This interim final rule establishes the Postal Service Health Benefits (PSHB) Program within the Federal Employees Health Benefits (FEHB) Program as required by the Postal Service Reform Act of 2022 (PSRA), Public Law 117-108. The PSHB Program will include health benefits plans available only to United States Postal Service (Postal Service or USPS) employees, Postal Service annuitants, and their eligible family members starting January 1, 2025. For these individuals, eligibility for enrollment or coverage in FEHB plans based on Postal Service employment will end on December 31, 2024, and they will be able to enroll in or be covered only by PSHB plans after that time. Subject to limited exceptions, Postal Service annuitants who retire and become Medicare-eligible after December 31, 2024, and their Medicare-eligible family members will be required to enroll in Medicare Part B as a condition of eligibility to enroll in the PSHB Program.

With the enactment of the PSRA and these implementing regulations, the Office of Personnel Management (OPM) may now contract with carriers to offer two categories of health benefits plans through the broad umbrella of the FEHB Program, established under 5 U.S.C. 8901 et seq. First, pursuant to 5 U.S.C. 8902, OPM may contract with carriers to offer FEHB plans. Second, pursuant to 5 U.S.C. 8903c, OPM may now contract with carriers to offer PSHB plans through the PSHB Program within the FEHB Program. The broad umbrella of the FEHB Program comprises both FEHB plans and PSHB plans.

Section 101 of the PSRA adds new section 8903c to chapter 89 of title 5, United States Code, and directs OPM to establish the PSHB Program within the FEHB Program for Postal Service employees, Postal Service annuitants, and their eligible family members. OPM will administer the PSHB Program in accordance with chapter 89 of title 5, United States Code, and implementing regulations (5 CFR parts 890 and 892 and 48 CFR chapter 16), including these amended regulations. Under 5 U.S.C. 8903c(c)(3), except as otherwise set forth in 5 U.S.C. 8903c, the provisions of chapter 89 “applicable to health benefits plans offered by carriers under section 8903 or 8903a shall apply to plans offered under the “[PSHB] Program.”

The PSHB Program was authorized under the Title I Postal Service Financial Reforms provisions in the PSRA in furtherance of Congress's objective to “improve the financial position of the Postal Service while increasing transparency and accountability of the Postal Service's operations, finances, and performance.”  1 OPM is issuing this interim final rule to set forth standards to implement section 101 of the PSRA to establish the PSHB Program. The first Open Season for the PSHB Program will begin on November 11, 2024, and run through December 9, 2024, and the first contract year will begin January 2025.

Section 102 of the PSRA (“The USPS Fairness Act”) amends 5 U.S.C. 8909a which was established in the Postal Accountability and Enhancement Act of 2006 (Pub. L. 109-435) and which required the Postal Service to pre-fund health benefits costs for its retirees. Section 102 of the PSRA repeals the requirement to pay actuarially determined normal cost and amortization payments into the Postal Service Retiree Health Benefits Fund (PSRHBF) established at 5 U.S.C. 8909a, and cancels any unpaid amounts previously required to be paid under section 8909a. Section 102(b) requires OPM to calculate an amount that the Postal Service will pay annually into the PSRHBF using a formula set forth at 8909a(d)(1). This amount will be calculated by June 30 of each year beginning in 2026.

Section 101 of Title I of the PSRA directs OPM to “establish the Postal Service Health Benefits Program within the Federal Employees Health Benefits Program” under chapter 89 of title 5 of the United States Code. The PSRA specifies that “[e]xcept as otherwise provided . . . any [PSHB] contract . . . shall be consistent with the requirements of this chapter for contracts under section 8902 with carriers to offer health benefits plans.” Therefore, generally, the requirements of the FEHB Program will apply to the PSHB Program, unless otherwise set forth in the PSRA or in 5 CFR part 890.

The PSRA establishes the PSHB Program within the FEHB Program. The FEHB Program was established in 1960 and provides a choice of health plans, including fee-for-service plans and health maintenance organizations, to approximately 8.2 million covered individuals including employees of the Federal Government, Federal retirees (referred to as annuitants due to their eligibility for an annuity), members of their families, former spouses, and other groups statutorily eligible as enumerated in 5 U.S.C. 8901 or set forth in other authorizing legislation. Currently, Postal Service employees, Postal Service annuitants, and their family members are also eligible for FEHB pursuant to 39 U.S.C. 1005.

FEHB plans cover a wide range of health services including routine physical exams, primary and specialist doctor's visits, inpatient hospital care, surgery, laboratory and diagnostic tests, prescription drugs, and mental health services. Required benefits are listed in broad categories in the FEHB statute at 5 U.S.C. 8904 and include hospital benefits, surgical benefits, medical care and treatment, and obstetrical benefits, among others. The benefits, coverage, and premium details of each plan in the FEHB Program are negotiated with OPM each year. Eligible individuals can purchase additional dental and vision coverage through the Federal Employees Dental and Vision Insurance Program.

Each year, OPM issues guidance for health benefits carriers preparing FEHB plan benefits proposals. This guidance references OPM's commitment to ensuring that the Federal Government offers competitive, comprehensive health insurance benefits and includes OPM's policy goals and initiatives for the year. For 2023, these goals included advancing health equity, providing gender affirming care and services, and addressing obesity. This guidance outlines technical requirements for each proposal, including benefit package details such as actuarial value, benefit changes from the previous year, and the drug formulary. Carriers offering PSHB plans, as part of the FEHB Program, will be subject to the same or similar guidance. The PSRA requires that carriers offering PSHB plans will, to the greatest extent practicable, offer benefits and cost-sharing ( e.g., deductibles, copayments and coinsurance) equivalent to the benefits and cost-sharing for FEHB plans for that carrier in the initial contract year.

Generally, Federal employees can continue FEHB enrollment into retirement if they have been enrolled in FEHB for five years before retiring or, if less than five years, for all periods in which they were eligible to enroll. FEHB enrollees can also enroll in Medicare when they become eligible for Medicare regardless of whether they are retired or still actively employed. Annuitants who are enrolled in FEHB and covered by Medicare have Medicare as their primary coverage.

Under the PSRA, Postal Service employees whose Government contribution under chapter 89 is paid by the Postal Service, Postal Service annuitants whose Government contribution under chapter 89 is required to be paid under 5 U.S.C. 8906(g)(2), and eligible family members of those Postal Service employees and Postal Service annuitants are eligible for coverage under the PSHB Program. Starting January 2025, these Postal Service employees and Postal Service annuitants may not enroll in an FEHB plan. The major difference in eligibility between PSHB plans and FEHB plans is that, generally, as a new condition of eligibility to enroll in the PSHB Program, the PSRA requires that Postal Service annuitants and their eligible family members who are entitled to Medicare Part A (also referred to as “covered Medicare individuals”), must enroll in Medicare Part B, unless an exception applies.

A “covered Medicare individual” under section 8903c(a)(1) generally means an individual who is entitled to Medicare Part A, but the term excludes an individual who is eligible to enroll under section 1818 or 1818A of the Social Security Act (42 U.S.C. 1395i-2, 1395i-2a). Individuals eligible to enroll in Medicare Part A under 1818 are individuals age 65 or older who are not otherwise eligible for premium-free Medicare Part A, typically due to not having the required work history for premium-free Part A. Individuals eligible to enroll under 1818A are disabled individuals who lose Medicare coverage solely because of substantial gainful work. These individuals are exempt from the Medicare Part B enrollment requirement that applies to most other Postal Service annuitants and their PSHB-eligible family members.

For purposes of the FEHB Program, 5 U.S.C. 8901(5) defines a “member of family” of employees and annuitants to include spouses and children under 22 years of age, subject to exception, including natural children, adopted children, stepchildren, and foster children. The enactment of the Affordable Care Act in 2010 required health insurers to cover dependents until age 26. At that time OPM issued updates to its regulations to reflect that change and codified 5 CFR 890.302(b) and (c) which defines FEHB covered family members to include such children until they reach the age of 26, subject to exception. The PSHB Program will align with 5 CFR part 890 regarding the definition of family members for all purposes, including the Medicare special enrollment period (SEP) opportunity.

The PSRA adds new definitions to chapter 89. Section 8903c(a)(9) defines a Postal Service employee as “an employee of the Postal Service enrolled in a health benefits plan under this chapter whose Government contribution is paid by the Postal Service.” Under section 8903c(a)(8), a Postal Service annuitant “means an annuitant enrolled in a health benefits plan under this chapter whose Government contribution is required to be paid under section 8906(g)(2).” Therefore, individuals not meeting the statutory definition of a Postal Service annuitant or Postal Service employee are not eligible to enroll in a PSHB plan. If such individuals are eligible for enrollment in an FEHB plan, they may enroll or continue enrollment in such plan.

The PSRA does not establish a distinct category for Postal Service compensationers, those employees who sustain workplace-related illness or injury, receive workers' compensation payments through the Department of Labor's Office of Workers' Compensation Programs (OWCP) because of that illness or injury, and who are determined by the Secretary of Labor to be unable to return to duty. Section 8901 of title 5, U.S.C. includes “an employee who receives monthly compensation under subchapter I of chapter 81 of this title and who is determined by the Secretary of Labor to be unable to return to duty” in the definition of annuitant. 2 However, the PSRA definition of Postal Service annuitant is limited to those who are enrolled in a health benefits plan under 5 U.S.C. chapter 89, whose Government contribution is required to be paid under section 8906(g)(2).

Section 8906(g)(2) authorizes Government contributions for health benefits for individuals who become Postal Service annuitants “by reason of retirement” and their survivors. These contributions are paid first by the Postal Service Retiree Health Benefits Fund with any remaining amount paid by the Postal Service. The description in 8906(g)(2) does not include Postal Service compensationers, as they have not become annuitants by reason of retirement. Postal Service compensationers are more closely aligned with the 8903c(a) definition of Postal Service employee, whose Government contribution is paid by the Postal Service.

The definition of Postal Service employee, rather than Postal Service annuitant, will include Postal Service compensationers. Postal Service compensationers will not be subject to the Medicare Part B enrollment requirement, regardless of Medicare Part A entitlement.

The Centers for Medicare & Medicaid Services (CMS) generally considers those receiving worker's compensation payments to be employees. As described above, compensationers are considered to be employees within the meaning of 42 CFR 411.40, 411.43, and 411.45. Medicare is the secondary payer for all compensationers enrolled in an FEHB plan or a PSHB plan. Even if a compensationer is entitled to or eligible for Medicare benefits, enrolled in Medicare, and enrolled in an FEHB plan, Medicare is still the secondary payer, notwithstanding the statutory annuitant status for purposes of FEHB enrollment, with respect to those compensationers determined unable to return to duty. Should a Postal Service compensationer who is enrolled in a PSHB plan and entitled to or eligible for Medicare benefits choose to enroll in Medicare, that compensationers' Medicare coverage would be secondary to the PSHB plan coverage. Postal Service annuitants enrolled in Medicare and enrolled in a PSHB plan would have Medicare as primary coverage and PSHB plan coverage as secondary.

Eligibility for the PSHB Program does not affect eligibility for other Federal benefits. Postal Service employees and Postal Service annuitants may continue to enroll and cover their eligible family members in the Federal Employees Dental and Vision Insurance Program (FEDVIP), Federal Employees' Group Life Insurance (FEGLI), Federal Long Term Care Insurance Program (FLTCIP), and, for Postal Service employees and their family members, participate in the Federal Flexible Spending Account Program (FSAFEDS).

The PSRA includes the following requirements for consultation between OPM and several other Federal agencies:

• 5 U.S.C. 8903c(e)(3)(B) requires that OPM, in consultation with the Secretary of Veterans Affairs, Secretary of Health and Human Services, and the Postmaster General, promulgate regulations implementing the Department of Veterans Affairs (VA) and Indian Health Service (IHS) coverage exceptions to the Medicare enrollment requirements for certain Postal Service Medicare covered annuitants and family members enrolled in certain health care benefits provided by the VA, or eligible for IHS health services, within a year of enactment. OPM has engaged in this consultation since the PSRA was enacted.

• 5 U.S.C. 8903c(e)(4) requires OPM and the Postal Service, in consultation with the Social Security Administration (SSA) and CMS, to establish a process that will enable the Postal Service to timely inform Postal Service employees, Postal Service annuitants and the family members of Postal Service employees and annuitants of the Medicare enrollment requirements. OPM has engaged in this consultation since the PSRA was enacted.

• 5 U.S.C. 8903c(g)(2) requires OPM to consult with the Department of Health and Human Services (HHS) Secretary, VA Secretary, SSA Commissioner, and the Postmaster General in issuing regulations carrying out section 101 of the PSRA to include (1) a process to timely inform individuals of the enrollment requirements and how to request additional enrollment information in writing; (2) how an individual enrolled in PSHB can request a belated change of plan and be prospectively enrolled in a plan of the Postal Service employee's or Postal Service annuitant's choice; and (3) how individuals can cancel PSHB coverage in writing to the Postal Service because the individuals choose not to enroll in, or to disenroll from, Medicare Part B; and (4) any provisions necessary to implement the section. OPM has engaged in this consultation since the PSRA was enacted.

• 5 U.S.C. 8903c(l)(4)(B) requires the Postal Service to coordinate with OPM, and in consultation with CMS and SSA, to obtain and confirm accuracy of information as the Postal Service determines to be necessary to conduct the Health Benefits Education Program. 5 U.S.C. 8903c(l)(5)(C) requires the Postal Service, in consultation as necessary with OPM and CMS, to develop standards to ensure that information made available by navigators is fair, accurate, and impartial.

• 5 U.S.C. 8903c(l)(6) requires the Postal Service, as part of the regulations for the Health Benefits Education Program, to develop a process in consultation with OPM, SSA, and CMS for addressing inquiries from Postal Service employees and Postal Service annuitants about PSHB or Medicare enrollment.

• Section 101(c) of the PSRA requires OPM to establish a process by regulation to provide information to SSA regarding Postal Service annuitants and their family members who may be eligible to enroll in Medicare Part B during the special enrollment period (SEP) established by the PSRA under the Social Security Act. The section also requires SSA to provide information to OPM and the Postal Service regarding whether Postal Service annuitants and their family members are entitled to benefits under Medicare Part A and enrolled under Medicare Part B to assist OPM and the Postal Service in determining who may be eligible to enroll in Medicare Part B during the SEP, or who may be subject to the Part B enrollment requirements for PSHB eligibility. This interim final rule includes a process for OPM to provide information to SSA for these purposes.

• 5 U.S.C. 8909a(f) requires that OPM, after consultation with the Postal Service, promulgate any regulations determined necessary under section 102 of the PSRA with respect to the Postal Service Retiree Health Benefits Fund. OPM has addressed this provision in this regulation.

This interim final rule amends subparts A, C, and E of 5 CFR part 890 related to the FEHB Program and 48 CFR chapter 16, the Federal Employees Health Benefits Program Acquisition Regulation (FEHBAR). This interim final rule also adds a new subpart P to 5 CFR part 890 regulating the new PSHB Program within the FEHB Program.

This regulation establishes rules for the operation of the PSHB Program within the parameters of the PSRA. To the greatest extent possible, OPM is aligning these rules with the FEHB Program's treatment of FEHB plans. Where there is no existing rule applicable to FEHB plans, OPM is implementing the greatest flexibility for Postal Service employees, Postal Service annuitants, and their eligible family members.

OPM is amending § 890.101 to add definitions specific to the PSHB Program, including Postal Service, Postal Service employee, Postal Service annuitant, PSHB plan, and PSHB Program. OPM is also adding definitions for FEHB plan and FEHB Program. These definitions explain the relationship between the FEHB Program and the PSHB Program. In short, the FEHB Program offers FEHB plans, and the PSHB Program within the FEHB Program offers PSHB plans. As a result, the FEHB Program offers both FEHB plans and PSHB plans.

Section 8903c(a) of the PSRA includes definitions for the new PSHB Program. A Postal Service Medicare covered annuitant is defined as an individual who is both a Postal Service annuitant and a covered Medicare individual ( i.e., an individual entitled to benefits under Medicare Part A). 3 Section 8903c(e) requires that Postal Service Medicare covered annuitants and eligible family members who are covered Medicare individuals enroll in Medicare Part B to enroll or maintain enrollment in a PSHB plan unless an exception described in section 8903c(e)(3) applies. Section 8903c(a) excludes those who are eligible to enroll in Medicare under section 1818 or 1818A of the Social Security Act from the definition of covered Medicare individual.

OPM is adding a new § 890.115 to apply provisions of part 890 to Postal Service employees, Postal Service annuitants, and eligible family members unless the provision is inconsistent with PSRA law at 5 U.S.C. 8903c or the PSHB regulation in subpart P of part 890.

Postal Service employees and Postal Service annuitants will be eligible for enrollment in PSHB plans, not FEHB plans, starting with the initial PSHB contract year of 2025. Under 5 U.S.C. 8903c(d)(2), Postal Service employees and Postal Service annuitants may not enroll in FEHB plans for plan year 2025 or thereafter. OPM is adding a new § 890.301(p) to implement that prohibition, which will begin after December 31, 2024. There are no statutory exceptions to this prohibition on FEHB plan enrollment.

OPM is amending § 890.302 to apply to the whole of part 890, removing specific references to the FEHB Program to cover both FEHB plans and PSHB plans.

OPM is adding a new paragraph (l) to § 890.303 to indicate that a Postal Service employee eligible to enroll in a PSHB plan who moves to a Federal agency, without a break in service of more than three days, cannot continue in PSHB plan enrollment but may be eligible for FEHB plan enrollment if their position conveys eligibility. This is similar to the current FEHB rules that allow an employee to continue FEHB enrollment if they have a break in service of no more than three days.

Likewise, an employee who moves from a Federal agency to a PSHB-eligible Postal position, without a break in service of more than three days, may change to PSHB plan enrollment in the new job but otherwise may not maintain FEHB plan enrollment.

Enrollees in the PSHB Program will be subject to the FEHB Program requirement of maintaining enrollment for 5 years of service before retirement in order to carry that coverage into retirement. A Postal Service annuitant who (at the time the individual becomes an annuitant) was enrolled in a health benefits plan under chapter 89, including under 8903c, can meet that 5-year requirement if they were so enrolled as a Postal Service employee, as an employee defined at 5 U.S.C. 8901(1), 4 or a mix of both in order to maintain health benefits after retirement. That individual would maintain eligibility to continue enrollment in the FEHB plan or PSHB plan in which they were enrolled immediately before retirement. Subsequent changes in enrollment may be made, as permitted under chapter 89, from one FEHB plan to another FEHB plan, or from one PSHB plan to another PSHB plan under section 8903c, as applicable to the service from which the individual retired.

OPM's existing regulation at 5 CFR 890.303(d)(2), regarding employees who become survivor annuitants, continues to apply, as amended. The rule is expanded and now applies to an employee who is a survivor annuitant of a Postal Service employee or Postal Service annuitant and to a Postal Service employee or Postal Service annuitant who is a survivor annuitant of an employee. In either case, if an employee enrolled in a FEHB plan or a Postal Service employee enrolled in a PSHB plan separates with insufficient service to continue enrollment into retirement, but the separated individual is a survivor annuitant of an employee or annuitant, or of a Postal Service employee or Postal Service annuitant, and the separated individual is entitled to enroll as a survivor annuitant, the enrollment may be reinstated under the FEHB Program or PSHB Program as applicable to the service that gives rise to the survivor annuitant status.

In § 890.308, OPM is adding a new paragraph (i) that may require disenrollment from PSHB plans for Postal Service Medicare covered annuitants or removal from coverage of Medicare covered members of family who are not enrolled in Medicare Part B, unless an exception applies. Generally, unless an individual qualifies for an exception from the Medicare enrollment requirement, the individual will be disenrolled or removed from coverage from a PSHB plan if they have not enrolled in Medicare Part B (for example, during their seven-month Medicare Initial Enrollment Period (IEP), or applicable Medicare SEP). Pursuant to § 890.1612 in the new subpart P, OPM will share information regularly with SSA and CMS to confirm an individual's entitlement to Medicare Part A as well as enrollment or non-enrollment in Medicare Part B.

In a case where OPM, the PSHB Carrier, or the Postal Service belatedly learns that a Postal Service Medicare covered annuitant or eligible family member who is a covered Medicare individual who is enrolled or covered in a PSHB plan is not enrolled in Medicare Part B and does not qualify for an exception to the Medicare enrollment requirement, that individual will be permitted to stay enrolled in or covered by PSHB if they enroll in Medicare during their next enrollment opportunity, which may be the next Medicare General Enrollment Period. This opportunity to stay enrolled in PSHB despite lacking Medicare Part B coverage is not intended to allow a covered Medicare individual to maintain PSHB coverage without a good faith effort to remain continuously enrolled in Medicare Part B. The individual must enroll in Medicare Part B during that next available enrollment period (in this example, the next General Enrollment Period) and pay for any applicable late enrollment penalty assessed by CMS in order to remain in the PSHB plan. Such late enrollment penalty will increase the Medicare Part B premium as long as the individual is enrolled in Medicare Part B. If the Postal Service Medicare covered annuitant or eligible Medicare covered family member does not enroll in Medicare Part B at the next opportunity such as a Medicare General Enrollment Period, they will be disenrolled or removed from a PSHB plan and, in the case of a Postal Service annuitant, will have no further opportunity to re-enroll in a PSHB plan. Disenrollment of a Postal Service annuitant will also result in the removal of covered family members from PSHB coverage.

In any case where a Postal Service Medicare covered annuitant is disenrolled from a PSHB plan for non-enrollment in Medicare Part B, OPM will treat this removal as a termination. A termination, in contrast with a cancellation, confers rights to a 31-day temporary extension of coverage and rights to conversion for the enrollee and covered family members. Per existing FEHB regulation at 5 CFR 890.401, an enrollee or family member whose enrollment is terminated other than by a cancellation or discontinuance of plan is entitled to a 31-day temporary extension of coverage for self only, self plus one, or self and family without contributions by the enrollee or the Government. During that 31-day period, OPM requires carriers to either offer the individual a guaranteed-issue conversion policy or provide assistance enrolling in such a policy on or off the Health Care Marketplace or Exchange. OPM requests public comment on this approach.

This new subpart P implements section 101 of the PSRA establishing the PSHB Program for Postal Service employees, Postal Service annuitants, and their eligible family members. The PSHB Program set forth at 5 U.S.C. 8903c will be the only health benefits program available to these individuals through 5 U.S.C. chapter 89, and PSHB plans will be offered in lieu of FEHB plans for these individuals beginning with the first contract year in January 2025.

In § 890.1602(c), OPM defines terms specific to the PSHB Program. Statutorily defined terms have the same meaning as in the PSRA. Several other terms are defined to account for the Medicare enrollment requirements for Postal Service Medicare covered annuitants and their Medicare covered members of family in the PSHB.

The term “cancel” carries the same meaning as in FEHB, applying when an individual elects not to continue coverage, despite remaining eligible. The PSRA uses the term “cancel” in section 8903c(g) to describe when an individual loses PSHB coverage because of a decision not to enroll in Medicare Part B, or to disenroll from Medicare Part B. OPM is using its administrative authority to classify this circumstance as a termination in order to provide the individual with a 31-day temporary extension of coverage and rights to conversion. This classification of certain cancellations as terminations is delineated in § 890.1608(b)(5).

In § 890.1602(d), OPM deems references made to other subparts of part 890 to mean definitions established in subpart P. References incorporated in subpart P that do not apply to Postal Service employees or Postal Service annuitants or their eligible family members are not applicable and do not have meaning in subpart P.

As directed by the PSRA, § 890.1603, “Eligibility for the Postal Service Health Benefits Program,” allows that Postal Service employees, Postal Service annuitants, and family members will be eligible for coverage in the PSHB starting with the first contract year beginning January 2025. Under the PSRA, certain individuals are ineligible to enroll or be covered; they include:

• Postal Service Medicare covered annuitants without Medicare Part B coverage who are not covered by an exception in § 890.1604(c);

• Postal Service Medicare covered members of family who do not enroll in Medicare Part B and who are not covered by an exception in § 890.1604(c); and

• Any individual covered by another health benefits plan under chapter 89 of title 5, U.S.C. except as permitted under dual enrollment rules at § 890.302.

OPM is adding § 890.1603(d) to allow former spouses of Postal Service employees and Postal Service annuitants to enroll in an FEHB plan as described in subpart H (“Benefits for Former Spouses”). A former spouse of a Postal Service employee or Postal Service annuitant who is enrolled in an FEHB plan on or before December 31, 2024, may continue enrollment in an FEHB plan and is not required to change to a PSHB plan. Former spouses are not included in the PSRA as eligible for PSHB enrollment. Therefore, an individual who was covered under their spouse's PSHB plan would not continue eligibility if they became a former spouse. Those former spouses could enroll in an FEHB plan. Such former spouses will not be subject to the Medicare Part B enrollment requirement, regardless of Medicare eligibility or enrollment status. OPM invites comment on this approach.

OPM is adding § 890.1603(e) to allow survivor annuitants to be enrolled in PSHB plans in the same way they would have been enrolled in FEHB plans, with the addition of the Medicare enrollment requirement in § 890.1604.

Section 890.1604(a) requires that certain Postal Service annuitants who are entitled to Medicare Part A, and their eligible family members who are entitled to Medicare Part A, enroll in Medicare Part B as a condition of eligibility to enroll in or continue enrollment in the PSHB Program. This implements section 8903c(e) of the PSRA and is a unique requirement as a condition of participation in a health benefits program under chapter 89 of title 5, U.S.C. This requirement applies regardless of whether the Postal Service annuitant becomes entitled to Medicare Part A due to age, disability status, or other eligibility pathway.

As described above, all Postal Service compensationers will be considered employees for the purposes of the PSHB Program and will not be subject to the Medicare Part B coverage requirement. PSHB enrollees and covered members of family who are entitled to Medicare Part A and enrolled in Medicare Part B are able to receive their Medicare Part A and B benefits through Original Medicare or by enrolling in an available Medicare Advantage plan. Individuals entitled to Part A and enrolled in Part B may be able to buy Medigap policies, subject to certain requirements.

OPM is amending § 890.308, “Disenrollment and removal from enrollment,” to add a new paragraph (i) to insert cross reference to new § 890.1608(b), which describes the circumstances under which an individual can be disenrolled from a PSHB plan for non-enrollment in Medicare Part B.

Postal Service Medicare covered annuitants and their Medicare covered members of family will be required to enroll in Medicare Part B at their first opportunity, usually within the 7-month IEP around their 65th birthday or during an SEP if they are over the age of 65 and still in active employment. An individual can be removed or disenrolled from a PSHB plan if they do not enroll within those enrollment periods unless they qualify for an exception detailed in § 890.1604(c).

A Postal Service Medicare covered annuitant or Medicare covered member of family could be determined ineligible for PSHB if not enrolled in Medicare Part B. An individual can be disenrolled or removed from a PSHB plan any time after OPM, the PSHB Carrier, or the Postal Service determines that a Medicare covered annuitant or Medicare covered member of family required to be enrolled in Medicare Part B is not so enrolled. The process for disenrollment or removal from a PSHB plan for non-enrollment in Medicare Part B is detailed in § 890.1608(b).

Section 890.1604(c) describes the statutory exceptions to the Medicare Part B enrollment requirement for Postal Service Medicare covered annuitants and their Medicare covered members of family. Those exceptions are:

• Individuals who, as of January 1, 2025, are Postal Service annuitants who are not both entitled to benefits under Medicare Part A and enrolled in Medicare Part B;

• Individuals who, as of January 1, 2025, are Postal Service employees who are aged 64 and over;

• Postal Service Medicare covered annuitants and family members residing outside the United States and its territories who demonstrate their residency in accordance with Postal Service regulations;

• Postal Service Medicare covered annuitants and their family members enrolled in certain VA health care benefits. This exemption is derived from 5 U.S.C. 8903c(e)(3)(A)(iv)(II), which refers to individuals “enrolled in health care benefits provided by the Department of Veterans Affairs under subchapter II of chapter 17 of title 38, United States Code.” Subchapter II of chapter 17 of title 38, U.S.C. governs who is eligible for various VA health care benefits, including eligibility for VA hospital care and medical services. There is a limited class of veterans who are not required to enroll in the system of patient enrollment referred to in 38 U.S.C. 1705(a) in order to receive VA benefits described in subchapter II of chapter 17 of title 38, United States Code. As such, this regulation is drafted to include all veterans described in 38 U.S.C. 1710, including those who are not required to enroll in the VA's system of patient enrollment referred to in 38 U.S.C. 1705(a);

• Postal Service Medicare covered annuitants and family members eligible for health services provided by the Indian Health Service; and

• A Medicare covered member of family of a Postal Service Medicare covered annuitant who is not required to enroll in Medicare Part B, based on a statutory exception, in order to be eligible for PSHB coverage.

Section 890.1604(c) satisfies the requirement in 5 U.S.C. 8903c(e)(3)(B) that OPM promulgate regulations to implement the VA and IHS coverage exceptions. OPM consulted with VA and IHS beginning in the Spring of 2022 to draft these policies. IHS strongly recommends that Medicare covered Postal Service annuitants and their family members be permitted to use self-attestation as proof of eligibility for IHS health services for purposes of an exception to the Medicare Part B requirement. There are various acceptable documents or evidence that IHS uses as proof of eligibility for IHS health services, and OPM recommends accepting these as proof for the Medicare Part B exception. OPM seeks comment on this approach. Section 890.1604(d) describes how Medicare covered annuitants and Medicare covered members of family can demonstrate that they qualify for an exception to the Medicare enrollment requirement.

As required by the PSRA, § 890.1604(e) allows a Medicare covered annuitant or Medicare covered family member to notify the Postal Service in writing that they choose not to enroll or to disenroll from Medicare Part B. Per the PSRA statute, this would have the effect of cancelling PSHB enrollment. OPM will treat this circumstance as a termination, conferring rights to a 31-day temporary extension of coverage and conversion. OPM invites comment on this approach, which is intended to implement a member-centric approach to the transition to the PSHB Program.

Under 5 CFR 890.304(d)(2), an annuitant or survivor annuitant may suspend FEHB enrollment if they choose to get certain alternative coverage, including Medicare Advantage (MA), Medicaid or a similar state-sponsored program of medical assistance for the needy, Peace Corps, CHAMPVA, TRICARE (including coverage provided by the Uniformed Services Family Health Plan), or TRICARE-for-Life. These rules will apply to the PSHB Program. While PSHB enrollment is suspended, no PSHB premiums would be required. These individuals can re-enroll in a PSHB plan, subject to subpart P requirements, for instance, during the next Open Season, when they involuntarily lose coverage, or move out of an MA Plan's service area.

The Federal Employees Health Benefits Children's Equity Act of 2000 (Pub. L. 106-394) codified at 5 U.S.C. 8905(h) requires OPM to compel appropriate FEHB enrollment of an eligible employee in the presence of a court or administrative order for health insurance coverage of children and to prohibit the discontinuation of such enrollment by an annuitant who continued coverage into retirement. This law will be applied with respect to PSHB enrollment for those Postal Service employees who are under a court or administrative order to provide health insurance coverage and with respect to those Postal Service annuitants for whom a court order continues from when they were an employee, to the extent the Postal Service annuitant remains enrolled in a PSHB plan.

A Postal Service employee or Postal Service annuitant would be subject to the rules concerning court and administrative orders in the same way as employees and annuitants enrolled in an FEHB plan; however, the provisions of 5 U.S.C. 8905(h) cannot be fully and properly applied with respect to Postal Service annuitants for whom a court order continues from when they were an employee. While OPM has authority to compel enrollment in a PSHB plan and withhold the appropriate share of contribution toward premiums, the PSRA includes no authority for OPM to compel enrollment in Medicare Part B by Postal Service Medicare covered annuitants on the grounds of a court order for coverage of children. Further, a Postal Service annuitant who is subject to a court or administrative order to provide health insurance coverage could be disenrolled from PSHB coverage because of non-enrollment in Medicare Part B. In such a circumstance, the child would be without PSHB coverage despite the court or administrative order, and OPM would be without authority to compel continued enrollment in PSHB by a Postal Service annuitant who is required to be enrolled in Medicare Part B as a condition of PSHB enrollment but is not so enrolled.

The PSHB plan year will run from January 1 to December 31 each year starting in 2025. Any Open Season enrollment, change of enrollment, or reenrollment will take effect on January 1 of each year starting in 2025. The PSHB plan year is in contrast to the effective date of new FEHB enrollments by employees during the annual Federal Benefits Open Season, which is the first day of the first pay period that begins in the next year, and which follows a pay period during any part of which the employee is in a pay status. See § 890.301(f)(4)(i). For Open Season changes in FEHB enrollment for Postal Service employees, the effective date is the first day of the first pay period that begins in January of the next year. See § 890.301(f)(4)(ii). Under the current regulations, the effective date for FEHB enrollments and changes in enrollment may be different each year based on which day in January is the first day of the pay period.

OPM is making this change because a calendar year start date is easier for enrollees to track and follow their PSHB coverage. In addition, setting the PSHB plan year start date to January 1 would be consistent with the industry standard; the cutoff date for Postal Service Medicare covered annuitants who are listed as exceptions to the Medicare enrollment requirement; the effective date of benefit changes under OPM's contracts with carriers; health savings accounts for high deductible health plans; flexible spending accounts; coverage under the FEDVIP; and payments to compensationers.

A standard January 1 start date to the plan year may present certain challenges, which became apparent when OPM proposed such a change for the FEHB Program in 1998. 5 Such challenges include an effective way to collect and pro-rate FEHB premiums when one switches plans, given that January 1 is in the middle of a pay period for most Federal and Postal Service employees. Because of these challenges, OPM eventually withdrew the 1998 proposed rule in 2003. 6

OPM believes the prior challenges are mitigated by the advancement of technology, including the establishment of a centralized enrollment system for the PSHB Program. OPM also believes that payroll offices and other stakeholders will have the necessary lead time to make all appropriate system changes to accommodate this effective date.

OPM invites comments on a January 1 plan year start date for the PSHB Program. OPM invites comments on the operational feasibility of implementing a standard January 1 effective date for Open Season PSHB enrollment actions, including any challenges relating to premium allocation and whether it makes a difference if the centralized enrollment system calculates and requests the partial premium versus the Federal payroll provider.

Section 890.1605 establishes enrollment in the initial contract year, including a transitional Open Season that coincides with the standard FEHB Program Open Season in 2024 for enrollment in health benefits plans offering coverage in 2025. Definitions are included in § 890.1605(a), and the transitional Open Season is defined in § 890.1605(b). Consistent with 5 U.S.C. 8903c(f), the PSHB transitional Open Season will run at the same time as the standard FEHB Open Season outlined at § 890.301(f), starting the Monday of the second full workweek in November, going through the Monday of the second full workweek in December. This is the time period for Postal Service employees and Postal Service annuitants to select and enroll or continue enrollment, or choose not to enroll or continue enrollment, in a PSHB plan. Starting with the 2024 Open Season, Postal Service employees and Postal Service annuitants are ineligible to enroll or continue enrollment in FEHB plans for the 2025 plan year and thereafter.

Automatic enrollment into a PSHB plan for the initial contract year is described in § 890.1605(c). The PSRA requires that FEHB-enrolled Postal Service employees and Postal Service annuitants that do not make an election to enroll in a PSHB plan during the transitional Open Season will be automatically enrolled in a PSHB plan offered by their current FEHB Carrier to begin January 2025. If the carrier offers multiple PSHB plans or options, the individual will be automatically enrolled in the carrier's plan and option with equivalent or most similar benefits and cost-sharing to the individual's current FEHB plan. In a case where the carrier is not offering PSHB plans, those individuals will be automatically enrolled in the lowest-cost nationwide PSHB plan option that is not a high deductible health plan and does not charge an association or membership fee. All automatic enrollments will be into a PSHB plan of the same enrollment type (self only, self and family, or self plus one) as the 2024 FEHB plan.

In the FEHB Program, employees in a nonpay status, such as leave without pay, are not generally able to enroll in an FEHB plan during Open Season. OPM is changing this policy for the PSHB Program for the transitional Open Season in 2024 only. FEHB enrollments and FEHB plan eligibility will terminate at the end of 2024 for all Postal Service employees. Since these individuals can't continue their FEHB plan enrollment into 2025, OPM will permit Open Season elections for eligible Postal Service employees, regardless of pay status with the exception of § 890.303(e) individuals whose enrollment is terminated due to 365 days of nonpay status, for the 2024 Open Season only. OPM invites comment on this approach, which is intended to implement a member-centric approach to the transition to PSHB coverage.

Continuity of enrollment for PSHB is detailed in § 890.303 (“Continuation of enrollment”). As described above, OPM is updating the list of exclusions from the continuation of enrollment requirements.

Section 890.103 allows for OPM to correct administrative FEHB plan enrollment errors, including retroactive actions such as enrollments and correction of enrollment code errors. Such corrective actions are subject to appropriate withholding and contributions of premiums, which requires payment from the employee or annuitant for each pay period they are enrolled in a health benefits plan.

These correction of errors provisions will apply in the PSHB Program, as laid out in § 890.1614. This new section adds a clause to state “except that retroactive corrections to an enrollment under this subpart may not go further back than the initial contract year.” This is to establish that there cannot be a retroactive correction to a PSHB enrollment before the initial contract year of the PSHB Program.

Terminations are addressed in the FEHB Program according to rules in § 890.304. Section 890.304(b)(2) allows an annuitant whose coverage was terminated due to insufficient annuity to pay withholdings for the health benefits plan in which the annuitant was enrolled, to request reinstatement of coverage from the retirement systems when they failed, due to circumstances beyond their control, to directly pay premiums or to make an election to change enrollment to a health benefits plan so that their annuity was sufficient for the new withholdings. In this circumstance, the retirement system may reinstate coverage retroactively to the termination date.

Although 5 U.S.C. 8903c(d)(2) prohibits Postal Service employees and Postal Service annuitants who are covered in PSHB plans from enrolling or continuing enrollment in FEHB plans after 2024, the statute does not prohibit retroactive enrollment into a FEHB plan for an effective date beginning on or before December 31, 2024, before the start of the PSHB Program. Such retroactive enrollments may occur, for instance, due to an enrollment processing error that pre-dated the first contract year of the PSHB Program.

Section 890.1610 outlines the minimum standards for PSHB Carriers and plans, including a requirement to provide Medicare prescription drug benefits to Medicare Part D-eligible annuitants and family members pursuant to 5 U.S.C. 8903c(h). Section 8903c(c)(1)(B) of title 5, U.S.C. requires that PSHB plan contracts under the PSHB Program are consistent with the requirements of chapter 89 for FEHB plan contracts under section 8902. The minimum standards for PSHB Carriers will be the same as for FEHB Carriers as described at 48 CFR 1609.70, with the addition of the new § 1609.7002 outlining the minimum standards for PSHB Carriers. A PSHB plan must meet the minimum standards at 5 CFR 890.201. All PSHB plans must have coverage effective on January 1 of each contract year.

As required by 8903c(c)(1)(C), the FEHB Program will offer, to the greatest extent practicable, a PSHB plan from each FEHB Carrier that has a plan with 1,500 or more Postal Service employees or Postal Service annuitants enrolled in the 2023 contract year. In the initial contract year, PSHB Carriers must offer PSHB plans that have coverage with equivalent benefits and cost-sharing to the FEHB plans offered by that carrier, except to the extent needed to integrate Medicare Part D prescription drug benefits. If the FEHB plans offered by a carrier do not meet the requirements under Medicare Part D, then the carrier will need to adjust its corresponding PSHB plan accordingly. A carrier's prescription drug coverage may be different in its PSHB plan than in its FEHB plan.

OPM has the authority to exempt comprehensive medical plans, as described in 5 U.S.C. 8903(4), from the requirement that the PSHB Program include, to the greatest extent practicable, a plan offered by any FEHB Carrier that has a plan with 1,500 or more Postal Service enrollees. Comprehensive medical plans are defined in FEHB statute as one of four health plan categories that OPM is authorized to contract for. The term “comprehensive medical plans” refers to health maintenance organizations (HMOs). Many of these HMOs are regional rather than nationally available plans.

PSHB plans will offer the same enrollment types as FEHB plans, including self only, self plus one, and self and family coverage. Only Postal Service employees and Postal Service annuitants, including survivor annuitants, and those eligible for temporary continuation of coverage (TCC), may enroll in PSHB plans established under new subpart P of part 890. Those eligible to enroll may add eligible family members to their enrollment.

The PSRA requires plans in the PSHB Program to provide prescription drug benefits through Medicare Part D for Part D-eligible Postal Service annuitants and their Part D-eligible family members. Under 5 U.S.C. 8903c(h), PSHB plans are required to provide prescription drug benefits to these individuals through “employment-based retiree health coverage” either through a “prescription drug plan (PDP)” or a contract with a “PDP sponsor” of a prescription drug plan, as terms are defined in section 1860D-22(b), 1860D-41(a)(14), and 1860D-41(a)(13) of the Social Security Act, respectively.

A carrier offering employment-based retiree health coverage, defined in section 1860D-22(c)(1) of the Social Security Act and referred to in section 5 U.S.C. 8903c(h)(2) and a conforming amendment to 1860D-22(b), may provide prescription drug coverage through an employer group waiver plan or EGWP (for a discussion of EGWPs, see Prescription Drug Benefit Manual, Chapter 12, 7 Application of CMS Employer Group Waiver Authority).

To ensure compliance with 5 U.S.C. 8903c(h)(2) of the PSRA, a carrier seeking to offer a Medicare Advantage Prescription Drug (MA-PD) plan to PSHB members must offer prescription drug coverage for Part D-eligible Postal Service annuitants and their Part D-eligible family members through a PDP or through a contract with a PDP Sponsor and may, subject to OPM's approval, offer MA-PD coverage as an alternative for these individuals to elect, should they so choose. Consistent with FEHB Program policy and current FEHB contract provisions, OPM will consider carrier applications for PSHB plans that coordinate with EGWP MA-PDs, subject to the requirements in 8903c(h)(2) and negotiation with OPM.

Section 890.1611 describes OPM's right to withdraw approval of any PSHB plan or carrier, and to give notice of non-renewal of any health benefits plan contract for failure to meet applicable standards.

Section 890.1610(a)(4) implements the requirement at 5 U.S.C. 8903c(j) that OPM maintain separate reserves, including contingency reserves, for each PSHB plan. These reserves will include an account in OPM's administrative reserve and a contingency reserve for each plan, established under and governed by 5 CFR 890.503, 48 CFR chapter 16, and carrier contract.

Section 890.1612 requires OPM to enter into agreements with other agencies for information exchange necessary to implement the PSHB Program. As required by section 101(c)(2) of the PSRA, OPM will exchange information to SSA as necessary regarding Postal Service annuitants and their family members who may be subject to the Medicare enrollment requirements described in § 890.1604 or who may be eligible to enroll in Medicare Part B during the new Part B six-month SEP (beginning April 1, 2024) which was created by the PSRA as available to certain Postal Service annuitants and family members who are entitled to Medicare Part A and is described in section 1837(o) of the Social Security Act. In addition, OPM will establish periodic agreements with HHS, the Postal Service, VA, and other Federal agencies as needed to share data and information as is necessary to implement the PSHB Program.

These periodic agreements will specify the data elements that will be shared, the process for information sharing, the frequency of information sharing, and how that data can be used and disclosed. The purpose of these agreements is to determine (1) which Postal Service employees, Postal Service annuitants, and family members may be eligible to enroll in or be covered by in PSHB plans, (2) which Postal Service Medicare covered annuitants and Medicare covered members of family may be subject to the enrollment requirements described in § 890.1604, (3) whether Postal Service Medicare covered annuitants and Medicare covered members of family satisfy the Medicare enrollment requirements at § 890.1604, (4) which Postal Service annuitants and family members may be eligible to enroll in Medicare Part B during the six-month SEP beginning April 1, 2024 under a new section 1837(o) of the Social Security Act, and (5) a system for data sharing as needed for carrying out section 8903c of title 5, United States Code, and this subpart.

The calculations for contributions and withholdings for PSHB will be made in the same manner as 5 U.S.C. 8906 and subpart E of 5 CFR part 890. The Postal Service Government contribution will be determined using the calculation at section 8903c(i) of title 5, United States Code. Section 8903c(i)(3) states that OPM, when computing the weighted average of the rates offered by carriers for the initial PSHB contract year, shall take into account the enrollment of Postal Service employees and Postal Service annuitants in those carriers' plans as of March 31, 2023. Nonetheless, because OPM expects to have significantly more current Postal Service enrollment data available, OPM intends to use all available 2024 Postal Service enrollment information when determining the 2025 weighted average of the rates for the initial contract year, taking into account 2023 data as a comparison point and for validation purposes, or in the event 2024 data is not available. For all subsequent years, the PSHB plans and FEHB plans will each have the Government contributions calculated in accordance with § 890.501.

Some Postal Service Medicare covered annuitants and/or their Medicare covered members of family who enroll in Medicare during the SEP beginning April 1, 2024, may be subject to a Medicare Part B late enrollment penalty. This penalty is added to the monthly Medicare Part B premium and is usually charged for as long as the individual is enrolled in Medicare. The amount of the Part B late enrollment penalty depends on how long the individual waited to enroll after their initial period of Medicare eligibility. The PSRA requires that the Secretary of HHS enter into an agreement with the Postal Service under which the Postal Service agrees to pay on a quarterly or other periodic basis to the Secretary the amount of the Part B late enrollment premium increases for eligible individuals who enrolled during the SEP. In addition, the PSRA states that the Postal Service may direct OPM to pay such Part B late enrollment penalties for Postal Service Medicare covered annuitants or Medicare covered members of family who enroll in Part B during the 2024 SEP subject to the agreement between the Postal Service and HHS from the PSRHBF established under 5 U.S.C. 8909a until those funds are depleted. Thereafter, those payments will be paid from the Postal Service Fund established under 39 U.S.C. 2003.

Section 102 of the PSRA (“USPS Fairness Act”) directs OPM to annually calculate a payment to be made by the Postal Service into the PSRHBF beginning in June of 2026. This payment replaces the previously required actuarially determined pre-funding payments (normal cost and amortization) calculated annually by OPM from 2017 through 2021.

The payment into the PSRHBF required under the PSRA is not an actuarially determined pre-funding payment, though OPM's actuaries are responsible for calculating the new formula driven payment into the fund starting in 2026. The PSRA provides the formula by which OPM is to calculate the payment, which is defined as the difference between the Postal Service share of Postal Service annuitant premiums less estimated net claims costs. The PSRA defines estimated net claims costs as the difference between the sum of the costs incurred by the carrier for health services provided to Postal Service annuitants and reasonable administrative expenses less the Postal Service annuitants' share of premium.

Section 102 states that “[a]fter consultation with the United States Postal Service, [OPM] shall promulgate any regulations the Office determines necessary under this subsection.” OPM has determined that the formula is sufficiently defined in the law and defining it further in regulation is unnecessary. OPM invites comment on this approach.

The PSRA revises the language under 5 U.S.C. 8909a to provide that any calculation required under 39 U.S.C. 3654(b) should be based on current Postal Service annuitants and current Postal Service employees who would be eligible to retire under 5 U.S.C. 8901(3)(A)(i) or (ii) and who have the required years of health coverage to continue health benefits in retirement. Pursuant to 39 U.S.C. 3654(b), OPM is required to calculate and provide certain information for the Postal Service financial reporting on both health benefits and pension obligations as provided under chapters 83 and 84 of title 5. However, the requirements in the PSRA involving 39 U.S.C. 3654(b) apply only to health benefits and the CSRS and FERS statutes do not provide any similar requirement pertaining to section 3654(b). It would not be appropriate to calculate any pension obligations in the manner now required under 5 U.S.C. 8909a for post-retirement health benefits. As a result, OPM is interpreting the new PSRA provision in section 8909a as applying only to the “post-retirement health requirements” in 39 U.S.C. 3654(b). OPM invites comment on this approach.

The term `future net claims costs' as used in PSRA section 102(e)(1) does not have a definition in regulation or statute. Section 890.1613(e) clarifies that OPM interprets “future net claims costs” in section 102(e)(1) to be the same as “estimated net claims costs” as defined in section 102(g). OPM invites comment on this approach.

Since the inception of the FEHB Program in 1960, OPM has prescribed regulations over time that place responsibility for health benefits actions on to an “employing office,” as defined at 5 CFR 890.101, an “employing agency,” or an “agency.” Consequently, the FEHB Program's enrollment functions are not handled by OPM but are dependent on decentralized processes that utilize independent systems at different Federal agencies. Therefore, the Postal Service or other employing office  8 is responsible for processing appropriate requests for FEHB enrollment or changes in enrollment. See, e.g., 5 CFR 890.301(b). An employing office is also responsible for verifying the eligibility of family members. See 5 CFR 890.302.

For purposes of the PSHB Program, OPM will shift certain responsibilities from the employing office to a centralized enrollment system which will be administered by OPM or its contractor. As envisioned, the centralized enrollment system will be an electronic enrollment solution for all PSHB stakeholder groups including enrollees, the Postal Service and other employing offices, and PSHB Carriers. The centralized enrollment system will include an online portal to enter and process enrollment transactions, robust decision support tools, and a customer support center to assist enrollees via phone, email, or online chat. Persons who are unable to access the online portal will be able to enroll through other means such as phone, fax, or mail.

To support the establishment of centralized enrollment for the PSHB Program, OPM is adding several regulatory provisions. OPM may also issue guidance to further delineate responsibilities regarding PSHB enrollment.

In addition to any future guidance, in §§ 890.1605, 890.1606, 890.1608, and 890.1614, OPM is specifying that OPM will assume responsibility for the following health benefits actions for the PSHB Program: enrollment, changes of enrollment, correction of errors, election not to enroll, and disenrollment of enrollees and removal of family members. OPM will work with the Postal Service and other employing offices to determine additional details about these health benefit actions.

An individual who has received an initial decision affecting their enrollment in the PSHB Program may request a reconsideration of that initial decision. Individuals will be made aware of their right to an independent review and the time, manner, and entity to which the reconsideration request must be made.

As described above and included in § 890.1614(a), correction of errors for PSHB enrollments will follow the rules for FEHB correction of errors, except that a PSHB enrollment cannot be corrected to be effective before the first PSHB contract year.

Section 890.1614(b) requires that carrier entitlement to pursue subrogation and reimbursement recoveries must follow the requirements of § 890.106.

Section 890.1614(c) requires reconciliation of PSHB enrollment between OPM and each PSHB Carrier in a form and manner to be determined by OPM. If a Medicare covered annuitant or member of family is found not to be enrolled in Medicare Part B in violation of the requirements of § 890.1604, that individual may be disenrolled or removed from PSHB enrollment or coverage.

The regulations outlined in this interim final rule are codified in subparts A, C, E, and the new subpart P of 5 CFR part 890 and 48 CFR chapter 16.

OPM commonly publishes notices of proposed rulemaking in the Federal Register and invites public comment on rules before the provisions of the rules are finalized, either as proposed or as amended in response to public comments, and take effect, in accordance with the Administrative Procedure Act (APA) at 5 U.S.C. 551 et seq. and, where applicable, the Civil Service Reform Act of 1978 (CSRA) at 5 U.S.C. 1103(b).

Specifically, 5 U.S.C. 553 and 1103(b) require the agency to publish a notice of certain proposed rules in the Federal Register that includes a reference to the legal authority under which the rule is proposed, and the terms and substance of the proposed rule or a description of the subjects and issues involved. Further, the APA at 5 U.S.C. 553(c) requires agencies to give interested parties the opportunity to participate in the rulemaking through public comment before the provisions of a rule take effect.

However, the APA also provides that traditional notice and comment procedures are not required when, as relevant here, the agency for good cause finds that following those procedures would be impracticable, 5 U.S.C. 553(b)(B), and the CSRA includes a “parallel exception,” National Federation of Federal Employees v. Devine, 671 F.2d 607, 610 (D.C. Cir. 1982); see 5 U.S.C. 1103(b)(3). “[A] situation is impracticable when an agency finds that due and timely execution of its functions would be impeded by the notice otherwise required . . . as when a safety investigation shows that a new safety rule must be put in place immediately.” Util. Solid Waste Activities Group v. E.P.A, 236 F.3d 749, 754 (D.C. Cir. 2001) (quotation marks and alterations omitted); see Mack Trucks, Inc. v. E.P.A., 682 F.3d 87, 93 (D.C. Cir. 2012). OPM finds that following typical notice and comment procedures would be impracticable here because doing so would not allow sufficient time for the PSHB to be in effect by January 2025, as required by the PSRA. As explained further below, failure to meet this deadline would not only violate the PSRA but would also result in a potential gap in health insurance coverage for Postal Service employees, Postal Service annuitants, and their families. OPM is therefore issuing this interim final rule with request for comment—a temporary measure before OPM issues a final rule in response to comments received.

The deadlines that Congress has specified in the PSRA require this rule to become effective expeditiously. The PSRA provides in part that the Director of OPM shall issue regulations to carry out the PSHB provisions no later than April 6, 2023—just one year after statutory enactment—in consultation with the Secretary of Health and Human Services, the Secretary of Veterans Affairs, the Commissioner of Social Security, and the Postmaster General. See Devine, 671 F.2d at 611 (“This is not a case in which the agency received substantial prior notice of a statutory deadline[.]”). The law also requires that health coverage through a PSHB plan must begin in January 2025 and that Postal Service employees and Postal Service annuitants enroll for coverage during an annual Open Season period beginning in 2024.

To meet these statutory deadlines, this rule must go into effect immediately. That is so because until this rule is in place, OPM and the health insurance industry cannot engage in the complex process necessary to develop health insurance plans, make those plans available for enrollment during the 2024 Open Season, and effectuate coverage on January 1, 2025. And that complex process must begin now; specifically:

• For OPM to develop its enrollment plan strategy, and to determine the number, type, and location of FEHB plans committed to participating in the PSHB, OPM needs health insurance carriers seeking to participate in the PSHB Program to submit applications to OPM in August 2023 —just four months from issuance of this interim final rule. To prepare those applications, health insurance carriers will need to understand the requirements of the PSHB Program, including how they may differ from FEHB plans in a number of key areas. These areas include the Medicare Part D coverage integration requirements for PSHB plans, Medicare benefit coordination, and data exchange capabilities for PSHB enrollment eligibility which include data regarding an individual's entitlement for Medicare Part A and enrollment in Part B, their VA benefit enrollment status, and/or IHS eligibility. Carriers will need to know the implications of the requirements and capabilities outlined in this rule—and will need them to have effect—in order to (1) make a business decision about whether to participate in the Program and (2) put together a proposed plan that aligns with the requirements of this rule.

• OPM will then need to review such applications to ensure that the plans will satisfy requirements set forth in this rule by the Program start date. Review and vetting of carrier applications—including the financial fitness of the proposed PSHB plan, Postal-specific information system capabilities, and adherence to Medicare Part D coordination requirements such as plans arranging for prescription drug plan coverage—must occur during the Fall of 2023.

• In October 2023, the Postal Service is required by the PSRA to launch a Health Benefits Education Program to raise employee and annuitant awareness of the PSHB Program and its requirements through the distribution of information and facilitation of enrollment in available plans. While specific information such as rates and benefits will not be available until later in 2024, the Postal Service will structure this Education Program based on the requirements for the PSHB Program as set forth in this rule. Knowledge of the Program's requirements and the health insurance carriers that have applied to participate in the Program starting in 2023 will assist enrollees in understanding the decisions they will need to make.

• Throughout 2023 and 2024, OPM will, among other things, develop, test, and implement a Postal Service centralized enrollment system, which will be used by PSHB enrollees to select health plans for the 2025 plan year. OPM must integrate Medicare Part A entitlement and Medicare Part B enrollment data in accordance with existing FEHB regulations and the new PSHB requirements, as set forth in this rule that implements the PSRA. Enrollment data processed by the centralized enrollment system will be transmitted to PSHB Carriers, who will begin serving these enrollees starting January 1, 2025.

• In April of 2024, CMS will launch the six-month SEP, during which time Postal Service annuitants and their family members will have the opportunity to enroll in Medicare Part B, without a late enrollment penalty for the Part B enrollee. If Postal Service annuitants and their family members eligible for the SEP are not timely informed that they have this opportunity to enroll in Medicare Part B without having to pay a late enrollment penalty and how to do so, they may incur the standard late enrollment penalty if they subsequently wish to enroll in Part B, should they choose to do so, and such late enrollment penalty could remain in place for as long as they remain enrolled in Part B.

• By May 31, 2024, PSHB Program carriers will need to submit rates and benefits proposals to offer health plans for the 2025 plan year.

• In September 2024, OPM will publish the negotiated PSHB plan rates and benefits for the 2025 plan year.

• Open Season for enrollee selection of PSHB plans will occur from November 11 through December 9, 2024.

As this timeline makes clear, there are numerous operational interdependencies—beginning with carriers submitting applications to participate in the PSHB Program by August 2023—that necessitate the immediate effectiveness of this regulation. The immediate effectiveness of this rule is necessary not only for OPM to meet the statutorily required January 1, 2025 deadline for providing benefits to enrollees, but also because a failure to do so could result in a loss of healthcare coverage for Postal Service employees, annuitants, and their families. After December 31, 2024, Postal Service employees or Postal Service annuitants will no longer be eligible to enroll in an FEHB plan based on status as a Postal Service employee or Postal Service annuitant, and their family members will no longer be covered by such plan. Accordingly, §  890.1605 establishes that PSHB plans must be available to enroll individuals during the 2024 Open Season, starting on November 11, 2024. If PSHB plans are not available, those individuals may experience a gap in health insurance coverage, and people without insurance coverage have worse access to care and experience worse health outcomes than people who are insured. See Office of Disease Prevention and Health Promotion. (n.d.). Access to Health Services. Healthy People 2030. U.S. Department of Health and Human Services. https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/access-health-services; see also 42 U.S.C. 18091(2)(E) (observing the “poorer health and shorter lifespan of the uninsured”). Among the catalysts of poorer health is the decreased use of preventive services by individuals experiencing gaps in health insurance coverage, even if only for a relatively short period of time, and especially for individuals at or near retirement age. See Sudano, J.J. Jr., Baker, D.W. (2003). Intermittent Lack of Health Insurance Coverage and Use of Preventive Services. Am. J. Public Health, 93:130-37, available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447707. These services include mammography, Pap tests, cholesterol checks, flu vaccination, and prostate and breast cancer screenings. Id.

Additionally, OPM is obligated to provide Postal Service employees and Postal Service annuitants an opportunity to enroll in health insurance plans for which they are eligible under current statutory provisions, including provisions granting Postal Service employees and Postal Service annuitants eligibility under chapter 89. See 39 U.S.C. 1005(f). The FEHB regulations currently in effect permit health insurance enrollment actions and changes to be made during Open Season periods, which are required to be held annually from mid-November through the mid-December. 5 CFR 890.301(d). Failure to hold a PSHB Open Season period prior to December 31, 2024, when Postal Service employees and Postal Service annuitants lose eligibility for FEHB plan enrollment, may conflict with OPM regulations

In short, given the complexities of establishing this Program, as discussed above, expeditious issuance of these rules is required because otherwise PSHB plans will not be established by January 2025, potentially resulting in the loss of health insurance coverage for millions of Postal Service employees, Postal Service annuitants, and their family members. An interim final rule is therefore necessary so as to avoid the “possible imminent hazard” that individuals would face from a gap in coverage, Mack Trucks, Inc., 682 F.3d at 93.

For these reasons, OPM finds good cause to issue this interim rule. But, again, this rule is temporary: OPM invites public comments and will promulgate a final rule as soon as practical after receiving and considering them.

This interim final rule implements sections 101 and 102 of the PSRA which direct OPM to establish the PSHB Program for Postal Service employees, annuitants, and their eligible family members. These sections of the PSRA amend chapter 89 of title 5, United States Code, which identifies the individuals who, starting in 2025, will be eligible to enroll in a PSHB plan and may not remain in an FEHB plan under their Postal Service employment or retirement; those who must enroll in Medicare Part B to maintain enrollment in PSHB; the health benefits plans that should be offered to the greatest extent practicable; some plan requirements; the need for automatic enrollment in certain circumstances; contributions by the Postal Service; how reserves for PSHB plans are to be structured; requirements for information sharing; and other requirements necessary for PSHB Program implementation.

The PSHB Program is contained within chapter 89, which governs the FEHB Program generally. The PSRA confirms that PSHB plans are subject to the same provisions as FEHB plans unless they are inconsistent with the statute. OPM is given the discretion to make such determinations.

Section 101 of the PSRA codified at 5 U.S.C. 8903c directs OPM to issue regulations establishing the PSHB Program and is given the discretion to include “any provisions necessary to implement this section.” Section 8903c(g) addresses the topics for which Congress specifically instructed OPM to promulgate rules, clarifies how existing rules for the FEHB Program will apply to the PSHB Program, as well as new requirements regarding eligibility and enrollment, information sharing with other agencies, PSHB Carrier requirements, and other rules that will govern the PSHB Program. OPM's interim final rule is necessary to provide transparency into how it is implementing the PSRA, memorialize processes and procedures that will apply, allow carriers to begin preparations to enter the PSHB Program, and give individuals who will be impacted as much information about the PSHB Program as early as possible.

These regulatory provisions implement the statutory requirements, and without these provisions, it will be impossible for OPM to comply with its own obligations under the PSRA, and PSHB Carriers, other agencies, and Postal Service employees and annuitants will be uncertain about how the PSHB Program will operate.

Executive Order 12866 at section 3(f) 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, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

A regulatory impact analysis must be prepared for major rules with economically significant effects (annual effect of $100 million or more), and a “significant” regulatory action is subject to review by the Office of Management and Budget (OMB). OPM anticipates that this rule is likely to have economic impacts of $100 million or more in at least 1 year, meeting the definition of a “significant rule” under Executive Order 12866.

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, distributional impacts, and equity). This rule is a significant regulatory action under E.O. 12866. Therefore, OPM has provided an assessment of the potential costs, benefits, and transfers associated with this rule.

Overall, the PSRA and the PSHB Program, through this regulation, will help to promote the financial stability and long-term viability of the Postal Service, which provides a crucial role for society with respect to communication, commerce, and political participation. The Postal Service was established with the intent to benefit the public and provide reliable, affordable nationwide mail, package delivery, and other services. With the Postal Service's wide reach in providing essential services to nearly everyone in the U.S. in some form, its long-term stability is crucial. The PSRA improves the Postal Service's financial position, and a financially sustainable Postal Service ensures that the Postal Service can continue to fulfill its universal service mission, and make the investments needed to support service excellence, network efficiency, and introduce enhanced products and services for its customers.

This societal benefit will result primarily from the removal of the prefunding obligation related to future retiree health benefits and the shifting of insurance coverage costs away from the Postal Service to Medicare, and ultimately to taxpayers, who together with beneficiaries, fund Medicare. The Postal Service is required by law to be self-sufficient, and the Postal Service, along with its employees, pay taxes to fund Medicare each year, but many of its employees do not enroll in Medicare after they retire. Therefore, and unlike other employers who offer retiree health benefits and pay Medicare taxes, the Postal Service has not been able to ensure that its retiree health care program fully utilizes Medicare. Enabling the Postal Service to generally require its Medicare-eligible annuitants to enroll in Medicare when eligible ensures that the Postal Service can utilize Medicare in a similar manner as other employers, which strengthens its financial position and therefore its ability to continue its critical public service mission.

From a societal perspective, the primary costs associated with the implementation of the PSHB Program will be administrative and operational costs necessary to initiate and maintain the program, including development of information technology (IT) systems, education and outreach, and additional administrative staffing for the design, maintenance, and oversight of the increased quantity of health plans. These costs will be largest in the initial start-up phase and will be borne by Federal agencies, as well as carriers offering both FEHB plans and PSHB plans. The PSRA appropriated $94 million in implementation funding for OPM and other Federal agencies for these administrative and operational costs. Pursuant to section 101(d)(4) of the PSRA, the Postal Service deposited the appropriated funds into the Treasury as a miscellaneous receipt from the Postal Service Fund in fiscal year 2022.

Most of the impact from the PSRA and this regulation will occur via distributional effects. The principal transfer will be the shifting of premium costs from the Postal Service and PSHB members to Medicare as a result of the Medicare Part B enrollment requirements and the integration of Medicare Part D coverage into PSHB plans. This Part D integration could also result in a portion of costs being transferred to the pharmaceutical industry via the statutory manufacturer discounts provided to Part D, in conjunction with discounts negotiated with individual FEHB plans. Further, integrating Part D coverage into PSHB plans may result in a transfer of costs to carriers, particularly those with little Medicare experience, who may need to contract with third-party vendors to assist with integration, increasing administrative costs. The segmentation of the current FEHB risk pool will result in premiums reflective of each separate risk pool's health care utilization and costs, which are estimated to be higher for Postal Service enrollees compared with non-postal. 9 This may result in a slight reduction in FEHB premiums following implementation.

Ultimately, the total costs and benefits associated with the PSRA, and this interim final rule are highly uncertain because enrollee and carrier reactions to the effects on Medicare, the FEHB Program, and the new PSHB Program are unknown. In accordance with OMB Circular A-4, the following sections outline the benefits, costs, and transfers associated with section 101 of the PSRA and this regulatory action in more detail. Where specific costs were quantifiable, they are included inTable 1.

The regulatory baseline for this rule is the FEHB Program as it is currently administered, as the eligible population under both programs will largely remain the same. Postal Service employees, Postal Service annuitants, and their eligible family members are currently eligible for FEHB coverage. In 2021, this population totaled approximately 915,000 enrollees and 1.7 million total covered lives. There are nearly 700,000 Postal Service annuitants, including about 123,000 survivor annuitants. Of the Postal Service annuitants, about 500,000 are currently enrolled in the FEHB Program. A majority of these are Self-Only enrollments while 200,000 are Self Plus One or Self and Family enrollments.

Beginning in the 2025 plan year, the PSHB Program will be the only health benefits program available through the Postal Service to Postal Service employees, Postal Service annuitants, and their eligible family members. Unless they meet a specified exception, as previously outlined, Postal Service Medicare covered annuitants and their Medicare covered members of family will be required to enroll in Part B or will lose their eligibility to continue enrollment in the PSHB Program. Once this eligibility is lost, it cannot be reinstated. As with the regulatory baseline, those covered by a PSHB plan will also be responsible for Medicare premiums.

Currently, Postal Service annuitants and their family members that are participating in FEHB are not required to enroll in Medicare Part B, regardless of Medicare status. Based on 2021 data, OPM estimates that 75% of Postal Service annuitants aged 65 and over have enrolled in Medicare Part B. There will be approximately 100,000 Postal Service annuitants and their eligible family members who will be eligible to enroll in Part B during the six-month SEP beginning April 1, 2024.

Prior to the PSRA, the Postal Service paid the Government contribution for all Postal Service employees and annuitants enrolled in FEHB. The Government contribution was paid directly by the Postal Service for employees and from the PSRHBF for annuitants. In addition, the Postal Service was required under the Postal Accountability and Enhancement Act of 2006 to fully prefund retiree health benefits. Section 102 of the PSRA (“The USPS Fairness Act”) amended 5 U.S.C. 8909a to remove this prefunding requirement and replace it with a new calculation for annual payments into the PSRHBF. The law maintains the requirement that the Postal Service continue to pay the Government contribution; directly for employees or through the PSRHBF for annuitants. The Postal Service is also required to pay the Medicare Part B late enrollment penalty for any Medicare covered annuitants and members of family who enroll in Part B during the 2024 SEP. As with the regulatory baseline, there is no Government contribution towards Part B premiums.

Carriers that participate in the PSHB Program will generally be subject to the same minimum requirements for plan design that exist for FEHB plans under the FEHB Program, but PSHB plans will be required to integrate Part D prescription drug benefits for Medicare covered annuitants and Medicare covered members of family. In addition, carriers that are offering both PSHB plans and FEHB plans will need to offer equivalent benefits and cost sharing in the initial year, other than as needed to integrate Part D coverage.

This rule serves to implement the requirements of the PSRA. The regulatory action builds on the statute by offering clarity and efficient implementation. OPM anticipates that the timely promulgation of this rule will allow other Federal agencies, PSHB Carriers, and enrollees to begin necessary education and deliberation.

The Postal Service will benefit from increased financial stability because of the removal of the past-due pre-funding payments and future pre-funding obligations related to the retiree health benefits costs and from having a retiree health benefits program in which more annuitants are enrolled in Medicare. With fewer costs for retiree health benefits, the Postal Service will have more financial stability. Better, more stable Postal Service operations would benefit the country overall. The Postal Service plays a critical role in the nation's communications, commerce, and voting infrastructure. In rural and remote communities especially, many of which lack adequate broadband access and rely heavily on mail service, the Postal Service's universal service mandate ensures crucial access to essentials including medicine and food. 10

Within these communities, the Postal Service is often the only delivery service carrier with a door-to-door network and is heavily relied on by other delivery service carriers to provide “last mile” deliveries. According to the Postal Service Office of Inspector General, the Postal Service provided vital services during the COVID-19 pandemic, including the delivery of critical items such as medications, stimulus payments, election ballots, and record levels of home package deliveries. 11 A Government Accountability Office Report found that the Postal Service experienced a 9 percent decline in total mail volume in 2020 when compared to 2019, but package volume rose by 32 percent over the same period. 12 This underscores the importance of a stable Postal Service to the Nation.

With greater financial stability for the Postal Service, current Postal Service employees, Postal Service annuitants, and their family members will also see greater stability in their future health insurance coverage and other benefits.

Medicare covered annuitants may be eligible, depending on whether they meet statutory income and resource thresholds, for the low-income cost-sharing subsidies and premium subsidies that are part of the Medicare part D program, under section 1860D-14 of the Social Security Act.

Implementation of the PSRA and this regulatory action necessitates the administration and oversight of new health benefits plans, including substantial member education and outreach efforts, additional interagency coordination and the creation of new IT processes to satisfy new statutory eligibility and enrollment requirements, creating startup and ongoing costs to agencies, enrollees, and carriers. Table 1 depicts an accounting statement summarizing the assessment of the administrative costs associated with this regulatory action. Table 2 depicts the expected allocation of total spending over the course of 10 years, beginning in fiscal year (FY) 2023.

The following sections contain underlying details for the cost estimates presented in Table 1, including, where appropriate, the assumptions and methodology used by individual agencies in preparing them. For the purposes of this regulatory impact assessment (RIA), Startup Costs were defined as upfront, non-recurring costs associated with the PSRA implementation and are represented as aggregate total expenditures for the years leading up to and immediately following the PSHB implementation. Ongoing Costs were defined as recurring costs ( e.g., salary costs) beginning in the years preceding or immediately following the PSRA implementation and expected to persist through at least FY2032. All ongoing costs are presented as fully loaded, annual totals. These estimates for ongoing costs are preliminary, and funding for ongoing costs would be subject to the annual budget process.

Startup Costs: OPM estimates a total of $81.6 million in start-up costs for the development and administration of the PSHB Program. This estimate includes $68.3 million of IT and IT contract costs for system development and updates, including the creation of the centralized enrollment system. The centralized enrollment system will consolidate data from multiple agencies, including USPS, SSA, CMS, IHS, and VA, to create a centralized platform for verifying eligibility and processing enrollments. While a centralized enrollment system was not mandated by the PSRA, it will create efficiencies through the elimination of decentralized duplicative and manual processes and improve interagency communication. It is expected to yield long term cost-savings that will help offset significant upfront costs of development. Additional IT and IT contract costs are anticipated for updating existing systems, including Benefits Plus and the audit resolution tracking system, and developing new resources to improve customer experience, including the creation of an enrollment Decision Support Tool.

The remaining $13.4 million in estimated startup costs include $3.6 million for non-IT contractor support throughout implementation and $9.8 million for additional supplies, equipment, training, and communication related to the PSRA. All costs were estimated based on 2022 dollars and contract rates.

Ongoing Costs: As this is a new program, additional staffing and resources will be essential to establish and administer the PSHB. OPM estimates a total of $49.3 million in annual, ongoing costs related to the PSRA. This estimate consists of $24.4 million in annual salary costs for 153.5 additional full-time employees (FTEs) necessary for contract oversight, program operations, systems maintenance, customer service, policy support, and general support. Additionally, OPM anticipates $21 million in annual IT and IT contract costs for ongoing system development and maintenance support, and an additional $1.7 million in annual, non-IT contract costs related to oversight and management of the increased number of health benefits plans within the PSHB and FEHB populations. Finally, OPM estimates an additional $2.2 million in annual costs for training, communications and overhead related to the PSHB program and the annual Open Season period.

The above costs are represented as fully loaded annual projections based on 2022 dollars. Salaries and burden were based on 2022 pay tables and Washington, DC metro area locality adjustment, a burden percentage of 34%, and award and transit subsidies. This adjustment factor was used in lieu of a standard wage rate to more accurately reflect the historical trends in benefit costs for OPM employees, based on the anticipated locations and experience-levels of the aforementioned positions. Additionally, the wage rate is meant to capture overhead costs which were already represented in separate categories. All recurring costs are projected to be fully loaded beginning in FY2025 and to persist through at least FY2032. Given that development and onboarding will occur in the run-up to the PSHB implementation, OPM anticipates that annual costs related to the PSRA will increase steadily between FY2022 and FY2024.

Startup Costs: The Postal Service estimates $11.5 million in start-up costs for updating systems, development of training materials, and the development and maintenance of the Health Benefits Education Program. These estimates were calculated based on anticipated system configuration and assumed effort level and are subject to change based on additional requirements that may be required of the Postal Service.

Ongoing Costs: In preparation for and following implementation of the PSHB, the Postal Service estimates an additional $1.4 million in annual costs for increased staffing and communication needs. Specifically, the Postal Service estimates $0.9 million in salary costs for 6 additional FTEs, including 4 Program and 2 IT FTEs, and an additional $0.5 million towards increased outreach, education, and communication. Given the general retirement eligibility ages in comparison to the Medicare eligibility age, there will be a 3- to-5-year gap between the time of retirement until Medicare enrollment. It will be critical during the initial implementation of the Program and for the subsequent 5-10 years to send constant communications regarding plan options and healthcare costs, along with information about Medicare Part B eligibility periods and how and when to enroll. Additional resources will also be needed to monitor enrollee compliance for the Medicare Part B enrollment exceptions requirements on an ongoing basis. Although recruitment, onboarding, and development costs will gradually ramp up preceding implementation, the ongoing costs are expected to become fully realized beginning in FY25 and will likely persist for a period of 5-10 years following implementation, at which point the Postal Service will reevaluate resourcing needs. All costs were estimated in terms of 2022 dollars and pay scales.

Startup Costs: OWCP estimates a total of $72,500 in startup costs related to the PSRA. These include an estimated $50,000 in staff time for training on the PSRA changes and implementation, and $22,500 for pre- and post-implementation mailings to approximately 12,500 claimants and beneficiaries regarding changes to health benefit coverage. All costs were estimated based on 2022 dollars and pay scales.

Ongoing Costs: Beginning in 2025, OWCP estimates an additional $2,000 of annual, recurring costs for the creation and distribution of mailing announcements and customer service response letters related to the PSHB Open Season.

Startup Costs: The VA anticipates startup costs for system updates and development to meet the information sharing requirements outlined in § 890.1612 of the regulation. In total, the VA estimates $395,000 worth of IT contractor development work will be needed to integrate the existing Veteran Verification process with the centralized Enrollment and Eligibility System. The estimated costs are based on the anticipated number of scrum teams and sprints required to build this functionality and the projected firm-fixed-price contract rates. All costs were estimated in 2022 dollars.

Startup Costs: SSA estimates $7.3 million in startup costs for staffing support and system updates related to the PSHB implementation. These include an estimated $5.16 million in staffing costs for project management, policy and business process development, and additional technician support for the initial SEP. Additionally, SSA anticipates $2.17 million in up-front costs for system enhancements that will be necessary to support data exchanges and the initial SEP.

Ongoing Costs: SSA anticipates approximately 3 FTEs will be needed to support the PSHB following implementation, with estimated salary and overhead costs totaling $408,000 annually. These costs are based on the anticipated workload for processing annual enrollments and exceptions related to the Medicare coverage requirements for postal annuitants and family members. Additionally, SSA anticipates a small cost for the ongoing data exchange with OPM, although this cost cannot be determined until the data exchange is completed and will ultimately be reimbursed by OPM.

Indian Health Service (IHS) estimates de minimis costs for PSHB implementation. This is based upon the assumption that self-attestation will be utilized for Postal Service annuitants and family members to provide proof of eligibility for IHS health services for purposes of an exception to the Medicare Part B requirement.

Carriers will also have startup costs to participate in the PSHB Program, although the magnitude of these costs is unknown and will likely vary by carrier. Based on the 2021 FEHB headcount, OPM estimates that 41 FEHB Carriers provide coverage to Postal Service enrollees and they will therefore be impacted by implementation of the PSHB Program. Although OPM anticipates that not all carriers will elect to participate in the Program, at a minimum, assuming only plans with 1,500 or more Postal Service enrollees choose to participate, 28 carriers would be expected to incur additional costs associated with the creation and administration of separate PSHB plans. These costs will likely be incurred for internal training, updating enrollment processes and information systems, updating financial systems, and development of proposals specific to the PSHB Program. In developing plan options for the PSHB, carriers will not simply be able to duplicate FEHB plan designs as the requirement to integrate Part D coverage is substantively different. While large carriers may be able to leverage existing experience integrating Medicare Part D coverage in their other books of business, the need to apply and submit a different PSHB proposal will be a cost to carriers. PSHB Carriers will continue to incur annual costs to offer plans as there will need to be two sets of proposals, contract negotiations, and enrollment processing for carriers offering both PSHB and FEHB plans. This will likely create additional staffing costs on an ongoing basis.

Existing and future Postal Service annuitants may incur additional costs in navigating both Medicare and PSHB enrollment decisions, particularly in the initial years following implementation. Prior to the PSHB Program Open Season, a six-month SEP will be offered to provide existing Medicare-eligible Postal Service annuitants and their Medicare-eligible family members with the opportunity to enroll in Part B. This enrollment window will take place before PSHB benefits and premiums are set, meaning participants will not know the details of the PSHB premiums when making their Medicare election during the SEP. This could create additional burden and confusion for participants and may result in suboptimal enrollment decisions.

As with the training and communications costs for the first year, Postal Service employees may continue to need training as they approach retirement. They may generally experience new costs associated with interacting with a new set of options, especially if they have already planned to take certain actions upon retirement which are now infeasible under the PSRA. Additionally, as is true currently under FEHB, retirement will not be a PSHB qualifying life event. Postal Service annuitants will need to understand how their PSHB plan election will work with the Part B requirement upon retirement or wait for Open Season alignment in both Medicare and the PSHB to make a suitable choice for their health care insurance needs.

The main impact of section 101 of the PSRA and these rules will be a transfer of costs from the Postal Service to the Medicare Program, which is funded by taxpayers, including the Postal Service and beneficiaries. Additionally, a portion of these premium costs will likely be transferred to the pharmaceutical manufacturers due to reduced payments received from Medicare Part D enrollees. Table 3 summarizes the projected changes in annual premium expenditures for each of the primary stakeholders. These projections were obtained from separate, independent analyses performed by CMS, the Postal Service, and OPM, which were produced at different points in time and with different underlying methods and assumptions and are therefore intended to summarize the directional transfer of costs among the different stakeholders, not the overall budgetary impacts of the PSRA. Additionally, all estimates were based on FEHB and Medicare coverage as of 2023, and do not incorporate any changes expected from the Inflation Reduction Act or Carrier Letter 2023-02. 13 Details on the methods and assumptions utilized by each agency are provided in the Table 3 footnotes.

Beginning in 2025, mandatory Medicare Part B enrollment for all future Postal Service Medicare covered annuitants enrolled in PSHB, as well as optional enrollment for all current Medicare-eligible annuitants, will transfer a portion of the costs for these individuals from the Postal Service to Medicare. Additionally, the requirement for all PSHB plans to offer Medicare Part D prescription drug benefits will result in a significant transfer of prescription drug costs for all current and future Medicare-eligible annuitants and family members from the Postal Service to Medicare, with a portion of these costs transferred to the pharmacy supply chain in the form of reduced payments. This is due to the Medicare Coverage Gap Discount Program at section 1860D-14A of the Social Security Act, which requires manufacturers to provide a substantial discount on brand name drugs dispensed to applicable beneficiaries in the coverage gap. These industry discounts are in addition to the discounts negotiated with individual FEHB plans, resulting in lower per-member payments for the subset of current and future Postal Service annuitants who would have otherwise elected not to enroll in Part D. It is important to note, however, that all estimates related to Part D savings were conducted prior to the enactment of the Inflation Reduction Act (Pub. L. 117-169), which contained significant prescription drug provisions including, for example, a provision that sunsets the Coverage Gap Discount Program at the end of 2024, and establishes a new Manufacturer Discount Program, beginning Jan. 1, 2025, at section 1860D-14C of the Social Security Act.

The increase in Part B and Part D enrollment and the transfer of costs to Medicare will lower the aggregate costs among the PSHB population, as Medicare will cover a larger portion of the costs for Postal Service annuitants and family members that would have previously been covered by the PSHB plan. Given that premiums are based on average per member costs of the combined pool of annuitants and employees, this will likely result in lower premiums for PSHB plans compared with current FEHB premium amounts. While this will reduce costs for the Postal Service and current Postal Service employees, a portion of these costs will likely be transferred to the estimated 25% of current and future Medicare-eligible Postal Service annuitants and Medicare-eligible family members who elect or are required to enroll in Part B and otherwise would not have. These individuals will ultimately be subject to premiums for both Medicare and PSHB plans which, on net, may be higher than the current FEHB premiums. At the same time, being covered by Medicare in conjunction with a PSHB plan may also reduce out-of-pocket expenses ( e.g., co-payments and co-insurance) for annuitants than would otherwise have been incurred. Furthermore, we anticipate that some plans will reimburse all or part of Part B premiums, as is currently the case with some FEHB plans.

It is estimated that the cost of coverage for Postal employees and their eligible family members is slightly higher than for the other Federal employees. The creation of a separate risk pool for Postal Service employees and annuitants will result in premiums that are more reflective of the resulting Postal and non-Postal populations. Removal of these individuals from the FEHB plan population will therefore result in slight reduction in average per member costs which will be directionally reflected in FEHB plan premiums following PSHB implementation. The expected decrease in FEHB plan premiums would be mirrored by a slight increase in PSHB premiums, although this increase would be minimal compared to the expected decrease in premium due to Medicare enrollments, meaning that the likely result will be lower premiums for PSHB plans compared with current FEHB plan premium amounts.

As required in the PSRA, the Postal Service will need to pay to CMS the monthly late enrollment penalties for any Part B enrollments that occurred during the 2024 SEP. These late enrollment penalties are typically assessed to enrollees as a monthly increase in premiums and are intended to transfer a portion of the increased age-related risk that a late enrollee represents, compared with an individual that was enrolled at age 65. We estimate that approximately 100,000 Postal Service annuitant subscribers aged 65+ currently enrolled in the FEHB Program are not enrolled in Medicare Part B and, thus, would be eligible for the SEP. Given that these individuals have previously elected not to enroll in Part B, it is estimated that around 30% of current Postal Service annuitants will choose to enroll during the SEP. For these individuals, the additional late enrollment penalties will be transferred to the Postal Service.

Additional transfers will likely occur among individual carriers and with third party vendors or contractors as part of the PSHB implementation. In particular, the requirements for integration of Part D coverage into PSHB plans will likely benefit larger carriers with more Medicare experience, who will be better positioned to seamlessly adjust plans to incorporate Part D coverage. Smaller carriers, in particular, are likely to lean on third-party vendors or contractors to assist with the PSHB implementation and/or Part D coverage integration, which will transfer a portion of carrier revenue into these markets.

All benefits, costs, and transfers summarized above are based on baseline assumptions that plan enrollment, carrier participation, and healthcare utilization will remain consistent following implementation of the PSHB Program. It is likely that implementation of the PSHB Program and the additional Medicare enrollment requirements will impact some or all of these baseline assumptions, which will have downstream effects for cost and utilization within both the PSHB and FEHB populations. The magnitude and directionality of these effects will depend on several factors that are presently uncertain.

Individual carriers will likely weigh the costs and benefits of offering FEHB plans and PSHB plans. Shifting enrollment numbers and additional implementation costs may lead some carriers to scale back or discontinue participation in one or both kinds of plans. This would impact the number of available plan options for both PSHB and FEHB enrollees, as well as the likelihood that they would be able to keep their current plans. However, as noted below, it is likely that the PSRA will increase the total number of plans covering both the Postal Service and greater FEHB population.

Similarly, PSHB enrollees required to enroll in Medicare Part B would be subject to additional premiums, which may impact the likelihood of their enrollment in PSHB plans. It is estimated that around 25% of Postal Service annuitants who are otherwise eligible for Part B are not currently enrolled. It is possible they actively declined Part B coverage because they were satisfied with their existing coverage or felt that the additional Medicare premium costs were too high, although it is also possible that they were not fully aware of the benefits of Medicare enrollment on their overall health care expenses over the course of their lifetimes. Assuming that a similar percentage of future Postal Service annuitants would have made a similar determination, these individuals will now be required to enroll as a condition of PSHB eligibility. This may result in some Postal Service annuitants dropping PSHB coverage altogether if they determine that PSHB and Part B coverage together is unaffordable or duplicative for their health care circumstances, though this number may be limited since it would require those annuitants to forgo PSHB coverage for the rest of their lifetimes unless individuals opt to participate in a Medicare Advantage plan. This could potentially result in adverse selection within the PSHB plans, referring to the tendency for individuals with higher health risks to disproportionately elect more generous coverage. Ultimately, this would increase the average risk and costs within the PSHB enrolled population, creating upward pressure on premiums. Additionally, some carriers may elect not to offer or discontinue PSHB plans if they anticipate or experience lower than expected enrollment.

The additional Medicare Part B and Part D coverage may also induce a moral hazard effect due to the more robust coverage and lower cost-sharing. Moral hazard refers to the tendency of individuals to increase health care utilization and spending in response to greater coverage or lower out-of-pocket costs. If an individual is required to enroll in Medicare, they may feel more compelled to utilize the benefits, increasing overall health care consumption. This effect has been demonstrated in numerous studies, most notably the RAND and Oregon Health Insurance Experiments, which found that utilization of both necessary and unnecessary health services increased with increased coverage and lower cost sharing. 14 15  Increased utilization among these individuals would increase the overall per member costs within the PSHB plans which may result in higher premiums and potentially impact health outcomes.

Any increases to premiums as a result of adverse selection or moral hazard would have future implications on PSHB enrollment and plan selection. If premiums increased, a greater percentage of enrollees may shift into alternative plans with less comprehensive benefits such as plans with reduced formularies and narrower provider networks, lower premiums and higher cost-sharing ( e.g., standard option as opposed to high option health plans). This could potentially help to counter moral hazard effects and lower costs, although it could intensify adverse selection into the more robust plans, as high-cost individuals would be less likely to change plans.

Despite the assumption that not all carriers will offer both FEHB plans and PSHB plans, it is likely that the PSRA will increase the total number of plans covering both the Postal and greater FEHB population. This will result in smaller risk pools within each plan, which could lead to greater uncertainty with respect to costs. With smaller risk pools, each enrollee's health status has a larger impact on total costs. This can create greater variability in annual premiums. Smaller risk pools increase individual plans' exposure to high-cost outlier events, as there are fewer low or average-cost enrollees to offset these costs. Administrative costs would also be spread across smaller risk pools. To ensure financial solvency in such scenarios, plans may seek to price this additional risk exposure into premiums, resulting in an increase in the aggregate costs for all PSHB plan and FEHB plan enrollees compared to the baseline.

At present, there remains a great deal of uncertainty with respect to the longer-term impacts on plan enrollment, carrier participation, plan design, and plan premiums. It is possible that a number of current FEHB Carriers will elect not to participate in the PSHB Program or to drop their current FEHB plan offerings. Consolidation within the FEHB and PSHB markets would likely benefit larger carriers and may yield some efficiencies through greater economies of scale, although on aggregate, it is expected that PSHB implementation will result in a greater number of total plans and increased administrative costs and premiums. Fewer options may also simplify plan choice for employees and annuitants, saving time on plan comparisons.

Enrollment in the PSHB Program, particularly among individuals who are required to enroll in Medicare Part B, is also uncertain. For future Postal Service annuitants, the requirement to enroll in Part B after retirement represents an additional cost. This will likely factor into individual retirement planning decisions and could potentially lead to employees remaining in the workforce longer to delay these additional costs. Likewise, lower-risk individuals may determine that their Medicare coverage, including Part B coverage is sufficient for their health care needs and opt out of PSHB enrollment. These aspects could impact PSHB Program risk pools and influence carriers' decisions on whether to continue operating in the PSHB market. Each of these scenarios could trigger potential downstream effects on utilization and premiums and will be important to monitor. OPM invites comment on all topics addressed in this section.

There are no feasible alternatives to this regulation as it implements section 8903c, as added by the PSRA, which establishes the PSHB Program and is mandated by the law. Therefore, OPM does not have the discretion to forego issuing regulations altogether. However, we considered alternatives to certain aspects of this regulation.

OPM recognizes that, for a small portion of Postal Service annuitants and their family members who take advantage of the Medicare Part B SEP from April 1 to September 30, 2024, there may be confusion about having two consecutive separate health plan enrollment events given that the PSHB Program Open Season for plan year 2025 will occur from November 11 through December 9, 2024. As with current FEHB plans, however, OPM's rate review process for PSHB plans will not be completed until September 2024, which makes simultaneous enrollment in Medicare Part B and PSHB plans extremely problematic. Should OPM open PSHB plan enrollment at the same time as the Medicare SEP, without completing the rate review process, enrollees would be selecting PSHB plans for which the monthly cost is entirely unknown, leading to more confusion than leaving the Medicare SEP and PSHB Open Enrollment separate.

We explored an opportunity for Postal Service annuitants to “pre-enroll” in PSHB plans prior to OPM completing its PSHB rate review process. Combining the opportunity to pre-enroll in a PSHB plan with the Medicare SEP would allow Postal Service annuitants to complete both actions simultaneously. Alternatively, Postal Service annuitants could be automatically enrolled in a PSHB plan at the same time they enroll in Medicare Part B. Automatic pre-enrollment could relieve these Postal annuitants from making two separate enrollment decisions. However, we found both of these options would be undesirable for enrollees and their family members for several reasons.

Allowing individuals to pre-enroll in PSHB plans during the SEP means they would sign up for a plan without knowing their premium obligation. Similarly, because OPM will not have certified the future PSHB plans by the time the Medicare SEP occurs, there would be no way for an individual to know whether a given carrier will be participating in the PSHB Program for the next plan year, let alone what the final contract would look like. In general, while allowing those annuitants taking advantage of the Medicare SEP to simultaneously pre-enroll in a PSHB plan seems like it could reduce confusion and frustration from having two separate enrollment obligations, the timing of simultaneous PSHB pre-enrollment and the Medicare SEP would mean choosing a PSHB plan with unknown benefits and premiums and likely having to review the selection again during the PSHB Open Season period to ensure that the plan an individual pre-enrolled in actually makes sense for them once plan details are finalized and approved by OPM.

Much of the rationale for considering PSHB plan pre-enrollment can be achieved by providing information about automatic enrollment to Postal Service employees, Postal Service annuitants, and their family members. Postal Service annuitants who wish to keep their plan or take as little action as possible can have their needs met as easily with automatic enrollment after Open Season ends instead of OPM implementing a new pre-enrollment or automatic pre-enrollment. In addition, under 5 CFR 890.301(f)(2), the OPM Director has the authority to modify the dates for Open Season or hold additional Open Seasons. These authorities and flexibilities exist under current regulations and may be exercised without needing to make any specific provisions under this rulemaking.

Despite these findings, we invite comments on this approach.

OPM is developing a centralized enrollment system simultaneously with the implementation of the PSHB Program. As explained above, the centralized enrollment system will shift certain responsibilities from the employing office to a new system which will function as an electronic enrollment solution for all PSHB stakeholder groups. With the advancement of technology over time, the existing decentralized processes related to FEHB enrollment may no longer be the most efficient methods for accomplishing enrollment functions. Developing a centralized enrollment system for the PSHB Program allows OPM to take advantage of IT solutions and create a modern enrollment system for Postal Service employees, Postal Service annuitants, and their family members. OPM considered maintaining the existing enrollment processes that apply to enrollment in FEHB plans but ultimately determined that the establishment of the PSHB provided an ideal opportunity to utilize new technologies and centralization processes that will improve the experience of PSHB stakeholders.

The standards for requesting reconsideration of an initial decision affecting enrollment in the PSHB Program will be the same as current FEHB standards at 5 CFR 890.104 and 890.308. Individuals will be made aware of their right to an independent review and generally, the time and manner for requesting reconsideration. OPM is considering establishing PSHB-specific processes and will closely track the implementation of the PSHB Program particularly as Postal Service employees, Postal Service annuitants, family members, PSHB Carriers, employing agencies, and retirement systems become more familiar with the centralized enrollment system.

OPM considered keeping the effective date of coverage for PSHB plans as the first day of the first pay period of the calendar year for Postal Service employees, as is currently done for FEHB plans. Keeping this effective date for PSHB plans that Postal Service employees are familiar with will not result in implementation costs or risk confusing existing enrollees. However, the benefits of a January 1 effective date outweigh the costs of implementation and educating enrollees, as implementation costs are one-time and after several years there will be little to no ongoing enrollee education needs. Conversely, the benefits of the January 1 date will remain indefinitely. A calendar year start date is easier for enrollees to track and follow and is consistent with the industry standard and many similar programs, including health savings accounts, the Federal Employees Dental and Vision Insurance Program, and the cutoff date for Postal Service Medicare covered annuitants who qualify for an exception to the Medicare enrollment requirement.

OPM certifies this regulation will not have a significant economic impact on a substantial number of small entities.

OPM has examined this rule in accordance with Executive Order 13132, Federalism, and have determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or Tribal governments.

This regulation meets the applicable standard set forth in Executive Order 12988, Civil Justice Reform.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending by State, local, and Tribal governments in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2023, that threshold is approximately $177 million. This interim final rule does not mandate any requirements for State, local, or Tribal governments, or for the private sector.

Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act) (5 U.S.C. 801 et seq. ) requires rules (as defined in 5 U.S.C. 804) to be submitted to Congress before taking effect. OPM will submit to Congress and the Comptroller General of the United States a report regarding the issuance of this action before its effective date, as required by 5 U.S.C. 801. OMB's Office of Information and Regulatory Affairs has determined that this is a major rule as defined by the Congressional Review Act (5 U.S.C. 804(2)).

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

OPM is investigating whether to create a new information collection or revise an existing information collection for the PSHB Program and seeks public comment on this question. If an information collection is revised, it will be the SF-2809, Health Benefits Election Form, under OMB Control number 3206-0160. Information regarding the collection, including all current supporting materials, can be accessed at https://www.reginfo.gov/public/do/PRAMain. The systems of records notice for this collection is: OPM/Central-23, “FEHB Program Enrollment Records,” available at https://www.federalregister.gov/d/2021-01259 (86 FR 6377, January 21, 2021). Regardless of whether a revision to the SF-2809 is pursued or a new collection is proposed, OPM will publish a separate 60-day notice at a later date requesting comments.

Accordingly, OPM amends 5 CFR part 890 and 48 CFR chapter 16 (FEHBAR) as follows:

Throughout this document “we,” “us,” and “our” refer to EPA.

The EPA is approving revisions to the Iowa SIP and the Operating Permits Program received on June 3, 2022. The revisions incorporate recent changes to Iowa Administrative Code. The following chapters are impacted:

• Chapter 20, “Scope of Title—Definitions;”

• Chapter 21, “Compliance;” and

• Chapter 22, “Controlling Pollution.”

The revisions require the electronic submittal of air emissions reporting, construction permit applications, and Title V permit applications, and make administrative updates. EPA finds that these revisions meet the requirements of the Clean Air Act, do not impact the stringency of the SIP, and do not adversely impact air quality. The full text of these changes can be found in the State's submission, which is included in the docket for this action.

The State submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from January 12, 2022, to February 14, 2022, and held a public hearing on February 14, 2022. Iowa received one comment in support of the rule during the comment period. Iowa did not revise the rule based on public comment prior to submitting to EPA, as noted in the State submission included in the docket for this action.

In addition, as explained above, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The EPA accepted public comment on the proposed rule from January 24, 2023, to February 23, 2023. During this period, EPA received two comments outside the scope of this action and is accordingly not addressing any adverse comments. Therefore, the EPA is finalizing its proposal to approve revisions to the Iowa SIP and the Operating Permits Program at IAC 567-20.2, 567-21.1, 567-22.1, 567-22.105(1), 567-22.105(2) and 567-22.128(4).

In this document, 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 Iowa rules 567-20.2, 567-21.1, 567-22.1, 567-22.105(1), 567-22.105(2) and 567-22.128(4) discussed in section I of this preamble and as set forth below in the amendments to 40 CFR part 52. The EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 7 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Therefore, these materials have been approved by the EPA for inclusion in the State Implementation Plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 1

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act 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 the National Technology Transfer and Advancement Act (NTTA) because this rulemaking does not involve technical standards; and

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

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

• 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).

• Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 5, 2023. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, the EPA amends 40 CFR parts 52 and 70 as set forth below:

Why we need to publish a rule. To the maximum extent prudent and determinable, we must designate critical habitat for any species that we determine to be an endangered or threatened species under the Act. Designations of critical habitat can be completed only by issuing a rule through the Administrative Procedure Act rulemaking process (5 U.S.C. 551 et seq. ).

What this document does. This rule designates a total of 524 river miles (843 river kilometers) of critical habitat for the pearl darter in the Pascagoula River and Pearl River basins in Mississippi. We listed the pearl darter as a threatened species under the Act on October 20, 2017 (82 FR 43885, September 20, 2017).

The basis for our action. Section 4(a)(3) of the Act requires the Secretary of the Interior (Secretary) to designate critical habitat concurrent with listing to the maximum extent prudent and determinable. Section 3(5)(A) of the Act defines critical habitat as (i) the specific areas within the geographical area occupied by the species, at the time it is listed, on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protections; and (ii) specific areas outside the geographical area occupied by the species at the time it is listed, upon a determination by the Secretary that such areas are essential for the conservation of the species. Section 4(b)(2) of the Act states that the Secretary must make the designation on the basis of the best scientific data available and after taking into consideration the economic impact, the impact on national security, and any other relevant impacts of specifying any particular area as critical habitat.

Economic impacts. In accordance with section 4(d)(2) of the Act, we prepared an economic analysis of the impacts of designating critical habitat for the pearl darter. When we published the proposed rule to designate critical habitat, we announced, and solicited public comments on, the draft economic analysis (86 FR 36678, July 13, 2021).

Please refer to the final listing rule for the pearl darter, which published in the Federal Register on September 20, 2017 (82 FR 43885), for a detailed description of previous Federal actions. Subsequent to the final listing, we proposed to designate critical habitat for the pearl darter on July 13, 2021 (86 FR 36678).

In accordance with our peer review policy published in the Federal Register on July 1, 1994 (59 FR 34270) and our August 22, 2016, memorandum updating and clarifying the role of peer review of actions under the Act, we solicited independent scientific review from four knowledgeable individuals with scientific expertise that included familiarity with the pearl darter or related species, the geographic region in which the species occurs, the species' biological needs, threats to the species, and conservation biology principles. We received responses from two peer reviewers on the proposed critical habitat rule.

We reviewed all comments we received from the peer reviewers for substantive issues and new information regarding critical habitat for the pearl darter. The peer reviewers generally concurred with our methods and conclusions and provided additional information and suggestions for clarifying and improving the accuracy of the information in several sections of the preamble to the proposed rule. Peer reviewer comments are addressed below in Summary of Changes From the Proposed Rule and incorporated into this final rule as appropriate.

In addition, some of the peer reviewer comments also contained suggestions that were applicable to general recovery issues for the pearl darter, but not directly related to the critical habitat designation ( i.e., meaning these comments are outside the scope of the critical habitat rule). These general comments included topics such as the use of reintroductions and the number of areas used as reintroduction sites. While these comments may not be directly incorporated into the critical habitat rule, we have noted the suggestions and look forward to working with our partners on these topics during recovery planning for the pearl darter.

On July 13, 2021, we published in the Federal Register (86 FR 36678) a proposed rule to designate critical habitat for the pearl darter and to make available the associated draft economic analysis; the public comment period for that proposed rule was open for 60 days, ending September 13, 2021. We also contacted and invited appropriate Federal, State, and local agencies, scientific organizations, and other interested parties to comment on the proposed critical habitat designation and draft economic analysis during the comment period. Notices of the availability of these documents for review and inviting public comment were published by The Clarion Ledger on July 17, 2021. We did not receive any requests for a public hearing.

During the comment period, we received seven public comment letters on the proposed rule; a majority of the comments supported the designation, two comments opposed the designation in two separate areas, and most comments included suggestions on how we could refine or improve the designation. All substantive information provided to us during the comment period has been incorporated directly into this final rule or is addressed below.

(1) Comment: Both peer reviewers provided comments questioning why Unit 2 included only the Strong River and not any of the historical range within the mainstem Pearl River, as doing so would increase redundancy within the Pearl River drainage.

Our Response: We recognize the importance of redundancy within the Pearl River drainage. Based on the best available science, we determined that the Strong River is the only area within the Pearl River drainage that currently meets the criteria for unoccupied critical habitat (see Areas Unoccupied at the Time of Listing subsection below). This does not mean that areas within the mainstem Pearl River do not contain some or all of the physical or biological features essential to the conservation of the species, but rather that we do not have information that areas in the mainstem Pearl River meet the criteria for unoccupied critical habitat. The lower Strong River also represents the stream reach within the Pearl River drainage with the best potential for recovery of the species due to current conditions, suitability for reintroductions, and access for monitoring. Further evidence of the presence of physical or biological features within this reach of the Strong River is demonstrated by recent increases in other benthic fish species ( e.g., frecklebelly madtom ( Noturus munitus ), crystal darter ( Crystallaria asprella )) that declined concurrent with the extirpation of the pearl darter (Piller et al. 2004, pp. 1007-1011; Wagner et al. 2018, pp. 4-5).

As described in the proposed rule, this unit currently provides some of the physical or biological features essential to the conservation of the pearl darter, including a stable channel with bottom substrates of fine and coarse sand, silt, loose clay, coarse gravel, fine and coarse particulate organic matter, and woody debris; a natural hydrograph with flows to support the normal life stages of the pearl darter; and the species' prey sources. Successful conservation of the pearl darter will require the reintroduction of pearl darter within the species' historical range; the lower Strong River unoccupied unit advances this goal. Reestablishing a population in the Strong River will provide for increased redundancy within the historical range and increase the species' ecological representation. Lastly, this river reach also provides the potential for the pearl darter to expand its range into other historically occupied areas, including the mainstem Pearl River, which currently may be or may later become suitable, to ensure that the species has an adequate level of redundancy within the Pearl River drainage and guard against future catastrophic events.

Section 4(b)(5)(A)(ii) of the Act requires the Service to give actual notice of any designation of lands that are considered to be critical habitat to the appropriate agency of each State in which the species is believed to occur and invite each such agency to comment on the proposed designation.

(2) Comment: The Mississippi Department of Wildlife, Fisheries, and Parks (MDWFP) provided a comment letter in support of the designation of critical habitat and recommended an extension of proposed Unit 1 in the Chunky River. Specifically, the MDWFP provided a publication with survey data for pearl darter in the Chunky River (Ellwanger et al. 2021, entire) collected after the proposed rule was published, which included records of adult pearl darter upstream of the previously known records in the Chunky River. The MDWFP requested an upstream increase of the critical habitat designation within the Chunky River system of approximately 6.5 river miles (mi) (10.5 river kilometers (km)) to the uppermost Highway 80 crossing in Newton County, Mississippi (32.324 °N, 88.976 °W).

Our response: We incorporated this new information and minor extension of critical habitat into the rule and associated economic analysis based on the received information. At the time of listing in 2017, the pearl darter was known from 19 river mi (31 river km) within the Chunky River (82 FR 43885; September 20, 2017, p. 43888). The 2021 detection provided by MDWFP was a result of targeted sampling within suitable habitat of the Chunky River (Ellwanger et al. 2021, entire), where targeted sampling had not previously been completed. This detection resulted in an expansion of the known range of the species within the Chunky River to 28 river mi (45 river km) of occupied habitat. We consider this additional mileage of stream reach to be occupied at the time of listing because the newly discovered segment upstream has the physical or biological features essential to the conservation of the species and there are no impediments to connectivity between the new occurrence record and the areas occupied at the time of listing. Thus, the additional mileage was likely unknown to be occupied at the time of listing due to a lack of targeted surveys for the species rather than absence of the species from this segment. Although previous fish surveys had been completed in this segment, they were not targeting the pearl darter or its habitat and may not have detected the species, which is difficult to detect during surveys due to the species' small size and rarity. As such, surveys within a particular reach of an occupied stream are not always definitive of the species' absence, which lends support for considering the 6.5 river mi (10.5 river km) segment as occupied at the time of listing.

(3) Comment: One public commenter noted that it is not necessary for the Service to designate the Leaf River as critical habitat for the pearl darter as the existing stream management practices are adequate to protect the habitat used by the pearl darter and, based on data collected over the last 20 years, the Leaf River is a healthy habitat for fish and macroinvertebrates. They also note that the pearl darter has increased in abundance over the past 20 or more years in the Leaf River.

Our Response: As directed by the Act, we proposed as critical habitat those specific areas occupied by the species at the time of listing on which are found those physical or biological features essential to the conservation of the species and which may require special management considerations or protection. Although the commenter suggested that abundance is increasing within the Leaf River and existing stream management practices are adequate to protect the habitat, the designation of critical habitat within the Leaf River is appropriate given that the segment was occupied at the time of listing and meets the definition of critical habitat as it has all of the physical or biological features essential to the conservation of the species. These features include: unobstructed and stable river channels with connected sequences of runs and bends associated with pools and scour holes, required substrates, a natural flow regime, adequate water quality conditions, and presence of a prey base.

(4) Comment: One commenter noted that the Service should develop a habitat suitability index, to assess the habitat impacts on the pearl darter, before designation of any critical habitat.

Our Response: As discussed above in our response to comment 3, we proposed as critical habitat those specific areas at the time of listing on which are found those physical or biological features essential to the conservation of the species. Further, Section 4(b)(2) of the Act states that the Secretary must make the designation based on the best scientific data available. We have used the best available information to determine areas that contain the physical or biological features essential to the conservation of the species, which are reflected in our proposed rule and this final designation.

We appreciate the suggestion to develop a habitat suitability index for the pearl darter. Subsequent to our proposed designation of critical habitat, we developed a habitat suitability index following standard modeling approaches (Elith et al. 2006, entire; Cutler et al. 2007, entire) using the best available science to inform the recovery efforts. This analysis identified areas throughout the Pascagoula River drainage that are considered suitable habitat and are aligned with our critical habitat designation (Service 2020, unpublished data).

(5) Comment: One commenter offered information about forestry best management practices and the conservation benefits they provide to aquatic species on private, working forests and requested that the Service include several references supporting these benefits.

Our Response: We recognize that silvicultural operations are widely implemented in accordance with State-approved best management practices (BMPs; as reviewed by Cristan et al. 2018, entire). We also recognize that the adherence to these BMPs broadly protects water quality, particularly related to sedimentation (as reviewed by Cristan et al. 2016, entire; Warrington et al. 2017, entire; and Schilling et al. 2021, entire) to an extent that these operations do not impair the species' conservation. We have included some of these references here in our response. In addition, in our proposed rule, we included the use of BMPs for forestry activities as an example of special management actions that would minimize or ameliorate threats to water quality.

(6) Comment: One commenter stated the designation of critical habitat in Unit 2 is not based on the best scientific data available, particularly that the water quality in Unit 2 does not meet the current State of Mississippi criteria, and that there is not scientific support for the statement that there is a high potential for successful reintroduction into the Pearl River drainage.

Our Response: We have identified that some of the physical or biological features essential to the conservation of the species can be found within Unit 2 in the Pearl River drainage (see Summary of Essential Physical or Biological Features, below). We have revised our description of the physical or biological features present in Unit 2 to reflect that the water quality physical or biological feature currently is not met during all portions of the year. However, Unit 2 in the Strong River provides some of the physical or biological features essential to the conservation of the pearl darter, including a stable channel with bottom substrates of sand, silt, loose clay and gravel, bedrock, fine and coarse particles of organic matter, woody debris, and a natural hydrograph with flows to support the normal life stages of the pearl darter and the species' prey sources. In addition, channel integrity is controlled and protected by natural bedrock outcrops, and improvement in water quality is indicated by the resurgence of other benthic fish species ( e.g., frecklebelly madtom and crystal darter) that historically co-occurred with the pearl darter and experienced declines when the pearl darter disappeared from the drainage (Piller et al. 2004, pp. 1007-1011; Tipton et al. 2004, pp. 57-60; Wagner et al. 2018, entire). We also acknowledge observations from a biologist that has worked in the Strong River since the 1970s (Hartfield 2021, pers. comm.) and a local landowner (Gillespie 2021, pers. comm.). Both have noted improvements in water quality due to a reduction in pollutants from chicken farming and other sources since the 1970s, presumably due to enactment and enforcement of the Clean Water Act of 1972, which has greatly improved water quality monitoring.

The assessment that this species has high potential for successful reintroduction is based on the fact that the species has been successfully propagated in captivity (Campbell and Schwarz 2019, entire) and suitable habitats are still found at the type locality on the Strong River (Wagner 2022, pers. comm.). Suttkus et al. (1994, p. 19) note habitat for the pearl darter in the Strong River, which is consistent with habitat descriptions from recent surveys in the Pascagoula (Slack et al. 2005, pp. 9-11; Clark et al. 2018, pp. 104-105) and observations of the habitat currently found at the type locality within the Strong River (Wagner 2022, pers. comm.).

Moreover, recent and ongoing studies have filled many of the previously identified knowledge gaps for the species that will inform successful reintroduction planning. Habitat associations have been studied (Clark et al. 2018, p. 103). Completed genetic work is being used to inform propagation and serve as a reference for reintroduction (Schaefer et al. 2020, entire). We are currently working with the University of Southern Mississippi to study the life history of the species through an ongoing project. Data collected through this project have been used to help inform the Service on the timing of spawning for the species, which will help to better monitor existing populations and any newly introduced populations. Additionally, a preliminary study of the diet of pearl darter has found the species not to be a specialist as it was noted to consume larval mayflies, caddisflies, black flies, and ostracods (Service 2022, unpublished data). We recognize that additional studies and information will help improve the reintroduction planning for the species although recent and ongoing studies have addressed many of the knowledge gaps that previously existed.

(7) Comment: One commenter notes that the economic analysis fails to consider costs to projects related to mitigation measures, water quality issues, project modifications, and project relocations.

Our Response: Section 4(b)(2) of the Act and its implementing regulations require that we consider the economic impact that may result from a designation of critical habitat. In our incremental effects memorandum (IEM), we clarified the distinction between the recommendations that will result from the species being listed and those attributable to the critical habitat designation ( i.e., difference between the jeopardy and adverse modification standards) for the pearl darter's critical habitat. As discussed in section 3 of the screening analysis (Industrial Economics, Incorporated (IEc) 2020, pp. 9-19), the Service does not anticipate making any additional project modification recommendations to avoid adverse modification of pearl darter critical habitat beyond what we already recommend to avoid impacts to other listed species with similar habitat requirements, including the Gulf sturgeon (listed as Atlantic sturgeon (Gulf subspecies); Acipenser oxyrinchus desotoi ), ringed map turtle ( Graptemys oculifera ), and yellow blotched map turtle ( Graptemys flavimaculata ). This statement is true for both Unit 1, which is occupied such that the species already would be considered for consultation since it is listed, and Unit 2, which is unoccupied. The screening analysis also highlights the project recommendations contained in the Standard Local Operations Procedures for Endangered Species (SLOPES) agreement for Mississippi between the Service and the U.S. Army Corps of Engineers. In making this determination in our economic analysis, the Service considered the potential for recommendations that include mitigation measures, are specific to water quality issues, or may result in project relocations.

(8) Comment: One commenter asserts that the economic analysis should consider the potential for losses in value among properties adjacent to the proposed river miles.

Our Response: Existing economics literature suggests that critical habitat may affect property values (List et al. 2006, entire; Auffhammer et al. 2020, entire). This literature references particular species and geographic contexts, and the transferability of the results to other species and regions is uncertain. As described in section 4 of the screening analysis (IEc 2020, pp. 19-20), this literature has not evaluated the effects of riverine critical habitat on adjacent property values. While perceptional effects on land values are possible, the likelihood and magnitude of such effects for this rule are uncertain. Although the screening analysis acknowledges this uncertainty, it does not conclude that these effects are likely, and we did not consider potential impacts to property values given the lack of support in the available literature (IEc 2020, p. 20). Lastly, the commenter did not provide information or literature on potential loss in property value that would lead us to change our evaluation in the screening analysis.

(9) Comment: One commenter suggests that the economic analysis should consider the costs associated with unrealized future development and lost tax revenues associated with activities in Unit 2.

Our Response: As described in response to comment 7 above and in section 3 of the screening analysis (IEc 2020, pp. 9-19), the Service does not anticipate making project modification recommendations to avoid adverse modification of pearl darter critical habitat beyond what has already been recommended to avoid impacts to other listed species with similar habitat requirements, including the Gulf sturgeon and ringed map turtle. The costs associated with changes in development activity would be incurred regardless of whether critical habitat for the pearl darter is designated along the Strong River because of the presence of other listed species. Therefore, the critical habitat designation for the pearl darter is unlikely to affect future development or tax revenues in the region.

(10) Comment: One commenter noted that the Service incorrectly states in the discussion of administrative costs of section 7 consultations in the draft economic analysis that the critical habitat designation will not result in any additional consultations on the Strong River.

Our Response: As Unit 2 overlaps with the listed range of the Gulf sturgeon and ringed map turtle, all activities with a Federal nexus that may affect pearl darter critical habitat would in fact require consultation even absent the critical habitat designation for the pearl darter in order to consider potential effects on the Gulf sturgeon and ringed map turtle. It is also important to note that activities potentially affecting critical habitat can occur outside of the area designated as critical habitat. Activities occurring upstream of the area designated as critical habitat for the Gulf sturgeon, which would include Unit 2, that could negatively impact water quality and then Gulf sturgeon critical habitat would require consultation under section 7(a)(2) of the Act where there is a Federal nexus. For example, in 2019, the Service consulted on a bridge replacement project situated along the Strong River in Simpson County and specifically considered the Gulf sturgeon critical habitat as well as the ringed map turtle. Similarly, in 2006, the Service considered both the Gulf sturgeon critical habitat and ringed map turtle during a consultation regarding a new pipeline crossing within the Strong River drainage. The proposed Unit 2, therefore, does benefit from the baseline protections afforded to other species with similar habitat needs given the connectivity of the Strong River with existing critical habitats on the Pearl River.

After consideration of the comments we received during the public comment period (refer to Summary of Comments and Recommendations, above) and new information published or obtained since the proposed rule was published, we made changes to the final critical habitat rule. Many small, non-substantive changes and corrections that do not affect the determination ( e.g., updating the Background section of the preamble in response to comments, minor clarifications) were made throughout the document. Below is a summary of changes made to the final rule.

(1) The draft economic analysis incorrectly displayed that the unoccupied habitat in proposed Unit 2 overlaps with the designated critical habitat for other species. Specifically, in Exhibit 1, Summary of Proposed Critical Habitat Units for the Pearl Darter, of the screening memo (IEc 2020, p. 6), incorrect information was displayed in the column Overlaps With Existing Critical Habitat For Other Aquatic or Riparian Listed Species under Unit 2. The “Yes” should have been a “No” as the proposed critical habitat does not overlap with critical habitat for other species. This error was corrected and is addressed in the updated memorandum from IEc (IEc 2021, p. 1).

(2) Updated the economic analysis to include consideration of the additional 6.5 river mi (10.5 river km) within Unit 1. Despite the increase in size of Unit 1, the total incremental costs are not expected to change relative to the screening analysis (IEc 2020, entire; IEc 2021, entire).

The following items describe changes made between statements in the preamble of the proposed rule and those in the preamble of this final rule.

(3) In Criteria Used To Identify Critical Habitat, based on feedback from a peer reviewer, we removed a statement that indicated the pearl darter's representation would increase from current levels by allowing for local environmental adaptation and increasing genetic representation. The Service had not provided adequate information to support that statement, and the species currently has low levels of genetic diversity within its occupied range.

(4) In Application of the “Adverse Modification” Standard, we included a statement that, during a consultation under section 7(a)(2) of the Act, the Services may find that activities likely to destroy or adversely modify critical habitat include activities that occur within critical habitat or affect the critical habitat.

(5) In Habitats Representative of the Historical, Geographical, and Ecological Distributions of the Species, we:

(a) Changed a statement that the pearl darter is definitively extirpated to it being considered extirpated within the Pearl River basin, based on information from peer reviewers. Given the species' cryptic nature, lack of targeted surveys within the Pearl River basin, and the fact that extirpation is a high bar to definitively prove, researchers do not consider the pearl darter to be definitively extirpated from this system despite a lack of detections over the past several decades.

(b) Added information from a habitat suitability model that was developed for recovery efforts (Service 2021, unpublished data), which confirmed that our proposed designation of critical habitat contains areas indicated as suitable for the species.

(c) Incorporated additional citations—provided through the public comment and peer review process—to support our discussion of physical and biological features, species needs, and species occurrence.

(d) Updated the calculation of the proportion of habitat lost from “roughly half” to 36 percent. The updated total better accounts for the proportion of occupied habitat lost with the extirpation of the species within the Pearl River basin.

(6) In Space for Individual and Population Growth and for Normal Behavior, we removed the description of the habitat for the prey of pearl darter and described only habitat as found in recent literature (Slack et al. 2005, pp. 9, 11).

(7) In Food, Water, Air, Light, Minerals, or Other Nutritional or Physiological Requirements section and Summary of Essential Physical or Biological Features, we incorporated information from a recent preliminary diet study (Service, unpublished data) of specimens from the Chunky River and Chickasawhay River. This study confirmed that the pearl darter is a dietary generalist.

(8) In Sites for Breeding, Reproduction, or Rearing (or Development) of Offspring, we incorporated information that indicates that spawning has not been observed in the wild, but rather individuals in spawning condition have been collected.

(9) In Areas Occupied at the Time of Listing, we have incorporated information from two additional citations (Clark et al. 2018, entire; Ellwanger et al. 2021, entire) that add known distribution information for the species.

(10) In Final Critical Habitat Designation, we have revised our description of the physical or biological features present in Unit 2 to reflect our recognition that the physical or biological feature pertaining to water quality is not currently met during all portions of the year.

(11) In the rule portion of this document we have made the following changes:

(a) In the list of the physical or biological features required for the pearl darter, we adjusted the descriptions of the bottom substrates and prey base, based on information received during the comment period; and,

(b) In the designation of critical habitat for Unit 1, we expanded the designation in the Chunky River based on information submitted by the Mississippi Department of Wildlife, Fisheries, and Parks as described above in the response to comment 2.

Critical habitat is defined in section 3 of the Act as:

(1) The specific areas within the geographical area occupied by the species, at the time it is listed in accordance with the Act, on which are found those physical or biological features

(a) Essential to the conservation of the species, and

(b) Which may require special management considerations or protection; and

(2) Specific areas outside the geographical area occupied by the species at the time it is listed, upon a determination that such areas are essential for the conservation of the species.

Our regulations at 50 CFR 424.02 define the geographical area occupied by the species as an area that may generally be delineated around species' occurrences, as determined by the Secretary ( i.e., range). Such areas may include those areas used throughout all or part of the species' life cycle, even if not used on a regular basis ( e.g., migratory corridors, seasonal habitats, and habitats used periodically, but not solely by vagrant individuals).

This critical habitat designation was proposed when the regulations defining “habitat” (85 FR 81411; December 16, 2020) and governing the 4(b)(2) exclusion process for the Service (85 FR 82376; December 18, 2020) were in place and in effect. However, those two regulations have been rescinded (87 FR 37757; June 24, 2022, and 87 FR 43433; July 21, 2022) and no longer apply to any designations of critical habitat. Therefore, for this final rule designating critical habitat for the pearl darter, we apply the regulations at 50 CFR 424.19 and the 2016 Joint Policy on 4(b)(2) exclusions (81 FR 7226; February 11, 2016).

Conservation, as defined under section 3 of the Act, means to use and the use of all methods and procedures that are necessary to bring an endangered or threatened species to the point at which the measures provided pursuant to the Act are no longer necessary. Such methods and procedures include, but are not limited to, all activities associated with scientific resources management such as research, census, law enforcement, habitat acquisition and maintenance, propagation, live trapping, and transplantation, and, in the extraordinary case where population pressures within a given ecosystem cannot be otherwise relieved, may include regulated taking.

Critical habitat receives protection under section 7 of the Act through the requirement that Federal agencies ensure, in consultation with the Service, that any action they authorize, fund, or carry out is not likely to result in the destruction or adverse modification of critical habitat. The designation of critical habitat does not affect land ownership or establish a refuge, wilderness, reserve, preserve, or other conservation area. Such designation does not allow the government or public to access private lands. Such designation does not require implementation of restoration, recovery, or enhancement measures by non-Federal landowners. Where a landowner requests Federal agency funding or authorization for an action that may affect a listed species or critical habitat, the Federal agency would be required to consult with the Service under section 7(a)(2) of the Act. However, even if the Service were to conclude that the proposed activity would likely result in destruction or adverse modification of the critical habitat, the Federal action agency and the landowner are not required to abandon the proposed activity, or to restore or recover the species; instead, they must implement “reasonable and prudent alternatives” to avoid destruction or adverse modification of critical habitat.

Under the first prong of the Act's definition of critical habitat, areas within the geographical area occupied by the species at the time it was listed are included in a critical habitat designation if they contain physical or biological features (1) which are essential to the conservation of the species and (2) which may require special management considerations or protection. For these areas, critical habitat designations identify, to the extent known using the best scientific and commercial data available, those physical or biological features that are essential to the conservation of the species (such as space, food, cover, and protected habitat).

Under the second prong of the Act's definition of critical habitat, we can designate critical habitat in areas outside the geographical area occupied by the species at the time it is listed, upon a determination that such areas are essential for the conservation of the species.

Section 4 of the Act requires that we designate critical habitat on the basis of the best scientific data available. Further, our Policy on Information Standards Under the Endangered Species Act (published in the Federal Register on July 1, 1994 (59 FR 34271)), the Information Quality Act (section 515 of the Treasury and General Government Appropriations Act for Fiscal Year 2001 (Pub. L. 106-554; H.R. 5658)), and our associated Information Quality Guidelines provide criteria, establish procedures, and provide guidance to ensure that our decisions are based on the best scientific data available. They require our biologists, to the extent consistent with the Act and with the use of the best scientific data available, to use primary and original sources of information as the basis for recommendations to designate critical habitat.

When we are determining which areas should be designated as critical habitat, our primary source of information is generally the information developed during the listing process for the species. Additional information sources may include any generalized conservation strategy, criteria, or outline that may have been developed for the species; the recovery plan for the species; articles in peer-reviewed journals; conservation plans developed by States and counties; scientific status surveys and studies; biological assessments; other unpublished materials; or experts' opinions or personal knowledge.

Habitat is dynamic, and species may move from one area to another over time. We recognize that critical habitat designated at a particular point in time may not include all of the habitat areas that we may later determine are necessary for the recovery of the species. For these reasons, a critical habitat designation does not signal that habitat outside the designated area is unimportant or may not be needed for recovery of the species. Areas that are important to the conservation of the species, both inside and outside the critical habitat designation, will continue to be subject to: (1) Conservation actions implemented under section 7(a)(1) of the Act; (2) regulatory protections afforded by the requirement in section 7(a)(2) of the Act for Federal agencies to ensure their actions are not likely to jeopardize the continued existence of any endangered or threatened species; and (3) the prohibitions found in section 9 of the Act. Federally funded or permitted projects affecting listed species outside their designated critical habitat areas may still result in jeopardy findings in some cases. These protections and conservation tools will continue to contribute to recovery of the species. Similarly, critical habitat designations made on the basis of the best available information at the time of designation will not control the direction and substance of future recovery plans, habitat conservation plans (HCPs), or other species conservation planning efforts if new information available at the time of those planning efforts calls for a different outcome.

Section 4(a)(3) of the Act, as amended, and implementing regulations (50 CFR 424.12) require that, to the maximum extent prudent and determinable, the Secretary shall designate critical habitat at the time the species is determined to be an endangered or threatened species. In our proposed critical habitat rule (86 FR 36678; July 13, 2021), we found that designating critical habitat is both prudent and determinable for the pearl darter. In this final rule, we reaffirm those determinations.

In accordance with section 3(5)(A)(i) of the Act and regulations at 50 CFR 424.12(b), in determining which areas we will designate as critical habitat from within the geographical area occupied by the species at the time of listing, we consider the physical or biological features that are essential to the conservation of the species and which may require special management considerations or protection. The regulations at 50 CFR 424.02 define “physical or biological features essential to the conservation of the species” as the features that occur in specific areas and that are essential to support the life-history needs of the species, including, but not limited to, water characteristics, soil type, geological features, sites, prey, vegetation, symbiotic species, or other features. A feature may be a single habitat characteristic or a more complex combination of habitat characteristics. Features may include habitat characteristics that support ephemeral or dynamic habitat conditions. Features may also be expressed in terms relating to principles of conservation biology, such as patch size, distribution distances, and connectivity. For example, physical features essential to the conservation of the species might include gravel of a particular size required for spawning, alkaline soil for seed germination, protective cover for migration, or susceptibility to flooding or fire that maintains necessary early-successional habitat characteristics. Biological features might include prey species, forage grasses, specific kinds or ages of trees for roosting or nesting, symbiotic fungi, or absence of a particular level of nonnative species consistent with conservation needs of the listed species. The features may also be combinations of habitat characteristics and may encompass the relationship between characteristics or the necessary amount of a characteristic essential to support the life history of the species.

In considering whether features are essential to the conservation of the species, we may consider an appropriate quality, quantity, and spatial and temporal arrangement of habitat characteristics in the context of the life-history needs, condition, and status of the species. These characteristics include, but are not limited to, space for individual and population growth and for normal behavior; food, water, air, light, minerals, or other nutritional or physiological requirements; cover or shelter; sites for breeding, reproduction, or rearing (or development) of offspring; and habitats that are protected from disturbance.

The pearl darter is historically known from rivers and streams within the Pearl River and Pascagoula River drainages in Mississippi and Louisiana, and the species was described from the lower Strong River within the Pearl River drainage of Mississippi (Suttkus et al. 1994, pp. 15-20). The darter has been considered extirpated from the Pearl River drainage for several decades apparently due to system-wide channel and water quality degradation occurring in the late 1960s to early 1970s (Kuhajda 2009, pp. 17-18; Wagner et al. 2017, entire). With this presumed extirpation, 36 percent of the historical, geographical, and ecological habitats of the pearl darter are no longer occupied. Channel integrity and water quality within the Pearl River drainage have since improved due to the enactment of State and Federal laws and regulations addressing water pollution and in-channel sand and gravel mining. In the lower Strong River, channel integrity is controlled and protected by natural bedrock outcrops, and water quality has improved as indicated by the resurgence of other benthic fish species that historically co-occurred with the pearl darter (Piller et al. 2004, pp. 1007-1011; Tipton et al. 2004, pp. 57-60; Wagner et al. 2018, entire).

Within the Pascagoula River drainage, the pearl darter is known to occur within the Pascagoula, Chickasawhay, Leaf, Chunky, and Bouie Rivers and the Okatoma and Black Creeks (Suttkus et al. 1994, pp. 15-20; Wagner et al. 2017, pp. 3-10, 12; Clark et al. 2018, pp. 100-103; Schaefer et al. 2020, pp. 26-27, 43-44). This area was reaffirmed as suitable habitat throughout a contiguous distribution based on a habitat suitability model developed for the species (Service 2021, unpublished data).

The lower Strong River within the Pearl River drainage and the rivers and streams identified above within the Pascagoula River drainage are representative of the historical, geographical, and ecological distribution of the species.

The pearl darter is found in free-flowing, low-gradient streams and rivers with pools and scour holes associated with channel bends and runs (Slack et al. 2002, p. 10; Bart et al. 2001, p. 13). Presence of the darter is associated with bottom substrates including fine and coarse sand, silt, loose clay, coarse gravel, fine and coarse particulate organic matter, and woody debris (Slack et al. 2005, pp. 9, 11). Pearl darter occurrence within these habitats may be seasonal with spawning occurring in upstream reaches and growth and recruitment in downstream reaches (Bart et al. 2001, pp. 13, 15). Therefore, a continuum of perennial, uninterrupted, and interconnected natural small stream-to-river channel habitat is required for downstream drift of larvae or movement of juveniles and upstream migration of spawning adults.

The pearl darter requires unimpeded and interconnected stretches of perennial and flowing streams and rivers with adequate water quality. Water temperatures at pearl darter collection sites have ranged from 8 to 30 degrees Celsius (°C) (46.4 to 86.0 degrees Fahrenheit (°F)) (Suttkus et al. 1994, pp. 17-19; Bart et al. 2001, p. 13, Slack et al. 2002, p. 10), with dissolved oxygen of 5.8 to 9.3 milligrams per liter (mg/1) (Suttkus et al. 1994, pp. 17-19; Bart et al. 2001, pp. 7, 13-14; Slack et al. 2002, p. 10). The species is apparently sensitive to warmer water temperatures and may seasonally require tributaries with canopy shading and/or cool spring flows as seasonal refugia from warmer, unshaded river channels (Bart et al. 2001, p. 14).

Preliminary analysis of diets of specimens from the Chunky River and Chickasawhay River show the species feeds on larval mayflies, larval caddisflies, larval black flies, ostracods (crustaceans), chironomids (midges), and gastropods (snails). Food availability is likely affected by adequate flow, channel stability, water quality, and local habitat conditions, which may vary throughout or between the rivers and streams occupied or historically occupied by the species. Pearl darter have been maintained in captivity for at least 2 years on a diet of bloodworms (Campbell and Schwarz 2019, entire).

Pearl darter have been collected at sites with cool to warm water temperatures (8 to 30 °C (46.4 to 86.0 °F)), high dissolved oxygen (5.8 to 9.3 mg/l), slightly acidic to basic pH values (6.3 to 7.6), and low levels of pollution (Suttkus et al. 1994, pp. 17-19; Bart et al. 2001, pp. 7, 13-14; Slack et al. 2002, p. 10). Spawning has not been observed in the wild for pearl darter. However, adult pearl darter have been collected in spawning condition in the Strong River where they were associated with bedrock and broken rubble (Suttkus et al. 1994, p. 19) and in three probable spawning sites in the Pascagoula River system that were characterized by extensive outcrops of limestone or sandstone (Bart and Piller 1997, p. 8). Pearl darter in spawning condition in the Pascagoula River drainage have also been collected over firm gravel in relatively shallow, flowing water from April to early May (Bart et al. 2001, p. 13). Ideal conditions for spawning have been described as channel reaches with good canopy shading, an extensive buffer of mature forest, and good water quality (Bart et al. 2001, p. 15).

Adults collected in spawning condition in the Pearl and Strong Rivers (Mississippi) were documented during March through May (Suttkus et al. 1994, pp. 19-20), and young of year were collected in June (Suttkus et al. 1994, p. 19). Based on collection occurrence patterns, some researchers have postulated that adult pearl darter migrate upstream during the fall and winter to spawn in suitable upstream gravel reaches with elevated river discharge during the spring dispersing the larvae and juveniles into downstream reaches (Bart et al. 2001, p. 14; Ross et al. 2000, p. 11). Other studies have hypothesized that the species disperses locally from shallow spawning habitats into nearby deeper habitats where their presence is more difficult to detect (Slack et al. 2002, p. 18). The pattern of the disappearance of the pearl darter from all stream orders in the Pearl River drainage over a relatively short period of time suggests that some degree of seasonal interchange between tributary and river channel subpopulations may have been a factor in the species' presumed extirpation from that drainage. Therefore, until more is known relative to seasonal dispersal, connectivity between instream habitats should be considered essential for successful breeding and rearing of the pearl darter.

We derive the specific physical or biological features essential to the conservation of pearl darter from studies of the species' habitat, ecology, and life history as described below. Additional information can be found in the proposed critical habitat (86 FR 36678; July 13, 2021) and final listing rule (82 FR 43885; September 20, 2017) for the pearl darter. We have determined that the following physical or biological features are essential to the conservation of the pearl darter:

(1) Unobstructed and stable stream and river channels with:

(a) Connected sequences of channel runs and bends associated with pools and scour holes; and

(b) Bottom substrates consisting of fine and coarse sand, silt, loose clay, coarse gravel, fine and coarse particulate organic matter, or woody debris.

(2) A natural flow regime necessary to maintain instream habitats and their connectivity.

(3) Water quality conditions, including cool to warm water temperatures (8 to 30 °C (46.4 to 86.0 °F)), high dissolved oxygen (5.8 to 9.3 mg/l), slightly acidic to basic pH (6.3 to 7.6), and low levels of pollutants and nutrients meeting the current State of Mississippi criteria as necessary to maintain natural physiological processes for normal behavior, growth, and viability of all life stages of the species.

(4) Presence of a prey base of small aquatic macroinvertebrates, including larval mayflies, larval caddisflies, larval black flies, ostracods (crustaceans), chironomids (midges), and gastropods (snails).

When designating critical habitat, we assess whether the specific areas within the geographical area occupied by the species at the time of listing contain features which are essential to the conservation of the species and which may require special management considerations or protection. The pearl darter faces threats from water quality degradation from point and non-point source pollution, discharges from municipalities, and geomorphological changes to its channel habitats (82 FR 43885, September 20, 2017, pp. 43888-43893). The features essential to the conservation of this species may require special management considerations or protection to reduce the following threats: (1) Actions that alter the minimum or existing flow regime, including impoundment, channelization, or water diversion; (2) actions that significantly alter water chemistry or temperature by the release of chemicals, biological pollutants, or heated effluents into the surface water or connected groundwater at a point or non-point source; and (3) actions that significantly alter channel morphology or geometry, including channelization, impoundment, road and bridge construction, or instream mining.

Examples of special management actions that would minimize or ameliorate threats to the pearl darter include: (a) Restoration and protection of riparian corridors; (b) implementation of best management practices to minimize erosion (such as State and industry best management practices for road construction, forest management, or mining activities); (c) stream bank restoration projects; (d) private landowner programs to promote watershed and soil conservation (such as the U.S. Department of Agriculture's Farm Bill and the Service's Private Lands programs); (e) implementation of best management practices for storm water; and (f) upgrades to industrial and municipal treatment facilities to improve water quality in effluents.

As required by section 4(b)(2) of the Act, we use the best scientific data available to designate critical habitat. In accordance with the Act and our implementing regulations at 50 CFR 424.12(b), we review available information pertaining to the habitat requirements of the species and identify specific areas within the geographical area occupied by the species at the time of listing and any specific areas outside the geographical area occupied by the species to be considered for designation as critical habitat. We are designating critical habitat in areas within the geographical area occupied by the species at the time of listing. We also are designating specific areas outside the geographical area occupied by the species because we have determined that a designation limited to occupied areas would be inadequate—and therefore designation of unoccupied area is essential—to ensure the conservation of the species.

The current distribution of the pearl darter is reduced from its historical distribution, and we anticipate that recovery will require continued protection of the existing population and habitat, as well as establishing a population within its historical range ( i.e., unoccupied critical habitat), to ensure there are adequate numbers of pearl darter occurring in stable populations for the species' continued conservation. Furthermore, rangewide recovery considerations, such as maintaining existing genetic diversity and striving for representation of all major portions of the species' historical range, were considered in formulating the proposed critical habitat designation.

We are designating critical habitat in areas within the geographical area occupied by the species at the time of listing. We identified areas with current occurrence records that we deemed suitable habitat (see delineation steps, below) and that had one or more of the physical or biological features identified for the pearl darter that may require special management considerations or protection. We also are designating specific areas outside of the geographical area occupied by the species at the time of listing because we have determined that those areas are essential for the conservation of the species. For those unoccupied areas, we have determined that it is reasonably certain that the unoccupied areas will contribute to the conservation of the species and contain one or more of the physical or biological features that are essential to the conservation of the species.

Threats to pearl darter occurring in the Pascagoula River drainage are compounded by the species' naturally low numbers and short life span, but the species' conservation potential is primarily limited by its extirpation from the Pearl River drainage and, therefore, its lack of redundancy. The documented Pearl River drainage extirpation was rapid and system-wide, including all mainstem and tributary collection sites seemingly simultaneously. As such, we consider pearl darter occurring within the Pascagoula River and its tributaries as a single population. The loss of the species' redundancy with its extirpation from the Pearl River drainage has also diminished its genetic and ecological representation and, therefore, increased the species' vulnerability to catastrophic events and population changes. A successful reintroduction into the Pearl River drainage would restore the species' redundancy within its historical range. Thus, reintroducing the species into the Pearl River drainage would contribute to the resilience and conservation of the pearl darter.

Factors implicated in the Pearl River extirpation include geomorphic instability ( i.e., channel erosion and degradation), sedimentation, and point source pollution from municipalities and industries ( e.g., Bart and Suttkus 1995, p. 14; Tipton et al. 2004, pp. 59-60). One or all of these factors may have been responsible for the diminishment or loss of some or all of the physical or biological features essential to the conservation of the pearl darter within the drainage ( e.g., channel stability, substrate, water quality, prey base). We now find that these factors have been reduced to a degree that the pearl darter may be successfully reintroduced into the Pearl River.

For example, active channel erosion and degradation that may have been precipitated by the 1956 construction of the Pearl River navigation system in the lower basin and aggravated by the 1963 construction of the Ross Barnett Reservoir in the upper basin have diminished. Moreover, instream mining is now prohibited by the States of Mississippi and Louisiana, thus resulting in more stable channel habitats within the basin. In addition, point-source pollution from untreated municipal and industrial discharge into the Pearl River has been significantly reduced by enactment and enforcement of the Clean Water Act of 1972 (33 U.S.C. 1251 et seq. ). The improvement of the physical or biological features within the Pearl River drainage is also demonstrated by recent observed increases in other benthic fish species ( e.g., crystal darter, frecklebelly madtom), which experienced declines concurrent with the extirpation of the pearl darter (Piller et al. 2004, pp. 1007-1011; Tipton et al. 2004, pp. 57-60; Wagner et al. 2018, p. 13). These improvements indicate that one or more of the physical or biological features essential to the conservation of the pearl darter are now present within the Pearl River drainage. Because the Pearl River drainage habitat contains the physical or biological features for the pearl darter and supports other benthic fish species with similar life processes, we conclude that the drainage contains the resources and conditions necessary to support the life processes for the pearl darter and is essential for the conservation of the species.

We completed the following steps to delineate critical habitat:

(1) Compiled all available current and historical occurrence data records for the pearl darter in both the Pascagoula and Pearl River drainages.

(2) Used confirmed presence from 1994-2021 as the foundation for identifying areas currently occupied in the Pascagoula River drainage.

(3) Evaluated habitat suitability of stream segments that contain the identified physical or biological features and that are currently occupied by the species and retained all occupied stream segments.

(4) Evaluated unoccupied segments of the Pearl River drainage for suitability of spawning and recruitment, darter reintroduction, and monitoring and management of a reintroduced population.

(5) Evaluated unoccupied segments of the Pearl River drainage for connectivity with reaches that were historically occupied and identified areas containing the physical or biological features essential to the conservation of the species that may require special management considerations or protection.

Sources of data for this critical habitat designation include the proposed and final listing rules (81 FR 64857, September 21, 2016; 82 FR 43885, September 20, 2017), fish collection databases provided by the MDWFP, survey reports and observations, and peer-reviewed publications.

We used reports and collection data to map species site collections and occurrences between 1994 and 2021, to determine areas occupied at the time of listing. Based on the best available scientific data, we determined that all currently known occupied habitat for the pearl darter was also occupied by the species at the time of listing and that these areas contain all of the physical or biological features essential to the conservation of the species although they may require special management considerations or protection.

As stated above, we delineated units based on documented occurrences and the existing physical or biological features essential to the conservation of the species. Collection occurrence patterns suggest that adult pearl darter migrate upstream to spawn in suitable gravel or bedrock reaches with elevated spring river discharge dispersing larvae and juveniles into downstream reaches; an alternative hypothesis considers that the pearl darter moves from shallow, easily collected spawning habitats into deeper habitats where it is more difficult to detect the fish (see Sites for Breeding, Reproduction, or Rearing (or Development) of Offspring, above). While both hypotheses are partially supported by data, we note that the disappearance of the species from the Pearl River drainage occurred fairly rapidly and simultaneously in all stream orders, suggesting some element of migration may be involved in the darter's life history. To allow for potential seasonal movement between stream reaches, we are designating one continuous unit of occupied critical habitat within the Pascagoula River drainage. This unit includes portions of the Chunky, Bouie, Leaf, Chickasawhay, and Pascagoula Rivers as well as reaches of Okatoma and Big Black Creeks as described below under Final Critical Habitat Designation.

Clark et al. (2018, entire) provides a thorough review of the distribution of the species from 1950 through 2016, throughout both the Pearl River and Pascagoula River drainages prior to the listing of the species in 2017. Since the 2017 listing of the species, there have been 86 site collections of pearl darter in the Pascagoula River drainage (Wagner et al. 2019, pp. 8-18; Schaefer et al. 2020, pp. 26-27, 43-44; Ellwanger et al. 2021, p. 5). One of these collections in 2018 extended the known range approximately 60 mi (97 km) in Black Creek, above its confluence with the occupied reach of Big Black Creek (Schaefer et al. 2020, pp. 26-27). An additional collection in 2021 extended the known historical range approximately 4.0 river mi (6.4 river km) upstream in the Chunky River, which is upstream of the second-most upstream State Highway 80 and Chunky River crossing (Ellwanger et al. 2021, p. 10). We consider this additional mileage of stream reach to be occupied at the time of listing because the reaches between the previously identified populations in Big Black Creek or Chunky River and the newly discovered populations upstream both have the physical or biological features essential to the conservation of the species and its potential seasonal migration. Further, there are no impediments to connectivity between the new occurrence records and the areas that were known to be occupied when the species was listed in 2017. The potential for seasonal migration, the species' small size and rarity, and the fact that surveys for the pearl darter are difficult and not always definitive of the species' absence within a particular reach of an occupied stream also support considering this area occupied at the time of listing.

In making these determinations, we recognize that collection sites for the pearl darter occur at areas generally accessible to fish biologists and that occupied habitats within a river reach may vary depending upon life stage, stream size, and season. Additionally, stream habitats are highly dependent upon upstream and downstream channel habitat conditions for their maintenance. Therefore, we considered the areas occupied at the time of listing to extend from an identifiable landmark ( e.g., bridge crossing, tributary confluence, etc.) nearest the uppermost records within second or third order streams through their confluence with third and fourth order streams downstream to an identifiable landmark near the lowermost areas of collection in the Pascagoula River ( i.e., forks of the East and West Pascagoula River). Within the current range of the pearl darter within the Pascagoula River drainage, some habitats may or may not be actively used at all times by individuals; however, these areas are necessary for maintaining population connectivity as well as other physical or biological features essential to the conservation of the species and, therefore, are considered the geographic area occupied at the time of listing for the pearl darter. This area (referred to below as Unit 1: Pascagoula River Unit ) contains all of the physical or biological features essential to the conservation of the pearl darter but may require special management conditions or protections.

To consider areas not occupied by the species at the time of listing for designation, we must demonstrate that these areas are essential for the conservation of the pearl darter. The occupied critical habitat designation does not include geographic areas within the Pearl River drainage—the only other area in which the pearl darter historically occurred—as it is considered extirpated in that drainage. In addition, because the Pascagoula River drainage population is the only extant population, that population provides no redundancy for the species. Based upon the species' rapid and system-wide extirpation from the Pearl River drainage, a series of back-to-back stochastic events or a single catastrophic event could similarly significantly reduce resiliency or extirpate the Pascagoula River population. For these reasons, we determined that we cannot conserve the species by designating only occupied habitat as it includes only a single population in a single drainage. Thus, we determined that habitat in another historical drainage is needed for the long-term survival and recovery of the species. Therefore, because we determined that the one occupied area alone is not adequate for the conservation of the species, we have identified and are designating as critical habitat specific areas outside the geographical area occupied by the species at the time of listing that are essential for the conservation of the species. We used historical occurrence data and the physical or biological features described earlier to identify unoccupied habitat essential for the conservation of the pearl darter.

Based on our review, we determined that the lower Strong River, a major tributary of the Pearl River, has the potential for future reintroduction and reoccupation by the pearl darter provided that stressors are managed and mitigated. Reestablishing a population in the Strong River will restore the species' redundancy within the historical range and increase the species' ecological representation. The specific area of the lower Strong River encompasses the minimum area of the species' historical range within the Pearl River drainage while still providing ecological diversity so that the species can evolve and adapt over time. This river reach also provides the potential for the pearl darter to expand its range into other historically occupied areas that currently may be or may later become suitable to ensure that the species has an adequate level of redundancy within the Pearl River drainage and guard against future catastrophic events. The lower Strong River also represents the stream reach within the historical range with the best potential for reestablishment of a population in the Pearl River due to current conditions, suitability for reintroductions, and access for monitoring.

Accordingly, we are designating one unoccupied unit in the lower Strong River within the Pearl River drainage. As described below in the individual unit descriptions (see description for Unit 2: Strong River Unit below), this unit contains some of the physical or biological features essential to the conservation of the species and is reasonably certain to contribute to the conservation of the species.

The areas designated as critical habitat include only stream channels within the ordinary high-water line. There are no developed areas within the critical habitat boundaries except for transportation and pipeline crossings, which do not remove the suitability of these areas for the pearl darter. When determining critical habitat boundaries, we made every effort to avoid including developed areas such as lands covered by buildings, pavement, and other structures because such lands lack physical or biological features necessary for pearl darter. The scale of the maps we prepared under the parameters for publication within the Code of Federal Regulations may not reflect the exclusion of such developed lands. Any such lands inadvertently left inside critical habitat boundaries shown on the maps of this rule have been excluded by text in the rule and are not designated as critical habitat. Therefore, a Federal action involving these lands will not trigger section 7 consultation with respect to critical habitat and the requirement of no adverse modification unless the specific action would affect the physical or biological features in the adjacent critical habitat.

We are designating as critical habitat areas that we have determined are occupied at the time of listing ( i.e., currently occupied) and that contain one or more of the physical or biological features that are essential to support life-history processes of the species. We have determined that occupied areas are inadequate to ensure the conservation of the species. Therefore, we are designating additional areas as unoccupied critical habitat. We have determined that these units are habitat for the species and will both contribute to the conservation of the species and contain at least one physical or biological features essential to the conservation of the species (see description for Unit 2: Strong River Unit below for explanation).

The two units are designated based on one or more of the physical or biological features being present to support pearl darter's life-history processes. One unit contains all of the identified physical or biological features and supports multiple life-history processes. The other unit contains only some of the physical or biological features necessary to support the pearl darter's particular use of that habitat.

The critical habitat designation is defined by the map or maps, as modified by any accompanying regulatory text, presented at the end of this document under Regulation Promulgation. We include more detailed information on the boundaries of the critical habitat designation in the preamble of this document. We will make the coordinates or plot points or both on which each map is based available to the public on https://www.regulations.gov at Docket No. FWS-R4-ES-2020-0062, on our internet site https://fws.gov/office/mississippi-ecological-services, and at the field office responsible for the designation (see FOR FURTHER INFORMATION CONTACT ).

We are designating approximately 524 river mi (843 river km) in two units as critical habitat for pearl darter. The critical habitat areas we describe below constitute our current best assessment of areas that meet the definition of critical habitat for pearl darter. The two areas designated as critical habitat are: (1) Pascagoula River Unit and (2) Strong River Unit. Table 1 shows the critical habitat units and the approximate area of each unit.

We present brief descriptions of all units, and reasons why they meet the definition of critical habitat for pearl darter, below.

Unit 1 consists of 494 river mi (794 river km) of occupied connected river and stream channels within the Pascagoula River drainage in Mississippi, including:

• 63 mi (102 km) of the Pascagoula River channel from its confluence with the West Pascagoula River in Jackson County, upstream to the confluence of the Leaf and Chickasawhay Rivers in George County;

• 80 mi (129 km) of Big Black Creek/Black Creek channel from its confluence with the Pascagoula River in Jackson County, upstream to U.S. Highway 49 Bridge in Forrest County;

• 160 mi (257 km) of Chickasawhay River channel from its confluence with the Leaf River just north of Enterprise, Clarke County, upstream to the confluence of Okatibbee Creek and Chunky River in Clarke County;

• 28 mi (45 km) of Chunky River channel from its confluence with Okatibbee Creek in Clarke County, upstream to the third (most upstream) Highway 80 Crossing in Newton County;

• 119 mi (192 km) of Leaf River channel from its confluence with the Chickasawhay River in George County, upstream to the bridge crossing at U.S. Highway 84 in Covington County;

• 15 mi (24 km) of Bouie River channel from its confluence with the Leaf River, upstream to the confluence of Okatoma Creek in Forrest County; and

• 28 mi (45 km) of Okatoma Creek from its confluence with the Bouie River in Forrest County, upstream to the bridge crossing at U.S. Highway 84 in Covington County.

The riparian lands (channel borders) in this unit are generally privately owned agricultural or silvicultural lands with short reaches owned and managed by the U.S. Forest Service or the State (see table above). All channel segments in Unit 1 are occupied by the pearl darter, and the unit contains all the physical or biological features essential to the conservation of the species, including deep pools, runs, and bends and scour holes; mixtures of bottom substrates of fine and coarse sand, silt, loose clay, coarse gravel, fine and coarse particulate organic matter, and woody debris; a natural hydrograph with flows and water quality that currently support the normal life stages of the pearl darter; and the species' prey sources.

Special management considerations and protections that may be required to address threats within the unit include minimizing surface water withdrawals or other actions that alter stream flow; reducing excessive use of manures, fertilizers, and pesticides near stream channels; improving treatment of wastewater discharged from permitted facilities; and implementing practices that protect or restore riparian buffer areas along stream corridors.

Unit 2 consists of 30 river mi (49 river km) of unoccupied habitat in the Strong River channel from its confluence with the Pearl River, upstream to U.S. Highway 49, in Simpson County, Mississippi. The riparian lands in this unit are generally privately owned agricultural or silvicultural lands with a short channel reach (0.39 mi (0.63 km)) owned and operated by the Simpson County Park Commission (see table above). Unit 2 is not within the geographic range occupied by the pearl darter at the time of listing, but this area was historically known to provide spawning and recruitment habitat prior to the species' extirpation from the Pearl River drainage. This unit currently provides some of the physical or biological features essential to the conservation of the pearl darter, including a stable channel with bottom substrates of fine and coarse sand, silt, loose clay, coarse gravel, fine and coarse particulate organic matter, and woody debris; a natural hydrograph with flows to support the normal life stages of the pearl darter; and the species' prey sources. Further evidence of the presence of physical or biological features within this reach of the Strong River is demonstrated by recent increases in other benthic fish species ( e.g., frecklebelly madtom) that declined concurrent with the extirpation of the pearl darter (Piller et al. 2004, pp. 1007-1011; Wagner et al. 2018, pp. 4-5).

As described above, the best available information demonstrates that the pearl darter disappeared from the entire Pearl River and all known tributary segments virtually simultaneously. Therefore, it is possible that a series of back-to-back stochastic events or a single catastrophic event could significantly reduce or extirpate the surviving pearl darter population within the Pascagoula River drainage. Due to the species' lack of redundancy, its naturally small numbers within the Pascagoula River drainage, and its short life span, the pearl darter is more vulnerable to existing and future threats, including habitat degradation and loss, catastrophic weather events, and introduced species. This unit would serve to protect habitat needed to reestablish a wild population within the historical range in the Pearl River drainage and recover the species. Reestablishing a population of the pearl darter within Unit 2 also would increase the species' redundancy and restore ecological representation, better ensuring its survival if a stochastic event were to impact the Pascagoula River population. This unit is essential for the conservation of the species because it will provide habitat for range expansion in known historical habitat that is necessary to increase viability of the pearl darter by increasing its resiliency, redundancy, and representation.

The need for reintroduction of the pearl darter into the Pearl River drainage has been recognized and is being discussed by our conservation partners. The landowner of the type locality (location where the species was described) within the Strong River unit has been working with the Service and MDWFP to regularly monitor for the presence of the pearl darter and other benthic fish and expressed interest in reestablishing the species on the property. Methods and facilities for propagating the species have been developed, tested, and proven at a Service fish hatchery. Accordingly, we are reasonably certain this unit will contribute to the conservation of the pearl darter.

Section 7(a)(2) of the Act requires Federal agencies, including the Service, to ensure that any action they fund, authorize, or carry out is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of designated critical habitat of such species.

We published a final rule revising the definition of destruction or adverse modification on August 27, 2019 (84 FR 44976). Destruction or adverse modification means a direct or indirect alteration that appreciably diminishes the value of critical habitat as a whole for the conservation of a listed species.

If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency (action agency) must enter into consultation with us. Examples of actions that are subject to the section 7 consultation process are actions on State, Tribal, local, or private lands that require a Federal permit (such as a permit from the U.S. Army Corps of Engineers under section 404 of the Clean Water Act (33 U.S.C. 1251 et seq. ) or a permit from the Service under section 10 of the Act) or that involve some other Federal action (such as funding from the Federal Highway Administration, Federal Aviation Administration, or the Federal Emergency Management Agency). Federal actions not affecting listed species or critical habitat—and actions on State, Tribal, local, or private lands that are not federally funded, authorized, or carried out by a Federal agency—do not require section 7 consultation.

Compliance with the requirements of section 7(a)(2) is documented through our issuance of:

(1) A concurrence letter for Federal actions that may affect, but are not likely to adversely affect, listed species or critical habitat; or

(2) A biological opinion for Federal actions that may affect, and are likely to adversely affect, listed species or critical habitat.

When we issue a biological opinion concluding that a project is likely to jeopardize the continued existence of a listed species and/or destroy or adversely modify critical habitat, we provide reasonable and prudent alternatives to the project, if any are identifiable, that would avoid the likelihood of jeopardy and/or destruction or adverse modification of critical habitat. We define “reasonable and prudent alternatives” (at 50 CFR 402.02) as alternative actions identified during consultation that:

(1) Can be implemented in a manner consistent with the intended purpose of the action,

(2) Can be implemented consistent with the scope of the Federal agency's legal authority and jurisdiction,

(3) Are economically and technologically feasible, and

(4) Would, in the Service Director's opinion, avoid the likelihood of jeopardizing the continued existence of the listed species and/or avoid the likelihood of destroying or adversely modifying critical habitat.

Reasonable and prudent alternatives can vary from slight project modifications to extensive redesign or relocation of the project. Costs associated with implementing a reasonable and prudent alternative are similarly variable.

Regulations at 50 CFR 402.16 set forth requirements for Federal agencies to reinitiate formal consultation on previously reviewed actions. These requirements apply when the Federal agency has retained discretionary involvement or control over the action (or the agency's discretionary involvement or control is authorized by law) and, subsequent to the previous consultation: (a) if the amount or extent of taking specified in the incidental take statement is exceeded; (b) if new information reveals effects of the action that may affect listed species or critical habitat in a manner or to an extent not previously considered; (c) if the identified action is subsequently modified in a manner that causes an effect to the listed species or critical habitat that was not considered in the biological opinion; or (d) if a new species is listed or critical habitat designated that may be affected by the identified action.

In such situations, Federal agencies sometimes may need to request reinitiation of consultation with us, but Congress also enacted some exceptions in 2018 to the requirement to reinitiate consultation on certain land management plans on the basis of a new species listing or new designation of critical habitat that may be affected by the subject Federal action. See 2018 Consolidated Appropriations Act, Public Law 115-141, Div, O, 132 Stat. 1059 (2018).

The key factor related to the destruction or adverse modification determination is whether implementation of the proposed Federal action directly or indirectly alters the designated critical habitat in a way that appreciably diminishes the value of the critical habitat as a whole for the conservation of the listed species. As discussed above, the role of critical habitat is to support physical or biological features essential to the conservation of a listed species and provide for the conservation of the species.

Section 4(b)(8) of the Act requires us to briefly evaluate and describe, in any proposed or final regulation that designates critical habitat, activities involving a Federal action that may violate section 7(a)(2) of the Act by destroying or adversely modifying such habitat, or that may be affected by such designation.

Activities that we may, during a consultation under section 7(a)(2) of the Act, consider likely to destroy or adversely modify critical habitat include, but are not limited to:

(1) Actions that would block or disconnect stream and river channels. Such activities could include, but are not limited to, the construction of dams or weirs, channelization, and mining. These activities could result in destruction of habitat, block movements between seasonal habitats, fragment and isolate subpopulations within critical habitat units, and/or affect flows within or into critical habitat.

(2) Actions that would affect channel substrates and stability. Such activities include channelization, impoundment, mining, road and bridge construction, removal of riparian vegetation, and land clearing within or into critical habitat. These activities may lead to changes in channel substrates, erosion of the streambed and banks, and excessive sedimentation that could degrade pearl darter habitat.

(3) Actions that would reduce flow levels or alter flow regimes within or into critical habitat. These could include, but are not limited to, activities that block or lower surface flow or groundwater levels, including channelization, impoundment, groundwater pumping, and surface water withdrawal or diversion. Such activities can result in long-term changes in stream flows that affect habitat quality and quantity for the darter and its prey.

(4) Actions that would affect water chemistry or temperature or introduce pollutants and nutrients at levels above State of Mississippi criteria. Such activities include, but are not limited to, the release of chemical pollutants, biological pollutants, or heated effluents into the surface water or connected groundwater at a point source or by dispersed release (non-point source). These activities could alter water quality conditions to levels that are beyond the tolerances of the pearl darter or its prey species.

(5) Actions that would result in the introduction, spread, or augmentation of nonnative aquatic species in occupied stream segments or in stream segments that are hydrologically connected to occupied stream segments, even if those segments are occasionally intermittent, or in the introduction of other species that compete with or prey on the pearl darter. Possible actions could include, but are not limited to, stocking of non-native fishes or other related actions. These activities also can introduce parasites or disease or affect the growth, reproduction, and survival of the pearl darter.

Section 4(a)(3)(B)(i) of the Act (16 U.S.C. 1533(a)(3)(B)(i)) provides that the Secretary shall not designate as critical habitat any lands or other geographical areas owned or controlled by the Department of Defense (DoD), or designated for its use, that are subject to an integrated natural resources management plan (INRMP) prepared under section 101 of the Sikes Act Improvement Act of 1997 (16 U.S.C. 670a), if the Secretary determines in writing that such plan provides a benefit to the species for which critical habitat is proposed for designation. There are no DoD lands with a completed INRMP within the final critical habitat designation.

Section 4(b)(2) of the Act states that the Secretary shall designate and make revisions to critical habitat on the basis of the best available scientific data after taking into consideration the economic impact, national security impact, and any other relevant impact of specifying any particular area as critical habitat. The Secretary may exclude an area from critical habitat based on economic impacts, impacts on national security, or any other relevant impacts. Exclusion decisions are governed by the regulations at 50 CFR 424.19 and the Policy Regarding Implementation of Section 4(b)(2) of the Endangered Species Act, 81 FR 7226 (Feb. 11, 2016) (2016 Policy)—both of which were developed jointly with the National Marine Fisheries Service (NMFS). We also refer to a 2008 Department of the Interior Solicitor's opinion entitled “The Secretary's Authority to Exclude Areas from a Critical Habitat Designation under Section 4(b)(2) of the Endangered Species Act” (M-37016). We explain each decision to exclude areas, as well as decisions not to exclude, to demonstrate that the decision is reasonable.

The Secretary may exclude any particular area if she determines that the benefits of such exclusion outweigh the benefits of including such area as part of the critical habitat, unless she determines, based on the best scientific data available, that the failure to designate such area as critical habitat will result in the extinction of the species. In making the determination to exclude a particular area, the statute on its face, as well as the legislative history, are clear that the Secretary has broad discretion regarding which factor(s) to use and how much weight to give to any factor.

Section 4(b)(2) of the Act and its implementing regulations require that we consider the economic impact that may result from a designation of critical habitat. In order to consider economic impacts, we prepared an incremental effects memorandum (IEM) and screening analysis which, together with our narrative and interpretation of effects, we consider our economic analysis of the critical habitat designation and related factors (IEc 2020, entire; IEc 2021, entire). The analysis, dated July 13, 2020, was made available for public review from July 13, 2021, through September 13, 2021 (IEc 2020, entire). The economic analysis addressed probable economic impacts of critical habitat designation for the pearl darter. Following the close of the comment period, we reviewed and evaluated all information submitted during the comment period that may pertain to our consideration of the probable incremental economic impacts of this critical habitat designation. Additional information relevant to the probable incremental economic impacts of the critical habitat designation for the pearl darter is summarized below and available in the screening analysis for the pearl darter (IEc 2020, entire; IEc 2021, entire), available at https://www.regulations.gov.

We received public comment on our draft economic analysis during the public comment period and updated the analysis based on public comments. The economic analysis now considers the addition of 6.5 river mi (10.5 river km) of critical habitat in the Chunky River. Because the initial assessment considered economic impacts across the entire Pascagoula River basin and the additional river segment falls within the boundary of this watershed, the updates made to the economic analysis did not change the overall conclusions of the analysis.

As part of our screening analysis, we considered the types of economic activities that are likely to occur within the areas likely affected by the critical habitat designation. In our evaluation of the probable incremental economic impacts that may result from the proposed designation of critical habitat for the pearl darter, first we identified in the IEM dated April 21, 2020, probable incremental economic impacts associated with the following categories of activities: (1) roadway and bridge construction and repair; (2) commercial or residential development; (3) dredging; (4) groundwater pumping; (5) instream dams and diversions; (6) storage, distribution, or discharge of chemical pollutants; (7) oil and gas; (8) utilities; (9) water quantity and supply; and (10) water quality. We considered each industry or category individually. Additionally, we considered whether their activities have any Federal involvement. Critical habitat designation generally will not affect activities that do not have any Federal involvement; under the Act, designation of critical habitat only affects activities conducted, funded, permitted, or authorized by Federal agencies. In areas where the pearl darter is present, Federal agencies already are required to consult with the Service under section 7 of the Act on activities they fund, permit, or implement that may affect the species. If we finalize this proposed critical habitat designation, consultations to avoid the destruction or adverse modification of critical habitat would be incorporated into the existing consultation process.

In our IEM, we attempted to clarify the distinction between the effects that will result from the species being listed and those attributable to the critical habitat designation ( i.e., difference between the jeopardy and adverse modification standards) for the pearl darter's critical habitat. The following specific circumstances in this case help to inform our evaluation: (1) The essential physical or biological features identified for critical habitat are the same features essential for the life requisites of the species, and (2) any actions that would result in sufficient harm or harassment to constitute jeopardy to the pearl darter also would likely adversely affect the essential physical or biological features of critical habitat. The IEM outlines our rationale concerning this limited distinction between baseline conservation efforts and incremental impacts of the designation of critical habitat for this species. This evaluation of the incremental effects has been used as the basis to evaluate the probable incremental economic impacts of this designation of critical habitat.

The critical habitat designation for the pearl darter totals approximately 524 mi (843 km) of river and stream channels in two units. Riparian lands bordering the critical habitat are under private (78 percent), county (0.1 percent), State (15 percent), and Federal (9 percent) ownership. A small portion (1.3 percent) has shared State and Federal ownership. Unit 1 is occupied by the pearl darter and represents 94 percent of the proposed critical habitat. Within this occupied unit, any actions that may affect the species or its habitat would also affect designated critical habitat, and it is unlikely that any additional conservation efforts would be recommended to address the adverse modification standard over and above those recommended as necessary to avoid jeopardizing the continued existence of the pearl darter. Therefore, only administrative costs are expected in actions affecting this unit. While this additional analysis will require time and resources by both the Federal action agency and the Service, it is believed that, in most circumstances, these costs would not be significant because they are predominantly administrative in nature.

Unit 2 is currently unoccupied by the species but is essential for the conservation of the species. This unit totals 30 mi (49 km) of river and stream channels and comprises 6 percent of the total proposed critical habitat designation. In this unoccupied area, any conservation efforts or associated probable impacts would be considered incremental effects attributed to the critical habitat designation. However, two threatened species, Gulf sturgeon and ringed map turtle currently occupy this unit. Conservation efforts to protect these species also would protect pearl darter critical habitat.

The economic analysis finds that the total annual incremental costs of critical habitat designation for the pearl darter are not anticipated to reach $100 million in any given year based on the anticipated annual number of consultations and associated administrative costs, which are not expected to exceed $710,000 in any year.

In Unit 1, which constitutes 94 percent of the critical habitat area, the activities that may affect the critical habitat are already subject to section 7 consultation due to the presence of pearl darter. We determined that the project modification recommendations made to avoid jeopardy to the pearl darter also would result in the avoidance of adverse modification. Thus, for projects and activities occurring in Unit 1, no additional project modification recommendations are likely to result from this critical habitat rule and costs would be limited to additional administrative effort.

A relatively small fraction (6 percent) of the critical habitat designation is in Unit 2, which is not currently occupied by the species. In these areas, activities that may affect the critical habitat for the pearl darter are also already subject to section 7 consultation due to the presence of other listed species (Gulf sturgeon and ringed map turtle) with similar habitat requirements. Additionally, activities that may affect pearl darter critical habitat in Unit 2 generally implement project modification recommendations from a standardized set provided in the Mississippi Standard Local Operations Procedures for Endangered Species (SLOPES) agreement. Through this agreement that was entered into in June 2017, the U.S. Army Corps of Engineers (COE) and the Service have established routine procedures for jointly implementing section 7 requirements for all projects that require COE permits. The agreement requires the COE to consult species-specific SLOPES documents to determine if a project is expected to adversely affect the species or its habitat. As part of the agreement, species-specific avoidance and minimization measures have been established for COE projects. The measures described for the pearl darter are similar to the measures described for overlapping species. Because the COE addresses permitting for projects with water impacts, all projects with a Federal nexus in the pearl darter critical habitat are likely to follow the Mississippi SLOPES procedures and recommendations. Therefore, even absent critical habitat designation, these activities are likely to avoid adverse effects on the habitat.

As discussed above, we considered the economic impacts of the critical habitat designation, and the Secretary is not exercising her discretion to exclude any areas from this designation of critical habitat for the pearl darter based on economic impacts.

In preparing this rule, we have determined that there are no lands within the designated critical habitat for pearl darter that are owned or managed by the DoD or Department of Homeland Security, and, therefore, we anticipate no impact on national security or homeland security. We did not receive any additional information during the public comment period for the proposed designation regarding impacts of the designation on national security or homeland security that would support excluding any specific areas from the final critical habitat designation under authority of section 4(b)(2) and our implementing regulations at 50 CFR 424.19, as well as the 2016 Policy.

Under section 4(b)(2) of the Act, we consider any other relevant impacts, in addition to economic impacts and impacts on national security as discussed above. To identify other relevant impacts that may affect the exclusion analysis, we consider a number of factors, including whether there are permitted conservation plans covering the species in the area such as HCPs, safe harbor agreements (SHAs), or candidate conservation agreements with assurances (CCAAs), or whether there are non-permitted conservation agreements and partnerships that would be encouraged by designation of, or exclusion from, critical habitat. In addition, we look at whether Tribal conservation plans or partnerships, Tribal resources, or government-to-government relationships of the United States with Tribal entities may be affected by the designation. We also consider any State, local, social, or other impacts that might occur because of the designation.

We are not excluding any areas from critical habitat. In preparing this final rule, we have determined that there are currently no HCPs or other management plans for the pearl darter, and the designation does not include any Tribal lands or trust resources. We anticipate no impact on Tribal lands, partnerships, or HCPs from this final critical habitat designation. We did not receive any information during the public comment period for the proposed rule regarding other relevant impacts to support excluding any specific areas from the final critical habitat designation under the authority of section 4(b)(2) and our implementing regulations at 50 CFR 424.19, as well as the 2016 Policy. Accordingly, the Secretary is not exercising her discretion to exclude any areas from this final designation based on other relevant impacts.

Executive Order 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget will review all significant rules. OIRA has determined that this rule is not significant.

Executive Order 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this proposed rule in a manner consistent with these requirements.

Under the Regulatory Flexibility Act (RFA; 5 U.S.C. 601 et seq. ), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA; 5 U.S.C. 801 et seq. ), whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effects of the rule on small entities ( i.e., small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of the agency certifies the rule will not have a significant economic impact on a substantial number of small entities. The SBREFA amended the RFA to require Federal agencies to provide a certification statement of the factual basis for certifying that the rule will not have a significant economic impact on a substantial number of small entities.

According to the Small Business Administration, small entities include small organizations such as independent nonprofit organizations; small governmental jurisdictions, including school boards and city and town governments that serve fewer than 50,000 residents; and small businesses (13 CFR 121.201). Small businesses include manufacturing and mining concerns with fewer than 500 employees, wholesale trade entities with fewer than 100 employees, retail and service businesses with less than $5 million in annual sales, general and heavy construction businesses with less than $27.5 million in annual business, special trade contractors doing less than $11.5 million in annual business, and agricultural businesses with annual sales less than $750,000. To determine if potential economic impacts to these small entities are significant, we considered the types of activities that might trigger regulatory impacts under this designation as well as types of project modifications that may result. In general, the term “significant economic impact” is meant to apply to a typical small business firm's business operations.

Under the RFA, as amended, and following recent court decisions, Federal agencies are required to evaluate the potential incremental impacts of rulemaking on those entities directly regulated by the rulemaking itself; in other words, the RFA does not require agencies to evaluate the potential impacts to indirectly regulated entities. The regulatory mechanism through which critical habitat protections are realized is section 7 of the Act, which requires Federal agencies, in consultation with the Service, to ensure that any action authorized, funded, or carried out by the agency is not likely to destroy or adversely modify critical habitat. Therefore, under section 7, only Federal action agencies are directly subject to the specific regulatory requirement (avoiding destruction and adverse modification) imposed by critical habitat designation. Consequently, it is our position that only Federal action agencies will be directly regulated by this designation. There is no requirement under the RFA to evaluate the potential impacts to entities not directly regulated. Moreover, Federal agencies are not small entities. Therefore, because no small entities will be directly regulated by this rulemaking, we certify that this critical habitat designation will not have a significant economic impact on a substantial number of small entities.

During the development of this final rule, we reviewed and evaluated all information submitted during the comment period on the July 13, 2021, proposed rule (86 FR 36678) that may pertain to our consideration of the probable incremental economic impacts of this critical habitat designation. Based on this information, we affirm our certification that this critical habitat designation will not have a significant economic impact on a substantial number of small entities, and a regulatory flexibility analysis is not required.

Executive Order 13211 (Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use) requires agencies to prepare statements of Energy Effects when undertaking certain actions. In our economic analysis, we did not find that this critical habitat designation will significantly affect energy supplies, distribution, or use. Therefore, this action is not a significant energy action, and no statement of energy effects is required.

In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq. ), we make the following finding:

(1) This rule will not produce a Federal mandate. In general, a Federal mandate is a provision in legislation, statute, or regulation that would impose an enforceable duty upon State, local, or Tribal governments, or the private sector, and includes both “Federal intergovernmental mandates” and “Federal private sector mandates.” These terms are defined in 2 U.S.C. 658(5)-(7). “Federal intergovernmental mandate” includes a regulation that “would impose an enforceable duty upon State, local, or Tribal governments” with two exceptions. It excludes “a condition of Federal assistance.” It also excludes “a duty arising from participation in a voluntary Federal program,” unless the regulation “relates to a then-existing Federal program under which $500,000,000 or more is provided annually to State, local, and Tribal governments under entitlement authority,” if the provision would “increase the stringency of conditions of assistance” or “place caps upon, or otherwise decrease, the Federal Government's responsibility to provide funding,” and the State, local, or Tribal governments “lack authority” to adjust accordingly. At the time of enactment, these entitlement programs were: Medicaid; Aid to Families with Dependent Children work programs; Child Nutrition; Food Stamps; Social Services Block Grants; Vocational Rehabilitation State Grants; Foster Care, Adoption Assistance, and Independent Living; Family Support Welfare Services; and Child Support Enforcement. “Federal private sector mandate” includes a regulation that “would impose an enforceable duty upon the private sector, except (i) a condition of Federal assistance or (ii) a duty arising from participation in a voluntary Federal program.”

The designation of critical habitat does not impose a legally binding duty on non-Federal Government entities or private parties. Under the Act, the only regulatory effect is that Federal agencies must ensure that their actions are not likely to destroy or adversely modify critical habitat under section 7. While non-Federal entities that receive Federal funding, assistance, or permits, or that otherwise require approval or authorization from a Federal agency for an action, may be indirectly impacted by the designation of critical habitat, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency. Furthermore, to the extent that non-Federal entities are indirectly impacted because they receive Federal assistance or participate in a voluntary Federal aid program, the Unfunded Mandates Reform Act would not apply, nor would critical habitat shift the costs of the large entitlement programs listed above onto State governments.

(2) We do not believe that this rule will significantly or uniquely affect small governments because it will not produce a Federal mandate of $100 million or greater in any year, that is, it is not a “significant regulatory action” under the Unfunded Mandates Reform Act. The designation of critical habitat imposes no obligations on State or local governments. Therefore, a Small Government Agency Plan is not required.

In accordance with E.O. 12630 (Government Actions and Interference with Constitutionally Protected Private Property Rights), we have analyzed the potential takings implications of designating critical habitat for the pearl darter in a takings implications assessment. The Act does not authorize us to regulate private actions on private lands or confiscate private property as a result of critical habitat designation. Designation of critical habitat does not affect land ownership or establish any closures or restrictions on use of or access to the designated areas. Furthermore, the designation of critical habitat does not affect landowner actions that do not require Federal funding or permits, nor does it preclude development of habitat conservation programs or issuance of incidental take permits to permit actions that do require Federal funding or permits to go forward. However, Federal agencies are prohibited from carrying out, funding, or authorizing actions that would destroy or adversely modify critical habitat. A takings implications assessment has been completed and concludes that this designation of critical habitat for the pearl darter does not pose significant takings implications for lands within or affected by the designation.

In accordance with E.O. 13132 (Federalism), this rule does not have significant federalism effects. A federalism summary impact statement is not required. In keeping with Department of the Interior and Department of Commerce policy, we requested information from, and coordinated development of this critical habitat designation with, appropriate State resource agencies. From a federalism perspective, the designation of critical habitat directly affects only the responsibilities of Federal agencies. The Act imposes no other duties with respect to critical habitat, either for States and local governments, or for anyone else. As a result, the rule does not have substantial direct effects either on the States, or on the relationship between the national government and the States, or on the distribution of powers and responsibilities among the various levels of government. The designation may have some benefit to these governments because the areas that contain the features essential to the conservation of the species are more clearly defined, and the physical or biological features of the habitat necessary for the conservation of the species are specifically identified. This information does not alter where and what federally sponsored activities may occur. However, it may assist State and local governments in long-range planning because they no longer have to wait for case-by-case section 7 consultations to occur.

Where State and local governments require approval or authorization from a Federal agency for actions that may affect critical habitat, consultation under section 7(a)(2) of the Act will be required. While non-Federal entities that receive Federal funding, assistance, or permits, or that otherwise require approval or authorization from a Federal agency for an action, may be indirectly impacted by the designation of critical habitat, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency.

In accordance with Executive Order 12988 (Civil Justice Reform), the Office of the Solicitor has determined that the rule will not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of the Order. We are designating critical habitat in accordance with the provisions of the Act. To assist the public in understanding the habitat needs of the species, this final rule identifies the physical or biological features essential to the conservation of the species. The designated areas of critical habitat are presented on maps, and the rule provides several options for the interested public to obtain more detailed location information, if desired.

This rule does not contain information collection requirements, and a submission to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) is not required. We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number.

Regulations adopted pursuant to section 4(a) of the Act are exempt from the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq. ) and do not require an environmental analysis under NEPA. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244). This includes listing, delisting, and reclassification rules, as well as critical habitat designations and species-specific protective regulations promulgated concurrently with a decision to list or reclassify a species as threatened. The courts have upheld this position ( e.g., Douglas County v. Babbitt, 48 F.3d 1495 (9th Cir. 1995) (critical habitat); Center for Biological Diversity v. U.S. Fish and Wildlife Service., 2005 WL 2000928 (N.D. Cal. Aug. 19, 2005) (concurrent 4(d) rule)).

In accordance with the President's memorandum of April 29, 1994 (Government-to-Government Relations with Native American Tribal Governments; 59 FR 22951), Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments), and the Department of the Interior's manual at 512 DM 2, we readily acknowledge our responsibility to communicate meaningfully with federally recognized Tribes on a government-to-government basis. In accordance with Secretarial Order 3206 of June 5, 1997 (American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered Species Act), we readily acknowledge our responsibilities to work directly with Tribes in developing programs for healthy ecosystems, to acknowledge that Tribal lands are not subject to the same controls as Federal public lands, to remain sensitive to Indian culture, and to make information available to Tribes. We have determined that no Tribal interests fall within the boundaries of the final critical habitat for the pearl darter, so no Tribal lands will be affected by the designation.

A complete list of references cited in this rulemaking is available on the internet at https://www.regulations.gov and upon request from the Mississippi Ecological Services Field Office (see FOR FURTHER INFORMATION CONTACT ).

The primary authors of this final rule are the staff members of the Fish and Wildlife Service's Species Assessment Team and the Mississippi Ecological Services Field Office.

Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below: