The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2021-0137; Project Identifier MCAI-2020-00269-E” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend the proposal because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Wego Wang, Aviation Safety Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued AD 2014-04-06, Amendment 39-17764 (79 FR 9990, February 24, 2014), (AD 2014-04-06), for all Turbomeca S.A. Arrius 2B1, 2B1A, 2B2, and 2K1 model turboshaft engines. AD 2014-04-06 was prompted by in-flight shutdowns caused by interrupted fuel supply at the HMU. AD 2014-04-06 requires initial and repetitive inspections of the HMU high pressure pump drive gear shaft splines, cleaning and inspections of the sleeve assembly splines, and replacement of the sleeve assembly on the affected high pressure pump drive gear shaft or replacement of the HMU if the HMU fails inspection. The agency issued AD 2014-04-06 to prevent in-flight shutdown and damage to the engine.

Since the FAA issued AD 2014-04-06, the manufacturer has published new service information that revises the inspections for certain HMUs, reduces compliance times for initial inspections, and allows application of non-cumulative tolerance of 10% of operating hours to be applied to the timing of the repetitive inspection of HMUs installed on certain engines.

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2020-0033, dated February 25, 2020 (referred to after this as “the MCAI”), to address the unsafe condition on these products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-0137.

This product has been approved by EASA and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Community, EASA has notified the agency of the unsafe condition described in the MCAI and service information. The FAA is issuing this NPRM because the agency evaluated all the relevant information provided by EASA and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

The FAA reviewed Safran Helicopter Engines Mandatory Service Bulletin (MSB) No. 319 73 2825, Version J, dated March 15, 2019. The MSB describes procedures for inspecting the HMU high pressure pump drive gear shaft splines and cleaning and inspecting the sleeve assembly splines. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in ADDRESSES .

This proposed AD would retain certain requirements of AD 2014-04-06. This proposed AD would require initial and repetitive inspections of the HMU high pressure pump drive gear shaft splines. This proposed AD would require cleaning of the sleeve assembly splines. This proposed AD would also require replacing the HMU or the sleeve assembly on the affected high pressure pump drive gear shaft if the HMU fails inspection.

EASA AD 2020-0033 identifies applicable engines as Safran Helicopter Engines Arrius 2B1, 2B1A, 2B2, 2G1, 2K1 and 2K2 model turboshaft engines, all serial numbers. This AD does not include Safran Helicopter Engines Arrius 2G1 and 2K2 model turboshaft engines in its applicability since these engines are not type certificated in the United States.

The FAA estimates that this AD, if adopted as proposed, would affect 194 engines installed on helicopters of U.S. registry.

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

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

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2006-25084; Project Identifier 2005-SW-38-AD” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may again revise this proposal because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this SNPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this SNPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this SNPRM. Submissions containing CBI should be sent to Hal Jensen, Aerospace Engineer, Operational Safety Branch, FAA, 950 L'Enfant Plaza N SW, Washington, DC 20024; telephone (202) 267-9167; email hal.jensen@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued an NPRM to amend 14 CFR part 39 by adding an AD that would apply to Bell Helicopter Textron, Inc., Model 206L series helicopters with a switch unit part number 206-063-613-003, serial numbers (S/Ns) 1413, 1414, 1415, 1424, 1428, 1430, 1432, and 1433, installed. The NPRM published in the Federal Register on June 22, 2006 (71 FR 35836). In the NPRM, the FAA proposed to require inspecting the switch unit to determine if it is an affected serial-numbered switch unit and replacing each affected switch unit with an airworthy switch unit that has an S/N other than those listed in the applicability. If the S/N is missing or unreadable; the mounting flange of the switch unit is not colored red; and the purchase date of the switch unit is between April 19 and July 26, 2004, or could not be determined, the NPRM proposed to require an operational test. If the switch unit failed the operational test, the NPRM proposed to require replacing the switch unit with an airworthy switch unit that has an S/N other than those listed in the applicability. The NPRM was prompted by Canadian AD CF-2004-24, dated November 24, 2004, issued by Transport Canada, which is the aviation authority for Canada, to correct an unsafe condition for Model 206L series helicopters. Transport Canada advised that eight low fuel level detectors of listed S/Ns may have been installed on Model 206L series helicopters. These detectors could hang in the high position and fail to indicate the low fuel condition. Accordingly, Transport Canada advised removing the affected switch units from service.

Since the NPRM was issued, a significant amount of time has elapsed requiring the FAA to reopen the comment period to allow the public a chance to comment on the proposed actions.

The NPRM also inadvertently identified the type certificate holder's name as, “Bell Helicopter Textron Canada” and “Bell Helicopter Textron, Inc.” instead of the correct name of “Bell Helicopter Textron Canada Limited.” Additionally, since the FAA issued the NPRM, Bell Helicopter Textron Canada Limited has changed its name to Bell Textron Canada Limited. This SNPRM reflects those changes and updates the contact information to obtain service documents. This SNPRM also updates the estimated cost information.

Additional review also revealed necessary changes to address the unsafe condition. This SNPRM proposes to clarify the applicability by identifying the specific model helicopters in the series that are applicable, clarify affected model designations, expand the applicability by adding switch units with a missing or illegible S/N or with an S/N that cannot be determined, add a compliance time that was missing in the NPRM, and add parts installation prohibitions. This SNPRM also updates the AD format. As a result, paragraph identifiers have changed, the proposed requirements have been revised by removing unnecessary information, and the information in a figure has changed to a note.

Lastly, the FAA's Aircraft Certification Service has changed its organizational structure. The new structure replaces product directorates with functional divisions. The FAA has revised some of the office titles and nomenclature throughout this proposed AD to reflect the new organizational changes. Additional information about the new structure can be found in the Notice published on July 25, 2017 (82 FR 34564).

The following discussion presents the comments received on the NPRM and the FAA's response.

The Modification and Replacement Parts Association comments in support of replacing certain defective switch units with airworthy switch units. However, the Modification and Replacement Parts Association stated that specifying the particular part that must be installed conflicts with 14 CFR 21.303 by invalidating previous approvals under parts manufacturer approval (PMA) and prohibiting the development, manufacture, and installation of PMA parts designed to be free of the noted defects. In light of this, the Modification and Replacement Parts Association requested allowing equivalent replacement parts to correct the unsafe condition under PMA (other than identicality) in the AD.

The FAA agrees and has changed instances of replacing an affected switch unit with an airworthy switch unit that does not have a serial number listed in the applicability. This SNPRM proposes to require removing affected switch units from service instead. It is assumed that an approved and airworthy part will be installed in order to return the helicopter to service.

These helicopters have been approved by the aviation authority of Canada and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with Canada, Transport Canada, its technical representative, has notified the FAA of the unsafe condition described in its AD. The FAA is proposing this AD after determining the unsafe condition described previously is likely to exist or develop in other helicopters of the same type designs. Certain changes described above expand the scope of the NPRM. As a result, it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.

The FAA reviewed Bell Helicopter Textron Alert Service Bulletin No. 206L-04-132, Revision A, dated October 4, 2004. This service information specifies procedures for determining whether any of eight specified serial-numbered detector switch units are installed because they may fail to indicate a low fuel condition. If the S/N is missing or unreadable, the service information specifies inspecting the switch unit to determine if it is an affected switch unit. The service information also specifies removing each affected switch unit.

This proposed AD would require removing certain switch units from service and prohibit installing those switch units.

This proposed AD would also require accomplishing an operational test of certain other switch units, and if the operational test fails, removing the switch unit from service. This proposed AD would also prohibit installing those certain other switch units unless they pass an operational test.

This proposed AD applies to switch units with a missing or illegible S/N or with an S/N that cannot be determined, and requires certain actions for those switch units, whereas the Transport Canada AD does not.

The FAA estimates that this AD, if adopted as proposed, would affect up to 558 helicopters of U.S. Registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this proposed AD.

Replacing a switch unit would take about 4 work-hours and parts would cost about $921 for an estimated cost of $1,261 per switch unit and up to $703,638 for the U.S. fleet. Accomplishing an operational test would take about 4 work-hours for an estimated cost of $340 per switch unit and up to $189,720 for the U.S. fleet.

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

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

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

For the reasons discussed, I certify this proposed regulation:

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

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

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

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

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2021-0143; Product Identifier 2019-SW-024-AD” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Blaine Williams, Aviation Safety Engineer, Los Angeles ACO Branch, 3960 Paramount Boulevard, Lakewood, CA 90712-4137; telephone 562-627-5371; email blaine.willaims@faa.gov. Any commentary that the FAA receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The EASA (now European Union Aviation Safety Agency), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0024, dated February 4, 2019 (EASA AD 2019-0024) (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI), to correct an unsafe condition for certain Airbus Helicopters Deutschland GmbH Model BO-105A, BO-105C, BO-105D, BO-105S, and BO-105LS A-3 helicopters. Model BO-105D helicopters are not certificated by the FAA and are not included on the U.S. type certificate data sheet; this proposed AD therefore does not include those helicopters in the applicability.

This proposed AD was prompted by the FAA's determination that aging of the elastomeric material in a TT-strap could affect the structural characteristics of the TT-strap. The FAA is proposing this AD to address aging of the elastomeric material in a TT-strap, which could lead to premature failure of a TT-strap, resulting in loss of control of the helicopter. See the MCAI for additional background information.

This proposed AD would not supersede AD 2016-25-14, Amendment 39-18740 (81 FR 94944, December 27, 2016) (AD 2016-25-14). This proposed AD would require replacement of certain TT-straps with serviceable parts. Accomplishment of the proposed replacement would then terminate all of the requirements of AD 2016-25-14 for Model BO-105LS A-3 helicopters only.

EASA AD 2019-0024 describes procedures for replacing certain TT-straps with serviceable parts and requires a storage life limit for TT-straps.

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

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

This proposed AD would require accomplishing the actions specified in EASA AD 2019-0024, described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this proposed AD and except as discussed under “Differences Between this Proposed AD and the MCAI.”

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2019-0024 will be incorporated by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2019-0024 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD. Service information specified in EASA AD 2019-0024 that is required for compliance with EASA AD 2019-0024 will be available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-0143 after the FAA final rule is published.

Although EASA AD 2019-0024 does not specify a life limit for the Lord TT-Straps part number (P/N) J17322-1 and P/N 117-14111, this proposed AD does specify a life limit for those parts.

Where EASA AD 2019-0024 specifies that installation of a Lord TT-Strap is allowed provided the first flight of that helicopter after that installation is accomplished before the storage life of that Lord TT-Strap exceeds 5 years, for this proposed AD, the installation of a Lord TT-Strap is allowed provided the first flight of that helicopter after that installation is accomplished before 5 years since the TT-strap's date of manufacture.

Where EASA AD 2019-0024 defines “serviceable part” as a Lord TT-Strap having a storage life not exceeding 5 years, for this proposed AD, a serviceable part is Lord TT-straps P/N J17322-1 and P/N 117-14111 having less than 5 years since that TT-strap's date of manufacture.

Where EASA AD 2019-0024 specifies that the “cure date” of a TT-Strap can be determined using the information provided in the applicable service information specified in EASA AD 2019-0024, or contacting Airbus Helicopters for applicable instructions, for this proposed AD, the option of contacting Airbus Helicopters is not required.

The FAA estimates that this proposed AD affects 61 helicopters of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

According to the manufacturer, some or all of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected operators. The FAA does not control warranty coverage for affected operators. As a result, the FAA has included all known costs in the cost estimate.

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

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

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

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

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

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

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

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend the Class E airspace extending upward from 700 feet above the surface at Yoakum Municipal Airport, TX, to support instrument flight rule operations at this airport.

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2021-0161/Airspace Docket No. 21-ASW-5.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the internet at https://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at https://www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Federal Aviation Administration, Air Traffic Organization, Central Service Center, Operations Support Group, 10101 Hillwood Parkway, Fort Worth, TX 76177.

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

The FAA is proposing an amendment to 14 CFR part 71 by amending the Class E airspace extending upward from 700 feet above the surface within a 6.3-mile (decreased from 7.2-mile) radius of Yoakum Municipal Airport, Yoakum, TX; and updating geographic coordinates of the airport to coincide with the FAA's aeronautical database.

This action is the result of an airspace review due to the decommissioning of the Yoakum NDB which provided navigation information for the instrument procedures at this airport.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11E, dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The Fair Labor Standards Act (FLSA or Act) requires all covered employers to pay nonexempt employees at least the federal minimum wage for every hour worked in a non-overtime workweek. 1 In an overtime workweek, for all hours worked in excess of 40 in a workweek, covered employers must pay a nonexempt employee at least one and one-half times the employee's regular rate. 2 The FLSA also requires covered employers to make, keep, and preserve certain records regarding employees. 3

The FLSA's minimum wage and overtime pay requirements apply only to employees. 4 Section 3(e) generally defines “employee” to mean “any individual employed by an employer.”  5 Section 3(d) of the Act defines “employer” to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee.”  6 Section 3(g) defines “employ” to “include[ ] to suffer or permit to work.”  7

The Supreme Court, in interpreting these definitions, has stated that “[a] broader or more comprehensive coverage of employees within the stated categories would be difficult to frame,” and that “the term `employee' had been given `the broadest definition that has ever been included in any one act.' ”  8 The Supreme Court has further stated that the “striking breadth” of the FLSA's definition of “employ”—“to suffer or permit to work”—“stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”  9 Thus, the FLSA expressly rejects the common law standard for determining whether a worker is an employee. 10

Though the FLSA's definition of employee is broader than the common law definition, the Supreme Court has also recognized that the Act was “not intended to stamp all persons as employees.”  11 The Supreme Court has acknowledged that even a broad definition of employee “does not mean that all who render service to an industry are employees.”  12 One category of workers that has been recognized as being outside the FLSA's broad definition of “employees” is “independent contractors.”  13 Courts have thus recognized a need to delineate between employees, who fall under the protections of the FLSA, and independent contractors, who do not.

The Supreme Court has repeatedly emphasized that the test for whether an individual is an employee under the FLSA is one of “economic reality.”  14 Under this test, the “technical concepts” used to label a worker as an employee or independent contractor do not drive the analysis, but rather it is the economic realities of the relationship between the worker and the employer that is determinative. 15

In United States v. Silk, 331 U.S. 704, 712 (1947), an early case applying an economic realities test under the Social Security Act, the Supreme Court acknowledged that “[p]robably it is quite impossible to extract from the statute a rule of thumb” regarding the distinction between employees and independent contractors. 16 The Court suggested that federal agencies and courts “will find that degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation and skill required in the claimed independent operation are important for decision.”  17 The Court cautioned that no single factor is controlling and that the list is not exhaustive. 18 The Court went on to note that the workers in that case were “from one standpoint an integral part of the businesses” of the employer, supporting a conclusion that some of the workers in that case were employees. 19

The same day that the Supreme Court issued its decision in Silk, it also issued Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947), in which it affirmed a circuit court decision that analyzed an FLSA employment relationship based on its economic realities. 20 The Court rejected an approach based on “isolated factors” and again considered “the circumstances of the whole activity.”  21 The Court considered several of the factors that it listed in Silk as they related to meat boners on a slaughterhouse's production line, ultimately determining that the boners were employees. 22 The Court noted, among other things, that the boners did a specialty job on the production line, had no business organization that could shift to a different slaughter-house, and were best characterized as “part of the integrated unit of production under such circumstances that the workers performing the task were employees of the establishment.”  23

Since Silk and Rutherford Food, federal courts of appeals have applied the economic realities test to distinguish independent contractors from employees who are entitled to the FLSA's protections. Recognizing that the common law concept of “employee” had been rejected for FLSA purposes, courts of appeals followed the Supreme Court's instruction that “`employees are those who as a matter of economic realities are dependent upon the business to which they render service.' ”  24

All of the courts of appeals have followed the economic realities test, and nearly all of them analyze the economic realities of an employment relationship using the factors identified in Silk. 25 No court of appeals considers any factor or combination of factors to universally predominate over the others in every case. 26 For example, the Ninth Circuit has explained that some of the factors “which may be useful in distinguishing employees from independent contractors for purposes of social legislation such as the FLSA” are: (1) The degree of the employer's right to control the manner in which the work is to be performed; (2) the worker's opportunity for profit or loss depending upon his or her managerial skill; (3) the worker's investment in equipment or materials required for his or her task, or employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree of permanence of the working relationship; and (6) whether the service rendered is an integral part of the employer's business. 27 The Ninth Circuit repeated the Supreme Court's instruction that no individual factor is conclusive and that the ultimate determination depends upon the circumstances of the whole activity. 28

Some courts of appeals have applied the factors with some variations. For example, the Fifth Circuit typically does not list the “integral part” factor as one of the considerations that guides the analysis. 29 Nevertheless, the Fifth Circuit—recognizing that the listed factors are not exhaustive—has considered the extent to which a worker's function is integral to a business as part of its economic realities analysis. 30 The Second Circuit varies in that it treats the employee's opportunity for profit or loss and the employee's investment as a single factor, but it still uses the same considerations as the other circuits to inform its economic realities analysis. 31

In sum, since the 1940s, federal courts have consistently analyzed the question of employee status under the FLSA by examining the economic realities of the employment relationship to determine whether the worker is dependent on the employer for work or is in business for him or herself. 32 In doing so, courts have looked to the six factors first articulated in Silk as useful guideposts while acknowledging that those factors are not exhaustive and should not be applied mechanically. 33

Since at least 1954, the Wage and Hour Division (WHD) has applied variations of this multifactor analysis when considering whether a worker is an employee under the FLSA or an independent contractor. 34 In a guidance document issued in 1964, WHD stated, “The Supreme Court has made it clear that an employee, as distinguished from a person who is engaged in a business of his own, is one who as a matter of economic reality follows the usual path of an employee and is dependent on the business which he serves.”  35 Like the courts, WHD has consistently applied a multifactor economic realities analysis when determining whether a worker is an employee under the FLSA or an independent contractor. 36

The Department's primary sub-regulatory guidance addressing this topic, WHD Fact Sheet #13, “Employment Relationship Under the Fair Labor Standards Act (FLSA),” similarly states that, when determining whether an employment relationship exists under the FLSA, the test is the “economic reality” rather than an application of “technical concepts,” and that status “is not determined by common law standards relating to master and servant.”  37 Instead, “it is the total activity or situation which controls,” and “an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.” The fact sheet identifies seven economic realities factors; in addition to factors that are similar to the six factors used by the federal courts of appeals and discussed above, it also identifies the worker's “degree of independent business organization and operation.” The fact sheet identifies certain other factors that are immaterial to determining whether a worker is an employee covered under the FLSA or independent contractor, including the place where work is performed, the absence of a formal employment agreement, and whether an alleged independent contractor is licensed by a State or local government. 38

In 1969 and 1972, WHD promulgated regulations relevant to specific industries after Congress amended the FLSA to change the way it applied to those industries. 39 Those regulations applied a multifactor analysis under the FLSA for determining whether a worker is an employee or independent contractor in those specific contexts. 40 Further, WHD promulgated a regulation in 1997 applying a multifactor economic realities analysis for distinguishing between employees and independent contractors under the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). 41

On July 15, 2015, WHD issued Administrator's Interpretation No. 2015-1, “The Application of the Fair Labor Standards Act's `Suffer or Permit' Standard in the Identification of Employees Who Are Misclassified as Independent Contractors” (AI 2015-1). 42 AI 2015-1 reiterated that the economic realities of the relationship are determinative and that the ultimate inquiry is whether the worker is economically dependent on the employer or truly in business for him or herself. It identified six economic realities factors that followed the six factors used by most federal courts of appeals: (1) The extent to which the work performed is an integral part of the employer's business; (2) the worker's opportunity for profit or loss depending on his or her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. AI-2015-1 further emphasized that the factors should not be applied in a mechanical fashion and that no one factor was determinative. AI 2015-1 was withdrawn on June 7, 2017. 43

In 2019, WHD issued an opinion letter, FLSA2019-6, regarding whether workers who worked for companies operating self-described “virtual marketplaces” were employees covered under the FLSA or independent contractors. 44 Like WHD's prior guidance, the letter stated that the determination depended on the economic realities of the relationship and that the ultimate inquiry was whether the workers depend on someone else's business or are in business for themselves. 45 The letter identified six economic realities factors that differed slightly from the factors typically articulated by WHD previously: (1) The nature and degree of the employer's control; (2) the permanency of the worker's relationship with the employer; (3) the amount of the worker's investment in facilities, equipment, or helpers; (4) the amount of skill, initiative, judgment, and foresight required for the worker's services; (5) the worker's opportunities for profit or loss; and (6) the extent of the integration of the worker's services into the employer's business. 46 Opinion Letter FLSA2019-6 was withdrawn for further review on February 19, 2021. 47

On January 7, 2021, the Department published a final rule entitled “Independent Contractor Status under the Fair Labor Standards Act” with an effective date of March 8, 2021 (Independent Contractor Rule or Rule). 48 The Independent Contractor Rule would introduce into Title 29 of the Code of Federal Regulations a new part (Part 795) titled “Employee or Independent Contractor Classification under the Fair Labor Standards Act” that would provide a new generally applicable interpretation of employee or independent contractor status under the FLSA. 49 The Rule would also revise WHD's prior interpretations of independent contractor status in 29 CFR 780.330(b) and 29 CFR 788.16(a), both of which apply in limited contexts. 50

The Department explained that the purpose of the Independent Contractor Rule would be to establish an economic realities test that improved on prior articulations that the Rule viewed as “unclear and unwieldy.”  51 It stated that the existing economic realities test applied by WHD and courts suffered from confusion regarding the meaning of “economic dependence,” a lack of focus in the multifactor balancing test, and confusion and inefficiency caused by overlap between the factors. 52 The Rule explained that the shortcomings and misconceptions associated with the test were more apparent in the modern economy and that additional clarity would promote innovation in work arrangements. 53

The Independent Contractor Rule explained that independent contractors are not employees under the FLSA and are therefore not subject to the Act's minimum wage, overtime pay, or recordkeeping requirements. 54 The Rule would adopt an “economic dependence” test under which a worker is an employee of an employer if that worker is economically dependent on the employer for work. 55 In contrast, the worker would be an independent contractor if the worker is in business for him or herself. 56

The Rule's new economic realities test would identify five economic realities factors that would guide the inquiry into a worker's status as an employee or independent contractor. 57 These factors would not be exhaustive, no one factor would be dispositive, and additional factors would be considered if they “in some way indicate whether the [worker] is in business for him- or herself, as opposed to being economically dependent on the potential employer for work.”  58 Two of the identified factors would be designated as “core factors” that would carry greater weight in the analysis. If both of those factors indicated the same classification, as either an employee or an independent contractor, there would be a “substantial likelihood” that classification is the worker's correct classification. 59

The first core factor would be the nature and degree of control over the work, which would indicate independent contractor status to the extent that the worker exercised substantial control over key aspects of the performance of the work, such as by setting his or her own schedule, by selecting his or her projects, and/or through the ability to work for others, which might include the potential employer's competitors. 60 Requiring the worker to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) would not constitute control. 61

The second core factor would be the worker's opportunity for profit or loss. 62 This factor would weigh towards the worker being an independent contractor to the extent the worker has an opportunity to earn profits or incur losses based on either his or her exercise of initiative (such as managerial skill or business acumen or judgment) or his or her management of investment in or capital expenditure on, for example, helpers or equipment or material to further the work. 63 While the effects of the worker's exercise of initiative and management of investment would both be considered under this factor, the worker would not need to have an opportunity for profit or loss based on both initiative and management of investment for this factor to weigh towards the worker being an independent contractor. 64 This factor would weigh towards the worker being an employee to the extent the worker is unable to affect his or her earnings or is only able to do so by working more hours or faster. 65

The Rule would also identify three other factors: The amount of skill required for the work, the degree of permanence of the working relationship between the worker and the employer, and whether the work is part of an integrated unit of production (which is distinct from the concept of the importance or centrality of the worker's work to the employer's business). 66 The Rule would provide that these other factors would be “less probative and, in some cases, [would] not be probative at all” and would be “highly unlikely, either individually or collectively, to outweigh the combined probative value of the two core factors.”  67

The Rule would further provide that the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible. 68 The Rule would also provide five examples illustrating how different factors would inform the analysis. 69

WHD issued Opinion Letters FLSA2021-8 and FLSA2021-9 on January 19, 2021 applying the Rule's analysis to specific factual scenarios, and then withdrew those opinion letters on January 26, 2021, explaining that the letters were issued prematurely because they were based on a Rule that had yet to take effect. 70

On February 5, 2021, the Department published a proposal to delay the Independent Contractor Rule's effective date until May 7, 2021, 60 days after the original effective date of March 8, 2021. 71 On March 4, 2021, after considering the approximately 1,500 comments received in response to that proposal, the Department published a final rule delaying the effective date of the Independent Contractor Rule as proposed. 72 The Department explained that the delay was consistent with a January 20, 2021 memorandum from the Assistant to the President and Chief of Staff, titled “Regulatory Freeze Pending Review.”  73 The Department further explained that a delay would allow it additional time to consider “significant and complex” issues associated with the Rule, including whether the rule effectuates the FLSA's purpose to broadly cover workers as employees as well as the costs and benefits attributed to the rule, including its effect on workers. 74

The Department proposes to withdraw the Independent Contractor Rule, which has not yet taken effect. The Department's reasons for proposing to withdraw the Rule are explained below, and the Department requests comments on its proposal.

WHD recognizes that the cornerstone of the FLSA is the Act's broad definition of “employ,” which provides that an employee under the Act is any individual whom an employer suffers, permits, or otherwise employs to work. 75 Rather than being derived from the common law of agency, the FLSA's “suffer or permit” definition of “employ” originally came from state laws regulating child labor. 76 This standard was intended to expand coverage beyond employers who controlled the means and manner of performance. 77 The FLSA's breadth in defining the employment relationship, as well as its clear remedial purpose, comes from the statutory text itself as well as the legislative history. 78 This standard “stretches the meaning of `employee' [under the FLSA] to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”  79 The FLSA's overarching inquiry of economic dependence thus establishes a broader scope of employment than that which exists under the common law of agency.

Among the reasons the Department is proposing to withdraw the Rule is that, upon further review and consideration of the Rule, the Department questions whether the Rule is fully aligned with the FLSA's text and purpose or case law describing and applying the economic realities test.

The Rule would elevate two “core” factors, control and opportunity for profit or loss, above all other factors, and would provide that only in “rare” cases would the other factors outweigh the core factors. 80 For decades, WHD, consistent with case law, has applied a multi-factor balancing test to assess whether the worker, as a matter of economic reality, is economically dependent on the employer or is in business for him or herself. 81 Courts universally apply this analysis as well and have explained that “economic reality” rather than “technical concepts” is the test of employment under the FLSA. 82 WHD and the courts of appeals generally consider and balance the following economic realities factors—derived from the Supreme Court's decisions in Silk, 331 U.S. at 716, and Rutherford Food, 331 U.S. at 729-30: The nature and degree of the employer's control over the work; the permanency of the worker's relationship with the employer; the degree of skill, initiative, and judgment required for the work; the worker's investment in equipment or materials necessary for the work; the worker's opportunity for profit or loss; whether the service rendered by the worker is an integral part of the employer's business; and the degree of independent business organization and operation. 83

The Rule would set forth a new analysis elevating two factors (control and opportunity for profit or loss) as “core” factors above the other factors, and designating them as having greater probative value. 84 The Rule would further provide that if both core factors point towards the same classification—that the worker is either an employee or an independent contractor—then there would be a substantial likelihood that this is the worker's correct classification. 85 In addition, the preamble to the Rule disagreed that the economic realities test “requires factors to be unweighted or equally weighted.”  86 Although the Rule did identify three other factors, it made clear that these “other factors are less probative and, in some cases, may not be probative at all, and thus are highly unlikely, either individually or collectively, to outweigh the combined probative value of the two core factors.”  87 The Rule underscored that it “is quite unlikely for the other, less probative factors to outweigh the combined weight of the core factors. In other words, where the two core factors align, the bulk of the analysis is complete, and anyone who is assessing the classification may approach the remaining factors and circumstances with skepticism, as only in unusual cases would such considerations outweigh the combination of the two core factors.”  88 Similarly, the Rule would provide that unlisted additional factors may be considered, but that they are “unlikely to outweigh either of the core factors.”  89 The Rule noted that “[w]hile all circumstances must be considered, it does not follow that all circumstances or categories of circumstance, i.e., factors, must also be given equal weight.”  90 Rather, the Rule would emphasize the control and opportunity for profit or loss factors as more probative than other factors in determining whether an individual is in business for him or herself, and provide that “other factors are less probative and may have little to no probative value in some circumstances.”  91

WHD understands that no court has taken the Rule's approach in analyzing whether a worker is an employee or an independent contractor under the FLSA, and that the Rule would mark a departure from WHD's own longstanding approach. In view of this elevation of only two factors, the Department is concerned that the Rule's approach may be inconsistent with the position, expressed by the Supreme Court and federal courts of appeals, that no single factor in the analysis is dispositive. 92 WHD is not aware of any court that has, as a general and fixed rule, elevated a subset of the economic realities factors, and there is no clear statutory basis for such a predetermined weighting of the factors. Rather, WHD is cognizant of the voluminous case law that emphasizes that it “ `is impossible to assign to each of these factors a specific and invariably applied weight.' ”  93 Undeniably, courts have generally refused to assign universal weights to certain factors; rather, courts emphasize that the analysis considers the totality of the circumstances and neither the presence nor absence of any particular factor is dispositive. 94

Accordingly, the Department is concerned that the Rule's approach is in tension with the language of the Act as well as the position, expressed by the Supreme Court and in appellate cases from across the Circuits, that no single factor is determinative in the analysis of whether a worker is an employee or independent contractor and, as such, questions whether the Rule's “core factor” approach is supportable.

As explained, the Independent Contractor Rule would identify two factors as “core” factors, would designate them as “the most probative” of whether a worker is an employee or independent contractor, and would provide that each core factor “typically carries greater weight in the analysis than any other factor.”  95 The nature and degree of control over the work would be one of the two core factors. 96 According to the Rule, “review of case law indicates that courts of appeals have effectively been affording the control and opportunity factors greater weight, even if they did not always explicitly acknowledge doing so.”  97 The Rule addressed and rejected comments which opined that focusing the analysis on two core factors—one of which would be control—would narrow the analysis to a common law control test. 98

Although the standard for determining who is an employee and who is an independent contractor under the Rule is not the same as the common law control analysis, the Department is concerned that significant legal and policy implications could result from making control one of only two factors that would be ascribed greater weight. For example, the Supreme Court has repeatedly stated that the FLSA's definition of “employ” in section 3(g) means that the scope of employment under the Act is broader than under a common law control ( i.e., agency) analysis. 99 In light of the directive to consider as employment relationships under the FLSA a broader scope of relationships than those where the employer sufficiently controls the work, the outsized—even if not exclusive—role that control would have if the Rule's analysis were to apply may be contrary to the Act's text and case law. These considerations are further reasons the Department is proposing to withdraw the Rule.

The Department is also concerned that the Independent Contractor Rule's treatment of the factors would improperly narrow the application of the economic realities test. For example, the Rule would provide that the opportunity for profit or loss factor indicates independent contractor status if the worker has that opportunity based on either his or her exercise of initiative (such as managerial skill or business judgment) or management of his or her investment in or capital expenditure on helpers or equipment or material to further his or her work. 100 The worker “does not need to have an opportunity for profit or loss based on both for this factor to weigh towards the individual being an independent contractor.”  101 In other words, the factor would indicate independent contractor status if the worker either: (1) Made no capital investment but exercised managerial skill or (2) had a capital investment but exercised no managerial skill. The Rule would therefore erase from the analysis in certain situations the worker's lack of capital investment or lack of managerial skill—both of which are longstanding and well-settled indicators of employee status. The worker's investment and managerial skill would be considered only as the two prongs comprising the opportunity for profit or loss factor under the Rule, so if one indicates an opportunity for profit or loss, the other could not reverse or weigh against that finding even if it indicates employee status as a matter of economic reality.

In addition, the preamble to the Rule provided that “comparing the individual worker's investment to the potential employer's investment should not be part of the analysis of investment.”  102 In support, the Rule cited decisions from the Fifth and Eighth Circuits in which courts gave little weight to the comparison of the potential employer's investment in its business to the worker's investment in the work in light of the facts presented in those cases. 103 However, the decisions cited did make the comparison of the investments a part of the analysis, but found that the comparison had little relevance or accorded it little weight under those particular facts. 104 In any event, numerous other courts of appeals consider the worker's investment in the work in comparison to the potential employer's investment in its business, 105 as does WHD in enforcement actions. Despite this authority, the Rule would preclude comparing the worker's investment to the potential employer's investment.

The Rule would also recast the factor examining whether the worker's work “is an integral part” of the employer's business as whether the work “is part of an integrated unit of production.”  106 The Rule would reject as irrelevant to this factor whether the work is important or central ( i.e., integral) to the employer's business. 107 Instead, the Rule would provide that “the relevant facts are the integration of the worker into the potential employer's production processes” because “[w]hat matters is the extent of such integration rather than the importance or centrality of the functions performed” by the worker. 108 The Rule asserted that this recast articulation is supported by Supreme Court precedent, 109 but WHD and courts often consider whether the work is important or central, as the Rule acknowledges. 110

Finally, in stressing the primacy of actual practice by providing that “the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible,”  111 the Rule would advise that “a business' contractual authority to supervise or discipline an individual may be of little relevance if in practice the business never exercises such authority.”  112 In support of this guidance, the Rule's preamble asserted that “the common law control test does not establish an irreducible baseline of worker coverage for the broader economic reality test applied under the FLSA,” and that the FLSA “does not necessarily include every worker considered an employee under the common law.”  113 This understanding of the FLSA's scope of employment seems inconsistent with the Supreme Court's observations that “[a] broader or more comprehensive coverage of employees” than that contemplated under the FLSA “would be difficult to frame,' ”  114 and that the FLSA “stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”  115

In the each of the ways identified above, the Rule would narrow the scope of facts and considerations comprising the analysis of whether the worker is an employee or independent contractor. The Department proposes to withdraw the Rule in part because it eliminates from the economic realities test several facts and concepts that have deep roots in both the courts' and WHD's application of the analysis. The Department is further concerned that for this reason, the Rule's approach is inconsistent with the court-mandated totality-of-the-circumstances approach to determining whether a worker is an employee or an independent contractor. 116 In addition to these legal concerns, the Department is concerned, as a policy matter, that the Rule's narrowing of the analysis would result in more workers being classified as independent contractors not entitled to the FLSA's protections, contrary to the Act's purpose of broadly covering workers as employees. To the extent that women and people of color are overrepresented in low-wage independent contractor positions, as some commenters asserted as part of the Independent Contractor Rule rulemaking, this result could have a disproportionate impact on low-wage and vulnerable workers. For example, a report from the U.S. Treasury Department Office of Tax Analysis shows that independent contractors are more likely to be low-income than those who are primarily employees. The report finds that 42 percent of what it calls “gig economy or platform workers” and 45 percent of “self-employed sole proprietors” make less than $20,000 a year, compared to 14 percent of those who are employees earning wages. 117

One of the Independent Contractor Rule's primary stated purposes would be to “significantly clarify to stakeholders how to distinguish between employees and independent contractors under the Act.”  118 Although the intent of the Rule would be to provide clarity, it would also (as discussed above) introduce several concepts to the analysis that neither courts nor WHD have previously applied. The Department's proposal to withdraw the Rule arises in part from a concern regarding the possibility that these changes will cause confusion or lead to inconsistent outcomes rather than provide clarity or certainty, as intended.

For example, the Rule would identify two factors as “core” factors, would designate them as “the most probative,” and would provide that they carry “greater weight” than other factors. 119 The Rule would also provide that, if both core factors “point towards the same classification . . . , there is a substantial likelihood that is the individual's accurate classification,” and other factors would be “highly unlikely, either individually or collectively, to outweigh” the core factors. 120 Because neither courts nor WHD have previously pre-assigned certain factors a greater weight than other factors or grouped the factors into categories of “core” and “other” factors, it may not be clear to courts, WHD, and/or the regulated community how the analysis and weighing of factors would work, and there could be inconsistent approaches and/or outcomes as a result.

In addition, the Rule would recast several factors as discussed above. As one example, the factor that many courts articulate as whether the work “is an integral part” of the employer's business would be recast as whether the work “is part of an integrated unit of production.”  121 The Rule asserts that this revision is supported by Supreme Court precedent. 122 However, as the Rule acknowledges, 123 this more limited articulation has not generally been applied by courts or WHD and would thus be unfamiliar to employers, workers, courts, and WHD. As a result, there could be inconsistent approaches and/or outcomes in its application.

In sum, the Rule would make numerous changes to an economic realities test that courts and WHD are familiar with applying. Given that courts and WHD could struggle with applying the new concepts introduced by the Rule, the Department is uncertain whether the Rule would provide the clarity that it intends.

As part of its analysis of possible costs, transfers, and benefits, the Independent Contractor Rule quantified some possible costs (regulatory familiarization) and some possible cost savings (increased clarity and reduced litigation). 124 The Rule identified and discussed—but did not quantify—numerous other costs, transfers, and benefits possibly resulting from the Rule, including “possible transfers among workers and between workers and businesses.”  125 The Rule “acknowledge[d] that there may be transfers between employers and employees, and some of those transfers may come about as a result of changes in earnings,” but determined that these transfers cannot “be quantified with a reasonable degree of certainty for purposes of [the Rule].”  126 The Economic Policy Institute (EPI) had submitted a comment during the rulemaking estimating that the annual transfers from workers to employers as a result of the Rule would be $3.3 billion in pay, benefits, and tax payments. 127 The Rule discussed its disagreements with various assumptions underlying EPI's estimate and explained its reasons for not adopting the estimate. 128 The Rule concluded that “workers as a whole will benefit from [the Rule], both from increased labor force participation as a result of the enhanced certainty provided by [the Rule], and from the substantial other benefits detailed [in the Rule].”  129 Although the Rule did not use EPI's analysis to quantify transfers, upon further consideration, the Department believes that the analysis may be useful in illustrating the types of impacts that the Rule would have on workers.

Upon review, the Department does not believe the Rule fully considered the likely costs, transfers, and benefits that could result from the Rule. This concern is premised in part on WHD's role as the agency responsible for enforcing the FLSA and its experience with cases involving the misclassification of employees as independent contractors. The consequence for a worker of being classified as an independent contractor is that the worker is excluded from the protections of the FLSA. Without the protections of the FLSA, workers need not be paid at least the federal minimum wage for all hours worked, and are not entitled to overtime compensation for hours worked over 40 in a workweek. These impacts can be significant and must be evaluated further. In addition, a recent Presidential Memorandum began a process for agencies to better “take into account the distributional consequences of regulations.”  130 WHD also questions whether a rule that could increase the number of independent contractors, 131 effectuates the FLSA's purpose, recognized repeatedly by the Supreme Court, to broadly provide employees with its protections. 132 These concerns are an additional reason that the Department is proposing to withdraw the Rule.

Because the Independent Contractor Rule has yet to take effect, the Department does not believe that withdrawing it would be disruptive. Courts have not applied the Rule in deciding cases. Moreover, WHD has not implemented the Rule. For example, WHD's Fact Sheet #13, titled “Employment Relationship Under the Fair Labor Standards Act (FLSA)” and dated July 2008, does not contain the Rule's analysis for determining whether a worker is an employee or independent contractor. 133 WHD's Field Operations Handbook addresses independent contractor status by simply cross-referencing Fact Sheet #13 and likewise does not contain the Rule's new economic realities test. 134 WHD's elaws Advisor compliance-assistance information regarding independent contractors likewise does not contain the Rule's analysis. 135 And on January 26, 2021, Wage and Hour withdrew two opinion letters that it had issued on January 19, 2021 applying the Rule's analysis to several factual scenarios. 136 WHD explained that the letters were “issued prematurely because they are based on [a Rule] that ha[s] not gone into effect.”  137 Accordingly, the regulated community has been functioning under the current state of the law and the Department does not believe that it would be negatively affected by continuing to do so were the Rule to be withdrawn. In particular, any businesses currently engaging independent contractors or individuals who are now independent contractors would be able to continue to operate without any effect brought about by the absence of new regulations. Even if the Department withdraws the Rule, businesses that had taken steps in preparation for the Rule taking effect will not be precluded from adjusting their relationships with workers or paying for new services from workers, and can rely on past court decisions and WHD guidance to determine whether those workers are employees under the FLSA or independent contractors.

If the Independent Contractor Rule is withdrawn as proposed: (1) The guidance that the Rule would have introduced as Part 795 of Title 29 of the Code of Federal Regulations will not be introduced and Part 795 will be reserved; and (2) the revisions that the Rule would have made to 29 CFR 780.330(b) and 29 CFR 788.16(a) will not occur and their text will remain unchanged. The Department is not proposing any regulatory guidance to replace the guidance that the Independent Contractor Rule would have introduced as Part 795, so any commenter feedback addressing or suggesting such a replacement or otherwise requesting that the Department adopt any specific guidance if the Rule is withdrawn will be considered to be outside the scope of this NPRM. In addition to the reasons for the proposed withdrawal explained above, withdrawal of the Rule would allow WHD an additional opportunity to consider legal and policy issues relating to the FLSA and independent contractors.

The Paperwork Reduction Act of 1995 (PRA) and its attendant regulations require an agency to consider its need for any information collections, their practical utility, as well as the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. The PRA typically requires an agency to provide notice and seek public comments on any proposed collection of information contained in a proposed rule. This NPRM does not contain a collection of information subject to Office of Management and Budget approval under the PRA.

Under Executive Order 12866, OMB's Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and OMB review. 138 Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as a regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as economically significant); (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. This proposed withdrawal will be economically significant under section 3(f) of Executive Order 12866 because it is withdrawing an economically significant rule.

Executive Order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with obtaining the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. 139 Executive Order 13563 recognizes that some costs and benefits are difficult to quantify and provides that, when appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. The analysis below outlines the impacts that the Department anticipates may result from this proposed withdrawal and was prepared pursuant to the above-mentioned executive orders.

On January 7, 2021, WHD published a final rule titled “Independent Contractor Status under the Fair Labor Standards Act” (Independent Contractor Rule or Rule). 140 The Department is proposing to withdraw the Rule, which has not taken effect. If this withdrawal goes forward as proposed, the Rule will never have been in effect. Aside from minimal rule familiarization costs, the Department also provides below a qualitative discussion of the transfers that may be avoided by withdrawing the Rule.

Withdrawing the Independent Contractor Rule would impose direct costs on businesses that will need to review the withdrawal. To estimate these regulatory familiarization costs, the Department determined: (1) The number of potentially affected entities, (2) the average hourly wage rate of the employees reviewing the withdrawal, and (3) the amount of time required to review the withdrawal. It is uncertain whether these entities would incur regulatory familiarization costs at the firm or the establishment level. 141 For example, in smaller businesses there might be just one specialist reviewing the withdrawal, while larger businesses might review it at corporate headquarters and determine policy for all establishments owned by the business. To avoid underestimating the costs of the withdrawal, the Department uses both the number of establishments and the number of firms to estimate a potential range for regulatory familiarization costs. The lower bound of the range is calculated assuming that one specialist per firm will review the withdrawal, and the upper bound of the range assumes one specialist per establishment.

The most recent data on private sector entities at the time this NPRM was drafted are from the 2017 Statistics of U.S. Businesses (SUSB), which reports 5,996,900 private firms and 7,860,674 private establishments with paid employees. 142 Because the Department is unable to determine how many of these businesses are interested in using independent contractors, this analysis assumes all businesses will undertake review.

The Department believes ten minutes per entity, on average, to be an appropriate review time here. This rulemaking would withdraw the Independent Contractor Rule and would not set forth any new regulations in its place. Additionally, the Department believes that many entities do not use independent contractors and thus would not spend any time reviewing the withdrawal. Therefore, the ten-minute review time represents an average of no time for the entities that do not use independent contractors, and potentially more than ten minutes for review by some entities that might use independent contractors.

The Department's analysis assumes that the withdrawal would be reviewed by Compensation, Benefits, and Job Analysis Specialists (SOC 13-1141) or employees of similar status and comparable pay. The median hourly wage for these workers was $31.04 per hour in 2019, the most recent year of data available. 143 The Department also assumes that benefits are paid at a rate of 46 percent  144 and overhead costs are paid at a rate of 17 percent of the base wage, resulting in a fully loaded hourly rate of $50.60.

The Department estimates that the lower bound of regulatory familiarization cost range would be $50,675,004 (5,996,900 firms × $50.60 × 0.167 hours), and the upper bound, $66,424,267 (7,860,674 establishments × $50.60 × 0.167 hours). The Department estimates that all regulatory familiarization costs would occur in Year 1.

Additionally, the Department estimated average annualized costs of this proposed withdrawal over 10 years. Over 10 years, it would have an average annual cost of $6.7 million to $8.8 million, calculated at a 7 percent discount rate ($5.8 million to $7.6 million calculated at a 3 percent discount rate). All costs are in 2019 dollars.

In the Independent Contractor Rule, the Department estimated cost savings associated with increased clarity, as well as cost savings associated with reduced litigation. The Department does not anticipate that this withdrawal would increase costs in these areas, or result in greater costs as compared to the Rule. Although the intent of the Rule would be to provide clarity, it would also introduce several concepts to the analysis that neither courts nor WHD have previously applied. Because the Rule would be unfamiliar and could lead to inconsistent approaches and/or outcomes, and because withdrawal would maintain the status quo, the Department does not believe that a withdrawal of the Independent Contractor Rule would result in decreased clarity for stakeholders.

One of the main benefits discussed in the Rule was the increased flexibility associated with independent contractor status. The Department acknowledges that although many independent contractors report that they value the flexibility in hours and work, employment and flexibility are not mutually exclusive. Many employees similarly value and enjoy such flexibility.

The Department welcomes any comments and data on other costs associated with this proposed withdrawal.

The Department believes that it is important to provide a qualitative discussion of the transfers that would have occurred under the Rule. In the economic analysis accompanying the Rule, the Department assumed that the Rule would lead to an increase in the number of independent contractor arrangements, and acknowledged that some of this increase could be due to businesses reclassifying employees as independent contractors. As discussed in the Rule and again below, an increase in independent contracting could have resulted in transfers associated with employer-provided fringe benefits, tax liabilities, and minimum wage and overtime pay. By withdrawing the Rule, these transfers from employees (and, in some cases, from state or local governments) to employers are avoided. The Department welcomes any comments and data on the transfer impacts associated with this proposed withdrawal.

The reclassification of employees as independent contractors, or the use of independent contracting relationships as opposed to employment, decreases access to employer-provided fringe benefits such as health care or retirement benefits. According to the BLS Current Population Survey (CPS) Contingent Worker Supplement (CWS), 79.4 percent of self-employed independent contractors have health insurance, compared to 88.3 percent of employees. 145 This gap between independent contractors and employees is also true for low-income workers. Using CWS data, the Department compared health insurance rates for workers earning less than $15 per hour and found that 71.0 percent of independent contractors have health insurance compared with 78.5 percent of employees.

Additionally, a major source of retirement savings is employer-sponsored retirement accounts. According to the CWS, 55.5 percent of employees have a retirement account with their current employer; in addition, the BLS Employer Costs for Employee Compensation (ECEC) found that employers pay 5.3 percent of employees' total compensation in retirement benefits on average ($1.96/$37.03). If a worker shifts from employee to independent contractor status, that worker may no longer receive employer-provided retirement benefits.

As self-employed workers, independent contractors are legally obligated to pay both the employee and employer shares of the Federal Insurance Contributions Act (FICA) taxes. Thus, as discussed in the Rule, if workers' classifications change from employees to independent contractors, there may be a transfer in federal tax liabilities from employers to workers. 146 Although the Rule only addressed whether a worker is an employee or an independent contractor under the FLSA, the Department assumes in this analysis that employers are likely to keep the status of most workers the same across all benefits and requirements, including for tax purposes. 147 These payroll taxes include the 6.2 percent employer component of the Social Security tax and the 1.45 percent employer component of the Medicare tax. 148 In sum, independent contractors are legally responsible for an additional 7.65 percent of their earnings in FICA taxes (less the applicable tax deduction for this additional payment).

In addition to affecting tax liabilities for workers, some commenters claimed that the Rule would have an impact on state tax revenue and budgets. In their comment to the NPRM proposing the Independent Contractor Rule, several States' Attorneys General asserted that misclassifying employees as independent contractors leads to losses in unemployment insurance and workers' compensation funds, as well as increases in the cost of providing health care coverage to uninsured workers. Because independent contractors do not receive benefits like health insurance, workers compensation, and retirement plans from an employer, these commenters suggested that a rule that increases the prevalence of independent contracting could shift this burden to State and Federal governments.

When workers are shifted from employee to independent contractor status, the minimum wage and overtime pay requirements of the FLSA no longer apply. Independent contractors are more likely to earn less than the minimum wage: The 2017 CWS data indicate that independent contractors are more likely than employees to report earning less than the FLSA minimum wage of $7.25 per hour (8 percent for self-employed independent contractors, 5 percent for other independent contractors, and 2 percent for employees). Research on drivers who work for online transportation companies in California and New York also finds that many drivers receive significantly less than the applicable state minimum wages. 149

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (1996), requires federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. The RFA requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Accordingly, the Department examined this proposed withdrawal to determine whether it would have a significant economic impact on a substantial number of small entities.

The most recent data on private sector entities at the time this NPRM was drafted are from the 2017 Statistics of U.S. Businesses (SUSB), which reports 5,996,900 private firms and 7,860,674 private establishments with paid employees. 150 Of these, 5,976,761 firms and 6,512,802 establishments have fewer than 500 employees. The per-entity cost for small business employers is the regulatory familiarization cost of $8.43, or the fully loaded mean hourly wage of a Compensation, Benefits, and Job Analysis Specialist ($50.60) multiplied by 1/6 hour (ten minutes). Because this cost is minimal for small business entities, and well below one percent of their gross annual revenues, which is typically at least $100,000 per year for the smallest businesses, the Department certifies that this proposed withdrawal would not have a significant economic impact on a substantial number of small entities. The Department welcomes any comments and data on this Regulatory Flexibility Act Analysis, including the costs and benefits of this proposed withdrawal on small entities.

The Unfunded Mandates Reform Act of 1995 (UMRA)  151 requires agencies to prepare a written statement for rules with a federal mandate that may result in increased expenditures by state, local, and tribal governments, in the aggregate, or by the private sector, of $165 million ($100 million in 1995 dollars adjusted for inflation) or more in at least one year. 152 This statement must: (1) Identify the authorizing legislation; (2) present the estimated costs and benefits of the rule and, to the extent that such estimates are feasible and relevant, its estimated effects on the national economy; (3) summarize and evaluate state, local, and tribal government input; and (4) identify reasonable alternatives and select, or explain the non-selection, of the least costly, most cost-effective, or least burdensome alternative. This proposed withdrawal is not expected to result in increased expenditures by the private sector or by state, local, and tribal governments of $165 million or more in any one year.

The Department has (1) reviewed this proposed withdrawal in accordance with Executive Order 13132 regarding federalism and (2) determined that it does not have federalism implications. The proposed withdrawal would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This proposed withdrawal would not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Fair Labor Standards Act (FLSA or Act) requires all covered employers to pay nonexempt employees at least the federal minimum wage for every hour worked in a non-overtime workweek. 1 In an overtime workweek, for all hours worked in excess of 40 in a workweek, covered employers must pay a nonexempt employee at least one and one-half times the employee's regular rate. 2 The FLSA also requires covered employers to make, keep, and preserve certain records regarding employees. 3

The FLSA does not define “joint employer” or “joint employment.” However, section 3(d) of the Act defines “employer” to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee.”  4 Section 3(e) generally defines “employee” to mean “any individual employed by an employer”  5 and identifies certain specific groups of workers who are not “employees” for purposes of the Act. 6 Section 3(g) defines “employ” to “include[ ] to suffer or permit to work.”  7

In July 1939, a year after the FLSA's enactment, the Department's Wage and Hour Division (WHD) issued Interpretative Bulletin No. 13 addressing, among other topics, whether two or more companies may be jointly and severally liable for a single employee's hours worked under the FLSA. 8 WHD recognized in the Bulletin that there is joint employment liability under the FLSA and provided examples of situations where two companies are and are not joint employers of an employee. 9 For situations where an employee works hours for one company and works separate hours for another company in the same workweek, WHD focused on whether the two companies were “acting entirely independently of each other with respect to the employment of the particular employee” (in which case they were not joint employers) or, “on the other hand, the employment by [the one company] [wa]s not completely disassociated from the employment by [the other company]” (in which case they were joint employers and the hours worked for both would be aggregated for purposes of the Act). 10 WHD stated in the Bulletin that it “will scrutinize all cases involving more than one employment and, at least in the following situations, an employer will be considered as acting in the interest of another employer in relation to an employee: If the employers make an arrangement for the interchange of employees or if one company controls, is controlled by, or is under common control with, directly or indirectly, the other company.”  11

In 1958, WHD published a rule introducing 29 CFR part 791, entitled “Joint Employment Relationship under Fair Labor Standards Act of 1938.”  12 Section 791.2(a) reiterated that there is joint employment liability under the Act and stated that the determination “depends upon all the facts in the particular case.”  13 It further stated that two or more employers that “are acting entirely independently of each other and are completely disassociated” with respect to the employee's employment are not joint employers, but joint employment exists if “employment by one employer is not completely disassociated from employment by the other employer(s).”  14 Section 791.2(b) explained that, “[w]here the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

(1) Where there is an arrangement between the employers to share the employee's services, as, for example, to interchange employees; or

(2) Where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or

(3) Where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.”  15

In 1961, WHD amended a footnote in § 791.2(a) to clarify that a joint employer is also jointly liable for overtime pay. 16 Over the next several decades, WHD issued various guidance documents including Fact Sheets, opinion letters, as well as legal briefs reiterating the Department's position concerning joint employment. See, e.g., Op. Letter, FLSA (Dep't of Labor Apr. 11, 2005), 2005 WL 2086804 (employees of health care system comprised of hospitals, nursing homes, and parent holding company); Op. Letter, FLSA (Dep't of Labor Aug. 24, 1999), 1999 WL 1788146 (private duty nurses); Op. Letter, FLSA (Dep't of Labor Jan. 27, 1998), 1998 WL 852621 (grocery vendor employees stocking grocery shelves); Op. Letter, FLSA (Dep't of Labor Aug. 9, 1989), 1989 WL 1632931 (enclave program).

In 2014, WHD issued an Administrator's Interpretation (Home Care AI) addressing how joint employment under the FLSA applies to certain home care workers. 17 The Home Care AI explained that the FLSA's definitions of “employer,” “employee,” and “employ,” “and therefore the scope of employment relationships the Act covers, are exceedingly broad.”  18 The Home Care AI discussed application of 29 CFR 791.2 and stated that its “focus . . . is the degree to which the two possible joint employers share control with respect to the employee and the degree to which the employee is economically dependent on the purported joint employers.”  19 WHD recognized that, “when making joint employment determinations in FLSA cases, the exact factors applied may vary,” but also stated that “a set of factors that addresses only control is not consistent with the breadth of employment under the FLSA” because an analysis based solely on the potential employer's joint control “ `cannot be reconciled with [FLSA section 3(g)'s “suffer or permit” language], which necessarily reaches beyond traditional agency law.' ”  20 Accordingly, the Home Care AI applied a non-exclusive set of factors relating to the potential joint employer's control and other aspects of the relationship to provide guidance regarding the possibility of joint employment in numerous hypothetical scenarios specific to the home care industry. 21 WHD withdrew the Home Care AI on March 10, 2020.

In 2016, WHD issued an Administrator's Interpretation (Joint Employment AI) addressing joint employment generally under the FLSA and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), which uses the same definition of “employ” as the FLSA. 22 Relying on the text and history of FLSA section 3(g) and case law interpreting it, the Joint Employment AI explained that joint employment, like employment generally, is expansive under the FLSA and “notably broader than the common law concepts of employment and joint employment.”  23 The Joint Employment AI further explained that “the expansive definition of `employ' as including `to suffer or permit to work' rejected the common law control standard and ensures that the scope of employment relationships and joint employment under the FLSA and MSPA is as broad as possible.”  24 The AI described how “suffer or permit” or “similar phrasing was commonly used in state laws regulating child labor and was `designed to reach businesses that used middlemen to illegally hire and supervise children.' ”  25 The AI thus concluded that “the `suffer or permit to work' standard was designed to expand child labor laws' coverage beyond those who controlled the child laborer,” “prevent employers from using `middlemen' to evade the laws' requirements,” and ensure joint liability in a type of vertical joint employment situation (explained below). 26

The Joint Employment AI discussed two types of joint employment. It discussed horizontal joint employment, which exists where an employee is separately employed by, and works separate hours in a workweek for, more than one employer, and the employers “are sufficiently associated with or related to each other with respect to the employee” such that they are joint employers. 27 The Joint Employment AI explained that “the focus of a horizontal joint employment analysis is the relationship between the two (or more) employers” and that 29 CFR 791.2 provided guidance on analyzing that type of joint employment, and the AI gave some additional guidance on applying § 791.2. 28 The Joint Employment AI also discussed vertical joint employment, which exists where an “employee has an employment relationship with one employer (typically a staffing agency, subcontractor, labor provider, or other intermediary employer),” another employer is “receiv[ing] the benefit of the employee's labor,” and “the economic realities show that he or she is economically dependent on, and thus employed by,” the other employer. 29 The Joint Employment AI explained that the vertical joint employment analysis does not focus on examining the relationship between the two employers but instead “examines the economic realities” of the relationship between the employee and the other employer that is benefitting from his or her labor. 30 The AI noted that “several Circuit Courts of Appeals have also adopted an economic realities analysis for evaluating vertical joint employment under the FLSA,” and that, “[r]egardless of the exact factors, the FLSA and MSPA require application of the broader economic realities analysis, not a common law control analysis, in determining vertical joint employment.”  31 The AI advised that, “because of the shared definition of employment and the coextensive scope of joint employment between the FLSA and MSPA,” the non-exclusive, multi-factor economic realities analysis set forth by WHD in its MSPA joint employment regulation should be applied in FLSA vertical joint employment cases to analyze the relationship between the employee and the other employer, and that doing so “is consistent with both statutes and regulations.”  32 The AI provided some additional guidance on applying the analysis. 33 WHD withdrew the Joint Employment AI on June 7, 2017. 34

In January 2020, WHD published a final rule entitled “Joint Employer Status Under the Fair Labor Standards Act,” which became effective on March 16, 2020 (Joint Employer Rule or Rule). 35 The Joint Employer Rule rewrote 29 CFR part 791. Currently, § 791.1 contains an introductory statement, § 791.2 contains the substance of the Rule and addresses both vertical joint employment (which it refers to as “the first joint employer scenario”) and horizontal joint employment (which it refers to as “the second joint employer scenario”), and § 791.3 contains a severability provision. 36

For vertical joint employment, § 791.2(a)(1) states that “[t]he other person [that is benefitting from the employee's labor] is the employee's joint employer only if that person is acting directly or indirectly in the interest of the employer in relation to the employee” and then cites FLSA section 3(d)'s definition of “employer.”  37 The Joint Employer Rule provided that section 3(d) is the sole statutory provision in the FLSA for determining “joint employer status” under the Act—to the exclusion of sections 3(e) and 3(g). 38 The Joint Employer Rule further provided that the definitions of “employee” and “employ” in sections 3(e) and 3(g) “determine whether an individual worker is an employee under the Act.”  39 Citing section 3(d)'s definition of “employer” as including “any person acting directly or indirectly in the interest of an employer in relation to an employee,” the Rule stated that “only this language from section 3(d) contemplates the possibility of a person in addition to the employer who is also an employer and therefore jointly liable for the employee's hours worked.”  40 The Rule concluded that this language from section 3(d), “by its plain terms, contemplates an employment relationship between an employer and an employee, as well as another person who may be an employer too—which exactly fits the [vertical] joint employer scenario under the Act.”  41 The Rule relied on the Supreme Court's decision in Falk v. Brennan   42 and the Court of Appeals for the Ninth Circuit's decision in Bonnette v. California Health & Welfare Agency   43 to “support focusing on section 3(d) as determining joint employer status.”  44

Section 791.2(a)(1) states that “four factors are relevant to the determination” of whether the other employer is a joint employer in the vertical joint employment situation. 45 Those four factors are whether the other employer: (1) Hires or fires the employee; (2) supervises and controls the employee's work schedule or conditions of employment to a substantial degree; (3) determines the employee's rate and method of payment; and (4) maintains the employee's employment records. 46 The Joint Employer Rule stated that its four-factor test was “derived from” Bonnette. 47 In Bonnette, the Ninth Circuit affirmed a finding of vertical joint employment after considering whether the other employer: (1) Had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records. 48

The Joint Employer Rule's four-factor analysis deviated from Bonnette' s analysis in several ways. First, the Rule articulates the first factor as whether the other employer “[h]ires or fires the employee” as opposed to whether it had “the power” to hire and fire. 49 Section 791.2(a)(3)(i) states that the “potential joint employer must actually exercise . . . one or more of these indicia of control to be jointly liable under the Act,” and that “[t]he potential joint employer's ability, power, or reserved right to act in relation to the employee may be relevant for determining joint employer status, but such ability, power, or right alone does not demonstrate joint employer status without some actual exercise of control.”  50 Second, the Joint Employer Rule changed the second factor to consider whether the potential joint employer supervises and controls work schedules or conditions of employment “to a substantial degree.” This phrase is absent from the test articulated in Bonnette (although Bonnette found that, on the factual record before it, the potential joint employers “exercised considerable control” in that area). 51 Third, § 791.2(a)(2) states that “[s]atisfaction of the maintenance of employment records factor alone will not lead to a finding of joint employer status,” but Bonnette did not provide that limitation. 52 Finally, § 791.2(b) states that “[a]dditional factors may be relevant for determining joint employer status in this scenario, but only if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee's work.”  53 Bonnette, however, stated that its four factors “provide a useful framework for analysis in this case,” but “are not etched in stone and will not be blindly applied,” and that “[t]he ultimate determination must be based `upon the circumstances of the whole activity.' ”  54

In addition to generally excluding factors that are not indicative of the potential joint employer's control over the employee's work, the Joint Employer Rule specifically excluded any consideration of the employee's economic dependence on the potential joint employer. 55 The Rule asserted that “economic dependence is relevant when applying section 3(g) and determining whether a worker is an employee under the Act; however, determining whether a worker who is an employee under the Act has a joint employer for his or her work is a different analysis that is based on section 3(d).”  56 The Rule further asserted that, “[b]ecause evaluating control of the employment relationship by the potential joint employer over the employee is the purpose of the Department's four-factor balancing test, it is sensible to limit the consideration of additional factors to those that indicate control.”  57

To determine horizontal joint employment, the Joint Employer Rule adopted the standard in the prior version of 29 CFR 791.2 with non-substantive revisions. 58 Section 791.2(e)(2) states that, in this “second joint employer scenario”, “if the employers are acting independently of each other and are disassociated with respect to the employment of the employee,” they are not joint employers. 59 It further states that, “if the employers are sufficiently associated with respect to the employment of the employee, they are joint employers and must aggregate the hours worked for each for purposes of determining compliance with the Act.”  60 It identifies the same three general examples of sufficient association as the prior version of 29 CFR 791.2. 61

The Joint Employer Rule adopted additional provisions that apply to both vertical and horizontal joint employment. Section 791.2(f) addresses the consequences of joint employment and provides that “[f]or each workweek that a person is a joint employer of an employee, that joint employer is jointly and severally liable with the employer and any other joint employers for compliance” with the Act. 62 Section 791.2(g) provides 11 “illustrative examples” of how the Rule may apply to specific factual situations implicating both vertical and horizontal joint employment. 63

In February 2020, 17 States and the District of Columbia (the States) filed a lawsuit in the United States District Court for the Southern District of New York against the Department asserting that the Joint Employer Rule violated the Administrative Procedure Act (APA). 64 The Department moved to dismiss the lawsuit on the grounds that the States did not have standing. The district court denied that motion on June 1, 2020. 65 The district court issued an order on June 29, 2020 permitting the International Franchise Association, the Chamber of Commerce of the United States of America, the National Retail Federation, the Associated Builders and Contractors, and the American Hotel and Lodging Association (Intervenors) to intervene as defendants in the case. 66 The parties filed cross-motions for summary judgment, which the district court decided on September 8, 2020. 67

The district court vacated the Joint Employer Rule's “novel standard for vertical joint employer liability” because its “revisions to that scenario are flawed in just about every respect.”  68 The district court found that the Rule violated the APA because it was contrary to the law—specifically, it conflicted with the FLSA. 69 The district court identified three conflicts: The Rule's reliance on the FLSA's definition of “employer” in section 3(d) as the sole textual basis for joint employment liability; its adoption of a control-based test for determining vertical joint employer liability; and its prohibition against considering additional factors beyond control, such as economic dependence. 70 In addition, the district court found that the Rule was “arbitrary and capricious” in violation of the APA for three reasons: The Rule did not adequately explain why it departed from WHD's prior interpretations; the Rule did not consider the conflict between it and WHD's MSPA joint employment regulations; and the Rule did not adequately consider its cost to workers. 71

The district court concluded that the Joint Employer Rule's “novel interpretation for vertical joint employer liability” was unlawful under the APA and vacated all of § 791.2 except for § 791.2(e). 72 The court determined that, because the Rule's “non-substantive revisions to horizontal joint employer liability are severable,” § 791.2(e) “remains in effect.”  73 The Department and the Intervenors appealed the district court's decision, and the appeal is pending before the Court of Appeals for the Second Circuit. 74 The Department and the Intervenors each filed an opening brief with the Second Circuit on January 15, 2021 in support of the Rule; the States' response brief is due on April 16, 2021.

The Department proposes to rescind the Joint Employer Rule. Although the Rule went into effect on March 16, 2020, the U.S. District Court for the Southern District of New York vacated most of the Rule in a September 8, 2020 decision. 75 The Department's reasons for proposing to rescind the Joint Employer Rule are explained below, and the Department requests comments on its proposal.

The statutory analysis and test for vertical joint employment set forth in the Joint Employer Rule is different from the analyses and tests applied by every court to have considered joint employer questions prior to the Rule's issuance, as well as WHD's previous enforcement approach. In reviewing the Rule, the Southern District of New York concluded that it was contrary to law and arbitrary and capricious. Further consideration is needed in order to fully analyze and possibly address the concerns raised by the court. As such, the Department proposes to rescind the Rule to allow it to engage in further legal analysis, in order to ensure that lawful and clear guidance is being provided to the regulated community.

In New York, et al. v. Scalia, the district court found that the Rule conflicts with the FLSA and was thus contrary to law in violation of the APA. The court raised several issues regarding the Rule's statutory analysis of the Act. First, the district court rejected the Rule's assertion that the FLSA's definition of “employer” in section 3(d) is the sole textual basis under the FLSA for determining joint employment. Because section 3(d) defines “employer” by referencing employees, and section 3(e)(1) in turn defines “employee” by referencing “employ” (defined in section 3(g)), “all three definitions are relevant to determining joint employer status under the FLSA.”  76 The district court faulted the Rule for bifurcating the statutory definitions and using “different tests for `primary' and `joint' employment.”  77 According to the district court, “[t]here is . . . no independent test for joint employment under the FLSA,” “[a]n entity is an employer if it meets the FLSA's definition,” and “[i]t is a joint employer if it meets the definition and another entity also meets the definition.”  78 The district court concluded that the Rule's “novel interpretation that section 3(d) is the sole textual basis for joint employer liability conflicts with the FLSA” and “is reason enough to conclude that the [Rule] must be set aside.”  79

Looking to the language of the statute itself, WHD is concerned that the text of section 3(d) alone may not easily encompass all scenarios in which joint employment may arise; multiple employers may “suffer or permit” an employee to work and could thus be joint employers under section 3(g) without one working “in the interest of an employer” under section 3(d). 80 Moreover, the district court in New York v. Scalia noted that the Rule “disregarded” the operative language of section 3(d) which begins with “includes” instead of “means.”  81 The court explained that under principles of statutory construction, it is sufficient to prove employer status by showing that the entity acted directly or indirectly in the interest of an employer in relation to an employee, but the Rule wrongly converted this into a necessary condition for proving employer status. 82 WHD recognizes that under the FLSA, an “employer” “ includes any person acting directly or indirectly in the interest of an employer in relation to an employee,” “ includes a public agency,” but “ does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization”; by its own terms, section 3(d) is not exhaustive. 83 Additionally, there is case law indicating that section 3(d) was written for the purpose of imposing responsibility upon the agents of employers, as the court observed in Greenberg v. Arsenal Building Corp., 144 F. 2d 292, 294 (2d Cir. 1944) (explaining that “the section would have little meaning or effect if such were not the case”). 84

Invitation to Comment: We invite you to submit comments regarding the proposed priority, requirement, and definitions. To ensure that your comments have maximum effect in developing the notice of final priority requirement, and definitions, we urge you to identify clearly the specific section of the proposed priority, requirement, or definition that each comment addresses.

We are particularly interested in comments about whether the proposed priority, requirement, and definitions would be challenging for new applicants to meet and, if so, how the proposed priority, requirement, and definitions could be revised to address potential challenges and reduce burden.

Directed Question 1: For the proposed priority, the Department is considering a requirement that would limit the reimbursement of indirect costs based on the grantee's modified total direct cost (MTDC) base, as defined in 2 CFR 200.68.

We are considering this requirement based on 2 CFR 200.414(c)(1), which allows a Federal awarding agency to use an indirect cost rate different from the negotiated rate when required by Federal statute or regulation or when approved by a Federal awarding agency head or delegate head based on documented justification when the Federal awarding agency implements, and makes publicly available, the policies, procedures, and general decision making criteria that their programs will follow to seek and justify deviations from negotiated rates. Federal discretionary grantees have historically been reimbursed for indirect costs at the rate that the grantee has negotiated with its cognizant Federal agency, and we believe that use of the negotiated rate is appropriate for most grants in most circumstances. However, the Department analyzed the indirect cost rates for all current comprehensive centers (Assistance Listing Number 84.283) and found a wide range of indirect cost rate agreements in place. The indirect cost rates ranged from 10 percent to over 125 percent, with an average of 52 percent. The percentage of indirect costs charged to the grant compared to total budget amounts varied across the current comprehensive centers from 9 percent to 39 percent, with 33 percent of grantees charging between 20 percent and 35 percent. We are considering limiting the indirect costs to maximize the availability of funds to provide technical assistance (TA) to a variety of stakeholders to meet the needs of students at risk of not attaining full literacy skills due to a disability, including dyslexia.

Consistent with our analysis, we have proposed a requirement that would set a reasonable cap in an amount between 20 percent to 35 percent for those administrative costs that are indirect costs for grantees, including subrecipients.

The Department invites comments on the practical implications of this proposed indirect cost limitation for the grantee and subrecipients, specific comments on the maximum indirect cost rate, including what a reasonable cap would be and the rationale for the proposed amount, and thoughts on allowing programs to seek and justify deviations.

Directed Question 2: The Department seeks information on the rigor of the evaluation that should be conducted by the Center. Paragraph (c) of the proposed priority outlines the proposed requirements related to a third-party evaluator. The Department is interested in comments related to the evaluation methods or research designs, cost, and personnel time needed to conduct a rigorous evaluation of the Center's effect on student literacy achievement and the capacity of educators to implement evidence-based (as defined in section 8101(21) of the ESEA) instruction and assessment. Relatedly, the Department invites comments on the appropriateness of using a “third party” or independent evaluator, particularly for the summative evaluation.

We invite you to assist us in complying with the specific requirements of Executive Orders 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from the proposed priority, requirement, and definitions. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program.

During and after the comment period, you may inspect all public comments about the proposed priority, requirement, and definitions by accessing Regulations.gov . Due to the current novel coronavirus 2019 (COVID-19) pandemic, the Department buildings are currently not open. However, upon reopening, you may also inspect the comments in person in Room 5175, 550 12th Street SW, Potomac Center Plaza, Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., Eastern Time, Monday through Friday of each week except Federal holidays. Please contact the person listed under FOR FURTHER INFORMATION CONTACT .

Assistance to Individuals With Disabilities in Reviewing the Rulemaking Record: On request, we will provide an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for the proposed priority, requirement, and definitions. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT .

Purpose of Program: The Comprehensive Centers program supports the establishment of not fewer than 20 comprehensive centers to provide capacity building services to State educational agencies (SEAs), regional educational agencies (REAs), local educational agencies (LEAs), and schools that improve educational outcomes for all students, close achievement gaps, and improve the quality of instruction. The purpose of the National Comprehensive Center on Improving Literacy for Students with Disabilities (Center) is to identify or develop evidence-based literacy assessment tools and professional development activities and identify evidence-based instruction, strategies, and accommodations for students at risk of not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning. The Center will also disseminate its products and information on evidence-based literacy to families, SEAs, LEAs, REAs, and schools.

Program Authority: Section 203 of the Educational Technical Assistance Act of 2002 (ETAA) (20 U.S.C. 9602) and section 2244 of the ESEA (20 U.S.C. 6674).

This notice contains one proposed priority.

Background: Section 2244 of the ESEA requires the Secretary to establish a comprehensive center on students at risk of not attaining full literacy skills due to a disability. Comprehensive centers are typically administered by the Office of Elementary and Secondary Education (OESE). OESE is funding this Center; however, because of the Center's subject matter, it will be administered jointly by OESE and the Office of Special Education and Rehabilitative Services (OSERS).

The project is designed to improve implementation of evidence-based literacy practices in both teacher classroom and remote learning environments. With respect to remote learning, the proposed priority is intended to ensure that teachers have the training and support they need to implement evidence-based literacy practices during remote instruction for students with disabilities, including students with dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning. Remote learning plays a critical role in regular instruction and can serve as a crucial link allowing high-quality teaching and learning to continue when regular instruction is disrupted.

The project will be awarded and must be operated in a manner consistent with nondiscrimination requirements contained in Federal civil rights laws.

Proposed Priority: The purpose of this proposed priority is to fund a cooperative agreement to establish and operate a National Comprehensive Center on Improving Literacy for Students with Disabilities (Center) for children in early childhood education programs through high school. The Center must—

(a) Identify or develop free or low-cost evidence-based assessment tools for identifying students at risk of not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning;

(b) Identify evidence-based literacy instruction, strategies, and accommodations, including assistive technology, designed to meet the specific needs of such students;

(c) Provide families of such students with information to assist such students;

(d) Identify or develop evidence-based professional development for teachers, paraprofessionals, principals, other school leaders, and specialized instructional support personnel to—

(1) Understand early indicators of students at risk of not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning;

(2) Use evidence-based screening assessments for early identification of such students beginning not later than kindergarten;  1 and

(3) Implement evidence-based instruction designed to meet the specific needs of such students; and

(e) Disseminate the products of the comprehensive center to regionally diverse SEAs, REAs, LEAs, and schools, including, as appropriate, through partnerships with other comprehensive centers established under section 203 of the Educational Technical Assistance Act of 2002 (20 U.S.C. 9602), and regional educational laboratories established under section 174 of the Education Sciences Reform Act of 2002 (20 U.S.C. 9564).

In addition to these programmatic requirements, to be considered for funding under this priority, applicants must meet the application and administrative requirements in this priority, which are:

(a) Demonstrate, in the narrative section of the application under “Significance,” how the proposed project will—

(1) Address current and emerging training and information needs of SEAs, REAs, LEAs, TA centers, schools, and practitioners to select and implement teacher classroom and remote learning environment evidence-based practices (EBPs) that will improve literacy outcomes for students with disabilities, including students with dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning. To meet this requirement, the applicant must—

(i) Demonstrate knowledge of current and emerging EBPs, which can be used in reading and literacy-related teacher classroom and remote learning environment instruction, screening, assessment, and identification or diagnosis of students at risk for not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning. This includes demonstrating knowledge of current and emerging reading and literacy-related EBPs for students who are English learners; students from a variety of settings ( e.g., rural, suburban, urban); students from low-income families; and other educationally disadvantaged students; or

(ii) Demonstrate knowledge of, previous experience with, and results of using creative approaches and implementing in-person and virtual TA strategies to provide capacity-building services and disseminate teacher classroom and remote learning environment EBPs to a variety of entities, including parents, SEAs, REAs, LEAs, schools, Head Start, and other early childhood programs;

(2) Demonstrate a record of improving outcomes in literacy achievement for students at risk for not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning, in order to better prepare them to compete in a global economy; and

(3) Demonstrate a record of improving the adoption, implementation, and sustainment of teacher classroom and remote learning environment EBPs in literacy instruction for students at risk for not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning.

(b) Demonstrate, in the narrative section of the application under “Quality of project services,” how the proposed project will—

(1) Ensure equal access and treatment for members of groups that have traditionally been underrepresented based on race, color, national origin, sex, age, or disability. To meet this requirement, the applicant must describe how it will—

(i) Identify the needs of the intended recipients for TA and information; and

(ii) Ensure that products and services meet the needs of the intended recipients of the grant;

(2) Achieve its goals, objectives, and intended short-term, intermediate, and long-term outcomes. To meet this requirement, the applicant must provide—

(i) A five-year plan for the Center to identify current and emerging training and information needs and to address the priority;

(ii) Measurable intended project outcomes; and

(iii) In Appendix A, the logic model (as defined in 34 CFR 77.1) by which the proposed project will achieve its intended outcomes that depicts, at a minimum, the goals, activities, outputs, and intended short-term, intermediate, and long-term outcomes of the proposed project;

(3) Use a conceptual framework (and provide a copy in Appendix A) to develop project plans and activities, and describe any underlying concepts, assumptions, expectations, or theories, as well as the presumed relationships or linkages among these variables, and any empirical support for this framework;

(4) Be based on current research and make use of EBPs in the development and delivery of its products and services. To meet this requirement, the applicant must describe—

(i) The current research on teacher classroom and remote learning environment EBPs for literacy instruction for students at risk for not attaining full literacy skills due to a disability, including dyslexia impacting reading or writing, or developmental delay impacting reading, writing, language processing, comprehension, or executive functioning; and

(ii) The current research about adult learning principles in in-person and virtual settings and implementation science that will inform the proposed TA; and

(5) Develop products or refine or update publicly available existing products and provide in-person and virtual services that are of high quality and sufficient intensity and duration to achieve the intended measurable outcomes of the proposed project. To address this requirement, the applicant must describe—

(i) How it proposes to identify or develop the knowledge base in teacher classroom and remote learning environment literacy instruction for students at risk of not attaining full literacy skills due to a disability;

(ii) Its proposed approach to universal, general TA, which must identify the intended recipients, including the type and number of recipients, that will receive the products and services under this approach;

(iii) Its proposed approach to targeted, specialized TA, which must identify—

(A) The intended recipients, including the type and number of recipients, that will receive the products and services under this approach, a description of new or existing publicly available products that may be used and services that the Center proposes to make available, and the expected impact of those products and services under this approach; and

(B) Its proposed approach to measure the readiness of potential TA recipients to work with the project, assessing, at a minimum, their current infrastructure, available resources, and ability to build capacity at the local level; and

(iv) Its proposed approach to intensive, sustained TA, which must identify—

(A) The intended recipients, including the type and number of recipients, that will receive the products and services, a description of new or existing publicly available products that may be used and services that the Center proposes to make available, and the expected impact of those products and services under this approach;

(B) Its proposed approach to measure the readiness of the target audiences to work with the project, including their commitment to the initiative, alignment of the initiative to their needs, current infrastructure, available resources, and ability to build capacity at the SEA, REA, LEA, school, and early childhood education program levels;

(C) Its proposed plan for assisting SEAs, REAs, and LEAs to build or enhance in-person and virtual training systems that include capacity-building services and professional development based on adult learning principles and coaching; and

(D) Its proposed plan for working with appropriate levels of the education system ( e.g., SEAs, regional TA providers, districts, schools, early childhood education programs, families) to ensure that there is communication between each level and that there are systems in place to support the use of teacher classroom and remote learning environment EBPs for literacy instruction;

(6) Partner with the National Comprehensive Center and at least one of the other federally funded comprehensive centers, regional educational laboratories, equity assistance centers, OSEP- and other related federally funded TA Centers, parent training and information and community parent resource centers funded by the Department and OSEP ( e.g., Center for Parent Information and Resources and Parent Technical Assistance Centers), and other related organizations to refine or develop products and implement services that maximize efficiency. To address this requirement, the applicant must describe—

(i) How the proposed project will use technology to achieve the intended project outcomes;

(ii) With whom the proposed project will collaborate and the intended outcomes of this collaboration; and

(iii) How the proposed project will use non-project resources to achieve the intended project outcomes; and

(7) Develop a dissemination plan that describes how the applicant will systematically distribute information, products, and services to varied intended audiences, using a variety of in-person and virtual dissemination strategies, to promote awareness and use of the Center's products and services.

(c) In the narrative section of the application under “Quality of the project evaluation,” include an evaluation plan for the project developed in consultation with and implemented by a third-party evaluator. The evaluation plan must—

(1) Articulate formative and summative evaluation questions, including important process and outcome evaluation questions, that are linked directly to the project's proposed logic model required in paragraph (b)(2)(iii) of this notice;

(2) Describe how progress in and fidelity of implementation, as well as project short-term, intermediate, and long-term outcomes, will be measured to answer the evaluation questions. Specify the measures and associated instruments or sources for data appropriate to the evaluation questions. Include information regarding reliability and validity of measures where appropriate;

(3) Describe strategies for analyzing data and how data collected as part of this plan will be used to inform and improve service delivery over the course of the project and to refine the proposed logic model and evaluation plan, including subsequent data collection;

(4) Provide a timeline for conducting the evaluation and include staff assignments for completing the plan. The timeline must indicate that the data will be available annually for the annual performance report (APR); and

(5) Dedicate sufficient funds in each budget year to cover the costs of developing or refining the evaluation plan in collaboration with a “third-party” evaluator and the costs associated with the implementation of the evaluation plan by the third-party evaluator.

(d) Demonstrate, in the narrative section of the application under “Adequacy of resources and quality of project personnel,” how—

(1) The proposed project will ensure equal access for employment for all, including those who are members of groups that have traditionally been underrepresented based on race, color, national origin, sex, age, religion, or disability;

(2) The proposed key project personnel, consultants, and subcontractors have the qualifications, subject-matter expertise, and technical experience to carry out the proposed activities, achieve the project's intended outcomes, and develop ongoing partnerships with leading experts and organizations nationwide to inform project activities;

(3) The applicant and any key partners have adequate resources to carry out the proposed activities; and

(4) The proposed costs are reasonable in relation to the anticipated results and benefits.

(e) Demonstrate, in the narrative section of the application under “Quality of the management plan,” how—

(1) The proposed management plan will ensure that the project's intended outcomes will be achieved on time and within budget. To address this requirement, the applicant must describe—

(i) Clearly defined responsibilities for key project personnel, consultants, and subcontractors, as applicable; and

(ii) Timelines and milestones for accomplishing the project tasks;

(2) Key project personnel and any consultants and subcontractors will be allocated and how these allocations are appropriate and adequate to achieve the project's intended outcomes. The identified project director should be, at minimum, 0.5 full-time equivalency throughout the project period;

(3) The proposed management plan will ensure that the products and services provided are of high quality, relevant, and useful to recipients; and

(4) The proposed project will benefit from a diversity of perspectives, including those of families, general and special education teachers, TA providers, researchers, institutions of higher education, and policy makers, among others, in its development and operation.

(f) Address the following additional application requirements. The applicant must—

(1) Include, in Appendix A, personnel-loading charts and timelines, as applicable, to illustrate the management plan described in the narrative;

(2) Include, in the budget, attendance at the following:

(i) A one and one-half day kick-off meeting in Washington, DC, or virtually, after receipt of the award, and an annual planning meeting in Washington, DC, or virtually, with the OSEP project officer, OESE staff, and other relevant staff during each subsequent year of the project period.

(ii) A two and one-half day project directors' conference in Washington, DC, or a virtual conference, during each year of the project period;

(iii) Two annual two-day trips to attend Department briefings, Department-sponsored conferences, and other meetings, as requested by OSEP; and

(iv) At least monthly, communicate and collaborate with other Department-funded centers to achieve project objectives;

(3) Include, in the budget, a line item for an annual set-aside of 5 percent of the grant amount to support emerging needs that are consistent with the proposed project's intended outcomes, as those needs are identified in consultation with, and approved by, the OSEP project officer. With approval from the OSEP project officer, the project must reallocate any remaining funds from this annual set-aside no later than the end of the third quarter of each budget period;

(4) Include a plan for maintaining a high-quality website, with an easy-to-navigate design, that meets government or industry-recognized standards for accessibility;

(5) Include a plan for ensuring that annual project progress toward meeting project goals is posted on the project website;

(6) Include, in Appendix A, a letter of agreement from each partnering organization or consultant. The letter of agreement should clearly specify the role of the partnering organization or consultant and the time needed to fulfill the commitment to the project; and

(7) Include, in Appendix A, an assurance to assist OSEP and OESE with the transfer of pertinent resources and products and to maintain the continuity of services to target audiences during the transition to this new award period and at the end of this award period, as appropriate.

When inviting applications for a competition using one or more priorities, we designate the type of each priority as absolute, competitive preference, or invitational through a notice in the Federal Register . The effect of each type of priority follows:

Absolute priority: Under an absolute priority, we consider only applications that meet the priority (34 CFR 75.105(c)(3)).

Competitive preference priority: Under a competitive preference priority, we give competitive preference to an application by (1) awarding additional points, depending on the extent to which the application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) selecting an application that meets the priority over an application of comparable merit that does not meet the priority (34 CFR 75.105(c)(2)(ii)).

Invitational priority: Under an invitational priority, we are particularly interested in applications that meet the priority. However, we do not give an application that meets the priority a preference over other applications (34 CFR 75.105(c)(1)).

Background: We propose a requirement for this grant competition that would limit the reimbursement of indirect costs based on its modified total direct cost (MTDC) base, as defined in 2 CFR 200.68. The cap would apply to indirect administrative costs for grantees and subrecipients.

This requirement is based on 2 CFR 200.414(c)(1), which allows a Federal awarding agency to use an indirect cost rate different from the negotiated rate when required by Federal statute or regulation or when approved by a Federal awarding agency head or delegate head based on documented justification when the Federal awarding agency implements, and makes publicly available, the policies, procedures, and general decision-making criteria that their programs will follow to seek and justify deviations from negotiated rates.

Federal discretionary grantees have historically been reimbursed for indirect costs at the rate that the grantee has negotiated with its cognizant Federal agency, and we believe that use of the negotiated rate is appropriate for most grants in most circumstances. However, we would limit the indirect costs to maximize the availability of funds to provide TA to a variety of stakeholders and to meet the needs of students at risk of not attaining full literacy skills due to a disability, including dyslexia.

Requirement: Indirect costs are limited to no more than 35 percent of costs, based on a modified total direct cost (MTDC) base, as defined in 2 CFR 200.68.

We propose the following definitions for use with the proposed priority. We propose these definitions to ensure that applicants have a clear understanding of how we are using these terms. We propose to use some definitions the Department has adopted elsewhere and provide the source of existing definitions in parentheses.

Capacity-building services means assistance that strengthens an individual's or organization's ability to engage in continuous improvement and achieve expected outcomes. (Final Priorities, Requirements, Definitions, and Performance Measures; Comprehensive Centers Program (84 FR 13122), April 4, 2019)

Fidelity means the delivery of instruction in the way in which it was designed to be delivered. (Final Priorities and Definitions; State Personnel Development Grants (77 FR 45944), August 2, 2012)

Intensive, sustained TA means TA services often provided on-site and requiring a stable, ongoing relationship between the TA center staff and the TA recipient. This category of TA should result in changes to policy, program, practice, or operations that support increased recipient capacity or improved outcomes at one or more systems levels.

Regional educational agency, for the purposes of this program, means “Tribal Educational Agency” as defined in ESEA section 6132(b)(3), as well as other educational agencies that serve regional areas. (Final Priorities, Requirements, Definitions, and Performance Measures; Comprehensive Centers Program (84 FR 13122), April 4, 2019)

TA services are defined as negotiated series of activities designed to reach a valued outcome.

Targeted, specialized TA means TA services based on needs common to multiple recipients and not extensively individualized. A relationship is established between the TA recipient and one or more TA center staff. This category of TA includes one-time, labor-intensive events, such as facilitating strategic planning or hosting regional or national conferences. It can also include episodic, less labor-intensive events that extend over a period of time, such as facilitating a series of conference calls on single or multiple topics that are designed around the needs of the recipients. Facilitating communities of practice can also be considered targeted, specialized TA.

Third-party evaluator is an independent and impartial program evaluator who is contracted by the grantee to conduct an objective evaluation of the project. This evaluator must not have participated in the development or implementation of any project activities, except for the evaluation activities, nor have any financial interest in the outcome of the evaluation.

Universal, general TA means TA and information provided to independent users through their own initiative, resulting in minimal interaction with TA center staff and including one-time, invited or offered conference presentations by TA center staff. This category of TA also includes information or products, such as newsletters, guidebooks, or research syntheses, downloaded from the TA center's website by independent users. Brief communications by TA center staff with recipients, either by telephone or email, are also considered universal, general TA.

We will announce the final priority, requirement, and definitions in a document in the Federal Register . We will determine the final priority, requirement, and definitions after considering public comments and other information available to the Department. This document does not preclude us from proposing additional priorities, requirements, definitions, or selection criteria, subject to meeting applicable rulemaking requirements.

Under Executive Order 12866, the Office of Management and Budget (OMB) determines whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

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

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

OMB has determined that this proposed regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

We have also reviewed this proposed regulatory action under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing the proposed priority, requirement, and definitions based on a reasoned determination that the benefits would justify the costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that this regulatory action is consistent with the principles in Executive Order 13563.

We also have determined that this regulatory action would not unduly interfere with State, local, and Tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.

In addition, we have considered the potential benefits of this regulatory action and have noted these benefits in the background section of this document.

Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand. The Secretary invites comments on how to make the proposed priority, requirement, and definitions easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?

• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?

• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?

• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections?

• Could the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of the preamble be more helpful in making the proposed regulations easier to understand? If so, how?

• What else could we do to make the proposed regulations easier to understand?

To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the ADDRESSES section.

Regulatory Flexibility Act Certification: The Secretary certifies that this proposed regulatory action would not have a significant economic impact on a substantial number of small entities. The U.S. Small Business Administration (SBA) Size Standards define “small entities” as for-profit or nonprofit institutions with total annual revenue below $7,000,000 or, if they are institutions controlled by small governmental jurisdictions (that are comprised of cities, counties, towns, townships, villages, school districts, or special districts), with a population of less than 50,000.

We invite comments from small eligible entities as to whether they believe this proposed regulatory action would have a significant economic impact on them and, if so, request evidence to support that belief. The small entities that this proposed regulatory action would affect are public or private nonprofit agencies and organizations, including Indian Tribes and institutions of higher education that may apply. We believe that the costs imposed on an applicant by the proposed priority, requirement, and definitions would be limited to paperwork burden related to preparing an application and that the benefits of the proposed priority, requirement, and definitions would outweigh any costs incurred by the applicant. There are very few entities who could provide the type of TA required under the proposed priority. For these reasons the proposed priority, requirement, and definitions would not impose a burden on a significant number of small entities.

Paperwork Reduction Act of 1995: The proposed priority, requirement, and definitions contain information collection requirements that are approved by OMB under OMB control number 1894-0006.

Intergovernmental Review: This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

Accessible Format: On request to the contact person listed under FOR FURTHER INFORMATION CONTACT , individuals with disabilities can obtain this document in an accessible format. The Department will provide the requestor with an accessible format that may include Rich Text Format (RTF) or text format (txt), a thumb drive, an MP3 file, braille, large print, audiotape, or compact disc, or other accessible format.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register . You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site you can view this document, as well as all other documents of this Department published in the Federal Register , in text or Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

Throughout this document wherever “we,” “us,” or “our” is used, we mean EPA.

In CAA section 169A, Congress created a program for protecting visibility in national parks and wilderness areas. This section of the CAA establishes “as a national goal the prevention of any future, and the remedying of any existing, impairment of visibility in mandatory Class I Federal areas which impairment results from manmade air pollution.”  1

EPA promulgated a rule to address regional haze on July 1, 1999. 2 The Regional Haze Rule revised the existing visibility regulations  3 to integrate provisions addressing regional haze and established a comprehensive visibility protection program for Class I areas. The requirements for regional haze, found at 40 CFR 51.308 and 51.309, are included in EPA's visibility protection regulations at 40 CFR 51.300-51.309. EPA most recently revised the Regional Haze Rule on January 10, 2017. 4

The CAA requires each state to develop a SIP to meet various air quality requirements, including protection of visibility. 5 Regional haze SIPs must assure reasonable progress toward the national goal of achieving natural visibility conditions in Class I areas. A state must submit its SIP and SIP revisions to EPA for approval. Once approved, a SIP is enforceable by EPA and citizens under the CAA; that is, the SIP is federally enforceable. If a state fails to make a required SIP submittal, or if we find that a state's required submittal is incomplete or not approvable, then we must promulgate a FIP to fill this regulatory gap, unless the state corrects the deficiency. 6

Section 169A of the CAA directs EPA to require states to evaluate the use of retrofit controls at certain larger, often uncontrolled, older stationary sources in order to address visibility impacts from these sources. Specifically, section 169A(b)(2)(A) of the CAA requires state implementation plans to contain such measures as may be necessary to make reasonable progress toward the natural visibility goal, including a requirement that certain categories of existing major stationary sources built between 1962 and 1977 procure, install, and operate the “Best Available Retrofit Technology” (BART) as determined by the states. Under the Regional Haze Rule, states are directed to conduct BART determinations for such “BART-eligible” sources that may reasonably be anticipated to cause or contribute to any visibility impairment in a Class I area. 7

Rather than requiring source-specific BART controls, states also have the flexibility to adopt alternative measures, as long as the alternative provides greater reasonable progress towards natural visibility conditions than BART ( i.e., the alternative must be “better than BART”). 8

In addition to the BART requirements, the CAA's visibility protection provisions also require that states' regional haze SIPs contain a “long-term (ten to fifteen years) strategy for making reasonable progress toward meeting the national goal. . ..”  9 The long-term strategy must address regional haze visibility impairment for each mandatory Class I area within the state and for each mandatory Class I area located outside the state that may be affected by emissions from the state. It must include the enforceable emission limitations, compliance schedules, and other measures necessary to achieve the reasonable progress goals. 10 The reasonable progress goals, in turn, are calculated for each Class I area based on the control measures states have selected by analyzing the four statutory “reasonable progress” factors, which are “the costs of compliance, the time necessary for compliance, the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any existing source subject to such requirement.”  11 Thus, the four reasonable progress factors are considered by a state in setting the reasonable progress goal by virtue of the state having first considered them, and certain other factors listed in § 51.308(d)(3) of the Regional Haze Rule, when deciding what controls are to be included in the long-term strategy. Then, the numerical levels of the reasonable progress goals are the predicted visibility outcome of implementing the long-term strategy in addition to ongoing pollution control programs stemming from other CAA requirements.

Unlike BART determinations, which are required only for the first regional haze planning period SIPs, 12 states are required to submit updates to their long-term strategies, including updated reasonable progress analyses and reasonable progress goals, in the form of SIP revisions on July 31, 2021, and at specific intervals thereafter. 13 In addition, each state must periodically submit a report to EPA at five-year intervals beginning five years after the submission of the initial regional haze SIP, evaluating the state's progress towards meeting the reasonable progress goals for each Class I area within the state. 14

CAA section 110(a)(2) requires that SIPs, including regional haze SIPs, contain monitoring, record keeping, and reporting provisions sufficient to ensure emission limits are practically enforceable. 15 Accordingly, 40 CFR part 51, subpart K, Source Surveillance, requires the SIP to provide for monitoring the status of compliance with the regulations in it, including “[p]eriodic testing and inspection of stationary sources,”  16 and “legally enforceable procedures” for recordkeeping and reporting. 17 Furthermore, 40 CFR part 51, appendix V, Criteria for Determining the Completeness of Plan Submissions, states in section 2.2 that complete SIPs contain: “(g) Evidence that the plan contains emission limitations, work practice standards and recordkeeping/reporting requirements, where necessary, to ensure emission levels”; and “(h) Compliance/enforcement strategies, including how compliance will be determined in practice.”

The Regional Haze Rule requires that a state consult with Federal Land Managers (FLMs) before adopting and submitting a required SIP or SIP revision. Under 40 CFR 51.308(i)(2), a state must provide an opportunity for consultation no less than 60 days prior to holding any public hearing or other public comment opportunity on a SIP or SIP revision for regional haze. Further, when considering a SIP or SIP revision, a state must include in its proposal a description of how it addressed any comments provided by the FLMs. 18

Under CAA section 110( l ), EPA cannot approve a plan revision “if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 7501 of this title), or any other applicable requirement of this chapter.”  19 CAA section 110( l ) applies to all requirements of the CAA and to all areas of the country, whether attainment, nonattainment, unclassifiable or maintenance for one or more of the six criteria pollutants. EPA interprets section 110( l ) as applying to all National Ambient Air Quality Standards (NAAQS) that are in effect, including those for which SIP submissions have not been made. 20 However, the level of rigor needed for any CAA section 110( l ) demonstration will vary depending on the nature and circumstances of the revision.

The Governor of North Dakota originally submitted a Regional Haze SIP to EPA on March 3, 2010, followed by SIP Supplement No. 1 submitted on July 27, 2010, and SIP Amendment No. 1 submitted on July 28, 2011 (collectively, the “2010 Regional Haze SIP”). The State's 2010 Regional Haze SIP was submitted to meet the requirements of the regional haze program for the first regional haze planning period. Among other things, the 2010 Regional Haze SIP included North Dakota's determination under the reasonable progress requirements found at 40 CFR 51.308(d)(1) that no additional nitrogen oxide (NO X ) emissions controls were warranted at Antelope Valley Station Units 1 and 2.

On April 6, 2012, EPA promulgated a final rule titled, “Approval and Promulgation of Implementation Plans; North Dakota; Regional Haze State Implementation Plan; Federal Implementation Plan for Interstate Transport of Pollution Affecting Visibility and Regional Haze; Final Rule,” (2012 Final Rule). 21 The 2012 Final Rule approved in part and disapproved in part the 2010 Regional Haze SIP. As relevant here, EPA disapproved North Dakota's reasonable progress determination that no additional NO X emissions controls were warranted at Antelope Valley Station.

Concurrent with disapproving North Dakota's NO X reasonable progress determination for Antelope Valley Station, EPA promulgated a FIP in the 2012 Final Rule that imposed a NO X reasonable progress emission limit of 0.17 lb/MMBtu (30-day rolling average) each for Units 1 and 2 based on the emission reductions achievable through the installation and operation of new low-NO X burners and changes to the overfire air system. The FIP required Basin Electric Power Cooperative, the owner of Antelope Valley Station, to comply with the emission limit and related monitoring, record keeping, and reporting requirements as expeditiously as practicable, but no later than July 31, 2018. 22

Subsequently, several petitioners challenged various aspects of the 2012 Final Rule in the United States Court of Appeals for the Eighth Circuit. Pertinent to this proposal, the State of North Dakota challenged EPA's disapproval of the State's reasonable progress determination that no additional NO X emissions controls were warranted at Antelope Valley Station Units 1 and 2. The State also challenged EPA's determination in its FIP that an emission limit of 0.17 lb/MMBtu (30-day rolling average) was necessary to satisfy the reasonable progress requirements.

On September 23, 2013, the Eighth Circuit concluded that EPA properly disapproved portions of the 2010 Regional Haze SIP, including the reasonable progress determination for Antelope Valley Station Units 1 and 2. The court also upheld EPA's FIP promulgating an emission limit of 0.17 lb/MMbtu (30-day rolling average) for Antelope Valley Station Units 1 and 2. However, the court vacated and remanded EPA's FIP promulgating an emission limit of 0.13 lb/MMbtu (30-day rolling average) for Coal Creek Station, which is another coal-fired power plant located in North Dakota and was addressed in the 2010 Regional Haze SIP and the 2012 Final Rule. 23

On August 3, 2020, North Dakota submitted Amendment No. 2 to the Regional Haze SIP, which incorporates the 2012 FIP requirements for Antelope Valley Station. 24 Amendment No. 2 is the subject of this proposed action.

Sections 110(a)(2) and 110( l ) of the CAA, 40 CFR 51.102, and appendix V to part 51 require that a state provide reasonable notice and a public hearing before adopting a SIP revision and submitting it to EPA. North Dakota provided notice, held a public hearing on February 7, 2020, and accepted comments on Amendment No. 2 from December 17, 2019 through February 17, 2020.

Antelope Valley Station Units 1 and 2 are tangentially-fired boilers, each having a generating capacity of 435 megawatts (MW). These boilers are not BART-eligible because they commenced operation in the 1980s, after the 15-year period specified in the CAA and the Regional Haze Rule. The boilers burn North Dakota lignite. In the 2010 Regional Haze SIP, North Dakota identified Antelope Valley Station Units 1 and 2 as sources that potentially affect visibility in Class I areas that should be evaluated for reasonable progress controls. 25

The requirements of the 2012 FIP for Antelope Valley Station Units 1 and 2, including the emission limit of 0.17 lb/MMBtu (30-day rolling average), and associated monitoring, recordkeeping, and reporting, are the same requirements incorporated into the State's Permit to Construct number PTC 20031, which is part of Amendment No. 2. 26 Thus, for the same reasons we concluded in our 2012 Final Rule that this emission limit and the corresponding monitoring, recordkeeping, and reporting requirements are appropriate and reasonable under 40 CFR 51.308(d), we continue to find that they satisfy reasonable progress requirements for NO X for the first planning period at Antelope Valley Station. 27 Accordingly, we propose to approve Amendment No. 2.

As described in section I.E of this proposed rule, the Regional Haze Rule grants the FLMs a special role in the review of regional haze SIPs. Under 40 CFR 51.308(i)(2), North Dakota was required to provide the FLMs with an opportunity for consultation in development of the State's proposed SIP revision. By email correspondence on December 4, 2019, North Dakota provided the FLMs the opportunity to comment on Amendment No. 2. 28 The National Park Service responded by email on January 6, 2020, indicating its intent to comment on the State's review of control measures for Antelope Valley Station as part of the second regional haze planning period. No other FLMs commented. EPA proposes to find that North Dakota fulfilled its requirement to consult with the FLMs on the SIP revision.

We are proposing to approve the following elements of Amendment No. 2 to the North Dakota Regional Haze SIP:

• A NO X emission limit of 0.17 lb/MMBtu (30-day rolling average) each for Antelope Valley Station Units 1 and 2 with the emission limit to apply at all times including during periods of startup, shutdown, emergency, and malfunction.

• The associated monitoring, recordkeeping, and reporting requirements for Antelope Valley Station Units 1 and 2.

• Compliance with the emission limit and monitoring, recordkeeping, and reporting requirements in the SIP revision no later than when EPA finalizes this proposed action.

• Related nonregulatory provisions as reflected in additions and changes to the 2010 Regional Haze SIP in section 9.5.1 (Antelope Valley Station), Appendix J.1.6 (FLM Comments on Amendment No. 2 and Department's Response), and Appendix J.3.4 (U.S. Environmental Protection Agency Comments on Amendment No. 2 and Department's Response).

We are also proposing to restore certain other nonregulatory text amendments under 40 CFR 52.1820(e). The proposed amendments include incorporation of those previously approved in our 2012 Final Rule. EPA partially approved these provisions as meeting the requirements of the CAA and applicable regulations in previous actions;  29 however, we inadvertently deleted all approved provisions relevant to regional haze in 40 CFR 52.1820(e) when updating the paragraph in 2015. 30 We are proposing to remedy that error here; however, in this proposed action, we are not otherwise addressing or reopening for comment any of the previously approved provisions. We will deem any comments on these provisions beyond the scope of this action.

Because we are proposing to find that Amendment No. 2 satisfies the reasonable progress requirements for NO X at Antelope Valley Station Units 1 and 2 for the first regional haze planning period, we are also proposing to withdraw the corresponding portions of the North Dakota Regional Haze FIP at 40 CFR 52.1825.

In addition, EPA plans to remove from the Code of Federal Regulations the FIP requirements for Coal Creek Station that the Eighth Circuit vacated in the North Dakota decision. 31 Because this is a purely ministerial action to ensure that the Code of Federal Regulations reflects current case law, we are not inviting public comment on our removal of the vacated language. Note that North Dakota's BART obligation for Coal Creek Station remains outstanding.

We are not proposing any other changes to our 2012 Final Rule because no other changes were addressed in Amendment No. 2 or required by the North Dakota decision. Accordingly, all other parts of our 2012 FIP, including our determinations regarding North Dakota's reasonable progress goals, long-term strategy, and interstate transport obligations under CAA section 110(a)(2)(D)(i)(II) concerning visibility protection, 32 remain in place. 33 We are not reopening or taking comment on these aspects of our 2012 Final Rule. We will deem any comments on these issues beyond the scope of this action.

Under CAA section 110( l ), EPA cannot approve a plan revision “if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 7501 of this title), or any other applicable requirement of this chapter.”  34 The previous sections of this document and our 2011 proposed rule and 2012 Final Rule explain how the proposed SIP revision will comply with applicable regional haze requirements and general implementation plan requirements, such as enforceability. 35 Additionally, there are no NAAQS nonattainment or maintenance areas in North Dakota. 36 Approval of Amendment No. 2 would merely transfer the emission limit and associated monitoring, recordkeeping, and reporting requirements for Antelope Valley Station Units 1 and 2 currently found in EPA's 2012 FIP  37 into North Dakota's Regional Haze SIP. Thus, there will be no change in air quality requirements or to actual emissions from the Antelope Valley Station. As such, the SIP revision will not interfere with attainment of the NAAQS, reasonable further progress, or other CAA requirements. Accordingly, we propose to find that an approval of Amendment No. 2 and concurrent withdrawal of the corresponding FIP, are not anticipated to interfere with applicable requirements of the CAA and therefore CAA section 110( l ) does not prohibit approval of this SIP revision.

In this rule, EPA is proposing to include, in a final EPA rule, regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference the amendments described in sections II and III. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 8 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

This action is not a “significant regulatory action” under the terms of Executive Order 12866  38 and was therefore not submitted to the Office of Management and Budget (OMB) for review. This proposed rule applies to only a single facility in North Dakota: Antelope Valley Station. It is therefore not a rule of general applicability.

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

This proposed action does not impose an information collection burden under the provisions of the Paperwork Reduction Act (PRA). 39 A “collection of information” under the PRA means “the obtaining, causing to be obtained, soliciting, or requiring the disclosure to an agency, third parties or the public of information by or for an agency by means of identical questions posed to, or identical reporting, recordkeeping, or disclosure requirements imposed on, ten or more persons, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit.”  40 Because this proposed rule revises regional haze requirements reporting requirements for a single facility, the PRA does not apply.

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations and small governmental jurisdictions.

For purposes of assessing the impacts of this proposed rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This proposed rule does not impose any requirements or create impacts on small entities as no small entities are subject to the requirements of this proposed rule.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local and tribal governments and the private sector. Under section 202 of UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for final rules with “Federal mandates” that may result in expenditures to state, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more (adjusted for inflation) in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 of UMRA do not apply when they are inconsistent with applicable law. Moreover, section 205 of UMRA allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory actions with significant federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

Under Title II of UMRA, EPA has determined that this proposed rule does not contain a federal mandate that may result in expenditures that exceed the inflation-adjusted UMRA threshold of $100 million  41 by state, local, or tribal governments or the private sector in any one year. The proposed approval of Amendment No. 2, and simultaneous withdraw of corresponding portions of our FIP, would not result in private sector expenditures. Additionally, we do not foresee significant costs (if any) for state and local governments. Thus, this proposed rule is not subject to the requirements of sections 202 or 205 of UMRA. This proposed rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments.

Executive Order 13132, Federalism, 42 revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.”  43 “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”  44 Under Executive Order 13132, EPA may not issue a regulation “that has federalism implications, that imposes substantial direct compliance costs, . . . and that is not required by statute, unless [the Federal Government provides the] funds necessary to pay the direct [compliance] costs incurred by the State and local governments,” or EPA consults with state and local officials early in the process of developing the final regulation. 45 EPA also may not issue a regulation that has federalism implications and that preempts state law unless the agency consults with state and local officials early in the process of developing the final regulation.

This action does not have federalism implications. The proposed rule will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, Executive Order 13132 does not apply to this action.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments,” requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.”  46 This proposed rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments. Thus, Executive Order 13175 does not apply to this rule.

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997). EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the executive order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.

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

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires federal agencies to evaluate existing technical standards when developing a new regulation. Section 12(d) of NTTAA, Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to consider and use “voluntary consensus standards” in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the agency decides not to use available and applicable voluntary consensus standards.

This proposed rulemaking does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

Executive Order 12898, establishes federal executive policy on environmental justice. 47 Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies and activities on minority populations and low-income populations in the United States.

In 2012, we determined that our final action would “not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increased the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population.”  48 Because this proposed rule does not alter requirements for Antelope Valley Station, and only transfers them from the FIP to the SIP, our determination is unchanged from that in 2012. EPA, however, will consider any input received during the public comment period regarding environmental justice considerations.

40 CFR part 52 is proposed to be amended as follows:

The additions read as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Ohio identified the Master Metals, Incorporated Facility (Master Metals), a former secondary lead smelter in Cleveland, Ohio, as the primary cause of high monitored lead concentrations in Cuyahoga County. On October 14, 1992, Ohio issued an order to Master Metals requiring the facility to shut down unless specific improvements were made to the facility's pollution controls. On August 5, 1993, Ohio ordered an immediate shut down of the Master Metals facility and prohibited any activities to be conducted at the facility until required improvements were made. The facility did not reopen.

Effective August 26, 2011, Ohio rescinded OAC rules 3745-71-05 and 3745-71-06, as part of a 5-year review of its rules. OAC 3745-71-06, “Source specific emission limits,” contained the lead and particulate matter emission limits plus operational limits only applicable to Master Metals. OAC 3745-71-05, “Emissions test methods and procedures and reporting requirements for new and existing sources,” provided the test methods and other elements supporting OAC 3745-71-06. Ohio determined that these rules should be rescinded because they were facility-specific to Master Metals, which no longer exists, and has requested removal of these rules from the SIP.

Ohio also rescinded OAC rule 3745-71-01, “Definitions,” effective on August 26, 2011. Ohio requests the removal of OAC 3745-71-01 from the SIP because its definitions and referenced documents are unnecessary given the other rules removed from OAC chapter 71.

Finally, Ohio requests the removal of OAC rule 3745-71-03, “Methods of ambient air measurement,” effective on August 26, 2011. The air quality sampling requirements in OAC 3745-71-03 have been consolidated into OAC rule 3745-25-02, which was approved into the SIP on October 26, 2010 (75 FR 65572). Thus, the lead monitoring requirements in OAC rule 3745-71-03 are duplicative since the air quality sampling requirements are also in the Ohio SIP at OAC rule 3745-25-02.

In the request to remove OAC rules 3745-71-01, 3745-71-03, 3745-71-05, and 3745-71-06 from Ohio SIP, Ohio provided an analysis pursuant to Clean Air Act (CAA) section 110(l). CAA section 110(l) prohibits EPA from approving a SIP revision if that revision would interfere with any applicable requirement concerning attainment, reasonable further progress, or any other CAA requirement.

Ohio states that removing the rules from its SIP will not result in increased emissions or risk National Ambient Air Quality Standard violations because the facility has been permanently shut down and thus has no emissions. Therefore, OAC rules 3745-71-05 and 3745-71-06 can be removed without an effect on emissions. The monitoring requirements in OAC rule 3745-71-03 are also approved into its SIP as OAC rule 3745-25-02, which will keep the requirements within the SIP. Ohio found that the definitions and references of OAC rule 3745-71-01 can be removed from its SIP because they are not necessary due to the removal of the other rules from the SIP.

The Master Metals facility has permanently shut down and the site has been remediated. Thus, the source of the lead and particulate matter emissions controlled by the OAC Chapter 3745-71 rules is gone and there are no longer any emissions from it.

EPA concurs with Ohio on the removal of OAC rule 3745-71-06 from the SIP. The facility is shut down and the site has been put into new use. EPA also concurs with Ohio on the removal of OAC rules 3745-71-01 and 3745-71-05 from the SIP. OAC rule 3745-71-01 contains definitions and references to Federal rules. Those definitions are not needed with the removal of OAC rule 3745-71-06. OAC rule 3745-71-05 provides the lead emissions test procedures and reporting requirements. The shutdown of Master Metals and the removal of OAC rule 3745-71-06 results in no lead emissions to monitor or report.

EPA approved OAC rule 3745-25-02, which includes lead air quality sampling requirements, into the SIP on October 26, 2010 (75 FR 65572). The requirements of OAC rule 3745-71-03 are duplicated in OAC rule 3745-25-02 intro and (F)(2). The lead air quality sampling requirements are in the SIP with OAC rule 3745-25-02, which means OAC rule 3745-71-03 can be removed while those requirements will remain in the SIP. Thus, EPA agrees with Ohio that OAC rule 3745-71-03 can be removed from the SIP.

For the reasons set forth above EPA is proposing to approve Ohio's request.

EPA is proposing to approve the removal of OAC rules 3745-71-01, 3745-71-03, 3745-71-05, and 3745-71-06 from the Ohio SIP.

In this document, EPA is proposing to amend regulatory text that includes incorporation by reference. As described in the proposed amendments to 40 CFR part 52 set forth below, EPA is proposing to remove provisions of the EPA-Approved Ohio Regulations from the Ohio State Implementation Plan, which is incorporated by reference in accordance with the requirements of 1 CFR part 51. EPA has made, and will continue to make, the SIP generally available through www.regulations.gov and at the EPA Region 5 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

For the reasons stated in the preamble, EPA proposes to amend 40 CFR part 52 as set forth below:

On January 20, 2021, President Biden issued “Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” (86 FR 7037, January 25, 2021) (“Executive Order 13990”). Section 2 of Executive Order 13990 directs the heads of all agencies to immediately review regulations that may be inconsistent with, or present obstacles to, the policy set forth in Section 1 of Executive Order 13990. In the January 20, 2021 White House “Fact Sheet: List of Agency Actions for Review,” the “National Primary Drinking Water Regulations: Lead and Copper Rule Revisions” (LCRR) is specifically identified as an agency action that will be reviewed in conformance with Executive Order 13990 ( https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/fact-sheet-list-of-agency-actions-for-review/ ). Also on January 20, 2021, Ronald A. Klain, the Assistant to the President and Chief of Staff, issued a Memorandum for the Heads of Executive Departments and Agencies entitled, “Regulatory Freeze Pending Review” (White House memorandum) (86 FR 7424, January 28, 2021); the memorandum directs agencies to consider postponing the effective date of regulations that have been published in the Federal Register , but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy the rules may raise. In addition, the LCRR has been challenged in court by the Natural Resources Defense Council, Newburgh Clean Water Project, NAACP, Sierra Club, United Parents Against Lead and the Attorneys General of New York, California, Illinois, Maryland, Minnesota, New Jersey, Oregon, Pennsylvania, Wisconsin, and the District of Columbia. Those cases have been consolidated in Newburgh Clean Water Project, et al. v EPA , No. 21-1019 (D.C. Cir.). EPA also received a letter on March 4, 2021 from 36 organizations and five individuals requesting that EPA suspend the March 16, 2021 effective date of the LCRR to review the rule and initiate a new rulemaking. EPA also received a letter on February 4, 2021 from the American Water Works Association requesting that EPA not delay the rule.

Consistent with Executive order 13990 and the White House memorandum, EPA has decided to review the LCRR, which was published in the Federal Register on January 15, 2021. The Agency is simultaneously publishing, in the “Final Rules” section of this issue of the Federal Register , a final rule providing for a short delay of the LCRR's effective date to June 17, 2021, while EPA seeks comment on this proposal to extend the effective date further to December 16, 2021. The purpose of an extension of the effective date to December 16, 2021, is to allow EPA to conduct a review of the LCRR and consult with stakeholders, including those who have been historically underserved by, or subject to discrimination in, Federal policies and programs prior to the LCRR going into effect. The LCRR made extensive and significant changes to the existing regulatory requirements, involving complex factual, legal, and policy issues. This proposed extension of the effective date would allow EPA adequate time to conduct a thorough review of this complex set of requirements to assess whether the LCRR is inconsistent with, or presents obstacles to, the policy set forth in Section 1 of the Executive Order 13990, and to consult with stakeholders in that review prior to the rule going into effect.

The LCRR's effective date (when the rule is codified into the Code of Federal Regulations ) is different from the compliance date. Section 1412(b)(10) of the Safe Drinking Water Act specifies that drinking water regulations shall generally take effect ( i.e., require compliance) three years after the date the regulation is promulgated. This 3-year period is used by states to adopt laws and regulations in order to obtain primary enforcement responsibility for the rule and by water systems to take any necessary actions to meet the compliance deadlines in the rule. EPA is also proposing to extend the January 16, 2024, compliance dates in the LCRR by nine months to September 16, 2024, to correspond to the proposed delay in the effective date (nine months from the original effective date of March 16, 2021). This proposed extension would have the effect of maintaining the same time period between the effective date and the compliance date in the LCRR that was published on January 15, 2021. EPA expects that the duration of the compliance date extension would provide drinking water systems with adequate time to take actions needed to assure compliance with the LCRR after it takes effect. It should also provide states with primary enforcement responsibility adequate time to revise their primacy program in light of EPA's final LCRR.

The impact of lead exposure, including through drinking water, is a public health issue of paramount importance and its adverse effects on children and the general population are serious and well known. For example, exposure to lead is known to present serious health risks to the brain and nervous system of children. Lead exposure causes damage to the brain and kidneys and can interfere with the production of red blood cells that carry oxygen to all parts of the body. Lead has acute and chronic impacts on the body. The most robustly studied and most susceptible subpopulations are the developing fetus, infants, and young children. Even low level lead exposure is of particular concern to children because their growing bodies absorb more lead than adults do, and their brains and nervous systems are more sensitive to the damaging effects of lead. EPA estimates that drinking water can make up 20 percent or more of a person's total exposure to lead. Infants who consume mostly formula mixed with tap water can, depending on the level of lead in the system and other sources of lead in the home, receive 40 percent to 60 percent of their exposure to lead from drinking water used in the formula. Scientists have linked lead's effects on the brain with lowered intelligence quotient (IQ) and attention disorders in children. Young children and infants are particularly vulnerable to lead because the physical and behavioral effects of lead occur at lower exposure levels in children than in adults. During pregnancy, lead exposure may affect prenatal brain development. Lead is stored in the bones and it can be released later in life. Even at low levels of lead in blood, there is an increased risk of health effects in children ( e.g., less than 5 micrograms per deciliter) and adults ( e.g., less than 10 micrograms per deciliter).

The 2013 Integrated Science Assessment for Lead and the HHS National Toxicology Program Monograph on Health Effects of Low-Level Lead have both documented the association between lead and adverse cardiovascular effects, renal effects, reproductive effects, immunological effects, neurological effects, and cancer. EPA's Integrated Risk Information System (IRIS) Chemical Assessment Summary provides additional health effects information on lead.

Because of disparities in the quality of housing, community economic status, and access to medical care, lead in drinking water (and other media) disproportionately affects lower-income people. Minority and low-income children are more likely to live in proximity to lead-emitting industries and to live in urban areas, which are more likely to have contaminated soils, contributing to their overall exposure. Additionally, non-Hispanic black individuals are more than twice as likely as non-Hispanic whites to live in moderately or severely substandard housing which is more likely to present risks from deteriorating lead based paint. The disparate impacts for low-income and minority populations may be exacerbated because of their more limited resources for remediating the sources of lead such as lead service lines.

For example, stakeholders have raised concerns that to the extent water systems rely on homeowners to pay for replacement of privately owned portions of lines, lower-income homeowners will be unable to replace lines, resulting in disparate levels of protection. Moreover, the crisis in Flint, Michigan, has brought increased attention to the challenge of lead in drinking water systems across the country.

Given the paramount significance to the public's health for ensuring that lead in drinking water is adequately addressed under the Safe Drinking Water Act, and the concerns raised by litigants and other stakeholders about the LCRR, it is critically important that EPA's review of the LCRR be deliberate and have the benefit of meaningful engagement with the affected public, including underserved communities disproportionately affected by exposure to lead.

In conducting its review, EPA will carefully consider the concerns raised by stakeholders, including disadvantaged communities that have been disproportionately impacted, states that administer national primary drinking water regulations, consumer and environmental organizations, water systems and other organizations. There is a wide range of stakeholder views regarding the LCRR; some argue that it does not sufficiently protect the public health while others raise concerns that the rule imposes burdens that states and water systems do not have the resources to address. For example, a primary source of lead exposure in drinking water is lead service lines. Stakeholders have raised concerns that despite the significance of this source of lead, the LCRR fails to require, or create adequate incentives, for public water systems to replace all of their service lines. In addition, stakeholders have raised concerns that portions of many lead service lines are privately owned and disadvantaged homeowners may not be able to afford the cost of replacing their portion of the lead service line and may not have this significant source of lead exposure removed if their water system does not provide financial assistance. Other stakeholders have raised concerns regarding the significant costs public water systems and communities would face to replace all lead service lines. Based upon information from the Economic Analysis for the Final Lead and Copper Rule, EPA estimates that there are between 6.3 and 9.3 million lead service lines nationally and the cost of replacing all of these lines is between $25 and $56 billion.

Another key element of the LCRR relates to requiring public water systems to conduct an inventory of lead service lines so that systems know the scope of the problem, can identify potential sampling locations and can communicate with households that are or may be served by lead service lines to inform them of the actions they may take to reduce their risks. Some stakeholders have raised concerns that the rule's inventory requirements are not sufficiently rigorous to ensure that consumers have access to useful information about the locations of lead service lines in their community. Other stakeholders have raised concerns that water systems do not have accurate records about the composition of privately owned portions of service lines and that have concerns about public water systems publicly releasing information regarding privately owned property.

A core component of the LCRR is maintaining an “action level” of 15 parts per billion (ppb), which serves as a trigger for certain actions by public water systems such as lead service line replacement and public education. The LCRR did not modify the existing lead action level but established a 10 ppb “trigger level” to require public water systems to initiate actions to decrease their lead levels and take proactive steps to remove lead from the distribution system. Some stakeholders support this new trigger level while others argue that EPA has unnecessarily complicated the regulation. Some stakeholders suggest that the Agency should eliminate the new trigger level and instead lower the 15 ppb action level.

Some stakeholders have indicated that the Agency has provided too much flexibility for small water systems and that it is feasible for many of the systems serving 10,000 or fewer customers to take more actions to reduce drinking water lead levels than required under the LCRR. Other stakeholders have highlighted the limited technical, managerial, and financial capacity of small water systems and support the flexibilities provided by the LCRR to all of these small systems.

Stakeholders have divergent views of the school and childcare sampling provisions of the LCRR; some believe that the sampling should be more extensive, while others do not believe that community water systems should be responsible for it and that such a program would be more effectively carried out by the school and childcare facilities.

Finally, some stakeholders have expressed concerns that the Agency did not provide adequate opportunities for a public hearing and did not provide a complete or reliable evaluation of the costs and benefits of the proposed LCRR.

The significant issues identified by stakeholders warrant careful and considerate review of the rule, as well as relief from the compliance deadlines as EPA considers the issues raised by stakeholders and litigants. After publication of a final national primary drinking water rule, states and water systems commence activities to achieve compliance with the rule by the deadline established in the LCRR based on the requirements of Section 1412(b)(10) of SDWA. States will undertake actions to obtain primacy to implement the regulations and water systems will begin the actions to prepare lead service line inventories, and as appropriate to prepare lead service line replacement plans. The postponement of compliance dates through this action is intended as a stopgap measure to prevent the unnecessary expenditure of resources by water systems and states on those efforts until EPA completes its review of the LCRR and can provide some certainty that the LCRR requirements will not be changed. Without a delay in the effective date of the rule, regulated entities may make decisions and spend scarce resources on compliance obligations that could change at the end of EPA's review period.

Section 1412(b)(9) of the Safe Drinking Water Act authorizes EPA to review and revise national primary drinking water rules “as appropriate” and directs that any revision “shall maintain, or provide for greater, protection of the health of persons.” 42 U.S.C. 300g-1(b)(9). This proposed delay is consistent with EPA's exercise of this discretionary authority to revise its drinking water rules. As noted above, some stakeholders have raised questions about the lead service line replacement requirements and the small system flexibility requirements, including whether they are consistent with the “anti-backsliding” standard in section 1412(b)(9). EPA would evaluate those concerns during its review of the rule.

EPA is requesting public comment on this additional 6-month extension of the June 17, 2021, effective date to December 16, 2021, and the 9-month extension of the current compliance date of January 16, 2024, to September 16, 2024, respectively. EPA will engage with stakeholders during the 9 month review period to evaluate the rule and determine whether to initiate a process to revise components of the rule. If EPA decides it is appropriate to propose revisions to the rule, it will consider whether to further extend compliance dates for those specific obligations.

Specifically, EPA is seeking comment on the duration of the effective date and compliance date extensions and whether the compliance date extension should apply to the entire LCRR or certain components of the final rule. EPA intends to issue a final decision on this proposal prior to the June 17, 2021, effective date promulgated in the “Final Rules” section of this issue of the Federal Register .

Submit your written comments, identified by Docket ID No. HQ-OW-2017-0300 at https://www.regulations.gov (our preferred method), or the other methods identified in the ADDRESSES section. Once submitted, comments cannot be edited or removed from the docket. EPA may publish any comment received to its public docket. Do not submit to EPA's docket at https://www.regulations.gov any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

EPA is temporarily suspending its Docket Center and Reading Room for public visitors, with limited exceptions, to reduce the risk of transmitting COVID-19. Our Docket Center staff will continue to provide remote customer service via email, phone, and webform. We encourage the public to submit comments via https://www.regulations.gov/ as there may be a delay in processing mail and faxes. Hand deliveries or couriers will be received by scheduled appointment only. For further information and updates on EPA Docket Center services, please visit us online at https://www.epa.gov/dockets. EPA continues to carefully and continuously monitor information from the Centers for Disease Control and Prevention (CDC), local area health departments, and our Federal partners so that we can respond rapidly as conditions change regarding COVID-19.

This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. Any changes made in response to OMB recommendations have been documented in the docket.

This action does not impose an information collection burden under the PRA. This action does not contain any information collection activities.

I certify that this action if finalized would not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This proposed action would not impose any requirements on anyone, including small entities.

This proposed action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538. The proposed action would impose no enforceable duty on any State, local or tribal governments or the private sector.

This proposed action does not have federalism implications. It would not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This proposed action does not have tribal implications as specified in Executive Order 13175. This proposed action is not subject to Executive Order 13175 because it would not have a substantial direct effect on tribes or on the relationship between the national government and tribes.

EPA interprets Executive Order 13045 as applying only to those regulatory actions that are economically significant, per the definition of “covered regulatory action” in Section 2-202 of the Executive Order. This proposed action is not subject to Executive Order 13045 because the proposed delays of the effective date and the compliance date are not economically significant.

This proposed action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This proposed rulemaking does not involve technical standards.

This proposed action is not subject to Executive Order 12898 (59 Fed 7629, Feb. 16, 1994) because it does not establish an environmental health or safety standard.

In the April 17, 2015 Disposal of Coal Combustion Residuals from Electric Utilities final rule, EPA established national criteria for CCR landfills and surface impoundments. The final rule also established a beneficial use definition to distinguish legitimate beneficial use from disposal and provided requirements for the management of piles of CCR. These specific provisions of the 2015 rule were remanded back to EPA on August 21, 2018, by the U.S. Court of Appeals for the District of Columbia Circuit. To help reconsider these remanded provisions most recently, on December 22, 2020, EPA published a Notice of Data Availability (NODA). See 85 FR 83478. In the NODA, EPA provided public notice of the new information and data the Agency obtained since these provisions were remanded. The new information and data were included in the NODA's docket at EPA-HQ-OLEM-2020-0463. In the NODA, EPA sought public comment on whether these new information and data should inform the Agency's reconsideration of the remanded provisions. Furthermore, EPA solicited additional information and data from the public that may further help inform the Agency's reconsideration of the remanded provisions.

The comment period ended on February 22, 2021. On February 15, 2021, Earthjustice formally requested an additional 60 days to review the NODA and the information in the docket for the NODA; consider the Agency's request for information; and, develop and submit comments. Earthjustice's request has been included in the NODA's docket. In its request, Earthjustice stated that the large volume of documents in the docket requiring review, the scope of additional information being requested by EPA, and the timeline conflict with the development of submissions for the Legacy Impoundment advance notice of proposed rulemaking (85 FR 65015 October 14, 2020), which closed on February 12, 2021, impeded development of comprehensive responses to the NODA request. Earthjustice stated that additional time will result in the Agency receiving more robust data and information submissions from Earthjustice and other environmental organizations. Following this request from Earthjustice, EPA has decided to reopen the comment period for 60 days, from March 12, 2021 to May 11, 2021.

On December 14, 2020, FEMA published a proposed rule titled Cost of Assistance Estimates in the Disaster Declaration Process for the Public Assistance Program. 1 Pursuant to 44 CFR 206.48(a), FEMA considers several factors when determining whether to recommend that the President declare a major disaster authorizing the Public Assistance program. In the Disaster Recovery Reform Act of 2018 (DRRA), 2 Congress directed FEMA to generally review those factors, specifically the estimated cost of the assistance factor, and to update them through rulemaking, as appropriate. 3 Congress also directed FEMA to give greater consideration to the recent multiple disasters and localized impacts factors  4 when evaluating a request for a major disaster. 5

As published on December 14, 2020, FEMA proposes to amend the estimated cost of the assistance factor in 44 CFR 206.48(a)(1) to raise the per capita indicator and the minimum threshold. As is detailed in the proposed rule, the current per capita indicator and minimum threshold do not provide an accurate measure of States' capabilities to respond to disasters. 6 FEMA does not propose to substantively revise the localized impacts factor because it is already sufficiently flexible to address the requirements of section 1232 of the DRRA. FEMA also does not propose any revisions to the recent multiple disasters factor, but requests comment on whether the 12-month time limit currently in place is sufficient to address this factor as required by the DRRA.

DRRA further provided that FEMA shall engage in meaningful consultation with relevant representatives of State, regional, local, and Indian Tribal government stakeholders. 7 In fulfillment of this requirement, FEMA held a public meeting on February 24, 2021, to solicit feedback on the proposed rule from its stakeholders and extended the comment period for the rule from February 12 to March 12, 2021. 8

Due to technical difficulties at the February 24 meeting, FEMA is further extending the comment period until April 12, 2021, and will hold two additional public meetings on March 22 and 23, 2021, to ensure all interested parties have the fullest opportunity to provide comments on the proposed rule. The meeting on March 23 will focus on the potential impact of the proposed rule on Indian Tribal governments and is intended to give Tribal members and representatives a separate opportunity to provide their feedback on the proposed rule. FEMA welcomes input, both at the meetings and in written comments submitted separately, on considerations of local economic factors such as the local assessable tax base; the local sales tax; the median income and poverty rate of the local affected area as it compares to that of the State and the economic health of the State, including such factors as the State unemployment rate compared to the national rate; and how such factors can be used to evaluate whether the affected State and local governments have been overwhelmed. 9

FEMA will carefully consider all relevant comments received during the meetings and during the rest of the comment period when determining whether to issue a final rule.