Background

On December 14, 2004, FSIS issued a final rule establishing January 1, 2008, as the uniform compliance date for new meat and poultry labeling regulations issued between January 1, 2005, and December 31, 2006 (69 FR 74405). The 2004 final rule also provided that the Agency would set uniform compliance dates for new labeling regulations in 2-year increments and periodically issue final rules announcing and requesting comments on those dates. Consistent with the 2004 final rule, the Agency has since published eight rules establishing the uniform compliance dates of January 1, 2010, January 1, 2012, January 1, 2014, January 1, 2016, January 1, 2018, January 1, 2020, January 1, 2022, and January 1, 2024 (72 FR 9651, 73 FR 75564, 75 FR 71344, 77 FR 76824, 79 FR 71007, 81 FR 91670, 83 FR 63052, and 85 FR 81339).

The new uniform compliance date will apply only to final FSIS regulations that require changes in the labeling of meat and poultry products and that are published after January 1, 2023, and before December 31, 2024. For each final rule that requires changes in labeling, FSIS will specifically identify January 1, 2026, as the compliance date. All meat and poultry food products that are subject to labeling regulations issued between January 1, 2023, and December 31, 2024, will be required to comply with these regulations on products introduced into commerce on or after January 1, 2026. If any food labeling regulation involves special circumstances that justify a compliance date other than January 1, 2026, the Agency will determine an appropriate compliance date and will publish that compliance date in the rulemaking.

Two-year increments increase industry's ability to make orderly adjustments to new labeling requirements without exposing consumers to outdated labels. This approach allows meat and poultry producers to plan for the use of label inventories and to develop new labeling materials that meet the new requirements. It also serves to reduce the economic impact of changing labels on both producers and consumers.

In the March 5, 2007, final rule, FSIS received only four comments on the announced uniform compliance dates, all in support. In the March 5, 2007, final rule, FSIS determined that further rulemaking for uniform compliance dates for labeling requirements is unnecessary (72 FR 9651). The Agency received no comments on the 2007 final rule, the comments FSIS received on the 2012 final rule were outside the scope (77 FR 76824), and FSIS received no comments on the 2014 final rule (79 FR 71007) or the 2016 final rule (81 FR 91670). The Agency received four comments on the 2018 final rule, all in support. The Agency received four comments on the 2020 final rule; one was outside the scope of the rulemaking and three were in support of the rule. Consistent with its statement in 2007, FSIS finds that further rulemaking on this matter is unnecessary. However, FSIS is providing an opportunity for comment on the uniform compliance date established in this final rule.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety benefits, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated as a “non-significant” regulatory action under section 3(f) of E.O. 12866. Accordingly, the final rule has not been reviewed by the Office of Management and Budget (OMB) under E.O. 12866.

This rule does not have a significant economic impact on a substantial number of small entities; consequently, a regulatory flexibility analysis is not required (5 U.S.C. 601-612).

FSIS has reviewed this rule under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and has determined that there is no new information collection related to this final rule. Under this final rule, the Agency is establishing January 1, 2026, as the uniform compliance date for new meat and poultry product labeling regulations that will be issued between January 1, 2023, and December 31, 2024. The relevant information collection or record keeping requirements are covered under OMB approval number 0583-0092, Marking, Labeling, and Packaging.

FSIS and USDA are committed to achieving the purposes of the E-Government Act (44 U.S.C. 3601, et seq. ) by, among other things, promoting the use of the internet and other information technologies and providing increased opportunities for citizen access to Government information and services, and for other purposes.

This final rule has been reviewed under E.O. 12988, Civil Justice Reform. Under this rule: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) no administrative proceedings will be required before parties may file suit in court challenging this rule. However, parties may be required to exhaust their administrative remedies before challenging in court any specific agency action that is the subject of an appeal pursuant to this rule.

This rule has been reviewed in accordance with the requirements of E.O. 13175, “Consultation and Coordination with Indian Tribal Governments.” E.O. 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

FSIS has assessed the impact of this rule on Indian tribes and determined that this rule does not, to our knowledge, have tribal implications that require tribal consultation under E.O. 13175. If a tribe requests consultation, FSIS will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified herein are not expressly mandated by Congress.

Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this Federal Register publication on-line through the FSIS web page located at: https://www.fsis.usda.gov/federal-register.

FSIS will also announce and provide a link to it through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to our constituents and stakeholders. The Constituent Update is available on the FSIS web page. Through the web page, FSIS is able to provide information to a much broader, more diverse audience. In addition, FSIS offers an email subscription service which provides automatic and customized access to selected food safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export information, regulations, directives, and notices. Customers can add or delete subscriptions themselves and have the option to password protect their accounts.

In accordance with Federal civil rights law and USDA civil rights regulations and policies, USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.

Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information ( e.g., Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, or staff office; the USDA TARGET Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service at (800) 877-8339.

To file a program discrimination complaint, a complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form, which can be obtained online at https://www.ocio.usda.gov/document/ad-3027, from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant's name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to USDA by:

(1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410; or

(2) Fax: (833) 256-1665 or (202) 690-7442; or

(3) Email: program.intake@usda.gov .

USDA is an equal opportunity provider, employer, and lender.

Authority for This Rulemaking

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 establish Class E airspace extending upward from 700 feet above the surface at Brookings Airport, OR, to support IFR operations at the airport.

The FAA published a notice of proposed rulemaking (NPRM) in the Federal Register for FAA-2022-1031 (87 FR 57160; September 19, 2022) to establish Class E airspace extending upward from 700 feet above the surface at Brookings Airport, OR. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. Two comments were received. One comment was in favor, and the other was not germane to the proposal.

This document amends FAA Order JO 7400.11G, Airspace Designations and Reporting Points, dated August 19, 2022, and effective September 15, 2022. FAA Order JO 7400.11G is publicly available as listed in the ADDRESSES section of this document. FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending 14 CFR part 71 by establishing Class E airspace extending upward from 700 feet above the surface at Brookings Airport, OR. Class E airspace extending upward from 700 feet above the surface is intended to contain departing aircraft until reaching 1,200 feet above the surface, and arriving aircraft below 1,500 feet above the surface. The airspace is centered on the Brookings Airport reference point, with a 6.4-mile radius, excluding the portion northeast of the airport, as circling is not authorized there. A 6.4-mile radius is needed due to rising terrain from north to southeast of the airport, clockwise.

The Class E5 airspace designation is published in paragraph 6005 of FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in FAA Order JO 7400.11.

FAA Order JO 7400.11 is published annually and becomes effective on September 15.

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

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

In consideration of the foregoing, the FAA amends 14 CFR part 71 as follows:

History

The FAA published a final rule in the Federal Register for Docket No. FAA-2022-0932, in the Federal Register (87 FR 74962; December 7, 2022) amending, in part, RNAV routes T-315 and T-325. Subsequent to the publication, the FAA determined that the DVANY, CT, START, IL, and DEBOW, WI, route points were inadvertently identified as WPs, in error. The correct reference for the three points is a Fix. This rule corrects the errors by changing the reference of the DVANY, CT, WP to the DVANY, CT, Fix; the START, IL, WP to the START, IL, Fix; and the DEBOW, WI, WP to the DEBOW, WI, Fix.

These are editorial changes only to match the FAA NASR database information and do not alter the alignment of routes T-315 or T-325.

United States RNAV T-routes are published in paragraph 6011, and RNAV Q-routes are published in paragraph 2006, respectively, of FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022, which is incorporated by reference in 14 CFR 71.1. The RNAV routes listed in this document will be published subsequently in FAA Order JO 7400.11.

The references to the DEVANY, CT, START, IL, and DEBOW, WI, WPs, as published in the Federal Register of December 7, 2022 (87 FR 74962), FR Doc. 2022-26489, is corrected as follows:

On page 74964, correct the table for T-315 JARLO, WV to Burlington, VT (BTV) [Amended] to read:

Electronic Availability

This document and additional information concerning OFAC are available on OFAC's website: www.treas.gov/ofac.

On December 15, 2021, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. ) (IEEPA) and the Fentanyl Sanctions Act (21 U.S.C. 2301 et seq. ), issued Executive Order (E.O.) 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade” (86 FR 71549, December 17, 2021).

In E.O. 14059, the President found that the trafficking into the United States of illicit drugs, including fentanyl and other synthetic opioids, is causing the deaths of tens of thousands of Americans annually, as well as countless more non-fatal overdoses with their own tragic human toll. Drug cartels, transnational criminal organizations, and their facilitators are the primary sources of illicit drugs and precursor chemicals that fuel the current opioid epidemic, as well as drug-related violence that harms communities. The President found that international drug trafficking—including the illicit production, global sale, and widespread distribution of illegal drugs; the rise of extremely potent drugs such as fentanyl and other synthetic opioids; as well as the growing role of internet-based drug sales—constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States, which requires the United States to modernize and update its response to drug trafficking, and declared a national emergency to deal with that threat.

OFAC is issuing the Illicit Drug Trade Sanctions Regulations, 31 CFR part 599 (the “Regulations”), to implement E.O. 14059, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 14059. A copy of E.O. 14059 appears in appendix A to this part.

The Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part 599 with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions. The appendix to the Regulations will be removed when OFAC supplements this part with a more comprehensive set of regulations.

Because the Regulations involve a foreign affairs function, the provisions of E.O. 12866 of September 30, 1993, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

I. Background

The SIP is a living document revised by the State as necessary to address its unique air pollution problems in a manner consistent with requirements of section 110 of the Clean Air Act (CAA), 42 U.S.C. 7410. Therefore, from time to time, the EPA must take action on SIP revisions containing new and/or revised regulations, approving and incorporating them by reference into the SIP. On May 22, 1997, the EPA revised the procedures for incorporating by reference federally approved SIP provisions, as a result of consultations between the EPA and the Office of the Federal Register (OFR) (62 FR 27968). The description of the revised SIP document, IBR procedures and “Identification of plan” format is discussed in further detail in the May 22, 1997, Federal Register document. On December 10, 2013, the EPA published a Federal Register document beginning the new IBR procedure for Oregon (78 FR 74012). The EPA subsequently published an update to the IBR materials for Oregon on April 10, 2019 (84 FR 14272). Since then, the EPA has approved and incorporated by reference several provisions of the Oregon Revised Statutes (ORS), Oregon Administrative Rules (OAR), Lane Regional Clean Air Protection Agency (LRAPA) rules, and City and County Ordinances into the Oregon SIP. The following Federal Register documents contain the provisions that EPA approved and incorporated by reference: 84 FR 26347, June 6, 2019; 84 FR 58324, October 31, 2019; 84 FR 58327, October 31, 2019; 85 FR 35198, June 9, 2020; 86 FR 27976, May 25, 2021; 86 FR 43954, August 11, 2021; 87 FR 29046, May 12, 2022; 87 FR 41256, July 12, 2022; 87 FR 51262, August 22, 2022; and 87 FR 51265, August 22, 2022.

In this action, the EPA is announcing the update to the Oregon materials approved and incorporated by reference into the Oregon SIP at 40 CFR 52.1970(c) as of August 31, 2022. The EPA is also correcting minor typographical errors, including correcting the federal citation for the June 9, 2020 approval of OAR 340-236-0010 Definitions (definitions for emission standards for specific industries) from “85 FR 33198” to “85 FR 35198”; correcting typographical errors to entry OAR 340-256-0330 to reflect corrected information and finally correcting Table 4, footnote 1 to replace the word “Titles” with the word “Title”. Lastly, in subsection 52.1970 (e), the EPA is revising the heading for Table 5 to better reflect the content of the table.

The EPA has determined that this action falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedures Act (APA), which, upon finding “good cause,” authorizes agencies to dispense with public participation, and section 553(d)(3), which allows an agency to make an action effective immediately (thereby avoiding the 30-day delayed effective date otherwise provided for in the APA). Today's rule simply codifies provisions, which are already in effect as a matter of law in Federal and approved State programs. Under section 553 of the APA, an agency may find good cause where procedures are “impractical, unnecessary, or contrary to the public interest.” Public comment is “unnecessary” and “contrary to the public interest” since the codification only reflects existing law. Immediate notice in the CFR benefits the public by removing outdated citations and incorrect table entries.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is updating its compilation of State and local rules included in the Oregon SIP by finalizing the incorporation by reference of previously EPA-approved regulations promulgated by Oregon and federally approved prior to August 31, 2022. These include new and revised provisions as contained in the Federal Register documents listed in section I of this preamble. Lastly, the EPA is also correcting typographical errors in 52.1970(c) as described in section II of this preamble. The EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 10 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Under the Clean Air Act (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, the 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 Clean Air Act; and

• Does not provide the 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 the 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 as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Alaska regulations described in sections I and II of this preamble. The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

This action is subject to the Congressional Review Act, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

The EPA has also determined that the provisions of section 307(b)(1) of the CAA pertaining to petitions for judicial review are not applicable to this action. Prior EPA rulemaking actions for each individual component of the Oregon SIP compilations had previously afforded interested parties the opportunity to file a petition for judicial review in the United States Court of Appeals for the appropriate circuit within 60 days of such rulemaking action. Thus, the EPA sees no need in this action to reopen the 60-day period for filing such petitions for judicial review for this “Identification of plan” update action for Oregon.

Part 52 of chapter I, title 40 of the Code of Federal Regulations, is amended as follows:

I. Background A. Overview of the Basic Health Program

Section 1331 of the Patient Protection and Affordable Care Act (Pub. L. 111-148, enacted March 23, 2010), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted March 30, 2010) (collectively referred to as the Affordable Care Act or ACA), provides States with an option to establish a Basic Health Program (BHP). In the States that elect to operate a BHP, the BHP makes affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the Federal poverty level (FPL) who are not otherwise eligible for Medicaid, the Children's Health Insurance Program (CHIP), or affordable employer-sponsored coverage, or for individuals whose income is below these levels but are lawfully present non-citizens ineligible for Medicaid. For those States that have expanded Medicaid coverage under section 1902(a)(10)(A)(i)(VIII) of the Social Security Act (the Act), the lower income threshold for BHP eligibility is effectively 138 percent due to the application of a required 5 percent income disregard in determining the upper limits of Medicaid income eligibility (section 1902(e)(14)(I) of the Act).

A BHP is another option for States to provide affordable health benefits to individuals with incomes in the ranges described above. States may find a BHP a useful option for several reasons, including the ability to potentially coordinate standard health plans in the BHP with their Medicaid managed care plans, or to potentially reduce the costs to individuals by lowering premiums or cost-sharing requirements.

Federal funding for a BHP under section 1331(d)(3)(A) of the ACA is based on the amount of the Federal premium tax credit (PTC) allowed and payments to cover required cost-sharing reductions (CSRs) that would have been provided for the fiscal year to eligible individuals enrolled in BHP standard health plans in the State if such eligible individuals were allowed to enroll in a qualified health plan (QHP) through Health Insurance Exchanges (Exchanges). These funds are paid to trusts established by the States and dedicated to the BHP, and the States then administer the payments to standard health plans within the BHP.

In the March 12, 2014, Federal Register (79 FR 14111), we published a final rule entitled “Basic Health Program: State Administration of Basic Health Programs; Eligibility and Enrollment in Standard Health Plans; Essential Health Benefits in Standard Health Plans; Performance Standards for Basic Health Programs; Premium and Cost Sharing for Basic Health Programs; Federal Funding Process; Trust Fund and Financial Integrity” (hereinafter referred to as the BHP final rule), implementing section 1331 of the ACA, which governs the establishment of BHPs. The BHP final rule established the standards for State and Federal administration of BHPs, including provisions regarding eligibility and enrollment, benefits, cost-sharing requirements and oversight activities. While the BHP final rule codified the overall statutory requirements and basic procedural framework for the funding methodology, it does not contain the specific information necessary to determine Federal payments. We anticipated that the methodology would be based on data and assumptions that would reflect ongoing operations and experience of BHPs, as well as the operation of the Exchanges. For this reason, the BHP final rule indicated that the development and publication of the funding methodology, including any data sources, would be addressed in a separate annual BHP Payment Notice.

In the BHP final rule, we specified that the BHP Payment Notice process would include the annual publication of both a proposed and final BHP payment methodology. The proposed BHP Payment Notice would be published in the Federal Register each October, 2 years prior to the applicable program year, and would describe the proposed funding methodology for the relevant BHP year, 1 including how the Secretary of the Department of Health and Human Services (the Secretary) considered the factors specified in section 1331(d)(3) of the ACA, along with the proposed data sources used to determine the Federal BHP payment rates for the applicable program year. The final BHP Payment Notice would be published in the Federal Register in February, and would include the final BHP payment methodology, as well as the Federal BHP payment rates for the applicable BHP program year. For example, payment rates in the final BHP Payment Notice published in February 2015 applied to BHP program year 2016, beginning in January 2016. As discussed in section II.D. of this final rule, and as referenced in 42 CFR 600.610(b)(2), State data needed to calculate the Federal BHP payment rates for the final BHP Payment Notice must be submitted to CMS.

In the 2023 BHP proposed rule, we proposed to revise the schedule for issuance of payment notices and allow payment notices to be effective for 1 or multiple program years, as determined by and subject to the discretion of the Secretary, beginning with the 2023 BHP payment methodology. As discussed in section IV. of this final rule, we are finalizing this proposal. Thus, the payment methodology described in this final rule will be in effect until CMS proposes a new payment methodology.

As described in the BHP final rule, once the final rule for the applicable program year has been published, we will generally make modifications to the BHP funding methodology on a prospective basis, with limited exceptions. The BHP final rule provided that retrospective adjustments to the State's BHP payment amount may occur to the extent that the prevailing BHP funding methodology for a given program year permits adjustments to a State's Federal BHP payment amount due to insufficient data for prospective determination of the relevant factors specified in the applicable final BHP Payment Notice. For example, the population health factor adjustment described in section III.D.3. of this final rule allows for a retrospective adjustment (at the State's option) to account for the impact that BHP may have had on the risk pool and QHP premiums in the Exchange. Additional adjustments could be made to the payment rates to correct errors in applying the methodology (such as mathematical errors).

Under section 1331(d)(3)(ii) of the ACA, the funding methodology and payment rates are expressed as an amount per eligible individual enrolled in a BHP standard health plan (BHP enrollee) for each month of enrollment. These payment rates may vary based on categories or classes of enrollees. Actual payment to a State would depend on the actual enrollment of individuals found eligible in accordance with a State's certified BHP Blueprint eligibility and verification methodologies in coverage through the State BHP. A State that is approved to implement a BHP must provide data showing quarterly enrollment of eligible individuals in the various Federal BHP payment rate cells. Such data must include the following:

• Personal identifier;

• Date of birth;

• County of residence;

• Indian status;

• Family size;

• Household income;

• Number of persons in household enrolled in BHP;

• Family identifier;

• Months of coverage;

• Plan information; and

• Any other data required by CMS to properly calculate the payment.

On October 11, 2017, the Attorney General of the United States provided the Department of Health and Human Services and the Department of the Treasury (the Departments) with a legal opinion indicating that the permanent appropriation at 31 U.S.C. 1324, from which the Departments had historically drawn funds to make CSR payments, cannot be used to fund CSR payments to insurers. In light of this opinion—and in the absence of any other appropriation that could be used to fund CSR payments—the Department of Health and Human Services directed CMS to discontinue CSR payments to issuers until Congress provides for an appropriation. In the absence of a Congressional appropriation for Federal funding for CSR payments, we cannot provide States with a Federal payment attributable to CSRs that would have been paid on behalf of BHP enrollees had they been enrolled in a QHP through an Exchange.

Starting with the payment for the first quarter (Q1) of 2018 (which began on January 1, 2018), we stopped paying the CSR component of the quarterly BHP payments to New York and Minnesota (the States), the only States operating a BHP in 2018. The States then sued the Secretary for declaratory and injunctive relief in the United States District Court for the Southern District of New York. See New York v. U.S. Dep't of Health & Human Servs., No. 18-cv-00683 (RJS) (S.D.N.Y. filed Jan. 26, 2018). On May 2, 2018, the parties filed a stipulation requesting a stay of the litigation so that HHS could issue an administrative order revising the 2018 BHP payment methodology. As a result of the stipulation, the court dismissed the BHP litigation. On July 6, 2018, we issued a Draft Administrative Order on which New York and Minnesota had an opportunity to comment. Each State submitted comments. We considered the States' comments and issued a Final Administrative Order on August 24, 2018  2 (Final Administrative Order) setting forth the payment methodology that would apply to the 2018 BHP program year.

In the November 5, 2019 Federal Register (84 FR 59529) (hereinafter referred to as the November 2019 final BHP Payment Notice), we finalized the payment methodologies for BHP program years 2019 and 2020. The 2019 payment methodology is the same payment methodology described in the Final Administrative Order. The 2020 payment methodology is the same methodology as the 2019 payment methodology with one additional adjustment to account for the impact of individuals selecting different metal tier level plans in the Exchange, referred to as the Metal Tier Selection Factor (MTSF). 3 In the August 13, 2020 Federal Register (85 FR 49264 through 49280) (hereinafter referred to as the August 2020 final BHP Payment Notice), we finalized the payment methodology for BHP program year 2021. The 2021 payment methodology is the same methodology as the 2020 payment methodology, with one adjustment to the income reconciliation factor (IRF). In the July 7, 2021 Federal Register (86 FR 35615) (hereinafter referred to as the July 2021 final BHP Payment Notice), we finalized the payment methodology for BHP program year 2022. The 2022 payment methodology is the same as the 2021 payment methodology, which the exception of the removal of the MTSF. The 2023 payment methodology is the same as the 2022 payment methodology, except for the addition of a factor to account for a State operating a BHP and implementing an approved State Innovation Waiver under section 1332 of the ACA (referred to as a section 1332 waiver throughout this final payment methodology).

In the May 25, 2022 Federal Register (87 FR 31815 through 31833), we published the “Federal Funding Methodology for Program Year 2023 and Proposed Changes to Basic Health Program Regulations” proposed rule (hereinafter referred to as the 2023 BHP proposed rule).

We received 7 timely public comments from individuals and organizations, including, but not limited to, State government agencies, other government agencies, and private citizens. In this section, we provide a summary of the provisions of the 2023 BHP proposed rule and the public comments and our responses.

In the 2023 BHP proposed rule, we proposed the methodology for how the Federal BHP payments would be calculated for program year 2023 and subsequent years until a new payment methodology is proposed and finalized, in accordance with the policy finalized in section IV of this final rule.

We received the following comments on the background information included in the 2023 BHP proposed rule.

Comment: Several commenters were supportive of the 2023 BHP payment methodology described in the 2023 BHP proposed rule.

Response: We appreciate the support from these commenters. As described further in this final rule, we are finalizing the 2023 methodology as proposed in the 2023 BHP proposed rule.

Comment: One commenter suggested caution regarding the adoption of BHP in new States, as the establishment of a BHP could impact affordability for individuals who remain in Marketplace coverage. Specifically, the commenter noted that adoption of a BHP could result in a loss in overall enrollment in the individual market, higher premiums for consumers with incomes above 200 percent FPL who remain in the individual market, and a potential reduction in plan choices.

Response: We appreciate the comment. We believe that States should consider how a BHP would impact coverage and affordability for State residents as part of its decision to start a BHP.

In the 2023 BHP proposed rule, we proposed in the overview of the funding methodology to calculate the PTC and CSR as consistently as possible and in general alignment with the methodology used by Exchanges to calculate the advance payments of the PTC (APTC) and CSR, and by the Internal Revenue Service (IRS) to calculate the allowable PTC. We proposed four equations that would, if finalized, compose the overall BHP payment methodology. For specific discussions of these proposals, please refer to the 2023 BHP proposed rule (87 FR 31817 through 31819).

We received no comments on the overview of the funding methodology included in the 2023 BHP proposed rule. Therefore, we are finalizing these policies as proposed.

In the 2023 BHP proposed rule, we proposed to continue to require that a State implementing BHP provide us with an estimate of the number of BHP enrollees it will enroll in the upcoming BHP program quarter, by applicable rate cell, to determine the Federal BHP payment amounts. For each State, we proposed using rate cells that separate the BHP population into separate cells based on the following factors: age, geographic rating area, coverage status, household size, and income. For specific discussions of these proposals, please refer to the 2023 BHP proposed rule (87 FR 31819 through 31820).

We received no comments on this aspect of the proposed methodology. Therefore, we are finalizing these policies as proposed.

In the 2023 BHP proposed rule, we proposed to continue to use, to the extent possible, data submitted to the Federal Government by QHP issuers seeking to offer coverage through an Exchange that uses HealthCare.gov to determine the Federal BHP payment cell rates. However, for States operating a State-based Exchange (SBE), which do not use HealthCare.gov , we proposed to continue to require such States to submit required data for CMS to calculate the Federal BHP payment rates in those States. For specific discussions, please refer to the 2023 BHP proposed rule (87 FR 31820 through 31821).

We received no comments on this aspect of the proposed methodology. Therefore, we are finalizing these policies as proposed.

In the 2023 BHP proposed rule, we proposed to use eight specific variables in the payment equations that compose the overall BHP funding methodology:

For each proposed variable, we included a discussion on the assumptions and data sources used in developing the variables. We proposed to include a new factor, the WF, to account for a State operating a BHP and implementing an approved section 1332 waiver. For specific discussions, please refer to 2023 BHP proposed rule (87 FR 31821 through 31826).

Below is a summary of the public comments we received regarding specific factors and our response.

Comment: Several commenters were supportive of the inclusion of the WF in the payment methodology. Specifically, commenters noted this factor will result in more equitable funding for States that have chosen to operate a BHP as well as a reinsurance program under section 1332 of the ACA.

Response: We appreciate the support from these commenters. After consideration of comments, we are finalizing the inclusion of the WF in the payment methodology as proposed.

In the 2023 BHP proposed rule, we proposed to continue to provide States operating a BHP with the option to use the 2022 QHP premiums multiplied by a premium trend factor to calculate the Federal BHP payment rates instead of using the 2023 QHP premiums. We proposed to require States to make their election for the 2023 program year within 60 days of publication of the final payment methodology. For specific discussions, please refer to the 2023 BHP proposed rule (87 FR 31827).

We received no comments on this aspect of the proposed methodology. Therefore, we are finalizing these policies as proposed.

In the 2023 BHP proposed rule, we proposed to provide States implementing BHP the option to develop a methodology to account for the impact that including the BHP population in the Exchange would have had on QHP premiums based on any differences in health status between the BHP population and persons enrolled through the Exchange. We proposed that States would submit their optional protocol to CMS by the later of August 1, 2022, or 60 days after the publication of the final rule. We proposed that CMS would approve the protocol by December 31, 2022. For specific discussions, please refer to the 2023 BHP proposed rule (87 FR 31827 through 31828).

We received no comments on this aspect of the methodology. Therefore, we are finalizing this policy as proposed, with one modification to the date by which CMS will approve the protocol. Because we are finalizing the 2023 payment methodology after August 1, 2022, a State electing this option must submit its operational protocol to CMS within 60 days of publication of this final rule. Because December 31, 2022, falls within 60 days of publication of this final rule, we are finalizing that CMS will review and approve the State's protocol within 60 days of receipt of the proposed protocol.

In the 2023 BHP proposed rule, we proposed two changes related to the timing of publication of the BHP payment methodologies and correcting payment errors in § 600.610 (87 FR 31828 through 31829). Specifically, we proposed to revise § 600.610(a)(1) to provide for issuance of payment methodology that may be effective for only 1 or multiple program years, as determined by and subject to the discretion of the Secretary, beginning with the 2023 BHP payment methodology and then going forward. In addition, we proposed at § 600.610(a)(1) and (b)(1) to change the schedule of publication dates for the proposed and final BHP payment methodologies. We also proposed changes to § 600.610(c)(2)(ii) to allow retroactive adjustments to a State's payment if the payment was a result of an error in the application of the payment methodology, which would allow CMS to correct payments made to States in 2019 that were based on an incorrect value for the income reconciliation factor.

Below is a summary of the public comments we received regarding these proposals and our responses.

Comment: Many commenters expressed support for the regulatory changes. Specifically, one commenter noted that allowing the payment methodology to apply to multiple years will reduce administrative burden when there are no changes to the proposed payment methodology.

Response: We appreciate the support from these commenters. As described further in this final rule, we are finalizing the regulations as proposed.

Comment: One commenter requested clarification regarding how CMS will notify States of the annual deadlines for electing to use the current year's Marketplace premiums or the previous year's Marketplace premiums (multiplied by a trend factor) for purposes of calculating BHP payments and submitting an optional risk adjustment protocol.

Response: To maintain consistency with the deadlines established for making these elections for previous program years, States will have until the later of May 15 of the year preceding the applicable program year or 30 days from the release of the subregulatory guidance to elect to use the current year's Marketplace premiums or the previous year's Marketplace premiums (multiplied by a trend factor) for purposes of calculating Federal BHP payments. States will have until the later of August 1 of the year preceding the applicable program year or 30 days from the release of the subregulatory guidance to submit an optional risk adjustment protocol. These dates will be included in the subregulatory guidance CMS issues.

Comment: One commenter requested that CMS issue subregulatory guidance updating the values of factors needed to calculate Federal BHP payments by January of the year preceding the applicable benefit year.

Response: We are unable to carry out the commenter's request because the value of the factors may not be available in time to publish subregulatory guidance annually in January. We anticipate releasing subregulatory guidance in the Spring of the year preceding the applicable benefit year to the extent possible. As discussed previously in this final rule, States will have until the later of May 15 of the year preceding the applicable program year or 30 days from the release of the subregulatory guidance to elect to use the current year's Marketplace premiums or the previous year's Marketplace premiums (multiplied by a trend factor) for purposes of calculating Federal BHP payments.

Comment: One commenter supported the proposed regulation change that would allow CMS to correct the 2019 payments to States that were calculated based on an incorrect value for the income reconciliation factor.

Response: We appreciate the support and are finalizing these regulation changes as proposed, with minor formatting edits. Specifically, we are separating revised § 600.610(a)(1) into § 600.610(a)(1)(i) and (ii) for improved clarity.

After consideration of public comments received, we are finalizing these regulation changes as proposed.

Section 1331(d)(3) of the ACA directs the Secretary to consider several factors when determining the Federal BHP payment amount, which, as specified in the statute, must equal 95 percent of the value of the PTC allowed and CSRs that would have been paid on behalf of BHP enrollees had they enrolled in a QHP through an Exchange. Thus, the BHP funding methodology is designed to calculate the PTC and CSRs as consistently as possible and in general alignment with the methodology used by Exchanges to calculate advance payments of the PTC (APTC) and CSRs, and the methodology used to calculate PTC under 26 U.S.C. 36B, for the tax year. In general, we have relied on values for factors in the payment methodology specified in statute or other regulations, as available, and have developed values for other factors not otherwise specified in statute, or previously calculated in other regulations, to simulate the values of the PTC allowed and CSRs that would have been paid on behalf of BHP enrollees if they had enrolled in QHPs offered through an Exchange. In accordance with section 1331(d)(3)(A)(iii) of the ACA, the final funding methodology must be certified by the Chief Actuary of CMS, in consultation with the Office of Tax Analysis (OTA) of the Department of the Treasury, as having met the requirements of section 1331(d)(3)(A)(ii) of the ACA.

Section 1331(d)(3)(A)(ii) of the ACA specifies that the payment determination shall take into account all relevant factors necessary to determine the value of the PTC allowed and CSRs that would have been paid on behalf of eligible individuals, including but not limited to, the age and income of the enrollee, whether the enrollment is for self-only or family coverage, geographic differences in average spending for health care across rating areas, the health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments that would have been made if the enrollee had enrolled in a QHP through an Exchange, and whether any reconciliation of APTC and CSR would have occurred if the enrollee had been so enrolled. Under all previous payment methodologies, the total Federal BHP payment amount has been calculated using multiple rate cells in each State. Each rate cell represents a unique combination of age range (if applicable), 4 geographic area, coverage category (for example, self-only or two-adult coverage through the BHP), household size, and income range as a percentage of FPL, and there is a distinct rate cell for individuals in each coverage category within a particular age range who reside in a specific geographic area and are in households of the same size and income range. The BHP payment rates developed also are consistent with the State's rules on age rating. Thus, in the case of a State that does not use age as a rating factor on an Exchange, the BHP payment rates would not vary by age.

Under the methodology finalized in the July 2021 final BHP Payment Notice, the rate for each rate cell is calculated in two parts. The first part is equal to 95 percent of the estimated PTC that would have been allowed if a BHP enrollee in that rate cell had instead enrolled in a QHP in an Exchange. The second part is equal to 95 percent of the estimated CSR payment that would have been made if a BHP enrollee in that rate cell had instead enrolled in a QHP in an Exchange. These two parts are added together and the total rate for that rate cell would be equal to the sum of the PTC and CSR rates. As noted in the July 2021 final BHP Payment Notice, we currently assign a value of zero to the CSR portion of the BHP payment rate calculation, because there is presently no available appropriation from which we can make the CSR portion of any BHP payment.

We note that throughout this final rule, when we refer to enrollees and enrollment data, we mean data regarding individuals who are enrolled in the BHP who have been found eligible for the BHP using the eligibility and verification requirements that are applicable in the State's most recent certified Blueprint. By applying the equations separately to rate cells based on age (if applicable), income and other factors, we effectively take those factors into account in the calculation. In addition, the equations reflect the estimated experience of individuals in each rate cell if enrolled in coverage through an Exchange, taking into account additional relevant variables. Each of the variables in the equations is defined in this section, and further detail is provided later in this section of this final rule.

As noted in section II.B. of this final rule, we proposed four equations, which we are finalizing as proposed, that would compose the overall BHP payment methodology. Equation (1) will be used to calculate the estimated PTC for eligible individuals enrolled in the BHP in each rate cell. Equation (2a) and Equation (2b) will be used to calculate the adjusted reference premium that is used in Equation (1). Equation (3) will determine the total monthly payment by rate cell.

We are finalizing, as proposed, that estimated PTC per enrollee will be calculated for each rate cell for each State based on age range (if applicable), geographic area, coverage category, household size, and income range. The PTC portion of the rate will be calculated in a manner consistent with the methodology used to calculate the PTC for persons enrolled in a QHP as defined in 26 CFR 1.36B-3, with five adjustments. First, the PTC portion of the rate for each rate cell will represent the mean, or average, expected PTC that all persons in the rate cell would receive, rather than being calculated for each individual enrollee. Second, the reference premium (RP) (described in section III.D.1. of this final rule) used to calculate the PTC will be adjusted for the BHP population health status. In the case of a State that elects to use 2022 premiums for the basis of the BHP Federal payment, the RP also will be adjusted for the projected change in the premium from 2022 to 2023. These adjustments are described in Equation (2a) and Equation (2b). Third, the PTC will be adjusted prospectively to reflect the average net expected impact of income reconciliation for individuals receiving APTC in the Exchange on the combination of all persons enrolled in the BHP; this adjustment, the IRF, which is described in section III.D.7. of this final rule, will account for the impact on the PTC that would have occurred had such reconciliation been performed. Finally, the rate is multiplied by 95 percent, consistent with section 1331(d)(3)(A)(i) of the ACA. We note that in the situation where the average income contribution of an enrollee would exceed the adjusted reference premium, we will calculate the PTC to be equal to 0 and would not allow the value of the PTC to be negative.

Consistent with the methodology described above, Equation (1), used to calculate the PTC portion of the BHP payment for each rate cell, is finalized as follows:

As part of the calculations for the PTC portion of the BHP payment, we will calculate the value of the adjusted reference premium as described below in Equations (2a) and (2b). We are finalizing these equations as proposed. Consistent with the existing approach, we will allow States to choose between using the actual current year premiums or the prior year's premiums multiplied by the PTF (described in section III.E. of this final rule). Below we describe how we will calculate the adjusted reference premium under each option.

In the case of a State that elects to use the reference premium (RP) based on the current program year (for example, 2023 premiums for the 2023 program year), Equation (2a) will be used to calculate the value of the adjusted reference premium. The RP, discussed in more detail in section III.D.1. of this final rule, is based on the second lowest cost silver plan premium in the applicable program year, in this case the current program year. The adjusted reference premium will be equal to the RP multiplied by the BHP population health factor (PHF) (described in section III.D.3. of this final rule), which will reflect the projected impact that enrolling BHP-eligible individuals in QHPs through an Exchange would have had on the average QHP premium, and multiplied by the PAF (described in section III.D.2. of this final rule). The PAF will account for the change in silver-level premiums due to the discontinuance of CSR payments. We will also multiply this value by the section 1332 waiver factor (WF) (described in section III.D.7 of this final rule), as applicable. Equation (2a) is finalized as follows:

In the case of a State that elected to use the RP based on the prior program year (for example, 2022 premiums for the 2023 program year), Equation (2b) will be used calculate the value of the adjusted reference premium. The adjusted reference premium will be equal to the RP for the prior program year multiplied by the BHP PHF (described in section III.D.3. of this final rule), which will reflect the projected impact that enrolling BHP-eligible individuals in QHPs on an Exchange would have had on the average QHP premium. It will then be multiplied by the PAF (described in section III.D.2. of this final methodology), which will account for the change in silver-level premiums due to the discontinuance of CSR payments. Then, it will be multiplied by the PTF (described in section III.E. of this final rule), which would reflect the projected change in the premium level between 2022 and 2023. Finally, it will be multiplied by the WF (described in section III.D.7 of this final rule). Equation (2b) is finalized as follows:

In general, the payment rate for each rate cell will be multiplied by the number of BHP enrollees in that cell (that is, the number of enrollees that meet the criteria for each rate cell) to calculate the total monthly BHP payment. This calculation is shown in Equation (3), which we are finalizing as proposed.

In this equation, we will assign a value of zero to the CSR part of the BHP payment rate calculation (CSR a,g,c,h,i ) because there is presently no available appropriation from which we can make the CSR portion of any BHP payment. In the event that an appropriation for CSRs for 2022 is made, we will determine whether and how to modify the CSR part of the BHP payment rate calculation (CSR a,g,c,h,i ) or the PAF in the payment methodology.

We proposed to require the use of certain rate cells in applying Equations (1), (2a), (2b), and (3) of the payment methodology. Discussed in more detail below, we proposed to separate the BHP population into separate rate cells based on five factors (age, geographic area, coverage status, household size, and household income). We are finalizing use of the proposed rate cells and factors, as proposed.

Consistent with the previous payment methodologies, we also proposed that a State implementing a BHP will provide us an estimate of the number of BHP enrollees it projects will enroll in the upcoming BHP program quarter, by applicable rate cell, prior to the first quarter and each subsequent quarter of program operations until actual enrollment data is available. Upon our approval of such estimates as reasonable, we proposed to use those estimates to calculate the prospective payment, for deposit in the State's BHP trust fund, for the first and subsequent quarters of program operation until the State provides us with actual enrollment data for those periods. The actual enrollment data is required to calculate the final BHP payment amount and make any necessary reconciliation adjustments to the prior quarters' prospective payment amounts due to differences between projected and actual enrollment. Subsequent quarterly deposits to the State's BHP trust fund will be based on the most recent actual enrollment data submitted to us. Actual enrollment data must be based on individuals enrolled for the quarter whom the State found eligible and whose eligibility was verified using eligibility and verification requirements elected by the State in its applicable BHP Blueprint for the quarter that enrollment data is submitted. These procedures, which are finalized as proposed, will ensure that Federal payments to a State reflect actual BHP enrollment during a year, within each applicable rate cell, and prospectively determine Federal payment rates for each category of BHP enrollment.

We proposed to use rate cells that separate the BHP population in each State operating a BHP into separate cells based on the five factors described below. We are finalizing all five factors as proposed.

Factor 1—Age: We will separate enrollees into rate cells by age (if applicable), using the following age ranges that capture the widest variations in premiums under HHS's Default Age Curve:  5

• Ages 0-20.

• Ages 21-34.

• Ages 35-44.

• Ages 45-54.

• Ages 55-64.

This provision is unchanged from the current methodology. 6

Factor 2—Geographic area: For each State, we will separate enrollees into rate cells by geographic areas within which a single RP is charged by QHPs offered through the State's Exchange. Multiple, non-contiguous geographic areas will be incorporated within a single cell, so long as those areas share a common RP. 7 This provision is also unchanged from the current methodology.

Factor 3—Coverage status: We will separate enrollees into rate cells by coverage status, reflecting whether an individual is enrolled in self-only coverage or persons are enrolled in family coverage through the BHP, as provided in section 1331(d)(3)(A)(ii) of the ACA. For individuals enrolled in family coverage through the BHP, separate rate cells, as explained below, will apply based on whether such coverage involves two adults alone or whether it involves children. This provision is unchanged from the current methodology.

Factor 4—Household size: We will continue the current methods for separating enrollees into rate cells by household size that States use to determine BHP enrollees' household income as a percentage of the FPL under § 600.320 (Determination of eligibility for and enrollment in a standard health plan). We will require separate rate cells for several specific household sizes. For each additional member above the largest specified size, we will publish instructions for how we would develop additional rate cells and calculate an appropriate payment rate based on data for the rate cell with the closest specified household size. We will publish separate rate cells for household sizes of 1 through 10. This finalized provision is unchanged from the current methodology.

Factor 5—Household Income: For households of each applicable size, we will continue the current methods for creating separate rate cells by income range, as a percentage of FPL. The PTC that a person would receive if enrolled in a QHP through an Exchange varies by household income as a percentage of the FPL as well as by the metal tier level of the QHP plans in the Exchange. Thus, separate rate cells will be used to calculate Federal BHP payment rates to reflect different bands of income measured as a percentage of FPL. We will use the following income ranges, measured as a percentage of the FPL:

• 0 to 50 percent of the FPL.

• 51 to 100 percent of the FPL.

• 101 to 138 percent of the FPL. 8

• 139 to 150 percent of the FPL.

• 151 to 175 percent of the FPL.

• 176 to 200 percent of the FPL.

This provision is unchanged from the current methodology.

These rate cells will only be used to calculate the Federal BHP payment amount. A State implementing a BHP will not be required to use these rate cells or any of the factors in these rate cells as part of the State payment to the standard health plans participating in the BHP or to help define BHP enrollees' covered benefits, premium costs, or out-of-pocket cost-sharing levels.

Consistent with the current methodology, we are finalizing our proposal to use averages to define Federal payment rates, both for income ranges and age ranges (if applicable), rather than varying such rates to correspond to each individual BHP enrollee's age (if applicable) and income level. This approach will increase the administrative feasibility of making Federal BHP payments and reduce the likelihood of error resulting from highly complex methodologies. This approach should not significantly change Federal payment amounts, since within applicable ranges the BHP-eligible population is distributed relatively evenly.

The number of factors contributing to rate cells, when combined, can result in over 350,000 rate cells, which can increase the complexity when generating quarterly payment amounts. In future years, and in the interest of administrative simplification, we will consider whether to combine or eliminate certain rate cells, once we are certain that the effect on payment would be insignificant.

To the extent possible, unless otherwise provided, we will continue to use data submitted to the Federal government by QHP issuers seeking to offer coverage through the Exchange in the relevant BHP State to perform the calculations that determine Federal BHP payment cell rates.

States operating an SBE in the individual market must provide data to support the development of the Federal BHP payment rates in those States, for example premiums for their second lowest cost silver plans, by geographic area. We proposed that States operating BHPs interested in obtaining the applicable 2023 program year Federal BHP payment rates for its State must submit the needed data accurately, completely, and as specified by CMS, by no later than October 15, 2022. Because we are finalizing this rule after October 15, 2022, States must submit this data to CMS within 30 days of publication of this final rule. If additional State data (that is, in addition to the second lowest cost silver plan premium data) are needed to determine the Federal BHP payment rate, such data must be submitted in a timely manner, and in a format specified by us to support the development and timely release of annual BHP Payment Methodologies. The specifications for data collection to support the development of BHP payment rates are published in CMS guidance and are available on the Basic Health Program page of Medicaid.gov, https://www.medicaid.gov/sites/default/files/2019-11/premium-data-collection-tool.zip .

States operating a BHP should be technologically prepared to begin submitting actual enrollment data at the start of their BHP, starting with the beginning of the first program year. States must submit actual enrollment data to CMS on a quarterly basis thereafter. This differs from the enrollment estimates used to calculate the initial BHP payment, which States would generally submit to CMS 60 days before the start of the first quarter of the program start date. This requirement is necessary for us to implement the payment methodology that is tied to a quarterly reconciliation based on actual enrollment data.

We are finalizing our proposal to continue the policy first adopted in the 2016 final BHP payment methodology that in States that have BHP enrollees who do not file Federal tax returns (non-filers), the State must develop a methodology to determine the enrollees' household income and household size consistently with Exchange requirements. 9 The State must submit this methodology, which is subject to CMS approval, to us at the time of their Blueprint submission. We reserve the right to approve or disapprove the State's methodology to determine household income and household size for non-filers if the household composition and/or household income resulting from application of the methodology are different from what typically would be expected to result if the individual or head of household in the family were to file a tax return. States currently operating a BHP that wish to change the methodology for non-filers must submit a revised Blueprint outlining the revisions to its methodology, consistent with § 600.125.

In addition, as the Federal payments are determined quarterly and the enrollment data is required to be submitted by the States to us quarterly, the quarterly payment will be based on the characteristics of the enrollee at the beginning of the quarter (or their first month of enrollment in the BHP in each quarter). Thus, if an enrollee were to experience a change in county of residence, household income, household size, or other factors related to the BHP payment determination during the quarter, the payment for the quarter will be based on the data as of the beginning of the quarter (or their first month of enrollment in the BHP in the applicable quarter). Payments will still be made only for months that the person is enrolled in and eligible for the BHP. We do not anticipate that this will have a significant effect on the Federal BHP payment. The States must maintain data that is consistent with CMS' verification requirements, including auditable records for each individual enrolled, indicating an eligibility determination and a determination of income and other criteria relevant to the payment methodology as of the beginning of each quarter.

Consistent with § 600.610 (Secretarial determination of BHP payment amount), the State is required to submit certain data in accordance with this final rule. We require that this data be collected and validated by States operating a BHP, and that this data be submitted to CMS.

As explained in section III.D.5. of this final rule, the PTC is based, in part, on the premiums for the applicable second lowest cost silver plan offered through the Exchange operating in the state. To calculate the estimated PTC that would be paid if BHP-eligible individuals enrolled in QHPs through an Exchange, we must calculate a RP. For the purposes of calculating the BHP payment rates, the RP, in accordance with 26 U.S.C. 36B(b)(3)(C), is defined as the adjusted monthly premium for an applicable second lowest cost silver plan. The applicable second lowest cost silver plan is defined in 26 U.S.C. 36B(b)(3)(B) as the second lowest cost silver plan of the individual market in the rating area in which the taxpayer resides that is offered through the same Exchange. We will use the adjusted monthly premium for an applicable second lowest cost silver plan in the applicable program year (2023) as the RP (except in the case of a State that elects to use the prior plan year's premium as the basis for the Federal BHP payment for 2022, as described in section III.E. of this final rule). This method is unchanged from the current methodology except to update the reference years, and to provide additional methodological details to simplify calculations and to deal with potential ambiguities.

The RP used for purposes of calculating the Federal BHP payment will be the premium applicable to non-tobacco users. This is consistent with the provision in 26 U.S.C. 36B(b)(3)(C) that bases the PTC on premiums that are adjusted for age alone, without regard to tobacco use, even for States that allow insurers to vary premiums based on tobacco use in accordance with 42 U.S.C. 300gg(a)(1)(A)(iv).

Consistent with the policy set forth in 26 CFR 1.36B-3(f)(6), to calculate the PTC for those enrolled in a QHP through an Exchange, we will not update the payment methodology, and subsequently the Federal BHP payment rates, in the event that the second lowest cost silver plan used as the RP, or the lowest cost silver plan, changes (that is, terminates or closes enrollment during the year).

The applicable second lowest cost silver plan premium will be included in the BHP payment methodology by age range (if applicable), geographic area, and self-only or applicable category of family coverage obtained through the BHP.

We note that the choice of the second lowest cost silver plan for calculating BHP payments relies on several simplifying assumptions in its selection. For the purposes of determining the second lowest cost silver plan for calculating PTC for a person enrolled in a QHP through an Exchange, the applicable plan may differ for various reasons. For example, the second lowest cost silver plan for a family consisting of two adults, their child, and their niece may be different than the second lowest cost silver plan for a family with two adults and their children, because one or more QHPs in the family's geographic area might not offer family coverage that includes a niece. We believe that it would not be possible to replicate such variations for calculating the BHP payment and believe that in the aggregate, they will not result in a significant difference in the payment. Thus, we will use the second lowest cost silver plan available to any enrollee for a given age, geographic area, and coverage category.

This choice of RP relies on an assumption about enrollment in the Exchanges. In the payment methodologies for program years 2015 through 2019, we had assumed that all persons enrolled in the BHP would have elected to enroll in a silver level plan if they had instead enrolled in a QHP through an Exchange (and that the QHP premium would not be lower than the value of the PTC). In the November 2019 final BHP Payment Notice, we continued to use the second-lowest cost silver plan premium as the RP, but for the 2020 payments we changed the assumption about which metal tier plans enrollees would choose, by adding the Metal Tier Selection Factor (MTSF). In the final 2022 payment methodology, we removed the MTSF. We will continue the approach taken in the final 2022 payment methodology and not apply the MTSF in this 2023 payment methodology.

We do not believe it is appropriate to adjust the payment for an assumption that some BHP enrollees would not have enrolled in QHPs for purposes of calculating the BHP payment rates, since section 1331(d)(3)(A)(ii) of the ACA requires the calculation of such rates as if the enrollee had enrolled in a QHP through an Exchange.

The applicable age bracket (if any) will be one dimension of each rate cell. We proposed to assume a uniform distribution of ages and estimate the average premium amount within each rate cell. We believe that assuming a uniform distribution of ages within these ranges is a reasonable approach and would produce a reliable determination of the total monthly payment for BHP enrollees. We also believe this approach will avoid potential inaccuracies that could otherwise occur in relatively small payment cells if age distribution were measured by the number of persons eligible or enrolled. We have used this approach starting since the 2015 program year. We believe that other approaches (that is, other than assuming uniform age distribution) could skew the calculation of the payment rates for each rate cell. Given the number of rate cells and the fact that in some cases the number of enrollees in a cell may be small (particularly for less common family sizes, smaller counties, etc.), we believe that using estimates of age distribution or historical data also could skew results. We also believe a uniform age distribution is reasonably simple to use and avoids increasing burden on States to report data to CMS. We have found this approach reliable to date.

We will use geographic areas based on the rating areas used in the Exchanges. We will define each geographic area so that the RP is the same throughout the geographic area. When the RP varies within a rating area, we will define geographic areas as aggregations of counties with the same RP. Although plans are allowed to serve geographic areas smaller than counties after obtaining our approval, no geographic area, for purposes of defining BHP payment rate cells, will be smaller than a county. We believe that the benefits of simplifying both the calculation of BHP payment rates and the operation of the BHP justify any impacts on Federal payment levels.

Finally, in terms of the coverage category, Federal payment rates will only recognize self-only and two-adult coverage, with exceptions that account for children who are potentially eligible for the BHP. First, in States that set the upper income threshold for children's Medicaid and CHIP eligibility below 200 percent of FPL (based on modified adjusted gross income (MAGI)), children in households with incomes between that threshold and 200 percent of FPL would be potentially eligible for the BHP. Currently, the only States in this category are Idaho and North Dakota. 10 Second, the BHP will include lawfully present immigrant children with household incomes at or below 200 percent of FPL in States that have not exercised the option under sections 1903(v)(4)(A)(ii) and 2107(e)(1)(E) of the Act to qualify all otherwise eligible, lawfully present immigrant children for Medicaid and CHIP. States that fall within these exceptions will be identified based on their Medicaid and CHIP State Plans, and the rate cells will include appropriate categories of BHP family coverage for children. For example, Idaho's Medicaid and CHIP eligibility is limited to families with MAGI at or below 185 percent FPL. If Idaho implemented a BHP, Idaho children with household incomes between 185 and 200 percent could qualify. In other States, BHP eligibility will generally be restricted to adults, since children who are citizens or lawfully present immigrants and live in households with incomes at or below 200 percent of FPL will qualify for Medicaid or CHIP, and thus be ineligible for a BHP under section 1331(e)(1)(C) of the ACA, which limits a BHP to individuals who are ineligible for minimum essential coverage (as defined in 26 U.S.C. 5000A(f)).

The PAF considers the premium increases in other States that took effect after we discontinued payments to issuers for CSRs provided to enrollees in QHPs offered through Exchanges. Despite the discontinuance of Federal payments for CSRs, QHP issuers are required to provide CSRs to eligible enrollees. As a result, many QHP issuers increased the silver-level plan premiums to account for those additional costs; adjustments and how those were applied (for example, to only silver-level plans or to all metal tier plans) varied across States. For the States operating BHPs in 2018, the increases in premiums were relatively minor, because the majority of enrollees eligible for CSRs (and all who were eligible for the largest CSRs) were enrolled in the BHP and not in QHPs on the Exchanges, and therefore issuers in BHP States did not significantly raise premiums to cover costs related to HHS not making CSR payments.

In the Final Administrative Order and the 2019 through 2022 final BHP Payment Notices, we incorporated the PAF into the BHP payment methodologies to capture the impact of how other States responded to us ceasing to make CSR payments. We will include the PAF in the 2023 payment methodology and will calculate it in the same manner as in the Final Administrative Order. In the event that an appropriation for CSRs for 2023 is made, we would determine whether and how to modify the PAF in the payment methodology.

Under the Final Administrative Order, 11 we calculated the PAF by using information sought from QHP issuers in each State and the District of Columbia, and we determined the premium adjustment that the responding QHP issuers made to each silver level plan in 2018 to account for the discontinuation of CSR payments to QHP issuers. Based on the data collected, we estimated the median adjustment for silver level QHPs nationwide (excluding those in the two BHP States). To the extent that QHP issuers made no adjustment (or the adjustment was zero), this would be counted as zero in determining the median adjustment made to all silver level QHPs nationwide. If the amount of the adjustment was unknown—or we determined that it should be excluded for methodological reasons (for example, the adjustment was negative, an outlier, or unreasonable)—then we did not count the adjustment towards determining the median adjustment. 12 The median adjustment for silver level QHPs is the nationwide median adjustment.

For each of the two BHP States, we determined the median premium adjustment for all silver level QHPs in that State, which we refer to as the State median adjustment. The PAF for each BHP State equaled one plus the nationwide median adjustment divided by one plus the State median adjustment for the BHP State. In other words:

To determine the PAF described above, we sought to collect QHP information from QHP issuers in each State and the District of Columbia to determine the premium adjustment those issuers made to each silver level plan offered through the Exchange in 2018 to account for the end of CSR payments. Specifically, we sought information showing the percentage change that QHP issuers made to the premium for each of their silver level plans to cover benefit expenditures associated with the CSRs, given the lack of CSR payments in 2018. This percentage change was a portion of the overall premium increase from 2017 to 2018.

According to our records, there were 1,233 silver level QHPs operating on Exchanges in 2018. Of these 1,233 QHPs, 318 QHPs (25.8 percent) responded to our request for the percentage adjustment applied to silver level QHP premiums in 2018 to account for the discontinuance of the CSRs. These 318 QHPs operated in 26 different States, with 10 of those States running SBEs (while we requested information only from QHP issuers in States serviced by an FFE, many of those issuers also had QHPs in States operating SBEs and submitted information for those States as well). Thirteen of these 318 QHPs were in New York (and none were in Minnesota). Excluding these 13 QHPs from the analysis, the nationwide median adjustment was 20.0 percent. Of the 13 QHPs in New York that responded, the State median adjustment was 1.0 percent. We believe that this is an appropriate adjustment for QHPs in Minnesota, as well, based on the observed changes in New York's QHP premiums in response to the discontinuance of CSR payments (and the operation of the BHP in that State) and our analysis of expected QHP premium adjustments for States with BHPs. We calculated the final PAF as (1 + 20%) ÷ (1 + 1%) (or 1.20/1.01), which results in a value of 1.188.

We are finalizing our proposal to continue to set the PAF to 1.188 for program year 2023, with one limited exception as described below. We believe that this value for the PAF continues to reasonably account for the increase in silver-level premiums experienced in non-BHP States that took effect after the discontinuance of the CSR payments. We believe that the impact of the increase in silver-level premiums in 2022 can reasonably be expected to be similar to that in 2018, because the discontinuation of CSR payments has not changed. Moreover, we believe that States and QHP issuers have not significantly changed the manner and degree to which they are increasing QHP silver-level premiums to account for the discontinuation of CSR payments since 2018, and we expect the same for 2023.

In addition, the percentage difference between the average second lowest cost silver level QHP and the bronze-level QHP premiums has not changed significantly since 2018, and we do not expect a significant change for 2023. In 2018, the average second lowest cost silver level QHP premium was 41.1 percent higher than the average lowest cost bronze level QHP premium ($481 and $341, respectively). In 2022, (the latest year for which premiums have been published), the difference was modestly lower; the average second lowest cost silver level QHP premium was 33.1 percent higher than the average lowest cost bronze level QHP premium ($438 and $329, respectively). 13 In contrast, the average second lowest cost silver level QHP premium was only 23.8 percent higher than the average lowest cost bronze level QHP premium in 2017 ($359 and $290, respectively). 14 If there were a significant difference in the amounts that QHP issuers were increasing premiums for silver level QHPs to account for the discontinuation of CSR payments over time, then we would expect the difference between the bronze level and silver level QHP premiums to change significantly over time, and that this would be apparent in comparing the lowest-cost bronze-level QHP premium to the second lowest cost silver level QHP premium.

We are finalizing our proposal to make one limited exception in setting the value of the PAF, for States in the first year of implementing a BHP. In the case of a State in the first year of implementing a BHP, if the State chooses to use prior year second lowest cost silver level QHP premium to determine the BHP payment (for example, the 2022 premiums for the 2023 program year), we will set the value of the PAF to 1.00. In this case, we believe that adjustment to the QHP premiums to account for the discontinuation of CSR payments would be included fully in the prior year premiums. If the State chooses to use the prior year premiums, then no further adjustment would be necessary for the BHP payments; therefore, the value of the PAF will be 1.00.

We are finalizing our proposal to include the PHF in the methodology to account for the potential differences in the average health status between BHP enrollees and persons enrolled through the Exchanges. To the extent that BHP enrollees would have been enrolled through an Exchange in the absence of a BHP in a State, the exclusion of those BHP enrollees in the Exchange may affect the average health status of the overall population and the expected QHP premiums.

We currently do not believe that there is evidence that the BHP population would have better or poorer health status than the Exchange population. At this time, there continues to be a lack of data on the experience in the Exchanges that limits the ability to analyze the potential health differences between these groups of enrollees. More specifically, Exchanges have been in operation since 2014, and 2 States have operated BHPs since 2015, but data is not available to do the analysis necessary to determine if there are differences in the average health status between BHP and Exchange enrollees. In addition, differences in population health may vary across States. We also do not believe that sufficient data would be available to permit us to make a prospective adjustment to the PHF under § 600.610(c)(2) for the 2023 program year.

Given these analytic challenges and the limited data about Exchange coverage and the characteristics of BHP-eligible consumers, the PHF will be 1.00 for program year 2023.

In previous years' BHP payment methodologies, we included an option for States to include a retrospective population health status adjustment. States will have same option for 2023 to include a retrospective population health status adjustment in the certified methodology, which is subject to our review and approval. This option is described further in section III.F. of this final rule. Regardless of whether a State elects to include a retrospective population health status adjustment, we anticipate that, in future years, when additional data becomes available about Exchange coverage and the characteristics of BHP enrollees, we may propose a different PHF.

While the statute requires consideration of risk adjustment payments and reinsurance payments insofar as they would have affected the PTC that would have been provided to BHP-eligible individuals had they enrolled in QHPs, we are not requiring that a BHP's standard health plans receive such payments. As explained in the BHP final rule, BHP standard health plans are not included in the Federally-operated risk adjustment program. 15 Further, standard health plans did not qualify for payments under the transitional reinsurance program established under section 1341 of the ACA for the years the program was operational (2014 through 2016). 16 To the extent that a State operating a BHP determines that, because of the distinctive risk profile of BHP-eligible consumers, BHP standard health plans should be included in mechanisms that share risk with other plans in the State's individual market, the State would need to use other methods for achieving this goal.

Household income is a significant determinant of the amount of the PTC that is provided for persons enrolled in a QHP through an Exchange. Accordingly, all BHP Payment Methodologies incorporate household income into the calculations of the payment rates through the use of income-based rate cells. We are finalizing our proposal to define household income in accordance with the definition of modified adjusted gross income in 26 U.S.C. 36B(d)(2)(B) and consistent with the definition in 45 CFR 155.300. Income will be measured relative to the FPL, which is updated periodically in the Federal Register by the Secretary under the authority of 42 U.S.C. 9902(2). Household size and income as a percentage of FPL will be used as factors in developing the rate cells. We are finalizing our proposal to use the following income ranges measured as a percentage of FPL: 17

• 0-50 percent.

• 51-100 percent.

• 101-138 percent.

• 139-150 percent.

• 151-175 percent.

• 176-200 percent.

We are finalizing our proposal to assume a uniform income distribution for each Federal BHP payment cell. We believe that assuming a uniform income distribution for the income ranges finalized will be reasonably accurate for the purposes of calculating the BHP payment and would avoid potential errors that could result if other sources of data were used to estimate the specific income distribution of persons who are eligible for or enrolled in the BHP within rate cells that may be relatively small.

Thus, when calculating the mean, or average, PTC for a rate cell, we will calculate the value of the PTC at each one percentage point interval of the income range for each Federal BHP payment cell and then calculate the average of the PTC across all intervals. This calculation would rely on the PTC formula described in section III.D.5. of this final rule.

As the APTC for persons enrolled in QHPs would be calculated based on their household income during the open enrollment period, and that income would be measured against the FPL at that time, we will adjust the FPL by multiplying the FPL by a projected increase in the CPI-U between the time that the BHP payment rates are calculated and the QHP open enrollment period, if the FPL is expected to be updated during that time. The projected increase in the CPI-U will be based on the intermediate inflation forecasts from the most recent Old-Age, Survivors, and Disability Insurance (OASDI) and Medicare Trustees Reports. 18

In Equation 1, described in section III.A.1. of this final rule, we are finalizing our proposal to use the formula described in 26 U.S.C. 36B(b) to calculate the estimated PTC that would be paid on behalf of a person enrolled in a QHP on an Exchange as part of the BHP payment methodology. This formula is used to determine the contribution amount (the amount of premium that an individual or household theoretically would be required to pay for coverage in a QHP on an Exchange), which is based on (A) the household income; (B) the household income as a percentage of FPL for the family size; and (C) the schedule specified in 26 U.S.C. 36B(b)(3)(A) and shown below.

The difference between the contribution amount and the adjusted monthly premium (that is, the monthly premium adjusted for the age of the enrollee) for the applicable second lowest cost silver plan is the estimated amount of the PTC that would be provided for the enrollee.

The PTC amount provided for a person enrolled in a QHP through an Exchange is calculated in accordance with the methodology described in 26 U.S.C. 36B(b)(2). The amount is equal to the lesser of the premium for the plan in which the person or household enrolls, or the adjusted premium for the applicable second lowest cost silver plan minus the contribution amount.

The applicable percentage is defined in 26 U.S.C. 36B(b)(3)(A) and 26 CFR 1.36B-3(g) as the percentage that applies that applies to a taxpayer's household income that is within an income tier, increasing on a sliding scale in a linear manner from an initial premium percentage to a final premium percentage. We are finalizing our proposal to continue to use applicable percentages to calculate the estimated PTC that would be paid on behalf of a person enrolled in a QHP on an Exchange as part of the BHP payment methodology as part of Equation 1.

As described in section II.D.5 of the 2023 BHP proposed rule, we are finalizing our proposal to use the formula described in 26 U.S.C. 36B(b) to calculate the estimated PTC that would be paid on behalf of a person enrolled in a QHP in the Marketplace as part of the BHP payment methodology. In 2021 and 2022, the applicable percentages defined in 26 U.S.C. 36B(b)(3)(A) and 26 CFR 1.36B-3(g) were set in the American Rescue Plan Act of 2021 (Pub. L. 117-2, enacted March 11, 2021). We used those applicable percentages for program years 2021 and 2022. Section 12001 of Subtitle C of the Inflation Reduction Act of 2022 (Pub. L. 117-169, enacted August 16, 2022) extended these applicable percentages for the years 2023 through 2025. Therefore, we will use the applicable percentages in Table 1 for the 2023 BHP program year.

The updated applicable percentages, which are described in Table 1, increase on a sliding scale in a linear manner from the premium percentage applicable to individuals with income at the lowest end of the premium band to the premium percentage applicable to individuals with income at the highest end of the premium band.

For persons who enroll, or enroll a family member, in a QHP through an Exchange for which APTC is paid, a reconciliation is required by 26 U.S.C. 36B(f) following the end of the coverage year. The reconciliation requires the enrolling individual (the taxpayer) to compare the total amount of APTC paid on behalf of the taxpayer or a family member of the taxpayer for the year of coverage to the total amount of PTC allowed for the year of coverage, based on household circumstances shown on the Federal income tax return. If the amount of a taxpayer's PTC exceeds the APTC paid on behalf of the taxpayer, the difference reduces the taxpayer's tax liability for the year of coverage or results in a refund to the extent it exceeds the taxpayer's tax liability. If the APTC exceeds the PTC allowed, the taxpayer must increase his or her tax liability for the year of coverage by the difference, subject to certain limitations in statute and regulation.

Section 1331(e)(2) of the ACA specifies that an individual eligible for the BHP may not be treated as a “qualified individual” under section 1312 of the ACA who is eligible for enrollment in a QHP offered through an Exchange. We are defining “eligible for the BHP” to mean anyone for whom the State agency or the Exchange assesses or determines, based on the single streamlined application or renewal form, as eligible for enrollment in the BHP. Because enrollment in a QHP is a requirement for individuals to receive APTC, individuals determined or assessed as eligible for a BHP are not eligible to receive APTC for coverage in the Exchange. Because they do not receive APTC, BHP enrollees are not subject to the same income reconciliation as Exchange enrollees.

Nonetheless, there may still be differences between a BHP enrollee's household income reported at the beginning of the year and the actual household income over the year. These may include small changes (reflecting changes in hourly wage rates, hours worked per week, and other fluctuations in income during the year) and large changes (reflecting significant changes in employment status, hourly wage rates, or substantial fluctuations in income). There may also be changes in household composition. Thus, we believe that using unadjusted income as reported prior to the BHP program year may result in calculations of estimated PTC that are inconsistent with the actual household incomes of BHP enrollees during the year. Even if the BHP adjusts household income determinations and corresponding claims of Federal payment amounts based on household reports during the year or data from third-party sources, such adjustments may not fully capture the effects of tax reconciliation that BHP enrollees would have experienced had they been enrolled in a QHP through an Exchange with APTC.

Therefore, in accordance with current practice, we are finalizing our proposal to include in Equation 1 an adjustment, the IRF, that will account for the difference between calculating estimated PTC using: (a) household income relative to FPL as determined at initial application and potentially revised mid-year under § 600.320, for purposes of determining BHP eligibility and claiming Federal BHP payments; and (b) actual household income relative to FPL received during the plan year, as it would be reflected on individual Federal income tax returns. This adjustment will seek prospectively to capture the average effect of income reconciliation aggregated across the BHP population had those BHP enrollees been subject to tax reconciliation after receiving APTC for coverage provided through QHPs. Consistent with the methodology used in past years, we will estimate reconciliation effects based on tax data for 2 years, reflecting income and tax unit composition changes over time among BHP-eligible individuals.

The OTA maintains a model that combines detailed tax and other data, including Exchange enrollment and PTC claimed, to project Exchange premiums, enrollment, and tax credits. For each enrollee, this model compares the APTC based on household income and family size estimated at the point of enrollment with the PTC based on household income and family size reported at the end of the tax year. The former reflects the determination using enrollee information furnished by the applicant and tax data furnished by the IRS. The latter would reflect the PTC eligibility based on information on the tax return, which would have been determined if the individual had not enrolled in the BHP. Consistent with prior years, we will use the ratio of the reconciled PTC to the initial estimation of PTC as the IRF in Equation (1) for estimating the PTC portion of the BHP payment rate.

We are finalizing our proposal to distinguish between the IRF for Medicaid expansion States and non-Expansion States to remove data for those with incomes under 138 percent of FPL for Medicaid expansion States. This is the same approach that we finalized in the 2021 and 2022 final BHP Payment Notices. Therefore, we proposed to set the value of the IRF for States that have expanded Medicaid equal to the value of the IRF for incomes between 138 and 200 percent of FPL and the value of the IRF for States that have not expanded Medicaid equal to the value of the IRF for incomes between 100 and 200 percent of FPL. This gives an IRF of 100.66 percent for States that have expanded Medicaid and 101.63 percent for States that have not expanded Medicaid for program year 2023. Both current States operating a BHP have expanded Medicaid eligibility, and therefore we finalize the value of the IRF to be 100.66 percent.

We will use this value for the IRF in Equation (1) for calculating the PTC portion of the BHP payment rate.

Section 1332 of the ACA permits States to apply for a waiver from certain ACA requirements to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance coverage while retaining the basic protections of the ACA. Section 1332 of the ACA authorizes the Secretary of HHS and the Secretary of the Treasury (collectively, the Secretaries) to approve a State's request to waive all or any of the following requirements falling under their respective jurisdictions for health insurance coverage within a State for plan years beginning on or after January 1, 2017: (1) Part I of subtitle D of Title I of the ACA (relating to the establishment of QHPs); (2) Part II of subtitle D of Title I of the ACA (relating to consumer choices and insurance competition through Health Benefit Exchanges); (3) Section 1402 of the ACA (relating to reduced cost sharing for individuals enrolling in QHPs); and (4) Sections 36B (relating to refundable credits for coverage under a QHP), 4980H (relating to shared responsibility for employers regarding health coverage), and 5000A (relating to the requirement to maintain minimum essential coverage) of the Internal Revenue Code (Code).

Under section 1332 of the ACA, the Secretaries may exercise their discretion to approve a request for a section 1332 waiver only if the Secretaries determine that the proposal for the section 1332 waiver meets the following four requirements, referred to as the statutory guardrails: (1) The proposal will provide coverage that is at least as comprehensive as coverage defined in section 1302(b) of the ACA and offered through Exchanges established under title I of the ACA, as certified by the Office of the Actuary of CMS, based on sufficient data from the State and from comparable States about their experience with programs created by the ACA and the provisions of the ACA that would be waived; (2) the proposal will provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable for the State's residents as would be provided under title I of the ACA; (3) the proposal will provide coverage to at least a comparable number of the State's residents as would be provided under title I of the ACA; and (4) the proposal will not increase the Federal deficit. 19

The Secretaries retain their discretionary authority under section 1332 of the ACA to deny waivers when appropriate given consideration of the application as a whole, even if an application meets the four statutory guardrails. Eighteen (18) States have approved section 1332 waivers for plan year 2023. 20

Section 1332(a)(3) of the ACA directs the Secretaries to pay pass-through funding to the State for the purpose of implementing the State's section 1332 waiver. Under an approved section 1332 waiver, a State may receive pass-through funding associated with the resulting reductions in Federal spending on Exchange financial assistance (PTC, CSRs, and small business tax credits (SBTC)) consistent with the statute and reduced as necessary to ensure deficit neutrality. These payments are made in compliance with the applicable waiver plans, the specific terms and conditions governing the waiver, and accompanying statutory and regulatory requirements. Specifically, section 1332(a)(3) of the ACA provides that pass-through funding shall be paid to States for purposes of implementing the States' waiver plans. The specific impacts of the waivers on premiums and PTCs vary across States and plan years, depending, in part, on the State's approved section 1332 waiver plan and the design of the State's program. 21 The regulations at 31 CFR 33.122 and 45 CFR 155.1322 specify that pass-through funding amounts will be calculated annually by the Departments for States with approved waivers. 22 Additionally, section 1332(a)(4)(B)(v) of the ACA requires that the Secretaries issue regulations that provide a process for periodic evaluations by the Secretaries of the program under the waiver. 23 As implemented by the Departments, the periodic evaluations include evaluation of pass-through funding and associated reporting and methodologies. Information on the pass-through funding amounts is made available publicly on the CMS website. 24

For a State that operates a BHP and an approved section 1332 waiver, the Federal BHP can have an impact on section 1332 waiver pass-through funding for that State. For example, the existence of a Federal BHP impacts aggregate PTC amounts in the State because BHP moves some individuals, who would otherwise be eligible for PTC, out of Exchange coverage. Similarly, as the section 1332 waiver may impact the benchmark QHP premiums and the PTCs in a State, the waiver may also have an effect on the calculation of Federal BHP payments in a State operating a BHP.

If the section 1332 waiver reduces premiums for eligible enrollees, then this can lead to a reduction in the amount of PTC available for eligible enrollees (in particular, if the second lowest-cost silver QHP premium is reduced). While this may not have an effect on particular subsidized QHP enrollees, as their share of the premium would remain unchanged, it would reduce the amount of Federal outlays for PTC. With respect to a State's approved section 1332 waiver, the amount of Federal pass-through funding would equal the difference between (1) the amount, determined annually by the Secretaries, of PTC under section 36B of the Code, the SBTC under section 45R of the Code, or CSRs under part I of subtitle E of the ACA (collectively referred to as Exchange financial assistance) that individuals and small employers in the State would otherwise be eligible for had the State not received approval for its section 1332 waiver and (2) the amount of Exchange financial assistance that individuals and small employers are eligible for with the approved section 1332 waiver in place. The section 1332 waiver pass-through amount would not be increased to account for any savings or decreases in Federal spending other than the reduction in Exchange financial assistance. This pass-through amount for the section 1332 waiver would be reduced by any net increase in Federal spending or net decrease in Federal revenue if necessary to ensure deficit neutrality. The State must use this pass-through funding only for purposes of implementing the plan associated with the State's approved section 1332 waiver. Therefore, in States that operate only an approved section 1332 waiver, the net expected Federal spending is the same, even though the amount of PTC paid by the Federal government is lower.

However, for a State that operates a BHP and a section 1332 waiver, a reduction in the expected Federal PTC payments due to the operation of the waiver leads directly to a reduction in Federal BHP funding to the State under the current BHP methodology. The amount of PTC and CSRs individuals are eligible for in the Exchange is dependent on the cost of the second lowest cost silver plan premium, and the cost of the second lowest cost silver plan premium is the basis for determining the amount of Federal funding for its BHP program. Therefore, a reduction in second lowest cost silver plan premium due to a section 1332 waiver, also reduces the Federal BHP payment. These reductions may be substantial. For example, in Minnesota in 2021, the State's section 1332 waiver resulted in a State-wide average premium reduction of 21.3 percent compared to without the waiver. This led to a similar reduction in PTC paid, and thus a similar reduction in Federal BHP funding. While the PTC allowed for persons eligible for subsidized coverage in the Exchange is lower with the section 1332 waiver in place, the reduction in premiums means that the net benefit to those individuals has not decreased—rather, Federal funding has been shifted from PTC in part to pass-through payments made to the State.

On January 28, 2021, President Biden issued Executive Order (E.O.) 14009 directing HHS, and the heads of all other executive departments and agencies with authorities and responsibilities related to Medicaid and the ACA, to review all existing regulations, orders, guidance documents, policies, and any other similar agency actions to determine whether such agency actions are inconsistent with the policy set forth in section 1 of E.O. 14009 to protect and strengthen the ACA. 25 As part of this review, we considered the impact of approved section 1332 waivers on Federal BHP funding and vice versa in States that elect to operate both a BHP and an approved section 1332 waiver, including the impact in Minnesota, as previously discussed.

We determined it is appropriate to account for the impact of an approved section 1332 waiver when calculating Federal BHP payments. This is necessary for consistency with E.O. 14009 and this Administration's goal of protecting and strengthening the ACA and making high-quality, affordable health care accessible for every American. We believe that it is appropriate to consider the amount of pass-through funding associated with the section 1332 waiver as part of the PTC for the purpose of determining the BHP payments. As described previously, while the PTC allowed may be reduced under the section 1332 waiver, the benefit to the persons eligible for such subsidized coverage has not decreased. Considering the section 1332 pass-through funding as part of the PTC for purposes of determining the BHP payment also counteracts the reduction in Federal BHP funding for States that lawfully exercise the flexibility Congress provided to implement both of the alternative State programs under sections 1331 and 1332 of the ACA. Therefore, we are finalizing our proposal to add the section 1332 WF for the 2023 BHP payment methodology. This factor will be calculated as the ratio of (1) the second lowest cost silver plan premium that would have been in place without the waiver in place for the plan year to (2) the second lowest cost silver plan in place with the waiver in place for the plan year, as determined for the purposes of calculating the section 1332 waiver pass-through payment. 26 This factor will be calculated specific to each State and geographic area, to the extent that the factor may vary across geographic areas. The second lowest cost silver plan premiums with and without the waiver, as provided by the State as part of the section 1332 waiver information submitted to the Secretaries, will be reviewed by CMS and used to calculate the factor. In the event that the State's section 1332 waiver second lowest cost silver plan with- and without-waiver information is not available prior to the calculation of the Federal BHP payments in the fall prior to the start of the BHP program year, we are finalizing our proposal to temporarily use values from the prior year's waiver reporting, and then retroactively update the payment rates and payments once the values for the applicable plan year are known. In the case that prior-year data is not available, such as in the case of a new waiver or waiver amendment that could delay the timeline by which the State would receive BHP funding, we are finalizing our proposal to initially calculate the rates without adjustment for the section 1332 WF, and then to retroactively adjust payment rates and payments using the updated waiver data once it becomes available. 27

In the interest of allowing States greater certainty in the total BHP Federal payments for a given plan year, we have given States the option to have their final Federal BHP payment rates calculated using a projected adjusted reference premium (that is, using premium data from the prior program year multiplied by the premium trend factor (PTF), as described in Equation (2b)). We will require States to make their election to have their final Federal BHP payment rates calculated using a projected adjusted reference premium by 60 days after the publication of this final rule.

With the addition of the section 1332 WF, there is the possibility that using the previous year's QHP premiums multiplied by the PTF could lead to unexpected results if there are significant changes to the State's approved section 1332 waiver, including changes that could occur at the start or the end of the waiver. For example, if a State were to implement a section 1332 waiver in 2023 that lowered premiums significantly, and the State then chose to use the prior year's premiums (that is, 2022 plan year premiums) multiplied by the PTF, this could lead to BHP payment well in excess of what would have been paid in the Exchanges when the WF is added to the methodology. Similarly, if a State were to end its section 1332 waiver and choose to use the prior year's premiums, the BHP payment could be less than what would otherwise be expected.

We are finalizing our proposal that in the following cases, the current year QHP premiums would have to be used for calculating BHP payments with regard to section 1332 waivers: (1) A State implements a new section 1332 waiver that begins at the start of the BHP program year; (2) a State ends a section 1332 waiver in the year prior to the start of the BHP program year; or (3) the percentage difference between the with and without waiver premiums used to determine the section 1332 waiver pass-through funding amount (and used to determine the WF) changes by 5 or more percentage points from the prior year. The percentage difference would be measured based on the enrollment-weighted average of the with and without waiver premiums. We believe that these three scenarios (the start of a new waiver, the end of a waiver, and a significant change to a waiver) reflect all relevant scenarios in which changes to a section 1332 waiver would lead to a significant error in the calculation of BHP payments if the prior year premiums were used in the BHP payment methodology. We believe that the requirement to use the current year QHP premiums in these limited circumstances would avoid an incorrect calculation of BHP payments due to changes related to the section 1332 waiver.

For Equation (2b), we will define the PTF, with minor changes in calculation sources and methods, as follows:

PTF: In the case of a State that would elect to use the 2022 premiums as the basis for determining the 2023 BHP payment, it would be appropriate to apply a factor that would account for the change in health care costs between the year of the premium data and the BHP program year. This factor would approximate the change in health care costs per enrollee, which would include, but not be limited to, changes in the price of health care services and changes in the utilization of health care services. This would provide an estimate of the adjusted monthly premium for the applicable second lowest cost silver plan that would be more accurate and reflective of health care costs in the BHP program year.

For the PTF we are finalizing our proposal to use the annual growth rate in private health insurance expenditures per enrollee from the National Health Expenditure (NHE) projections, developed by the Office of the Actuary in CMS ( https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected ). Based on these projections, we are finalizing our proposal that the PTF be 4.6 percent for BHP program year 2023.

We note that the increase in premiums for QHPs from 1 year to the next may differ from the PTF developed for the BHP funding methodology for several reasons. In particular, we note that the second lowest cost silver plan may be different from 1 year to the next. This may lead to the PTF being greater than or less than the actual change in the premium of the second lowest cost silver plan.

To determine whether the potential difference in health status between BHP enrollees and consumers in an Exchange would affect the PTC and risk adjustment payments that would have otherwise been made had BHP enrollees been enrolled in coverage through an Exchange, we will provide States implementing the BHP the option to propose and to implement, as part of the certified methodology, a retrospective adjustment to the Federal BHP payments to reflect the actual value that would be assigned to the population health factor (or risk adjustment) based on data accumulated during that program year for each rate cell.

We acknowledge that there is uncertainty for this factor due to the lack of available data to analyze potential health differences between the BHP and QHP populations, which is why, absent a State election, we are finalizing our proposal to use a value for the PHF (see section III.D.3. of this final rule) to determine a prospective payment rate which assumes no difference in the health status of BHP enrollees and QHP enrollees. There is considerable uncertainty regarding whether the BHP enrollees will pose a greater risk or a lesser risk compared to the QHP enrollees, how to best measure such risk, the potential effect such risk would have had on PTC, and risk adjustment that would have otherwise been made had BHP enrollees been enrolled in coverage through an Exchange. However, to the extent that a State would develop an approved protocol to collect data and effectively measure the relative risk and the effect on Federal payments of PTCs and CSRs, we are finalizing our proposal to permit a retrospective adjustment that will measure the actual difference in risk between the two populations to be incorporated into the certified BHP payment methodology and used to adjust payments in the previous year.

For a State electing the option to implement a retrospective population health status adjustment as part of the BHP payment methodology applicable to the State, we are finalizing our proposal to require the State to submit a proposed protocol to CMS, which would be subject to approval by us and would be required to be certified by the Chief Actuary of CMS, in consultation with the OTA. We are finalizing our proposal to apply the same protocol for the population health status adjustment as what is set forth in guidance in “Considerations for Health Risk Adjustment in the Basic Health Program in Program Year 2015” ( https://www.medicaid.gov/sites/default/files/2019-11/risk-adjustment-and-bhp-white-paper.pdf ). We proposed to require a State to submit its proposed protocol for the 2022 program year by the later of August 1, 2022 or 60 days after the publication of this final rule. Because this final rule is being published within 60 days of August 1, 2022, we are finalizing that a State will be required to submit its proposed protocol for the 2022 program year by 60 days after the publication of this final rule. This submission will also need to include descriptions of how the State would collect the necessary data to determine the adjustment, including any contracting contingences that may be in place with participating standard health plan issuers. We will provide technical assistance to States as they develop their protocols, as requested. We proposed that we must approve the State's protocol by December 31, 2022, for the 2023 program year. Due to the publication date of this final rule, we are finalizing that we will approve the State's protocol within 50 days of receipt of the proposed protocol. Finally, the State will be required to complete the population health status adjustment at the end of the program year based on the approved protocol. After the end of the program year, and once data is made available, we will review the State's findings, consistent with the approved protocol, and make any necessary adjustments to the State's Federal BHP payment amounts. If we determine the Federal BHP payments were less than they would have been using the final adjustment factor, we will apply the difference to the State's next quarterly BHP trust fund deposit. If we determine that the Federal BHP payments were more than they would have been using the final reconciled factor, we will subtract the difference from the next quarterly BHP payment to the State.

We proposed two changes related to the timing of publication of the BHP payment methodologies under 42 CFR 600.610. Specifically, we proposed to revise § 600.610(a)(1) to provide for issuance of payment notices that may be effective for only one or multiple program years, as determined by and subject to the discretion of the Secretary, beginning with the 2023 BHP payment methodology and then going forward. In addition, we proposed at § 600.610(a)(1) and (b)(1) to change the schedule of publication dates for the proposed and final BHP payment notices. As stated in section II.H. of this final rule, we received several comments in support of these proposed changes. Therefore, we are finalizing these regulations as proposed, with minor formatting edits to separate § 600.610(a)(1) into § 600.610(a)(1)(i) and (ii) for increased clarity.

We also proposed to revise § 600.610(c)(2)(ii) such that a State's payment amount may be retroactively revised due to a mathematical error in the development or application of the BHP funding methodology. We discussed that CMS recently became aware of an error in calculating the IRF for program year 2019, resulting in an underpayment of Federal funds to States for their BHPs. In reviewing the model used to calculate the IRF, CMS and OTA found an error in the computation of the IRF. Working with OTA, we developed a new value for the IRF for 2019. Previously, the IRF for the 2019 BHP payment methodology was 98.03 percent. The corrected value for the IRF for program year 2019 was recalculated as the median of the impact of income reconciliation on PTC for persons with incomes between 100 percent and 200 percent of FPL (102.36 percent) and the impact for persons with incomes between 133 percent and 200 percent of FPL (101.66 percent), which is 102.01 percent. Using the median of the two values is the same approach as we used to calculate the original IRF value in 2019, and the difference between the values is attributable to a mathematical error made during the development of the BHP payment methodology for program year 2019. As stated in section II.H. of this final rule, we received comments in support of this regulation change, which would also allow us to issue corrected payments to states for 2019. We are finalizing this regulation change as proposed. We will issue further guidance to states on the timing of receiving the updated payments for 2019.

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

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

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

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

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

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

In the May 25, 2022 BHP proposed rule (87 FR 31815), we solicited public comment on each of these issues for that rule's proposed collection of information requirements and burden estimates. We did not receive such comments and are finalizing those requirements and burden estimates as proposed. The finalized requirements and burden estimates follow.

To derive average costs, we used data from the U.S. Bureau of Labor Statistics' (BLS) May 2021 National Occupational Employment and Wage Estimates for our salary estimates ( https://www.bls.gov/oes/current/oes_nat.htm ). In this regard, Table 2 presents BLS' mean hourly wage, our estimated cost of fringe benefits and overhead, and our adjusted hourly wage.

To derive the average cost estimates, we also adjusted BLS' mean hourly wage by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and overhead costs vary significantly from employer to employer, and because methods of estimating these costs vary widely from study to study. Therefore, we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method.

When ready, the following changes will be submitted to OMB for approval under control number 0938-1218 (CMS-10510). Consistent with the May 25, 2022 (87 FR 31815) proposed rule, we are in the process of reinstating that control number as our previous approval was discontinued on August 31, 2017, based on our estimated number of respondents. We are reinstating the control number based on 5 CFR 1320.3(c)(4)(i) using the standard non-rule PRA process which includes the publication of 60- and 30-day Federal Register notices. In addition to the reinstatement, we are also in the process of proposing changes that are associated with the March 12, 2014 (79 FR 14112) BHP final rule that have not previously received PRA approval. The following finalized burden estimates are also included in our reinstatement effort. The 60-day notice published in the Federal Register on August 4, 2022 (87 FR 47750). The collection of information request will be submitted to OMB for approval subsequent to the publication of the 30-day Federal Register notice.

In sections II.A. and III.B. of this final rule, we finalized that a State that is approved to implement a BHP must provide CMS with an estimate of the number of BHP enrollees its projects will enroll in the upcoming BHP program quarter, by applicable rate cell, prior to the first quarter and each subsequent quarter of program operations until after actual enrollment data is available. Enrollment data must be submitted by age range (if applicable), geographic area, coverage status, household size, and income range.

We estimate that it will take a business operations specialist 10 hours at $77.25/hr and a general manager 2 hours at $110.82/hr to compile and submit the quarterly estimated enrollment data to CMS. For 2023, we estimate that two States will operate a BHP and will submit the required estimated enrollment data to CMS. In aggregate, we estimate an annual burden of 96 hours (2 States × 12 hr/response × 4 responses/yr) at a cost of $7,953 [2 States × 4 responses/yr ((10 hr × $77.25/hr) + (2 hr × $110.82/hr)).

In sections II.A. and III.B. of this final rule, we also finalized that, following each BHP program quarter, a State operating a BHP must submit actual enrollment data to CMS. Actual enrollment data must be based on individuals enrolled for the quarter who the State found eligible and whose eligibility was verified using eligibility and verification requirements as agreed to by the State in its applicable BHP Blueprint for the quarter that enrollment data is submitted. Actual enrollment data must include a personal identifier, date of birth, county of residence, Indian status, family size, household income, number of persons in the household enrolled in BHP, family identifier, months of coverage, plan information, and any other data required by CMS to properly calculate the payment. This may include the collection of data related to eligibility for other coverage, marital status (for calculating household composition), or more precise residence location.

We estimate that it will take a business operations specialist 100 hours at $77.25/hr and a general manager 10 hours at $110.82/hr to compile and submit the quarterly actual enrollment data to CMS. For 2023, we estimate that two States will operate a BHP and will submit the required actual enrollment data to CMS. In aggregate, we estimate an annual burden of 880 hours (2 States × 110 hr/response × 4 responses/yr) at a cost of $70,666 [2 States × 4 responses/yr ((100 hr × $77.25/hr) + (10 hr × $110.82/hr)).

In section III.C. of this final rule, we finalized that States operating an SBE in the individual market must provide certain data, including premiums for second lowest cost silver plans, by geographic area, for CMS to calculate the Federal BHP payment rates in those States. We proposed that States operating BHPs interested in obtaining the applicable 2023 program year Federal BHP payment rates for its State must submit the data to CMS by October 15, 2022. Because we are finalizing this rule after October 15, 2022, we have changed the submission deadline from “October 15, 2022” to read “within 30 days of publication of this final rule.”

We estimate that it will take a business operations specialist 20 hours at $77.25/hr and a general manager 2 hours at $110.82/hr to compile and submit the required data to CMS. In aggregate, we estimate an annual burden of 44 hours (2 States × 22 hr/response) at a cost of $3,533 [2 States × ((20 hr × $77.25/hr) + (2 hr × $110.82/hr))].

Section 1331 of the ACA (42 U.S.C. 18051) requires the Secretary to establish a BHP, and section 1331(d)(1) specifically provides that if the Secretary finds that a State meets the requirements of the program established under section 1331(a) of the ACA, the Secretary shall transfer to the State Federal BHP payments described in section 1331(d)(3) of the ACA. This final rule provides for the funding methodology to determine the Federal BHP payment amounts required to implement these provisions for program year 2023.

We have examined the impacts of this rule as required by E.O. 12866 on Regulatory Planning and Review (September 30, 1993), E.O. 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (Pub. L. 96354, enacted September 19, 1980), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, enacted March 22, 1995), E.O. 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) (having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order.

A regulatory impact analysis (RIA) must be prepared for major rules with significant regulatory action(s) or with economically significant effects ($100 million or more in any 1 year). Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined this rulemaking is “economically significant” as measured by the $100 million threshold. Accordingly, we have prepared a Regulatory Impact Analysis that to the best of our ability presents the costs and benefits of the rulemaking.

The aggregate economic impact of this final payment methodology is estimated to be $357 million in transfers for calendar years (CY) 2022 and 2023 (measured in real 2022 dollars), which would be an increase in Federal payments to the State BHPs. For the purposes of this analysis, we have assumed that two States would implement BHPs in 2023. This assumption is based on the fact that two States have established a BHP to date, and we do not have any indication that additional States may implement a BHP in CY 2023. Of these two States, only one (Minnesota) currently has an approved section 1332 waiver.

Projected BHP enrollment and expenditures under the previous payment methodology were calculated using the most recent 2022 QHP premiums and State estimates for BHP enrollment. We projected enrollment for 2023 using the projected increase in the number of adults in the U.S. from 2022 to 2023 (0.4 percent), and we projected premiums using the NHE projection of premiums for private health insurance (4.6 percent). Prior to any changes made in the 2023 BHP payment methodology, Federal BHP expenditures are projected to be $8,340 million in 2023, which are described in detail below. This projection serves as our baseline scenario when estimating the net impact of the 2023 methodology on Federal BHP expenditures.

The incorporation of the WF is the most significant change in this final 2023 payment methodology from the final 2022 payment methodology. To calculate the impact of adding the WF to the methodology, we took the following steps. First, we calculated the estimated value of the WF using the most recently available section 1332 waiver premium data for 2021. 28 In Minnesota, the average percentage difference between the “with waiver” second lowest cost silver plan premiums and the “without waiver” second lowest cost silver plan premiums for 2021 is 27.3 percent (calculated as the average of the “without waiver” second lowest cost silver plan premium divided by the “with waiver” second lowest cost silver plan premium, averaged across all rating areas). We then increased the RPs in the model for Minnesota by 27.3 percent, which represents the impact of the WF. The resulting Federal BHP payments were 28.2 percent higher incorporating this adjustment. The projected BHP expenditures after these changes are $8,154 million, which is the sum of the prior estimate ($8,021 million) and the impacts of the changes to the methodology ($133 million). For Minnesota, estimated payments would increase from $470 million to $603 million in 2023.

The South Atlantic snapper-grouper fishery, which includes red porgy, is managed under the FMP. The FMP was prepared by the Council and implemented through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).

The Magnuson-Stevens Act requires that NMFS and regional fishery management councils prevent overfishing and achieve, on a continuing basis, the OY from federally managed fish stocks. These mandates are intended to ensure that fishery resources are managed for the greatest overall benefit to the nation, particularly with respect to providing food production and recreational opportunities, and protecting marine ecosystems. To further this goal, the Magnuson-Stevens Act requires fishery managers to minimize bycatch and bycatch mortality to the extent practicable.

On September 9, 2022, NMFS published a notice of availability for Amendment 50 and requested public comment (87 FR 55376). On September 26, 2022, NMFS published a proposed rule for Amendment 50 and requested public comment (87 FR 58302). NMFS approved Amendment 50 on December 7, 2022. The proposed rule and Amendment 50 outline the rationale for the actions contained in this final rule. A summary of the management measures described in Amendment 50 and implemented by this final rule is described below.

In 1990, a stock assessment for red porgy was completed and NMFS determined that the stock was subject to overfishing and overfished. As a result of that stock status, through Amendment 4 to the FMP the Council established an initial rebuilding plan and a minimum size limit for red porgy (56 FR 56016, October 31, 1991). The rebuilding plan was put into effect in 1991 with a target time to rebuild of 10 years. The stock was again assessed in 1999 and again was determined to be subject to overfishing and overfished. Through an emergency rule published in 1999, NMFS prohibited the harvest and possession of red porgy in or from the exclusive economic zone (EEZ) off the southern Atlantic states (64 FR 48324, September 3, 1999). NMFS subsequently extended the emergency rule to prohibit the harvest and possession of red porgy through August 28, 2000 (65 FR 10039, February 25, 2000).

The final rule to implement Amendment 12 to the FMP replaced the emergency rule and closed commercial harvest during the red porgy peak spawning season, reduced the commercial trip limit, and reduced the recreational bag limit (65 FR 51248, August 23, 2000). Amendment 12 also specified a new 18-year rebuilding plan, which began with the implementation of the emergency rule that prohibited harvest on September 3, 1999. The red porgy stock was assessed again in 2002, as the first stock in the South Atlantic to be assessed through the Southeast Data, Assessment, and Review (SEDAR) process (SEDAR 1). The SEDAR 1 assessment indicated the stock was overfished but not undergoing overfishing. Subsequent update assessments in 2006 and 2012 also resulted in the same stock status determinations as the 2002 SEDAR 1 assessment.

The most recent SEDAR stock assessment for South Atlantic red porgy (SEDAR 60) was completed in April 2020. The assessment included data through 2017 and incorporated the revised estimates for recreational catch from the Marine Recreational Information Program Fishing Effort Survey (MRIP FES), as discussed later in this final rule. The Council's Scientific and Statistical Committee (SSC) reviewed SEDAR 60 at their April 2020 meeting and found that the assessment was conducted using the best scientific information available, and was adequate for determining stock status and supporting fishing level recommendations. The findings of the assessment indicated that the South Atlantic red porgy stock is undergoing overfishing and is overfished. NMFS also determined that the red porgy stock has not made adequate progress towards rebuilding.

The findings of SEDAR 60 showed a declining trend in average recruitment throughout the time series reviewed in the assessment, and that red porgy has made little progress towards rebuilding, given the low recruitment in recent years. The projections within SEDAR 60 indicate the reduced ABCs would have only a very minor impact on stock rebuilding. If recruitment continues to be low, the productivity of the stock and the benchmark management reference points would need to be reevaluated. The red porgy stock is currently scheduled to be assessed again in 2025.

Following a notification from NMFS to a Council that a stock is undergoing overfishing and is overfished, the Magnuson-Stevens Act requires the Council to develop an FMP amendment with actions that immediately end overfishing and rebuild the affected stock. The Council developed Amendment 50 in response to the results of SEDAR 60.

In addition to the revisions to the commercial quotas and sector ACLs, modified red porgy management measures are needed to constrain commercial and recreational harvest to the proposed fishing levels. This final rule reduces commercial trip limits and recreational bag and possession limits, and implements a 2-month recreational fishing season. The Council intends that these actions will allow retention of red porgy over the longest period of time projected during the fishing year while preventing overfishing. This final rule also adjusts the recreational AMs to ensure they are effective at keeping recreational landings from exceeding the recreational ACL and correct for overages when they occur. This final rule and Amendment 50 do not adjust commercial AMs.

The Council determined that the actions in Amendment 50 will end overfishing of South Atlantic red porgy, rebuild the stock, and achieve OY while minimizing, to the extent practicable, adverse social and economic effects.

This final rule revises the sector ACLs, commercial seasonal quotas, commercial trip limits, recreational bag and possession limits, recreational fishing season, and recreational AMs. All weights described in this final rule are in gutted weight, unless otherwise specified.

As implemented through Regulatory Amendment 18 to the FMP, the current total ACL and annual OY for red porgy are equal to the current ABC of 328,000 lb (148,778 kg), round weight. In Amendment 50, the Council is revising the ABC based on SEDAR 60 and the recommendation of the SSC, and keeping the ABC, total ACL, and annual OY equal to each other.

This final rule revises the total ACL equal to the recommended ABC of 75,000 lb (34,019 kg), round weight, 72,115 lb (32,711 kg), gutted weight, for 2022; 81,000 lb (36,741 kg), round weight, 77,885 lb (35,328 kg), gutted weight, for 2023; 87,000 lb (39,463 kg), round weight, 83,654 lb (37,945 kg), gutted weight, for 2024; 91,000 lb (41,277 kg), round weight, 87,500 lb (39,689 kg), gutted weight, for 2025; and 95,000 lb (43,091 kg), round weight, 91,346 lb (41,434 kg), gutted weight, for 2026 and subsequent fishing years.

Amendment 50 revises the commercial and recreational allocations for red porgy. The current sector ACLs for red porgy are based on the commercial and recreational allocations of the total ACL at 50.00 percent and 50.00 percent, respectively, and were established through Amendment 15B to the FMP (74 FR 58902, November 16, 2009).

The new red porgy sector allocations in Amendment 50 will result in commercial and recreational allocations of 51.43 percent and 48.57 percent, respectively. The Council determined the revised sector allocations by applying the allocation formula adopted through the Comprehensive ACL Amendment to the FMP, which is ACL = ((mean landings 2006-2008) * 0.5)) + ((mean landings 1986-2008) * 0.5), to the revised total ACL that includes updated recreational landings from the MRIP FES method.

Utilizing the revised allocation formula will incorporate revised recreational landings from the MRIP FES, which will result in a slight shift of allocation to the commercial sector. Although commercial fishing, compared to recreational fishing, tends to occur in deeper water, where mortality of discarded fish is greater, the Council reasoned that a slightly increased allocation to the commercial sector will potentially reduce the number of fish that are discarded if the commercial ACL is reached in-season and a sector closure becomes necessary, thus promoting conservation.

The commercial ACLs will be 37,089 lb (16,823 kg), for 2022; 40,056 lb (18,169 kg), for 2023; 43,023 lb (19,515 kg), for 2024; 45,001 lb (20,412 kg), for 2025; and 46,979 lb (21,309 kg), for 2026 and subsequent years.

The recreational ACLs will be 35,026 lb (15,888 kg), for 2022; 37,829 lb (17,159 kg), for 2023; 40,631 lb (18,430 kg), for 2024; 42,499 lb (19,277 kg), for 2025; and 44,367 lb (20,125 kg), for 2026 and subsequent years.

Regulatory Amendment 27 to the FMP established two commercial fishing seasons for red porgy with 30 percent of the commercial ACL allocated to Season 1 (January through April) and 70 percent allocated to Season 2 (May through December) (85 FR 4588, January 27, 2020). Any remaining commercial quota from Season 1 would be added to the commercial quota in Season 2. Any remaining quota from Season 2 would not be carried forward into the next fishing year. Amendment 50 and this final rule will not alter the current fishing seasons or commercial season ACL allocations.

Under Amendment 50, the commercial quotas in 2022 for Season 1 will be 11,127 lb (5,047 kg) and Season 2 will be 25,962 lb (11,776 kg); in 2023, Season 1 will be 12,017 lb (5,451 kg) and Season 2 will be 28,039 lb (12,718 kg); in 2024, Season 1 will be 12,907 lb (5,855 kg) and Season 2 will be 30,116 lb (13,660 kg); in 2025, Season 1 will be 13,500 lb (6,123 kg) and Season 2 will be 31,501 lb (14,289 kg); and for 2026 and subsequent years, Season 1 will be 14,094 lb (6,393 kg) and Season 2 will be 32,886 lb (14,917 kg).

Amendment 13C to the FMP established the current commercial trip limit for red porgy of 120 fish from May 1 through December 31, with no harvest allowed from January 1 through April 30 (71 FR 55096, September 21, 2006). Regulatory Amendment 27 to the FMP removed the January 1 through April 30 spawning season commercial closure, and established the current 60 fish trip limit from January 1 through April 30, to reduce discarding of red porgy by the commercial sector during the early part of the fishing year. This final rule modifies the commercial trip limits for red porgy to be 15 fish for both Seasons 1 and 2.

The Council decided that under the revised 15-fish commercial trip limit, the lowest trip limit considered, commercial fishermen could retain an amount of red porgy over the longest amount of time during the fishing seasons, and this will increase the likelihood of red porgy remaining open to commercial harvest and available to consumers for as long as possible. Additionally, the Council expects the revised commercial trip limit to minimize discards of incidentally harvested red porgy when fishermen target other snapper-grouper species, such as gray triggerfish and vermilion snapper.

The current recreational bag and possession limits for red porgy in the South Atlantic, specified by the final rule Amendment 13C to the FMP, are three per person per day, or three per person per trip, whichever is more restrictive. This final rule reduces the recreational bag and possession limits to one fish per person per day, or one fish per person per trip, whichever is more restrictive.

Given the substantial reduction in harvest needed to end red porgy overfishing immediately, and to increase the likelihood of rebuilding the stock, the Council selected the lowest bag limit considered in Amendment 50 to continue to allow recreational retention and help constrain harvest to the reduced recreational ACL.

Recreational harvest of red porgy is currently allowed year-round until the recreational ACL is met or is projected to be met. This final rule establishes a recreational fishing season for red porgy where harvest will be allowed only from May 1 through June 30. The recreational sector will be closed annually from January 1 through April 30 and from July 1 through December 31. During the revised seasonal closures, the recreational bag and possession limits for red porgy will be zero.

Given the substantial reductions in harvest that are needed to address the determination that the stock is undergoing overfishing and overfished, shortening the time recreational fishing is allowed helps to reduce the risk that recreational catches will exceed the reduced sector ACL. The Council selected the most conservative recreational fishing season alternative in Amendment 50 to reduce the chance the recreational ACL will be exceeded, while still allowing for some recreational harvest opportunities.

The current AMs were established through Amendment 34 to the FMP (81 FR 3731, January 22, 2016) and includes an in-season closure for the remainder of the fishing year if recreational landings reach or are projected to reach the recreational ACL, regardless of whether the stock is overfished. The current AMs also include post-season adjustments. If recreational landings exceed the recreational ACL, then during the following fishing year recreational landings will be monitored for a persistence in increased landings. If the total ACL is exceeded and red porgy are overfished, the length of the recreational fishing season and the recreational ACL are reduced by the amount of the recreational ACL overage.

This final rule revises the recreational AMs for red porgy. Given the new 2-month fishing season, both the current in-season closure and stock status based post-season AMs will be replaced with a new post-season AM. The revised recreational AM would be triggered in the following fishing year if the recreational ACL is exceeded. If recreational landings exceed the recreational ACL, the length of the following year's recreational fishing season would be reduced by the amount necessary to prevent the recreational ACL from being exceeded in the following year. However, the length of the recreational season would not be reduced if the Regional Administrator determines, using the best scientific information available, that a reduction is not necessary.

The Council's intent in revising the recreational AMs is to avoid an in-season closure of the recreational sector and extend maximum fishing opportunities to the sector during the 2-month recreational season. The revised AM will remove the current potential duplicate AM application of a reduction in the recreational season length and a payback of the recreational ACL overage if the total ACL was exceeded. Under the revised measure, the AM trigger will not be tied to the total ACL, but only to the recreational ACL. The modification of the current recreational AMs will ensure that overages in the recreational sector do not in turn affect the catch levels for the commercial sector. Any reduced recreational season length as a result of the new AM being implemented would apply to the recreational fishing season in the year following a recreational ACL overage.

In addition to the measures within this final rule, Amendment 50 revises the overfishing limit (OFL) for red porgy equal to the ABC and updates other biological reference points. The amendment also establishes a new rebuilding plan, and revises the ABC, the annual OY, and the sector allocations.

As previously discussed, the Council implemented an 18-year rebuilding plan for the South Atlantic red porgy stock through Amendment 12 to the FMP that was expected to rebuild the stock by the end of 2017 (65 FR 51248, September 22, 2000). Because the South Atlantic red porgy stock did not rebuild within that time, and is still overfished, Amendment 50 establishes a new rebuilding plan schedule equal to the time estimated to rebuild the stock while maintaining fishing mortality at 75 percent of the maximum fishing mortality threshold during the rebuilding period. This rebuilding period will be 26 years, beginning in 2022 and ending in 2047.

The current ABC for red porgy was implemented in Regulatory Amendment 18 to the FMP, based upon a stock assessment update (2012 SEDAR 1 Update) and the Council's SSC's recommendations (78 FR 47574, August 6, 2013).

In April 2020, the Council's SSC reviewed the latest stock assessment (SEDAR 60) and recommended new ABC levels as determined by SEDAR 60. The assessment and associated ABC recommendations incorporated the revised estimates for recreational catch and effort from the MRIP Access Point Angler Intercept Survey (APAIS) and FES. MRIP began incorporating a new survey design for APAIS in 2013 and replaced the Coastal Household Telephone Survey (CHTS) with FES in 2018. Prior to the implementation of MRIP in 2008, recreational landings estimates were generated using the Marine Recreational Fisheries Statistics Survey (MRFSS). As explained in Amendment 50, total recreational fishing effort estimates generated from MRIP FES are generally higher than both the MRFSS and MRIP CHTS estimates. This difference in estimates occurs because MRIP FES is designed to more accurately measure fishing activity, not because there was a sudden increase in fishing effort. The MRIP FES is considered by the Council's SSC, the Council, and NMFS to be a more reliable estimate of recreational effort and more robust compared to the MRIP CHTS method. The new ABC recommendations within Amendment 50 also represent the best scientific information available as determined by the SSC.

In addition, the Council chose to specify OY for red porgy on an annual basis and set it equal to the ABC and total ACL, in accordance with the guidance provided in the Magnuson-Stevens Act National Standard 1 Guidelines at 50 CFR 600.310(f)(4)(iv), and using the formula implemented through the Comprehensive ACL Amendment to the FMP (77 FR 15915, March 16, 2012).

NMFS received four comments from individuals during the public comment period on the notice of availability and proposed rule for Amendment 50. NMFS acknowledges the four comments in favor of the action in Amendment 50 and the proposed rule and agrees with them. No comments were received opposing Amendment 50 or the proposed rule. No changes were made to the final rule as a result of public comment.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with Amendment 50, the FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

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

This final rule does not contain policies with federalism or “takings” implications, as those terms are defined in E.O. 13132 and E.O. 12630, respectively.

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

Pursuant to section 604 of the Regulatory Flexibility Act (RFA), NMFS has completed a final regulatory flexibility analysis (FRFA) in support of Amendment 50. The FRFA incorporates the initial regulatory flexibility analysis (IRFA), a summary of the significant issues raised by public comments in response to the IRFA and NMFS' responses to those comments. A summary of the IRFA was published in the proposed rule for this action and is not repeated here. A description of why this action was considered, the objectives of the action, and the legal basis for this rule is contained in Amendment 50 and in the preambles to the proposed rule and this final rule and are not repeated here. The following constitutes the FRFA prepared for this final action.

The Magnuson-Stevens Act provides the statutory basis for this final rule. A description of this final rule, why it is being implemented, and the purpose of this final rule are contained in the SUMMARY and SUPPLEMENTARY INFORMATION sections of this final rule.

No public comments were received specifically in response to the IRFA, nor were there any public comments received that related to the potential economic impacts on small entities. No changes to this final rule were made in response to public comments.

All monetary estimates in the following analysis are in 2019 dollars.

This final rule will directly affect both anglers (recreational fishers) and commercial fishing businesses that harvest red porgy in the South Atlantic EEZ. Anglers, however, are not considered small entities as that term is defined in 5 U.S.C. 601(6), whether fishing from charter vessel or headboat (for-hire) fishing, private or leased vessels. Therefore, neither estimates of the number of anglers nor the impacts on them are required or provided in this analysis. For-hire fishing businesses would be indirectly affected, and because the effects on for-hire businesses would be indirect, they fall outside the scope of the RFA.

Any business that operates a commercial fishing vessel that harvests red porgy in the South Atlantic EEZ must have a valid Federal South Atlantic snapper-grouper permit assigned to that vessel. From 2015 through 2019, an annual average of 161 (24 percent) snapper-grouper permitted vessels reported landings of red porgy. Therefore, NMFS estimates that 161 snapper-grouper permitted vessels will be directly affected by this rule.

For RFA purposes, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily involved in commercial fishing (NAICS 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and its combined annual receipts are not in excess of $11 million for all of its affiliated operations worldwide. The average annual total revenue for a snapper-grouper permitted vessel that landed red porgy from 2015 through 2019 was $68,539, which is substantially less than the above threshold. Moreover, none of the permitted vessels that land red porgy have annual revenue close to or greater than $11 million. Hence, NMFS estimates that all of the businesses that operate snapper-grouper permitted vessels that land red porgy are small.

Actions 1 and 2 of Amendment 50, which will establish a rebuilding plan and revise the OFL, ABC, annual OY, and total ACL for red porgy, would have indirect impacts on small businesses and their magnitudes are dependent on subsequent action.

Action 3 of Amendment 50 revises the sector allocations and increases the commercial allocation of the total ACL from 50 percent to 51.43 percent. Currently, the commercial ACL is 157,692 lb (71,528 kg), gutted weight, 164,000 lb (157,692 kg), whole weight. In combination, Actions 2 (total ACL) and 3 (sector allocations) would reduce the commercial ACL by 120,603 lb (54,705 kg) for 2022, and then to 110,713 lb (50,219 kg) for 2026 and subsequent years. If average annual commercial ACL landings from 2015 through 2019 represent future baseline landings from 2022 through 2026, Action 3 would generate an average annual reduction of commercial ACL landings of 68,822 lb (31,217 kg) during that 5-year period. At an average dockside price of $2.35 per lb, if the average 161 snapper-grouper permitted vessels with red porgy landings account for all commercial ACL landings of red porgy, they would collectively have annual losses of dockside revenue of $161,733 or individually have an average reduction of $1,005 (1.47 percent) per vessel. However, commercial landings reported by snapper-grouper permitted vessels represent, on average, 91.34 percent of commercial ACL landings from 2015 through 2019. As such, the 161 permitted vessels would collectively have average annual reductions of red porgy landings of 62,822 lb (28,496 kg) (91.34 percent of 68,822 lb (28,496 kg)) and dockside revenue of $147,727, or individually have average annual reductions of 427 lb (194 kg) and $918 (1.34 percent) per vessel.

Commercial landings of red porgy are not equally divided across the states. For purposes of protecting confidential information, Florida and Georgia vessels, landings and revenues are combined. On average, Florida and Georgia combined account for 28.73 percent of annual landings by weight and North Carolina and South Carolina account for 35.38 percent and 35.90 percent, respectively. Consequently, the average revenue losses per vessel under Action 3 (allocation) vary by state. NMFS estimates that the 49 Florida or Georgia vessels that land red porgy would each have an annual loss of $870 (1.24 percent of total dockside revenue), the 70 North Carolina vessels that land red porgy would each have an annual loss of $747 (1.41 percent of total dockside revenue), and the 42 South Carolina vessels that land red porgy would each have an annual loss of $1,251 (1.48 percent of total dockside revenue).

Action 4 (commercial trip limits) in Amendment 50 reduces the commercial trip limits for red porgy in the South Atlantic EEZ from 60 to 15 fish in Season 1 (January 1 through April 3) and 120 to 15 fish in Season 2 (May 1 through December 31). Because of the prohibition on commercially harvesting red porgy that had previously been in effect from January through April from January 1, 2015, to February 26, 2020, landings per trip during March and April of 2020 are used to evaluate baseline trips and landings per trip during March and April of Season 1. The resulting March and April figures are then doubled to produce estimates of the baseline number of trips and landings during Season 1. Baseline landings per trip during Season 2 are evaluated using landings from May 1 through December 31 from 2015 through 2019.

During Season 1, an estimated seven (14.29 percent) of 49 Florida and Georgia vessels report 82 trips that land over 15 red porgy. Similarly, an estimated 17 (24.29 percent) of 70 North Carolina vessels and 13 (30.95 percent) of 42 South Carolina vessels report 86 and 84 trips, respectively, that land over 15 red porgy during Season 1. NMFS estimates that the average trip that lands over 15 red porgy during Season 1 would lose 63 lb (29 kg) in Florida or Georgia, 45 lb (20 kg) in North Carolina, and 62 lb (28 kg) in South Carolina. The average losses in dockside revenue per vessel during Season 1 would be $1,734 for the 7 snapper-grouper permitted vessels that land red porgy in Florida or Georgia, $535 for the 17 snapper-grouper permitted vessels that land the species in North Carolina, and $941 for the 13 snapper-grouper permitted vessels that land red porgy in South Carolina.

From 2015 through 2019, an annual average of up to 52 vessels made 293 trips that landed red porgy in Florida or Georgia during Season 2 (May through December), and 68.60 percent of those trips made by 29 vessels landed more than 15 fish. During that same 5-year period, an annual average of 70 vessels made 590 trips that landed red porgy in North Carolina during Season 2, and 52.88 percent of those trips made by 47 vessels landed more than 15 fish. Furthermore, an annual average of 42 vessels made 362 trips that landed red porgy in South Carolina during Season 2 and 66.85 percent of the trips made by 36 vessels landed more than 15 fish. NMFS estimates that the average trip that currently lands over 15 red porgy in Florida or Georgia would lose 127 lb (58 kg) of red porgy, while the average trips that land over 15 red porgy in North Carolina and South Carolina would lose 75 lb (34 kg) and 103 lb (47 kg), respectively. With an average dockside price of $2.35/lb, the annual average of 29 vessels that land over 15 red porgy per trip during Season 2 in Florida or Georgia would have estimated annual reductions of $2,069 per vessel. Similarly, the average annual 47 vessels that land over 15 fish per trip in North Carolina and 38 vessels that land over 15 fish per trip in South Carolina during Season 2 would have an estimated annual revenue loss of $1,170 and $1,627 per vessel, respectively.

Actions 5 (recreational bag limits and recreational fishing season) and 6 (recreational AMs) in Amendment 50 will have direct impacts on anglers (recreational fishers), and no direct impacts on small businesses. Therefore, descriptions of those actions and analysis of their impacts are neither required nor provided.

The estimated impacts of each of the proposed actions on a vessel with a Federal commercial snapper-grouper permit that reports landings of red porgy are summarized in Table 1. Note that not all vessels are equally affected by the actions. For example, while Action 3 would affect 100 percent of the 49 Florida and Georgia vessels, the Season 1 trip limit of Action 4 would affect 14.29 percent of those 49 vessels. Because of that, the total impact per vessel of the combined actions is not the same for all vessels. Seven Florida and Georgia vessels would experience the maximum total adverse impact of $4,674, assuming they are also affected by the Season 2 trip limit, while 20 Florida and Georgia vessels would experience the minimum total adverse impact of $870. The range of the total impact per vessel is summarized in Table 2.

As described in Amendment 50, annual net revenue from operations for vessels in the commercial snapper-grouper fishery was approximately 5 percent of their average annual total revenue from 2014 through 2016, while average net cash flow was about 19 percent of their average annual gross revenue during this time. Given that the rule could reduce a vessel's annual total revenue by an estimated 4.03 percent to 6.64 percent, NMFS determined that this final rule would have a significant adverse impact on a substantial number of small entities.

Three alternatives to Action 2, which would revise the total ACL, were considered, but not selected by the Council. Two of those alternatives would have larger decreases in the total ACL and subsequently larger reductions in the commercial ACL. As such, those two alternatives would have a larger adverse impact on small businesses. The third alternative, the status quo, would have no adverse impact on small businesses beyond the baseline.

The status-quo alternative to Action 3 (sector allocations), which would keep the commercial allocation of the total ACL at 50 percent, was considered, but not selected by the Council. It would have had a larger adverse economic impact on small businesses than the selected alternative.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency will publish one or more guides to assist small entities in complying with the rule and will designate such publications as “small entity compliance guides.” The agency will explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a fishery bulletin to permit holders that also serves as a small entity compliance guide was prepared. This final rule and the guide ( i.e., bulletin) will be available on the website (see ADDRESSES ). Hard copies of the guide and this final rule will be available upon request (see ADDRESSES ).

For the reasons set out in the preamble, 50 CFR part 622 is amended as follows: