application “will not result in any incremental environmental impacts as compared to the environmental impacts previously reviewed” for the corresponding long-term authorization(s). 29 DOE also found that approval of each application would not require additional construction or modification to the previously approved facilities. 30 Accordingly, in every short-term order for non-FTA exports to date, DOE has granted the non-FTA portion of the application, in part, based on a categorical exclusion from the preparation of an EA or EIS under NEPA  31 (specifically, categorical exclusion B5.7 under DOE's regulations at 10 CFR part 1021, subpart D, appendix B). 32

Nearly five years ago, in January 2016, DOE issued its first short-term LNG export authorization to Sabine Pass to supplement its existing long-term LNG export authorizations. 33 Since that time, the U.S. market for natural gas—and, in particular, the LNG export market—has matured, as has DOE's understanding of the administrative burdens associated with implementing its regulatory program under NGA section 3. Upon review, DOE has determined that it is no longer necessary to issue separate long-term and short-term authorizations to export natural gas from the same facility (or facilities) for the same authorization holder. If an authorization holder has a long-term export order tied to contracts of two years or longer, but wishes to export a subset of that approved volume on a short-term or spot market basis under transactions with terms of less than two years (including commissioning volumes prior to the start of a facility's commercial operations  34 ), DOE finds that it is beneficial to provide both types of authority in a single consolidated order going forward.

As an initial matter, DOE's regulations implementing NGA section 3 do not address the terms of an applicant's natural gas supply or sales contracts, nor do they distinguish between types of export authority on this basis. 35 Therefore, there is no legal requirement for DOE to continue issuing separate short-term and long-term authorizations on a non-additive basis from the same facility.

DOE also finds that there are no practical benefits to continuing to separate these types of authorizations. DOE developed this approach in 2016 during a rapidly evolving regulatory period for exports of LNG and other forms of natural gas. At this point, however, DOE's regulatory practice is well established, U.S. companies have been exporting domestically produced LNG from the lower 48-states around the globe for nearly five years, 36 and the need for U.S. exporters to have operational flexibility to compete in the global marketplace is greater than ever. 37 Based on its analysis of the U.S. natural gas market, DOE/FE believes this action is in the public interest under NGA section 3.

Accordingly, under this policy statement, DOE is establishing that certain long-term authorizations to export domestically produced natural gas—including LNG, compressed natural gas, and compressed gas liquid—will include authority to export the same approved volume pursuant to transactions with terms of less than two years on a non-additive basis (including non-additive commissioning volumes to be exported prior to the start of a facility's commercial operations).

This policy statement applies only to future long-term authorizations to export natural gas. 38 Concurrently with this policy statement, DOE is issuing a blanket order that (i) amends existing long-term export authorizations to include short-term export authority under NGA section 3(a) and (c), and (ii) vacates DOE's existing short-term orders (and short-term export authority granted in other orders) in light of DOE's action to consolidate this authority in each corresponding long-term authorization. 39 DOE has included a list of the affected export authorizations in that order.

In this policy statement, DOE is not proposing any new requirements for applicants or authorization holders under 10 CFR part 590. Rather, DOE's objective to streamline DOE's administrative process and to minimize administrative burdens and uncertainty on the U.S. natural gas industry by conserving resources that would be utilized to apply for and process short-term export authorizations, respectively, without any incremental benefit to the public.

The Secretary of Energy has approved publication of this policy statement.

This document of the Department of Energy was signed on December 18, 2020, by Steven Winberg, Assistant Secretary, Office of Fossil Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

Administrative enforcement proceedings brought by the FDIC are subject to the Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., and the FDIC Rules of Practice and Procedure, 12 CFR part 308. Under part 308, evidentiary hearings and related proceedings are generally presided over by an Administrative Law Judge (ALJ). See generally, 5 U.S.C. 556; 12 CFR 308.5, and 308.3. Additionally, part 308 provides that certain procedural and adjudicative functions are reserved to the Executive Secretary of the FDIC. These functions include but are not limited to: (1) Serving in place of an ALJ when no ALJ has jurisdiction over an administrative proceeding; (2) issuing rulings in certain administrative proceedings; and (3) serving as the custodian of records for administrative proceedings. See generally, 12 CFR 308.102(b) and 308.105.

On June 21, 2018, the U.S. Supreme Court held that the ALJs employed by the U.S. Securities and Exchange Commission (SEC) were “inferior officers” of the United States under the Appointments Clause of the United States Constitution because these ALJs hold a continuing office established by law, and they exercise “significant discretion” in connection with certain “important functions” when presiding over administrative hearings. Lucia v. SEC, 138 S. Ct. 2044, 2053-2054 (2018) ( Lucia ). As inferior officers, the Supreme Court held that the SEC's ALJs are “subject to the Appointments Clause and as such, can only be appointed by the President, “Courts of Law” or “Heads of Departments.” See, Lucia, 138 S. Ct. 2044, 2046.

Although the Lucia decision did not directly affect the FDIC or the ALJs for the FDIC, the Board nevertheless elected to formally appoint the ALJs that preside over FDIC enforcement proceedings. The ALJs who were serving at the time of the Lucia decision were appointed by the Board on July 19, 2018. See FDIC Board Resolution 085152. Since that time, the Board has appointed all ALJs that preside over FDIC enforcement proceedings.

Since the Lucia decision, the FDIC has received questions regarding whether the FDIC's Executive Secretary was also appointed in a manner consistent with the Supreme Court's ruling in Lucia. In fact, the Board duly appointed the FDIC's current Executive Secretary as an inferior officer on June 22, 1997, pursuant to Article II of the United States Constitution and 12 U.S.C. 1819(a) (Fifth) (allowing the FDIC to “appoint by its Board of Directors such officers and employees as are not otherwise provided for in this chapter”). Nonetheless, in the interest of transparency and to assuage any outstanding concerns about this issue, we are amending part 308 to clarify and to expressly provide that such adjudicative functions will continue to be performed by an inferior officer of the United States (Administrative Officer) that has been duly appointed by the Board.

In addition to clarifying that these adjudicative functions are performed by an Administrative Officer that is duly appointed by the Board, the FDIC is making technical changes to part 308 to update outdated references to certain position titles.

Section 553 of the Administrative Procedure Act (APA) (5 U.S.C. 553) sets forth requirements for providing the general public notice of, and the opportunity to comment on, proposed agency rules. However, unless notice or hearing is required by statute, those requirements do not apply to interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice. See 5 U.S.C. 553(b)(A).

The FDIC is updating part 308, its rules of practice and procedure, to substitute the Administrative Officer for the Executive Secretary in multiple places. Since the changes relate to agency organization, procedure, or practice, the rules are being published in final form without public notice and comment.

Under the Congressional Review Act (CRA), “[b]efore a rule can take effect, the Federal agency promulgating such rule shall submit to each House of the Congress and to the Comptroller General a report containing—(i) a copy of the rule; (ii) a concise general statement relating to the rule, including whether it is a major rule; and (iii) the proposed effective date of the rule.”  1 The CRA further defines the term “rule” as having “the meaning given such term in section 551, except that such term does not include—(A) any rule of particular applicability . . . ; (B) any rule relating to agency management or personnel; or (C) any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties.”  2

The FDIC is updating part 308, its rules of practice and procedure, to clarify that certain adjudicative functions, specified in part 308 as being performed by the FDIC's Executive Secretary or Assistant Executive Secretary, will be performed by an “Administrative Officer” or “Assistant Administrative Officer” who has been duly appointed by the Board. Additionally, the FDIC is updating outdated references to certain position titles in part 308. These amendments do not constitute substantive changes, but merely conform the titles in the regulation to the current titles of these positions.

The clarifications relate to agency management and personnel, and to agency practice and procedure. Further, to the extent that non-agency parties are impacted by the amended rules ( i.e., they may be required to submit requests and documents to the attention of the Administrative Officer rather than the Executive Secretary), their rights and obligations will not be substantially affected. As such, submission to Congress and the Comptroller General is not required for the rules to become effective.

This rule does not propose new or revisions to existing “collection[s] of information” as that term is defined under the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR part 1320.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. (5 U.S.C. 603 and 604). As noted previously, the FDIC has determined that it is unnecessary to publish a notice of proposed rulemaking for the final rule amending part 308. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply to this rulemaking for part 308.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), 3 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with the principle of safety and soundness and the public interest, any administrative burdens that the regulations would place on depository institutions, including small depository institutions and customers of depository institutions, as well as the benefits of the regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 4 The FDIC has determined that the rule would not impose additional reporting, disclosure, or other requirements; therefore the requirements of the RCDRIA do not apply.

Section 722 of the Gramm-Leach-Bliley Act  5 requires the Federal banking agencies to use “plain language” in all proposed and final rules published after January 1, 2000. In light of this requirement, the FDIC has sought to present the final rule in a simple and straightforward manner.

For the reasons stated in the preamble, the FDIC amends 12 CFR part 308 as follows:

The Missile Technology Control Regime (MTCR or Regime) is an export control arrangement among 35 nations, including most of the world's suppliers of advanced missiles and missile-related equipment, materials, software and technology. The Regime establishes a common list of controlled items and a common export control policy that member countries implement in accordance with their national export controls. The MTCR seeks to limit the risk of proliferation of weapons of mass destruction (WMD) by controlling exports of goods and technologies that could make a contribution to delivery systems (other than manned aircraft) for such weapons. The United States became a member at the Regime's founding in 1987.

In 1993, the MTCR's original focus on missiles for nuclear weapons delivery was expanded to include the proliferation of missiles for the delivery of all types of WMD, i.e., nuclear, chemical, and biological weapons. Such proliferation has been identified as a threat to international peace and security. One way to address this threat is to maintain vigilance over the transfer of missile equipment, material, and related technologies usable for systems capable of delivering WMD. MTCR members voluntarily pledge to adopt the Regime's Guidelines for Sensitive Missile-Relevant Transfers (MTCR Guidelines) and to restrict the transfer of items contained in the Regime's Equipment, Software, and Technology Annex. The Annex consists of Category I and Category II items, with Category I including items of greatest sensitivity. Category I items include rocket systems and unmanned aerial vehicle systems with a range capability of 300 km and greater and a payload capability of 500 kg and greater, and production facilities and major sub-systems for such items. Category II items include rocket systems and unmanned aerial vehicle systems with a range of 300 km or greater but below a payload capability of 500 kg. Category II also includes a wide range of equipment, material, and technologies, most of which have uses other than for systems capable of delivering WMD.

Pursuant to the MTCR Guidelines, transfers (including exports and reexports) of Category I items are subject to a “strong presumption of denial.” See MTCR Guidelines, Paragraph 2. Transfers of Category II Items are subject to a more flexible case-by-case review policy.

The MTCR Guidelines are implemented through the national export control laws, regulations and policies of Regime members. The United States has implemented in § 742.5 of the EAR missile technology controls and policies that are consistent with the MTCR Guidelines, including by imposing licensing requirements that apply to MTCR Category I and Category II items. As a Regime member, the United States exercises sovereign national discretion in making implementing decisions.

The U.S. Government remains committed to the goals of the MTCR, including the objective of limiting the proliferation of unmanned delivery systems for WMD. At the same time, the U.S. Government is cognizant of rapid advances in the uses of Unmanned Aerial Systems (UAS), including growing commercial uses for UAS that meet the MTCR Category I control criteria, as well as the need to protect U.S. national security and economic security interests. An inflexible approach to implementing the MTCR's strong presumption of denial that applies to Category I items creates a competitive disadvantage for the United States and other MTCR partners by restraining industry globally from fully participating in the expanding commercial UAS market, which increasingly includes suppliers outside of the MTCR. Additionally, the U.S. Government recognizes the need to enhance security relationships with countries that wish to collaborate on counter-terrorism, border control, and other mutual security interests. Accordingly, the U.S. Government has recognized the need to update its treatment of UAS that meet the 300 km/500 kg threshold as MTCR Category I items for the implementation of the MTCR's strong presumption of denial and export licensing review purposes to ensure U.S. economic, national security, and foreign policy interests are appropriately addressed.

The United States has been working with its MTCR partners on this issue since 2017, in the interest of updating UAS controls to address the ongoing revolution in both UAS technology and its applications. At the MTCR October 2019 Plenary in Auckland, New Zealand the United States put forward a revised proposal to increase flexibility for export control purposes on a certain subset of MTCR Category I UAS, based primarily on a speed value, and thus not subject their transfer to the Regime's strong presumption of denial. However, the MTCR partners have not achieved consensus on this proposal.

To address the national security and economic security concerns described above, on July 24, 2020, President Trump announced a change in the policy of the United States regarding exports of UAS (July 24, 2020 Revised UAS Export Policy). In this final rule, consistent with this revised policy, the U.S. Government is amending the licensing policy of the United States to allow greater flexibility in the export or reexport of certain MTCR Category I UAS subject to the Export Administration Regulations (EAR). Pursuant to this revision, the United States will invoke its national discretion on the implementation of the MTCR's strong presumption of denial to treat a subset of MTCR Category I UAS, i.e., those that have a range and payload capability equal to or greater than 300 km/500 kg but a maximum true airspeed of less than 800 km/hr, as Category II UAS for export licensing review purposes, which are generally subject to a more flexible case-by-case review. BIS is accordingly amending § 742.5 (Missile Technology) of the EAR to review license applications involving such UAS, as well as MT items for the design, development, production, or use in such systems, under a case-by-case review policy.

While the updated policy of the United States refers to the term UAS, the MTCR and the EAR use the term “Unmanned Aerial Vehicle (UAV)”. The change in licensing policy set forth in revised § 742.5 of the EAR consequently uses the term UAV.

In making this licensing review policy change, the U.S. Government is exercising its national discretion as a member of the MTCR. This change will strengthen U.S. national security by improving the capabilities of U.S. partners and will increase U.S. economic security by opening the expanding UAS market to U.S. industry. The U.S. Government is implementing the July 24, 2020 Revised UAS Policy as a responsible and reasonable approach to technological change, establishing a systematic framework for implementation of the MTCR's strong presumption of denial for export licensing review purposes as applied to a particular subset of MTCR Category I UAS. This subset of UAS is widely used in intelligence, surveillance, and reconnaissance (ISR) missions and various commercial and other applications not involving WMD delivery, so a case-by-case license review policy is warranted.

The United States takes seriously both its nonproliferation commitments and its responsibility to ensure that exports and reexports and subsequent use of all U.S.-origin UAS are conducted responsibly, with appropriate end users and for appropriate end uses. To this end, UAS that fall within this subset of Category I UAS will continue to be subject to a strong presumption of denial if they are intended for use as WMD delivery systems, or if they present a risk of diversion to such an end use.

This approach will maintain particular restraint on exports and reexports of those UAS that present higher risk for WMD delivery—such as cruise missiles, hypersonic aerial vehicles, and advanced unmanned combat aerial vehicles—without unduly impeding exports for growing commercial and conventional military applications. Finally, the United States notes that while all MTCR-related concerns are considered when reviewing a potential export or reexport of all UAS, the decision to approve—or not approve—such an export or reexport is a whole-of-government decision that takes into account all relevant factors and policies, including U.S. national security, nonproliferation, and foreign policy objectives, as well as the recipient country's capability and willingness to effectively and responsibly use and safeguard U.S.-origin items, including technology, in accordance with U.S. laws and policies.

This final rule revises the EAR's missile technology controls to reflect the July 24, 2020 Revised UAS Export Policy. Specifically, in § 742.5 of the EAR (Missile technology), this final rule revises paragraph (b)(1) to add a new licensing review policy for UAVs with a specified range, payload, and maximum true airspeed by adding a new Note to paragraph (b)(1). The new Note to paragraph (b)(1) added by this final rule specifies that UAV systems that have a range and payload capability equal to or greater than 300 km/500 kg, but a maximum true airspeed of less than 800 km/hr, and MT items for use in UAV systems that meet these parameters, will not be subject to a policy of denial. Instead, such UAV systems will be reviewed on a case-by-case basis to determine whether the export or reexport will be used in support of WMD activities or military activities contrary to U.S. national security, or whether there is a risk of diversion to such activities. In addition, the same, more flexible, review policy will apply under the new note to MT-controlled “parts” and “components” and other MT items for the design, “development,” “production,” or “use” ( see § 772.1 of the EAR (15 CFR part 772—Definitions of Terms)) of UAV systems that meet these parameters, including foreign-made UAV systems that do so (whether or not the foreign-made systems are or will be subject to the EAR).

BIS estimates that this licensing review policy change will result in an increase of twenty license applications submitted annually to BIS. This increase is anticipated because certain exporters that previously may have been deterred from applying for a license as a result of the more restrictive license review policy in place prior to this rule may now be motivated to apply for licenses under the new case-by-case license review policy. In addition, in making this estimate, BIS took into account the fact that the current number of commercial U.S. UAVs with the capability described in this final rule is rather small. Consequently, under the new, more flexible license review policy, the anticipated increase in the number of license applications will be minimal.

This final rule also makes a conforming technical change by revising the second sentence in paragraph (b)(1) of § 742.5 to add double quotation marks around the term parts (“part” is a defined term in the EAR) and to add after it the term “components” (“component” is also a defined term in the EAR). These technical edits clarify that the review standard applies to replacement “parts” and “components” for use in the specified applications ( i.e., manned aircraft, satellite, land vehicle, or marine vessel).

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. 4801-4852). ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

Executive Orders 13563 and 12866 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, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated a “significant regulatory action” under Executive Order 12866. Commerce estimates that this rule will result in a minimal increase to the number of license requests submitted to BIS annually.

This rule does not contain policies with federalism implications as that term is defined under E.O. 13132.

For the purposes of E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs,” this rule is issued with respect to a national security function of the United States. The cost-benefit analysis indicates that the rule is intended to improve national security as its primary direct benefit. The U.S. Government is acting to protect U.S. national security interests, which are directly related to U.S. economic security interests. An inflexible approach to implementing the MTCR's strong presumption of denial for the subset of UAS specified in this rule presents a competitive disadvantage for the United States, and other MTCR partners, by restraining industry from fully participating in the expanding commercial UAS market. Additionally, the U.S. Government needs to meet the growing demand for key tools, and capabilities and the development and enhancement of security relationships from countries that want to work with the U.S. on counter-terrorism, border control, and other mutual security interests. The revised U.S. national policy announced on July 24, 2020, is consistent with U.S. national security interests, as the United States will continue to maintain specific controls on transfers of UAS that present higher risks of use in or support for WMD delivery—such as cruise missiles, hypersonic aerial vehicles, and advanced unmanned combat aerial vehicles—while not unduly impeding exports for growing commercial and conventional military applications. Accordingly, this rule meets the requirements set forth in the April 5, 2017 OMB guidance implementing E.O. 13771 and is exempt from the requirements of E.O. 13771.

Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number.

This rule involves the following OMB approved collections of information subject to the PRA: 0694-0088, “Multi-Purpose Application”, which carries a burden hour estimate of 29.6 minutes for a manual or electronic submission; 0694-0096 “Five Year Records Retention Period”, which carries a burden hour estimate of less than 1 minute; and 0607-0152 “Automated Export System (AES) Program”, which carries a burden hour estimate of 3 minutes per electronic submission. This rule changes the respondent burden by increasing the estimated number of submissions by 20. Specific license application submission estimates are further discussed in the preamble of this rule where the regulatory revision is explained. The additional burden falls within the estimated burden approved by OMB for the information collections 0694-0088, 0694-0096, and 0607-0152.

Any comments regarding these collections of information, including suggestions for reducing the burden, may be submitted online at https://www.reginfo.gov/public/do/PRAMain. Find the particular information collection by using the search function and entering either the title of the collection or the OMB Control Number.

Pursuant to Section 4821 of ECRA, this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation, and delay in effective date.

Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

Accordingly, part 742 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

Pursuant to the Convention on Cultural Property Implementation Act, Public Law 97-446, 19 U.S.C. 2601 et seq. (hereinafter, “the Cultural Property Implementation Act”) which implements the 1970 United Nations Educational, Scientific and Cultural Organization (UNESCO) Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property (823 U.N.T.S. 231 (1972)), the United States entered into a bilateral agreement with the Italian Republic (Italy) on January 19, 2001, concerning the imposition of import restrictions on archaeological material representing the pre-Classical, Classical, and Imperial Roman periods (“the prior MOU”).

On January 23, 2001, the former U.S. Customs Service (now U.S. Customs and Border Protection (CBP)) published Treasury Decision 01-06 in the Federal Register (66 FR 7399), which amended § 12.104g(a) of Title 19 of the Code of Federal Regulations (19 CFR 12.104g(a)) to reflect the imposition of these restrictions and included a list covering certain types of archaeological material.

Import restrictions listed in 19 CFR 12.104g(a) are effective for no more than five years beginning on the date on which the agreement enters into force with respect to the United States. This period may be extended for additional periods of not more than five years if it is determined that the factors which justified the initial agreement still pertain and no cause for suspension of the agreement exists.

Since the final rule was published on January 23, 2001, the import restrictions that became effective on January 19, 2001, have been extended three times pursuant to exchanges of diplomatic notes as reflected in subsequent final rules. First, on January 19, 2006, CBP published CBP Decision (CBP Dec.) 06-01 in the Federal Register (71 FR 3000) which amended 19 CFR 12.104g(a) to reflect the extension for an additional period of five years. Second, on January 19, 2011, CBP published CBP Dec. 11-03 in the Federal Register (76 FR 3012) to extend the import restrictions for an additional five-year period. CBP Dec. 11-03 also reflects an amendment to the Designated List to include the subcategory “Coins of Italian Types” as part of the category entitled “Metal,” pursuant to 19 U.S.C. 2604. Third, on January 15, 2016, CBP published CBP Dec. 16-02 in the Federal Register (81 FR 2086) to further extend the import restrictions. This extension was pursuant to the exchange of diplomatic notes that took place between the United States and Italy, with entry into force on January 12, 2016, thus the extension of the import restrictions was implemented for an additional five-year period ending on January 12, 2021. See 19 CFR 12.104g(a); 81 FR 2086.

On September 29, 2020, the Assistant Secretary for Educational and Cultural Affairs, United States Department of State, after consultation with and recommendation by the Cultural Property Advisory Committee, determined that the cultural heritage of Italy continues to be in jeopardy from pillage of certain archaeological material representing the pre-Classical, Classical, and Imperial Roman periods and that the import restrictions should be extended for an additional five years. Subsequently, a new MOU was concluded between the United States and Italy on October 29, 2020. The new MOU supersedes and replaces the prior MOU of January 19, 2001, as amended and extended. The new MOU extends the import restrictions that went into effect under the prior MOU, as amended and extended, for five years from entry into force of the new MOU on January 12, 2021. The new MOU is titled: “Memorandum of Understanding between the Government of the United States of America and the Government of the Italian Republic Concerning the Imposition of Import Restrictions on Categories of Archaeological Material of Italy.” Accordingly, CBP is amending 19 CFR 12.104g(a) to reflect the extension of the import restrictions.

The restrictions on the importation of categories of archaeological material of Italy are to continue in effect until January 12, 2026. Importation of such materials from Italy continues to be restricted until that date unless the conditions set forth in 19 U.S.C. 2606 and 19 CFR 12.104c are met.

The Designated List of pre-Classical, Classical and Imperial Roman period archaeological material from Italy covered by these import restrictions is set forth in CBP Dec. 11-03. The Designated List and additional information may also be found at the following website address: https://eca.state.gov/cultural-heritage-center/cultural-property-advisory-committee/current-import-restrictions by selecting the materials for “Italy.”

This amendment involves a foreign affairs function of the United States and is, therefore, being made without notice or public procedure under 5 U.S.C. 553(a)(1). For the same reason, a delayed effective date is not required under 5 U.S.C. 553(d)(3).

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply.

CBP has determined that this document is not a regulation or rule subject to the provisions of Executive Order 12866 or Executive Order 13771 because it pertains to a foreign affairs function of the United States, as described above, and therefore is specifically exempted by section 3(d)(2) of Executive Order 12866 and section 4(a) of Executive Order 13771.

This regulation is being issued in accordance with 19 CFR 0.1(a)(1) pertaining to the Secretary of the Treasury's authority (or that of his/her delegate) to approve regulations related to customs revenue functions.

For the reasons set forth above, part 12 of title 19 of the Code of Federal Regulations (19 CFR part 12), is amended as set forth below:

Mark A. Morgan, the Chief Operating Officer and Senior Official Performing the Duties of the Commissioner, having reviewed and approved this document, is delegating the authority to electronically sign this notice document to Robert F. Altneu, who is the Director of the Regulations and Disclosure Law Division for CBP, for purposes of publication in the Federal Register .

On October 2, 2020, the Coast Guard was notified by the event organizer that the anticipated dates for the activities associated with the 59th Presidential Inauguration are scheduled from January 17, 2021, to January 25, 2021. The Coast Guard will enforce regulations in 33 CFR 165.508 for the zone identified in paragraph (a)(6). This action is being taken to protect government officials, mitigate potential terrorist acts and incidents, and enhance public and maritime safety and security immediately before, during, and after this event.

Our regulations for Security Zone; Potomac River and Anacostia River, and adjacent waters; Washington, DC, § 165.508, specifies the location for this security zone as an area that includes all navigable waters described in paragraphs (a)(1) through (a)(3). This zone includes (1) Security Zone 1; all navigable waters of the Potomac River, from shoreline to shoreline, bounded to the north by the Francis Scott Key (US-29) Bridge, at mile 113, and bounded to the south by a line drawn from the Virginia shoreline at Ronald Reagan Washington National Airport, at 38°51′21.3″ N, 077°02′00.0″ W, eastward across the Potomac River to the District of Columbia shoreline at Hains Point at position 38°51′24.3″ N, 077°01′19.8″ W, including the waters of the Boundary Channel, Pentagon Lagoon, Georgetown Channel Tidal Basin, and Roaches Run. (2) Security Zone 2; all navigable waters of the Anacostia River, from shoreline to shoreline, bounded to the north by the John Philip Sousa (Pennsylvania Avenue) Bridge, at mile 2.9, and bounded to the south by a line drawn from the District of Columbia shoreline at Hains Point at position 38°51′24.3″ N, 077°01′19.8″ W, southward across the Anacostia River to the District of Columbia shoreline at Giesboro Point at position 38°50′52.4″ N, 077°01′10.9″ W, including the waters of the Washington Channel. (3) Security Zone 3 all navigable waters of the Potomac River, from shoreline to shoreline, bounded to the north by a line drawn from the Virginia shoreline at Ronald Reagan Washington National Airport, at 38°51′21.3″ N, 077°02′00.0″ W, eastward across the Potomac River to the District of Columbia shoreline at Hains Point at position 38°51′24.3″ N, 077°01′19.8″ W, thence southward across the Anacostia River to the District of Columbia shoreline at Giesboro Point at position 38°50′52.4″ N, 077°01′10.9″ W, and bounded to the south by the Woodrow Wilson Memorial (I-95/I-495) Bridge, at mile 103.8.

As specified in § 165.508 (b), during the enforcement period, entry into or remaining in the zone is prohibited unless authorized by the Coast Guard Captain of the Port Maryland-National Capital Region. Public vessels and vessels already at berth at the time the security zone is implemented do not have to depart the security zone. All vessels underway within the security zone at the time it is implemented are to depart the zone at the time the security zone is implemented. To seek permission to transit the zone, the Captain of the Port Maryland-National Capital Region can be contacted at telephone number (410) 576-2693 or on Marine Band Radio, VHF-FM channel 16 (156.8 MHz). Coast Guard vessels enforcing this zone can be contacted on Marine Band Radio, VHF-FM channel 16 (156.8 MHz). The Coast Guard may be assisted by other Federal, state or local law enforcement agencies in enforcing this regulation. If the Captain of the Port or his designated on-scene patrol personnel determines the security zone need not be enforced for the full duration stated in this notice, a Broadcast Notice to Mariners may be used to suspend enforcement and grant general permission to enter the security zone.

This notice of enforcement is issued under authority of 33 CFR 165.508 and 5 U.S.C. 552(a). In addition to this notice of enforcement in the Federal Register , the Coast Guard will provide notification of this enforcement period via the Local Notice to Mariners and marine information broadcasts.

This rule repromulgates provisions of Part 75 that were originally published late in 2016 in a rulemaking which the Department had serious concerns about compliance with certain requirements of the Regulatory Flexibility Act. This rule also finalizes proposed changes to § 75.300, on statutory and national policy requirements to bring them into alignment with the Department's statutory authorities, including those underlying part 75. The Department is committed to the principle that every person must be treated with dignity and respect and afforded all of the protections of the Constitution and statutes enacted by Congress—and to fully enforcing such civil rights protections and requirements. The Department has determined, however, that the public policy requirements it imposed in the existing § 75.300(c) and (d) disrupted the balance struck by Congress with respect to nondiscrimination requirements applicable to grant recipients and, as evidenced by the requests for accommodations and lawsuits, will violate the Religious Freedom Restoration Act, 42 U.S.C. 2000bb-2000bb-4 (RFRA), in some circumstances. 1 The Department also believes that these requirements have sowed uncertainty that, over time, could decrease the effectiveness of Department-funded programs by deterring participation in them.

Given the careful balancing of rights, obligations, and goals in the public-private partnerships in Federal grant programs, the Department believes it appropriate to impose only those nondiscrimination requirements required by the Constitution and federal statutes applicable to the Department's grantees. But such authorities do not support the application of some of the requirements in existing § 75.300(c) and (d) to all recipients of Departmental assistance or to all Department-funded programs. Accordingly, the Department revises § 75.300(c) to recognize the public policy requirement that otherwise eligible persons not be excluded from participation in, denied the benefits of, or subjected to discrimination in the administration of programs and services where such actions are prohibited by federal statute. The Department also revises § 75.300(d) to state clearly that the Department will follow all applicable Supreme Court decisions in the administration of the Department's award programs. 2

With respect to the other provisions in the 2016 rulemaking, the Department repromulgates § 75.305(a), which addressed the applicability of certain payment provisions to states; § 75.365, which authorized the grant agency to require recipients to permit public access to various materials produced under a grant, but authorized the agency to place restrictions on grantees' ability to make public any personally identifiable information or other information that would be exempt from disclosure under FOIA; § 75.414(c)(1)(i) through (iii) and (f), which established limits on the amount of indirect costs allowable under certain types of grants; and § 75.477, which established that recipients could not include, in allowable costs under HHS grants, any tax payment imposed on an employer for failure to comply with the Affordable Care Act's employer shared responsibility provisions, but does not repromulgate the exclusion from allowable costs in grants of penalties due for failing to comply with the individual shared responsibility provision because such tax penalty has been reduced to zero except for tax penalties associated with failure to maintain minimum essential coverage prior to January 1, 2019.

On December 26, 2013, the Office of Management and Budget (OMB) issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR part 200, that “set standard requirements for financial management of Federal awards across the entire federal government.” 78 FR 78590 (Dec. 26, 2013). OMB's purpose in promulgating the Uniform Guidance was to (1) streamline guidance in making federal awards to ease administrative burden and (2) strengthen financial oversight over federal funds to reduce risks of fraud, waste, and abuse. 78 FR 78590 (Dec. 26, 2013); 85 FR 3766 (Jan. 22, 2020).

In December of 2014, the Department, in conjunction with OMB and two dozen other federal departments and agencies adopted Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UAR). 79 FR 75871 (Dec. 19, 2014). The Department adopted “OMB's final guidance with certain amendments, based on existing HHS regulations, to supplement the guidance as needed for the Department.” 79 FR at 75875.

As promulgated by OMB, the statutory authorities for the cost and audit principles in the Uniform Guidance and the UAR include the Chief Financial Officer's Act, 31 U.S.C. 503, the Budget and Accounting Act, 31 U.S.C. 1101-1125, the Single Audit Act, 31 U.S.C. 6101-6106, and several Executive Orders dictating internal government practice. 2 CFR 200.103. Similarly, as adopted—and as currently in force—these same authorities underlie HHS's UAR regulations. 45 CFR 75.103. These laws provide broad authority for the financial management and administration of federal awards (grants and cooperative agreements). The Chief Financial Officers Act, for example, provides that OMB shall “oversee, periodically review, and make recommendations to heads of agencies on the administrative structure of agencies with respect to their financial management activities.” 5 U.S.C. 503(a)(6). Similarly, the Single Audit Act directs each agency, pursuant to guidance issued by OMB, to “(1) monitor non-federal entity use of federal awards, and (2) assess the quality of audits conducted under this chapter.” 31 U.S.C. 7504. These statutes include rulemaking delegations, see, e.g., 31 U.S.C. 7505, and for decades have provided unquestioned authority for the financial management and oversight of federal grants. But that authority is limited to requirements associated with the financial management and oversight of federal grants.

As initially promulgated, Statutory and National Policy Requirements, 2 CFR 200.300 (and 45 CFR 75.300), was a notice provision. It directed the Federal awarding agency “to communicate to the non-Federal entity all relevant public policy requirements, including those in general appropriations provisions, and incorporate them either directly or by reference in the terms and conditions of the Federal award.” 2 CFR 200.300(a). See also Appendix I, F.2 to Part 200—Full Text of Notice of Funding Opportunity (describing requirement to inform applicants of national policy requirements: “Providing this information lets a potential applicant identify any requirements with which it would have difficulty complying if its application is successful . . . . Doing so will alert applicants that have received Federal awards from the Federal awarding agency previously and might not otherwise expect different terms and conditions.”). The section, Statutory and National Policy Requirements, was not intended to be an independent basis for, or to establish, new substantive conditions, nondiscrimination or otherwise.

In adopting the Uniform OMB guidance, the Department supplemented it with HHS specific amendments to account for the Department's particular functions and programs. 79 FR 75871, 75889 (Dec. 19, 2014). However, the Department did not add to the authorities beyond § 75.103 and the Housekeeping Statute as the basis for Part 75.

In § 75.300, Statutory and National Policy Requirements, HHS adopted OMB's Uniform Guidance nearly verbatim. Under § 75.300(a), the HHS agency awarding a grant is required to manage and administer the Federal award so as to ensure that Federal funding is expended and associated programs are implemented in full accordance with U.S. statutory and public policy requirements. The regulation specifically identifies those statutory and public policy requirements as including those protecting public welfare, the environment, and prohibiting discrimination. Section 75.300(a) also requires the HHS awarding agency to communicate to recipients all relevant public policy requirements, including those in general appropriations provisions, and incorporate them either directly or by reference in the terms and conditions of the Federal award.

The OMB Uniform Guidance and the Department's UAR apply to the recipients (and, as provided, subrecipients) of Federal financial assistance from the Department, whether such assistance is provided in the form of grants or cooperative agreements, with such recipients and subrecipients referenced, collectively, as “non-Federal entities.” In this preamble, for ease of reference, the Department uses the term “grant” in place of “Federal financial assistance” or “Federal award,” the terms used in the UAR and defined in § 75.2. Similarly, the term “grantmaking agency” is used to reference “Federal awarding agency” or “HHS awarding agency,” as those terms are defined in § 75.2. Finally, in this preamble, the Department uses “grantee” and “subgrantee” interchangeably with “recipient” and “subrecipient,” respectively, as those terms are also defined in § 75.2.

In July 2016, the Department proposed certain amendments to the UAR, and in December 2016, the Department finalized amendments to modify its UAR to incorporate certain directives “not previously codified in regulation.” 81 FR 89393 (December 12, 2016) (2016 Rule). These amendments included changes to a State payment provision, access to records, indirect allowable cost requirements, exclusion from allowable costs of employer and individual shared responsibility payments under the Affordable Care Act, and policy requirements dealing with discrimination and Supreme Court decisions on same-sex marriage. Specifically, the 2016 Rule adopted:

• Section 75.300(c) and (d), which required recipients not to discriminate on the basis of certain specified factors, regardless of whether those factors had been incorporated into nondiscrimination statutes applicable to the specific grants and recipients (and § 75.101(f), which exempted the Temporary Assistance for Needy Families from such requirements), and required recipient compliance with two specific Supreme Court decisions.

• Section 75.305(a), which addressed the applicability of certain payment provisions to states.

• Section 75.365, which authorized the grant agency both to require recipients to permit public access to various materials produced under a grant and to place restrictions on recipients' ability to make public any personally identifiable information or other information that would be exempt from disclosure under FOIA.

• Section 75.414(c)(1)(i) through (iii) and (f), which established limits on the amount of indirect costs allowable under certain types of grants.

• Section 75.477, which established that recipients could not include, in allowable costs under HHS grants, any tax penalty/payment imposed on an individual or on the employer for failure to comply with the individual or employer shared responsibility provisions, respectively. 3

These new requirements became effective January 11, 2017.

As States and other recipients and subrecipients became aware of these new regulatory requirements, some began to complain to the Department about certain elements of § 75.300(c) and (d), contending, among other things, that application of some of the requirements in those provisions (1) unlawfully interfered with certain faith-based organizations' protected speech and religious exercise, in violation of the Religious Freedom Restoration Act (RFRA), 42 U.S.C. 2000bb, et seq., or the U.S. Constitution, (2) exceeded the Department's statutory authority, and (3) reduced the effectiveness of programs funded by the Department by excluding certain entities from participating in those programs. These communications, requests for exemptions or deviations, and complaints  4 caused the Department to look more closely at the 2016 rulemaking by which these and other provisions in the UAR were adopted. The Department's examination raised serious concerns about compliance with certain requirements of the Regulatory Flexibility Act, and caused the Department to decide not to enforce the provisions added by the 2016 Rule, pending repromulgation. The Department issued that Notice of Exercise of Enforcement Discretion on November 1, 2019. See https://www.hhs.gov/about/news/2019/11/01/hhs-issues-proposed-rule-to-align-grants-regulation.html (issuance of proposed rule “follows same-day issuance of a Notice of Nonenforcement of certain regulatory provisions”); it was published in the Federal Register on November 19, 2019. Notice of Exercise of Enforcement Discretion, 84 FR 63809 (Nov. 19, 2019). 5

The Department simultaneously published a proposed rule to repromulgate or revise the provisions of the UAR that had been adopted through the 2016 Rule. It proposed to repromulgate, without change, §§ 75.305(a), 75.365, and 75.414(c)(1)(i)-(iii) and (f). With respect to § 75.477, the Department proposed to repromulgate only the exclusion from allowable costs of any employer payments for failure to offer health coverage to employees as required by 26 U.S.C. 4980H; it did not propose to repromulgate the provision with respect to shared responsibility payments for individuals because such tax penalty had been reduced to zero.

The Department proposed to amend § 75.300 because it had received communication and complaints, requests for exceptions (under 45 CFR 75.102), and lawsuits concerning § 75.300(c) and (d). It noted that it was preliminarily enjoined from enforcing § 75.300(c) in the State of Michigan as to a particular subgrantee's protected religious exercise. Buck v. Gordon, 429 F. Supp. 3d 447 (W.D. Mich. 2019). It also described concerns expressed by some non-federal entities that requiring compliance with certain nonstatutory requirements of those paragraphs violates the Religious Freedom Restoration Act (RFRA), 42 U.S.C. 2000bb, et seq., or the U.S. Constitution, exceeds the Department's statutory authority, or reduces the effectiveness of programs, for example, by reducing foster care placements in the Title IV-E program of HHS's Administration for Children and Families. The Department explained that these complaints and legal actions indicated that § 75.300(c) and (d) imposed regulatory burden and created a lack of predictability and stability for both the Department and stakeholders with respect to these provisions' viability and enforcement. 6 The Department also noted that some federal grantees had stated that they would require their subgrantees to comply with § 75.300(c) and (d), even if it meant some subgrantees with religious objections would leave the program(s) and cease providing services. Such grantees and subgrantees provide a substantial percentage of services in some Department-funded programs and are effective partners of federal and state governments in providing such services. As noted in the proposed rule, the Department believes that the departure of such grantees and subgrantees from Department-funded programs could likely reduce the effectiveness of those programs.

Accordingly, as an exercise of its discretion to establish requirements for its grant programs and to establish enforcement priorities for those programs, the Department proposed to amend § 75.300(c) and (d). It proposed to amend § 75.300(c) to require compliance with all applicable statutory nondiscrimination requirements. It also proposed to amend § 75.300(d) to specify its commitment to complying with all applicable Supreme Court decisions in administering its award programs, instead of singling out two specific Supreme Court decisions.

As the Department noted in the proposed rule, it had received several requests for exceptions from § 75.300(c) and (d) under 45 CFR 75.102(b) (allowing exceptions to part 75 requirements on a case-by-case basis). In January of 2019, the Department granted the State of South Carolina an exception from the provision in § 75.300(c) that required the State to prohibit subgrantees from selecting among prospective foster parents on the basis of religion, to the extent that such prohibition conflicts with a subgrantee's religious exercise, conditioned on the referral of potential foster parents who do not adhere to the subgrantee's religious beliefs to other subgrantees, or to the South Carolina foster care program. The State's request for a deviation or waiver from § 75.300(c) and (d) noted that the child placing agencies working with South Carolina comply with the requirements of Social Security Act Title IV-E, including the provision that they may not deny a person the right to become an adoptive or foster parent on the basis of “race, color, or national origin,” 42 U.S.C. 671(a)(18), and contended that the Department had unlawfully expanded such statutory provisions through those regulatory provisions. 7 The State also argued that the provisions violated the Constitution and RFRA because they require certain child placing agencies to abandon their religious beliefs or forgo the available public licensure and funding. In granting the exception, the Department, through its Office for Civil Rights (OCR) and the Administration for Children and Families (ACF), respectively, found that requiring the State's subgrantee to comply with the religious nondiscrimination provision would substantially burden its religious beliefs in violation of RFRA  8 and that application of the regulatory requirement would cause a significant programmatic burden for South Carolina's foster care program by impeding the placement of children into foster care. 9 Finding that other foster care agencies were available to facilitate adoptions for those who did not share the particular subrecipient's religious beliefs, the Department granted South Carolina's request for an exception with respect to the particular subgrantee and other similarly situated subgrantees, in order to facilitate the participation of faith-based entities in the recruitment of families for South Carolina's foster care program. The Department also reviewed § 75.300(c) and concluded that it likely exceeded the nondiscrimination provisions for the foster care program specifically enacted by Congress. 10

The State of Texas also expressed concerns about the legality of § 75.300(c) and (d). The Texas Attorney General first sent a letter to the Secretary and to several components of the Department from which it received grants, notifying them that it considered the gender-identity and sexual-orientation nondiscrimination requirements of § 75.300(c), and the treatment of same-sex-marriage requirement of § 75.300(d), to be contrary to law and that it did not intend to comply with such provisions in the operation of its programs funded with Department grants. In a subsequent communication, the Texas Attorney General's Office stated that § 75.300(c) and (d) suffer from various legal flaws, asked the Department to repeal the provisions, and, in the alternative, requested that ACF grant an exception from the application of those provisions for any faith-based, child-welfare service provider in Texas's Title IV-E foster care and adoption program. Another letter reiterated the arguments and requests made in the preceding letters. The Department, through ACF and OCR, reached out to the State on several occasions, but was unable to determine whether specific faith-based organizations were being affected by the provisions. One day before the Department posted the proposed rule in this rulemaking to its website, see https://www.hhs.gov/about/news/2019/11/01/hhs-issues-proposed-rule-to-align-grants-regulation.html, Texas, joined by the Archdiocese of Galveston-Houston, instituted a lawsuit challenging the regulations under the Administrative Procedure Act (APA), RFRA, the First Amendment, and the Spending Clause. Texas and the Archdiocese alleged that the application of § 75.300(c) and (d) to the State's Title IV-E Foster Care and Adoption Assistance program violates RFRA because it requires current and potential program participants, including the Archdiocese, which seeks to participate in Texas's Title IV-E program, to refrain from discriminating on the basis of sexual orientation, gender identity, and same-sex-marriage status as a condition of participation in the program. Texas v. Azar, 3:19-cv-0365 (S.D. Tex 2019). 11 Pursuant to the Department's motion to dismiss, on August 5, 2020, the district court dismissed the complaint as moot and entered judgment for the Department. Texas v. Azar, 2020 WL 4499128 (Aug. 5, 2020).

In addition to the litigation referenced above, the Department has also been subject to several other lawsuits concerning these provisions. As noted, in Buck v. Gordon, 429 F.Supp.3d 447 (W.D. Mich. 2019), a district court preliminarily enjoined the Department from enforcing § 75.300(c) with respect to plaintiffs. One of the plaintiffs in that lawsuit, a Catholic charity, was willing to place children for adoption with same-sex couples once they were certified by the State or another agency, but could not, consistent with its religious beliefs, provide such certifications. Michigan had not sought an exception, but had required subrecipients to comply with nondiscrimination conditions as adoption placement agencies, even though doing so violated the sincerely held religious beliefs of the plaintiff Catholic charity in the lawsuit. 12 Plaintiffs sued both Michigan and the Department. As noted, the court entered a preliminary injunction against the Department, prohibiting it from taking any enforcement action against Michigan based on the faith-based organization's protected religious exercise or Michigan's obligations under the preliminary injunction to accommodate that religious exercise.

Against the backdrop of multiple requests for exceptions, communications and other complaints concerning § 75.300(c) and (d), continued lawsuits, and a careful consideration of its authorities, the Department proposed amending these provisions in November of 2019. 84 FR 63831 (Nov. 19, 2019).

Consistent with 2 CFR 200.109, which requires OMB to review the Uniform Guidance every five years, on January 22, 2020, OMB issued a proposed rule to update the Uniform Guidance. 85 FR 3766 (Jan. 27, 2020). With respect to OMB's Statutory and National Policy Requirements provision, OMB proposed to amend the first sentence of § 200.300(a) to include references to the U.S. Constitution and federal law and specific references to free speech and religious liberty, in addition to the specific references currently in § 200.300(a). Thus, under the proposed guidance, the Federal awarding agency would be required to manage and administer the Federal award in a manner so as to ensure that Federal funding is expended and associated programs are implemented “in full accordance with the U.S. Constitution, Federal Law, statutory, and public policy requirements,” including “those protecting free speech, religious liberty, public welfare, the environment, and prohibiting discrimination.” 85 FR at 3793. According to OMB, the purpose for the proposed revisions are “to align with Executive Orders (E.O.) 13798 “Promoting Free Speech and Religious Liberty” and E.O. 13864 “Improving Free Inquiry, Transparency, and Accountability at Colleges and Universities.” These Executive Orders advise agencies on the requirements of religious liberty laws, including those laws that apply to grants, and set forth a policy of free inquiry at institutions receiving Federal grants; the proposed revisions would “underscore[ ] the importance of compliance with the First Amendment.” 85 FR at 3768. The comment period closed on March 23, 2020. On August 13, 2020, OMB issue the final Guidance for Grants and Agreements, 85 FR 49506 (Aug. 13, 2020). As amended in the final rule, section 200.300(a) provides that the federal awarding agency would manage and administer federal awards so as to ensure that funding and associated programs are implemented and managed “in full accordance with the U.S. Constitution, Federal Law, and public policy requirements,” including “those protecting free speech, religious liberty, public welfare, the environment, and prohibiting discrimination.” The Department anticipates that it will, as appropriate, amend its UAR to align with any changes adopted to the Uniform Guidance. 13

As discussed above, in promulgating the UAR and Part 75, both OMB and the Department relied almost exclusively on the Housekeeping Statute, 5 U.S.C. 301, and the financial management statutes in 2 CFR 200.103 (and 45 CFR 75.103). These include the Chief Financial Officer's Act, 31 U.S.C. 503, the Budget and Accounting Act, 31 U.S.C. 1101-1125, the Single Audit Act, 31 U.S.C. 6101-6106, and several Executive Orders dictating internal government practice.

The Department also has statutory authority to issue regulations to enforce certain government-wide statutory civil rights nondiscrimination statutes, such as Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq. (prohibiting discrimination on the basis of race, color, national origin by recipients of Federal financial assistance); Title IX of the Education Amendments of 1972, 20 U.S.C. 1681 (prohibiting discrimination on the basis of sex in federally assisted education programs), Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794 (prohibiting discrimination on the basis of disability in programs and activities conducted by, or receiving financial assistance from, federal agencies), and the Age Discrimination Act, 42 U.S.C. 6101 et seq. (prohibiting discrimination on the basis of age in programs and activities receiving financial assistance from federal agencies). There are also certain program specific nondiscrimination provisions where the Department has the authority to issue enforcement regulations. These include section 471(a)(18) of the Social Security Act (SSA), 42 U.S.C. 671(a)(18) (prohibiting discrimination on the basis of race, color, or national origin in Title IV-E adoption and foster care programs), and section 508 of the SSA, 42 U.S.C. 708 (prohibiting discrimination on the basis of age, race, color, national origin, disability, sex, or religion in Maternal and Child Health Services Block Grant programs). 14

The Department provided a 30-day comment period, which closed on December 19, 2019. The Department received well over 100,000 public comments. After considering the comments, the Department finalizes the proposed rule with the changes described in this section, in which the Department discusses the public comment, its responses, and the text of the final rules.

Comment: Several comments stated 30 days was not sufficient time to comment on the proposed rule and asked the Department to extend the comment period.

Response: The Department appreciates the commenters' suggestions, but respectfully disagrees that the 30-day comment period was insufficient and declines to extend the comment period. The APA does not have a minimum time period for comments, and 30-day comment periods are often provided in rulemakings. The comment period closed 30 days after publication of the proposed rule in the Federal Register on November 19, 2019, but the proposed rule went on display at the Office of the Federal Register on November 18, 2019, and on the Department's website on November 1, 2019. See https://www.hhs.gov/about/news/2019/11/01/hhs-issues-proposed-rule-to-align-grants-regulation.html. This is consistent with the 2016 Rule, which was also the subject of a 30-day comment period. See Health and Human Services Grant Regulation, 81 FR 45270 (July 13, 2016) (establishing a comment period that closed on August 16, 2016).

The comment period provided ample time for the submission of more than 100,000 comments by a variety of interested parties, including extensive comments by a number of entities. Those comments offer a broad array of perspectives on the provisions that the Department proposed to modify in its repromulgation of the 2016 Rule. The number and comprehensiveness of the comments received disprove commenters' claim that the 30-day comment period was insufficient. Accordingly, after reviewing the public comments and the requests for additional time, the Department does not believe that extending the comment period is or was necessary for the public to receive sufficient notice of, and opportunity to comment on, the proposed rule. Consequently, the Department concludes that the comment period was legally sufficient and is not extending the comment period.

As noted above, in proposing to repromulgate § 75.300(c) and (d) in modified form, the Department noted non-Federal entities have expressed concerns that requiring compliance with certain nonstatutory requirements of those paragraphs violates RFRA or the U.S. Constitution, exceeds the Department's statutory authority, or reduces the effectiveness of its programs. The Department further noted that the existence of complaints and legal actions indicates that § 75.300(c) and (d) imposed regulatory burden and created a lack of predictability and stability for the Department and stakeholders with respect to these provisions' viability and enforcement. The Department also noted that some Federal grantees had stated that they will require their subgrantees to comply with the nonstatutory requirements of § 75.300(c) and (d), even if it means some subgrantees with religious objections would leave the program(s) and cease providing services rather than comply. Because certain grantees and subgrantees that may cease providing services if forced to comply with § 75.300(c) and (d) provide a substantial percentage of services pursuant to some Department-funded programs and are effective partners of federal and state governments in providing such services, the Department indicated that it believes that such an outcome would likely reduce the effectiveness of Department-funded programs.

Accordingly, as an exercise of its discretion to establish requirements for its grant programs and to establish enforcement priorities for those programs, the Department proposed to amend § 75.300(c) and (d). It proposed to amend § 75.300(c) to require compliance with applicable statutory nondiscrimination requirements. It proposed to amend § 75.300(d) to provide that the Department would follow all applicable Supreme Court decisions in administering its award programs. The Department also proposed to remove § 75.101(f), which was added by the 2016 rule to clarify that the requirements of § 75.300(c) do not apply to the Temporary Assistance for Needy Families Program (title IV-A of the Social Security Act, 42 U.S.C. 601-619).

The Department reexamined the current § 75.300(c) and (d) and their authorities after also receiving complaints from recipients and States that these provisions exceeded the Department's authority under the laws cited in § 75.103 and the Housekeeping Statute, 5 U.S.C. 301. Several commenters pointed out, for example, that the Social Security Act prohibits discrimination on the basis of “race, color or national origin” in the foster care and adoption context, 42 U.S.C. 671(a)(18); see 42 U.S.C. 608(d) (incorporating statutory nondiscrimination provisions). And several other statutes, such as Title VI, 42 U.S.C. 2000d et seq, prohibit categories of discrimination by grantees on a government-wide basis. Upon closer scrutiny, the Department has determined it was not appropriate to stray beyond those statutory categories with the 2016 amendments to § 75.300.

The Department is finalizing § 75.300(c) as proposed, which states: “It is a public policy requirement of HHS that no person otherwise eligible will be excluded from participation in, denied the benefits of, or subjected to discrimination in the administration of HHS programs and services, to the extent doing so is prohibited by federal statute.”  15 This change ensures that relevant changes in the law in these areas will be most appropriately monitored by the relevant program offices administering them. The Department also finalizes the removal of § 75.101(f).

As discussed, OMB issued proposed guidance amending § 75.300(a) in January. OMB's proposed revision, requiring funds to be expended in full accordance with the Constitution and federal laws, could be seen as mirroring the requirements of proposed § 75.300(d). However, the Department is adopting paragraph (d) as proposed.

Comments: Some commenters opposed the proposed provisions, contending that the Department had the authority to promulgate the current § 75.300(c) and (d) in the 2016 rulemaking. Some said concern about the Department's legal authority is inconsistent with the Department's previous legal position as embodied in the current rule.

Other commenters supported the proposed provisions, contending that the current rule exceeds the Department's authority. Some of these commenters focused on specific programs. For example, some commenters said that the current rule exceeds the Department's authority by expanding the nondiscrimination clause in Title IV-E (the federal foster care and adoption program) to include classifications not found in the statute. Another commenter said that the current rule exceeds the Department's authority and discretion by unilaterally expanding civil rights protections to persons not protected by existing law or Supreme Court decisions. Another commenter noted that the Department lacks statutory authority to vary the nondiscrimination requirements established by Congress for funded programs. Other commenters labeled the current rule executive overreach, contended that it grossly exceeded the authority of an Executive Branch agency to implement the relevant statutory scheme, or argued that federal discrimination standards should adhere to the Constitution, acts of Congress, and Supreme Court decisions.

Response: The Department, like all federal agencies, has authority to revisit regulations and question the wisdom of its policies on a continuing basis. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984). The Department has, in fact, written into its UAR regulations a periodic review mechanism. 45 CFR 75.109 (“HHS will review 45 part 75 at least every five years”). In reassessing these provisions, particularly in light of the receipt of letters and complaints, 16 ongoing lawsuits, and exception requests, regarding the lawful and appropriate scope of § 75.300(c) and (d), the Department is exercising that obligation.

With respect to § 75.300(c) in particular, the Department begins by noting that Congress has selectively imposed nondiscrimination requirements in certain statutes, and with respect to certain grant programs, and not imposed the same requirements in others. For example, Title VI of the Civil Rights Act prohibits discrimination on the basis of race, color and national origin, but not religion or sex. Title IX of the Education Amendments of 1972 prohibits discrimination on the basis of sex, but not religion, and only in certain programs. While RFRA prohibits the federal government from substantially burdening a person's exercise of religion unless it demonstrates that the application of the burden is the least restrictive means of furthering a compelling governmental interest and discrimination by the federal government on the basis of religion often will violate RFRA, Congress does not specifically prohibit discrimination on the basis of religion (as such) in many of its statutes. In the statutes establishing certain programs and grants, Congress has specified the protected categories with respect to which discrimination is prohibited. Congress has not expressly included discrimination on the basis of sexual orientation, gender identity, or same-sex marriage status, in any statute applicable to departmental grants. In making these decisions, Congress balanced a number of competing considerations, including ensuring protections for beneficiaries and avoiding burdens that might discourage organizations from participating in Department-funded programs. And it balanced these considerations with respect to, and in the context of, specific grant programs.

Likewise, with respect to § 75.300(d), the Supreme Court's holdings in United States v. Windsor, 570 U.S. 744 (2013), and Obergefell v. Hodges, 576 U.S. 644 (2015), have limits. Generally, those cases require federal and state governments (as state actors) to treat same-sex and opposite-sex couples the same in licensing and recognizing marriage. Those cases do not require private individuals to abandon any views or beliefs that they have about same-sex marriage; nor could they, given that the Due Process Clause and Equal Protection doctrine do not regulate private conduct.

In promulgating the existing § 75.300(c) and (d), however, the Department went beyond the nondiscrimination requirements imposed by Congress and beyond the holdings of Windsor and Obergefell. It added additional prohibited bases of discrimination, thus disrupting the balance struck by Congress for nondiscrimination requirements in Department-funded grant programs. It also inserted a requirement that all grant recipients “[i]n accordance with the Supreme Court decisions in United States v. Windsor and in Obergefell v. Hodges, . . . must treat as valid the marriages of same-sex couples,” which thus extends the holdings in those cases to non-state action. Indeed, depending on how broadly that provision were interpreted, it could raise concerns under the unconstitutional conditions doctrine. Cf. Agency for Int'l Dev't v. Alliance for Open Society Int'l, Inc., 570 U.S. 205, 214 (2013) (“[T]he Government may not deny a benefit to a person on a basis that infringes his constitutionally protected . . . freedom of speech even if he has no entitlement to that benefit.” (internal quotation marks omitted).

The Department notes that the authority for imposing these requirements is not clear. In promulgating part 75, it relied on the Housekeeping Statute, 5 U.S.C. 301, which authorizes “[t]he head of an Executive department . . . [to] prescribe[ ] regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, pages, and property.” But the Department does not interpret that statute as authorizing substantive regulations imposing nondiscrimination requirements on the conduct of federal grant recipients, except as necessary or appropriate to implement an underlying substantive statutory requirement. 17 Similarly, the Department is not convinced that the authority conferred in the financial management statutes cited in 45 CFR 75.103 is appropriately exercised to impose nondiscrimination requirements of this sort. The Single Audit Act Amendments, for example, authorize the Department to promulgate rules to “(1) monitor non-Federal entity use of Federal awards, and (2) assess the quality of audits conducted under this chapter,” 31 U.S.C. 7504, 7505. That grant of authority does not appear to contemplate imposition of substantive nondiscrimination provisions onto all Departmental grant programs through regulation, especially where the substantive requirements were not embodied in statute(s) applying the requirement to all such grant programs.

Application of the requirements in § 75.300(c) and (d) is also contrary to RFRA in at least some circumstances. As explained at length later in this preamble, RFRA provides that the “Government shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability, except” where application of such substantial burden to a person “(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. 2000bb-1. The Department has already concluded that imposition of some of the nondiscrimination requirements in § 75.300(c) and (d) would violate the rights of certain religious organizations interested in providing foster-care services as part of Department-funded programs. There may be other circumstances where these requirements create similar problems under RFRA.

Even assuming that the Department had legal authority to impose the nondiscrimination requirements in circumstances that do not present a RFRA problem, however, the Department no longer believes it appropriate to do so. As explained throughout this preamble, those nondiscrimination requirements raised questions about whether the Department was exceeding its authority, disrupted the balance of nondiscrimination requirements adopted by Congress, and sowed uncertainty for grant applicants, recipients, and subrecipients that could deter participation in Department-funded programs and, over time, undermine the effectiveness of those programs. The Department is under no legal obligation to impose such requirements and has accordingly decided to remove them. In their place, the Department adopts a new § 75.300(c) to state clearly that all grant recipients and subrecipients must comply with the nondiscrimination requirements made applicable to them by Congress and a new § 75.300(d) to state that the Department will comply with all applicable Supreme Court precedents in its administration of grants. These provisions fall squarely within the Department's statutory authorities, respect the balance struck by Congress with respect to nondiscrimination requirements applicable to grant recipients, and will promote certainty for grant applicants and recipients by returning to the longstanding requirements with which they are familiar.

Comment: A number of commenters, both those that supported the proposed rule generally and those that opposed the proposed rule, suggested that proposed § 75.300(d) was unnecessary, as a truism or otherwise.

Response: The Department recognizes that proposed § 75.300(d) may seem a truism. But it states an important principle: The Department will follow all applicable Supreme Court decisions in administering its award programs. And it is not unknown for federal regulations to enunciate such principles that may seem unnecessary to be set forth in regulatory text. The Department, accordingly, finalizes § 75.300(d) as proposed.

Comment: Several commenters opposed the proposed rule, arguing that proposed § 75.300(c) creates an inconsistency among the Department's regulations and policies prohibiting discrimination. Specifically, commenters referred to HHSAR 352.237-74, which includes a “Non-Discrimination in Service Delivery” clause that prohibits discrimination based on non-merit factors such as “race, color, national origin, religion, sex, gender identity, sexual orientation, [and] disability (physical or mental).” Commenters noted that the Department cited this provision in promulgating current § 75.300(c); one commenter noted that the alignment of grant programs with contractual requirements helped guarantee uniformity in service delivery and ensured that discrimination had no place in any Department-funded program. Another commenter said that this codification was, according to the Department, “based on existing law or HHS policy.” Commenters asserted that removing this consistency goes against the Department's assertion, in its proposed rulemaking, that the amendment will increase predictability and stability, and would subject grants and service contracts to different nondiscrimination requirements. Furthermore, commenters have said that the proposed rule amending § 75.300(c) would remove explicit protections from certain communities, leaving grantees with little clarity or guidance.

Response: The Department respectfully disagrees. This final rule amending § 75.300(c) expressly prohibits discrimination where prohibited by federal statute. While the Department's regulations and policies applicable to federal contracts can serve as persuasive authority for its regulations and policies applicable to grants and cooperative agreements, they do not bind the Department in adopting policies that govern its grant programs.

Furthermore, in basing its decision to adopt current § 75.300(c) on the fact that the HHSAR contains such a provision with respect to service contracts, the Department may have failed to give sufficient consideration to the difference between grants and procurement contracts (including service contracts) under federal law. Under the Federal Grant and Cooperative Agreement Act, a grant (or cooperative agreement) is an assistance arrangement, where the purpose is to encourage the recipient of funding to carry out activities in furtherance of a public goal: A grant agreement is used when the principal purpose of the relationship is to transfer something of value to the recipient “to carry out a public purpose of support or stimulation authorized by a law of the United States” and “substantial involvement is not expected” between the agency and the recipient when carrying out the contemplated activity. 31 U.S.C. 6304. 18 In contrast, the primary purpose of a procurement contract is to acquire goods or services for the direct benefit or use of the government: A procurement contract (including for service delivery) is used when “the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States government.” 31 U.S.C. 6303. 19 Procurement contracts “are subject to a variety of statutory and regulatory requirements that generally do not apply to assistance transactions.” GAO-06-382SP, Appropriations Law (2006), Vol. II, 10-18. And, arguably, because the purpose is to acquire goods or services for the direct benefit or use of the government, the Department may have greater latitude to impose nondiscrimination and other requirements on a contractor than on a grantee, when the Department's purpose is to provide assistance through a grant. 20

Comments: With respect to religious liberty issues and RFRA, some commenters opposed the proposed rule based on their view that religious freedom exemptions do not belong in healthcare where lives may be at stake, or in science and medical procedures. Another commenter contended that the proposed rule would allow religious groups to discriminate, to the detriment of children needing foster care services. Another disagreed that the 2016 Rule violated religious freedom or RFRA, or required remediation for that reason. Other commenters contended the proposed rule would permit religious discrimination, including against beneficiaries and participants in direct federally funded programs, or opposed the proposed rule because religious freedom should not be pursued with discriminatory regulations or policies. Another claimed that the proposed rule is based on a false premise that protecting minorities is inconsistent with RFRA. Some commenters opposed the proposed rule, asserting that it is unconstitutional and violates the Establishment Clause (or the separation of church and state); another commenter contended that it would also violate the Equal Protection and Due Process components of the Fifth Amendment.

Conversely, many commenters supported the proposed rule because it protects the religious freedom of faith-based organizations that provide services in federal programs. They stated that the proposed rule corrected the RFRA violations in the 2016 rule, alleviated discrimination against faith-based organizations, and would protect against religious discrimination. Another commenter supported the proposed rule because the current rule may violate the Free Speech and Free Exercise Clauses of the U.S. Constitution. Some commenters supported the proposed rule because it is a regulation that frees up long-standing faith-based organizations to help the public good. A number of commenters, specifically addressing foster care and adoption or other child welfare programs, supported the proposed rule to prevent government discrimination against religious adoption and foster care providers or faith-based agencies, which should not need to choose between helping children and their deeply held beliefs and should be free to serve children and families according to their beliefs. Several noted that prohibiting religious groups from providing critical services to underserved and at-risk children violates the principles of religious freedom; others noted that Christian-based foster agencies should not be discriminated against because of their religious beliefs regarding marriage. Some commenters also supported the proposed rule because they support the inclusion of faith-based organizations for consideration in the awarding of grants.

Response: RFRA provides broad protection for religious liberty against infringement by the federal government. Burwell v. Hobby Lobby, 573 U.S. 682 (2014). RFRA provides that the federal government “shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability,” unless “it demonstrates that the application of the burden to the person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. 2000bb-1. RFRA's test is the “most rigorous” form of scrutiny identified by the Supreme Court. Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520, 546 (1993); see also City of Boerne v. Flores, 521 U.S. 507, 534 (1997) (“Requiring a State to demonstrate a compelling interest and show that it has adopted the least restrictive means of achieving that interest is the most demanding test known to constitutional law.”). It governs “all Federal law, and the implementation of that law, whether statutory or otherwise, and whether adopted before or after November 16, 1993”: It is applicable to federal statutory law adopted after such date “unless such law explicitly excludes such application by reference to this chapter.”  21

For purposes of RFRA, “exercise of religion” includes “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” 42 U.S.C. 2000bb-2(2), 2000cc-5(7)(A). The term “substantially burden” means to ban an aspect of a person's religious observance or practice, compel an act inconsistent with that observance or practice, or substantially pressure the person to modify such observance or practice.” Department of Justice, “Federal Law Protections for Religious Liberty,” 82 FR 49668, 49669-70 (Oct. 26, 2017). Whether the financial consequences are a fine or the withholding of a benefit, such as a grant or license, is irrelevant. See Sherbert v. Verner, 374 U.S. 398, 404 (1963) (“It is too late in the day to doubt that the liberties of religion and expression may be infringed by the denial of or placing of conditions upon a benefit or privilege.”); see also Hobbie v. Unemployment Appeals Comm'n of Fla., 480 U.S. 136, 141 (1987); Thomas v. Review Bd. of Ind., 450 U.S. 708, 717-18 (1981). 22 In 2017, the Supreme Court recognized that, under the First Amendment, religious institutions applying for government grants have “a right to participate in a government benefit program without having to disavow [their] religious character.” Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012, 2022 (2017). And RFRA likewise applies to government actions in administering grant programs. See 82 FR at 49669 (“RFRA applies to all actions by federal administrative agencies, including . . . grant or contract distribution and administration.”); see also OLC Opinion, “Application of the Religious Freedom Restoration Act to the Award of a Grant Pursuant to the Juvenile Justice and Delinquency Prevention Act,” 31 Op. O.L.C. 1, 62 (2007) (RFRA requires Office of Justice Programs to exempt a religious organization that is a grantee from a religious nondiscrimination requirement in the grant).

Government bears a heavy burden to justify a substantial burden on the exercise of religion. “[O]nly those interests of the highest order . . . can overbalance legitimate claims to the free exercise of religion.” Thomas, 450 U.S. at 718 (quoting Wisconsin v. Yoder, 406 U.S. 206, 215 (1972)). “[B]roadly formulated interests justifying the general applicability of government mandates” are insufficient. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 431 (2006). The government must establish a compelling interest to deny an accommodation to the particular claimant. Id. at 430, 435-38. An asserted compelling interest in denying an accommodation to a particular claimant is undermined by evidence that exemptions or accommodations have been granted for other interests, id. at 433, 436-37; Hobby Lobby, 134 S. Ct. at 2780, that the government has in place a system of individual exemptions from the requirement, Employment Division, Department of Human Resources of Oregon v. Smith, 494 U.S. 872, 884 (1994); Fraternal Order of Police v. City of Newark, 170 F.3d 359, 366 (3d Cir. 1999) (Alito, J.), or that similar agencies or programs do not impose the requirement, Holt v. Hobbs, 135 S. Ct. 853, 866 (2015). The compelling-interest requirement applies even where the accommodation sought is “an exemption from a legal obligation requiring [the claimant] to confer benefits on third parties.” Hobby Lobby, 134 S. Ct. at 2781 n.37. Although “in applying RFRA `courts must take adequate account of the burdens a requested accommodation may impose on nonbeneficiaries,' ” the Supreme Court has explained that almost any governmental regulation could be reframed as a legal obligation requiring a claimant to confer benefits on third parties. Id. (quoting Cutter v. Wilkinson, 544 U.S. 709, 720 (2005)). As nothing in the text of RFRA admits of an exception for laws requiring a claimant to confer benefits on third parties, 42 U.S.C. 2000bb-1, and such an exception would have the potential to swallow the rule, the Supreme Court has rejected the proposition that RFRA accommodations are categorically unavailable for laws requiring claimants to confer benefits on third parties. Hobby Lobby, 134 S. Ct. at 2781 n.37.

Even if the government can identify a compelling interest, the government must also show that denial of an accommodation is the least restrictive means of serving that compelling governmental interest. This standard is “exceptionally demanding.” Id. at 2780. It requires the government to show that it cannot accommodate the religious adherent while achieving its interest through a viable alternative, which may include, in certain circumstances, expenditure of additional funds, modification of existing exemptions, or creation of a new program. Id. at 2781. Indeed, the existence of exemptions for other individuals or entities that could be expanded to accommodate the claimant, while still serving the government's stated interests, will generally defeat a RFRA defense, as the government bears the burden to establish that no accommodation is viable. See id. at 2781-82.

Applying these principles, as noted in the proposed rule, and above, the Department determined that RFRA's application to § 75.300(c) in the context of the South Carolina Title IV-E foster care program, and the participation of a faith-based provider whose religious beliefs precluded it from complying with the religious nondiscrimination provision, required the Department to issue an exception to South Carolina for that faith-based organization and other similarly situated faith-based participants in South Carolina's foster care program who were willing to refer would-be foster parents to other providers. A federal district court in Michigan likewise concluded that RFRA required an exception from § 75.300(c) for a Catholic organization that participated in Michigan's foster care and adoption program, but could not—consistent with its Catholic beliefs—review and recommend to the State same-sex or unmarried couples (although it referred such cases to other child placing agencies for review and recommendation). The court issued a preliminary injunction precluding the Secretary from taking “any enforcement action against the State under 45 CFR 75.300(c) based upon [plaintiff's] protected religious exercise . . . or upon the State of Michigan's obligation under this preliminary injunction to accommodate such protected religious exercise.” Buck, 429 F.Supp.3d at 461. Finally, as noted above, the Department's OCR notified the Texas Attorney General that it had concluded that application of § 75.300(d) and certain provisions in § 75.300(c) to require Texas to exclude the Archdiocese of Galveston (or similarly situated entities) from its foster care and adoption programs would violate RFRA.

The Department recognized that it had a number of options to address the burdens imposed on religious exercise by § 75.300(c) and (d). As noted above, the Department proposed to amend the provisions to mirror the balance struck by Congress with respect to nondiscrimination requirements and to reduce confusion for grant applicants and recipients. This exercise of the Department's discretion also alleviates the substantial burdens on religious exercise that the Department had identified and others of which it is not yet aware. Especially in the absence of any statutory requirement to impose § 75.300(c) and (d), the Department believes that the best way to avoid such burdens on religious exercise is, instead of requiring individual objectors to assert claims under RFRA or other applicable laws, to avoid such regulatory requirements. 23

Comments: A number of commenters opposed the proposed revisions to § 75.300 because they asserted that the revisions would lead to spending of taxpayer dollars to support organizations that discriminate in violation of equal rights. Similarly, some commenters asserted that the proposed revisions to § 75.300 would violate the separation of church and state.

Response: The Department respectfully disagrees. Under the state action doctrine, the First, Fifth, and Fourteenth Amendment of the Constitution among others, apply only to state action, i.e., the action of the federal government and, as applicable, the state governments. It does not apply to private conduct. See United States v. Morrison, 529 U.S. 598 (2000); Civil Rights Cases, 109 U.S. 3 (1883). Thus, only the action of the federal government (or state governments) could violate the Establishment Clause or the Due Process or Equal Protection Clauses. The private conduct of Federal recipients and subrecipients is not considered state action merely by receipt of partial funding from the government. See Rendell-Baker v. Kohn, 457 U.S. 830 (1982). And the Department's funding of faith-based and other organizations for a wide variety of purposes does not constitute sufficient involvement or entwinement with the government for private recipients to be considered state actors. See Shelley v. Kraemer, 334 U.S. 1 (1948).

The government does not violate the Establishment Clause where grants are awarded to a wide variety of entities, including faith-based organizations, and for a wide variety of purposes, none of which are the promotion of religion. Indeed, “a significant factor in upholding governmental programs in the face of Establishment Clause attack is their neutrality towards religion.” Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 839 (1995). That “guarantee of neutrality is respected, not offended, when the government, following neutral criteria and evenhanded policies, extends benefits to recipients whose ideologies and viewpoints, including religious ones, are broad and diverse.” Id. Thus, religious adherents and organizations may, like nonreligious adherents and organizations, receive direct financial aid through a secular-aid program. Indeed, excluding religious adherents and organizations from secular-aid programs may violate the Free Exercise Clause. See, e.g., Trinity Lutheran, 137 S. Ct. 2012 (scrap tire program). And the Department is under an affirmative duty to allow faith-based organizations to participate equally in federal grant programs while maintaining their independence, including their expression of their religious beliefs. See, e.g., 42 U.S.C. 290kk-1 (SAMHSA discretionary funds), 300x-65 (SAMHSA block grants), 604a (Temporary Assistance for Needy Families); see also 45 CFR 87.3. 24

Comment: The Department received numerous comments on a variety of other laws as well. These included Title VII, the Affordable Care Act, the Family First Prevention Services Act, and state and local laws dealing with discrimination and child welfare. Some commenters believed these laws required keeping the current language of § 75.300(c) and (d), while other commenters believed these laws required the Department to repeal or amend paragraphs (c) and (d). Some also thought agency action to be premature given the pendency of several cases surrounding these laws at the Supreme Court.

Response: This rulemaking does not alter a grant applicant or recipient's obligations under the referenced laws or any regulations promulgated to implement such laws. Thus, grant applicants and recipients that are subject to nondiscrimination requirements in Title VII, the Affordable Care Act, and/or state or local laws dealing with discrimination, will remain subject to those laws to the same extent that they were before this rulemaking. Conversely, grant applicants and recipients who are not subject to those requirements will continue not to be subject to them. The Department will also continue to enforce any nondiscrimination provisions for which it has enforcement authority relating to grant applicants and recipients, and it will do so in accordance with the terms of the statutes. For example, the Department will continue to require State foster care plans under the Family First Prevention Services Act to include the prohibition on “delay[ing] or deny[ing] the placement of a child for adoption or into foster care, on the basis of the race, color, or national origin of the adoptive or foster parent, or of the child, involved,” 42 U.S.C. 671(a)(18)(b), while also ensuring that federal payments for foster care are only expended for child placements made pursuant to the “best interest of the child” standard. 42 U.S.C. 672(e).

Commenters noted the pendency before the Supreme Court of several cases raising the question whether Title VII prohibits an employer from firing employees because of their sexual orientation or gender identity, contending that any action by the Department would be premature. As a general matter, although the Supreme Court's interpretation of the language of Title VII may inform the interpretation of similar language in other statutes and regulations, like Title IX, the statutes differ in certain respects. See, e.g., Gebser v. Lago Vista Indep. Sch. Dist., 524 U.S. 274, 283-90 (1998) (comparing the text, context, and structure of Title VII and Title IX); Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 175 (2005) (same).

The Supreme Court has now decided those Title VII cases and nothing in its decision in Bostock v. Clayton County, 590 U.S. __, 140 S. Ct. 1731 (2020), on those consolidated cases precludes the Department from issuing this final rule. In Bostock v. Clayton County, the Supreme Court held that Title VII's prohibition of employment discrimination because of sex encompasses discrimination because of sexual orientation and gender identity. The provision at issue in Bostock stated that it is “unlawful . . . for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual . . . because of such individual's . . . sex.” 42 U.S.C. 2000e-2(a)(1). The Court stated that it “proceed[ed] on the assumption that `sex' signified what the employers suggest, referring only to biological distinctions between male and female” when Title VII was enacted.in 1964 140 S. Ct. at 1739. The Court then discussed the statute's use of the words “because of” (“by reason of” or “on account of”), “discriminate against” (treating [an] individual worse than others who are similarly situated), and “individual,” before concluding that the statute covered the challenged conduct, see 140 S. Ct. at 1739-40, 1753. The Court reasoned, “[f]or an employer to discriminate against employees for being homosexual or transgender, the employer must intentionally discriminate against individual men and women in part because of sex.” 140 S. Ct. at 1743. The Court noted that “[t]he only question before us is whether an employer who fires someone simply for being homosexual or transgender has discharged or otherwise discriminated against that individual `because of such individual's sex.' ” 140 S. Ct. at 1753 (“Under Title VII . . . we do not purport to address bathrooms, locker rooms, or anything else of the kind.”). It noted that “the employers worry that our decision will sweep beyond Title VII to other federal or state laws that prohibit sex discrimination,” but stated that “none of these other laws are before us; we have not had the benefit of adversarial testing about the meaning of their terms, and we do not prejudge any such question today.”). Id. Finally, the Court acknowledged the potential application of the “express statutory exception for religious organizations”; of the First Amendment, which “can bar the application of employment discrimination laws” in certain cases; and of RFRA, “a kind of super statute” which “might supersede Title VII's commands in appropriate cases.” 140 S. Ct. at 1754 (noting that “how these doctrines protecting religious liberty interact with Title VII are questions for future cases too”).

The final rule is consistent with Bostock. First, whether a grant recipient or applicant is subject to Title VII is determined by facts independent of its relationship to the Department. Receiving a grant from the Department does not change a grantee's obligations under that statute. Second, if the Court's reasoning in Bostock is extended to other statutory protections prohibiting discrimination on the basis of sex—statutory provisions that are applicable to grants, such as Title IX, section 1557 of the Affordable Care Act or other statutory provisions that incorporate Title IX's prohibition on discrimination on the basis of sex into Departmental grant programs, or other statutes that prohibit sex discrimination in Departmental grant programs—§ 75.300(c) and (d) would incorporate such protections. Third, because the final rule applies only applicable statutory nondiscrimination requirements to its grant programs, the Department necessarily acknowledges the potential exceptions to such requirements under the Constitution and federal statute, including in nondiscrimination statutes, RFRA, and the First Amendment. Accordingly, nothing about the Bostock decision undermines the Department's choice in this final rule to refer to statutory nondiscrimination requirements and state that the Department will follow applicable Supreme Court decisions in administering its award programs, rather than delineating the specific protected categories from discrimination in the rule or applying two specific Supreme Court decisions. If anything, Bostock shows the utility of the Department's approach in this final rule.

Comments: Some commenters opposed the proposed rule, contending that it is an arbitrary and capricious exercise of the Department's rulemaking authority and violates the APA; another added that it is an abuse of discretion and otherwise not in accordance with law. Several commenters asserted that the Department did not provide adequate evidence to support its assertions about complaints or the proposed revisions, or failed to provide a reasoned analysis for the proposed changes.

Response: The Department respectfully disagrees. Under the APA, agency action may be arbitrary and capricious if the agency (1) “relied on factors which Congress has not intended it to consider”; (2) “entirely failed to consider an important aspect of the problem”; (3) “offered an explanation for its decision that runs counter to the evidence before the agency”; or (4) offered an explanation “so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Having identified legal, policy, and programmatic issues presented by current § 75.300(c) and (d), the Department proposed, and now finalizes, revisions to the provisions to address the issues. As finalized here, the amended § 75.300(c) and (d) better align with the governing statutes. It is never arbitrary and capricious for an agency to “justify its policy choice by explaining why that policy `is more consistent with statutory language,' ” so long as the agency “analyze[s] or explain[s] why the statute should be interpreted” as the agency proposes. Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2127 (2016) (quoting Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 175 (2007)).

The Department respectfully disagrees with commenters that contended that the Department has not met the threshold standard for revising its regulations. Agency action that “changes prior policy” is not subject to a heightened justification or standard of review: An Agency “need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates. This means that the agency need not always provide a more detailed justification than what would suffice for a new policy created on a blank slate.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009). Given the limited justification for the adoption of § 75.300(c) and (d), and the fact that the Department was not statutorily obligated to add those provisions in the first place, the explanations provided in the proposed rule—and in this final rule—meet the applicable standards.

Comments: Many commenters opposed the proposed rule, contending that it would permit organizations to discriminate against members of the LGBTQ community, women, and religious minorities. One commenter claimed that the proposed rule eliminates protections for traditionally marginalized populations, including LGBTQ people, and permits discrimination in the administration of HHS programs and services based on gender identity or sexual orientation. Many suggested that LGBTQ individuals and other marginalized communities could lose access to healthcare through discrimination under the proposed rule. One commenter claimed that the proposed rule lays the foundation for possible discrimination against certain groups of people; other commenters expressed concern that it will set a precedent for discrimination in other health and human services programs. One commenter suggested that the proposed changes would increase the burdens on the LGBTQ community, women, and people of minority faiths, violating their civil rights and imposing damage far greater than the monetary effects on the regulated community. A number of State Attorneys General opposed the proposed rule, contending that it would eliminate explicit protections for age, disability, sex, race, color, natural origin, religion, gender identity, or sexual orientation, and replace them with a generic prohibition of discrimination to the extent prohibited by federal statutes, making grantees free to discriminate if they so choose. One commenter stated that the proposed rule would allow HHS award recipients, whether religious or non-religious, to discriminate based on non-merit factors unless some other prohibition applies explicitly to the program or activity. A number of commenters argued that discrimination has no place in HHS programs and that HHS has no authority to hold money or discriminate against anyone with their tax dollars. Other commenters claimed that the proposed rule would permit taxpayer dollars to support organizations that may discriminate against, or violate the rights of, vulnerable people who need services, or in violation of equal rights. Some commenters argued that discrimination is against American beliefs and that law and government policy should not allow it. Another commenter noted that all of humankind is created in the image of God, and that no form of discrimination is defensible.

In addition to the potential impact on foster care and adoption (discussed below), commenters asserted that the proposed rule would have an adverse impact on children and adults served in multiple systems of care. Other commenters claimed a negative impact on various health and human services programs supported by HHS funding, including housing, homeless shelters, child care, education, food assistance, health care, cancer screenings, immunization programs, reproductive care, and STD/STI and HIV/AIDS programs, Head Start and other pre-kindergarten programs, domestic violence hotlines, substance abuse programs, resettlement efforts for refugees and asylees, and community support services for seniors and people with disabilities. Several commenters claimed that the proposed rule could restrict access to HIV prevention and treatment and would be a setback to the administration's Ending HIV as an epidemic initiative.

Response: The Department believes that all people should be treated with dignity and respect, especially in the Department's programs, and that they should be given every protection afforded by the Constitution and the laws passed by Congress. The Department does not condone the unjustified denial of needed medical care or social services to anyone. And it is committed to fully and vigorously enforcing all of the nondiscrimination statutes entrusted to it by Congress. In this final rule, the Department reemphasizes this commitment to apply and enforce those nondiscrimination laws.

The Department does not agree with commenters' assertion that, should the Department limit its nondiscrimination regulatory and enforcement activities to the nondiscrimination laws passed by Congress, grantees will discriminate against vulnerable populations or deny services to the intended beneficiaries of departmental programs, or that individuals who are otherwise eligible to receive services from programs funded by the Department will not receive them. Commenters offered little evidence that this was the case before the current § 75.300(c) and (d) became effective in January 2017, and there is no reason to believe that this will occur as a result of the fact that the regulation will only require compliance with statutory nondiscrimination requirements. This final rule merely removes the regulatory requirement to comply with nonstatutory nondiscrimination requirements; grant recipients are still required to comply with the statutory nondiscrimination requirements that are applicable to the programs for which they receive Department funding—and they remain free, consistent with their other legal and regulatory obligations, to observe nonstatutory nondiscrimination practices. 25 To the extent that commenters view statutory nondiscrimination provisions as insufficient, they can address that issue with Congress.

The Department is committed to improving the health and wellbeing of all Americans. 26 Consistent with its statutory authority, the Department seeks, wherever possible, to remove barriers to healthcare. As a matter of policy, the Department recognizes and works to address barriers to treatment caused by stigma about depression, anxiety, substance use disorder, and other comorbid mental and behavioral health conditions. 27 For example, this final rule does not alter or affect the longstanding Federal protections against discrimination for individuals with HIV: Section 504, and hence also this final rule, prohibits discrimination on the basis that an individual has HIV. 28 OCR continues to pursue major enforcement actions under its authorities  29 and to provide the public guidance  30 to protect the rights of persons with HIV or AIDS. HHS remains committed to ensuring that those living with HIV or AIDS receive full protection under the law, in accordance with full implementation of the President's National HIV/AIDS Strategy. 31

Comments: Some commenters opposed the proposed rule, contending that it would license discrimination by allowing child welfare agencies to reject prospective foster and adoptive families on the basis of sexual orientation, gender identity or expression, religion, and other factors; several suggested that such interests would be prioritized above the best interests of the child. Others were concerned that it would permit discrimination against children in foster care who are LGBTQ and are entitled to loving support and the chance of a family. One state noted that its experience was that placement rates and time in care do not change significantly when discriminatory providers leave the field. A number of commenters thought that the proposed rule would have a negative impact on the availability of foster care/adoption placements; a few claimed that it would limit the number of loving parents that children can be placed with based on sexual preference, which does not serve anyone, with one commenter asserting that it will increase the number of children in foster care permanently. One commenter suggested that the substantive due process rights of children in state-regulated foster care will be impaired by the proposed rule and that placing the providers of foster care and adoption services in a position to serve their religious objectives over the best interest of the children in their care violates federal statute which gives the children and youth higher priority. Several commenters disagreed that the current rule reduces the effectiveness of HHS-funded programs, contending that there is no evidence validating the statement. One commenter faulted HHS for not providing empirical data to support the contention that the nondiscrimination rule is materially affecting efforts to find qualified providers; another complained that HHS did not present evidence that a significant number of grantees have been unduly burdened under the current rule.

On the other hand, some commenters believed that, with the proposed changes, more children in the foster care system will be able to receive help as there will be more organizations available to provide services. Other commenters supported the proposed rule, believing that it keeps faith-based adoption agencies viable. Several Senators who submitted comments argued that the proposed rule would encourage a wider array of foster service providers. Other commenters noted that faith-based organizations have a good track record of helping vulnerable children through foster care and adoption, and providing material support and services, and believe the proposed rule will have a positive impact on the availability of foster care and adoption services. Some noted that the proposed rule protects the beneficiaries of HHS programs by ensuring that faith-based organizations do not cease to provide services, including foster care; several commenters noted that the current rule jeopardized foster care for thousands of children nationwide.

Response: The Department and its Administration for Children and Families (ACF) supports the prompt placement of children in loving homes according to the best interest of the children involved. The Department recognizes that many states may need more foster and adoptive families and greater foster care capacity. The Department values the work of faith-based organizations in service to persons in need and in the protection of children. It believes that when both faith-based and secular entities participate in the foster care and adoption placement processes, children, families, and providers benefit from more, not fewer, placement options. 32

All children and youth should be treated fairly and with compassion and respect for their human dignity. Those in foster care need the support of a loving family to help them negotiate adolescence and grow into healthy adults, including those that face special or unique challenges. Faith-based child placement agencies are critical providers and partners in caring for vulnerable children and youth. These agencies have a long and successful history of placing foster children with loving families, either in temporary foster care or in forever homes through adoption. Their participation in these programs does not prevent qualified individuals, with whom some faith-based agencies cannot work, from becoming foster or adoptive parents because there are other agencies that would welcome their participation.

Failure to address the objections to the nonstatutory nondiscrimination requirements could destabilize this diverse system of foster care providers. Some faith-based subrecipients, including some that provide critically important child welfare services to states and local jurisdictions across the child welfare continuum, may not be able to provide needed services—and indeed, might be compelled to withdraw from the provision of child welfare services—if they are forced to comply with the current nonstatutory nondiscrimination requirements. Foster care service providers in Michigan, South Carolina, and Texas have made such claims, supported by the state in the case of the providers in South Carolina and Texas. Such a result would likely reduce the effectiveness of the foster care/adoption programs because, in many states, it would decrease the number of entities available to provide foster care/adoption related services. The Department further notes that a number of states have laws requiring the placement of children, when possible, with families of the same faith tradition as the child, in order to promote and protect the child's free exercise rights. Eliminating the ability of faith-based providers to participate in Department-funded foster care and adoption programs—because of their sincerely held religious beliefs—could thus make it more difficult for children to receive services from child placement agencies that share their faith traditions and are more likely to place such children with foster or adoptive parents and families who share their religious beliefs and values and faith traditions.

This final rule removes the federal regulatory barriers that would have precluded such faith-based organization from participating in the federally funded Title IV-E foster care and adoption programs.

Removing regulatory barriers to participation of faith-based child placement agencies thus serves the Department's goals of creating more options for children in need of loving homes. State child welfare agencies are best situated to determine how to serve the diversity of children and families within their states, but the changes in this final rule will ensure that they have the flexibility to work with all available providers. Such providers include not only those child placing agencies that operate within the context of their sincerely held religious beliefs, but also other providers that do not have such beliefs, including State agency placement services. The Department and ACF place the best interests of the child first, as participants in Department-funded Title IV-E programs must; ensuring qualified providers can participate allows ACF to continue to prioritize the child's best interest and to avoid any violation of RFRA.

Comments: Several commenters (including the Chairs of House Committees with jurisdiction) opposed the proposed rule, arguing that it would create a confusing, uneven patchwork of civil rights protections across HHS programs, and undermine a uniform nondiscrimination standard for HHS grant programs. Several commenters contended that the proposed rule would confuse beneficiaries and recipients of HHS services, and inevitably lead to extensive litigation; they also claimed that it would create conflicts between federal, state, and local law and with prior Executive Orders. Several commenters contended that the proposed rule creates greater ambiguity, compliance complexity and uncertainty for both providers and beneficiaries of HHS-funded programs.

Response: As noted above, Congress has been selective in imposing specific nondiscrimination criteria in certain statutes and programs, and not imposing the same criteria in other statutes and programs. The Department has elected to follow those selections, and leaves for Congress the determination whether to create a uniform nondiscrimination standard for all of the Department's grant programs.

The Department doubts that the lack of a uniform standard will cause confusion among grantees, beneficiaries, and recipients of Department-funded services. These organizations and individuals are likely familiar with the varying eligibility requirements imposed by Congress for various grant programs—that there may be varying nondiscrimination requirements among such programs is unlikely to come as a surprise. Moreover, the Department's agencies are required to inform recipients of the relevant public policy requirements—which includes the applicable nondiscrimination requirements—and to incorporate them either directly or by reference in the terms and conditions of the Federal award. See 45 CFR 75.300(a). This would minimize any potential for uncertainty or confusion as to what is required.

The Department respectfully disagrees that the proposed rule's provisions that are finalized here will create a conflict with state or local laws. A conflict arises when an entity cannot comply with two different laws. The Department's action here merely removes certain federal regulatory requirements. Regulated entities may follow such nondiscrimination principles (voluntarily or as a result of other law), consistent with their other legal obligations. And consistent with their constitutional and legal obligations, State and local governments remain free to adopt additional nondiscrimination requirements.

The Department also notes that commenters appear to have misunderstood its expressed concern in the proposed rule that the existence of the referenced complaints and legal actions created a lack of predictability and stability for the Department and stakeholders with respect to the viability and enforcement of the current § 75.300(c) and (d) in the proposed rule. 84 FR at 63832. In particular, the Department was focused on the situations that had been brought to its attention where under the current rule, nonstatutory requirements conflict with statutory requirements ( e.g., RFRA). It was in this context that the Department determined that the adoption of this regulatory approach would make compliance more predictable and simple for grant recipients, and, thus, control regulatory costs and relieve regulatory burden. The final rule is consistent with that comment.

In the proposed rule, the Department proposed to repromulgate § 75.305 without change. As stated in the proposed rule, the 2016 Rule modified the language in § 75.305 to clarify the relation between it, the Treasury-State Cash Management Improvement Act, and other regulatory provisions. The Department is reaffirming this clarification so that all states are aware of the necessity, for example, to expend refunds and rebates prior to drawing down additional grant funds. The Department repromulgates this provision without change.

As with the 2016 rulemaking, the Department received no comments on this proposal.

In the proposed rule, the Department proposed to repromulgate this section without change. Section 75.365 clarifies the limits on the restrictions that can be placed on non-federal entities that limit public access to records pertinent to certain federal awards. As stated in the proposed rule, it also implements Executive Order 13642 (May 9, 2013), and corresponding law. See, e.g., https://www.federalregister.gov/documents/2013/05/14/2013-11533/making-open-and-machine-readable-the-new-default-for-government-information/, and Departments of Labor, Health, and Human Services, and Education Appropriations Act of 2014, Public Law 113-76, Div. H, Sec. 527 (requiring “each Federal agency, or in the case of an agency with multiple bureaus, each bureau (or operating division) funded under this Act that has research and development expenditures in excess of $100,000,000 per year [to] develop a Federal research public access policy”). The language in this final rule codifies permissive authority for the Department's awarding agencies to require public access to manuscripts, publications, and data produced under an award, consistent with applicable law. The Department repromulgates this provision without change.

As with the 2016 rulemaking, the Department received no comments on this proposal.

This provision, as published in 2016, restricted indirect cost rates for certain grants. The Department is repromulgating this provision without change. As stated in the proposed rule, it is long-standing HHS policy to restrict training grants to a maximum eight percent indirect cost rate. In addition to implementing this limit for training grants, this section imposes the same limitation on foreign organizations and foreign public entities, which typically do not negotiate indirect cost rates, and includes clarifying language to § 75.414(f), which would permit an entity that had never received an indirect cost rate to charge a de minimis rate of ten percent, in order to ensure that the two provisions do not conflict. 33 Additionally, the American University, Beirut, and the World Health Organization are exempted specifically from the indirect-cost-rate limitation because they are eligible for negotiated facilities and administration (F&A) cost reimbursement. This restriction on indirect costs, as indicated by 45 CFR 75.101, would flow down to subawards and subrecipients.

The Department received no comments on this provision.

In repromulgating the provision, the Department makes several minor technical corrections to the language, replacing “training grants” with “Federal awards for training” in paragraph (c)(1)(i); replacing “grants awarded” with “Federal awards” and deleting an “and” in subparagraph (c)(1)(ii); and adding “in this section” after “paragraphs (c)(1)(i) and (ii)” in paragraph (f).

The Department proposed to repromulgate only part of current § 75.477, providing for the exclusion, from allowable costs, of any payments imposed on employers for failure to offer employees and their dependents the opportunity to enroll in minimum essential coverage. It did not propose to repromulgate the exclusion, from allowable costs, of any penalties imposed on individuals for failure to maintain minimum essential coverage because Congress reduced to zero the penalties imposed on individuals as a result of their failure to maintain such coverage, effective after December 31, 2018. The Department has since learned that payments of the tax penalties assessed for failure to comply with the individual shared responsibility prior to 2019 may continue, whether as the result of later filing, IRS administrative or appeals processes, or litigation in the Tax Court, the Court of Federal Claims, or the District Courts. As a result, the Department repromulgates § 75.477, with changes. As proposed, the Department repromulgates, without change from the proposed rule, the provision addressing tax penalties for failure to comply with the employer shared responsibility provisions. That provision makes clear that employers may not claim as allowable costs any payments imposed under 26 U.S.C. 4980H for failure to offer employees (and their dependents) the opportunity to enroll in minimum essential coverage. However, because of the possibility that individuals may still be responsible for payments of the tax penalties assessed for failure to comply with the individual shared responsibility prior to 2019, the Department repromulgates the provision excluding such payments from allowable costs, but only with respect to payments incurred as a result of the failure to maintain minimum essential coverage prior to January 1, 2019, the date on which the individual tax penalty was reduced to zero.

As with the 2016 promulgation of this provision, the Department received no comments on this section.

The Department has examined the impacts of this final rule as required by Executive Order 12866 on Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993); Executive Order 13563 on Improving Regulation and Regulatory Review, 76 FR 3821 (Jan. 21, 2011); Executive Order 13771 on Reducing Regulation and Controlling Costs, 82 FR 9339 (Jan. 30, 2017); the Regulatory Flexibility Act (Pub. L. 96-354, 94 Stat. 1164 (Sept. 19, 1980) and Executive Order 13272 on Proper Consideration of Small Entities in Agency Rulemaking, 67 FR 53461 (Aug. 16, 2002); section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4, 109 Stat. 48 (Mar. 22, 1995); Executive Order 13132 on Federalism, 64 FR 43255 (Aug. 4, 1999); Executive Order 13175 on Tribal Consultation, 65 FR 67249 (Nov. 6, 2000); the Congressional Review Act (Pub. L. 104-121, sec. 251, 110 Stat. 847 (Mar. 29, 1996)); section 654 of the Treasury and General Government Appropriations Act of 1999; and the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, et seq.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects; distributive impacts; and equity). Executive Order 13563 is supplemental to Executive Order 12866 and reaffirms the principles, structures, and definitions governing regulatory review established there.

As explained in the proposed rule and in this final rule, the Office of Management and Budget (OMB) has determined this rule is not economically significant in that it will not have an annual effect on the economy of greater than $100 million dollars in one year. However, because the Department determined that this rule is a “significant regulatory action” under Executive Order 12866, § 3(f)(4), in as much as it raises novel legal or policy issues that arise out of legal mandates, the President's priorities, or the principles set forth in an Executive Order, the Office of Management and Budget has reviewed it. Under Executive Order 13563, this rule harmonizes and streamlines rules, and promotes flexibility by removing unnecessary burdens.

As the Department noted in the proposed rule, after promulgation of the 2016 Rule, non-Federal entities, including States and other grant recipients and subrecipients raised concerns about § 75.300(c) and (d), contending that the requiring compliance with certain of the nonstatutory requirements would violate RFRA or the U.S. Constitution, exceed the Department's statutory authority, or reduce the effectiveness of the Department's programs. As a result of the Department's consideration of these issues, it believes that this final rule is needed for a number of reasons, including:

• To restore the Congressionally established balance with respect to nondiscrimination requirements. Congress carefully balanced the rights, obligations, and goals involved in various Federal grant programs when it decided which nondiscrimination provisions to make applicable to such programs. The 2016 Rule made a number of nondiscrimination requirements, including certain nonstatutory nondiscrimination requirements, applicable to all grantees in all Departmental grant programs, regardless of whether Congress had made such requirements applicable to the grantees in particular Departmental programs. Because Congress carefully balanced competing interests, rights, and obligation, the Department believes that it is appropriate to impose only those nondiscrimination requirements required by the Constitution and the federal statutes that are applicable to the grantees.

• To avoid RFRA issues. The imposition of certain nonstatutory nondiscrimination requirements on certain faith-based organizations as recipients or subrecipients in the Department's programs would likely constitute a substantial burden on their exercise of religion that is not the least restrictive means of furthering a compelling government interest and, likely, constitute a violation of RFRA. With respect to the Title IV-E foster care and adoption program, the Department has determined in two contexts that this was the case, and a federal district court similarly issued a preliminary injunction against the Department's enforcement of such provisions in the case of a faith-based organization that participates in Michigan's foster care and adoption program. The Department believes that this final rule constitutes the best way to avoid such burdens on religious exercise.

• To appropriately focus on compliance with applicable Supreme Court decisions. The 2016 Rule made two specific Supreme Court decisions applicable to all recipients of the Department's grants, although those decisions only apply to state actors. The Department is committed to complying not just with those decisions, but all applicable Supreme Court decisions, which is what this final rule provides.

• To limit uncertainty that would decrease the effectiveness of the Department's programs. Section 75.300(c) and (d) have raised questions about whether the Department exceeded its authority, disrupted the balance of nondiscrimination requirements adopted by Congress, generated requests for deviations or exceptions and lawsuits challenging the provisions, and sowed uncertainty for grant applicants, recipients, and subrecipients that could deter participation in Department-funded programs and, over time, undermine the effectiveness of those programs. The Department is under no legal obligation to impose such requirements and, accordingly, believes that it is appropriate to remove them in order to avoid such impacts to the Department's programs.

• To remove an exclusion from allowable indirect costs to the extent that is no longer necessary. The 2016 Rule excludes from allowable indirect costs any tax penalty imposed on individuals for failure to maintain minimum essential coverage under the ACA. That tax penalty has since been reduced to zero, but individuals may still be paying such tax penalties. Accordingly, the final rule limits the exclusion to tax penalties assessed for failure to maintain such coverage prior to January 1, 2019, when the penalty was reduced to zero.

Thus, as discussed in more detail elsewhere in the preamble, this final rule would

• Require recipients to comply with applicable federal statutory nondiscrimination provisions. 34

• Provide that HHS complies with applicable Supreme Court decisions in administering its award programs.

• Not repromulgate the exclusion from allowable costs of the tax penalty, now reduced to zero, imposed on individuals for failure to maintain minimum essential coverage, except for tax penalties associated with failure to maintain minimum essential coverage prior to January 1, 2019, when the tax penalty was reduced to zero.

• Repromulgate without change a provision which established that recipients could not include, in allowable costs under HHS grants, any tax penalty imposed on an employer for failure to comply with the employer mandate under the ACA.

• Repromulgate without change a provision which addressed the applicability of certain payment provisions to states.

• Repromulgate without change a provision which authorized the grant agency both to require recipients to permit public access to various materials produced under a grant and to place restrictions on recipients' ability to make public any personally identifiable information or other information that would be exempt from disclosure under FOIA.

• Repromulgate, with certain technical changes, a provision which established limits on the amount of indirect costs allowable under certain types of grants.

The Department carefully considered several alternatives, but rejected the potential alternatives for a number of reasons:

• Alternative 1: Not make any changes to the previously issued regulatory provisions at issue. The Department concluded that this alternative would likely lead to additional legal challenges. Moreover, because of the RFRA issues presented by application of certain provisions in the section to certain faith-based organizations that participate in or seek to participate in Department-funded programs or activities, the Department would continue to be faced with either litigation over the Department's compliance with RFRA, or additional requests for exceptions or deviations from the provisions, both of which would require the expenditure of departmental resources to address, as well as the expenditure of resources by such faith-based organizations that participate in, or seek to participate in, Department-funded programs or activities consistent with their religious beliefs. Finally, the current requirements, if enforced, could have led to the exclusion of certain faith-based organizations from participating in the Department's programs as recipients or subrecipients and would likely have a negative impact on the effectiveness of such programs.

• Alternative 2: Not make any changes to the regulatory provisions at issue, but promulgate a regulatory exemption for faith-based organizations whose religious exercise would be substantially burdened by the application of § 75.300(c) and (d) in their current form. This would address the RFRA issues presented by application of certain provisions in the section to certain faith-based organizations that participate in or seek to participate in Department-funded programs or activities. However, this approach would not adhere to the balance struck by Congress on nondiscrimination provisions applicable to Department grant programs and, thus, would raise competing concerns that might require careful balancing.

• Alternative 3: Revise § 75.300(c) and (d) to enumerate all applicable nondiscrimination provisions and the programs and recipients/subrecipients to which the nondiscrimination provisions would apply. This alternative would require the Department to update the provision every time Congress created a new program for the Department to implement, adopted new nondiscrimination provisions, or revised existing nondiscrimination provisions. Moreover, since § 75.300(a) already requires the grantmaking agency to communicate to awardees all relevant public policy requirements, including specifically all nondiscrimination requirements (and incorporate them either directly or by reference in the terms and conditions of the Federal award), this alternative would provide no new benefits to the recipients of grants from the Department's grantmaking agencies.

The Department expects several benefits from this final rule. The final rule will better align the regulation to the statutory requirements adopted by Congress. This provides covered entities more clarity and stability concerning the requirements applicable to them. The final rule better ensures compliance with RFRA, and allows the Department to avoid some situations where a substantial burden on religious exercise may be applied by requirements that flow from the Department but not from a statute. The final rule will reduce litigation and associated costs, both to the government and to covered entities, resulting from challenges to nonstatutory public policy requirements. The final rule relieves administrative burdens on covered entities by removing certain requirements that go beyond those mandated by statute. As a result, the final rule enables the participation of faith-based organizations that participate in or seek to participate in Department-funded programs or activities. In turn, the Department expects the final rule will avoid the negative impact that the current regulations, if fully implemented, may have on the effectiveness of the Department's programs. For example, the Department expects the final rule will avoid reducing participation rates in the Department's programs by entities that object to the current regulations. The Department believes some of those entities have been effective in providing a significant number and percentage of services in such programs, so the Department expects this rule will avoid a reduction in the effectiveness of the Department's programs and in the number of beneficiaries served overall.

As the Department noted in the regulatory impact analysis in the proposed rule and in this final rule, with respect to the Regulatory Flexibility Act (and as the Department reiterates below in response to comments), the Department does not believe that there will be any direct costs or economic impact associated with final rule, apart from potential administrative costs to grantees to become familiar with the requirements of the final rule.

The Department received comments on the Department's compliance with Executive Order 12866.

Comments: Several commenters contended that the Department had failed to conduct an adequate cost-benefit analysis for the proposed rule. Several commenters asserted that the Department had failed to consider the health and financial costs from the proposed rule; others alleged that the Department had failed to consider the impacts and harms that would flow from the proposed rule. One commenter alleged the proposed rule lacked a holistic analysis of risks and benefits of the proposed rule to small business or the foster care system. Another complained that the Department had not explained why the proposed rule was a significant regulatory action under Executive Order 12866, but not economically significant.

Response: The Department respectfully disagrees with commenters. First, the Department does not believe the final rule imposes the costs and harms that some commenters allege. While commenters opposing the revisions argued that the final rule would permit grantees and subrecipients to discriminate against LGBT individuals, women, and other vulnerable populations and negatively affect the health or well-being of such individuals who would be discouraged from seeking services from secular service providers, the Department does not believe that such discrimination is widespread in its programs (or would be widespread in its programs in the absence of the nonstatutory nondiscrimination requirements), nor that the final rule would lead to a reduction in services provided overall—or, as explained below, that this final rule would necessarily cause a change in the composition of participants in Department-funded programs. For example, as discussed above in cases concerning Title IV-E foster care and adoption programs, the Department is aware that various entities will provide services only to persons of their religion, or to persons having a certain marital status, but the Department is also aware that other entities in such programs have been available to provide services to parents with whom a specific provider will not work. On the other hand, the entities of which the Department is aware that will only work with limited categories of parents often place many children, and if they were forced to leave the program because of the current regulations, the overall number of children placed would likely drop.

With respect to the requirements imposed by current § 75.300(c) and (d) to comply with certain nonstatutory nondiscrimination requirements, the Department notes that these requirements of the 2016 rule became effective in January 2017, coinciding with the change in Administration. As a result of changes in compliance and enforcement priorities, the Department and its grantmaking agencies did not make, and have not made, any concerted effort to obtain recipient compliance with the nonstatutory nondiscrimination provisions since the 2016 rule became effective, and have not taken steps to enforce compliance with such requirements. In addition, in January 2019, the Department issued an exception to the State of South Carolina with respect to one of the nonstatutory nondiscrimination requirements, recognizing that requiring the State's compliance with respect to certain faith-based organizations would violate RFRA. In September 2019, a federal district court preliminarily enjoined the Department from enforcing § 75.300(c) with respect to the plaintiffs as a violation of RFRA. And on November 1, 2019, the Department announced that it would not be enforcing the provisions of the 2016 rule, including the nonstatutory nondiscrimination requirements, pending repromulgation of the provisions. In light of this sequence of events, the Department believes that its recipients fall into one of several categories:

• Recipients that adopted the nondiscrimination practices prior to the 2016 rule, voluntarily or as a result of state or local law. These recipients' observance of nonstatutory nondiscrimination requirements is, thus, not the result of the 2016 rule. Because this final rule merely removes the regulatory requirement to comply with the nonstatutory nondiscrimination provisions, recipients remain free to observe such nondiscrimination practices, consistent with their other legal and/or constitutional obligations. And the Department anticipates that recipients in this category are likely to continue to observe such practices.

• Recipients that had not adopted the nondiscrimination practices prior to the 2016 rule and still have not adopted such practices, despite the 2016 rule's nonstatutory nondiscrimination requirements, in some instances because of the concerns outlined in the proposed rule and this final rule with respect to such requirements. The Department knows that there are grantees that are in this category. Since this final rule removes the requirement to comply with such nonstatutory nondiscrimination provisions, the Department expects that these grantees will continue to do what they have been doing—and, thus, will not change any behavior as a result of the final rule.

• Recipients that had not adopted the nondiscrimination practices prior to the 2016 rule, but have complied with the nonstatutory nondiscrimination provisions since then. The Department acknowledges that there could be some grantees that are in this category, although it is not specifically aware of any. To the extent that any grantees fall into such category, it seems likely that many would continue to follow such nondiscrimination practices, voluntarily or because of new or newly enforced state or local laws. The Department reaches that conclusion because, to the extent that grantees knew about the nonstatutory nondiscrimination requirements imposed by the 2016 rule at the time it was promulgated and had any concerns about them, such grantees or prospective grantees would most likely have taken a “wait and see” approach to the Department's interpretation and enforcement of such provisions. They would thus have fallen within the category described in the previous bullet. The same would likely be the case with respect to such grantees that learned of the 2016 rule only after the fact—for example, as a result of coverage of the State of South Carolina's February 2018 request for a deviation from certain requirements in § 75.300(c) and (d). Absent specific concerns about complying with those nonstatutory requirements, the Department sees little reason that grantees would change course yet again.

For significant regulatory actions, Executive Order 12866 requires “an assessment, including the underlying analysis,” of benefits and costs “anticipated from the regulatory action.” Executive Order 12866, §§ 6(a)(3)(C), 3(f)(1). The Department provides such an assessment here and provided one in the proposed rule. Furthermore, the APA requires agencies to base their decisions “on consideration of the relevant factors,” State Farm, 463 U.S. 29, 42 (1983), but it does not require them to “conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value,” Michigan v. EPA, 135 S. Ct. 2699, 2711 (2015), or assess the relevant factors in quantitative terms, Ranchers Cattlemen Action Legal Fund v. USDA, 415 F.3d 1078, 1096-97 (9th Cir. 2005). The Department noted in the proposed rule that it would harmonize and streamline rules and promote flexibility by removing unnecessary burdens. It similarly noted that most of the provisions of the proposed rule have been operational since 2016, and that where the Department proposed to amend the 2016 provisions, grantees were already subject to the requirements that were proposed, so grantees would not need to make any changes to their current practice in response to the rulemaking. Although the Department received comments asserting that particular harms—for example, discrimination against particular groups of beneficiaries—would flow from the removal of the provisions, the Department did not identify such problems prompting its promulgation of § 75.300(c) and (d) in 2016, and the commenters did not provide evidence to suggest that such problems would occur after promulgation of this final rule.

Finally, the Department believes that this final rule will impose only de minimis costs, if any, on covered entities. This final rule relieves regulatory burdens by removing requirements on recipients and subrecipients in § 75.300(c) that are not imposed by statute, and eliminate the burden imposed on faith-based organizations that participate in the Department's programs to seek an exception from certain nonstatutory nondiscrimination imposed by the 2016 rule through litigation or the exception process in § 75.102(b), as well as the expenses that the Department would incur in addressing such litigation or exceptions requests. Therefore, as a qualitative matter, the final rule could be seen as relieving burdens and costs rather than imposing them. Because the final rule does not impose any new regulatory requirements, recipients and subrecipients should not incur any new or additional compliance costs. Nor does the Department believe covered entities would necessarily incur any more than de minimis costs to review this rule. Recipients are already required by § 75.300(a) and (b) and other regulatory provisions to comply with statutory nondiscrimination requirements and ensure their subrecipients and their programs are in compliance. Pursuant to § 75.300(a), the Department's grantmaking agencies are required to inform applicants for grants and recipients in notices of funding opportunities and award notices of applicable statutory and regulatory requirements, including, specifically, the nondiscrimination requirements applicable to the grant program. Therefore, as a practical matter, grantees and recipients may rely on these communications to inform them of the legal and regulatory requirements applicable to the programs in which they participate.

However, as a standard practice, the Department considers regulatory familiarization costs in its regulatory impact analyses. Although the Department issues many grants on an annual basis, many recipients receive multiple grants. Thus, based on information in the Department's Tracking Accountability in Government Grant Spending (TAGGS) system, the Department estimates that it has a total of 12,202 grantees. 35 Depending on the grantee, the task of familiarization could potentially fall to the equivalent of (1) a lawyer (hourly rate: Median $59.11, mean $69.86); (2) a general/operations manager (hourly rate: Median $48.45, mean $59.15); (3) a medical and health services manager (hourly rate: Median $48.55, mean $55.37); (4) a compliance officer (hourly rate: Median $33.02, mean $35.03); or (5) a social and community service manager (hourly rate: Median $32.28, mean $35.05). 36 Averaging these rates leads to a median hourly rate of $44.28 and mean hourly rate of $50.89. The Department assumes that the total dollar value of labor, which includes wages, benefits, and overhead, is equal to 200% of the wage rate, or $88.56 (median) and $101.78 (mean). The changes made by the final rule are straight forward and easy to understand—and the Department anticipates that professional organizations, trade associations and other interested groups may prepare summaries of the rule. Accordingly, the Department estimates that it would take a grantee approximately an hour to become familiar with the final rule's requirements. The Department, thus, concludes that the cost for grantee familiarization with the final rule would total $1,080,609.12 (median) or $1,241,919.56 (mean).

The Department does not believe that covered entities will incur training costs under § 75.300(c) and (d) of this rule. Section 75.300(c) only applies requirements to the extent imposed by statute, and recipients and subrecipients are already required to comply with such statutory requirements under § 75.300(a) and (b) and other statutes and regulations. Section 75.300(d) does not impose requirements that recipients or subrecipients need to review, but makes a general statement about the Department's compliance with applicable Supreme Court cases in its award programs, without requiring familiarity with any particular case on the part of recipients or subrecipients. In both respects, § 75.300(c) and (d) of this final rule impose requirements that may be simpler and easier to understand than the current regulation. 37

This is a summary of the Commission's document, Report and Order, FCC 20-156, ET Docket No. 20-36, adopted October 27, 2020 and released October 28, 2020. The full text of this document is available for public inspection and can be downloaded at: https://www.fcc.gov/document/fcc-increases-unlicensed-wireless-operations-tv-white-spaces-0 or by using the search function for ET Docket No. 20-36 on the Commission's ECFS web page at www.fcc.gov/ecfs.

1. The Commission adopts targeted changes to the part 15 unlicensed device rules for white space devices in the TV bands to provide improved broadband coverage that will benefit American consumers in rural and underserved areas as well as to provide improved access to narrowband IoT applications that will benefit consumers and businesses while still protecting broadcast television stations from harmful interference. Specifically, the Commission permits higher EIRP (“equivalent isotropically radiated power”) and higher antenna HAAT (“height above average terrain”) for fixed white space devices in “less congested” geographic areas. In addition, the Commission permits higher power mobile operation within “geo-fenced” areas in “less congested” areas. The Commission also adopts rule changes designed to facilitate the development of new and innovative narrowband IoT services.

2. The Commission declines at this time to allow higher power operation by white space devices operating within the service contour of an adjacent channel TV station or to change the methodology it uses to protect authorized services within the TV bands. The changes the Commission adopts apply only to white space devices operating on TV channels 2-35. The Commission excludes channel 36 from these changes based on the need to protect Wireless Medical Telemetry Service and Radio Astronomy Service operations on channel 37 (608-614 MHz).

3. The Commission adopts rule changes for fixed white space devices that operate in the TV bands to enable improved broadband service in rural areas and underserved areas. Specifically, in “less congested” areas the Commission increases the maximum permissible radiated power from 10 to 16 watts EIRP, and increases the maximum permissible antenna HAAT from 250 meters to 500 meters. Because the higher power and increased antenna limits will expand the maximum transmission range of white space devices, they will be able to provide broadband service over larger areas. Given these revisions, the Commission is commensurately increasing the minimum required separation distances between white space devices operating at higher power/HAAT and protected services in the TV bands.

4. Current rules permit fixed white space devices to operate on channels 2-36 with a 4 watts EIRP maximum in any area, provided the device meets minimum separation distances from co-channel and adjacent channel users in the band. In addition, a fixed white space device may operate with up to 10 watts EIRP on channels 2-35 in “less congested” areas, defined as those areas where at least half the television channels in the band of operation are not in use, provided the fixed device complies with larger separation distances from other users in the band. Fixed white space devices are limited to one-watt maximum conducted transmitter power, requiring devices with radiated power levels above one-watt EIRP to use an antenna with directional gain, e.g., 6 dBi to produce 4 watts EIRP, and 10 dBi to produce 10 watts EIRP.

5. In the notice of proposed rulemaking (85 FR 18901, April 3, 2020), the Commission proposed to permit fixed devices to operate in the TV bands, up to channel 35, with a maximum 16 watts EIRP (42 dBm) in “less congested” areas. The Commission proposed this change to permit fixed devices to reach users at greater distances in rural and other less congested areas, and thus enable improved broadband coverage at lower cost. The Commission proposed to maintain the one-watt transmitter conducted power limit for fixed devices and require instead that the higher power be achieved by using higher gain, more highly directional antennas to improve spectrum efficiency. The Commission proposed that in cases where an antenna with a gain higher than 12 dBi is used, the transmitter power must be reduced below one watt by the amount in dB that the antenna gain exceeds 12 dBi, in order to ensure that the EIRP from a fixed device does not exceed 16 watts EIRP.

6. The Commission adopts its proposal to permit fixed white space devices to operate in the TV bands on channels 2-35 with a maximum 16 watts EIRP (42 dBm) in “less congested” areas. The record generally supports this action, and as the Commission noted in the NPRM, this change will permit fixed devices used in “less congested” areas (including rural areas) to reach users at greater distances, thus enabling improved broadband coverage at less cost in these hard-to-reach areas. In addition, higher power will enable signals to better penetrate foliage, buildings, and other obstacles, thus providing improved coverage at locations where there is not a direct line-of-sight to the transmitter. The Commission also adopts its related proposals to maintain the transmitter conducted power limit of one watt, and to require that when an antenna with a directional gain of greater than 12 dB is used, the transmitter power must be reduced by the amount in dB that the antenna gain exceeds 12 dBi, thus ensuring that the maximum EIRP does not exceed 16 watts (42 dBm).

7. The Commission limits higher power operation to “less congested” areas as proposed in the NPRM. This is consistent with the Commission's actions in other white spaces proceedings in which it initially took a cautious approach when adopting white space rules. This limitation will also minimize the likelihood of any potential harmful interference to authorized services in the TV bands since there are fewer authorized services in “less congested,” typically rural, areas. The Commission therefore declines requests by Broadband Connects America Coalition and Public Interest Spectrum Coalition to allow higher power in all areas, not just “less congested” ones.

8. Restricting higher power operations only to “less congested” areas will also limit the potential impact on users of unlicensed wireless microphones (which share use of unused TV channels but are not entitled to any interference protection from unlicensed white space devices). Higher power operation will be permitted only at locations where multiple vacant channels are available for use by varying types of unlicensed users. The Commission's decision to limit the areas where higher power operations may occur should alleviate the concerns of wireless microphone operators about the potential impact that higher power white space devices would have on wireless microphone operations.

9. The Commission is not increasing the maximum permissible conducted transmitter power as requested by some parties. NAB opposes this request, arguing that greater conducted power levels will inevitably lead to inadvertent or intentional overpowered operation and increased potential for interference. The Commission finds that increasing conducted transmitter power limits could encourage the use of lower gain ( i.e., less directional) antennas, resulting in less efficient spectrum use and also increasing the potential for causing harmful interference to licensees and protected users. Requiring the use of more highly directional antennas will ensure that less white space device energy is directed outside the main antenna beam than would be the case if higher radiated power were achieved using lower gain, less directional antennas.

10. HAAT limit. The rules currently permit fixed white space devices to operate with a maximum 250-meter antenna HAAT. A white space database will not provide a list of available channels to a fixed white space device with an antenna HAAT that exceeds 250 meters, and such devices are not permitted to operate. The Commission adopted this requirement to limit the distance over which the fixed white space devices would transmit and thus limit the distance at which harmful interference to other TV band users could occur. The antenna HAAT limit also precludes white space devices from operating at certain locations, e.g., those where the ground HAAT exceeds 250 meters. In the White Spaces Order on Reconsideration, the Commission upheld its previous decision to maintain a 250-meter antenna HAAT limit but stated that it might consider increasing the limit in the future if there were a more complete record addressing whether higher HAAT could be permitted without causing harmful interference.

11. In the NPRM, the Commission proposed to increase the maximum permissible antenna HAAT for fixed white space devices operating on channels 2-35 from 250 meters to 500 meters and sought comment on appropriate procedures that may be necessary to ensure that broadcast operations and other entities in the TV bands are protected from harmful interference. The Commission noted that increasing permissible antenna HAAT would improve broadband coverage in rural areas by enabling signals to reach greater distances and enable fixed white space devices to operate at locations where they are not currently permitted due to the 250-meter HAAT limit, such as existing towers located at higher ground elevations. To protect Wireless Medical Telemetry Service and radio astronomy operations on channel 37, the Commission did not propose to permit operation with a higher HAAT in the adjacent channel 36.

12. Several commenters—including Adaptrum, Broadband Connects America Coalition, Consumer Technology Association, Dynamic Spectrum Alliance, Microsoft, Public Interest Spectrum Coalition, RADWIN, RED Technologies, RTO Wireless, and the Wireless internet Service Providers Association (WISPA)—support the proposal to increase the maximum HAAT for fixed devices to 500 meters as a way of promoting expanded coverage. Broadband Connects America Coalition, Microsoft, Public Interest Spectrum Coalition, and Dynamic Spectrum Alliance also recommend allowing higher HAAT in all areas, not just “less congested” ones.

13. As proposed, the Commission increases the HAAT limit for fixed white space devices that operate in the TV bands on channels 2-35 from 250 to 500 meters in “less congested” areas. As with the Commission decision to increase the maximum power allowed for fixed white space devices, this change will permit fixed devices used in “less congested,” including rural, areas to reach users at greater distances, thus enabling improved broadband coverage at less cost in these hard-to-reach areas. This change will also increase the number of locations where fixed white space devices can operate since it will permit white space device operators to use sites where the HAAT of the ground exceeds 250 meters, which would have been precluded under the current rules. Many parties support this change.

14. While the Commission recognizes that some parties request that it not limit this higher HAAT to “less congested” areas, the Commission believes that a more cautious approach is appropriate at this time due to the significant increase in HAAT it is allowing and the potential for harmful interference at greater distances, as noted by Smith and Fisher. Therefore, consistent with the Commission's actions increasing the maximum power limit for fixed white space devices, the Commission is restricting operation of white space devices with an HAAT of greater than 250 meters to “less congested” areas where fewer authorized services and protected entities are expected to be operating in the TV bands. Relatedly, because there are expected to be fewer authorized services and protected entities operating in “less congested” areas, the Commission expects that the separation distances between white space devices and authorized services and protected entities to generally be greater. This combination of fewer potential interactions between white space devices and authorized services and protected entities and greater distance separation minimizes the potential for harmful interference to such services. Moreover, these white space devices are still required to operate pursuant to the channel availability and power levels provided by a white space database which is designed to ensure that harmful interference does not occur. While wireless microphone interests express concerns about the impact of increased HAAT on unlicensed wireless microphone operations, restricting higher HAAT operations to “less congested” areas will serve to limit any impact on users of unlicensed wireless microphones since by definition these areas have multiple vacant TV channels ( i.e., at least half) available for use by other types of unlicensed operations. The Commission also notes that the rules do not provide harmful interference protection between unlicensed devices. However, because fixed white space device locations are registered in a database, unlicensed wireless microphone users have the ability to check the database and avoid using channels where a higher probability of harmful interference is predicted. In addition to limiting the use of high HAAT to “less congested” areas, as discussed in more detail below, the Commission is increasing the required separation distances between white space devices operating with higher HAAT and co-channel and adjacent channel TV contours to further minimize the likelihood of harmful interference.

15. Coordination procedure with licensees. The Commission sought comment on whether to require a coordination procedure between white space device operators and broadcast licensees when fixed white space devices operate with an HAAT exceeding 250 meters. In particular, the Commission requested comment on Microsoft's suggested coordination procedure comprised of several steps, including notifying a white space database administrator, notifying broadcast licensees, operating on a test basis on a 30-day trial authorization, as well as a process to submit claims of harmful interference, investigate such claims, and upon satisfactorily addressing any such claims, permit authorization on a permanent basis. The Commission expressed concern about the complexity of Microsoft's suggested coordination procedure and whether such a procedure is even warranted given the existing obligations of unlicensed devices to protect authorized radio services and other protected users. The Commission also sought comment on a simpler alternative to this procedure. Specifically, the Commission sought comment on whether a party wishing to operate a fixed white space device at an HAAT greater than 250 meters should be required to notify potentially affected, protected entities of their intended operation at least 48 hours in advance. The notification would include the prospective white space device operator's contact information, geographic coordinates of the antenna, antenna height above ground and average terrain, EIRP and channel(s) of operation. For notification purposes, a potentially affected TV station would be defined consistent with Microsoft's proposal, i.e., a station would receive notification if its broadcast contour was within the separation distance corresponding to an assumed HAAT 50 meters higher than the actual deployment.

16. Adaptrum, Microsoft, and WISPA support the more streamlined coordination procedure with broadcasters that the Commission proposed in the NPRM. RADWIN, RED Technologies, and Dynamic Spectrum Alliance assert that no coordination procedure is necessary since unlicensed device operators already have an obligation to not interfere with authorized services, although RED Technologies states that it supports the Commission's proposed coordination procedure if one is required.

17. The Commission adopts the simpler procedures proposed in the NPRM, except it will require that notifications be made four calendar days in advance of operating at an increased HAAT, in response to concerns raised by some parties that 48 hours is not sufficient notice. The Commission requires this coordination procedure because white space devices operating at high HAAT have the potential to interfere with TV reception at large distances. Several parties support this simpler procedure, which will ensure that TV broadcasters are aware of new white space device operations with high HAAT that have the potential to affect broadcast operations at greater distances. This procedure provides an opportunity for TV broadcasters to work with white space system operators to address any concerns regarding potential harmful interference situations.

18. Parties operating white space devices on an unlicensed basis have an ongoing obligation under the rules to cease operation if harmful interference occurs to any authorized service. The complex multi-step procedure, including a 30-day trial period, initially suggested by Microsoft and supported by NAB is therefore unnecessary. For example, requiring a 30-day trial period appears unnecessary since the unlicensed device operating parameters (location, channel, power, and antenna height) during a trial period would be no different than those planned for normal operation of the device. In addition, parties who believes that an unlicensed device is causing harmful interference may report this occurrence to the Commission and unlicensed device operator at any time, so there appears to be no need to require a specific time period for reporting and investigating interference complaints. An unlicensed device that causes harmful interference to an authorized service must cease operation regardless of whether the interference was found during the first 30 days of operation or sometime later.

19. As proposed in the NPRM, the Commission requires that when a party plans to operate a fixed white space device with an HAAT greater than 250 meters, it must contact a white space database and identify all TV broadcast station contours that would be potentially affected by operation at the planned HAAT and EIRP. The Commission will define a potentially affected TV station as one where the protected service contour would be within the applicable separation distance if the white space device were operating at an HAAT of 50 meters above the planned HAAT at the proposed power level. The Commission will also require that the installing party notify each of these broadcast licensees and provide the geographic coordinates of the white space device, relevant technical parameters of the proposed deployment, and contact information. The Commission will permit this process to be automated through the white space database, with notifications sent to a TV station licensee's address of record with the Commission. The white space device may commence operations no earlier than four days after the notification.

20. The Commission believes that increasing the notification period from two to four days balances broadcasters' concerns regarding having sufficient time to review proposed white space device operations when operating at high HAATs and the need for white space device operators to begin providing service. Because these white space devices are restricted to “less congested” areas, the Commission does not expect broadcasters to be overloaded with notification requests. Also, because device installation must generally be planned in advance, the four-day requirement should not unduly delay new broadband service to rural and underserved areas.

21. The Commission also adopts the other elements of the coordination procedure proposed in the NPRM. Specifically, the Commission will require that, upon request, the installing party must provide each potentially affected licensee with information on the time periods of operations. This will help licensees investigate alleged harmful interference from white space devices. The Commission will also require that if the installing party seeks to modify its fixed operations by (i) increasing its power level, (ii) moving more than 100 meters horizontally from its location, or (iii) making an increase in the HAAT or EIRP of the white space device that results in an increase in the minimum required separation distances from co-channel or adjacent channel TV station contours, then it must conduct a new coordination. This requirement will ensure that TV broadcast licensees have the most current information on white space device operations. The Commission selects 100 meters as the minimum change in location for which a new coordination is required since the tables of separation distances from TV station contours are rounded to the nearest 0.1 kilometer (100 meters). The Commission see no benefits in requiring a new coordination for changes less than 100 meters.

22. The Commission declines to require parties planning to operate white space devices with an HAAT above 250 meters to notify public safety or wireless microphone licensees prior to commencing operation, as requested by NPSTC, Sennheiser, and Shure. Their services are very different from broadcast TV. In the case of broadcast TV, white space devices must protect a consumer receive-only service with very weak signal levels at long distances from the transmitter. By contrast, public safety licensees operate two-way voice and data systems, generally operate with much higher signal levels than those a consumer receives at the edge of a TV contour and could increase power if necessary. Wireless microphones also operate at significantly higher signal levels than those at the edge of a TV contour. In addition, the required separation distances from licensed wireless microphones are much shorter than those for broadcast TV and are in fact shorter than the distances over which HAAT is calculated (3 to 16 kilometers). Therefore, the Commission believes it is unnecessary to notify wireless microphone licensees of nearby white space devices operating at high HAAT since the HAAT is undefined at the wireless microphone's location.

23. Antenna height above ground. The Commission previously increased the maximum permissible antenna height above ground from 30 meters to 100 meters in “less congested” areas in the White Spaces Order on Reconsideration (84 FR 34792, July 19, 2019). It took this action to improve wireless broadband service to Americans in rural and other underserved areas, and stated that a 100-meter antenna height above ground limit will benefit wireless broadband providers and users by permitting antennas to be mounted on towers or other structures at heights sufficient to clear intervening obstacles such as trees and hills that would attenuate the transmitted signal, thereby increasing the range at which the signal can be received.

24. In the NPRM, the Commission sought comment on whether to increase the antenna height above ground limit in addition to the HAAT limit, noting that antenna heights above ground and average terrain are directly related, in that any change to a device's antenna height above ground changes its HAAT by the same amount. The Commission further noted that limiting the antenna height above ground may also limit the maximum achievable HAAT in areas where the terrain is flat since in those areas the HAAT will be approximately the same as, or not significantly higher than, the antenna height above ground. This means that the antenna height above ground limit (30 or 100 meters) may preclude white space device operators from taking advantage of a higher HAAT limit, or even the current 250-meter limit. The Commission sought comment on whether it should increase the antenna height above ground limit or remove it completely and rely only on HAAT since the separation distances from protected services are based on HAAT. The Commission also sought comment on whether modified rules should apply across the entire U.S. or only in certain areas, such as “less congested” areas.

25. The Commission eliminates the requirement that a fixed device's antenna height above ground may not exceed 30 meters generally or 100 meters in “less congested” areas. Several parties support eliminating this requirement opining that it is unnecessary. As the Commission noted in the NPRM, the separation distances from protected services are based on the antenna HAAT, and the HAAT already takes into account the antenna height above ground. Therefore, there does not appear to be a need for a separate antenna height above ground limit, and limiting the height above ground can unnecessarily limit the maximum achievable HAAT. CP Communications and Sennheiser assert that the Commission has previously concluded that there is no general need to mount an antenna higher than the current limit to avoid shadowing by trees or other obstructions and that the current limit should therefore not be changed. The Commission acknowledges that it did decide in the 2015 White Spaces Order (80 FR 73044, Nov. 23, 2015) that there was no need for a higher antenna height above ground limit. However, upon further consideration the Commission reversed its decision and decided that there was a need to increase this limit in “less congested” areas in the 2019 White Spaces Order on Reconsideration. In that proceeding, the Commission stated “that real world experience has sufficiently demonstrated that increasing the allowable height above ground would be beneficial for operators in less congested areas” and that such a change would not increase the potential to cause harmful interference to other users. In that same White Spaces Order on Reconsideration, the Commission noted Sennheiser's concern about potential interference to wireless microphones from a higher height limit, but concluded that limiting higher antenna height to less congested areas, where there are many vacant channels, ensures there will be sufficient spectrum resources in these areas for multiple spectrum users. Finally, the Commission notes that no party provided specific information or analysis in response to the NPRM showing that there is actually a need to retain an antenna height above ground limit.

26. However, the Commission is not removing the 10-meter height above ground limit that applies to fixed white space devices operating within the protected contours of adjacent channel TV stations since the NPRM did not seek comment on changing that limit and no party indicated a need to do so. That height limit could be addressed at a future date.

27. The Commission increases the minimum required separation distances between white space devices operating at higher power and HAAT and the following services in the TV bands: (1) Broadcast television services, including low power; (2) receive sites of TV translators, low power TV stations, Class A TV stations, Multichannel Video Programming Distributors (MVPDs), and Broadcast Auxiliary Service (BAS) facilities; (3) private land mobile radio services and commercial mobile radio services (PLMRS/CMRS), and (4) licensed low power auxiliary service (LPAS) stations, including licensed wireless microphones. The increases the Commission adopts will protect these services from potentially receiving harmful interference as a result of expanded white space device operating parameters.

28. Broadcast television services, including low power. In the NPRM, the Commission proposed to expand the existing tables of minimum separation distances from broadcast television protected contours (both co-channel and adjacent channel) to include additional entries for fixed white space device operation at up to 500 meters HAAT and 42 dBm EIRP. No party argued that the proposed separation distances from co-channel and adjacent channel TV station protected contours are inadequate to prevent interference to TV reception. However, several parties request that the Commission significantly change the methodology used to protect services in the TV bands. Dynamic Spectrum Alliance, WISPA, and Public Interest Spectrum Coalition argue that the Commission should determine white space channel availability using a terrain-based model, such as the Longley-Rice Irregular Terrain Model, which they assert will determine channel availability more accurately than the overly conservative current contour-based model. NAB and Sennheiser, however, oppose using the Longley-Rice model due to concerns about its accuracy in protecting TV receivers and because it may slow operation of the white space database.

29. The Commission adopts the updated tables of separation distances from TV contours proposed in the NPRM. As noted, NAB supported these proposed separation distances in its comments to Microsoft's petition. In addition, the Commission adds a row at the end of each table (co-channel and adjacent channel) to include separation distances for white space devices with HAAT values over 500 meters and up to 550 meters, which will be used only for the purpose of determining which TV broadcast stations must be notified when a white space device operates with an HAAT of more than 450 meters and up to 500 meters.

30. The Commission declines at this time to alter the current method of protecting TV stations ( i.e., minimum separation distances outside of defined protected contours) by changing to a terrain-based model as requested by some parties. The Commission did not propose to make this change in the NPRM. However, it recognizes parties' arguments that more sophisticated propagation models could possibly identify unused TV spectrum more accurately than the current contour-based model while still protecting TV service from harmful interference.

31. Receive sites of TV translators, low power TV stations, Class A TV stations, MVPDs, and BAS facilities. In the NPRM, the Commission proposed to modify the keyhole-shaped exclusion zone around receive sites where white space devices may not operate. For fixed devices operating with an EIRP of greater than 10 watts, the Commission proposed to increase the minimum required separation distance from the receive site from 10.2 kilometers to 16.6 kilometers co-channel, and from 2.5 kilometers to 3.5 kilometers adjacent channel, over an arc of more than ±30 degrees outside the main lobe of the receive antenna. The Commission proposed no changes to the minimum required separation distances from a receive site (80 kilometers co-channel and 20 kilometers adjacent channel) within a ±30 degrees arc in the main lobe of the receive antenna. No party argued that the proposed changes are insufficient to protect these receive sites from higher power white space device operation. As such, the Commission adopts its proposal.

32. Private land mobile radio services and commercial mobile radio services ( PLMRS/CMRS ). The Commission proposed to increase the minimum required separation distances between fixed white space devices operating at greater than 10 watts EIRP and PLMRS/CMRS operations, which include public safety operations, on TV channels 14-20 (the T-Band) in 11 major markets and in some additional areas under rule waivers. In the 11 markets where PLMRS/CMRS stations are permitted to operate in the TV bands, the Commission proposed to increase the minimum required separation distance beyond the defined city center coordinates from 136 kilometers to 139.2 kilometers co-channel, and from 131.5 kilometers to 132.2 kilometers adjacent channel. The Commission also proposed to increase the minimum separation distance from PLMRS/CMRS base stations operating under a waiver outside the 11 markets from 56 kilometers to 59.2 kilometers co-channel and from 51.3 kilometers to 52.2 kilometers adjacent channel. NPSTC argues that these proposed separation distances need to be increased to reflect both the higher power and the higher HAAT proposed and provided a table of recommended separation distances.

33. The Commission will increase the proposed separation distances between PLMRS/CMRS operations and fixed white space devices operating with an HAAT of greater than 250 meters to properly reflect the increase in HAAT of up to 500 meters the Commission is permitting in “less congested” areas. No party objected to NPSTC's suggested separation distances, and the Commission believes that they will adequately protect PLMRS/CMRS operations from white space device operations at the higher power and HAAT levels the Commission is permitting. However, the Commission also recognizes Microsoft's suggestion that if the separation distances to protect PLMRS/CMRS are increased, they should be provided on a stepped basis, rather than based on the assumption that all white space devices operate at a maximum HAAT of 500 meters, to avoid needlessly making areas off limits to white space devices. The Commission agrees that this approach will maximize the amount of spectrum available for white space devices while protecting the PLMRS/CMRS from white space devices operating at higher power and antenna heights. The Commission will therefore specify protection distances for the PLMRS/CMRS for three power level ranges ( i.e., up to 4 watts EIRP, greater than 4 and up to 10 watts EIRP, and greater than 10 watts and up to 16 watts EIRP), and for two ranges of HAAT ( i.e., up to 250 meters, and greater than 250 meters and up to 500 meters). The Commission adopts the proposed separation distances for the lower HAAT range, and NPSTC's suggested separation distances for the higher HAAT range.

34. In the T-Band NPRM (85 FR 46047, July 31, 2020), the Commission sought comment on reallocating T-Band spectrum, assigning new licenses by auction for that spectrum in each of the 11 markets areas where the PLMRS/CMRS currently operates, and relocating “public safety eligibles” from this band. The Commission proposed rules that would allow for flexible use in the auctioned T-Band, including wireless use, and also proposed to permit broadcast operations. If the Commission adopts rules to allow new types of licensed services in the T-Band, white space devices would operate on a non-interference basis to them as they do with the current PLMRS/CMRS services in the bands. To the extent that any future services in the T-Band have a different potential for receiving interference than the PLMRS/CMRS, the Commission may need to adjust the minimum separation distances that white space devices must meet.

35. The following two tables show the minimum required separation distances from the 11 metropolitan areas where the PLMRS/CMRS can operate in the TV bands, and from PLMRS/CMRS operations authorized under waivers of the rules.

36. LPAS stations, including licensed wireless microphones. The Commission proposed an increase from one kilometer to 1.3 kilometers in the minimum required separation distance between fixed white space devices operating with greater than 10 watts EIRP and registered licensed wireless microphones. Sennheiser and Shure argue that the proposed separation distances to protect licensed wireless microphones should be increased, and they provided a table of recommended distances. Microsoft, however, argues that there is no need to increase the separation distances in the manner Sennheiser and Shure proposes.

37. The Commission increases the minimum required separation distance between fixed white space devices operating with a power level greater than 10 watts EIRP and licensed wireless microphones as proposed in the NPRM. This will provide the same level of protection to wireless microphones as the current rules based on a conservative free space propagation model.

38. The Commission declines to require even greater separation distances from wireless microphones as suggested by Sennheiser and Shure. The Commission first notes that no party challenged its 2015 decision to increase the maximum power for fixed white space devices to 10 watts in “less congested” areas without also increasing the one-kilometer separation distance from wireless microphones. The Commission also notes that it did not propose to increase the existing one-kilometer separation distance in the NPRM, and it believes that it would be inappropriate in these circumstances to take such an action based on this record. As a separate and independent basis for its decision, the Commission does not believe that Sennheiser's suggested increased separation distances for higher HAAT operations are appropriate. HAAT is defined and calculated along radials at a distance of three to 16 kilometers from a transmitter site, i.e., HAAT is not defined for distances less than three kilometers. The majority of Sennheiser's suggested separation distances are at distances of less than three kilometers, which is shorter than the distance (3-16 kilometers) over which HAAT is defined. Moreover, because higher HAAT operations are expected to be coupled with higher power operations to reach greater distances, the rules require use of a directional antenna which will both direct energy towards the horizon (rather than downward) and minimize the energy outside the main beam. This, in effect, will minimize white space signal strength at nearby wireless microphones. Thus, the Commission does not believe there would be any benefit to wireless microphones by increasing the separation distance requirements. In fact, the directional antenna requirement may actually provide a better operating environment for wireless microphones in such situations.

39. In the NPRM, the Commission sought comment on whether any changes are necessary to the definition of “less congested” area given that many of the proposals were limited to those areas. “Less congested” locations are typically rural or semi-rural areas and are defined as those where at least half of the TV channels within a device's particular TV sub-band of operation ( i.e., the low VHF (channels 2-6), the high VHF (channels 7-13), or the UHF (channels 14-36) band) are unused for broadcast and other protected services and are available for white space device use. The Commission sought comment on whether the current definition is still appropriate, and if not, what the appropriate metric for defining “less congested” area would be. In addition, because the number of vacant channels at a location can vary based on the EIRP and HAAT of a white space device, the Commission sought comment on whether it should define vacant channels depending on particular antenna height and power level.

40. The Commission will continue to define “less congested” areas as those where at least half of the TV channels in the bands that will continue to be allocated and assigned only for broadcast service are unused for broadcast and other protected services and available for white space device use. Areas where the spectrum is less congested generally correspond to rural and unserved areas that will benefit from improved broadband coverage, and the current definition provides a simple way for the white space database to identify these areas where the Commission permits higher power and antenna heights to improve broadband coverage. In addition, in areas where the spectrum is less congested, there is less likelihood that white space devices operating at higher power and antenna heights will cause interference to protected services in the TV band. The Commission agrees with wireless microphone operators that the current definition should be retained because spectrum is a scarce resource and it is therefore appropriate to base the definition on how much spectrum is available at a given location rather than population density.

41. Shure states that to the extent there are concerns about accounting for the number of vacant channels with variations in white space device EIRP and HAAT, the Commission can address this by defining vacant channels at a particular antenna height and power level. While no party suggested a specific white space device EIRP and HAAT that should be used in determining TV channel availability, the Commission notes that it stated in the 2015 White Spaces Order that vacant channels would be defined as those available for fixed white space devices operating with an EIRP of 40 milliwatts and an HAAT of 3 meters, although it did not codify this decision. Since no party suggested specific criteria for determining channel availability in response to the NPRM, the Commission retains and codifies its 2015 decision by specifying the power and antenna heights used to determine TV channel availability in the definition of “less congested” area in § 15.703.

42. In addition, the Commission clarifies the definition of “less congested” area by codifying its decision in the 2015 White Spaces Order that “less congested” areas are calculated by the white space database in the three TV bands separately: The low VHF band (channels 2-6), the high VHF band (channels 7-13) and the UHF band (channels 14-36). The Commission declines to significantly modify the definition of “less congested” areas as suggested by some parties. For the reasons described above, the Commission finds that the current definition, with certain modifications, is the appropriate metric for determining which areas are “less congested”. The Commission also declines Dynamic Spectrum Alliance's request to modify the definition of “less congested” area to consider all TV bands together (low VHF, high VHF and UHF) in determining vacant channel availability and whether an area qualifies as less congested. The higher frequency UHF TV band (470-608 MHz) is more heavily used by TV stations, white space devices, and wireless microphones than the lower frequency VHF TV bands (54-72 MHz, 76-88 MHz and 174-216 MHz) due to factors such as the shorter radio wavelengths and smaller required antennas. Moreover, because the TV bands are not contiguous, determining “less congested” areas based on considering all TV bands together may not produce a result that is representative of the actual spectrum congestion in the specific band where a white space device will operate. Thus, the Commission believes it is appropriate to continue determining “less congested” areas on a band-by-band approach, rather than by considering all TV bands together.

43. The white space rules permit two general classes of devices: Fixed and personal/portable, with personal/portable devices further subdivided into two types: Mode I and Mode II. Fixed and Mode II personal/portable devices must incorporate a geo-location capability to determine their coordinates and access a database to determine the available channels at those specific coordinates. The current rules permit fixed white space devices to operate with up to 4 watts EIRP generally, and up to 10 watts in “less congested” areas, which the Commission is increasing to 16 watts as discussed above. Personal/portable devices may operate with a maximum EIRP of 100 milliwatts. A Mode II personal/portable device must re-check its coordinates every 60 seconds and contact the database for an updated list of available channels if it changes location by more than 100 meters. Additionally, Mode II personal/portable devices may load channel availability information for multiple locations from the white space database and use that information to define a geographic area within which it can operate on a mobile basis (on the same available channels at all locations within that geographic area); the device must contact the database again, however, if it moves beyond the boundary of the area where the channel availability information is valid. No device manufacturers or database systems have yet implemented this provision.

44. In the NPRM, the Commission proposed to allow white space devices to operate on TV channels 2-35 on mobile platforms within geo-fenced areas at higher power levels than the rules currently permit for personal/ portable devices, and proposed to limit such operations to “less congested” areas to limit their potential for causing harmful interference. The Commission proposed to permit a higher power Mode II white space device installed on a movable platform to load channel availability information for multiple locations in the vicinity of its current location and to use that information to define a geo-fenced area within which it can operate on the same available channels at all locations. The Commission also proposed to require that the white space device's location be checked at least once every 60 seconds while in operation (unless in “sleep” mode). The Commission further proposed that a device may not use channel availability information for multiple locations if or when it moves closer than 1.6 kilometers to the boundary of the geo-fenced area in which the device operates, or at any point outside that boundary; this requirement would ensure that a device moving at 60 miles per hour (1.6 kilometers per minute) does not cross outside the boundary between device re-checks of its location. Additionally, the Commission proposed to prohibit operation on board aircraft or satellites to limit the range at which harmful interference could occur.

45. The Commission sought comment on a number of equipment issues for higher power geo-fenced mobile operations, including whether to permit fixed devices to operate on mobile platforms, the antenna and equipment authorization requirements that should apply, and whether the Commission should establish a new class of higher power mobile device to distinguish such devices from personal/portable white space devices. The Commission also sought comment on other requirements for higher power mobile white space devices, including whether to place limitations on the size of the area over which a geo-fenced mobile device could operate, the appropriate maximum power, whether there is a need to specify how information on an area will be provided to the white space database, and any other safeguards needed to ensure that higher power mobile devices do not cause harmful interference to protected operations. The Commission further sought comment on whether there is a need to prohibit operation on other mobile platforms such as trains and boats.

46. The Commission permits the operation of higher power mobile devices within defined geo-fenced areas in “less congested” areas, as proposed in the NPRM. A number of parties support this change, stating that it will benefit Americans in rural and underserved areas by permitting new agricultural applications and enabling broadband communications with moving vehicles such as school buses. The Commission implements this change by establishing a new class of higher power mobile white space device, rather than by modifying the Mode II personal/portable device rules as proposed in the NPRM and supported by Shure and Sennheiser, or by allowing fixed devices to operate on mobile platforms as suggested by Microsoft in its petition and supported by RED Technologies. The Commission agrees with commenters that establishing a new class of mobile white space device would be simpler than modifying the Mode II personal/portable device rules to permit higher power operation, and that this approach is more congruous than an approach providing for a fixed device on mobile platform as initially suggested by Microsoft. The Commission uses the term “mobile device” to refer to this class of white space devices to distinguish them from personal/portable white space devices. As suggested by Shure, the Commission is clearly indicating in the rules that mobile devices may operate only in “less congested” areas by adding this requirement to the definition of “mobile white space device”.

47. The Commission permits mobile devices to operate at the same radiated power level permitted for fixed devices in “less congested” areas, i.e., up to 16 watts EIRP. This power level will enable the provision of new types of mobile broadband services in rural and other unserved areas. Because the Commission is permitting power levels that are the same as fixed devices, it believes that many of the technical requirements that apply to fixed devices are also appropriate for the new class of mobile white space devices. Accordingly, the Commission requires mobile devices to comply with the same transmitter power limits as fixed devices, including maximum in-band power, adjacent channel emissions, power spectral density, and out-of-band emissions, as well as require them to meet the same antenna gain requirements as fixed devices. Under these requirements, a mobile device will be permitted to operate with a maximum transmitter power output of one watt, and can use an antenna with a gain of up to 12 dBi to achieve an EIRP of 16 watts. If the maximum gain of the antenna exceeds 12 dBi, then the transmitter power must be reduced by the same amount in dB that the antenna gain exceeds 12 dBi. Because mobile devices change direction as they travel, the Commission permits the use of electrically steerable directional antennas to help enable mobile devices to remain in contact with their associated base unit or another mobile device.

48. The white space database will determine channel availability over a defined geo-fenced area where a mobile device will operate. In order to provide flexibility for manufacturers and mobile device operators, the Commission does not specify how the boundaries of an area are entered into and stored within the white space database or a mobile device. The Commission does, however, require that both the white space database and mobile device contain the same boundary information. This requirement will ensure that mobile devices operate only where the database has determined available channels. Because mobile devices will operate at the same maximum power level as fixed devices, the Commission requires that the database use the same minimum required separation distances from protected services in the TV bands as fixed devices in determining available channels. This includes all protected services, including the PLMRS/CMRS, as noted by NPSTC. For simplicity of operation, the Commission requires that any channel identified by the database as available within the geo-fenced area must be available at the same power level over an entire geo-fenced area.

49. The Commission recognizes that there are some complexities in determining the available channels over a contiguous geo-fenced area. The current white space database system determines channel availability at discrete locations since it was designed to implement rules that require devices to determine their geographic coordinates at a single location and submit those coordinates to the database when requesting a list of available channels. The database system would have to use a modified methodology for determining available channels over a geo-fenced area. For example, it could divide the area into cells, e.g., 100 by 100-meters, and determine channel availability within each cell. The Commission will not prescribe the exact method that database administrators must use to determine channel availability within geo-fenced areas, but mobile white space devices must comply with the minimum required separation distances from protected services at any point within a geo-fenced area. The white space database will have to consider a mobile device's HAAT in determining available channels and consider any variation in HAAT over a geo-fenced area to determine whether a channel is available over the entire area. To simplify calculations, the Commission permits the database to use only the highest, i.e., worst case, HAAT within a geo-fenced area in determining channel availability rather than having to calculate the HAAT at each location. The Commission sees no reason to limit the size of the geo-fenced area since mobile devices will only be permitted to operate in areas where the spectrum is “less congested.” The requirement that a channel must be available over an entire geo-fenced area will tend to preclude extremely large areas since there is less likelihood that the same TV channel will be vacant over a very large contiguous area.

50. Because a mobile device must be able to accurately determine its location, the Commission requires that a mobile device comply with similar geo-location requirements to fixed devices. Specifically, the Commission requires that a mobile device incorporate a geo-location capability that is capable of determining its location and geo-location uncertainty (expressed in meters), with a confidence level of 95%. To provide flexibility in the design of mobile devices, the Commission permits the use of a remote geo-location unit as the rules permit for fixed devices, provided the remote unit is located on the same moveable platform as the mobile device, e.g., bus or tractor. To ensure that a mobile device is capable of determining whether it is within a geo-fenced area, the Commission requires that a mobile device have the ability to store information on the boundaries of a geo-fenced area in which it will operate.

51. While the Commission proposed in the NPRM to require a mobile white space device operating within a geo-fenced area to re-check its geographic coordinates at least once every 60 seconds and to cease operation if it travels closer than 1.6 kilometers to the edge of the geo-fenced area or is outside the boundary of the area, the Commission agrees with Shure that this proposed distance should be slightly increased to account for vehicles traveling at allowable highway speed limits. The proposed buffer requirement was intended to ensure that a mobile white space device traveling at 60 miles per hour (1.6 kilometers per minute) does not cross outside the geo-fenced area between location checks. However, the Commission recognizes Shure's argument that many vehicles travel faster than this speed. The Commission disagrees with Shure's contention that a 2.7-kilometer buffer is necessary because that corresponds to an atypical vehicle speed of more than 100 miles per hour, but note that Shure believes an increase in the buffer zone size to 1.9 kilometers (corresponding to a vehicle speed of just over 70 miles per hour) would be an improvement over the Commission's proposal of 1.6 kilometers. Accordingly, the Commission adopts the proposed location re-check interval of 60 seconds, but increases the size of the geo-fenced area buffer from the proposed 1.6 kilometers to 1.9 kilometers.

52. The Commission limits operation of mobile devices to “less congested” areas as proposed in the NPRM. The Commission believes that the primary applications for mobile devices will be in more rural areas, and limiting the new class of higher power mobile device to areas with more available spectrum will limit the likelihood of interference to authorized services in the TV bands as well as enable all unlicensed devices, including other white space devices and unlicensed wireless microphones, to have an opportunity to access spectrum in the TV bands. To limit the distance at which mobile devices could cause interference to authorized services, the Commission prohibits their operation on satellites and aircraft as proposed in the NPRM. This prohibition of operation on aircraft will include unmanned aerial vehicles ( e.g., drones).

53. The Commission sees no reason to specially limit the maximum height above ground level for mobile devices or to preclude operation on cranes or bucket trucks as suggested by NAB and others. The Commission requires a mobile device to report its height above ground to the white space database as is required for fixed devices, and the database will take the antenna height above ground into consideration when calculating a mobile device's HAAT and the available channels within a geo-fenced area. Thus, a higher antenna height above ground will not increase the likelihood of interference to authorized services as parties suggest. The Commissions also sees no reason to make any special requirements regarding the directivity of mobile device antennas, i.e., larger buffer zones, as suggested by Shure. The required size of the buffer zone is a function of a mobile device's speed and re-check interval and is independent of the power level used.

54. Under current rules, fixed white space devices operating with 4 watts or greater EIRP must comply with a power spectral density (PSD) limit of 12.6 dBm per 100 kilohertz, which limits total conducted power within any 6-megahertz television channel to 30 dBm. The PSD limit is proportionally lower for devices operating at lower EIRP levels. The Commission established PSD limits to prevent multiple white space devices from simultaneously operating at the maximum allowable power with transmit bandwidths of less than six megahertz within a single television channel, which would result in a total transmitted power within that channel significantly greater than the limit. The PSD limits were calculated based upon a single white space device spreading its energy uniformly across a 6-megahertz television channel bandwidth, excluding 250 kilohertz near each channel edge for roll-off, and serve to limit the maximum power of white space devices with bandwidths of less than 6-megahertz.

55. In the NPRM, the Commission proposed changes to the white space rules to facilitate narrowband ( e.g., 100 kilohertz) IoT device deployment on TV channels 2-35. The proposed rules would permit white space devices to operate with narrowband carriers rather than having to spread all of their energy across a six megahertz channel, and are designed to ensure that narrowband white space devices have no greater interference potential than wider bandwidth devices operating under the current rules. Specifically, the Commission proposed to define a “narrowband white space device” as a type of fixed or personal/portable white space device operating in a bandwidth of no greater than 100 kilohertz. The Commission also proposed that narrowband white space devices be client devices that communicate with a fixed or Mode II master device that contacts the white space database to obtain a list of available channels and operating powers at its location. In this connection, the Commission also sought comment on whether the proposed definition for narrowband white space device is appropriate for the intended IoT applications.

56. The Commission proposed to permit narrowband white space devices to operate with the same conducted PSD limit, adjacent channel emission limits, and antenna gain requirements as 4-watt fixed devices. To ensure that the total energy in a single TV channel does not cause harmful interference, the Commission proposed to limit each transmitter to transmissions totaling no more than 10 seconds per hour. The Commission further proposed to require narrowband devices to use a channel plan that limits total transmitted power in a six-megahertz channel to no higher than the existing limits for a four-watt EIRP broadband white space device. Although the Commission declined to propose requiring narrowband devices to use a listen-before-talk mechanism, it nonetheless sought comment on whether one would be necessary to prevent harmful interference to protected services in the TV bands. The Commission also sought comment on whether there is a need to increase the minimum separation distances from co-channel and adjacent channel TV station contours as the rules require for personal/portable devices operating as clients.

57. The Commission modifies the rules to facilitate the development of new and innovative narrowband IoT devices in the TV bands. Specifically, the Commission establishes a new class of “narrowband white space device,” which it defines as a type of fixed or personal/portable white space device operating in a bandwidth of no greater than 100 kilohertz. A number of parties support the proposals to modify the white space rules to permit narrowband IoT operations. In response to specific comment sought on the definition of a narrowband white space device, the Commission expands that definition to include master devices as well as clients. This change is suggested by Dynamic Spectrum Alliance and Microsoft to enable greater flexibility in the design of IoT networks. No party opposed this change. A narrowband device that operates as a client must communicate with a master device that contacts the white space database to obtain a list of available channels and operating powers at its location, while a narrowband device that acts as a master must incorporate a geo-location mechanism and be capable of obtaining lists of available channels and operating powers from the white space database. The Commission permits all types of white space devices that incorporate geo-location and have database access (fixed, Mode II, mobile, and narrowband) to act as a master device to a narrowband client device. TV band frequencies are better able to penetrate foliage and other obstacles than higher frequencies, so this action will permit the development of IoT devices with improved transmission range.

58. As proposed in the NPRM, the Commission permits narrowband white space devices to operate with a conducted PSD of up to 12.6 dBm/100 kilohertz, which is the same maximum level permitted for fixed devices, and require narrowband devices to comply with the same maximum antenna gain requirements as fixed devices, i.e., a maximum antenna gain of 6 dBi with no reduction in transmitter conducted power, or higher antenna gain if the conducted power is proportionally reduced. The Commission also requires narrowband white space devices to comply with an emission limit of −42.8 dBm into adjacent channels, i.e., outside of the 6-megahertz channel in which they operate. These requirements will permit a white space device to operate with a single or several narrowband carriers rather than having to spread all of its energy across a six megahertz channel while ensuring that narrowband white space devices have no greater interference potential than wider bandwidth devices operating under the current rules. To prevent narrowband devices from being used for data intensive applications and to limit the potential for these devices to cause harmful interference, the Commission limits transmissions on each narrowband channel to a total of 36 seconds per hour, as suggested by Dynamic Spectrum Alliance and Microsoft, i.e., a 1% duty cycle.

59. The Commission will not, however, increase this transmission time limit for narrowband devices to allow for signaling overhead as suggested by Microsoft. Microsoft has not indicated how much additional transmission time would be necessary for this overhead. Further, to the extent that a narrowband device needs additional transmission time for functions such as contacting a white space database to obtain a list of available channels, there appear to be ways to perform these functions while still complying with the 36 second per hour per narrowband channel limit. For example, under the rules the Commission is adopting there will be up to 55 narrowband channels within one six-megahertz TV channel, and a device could use one or more of these narrowband channels for signaling purposes. In addition, any overhead associated with contacting the database could be accomplished by other means, such as a non-narrowband white space channel, Wi-Fi, a fixed link, or a fiber connection.

60. The Commission also requires narrowband devices to use the proposed channel plan that limits total transmitted power in a six-megahertz channel to no higher than the existing limits for a four-watt EIRP broadband white space device. This channel plan requires narrowband white space devices to operate at least 250 kilohertz from the edge of a six-megahertz TV channel, unless the adjacent channel is also vacant, and requires narrowband white space devices to operate only on channels centered at integral multiples of 100 kilohertz between the 250 kilohertz guard bands. The net effect of these requirements is that narrowband devices will be permitted to operate within 55 possible 100-kilohertz channels in the center 5.5 megahertz of each six-megahertz channel. Even in the event that all 55 narrowband channels within a six-megahertz channel were occupied simultaneously by devices transmitting at maximum power, the total conducted and radiated power within that six-megahertz channel would be no greater than for a fixed device operating with one-watt conducted power and 4 watts EIRP. Because of the transmission time limit of thirty-six seconds per hour (a one-percent duty cycle), the interference potential of these narrowband white space devices will actually be significantly less than four-watt EIRP fixed devices in most cases since it is extremely unlikely that devices would transmit at maximum power on all 55 narrowband channels simultaneously, and even if they did, that would occur for no more than 36 seconds per hour.

61. The Commission is not limiting operation of narrowband devices to “less congested” areas as suggested by wireless microphone interests. Since narrowband devices will operate under control of a master device that accesses a white space database to determine available channels at its location, narrowband devices will not be permitted to operate on the channels at locations where registered licensed wireless microphones operate. Additionally, unlicensed wireless microphones and white space devices must already share spectrum with fixed white space devices operating at up to 4 watts EIRP in areas that do not meet the definition of “less congested.” Even under worst-case conditions, narrowband devices will have no greater interference potential than four-watt fixed devices and will have a significantly lower interference potential in the vast majority of cases. For these reasons, the Commission does not agree with RADWIN that a proliferation of narrowband devices will prevent spectrum use for internet access.

62. The Commission declines to allow a greater transmission duty cycle for narrowband devices used only by public safety entities as requested by NPSTC. While NPSTC does not indicate how much it wants the limit increased, the higher transmit duty cycle the Commission is permitting will benefit all narrowband device applications, including those used by public safety entities. Allowing different technical requirements for public safety entities would complicate equipment certification and would be difficult to enforce since there could be multiple versions of the same device, some of which could be legally used only by specific types of entities. It is not clear how the Commission could ensure that devices approved for use only by public safety entities would be marketed to, and operated by, only those entities.

63. White space devices must generally operate outside the protected contours of adjacent channel TV stations because a strong signal on an adjacent channel can cause interference to the reception of a channel being viewed. The general requirement that white space devices avoid operation within the protected contours of a station operating on an adjacent channel means that, as a practical matter, a white space device may operate only at locations where there are three contiguous vacant channels, i.e., the channel used by the white space device plus both adjacent channels. The Commission's rules do, however, provide two exceptions that permit white space device operations at lower power levels when adjacent channels are occupied, based upon the shorter distances at which interference to adjacent channel TV stations could occur. First, both fixed and personal/portable white space devices may operate at up to 40 milliwatts EIRP at locations where both adjacent channels are occupied. Second, fixed white space devices may operate within the protected contour of adjacent channel TV stations with a power level of 100 milliwatts EIRP when the white space device operates in a six-megahertz band centered on the boundary of two contiguous vacant channels, i.e., 50 milliwatts EIRP within a three-megahertz band in each channel.

64. In the NPRM, the Commission sought comment on whether it could permit white space devices to operate at higher power levels than the rules currently permit when adjacent TV channels are occupied. In particular, the Commission sought comment on methods that could be used to determine the locations where it could permit higher power unlicensed operations on adjacent channels, and if so, what specific technical parameters would need to be considered or specified in such calculations. The Commission also sought comment on whether there is any information available on adjacent channel selectivity and interference rejection capabilities of next-generation TV receivers, such as manufacturers' specifications or actual measurement results, and whether there is any indication that next-generation TV receivers will have better adjacent channel interference rejection than current receivers.

65. The Commission does not increase the maximum permissible power for white space devices operating inside the protected contour of adjacent channel TV stations at this time. As an initial matter, the Commission does not at this time have sufficient evidence in the record on which to change the manner of protecting broadcast services to a terrain-based model, as Microsoft and others suggest. Microsoft argues that the Commission should permit white space device operation within the protected contour of adjacent channel TV stations at higher power levels than the rules currently permit. In so doing, Microsoft supplied a test report on the results of laboratory measurements of current model ATSC 1.0 TV receivers and next generation ATSC 3.0 TV receivers that it claims shows higher power adjacent channel operation is possible because these TV receivers have better selectivity than the Commission assumed in developing the current power limits and because the use of terrain-based propagation models ( e.g., Longley-Rice) can provide a more accurate determination of where higher power adjacent channel white space device operation can be permitted without causing harmful interference. Microsoft also supplied a test report on field measurements conducted with Ark Multicasting, a lower power TV network operator, that it claims validates its laboratory measurements and demonstrates that for the given parameters ( e.g., fixed white space device EIRP and antenna pattern, DTV transmitter characteristics, adjacent channel selectivity of the newer model TV receivers with integral display tested, and distance between the DTV transmitter and the TV receiver) a white space device can operate within the protected contour on a first adjacent channel at higher powers than currently allowed.

66. But while data supplied by Microsoft shows that some newer model TV receivers have better adjacent channel selectivity than the −33 dB D/U ratio the Commission assumed when it adopted the power limits for white space devices operating inside the protected contour of adjacent channel TV stations, NAB disputes Microsoft's analysis, arguing that the TV receivers it used are not representative of the currently installed consumer base. Microsoft's report shows that the average adjacent channel selectivity of tested ATSC 1.0 receivers is better than the value the Commission assumed, and that ATSC 3.0 receivers have a selectivity 10 dB better than that of ATSC 1.0 receivers at lower order modulations and similar to ATSC 1.0 receivers at higher order modulations. In addition, the report shows that receiver adjacent channel selectivity improves by 5.7 dB on average when a white space device operates at a 3 megahertz offset from a TV channel edge.

67. The improved receiver selectivity shown in Microsoft's testing could allow white space devices to operate within adjacent channel protected contours at higher power levels than the rules currently permit without increasing the potential for interference to TV reception. The Commission recognizes, however, NAB's concern that Microsoft's testing was performed with a limited number of TV receivers which may not be representative of the currently installed base. The Commission encourages Microsoft and other parties to continue studies and white space device and TV receiver testing to determine whether or how the Commission can permit higher power for white space devices without causing harmful interference to TV reception. The Commission welcomes interested parties to file a petition in the future when this work has been done.

68. Directional antennas. Broadband Connects America Coalition, Public Interest Spectrum Coalition, and WISPA request that the white space database be allowed to consider the directivity of white space device transmit antennas in determining channel availability for white space devices. NAB opposes this request, arguing that there is no way of determining whether a directional antenna has been installed properly without hiring a licensed land-surveyor, which it believes is unlikely to occur. The Commission previously considered and rejected requests to consider white space device transmit antenna directivity in the White Spaces Order on Reconsideration and did not make any proposals on this issue in the NPRM. The Commission declines to take any action on these requests.

69. Wireless microphone issues. Wireless microphone interests request that the Commission not take action to change the rules for white space devices until it acts on the outstanding proceeding (GN Docket No. 14-166) that proposed to expand the eligibility for obtaining a part 74 license for wireless microphones and until the Commission addresses difficulties with the white space database in registering licensed wireless microphones.

70. The Commission declines to defer action in this proceeding pending a decision in GN Docket No. 14-166 on expanding part 74 licensing eligibility. The Commission actions in this proceeding will benefit Americans in rural and underserved areas by enabling improved broadband access. The Commission does not wish to delay these public benefits until some unspecified point in the future. Further, the Commission decision here will not adversely impact either licensed or unlicensed wireless microphone operations. For example, the Commission is limiting higher power and antenna height operations, as well as higher power geo-fenced operations, to areas where the spectrum is less congested, which will limit the impact on wireless microphones that operate in the TV bands. Moreover, because white space devices operate on an unlicensed basis, they are obligated by the rules to protect licensed wireless microphone operations; unlicensed wireless microphones operate on a co-equal basis with white space devices. However, if the Commission decides to expand wireless microphone licensing eligibility in GN Docket No. 14-166, any newly licensed wireless microphone operation would receive the same protection from harmful interference, even if white space device operators need to adjust their systems. Thus, the actions the Commission takes in this Report and Order do not alter the relationship between wireless microphones and white space devices, including the obligation for unlicensed devices to protect licensed wireless microphones.

71. The Commission appreciates parties bringing concerns about the white space database to its attention, and is working with the database administrators to address them. The Commission notes that a new administrator, RED Technologies, has taken over operation of the Nominet white space database. However, the Commission believes that the concerns parties raised, e.g., improvements to the licensed wireless microphone registration procedure, can be addressed without a need to delay action in this proceeding.

72. Paperwork Reduction Act Analysis. This document contains new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.

73. Final Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act of 1980 (RFA), as amended, the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) regarding the possible significant economic impact on small entities of the policies and rules adopted in this Report and Order, which the full FRFA is found in Appendix C at https://www.fcc.gov/document/fcc-increases-unlicensed-wireless-operations-tv-white-spaces-0. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of the Report and Order, including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

74. Congressional Review Act. The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs that this rule is non-major under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).

75. It is ordered, pursuant to sections 4(i), 201, 302, and 303 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 201, 302a, 303, that this Report and Order is hereby adopted .

76. It is further ordered that the amendments of the Commission's rules as set forth below are adopted , effective thirty days from the date of publication in the Federal Register , except for the amendment to § 15.709(g)(1)(ii), which contains new or modified information collection requirements that require approval by the OMB under the PRA and will become effective after the Commission publishes a document in the Federal Register announcing such approval and the relevant effective date.

77. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small Business Administration.

78. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analyses, to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 15 as follows:

This is a synopsis of the Commission's Report and Order, MB Docket No. 20-331; RM-11863; DA 20-1436, adopted December 2, 2020, and released December 2, 2020. The full text of this document is available for download at https://www.fcc.gov/edocs. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to this proceeding.

The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:

NMFS is specifying a 2021 catch limit of 2,000 t of longline-caught bigeye tuna for each U.S. Pacific territory. NMFS is also authorizing each U.S. Pacific territory to allocate up to 1,500 t of its 2,000 t bigeye tuna limit, not to exceed a 3,000 t total annual allocation limit among all the territories, to U.S. longline fishing vessels permitted to fish under the FEP. A specified fishing agreement with the applicable territory must identify those vessels.

NMFS will monitor catches of longline-caught bigeye tuna by the longline fisheries of each U.S Pacific territory, including catches made by U.S. longline vessels operating under specified fishing agreements. The criteria that a specified fishing agreement must meet, and the process for attributing longline-caught bigeye tuna, will follow the procedures in 50 CFR 665.819. When NMFS projects that the fishery will reach a territorial catch or allocation limit, NMFS will, as an accountability measure, prohibit the catch and retention of longline-caught bigeye tuna by vessels in the applicable territory (if the territorial catch limit is projected to be reached), and/or vessels in a specified fishing agreement (if the allocation limit is projected to be reached).

You may find additional background information on this action in the preamble to the proposed specifications published on November 9, 2020 (85 FR 71300). Regardless of the final specifications, all other existing management measures will continue to apply in the longline fishery.

On November 9, 2020, NMFS published the proposed specifications and request for public comments (85 FR 71300); the comment period closed on November 24, 2020. NMFS received comments on the proposed specifications from one person. NMFS considered these comments in making its decision on this action, and responds below. We made no changes to the final specifications.

NMFS specifically invited public comments on the effect of the proposed action on cultural fishing in American Samoa; we received no relevant comments on this issue.

Comment 1: Catch limits should be reduced because the styrofoam and plastic, with chemicals in them, used in longline fishing gear pose controversial implications for ecosystems, fish, and the food chain. Mitigation efforts should be made to protect consumers from harmful chemicals.

Response: NMFS has no information that longline fishing, including the gear used, results in significant adverse impacts to the marine habitat or food chain. Federal laws and regulations strictly regulate the disposal of waste in ocean waters. NMFS also notes that fisheries observers collect information on the frequency, location and composition of marine debris. During 2008-2016, NMFS observers on Hawaii vessels reported 1,326 marine debris items intercepted by longlines. While derelict fishing gear made up most of the debris, most (52 percent) was netting, and ropes and other types of lines (27 percent). Floats and monofilament fishing line used in longline fishing made up less than 9 percent of the debris. When longline fishermen snag marine debris in their gear, they typically bring it on board and disposed of in port. This prevents future entanglement with sea life and entry into the food chain.

Comment 2: Longline gear poses a threat to seabirds, most notably endangered albatross, that dive for baited lines and are hooked or entangled and drowned.

Responses: The short-tailed albatross ( Phoebastria albatrus ) is the only endangered albatross in the fishing area. None has ever been observed or reported interacting with Hawaii longline fisheries. The current biological opinion prepared under Section 7 of the Endangered Species Act concluded that Hawaii longline fisheries are not likely to jeopardize the continued existence of short-tailed albatross.

NMFS acknowledges that seabirds are sometimes hooked and entangled in longline gear, and we have implemented measures that significantly reduce seabird bycatch. Current mitigation methods include, but are not limited to, bird-scaring curtains, weights to quickly sink hooks below birds' reach, dying bait blue so it is less visible to birds, safe seabird handling techniques, and strategically discharging spent bait and fish offal to distract birds from lines and hooks. These mitigation methods are 70-90 percent effective at reducing seabird bycatch. Nonetheless, NMFS has noticed an increasing trend in seabird interaction rates and is currently developing and testing new mitigation methods, including the potential use of tori lines, to further protect seabirds.

Comment 3: While NMFS considered economic impacts on smaller fisheries, the effects of catch limits on “small entities” such as minority, ethnic, and/or native populations and the biodiversity of affected fishing territories were not explicitly considered.

Responses: Although these populations were not specifically addressed in the Regulatory Flexibility Act analysis of the effect of this rule on small entities, they were considered in the environmental assessment (EA) and supplemental environmental assessment (SEA) under Executive Order 12898 (E.O. 12898), “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations.” As described in the EA and SEA, NMFS does not expect the proposed action to have large effects to the environment that would result in a disproportionately large and adverse effect on minority or low-income populations including with respect to the availability of fish, other environmental effects, or health effects.

Comment 4: Longline bigeye tuna catch limits should be increased from previous years to address observed impacts of overfishing such as fewer fish and smaller fish, shorter fishing seasons, bizarre developments in their seasonal appearance and dispersal, and fewer overall species seen.

Response: In August 2020, the Western and Central Pacific Fisheries Commission (WCPFC) completed the most recent assessment of the western and central Pacific Ocean (WCPO) bigeye tuna stock. The assessment showed that the stock remains healthy, is not subject to overfishing and is not overfished. NMFS is satisfied that the catch limits are consistent with the conservation and management needs of bigeye tuna in the WCPO, and that this action would not result in a change in stock status.

Comment 5: Mitigation efforts should be made to ensure the sustainability of fishing practices and to protect marine species.

Response: See responses to comments 1, 2, and 4 regarding efforts to reduce marine debris, protect seabirds, and the scientific information NMFS considers when establishing catch limits. In accordance with the Endangered Species Act and Marine Mammal Protection Act, fisheries are managed under a suite of requirements designed to reduce the likelihood and severity of effects of unintentional and incidental interactions with protected species, and that allow monitoring of interactions. NMFS continually evaluates monitoring and scientific information to determine whether they change our understanding of the potential effects of our management decisions and prepares supplemental environmental analyses, as appropriate.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), the NMFS Assistant Administrator (AA) has determined that this final rule is consistent with the FEP, other provisions of the Magnuson-Stevens Act, and other applicable laws.

The AA has also determined that because this rule relieves a restriction, it is exempt from the otherwise-applicable requirement of a 30-day delayed effectiveness provision, pursuant to 5 U.S.C. 553(d)(1). This rule allows U.S. vessels identified in a valid specified fishing agreement to continue fishing in the WCPO even if NMFS closes the longline fishery for bigeye tuna. Consistent with Conservation and Management Measure 2018-01 adopted by the WCPFC at its December 2018 meeting, the bigeye tuna catch limit for U.S. longline fisheries in the western and central Pacific in 2021 is 3,554 t. When NMFS projects the limit will be reached, NMFS must close the fishery for bigeye tuna in the WCPO. Regulations at 50 CFR 665.819 require NMFS to begin attributing longline caught bigeye tuna to the U.S. territory to which a fishing agreement applies seven days before the date NMFS projects the fishery will reach the WCPO limit, or upon the effective date of the agreement, whichever is later.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration at the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. NMFS published the factual basis for the certification in the proposed rule, and we do not repeat it here. NMFS received no comments relevant to this certification; as a result, a final regulatory flexibility analysis is not required, and none has been prepared.

This action is exempt from review under Executive Order 12866.

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