Title: National Organic Program.

OMB Number: 0581-new.

Type of Request: New—Variances at 7 CFR 205.236(d)(1).

Abstract: On April 5, 2022, AMS published the “Origin of Livestock” (OOL) final rule (87 FR 19740) related to livestock production practices under the USDA organic regulations (7 CFR part 205). The final rule clarified that organic dairy operations may transition nonorganic animals to organic production once—after that, any animals added to an operation must have been organically managed from the last third of gestation. To provide flexibility, the final rule allows small, certified operations to request a variance from the rule's one-time transition requirement under limited conditions specified at 7 CFR 205.236(d). This is a new variance with an information collection burden for which there has not been public comment. In this request, AMS is seeking public comment on the burdens, costs, and other effects of the information collection required by the new variance.

AMS invites comment on the following topics: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

The Organic Foods Production Act of 1990 (OFPA), as amended (7 U.S.C. 6501-6524), authorizes the Secretary of Agriculture to establish the National Organic Program (NOP) and accredit certifying agents to certify that farms and businesses meet national organic standards. The purpose of OFPA is to: (1) establish national standards governing the marketing of certain agricultural products as organically produced products; (2) assure consumers that organically produced products meet a consistent standard; and (3) facilitate interstate commerce in fresh and processed food that is organically produced. 7 U.S.C. 6501.

Reporting and recordkeeping are essential to the integrity of the organic certification system. A paper trail is a critical element in carrying out the mandate of OFPA and the NOP. Reporting and recordkeeping serve the AMS mission, program objectives, and management needs by providing information on the efficiency and effectiveness of the program. The collected information is the basis for evaluating compliance with OFPA and the USDA organic regulations, administering the program, making management and program planning decisions, and establishing the cost of the program. It also supports administrative and regulatory actions in response to noncompliance with OFPA and the USDA organic regulations.

In general, the information collected is used by USDA, State programs, and certifying agents. Information is created and submitted by State and foreign program officials, peer review auditors, certifying agents, organic inspectors, certified organic producers and handlers, entities seeking accreditation or certification, and parties interested in changing the National List of Allowed and Prohibited Substances in §§ 205.600-205.607. Information collections require most of these entities to establish and maintain record-keeping procedures and to maintain space for records.

AMS amended the OOL requirements for dairy animals under the USDA organic regulations with a final rule published on April 5, 2022 (87 FR 19740). The final rule followed a proposed rule published on April 28, 2015 (80 FR 23455) and two subsequent comment periods (October 1, 2019, 84 FR 52041; May 12, 2021, 86 FR 25961). All comments can be accessed at https://www.regulations.gov (search for the Docket ID “AMS-NOP-11-0009”).

The final rule clarifies requirements related to organic dairy production under the USDA organic regulations and specifies how and when nonorganic dairy animals may be transitioned or converted to organic production. The final rule grants a one-time allowance for transitioning nonorganic animals to organic production to operations that (1) are not already certified for organic livestock production and that (2) have never transitioned animals. The final rule also allows variances for the movement of transitioned animals under limited scenarios. Specifically, the AMS Administrator  1 may issue case-by-case variances for some operations to sell or transfer transitioned animals (see discussion at 87 FR 19750). The final rule allows businesses that the Small Business Administration (SBA) classifies as small in its regulations (see 13 CFR part 121)  2 to request a variance. For example, the SBA regulations currently establish that a dairy cattle operation is a small business if it takes in less than $3.25 million in annual receipts; and a goat farming operation is small if it has less than $2.25 million in annual receipts. AMS limits variances to small businesses to minimize the adverse economic impact on small entities, as directed by the Regulatory Flexibility Act.

Pursuant to 7 CFR 205.236(d)(1), a small, organic dairy operation  3 may request a variance from the OOL transitioned animal sourcing prohibitions only if:

• The certified operation selling the transitioned animals is part of a bankruptcy proceeding or a forced sale (§ 205.236(d)(1)(i)); or

• The certified operation has become insolvent, must liquidate its animals, and as a result has initiated a formal process to cease its operations (§ 205.236(d)(1)(ii)); or

• The certified operation wishes to conduct an intergenerational transfer of transitioned animals to an immediate family member § 205.236(d)(1)(iii)).

The OOL variance request process is very similar to the request process for temporary variances at § 205.290. Under the process described in the NOP Program Handbook, 4 the operation must submit its request for a temporary variance in writing to its certifying agent and include supporting documentation justifying the need for the variance. Likewise, a certified operation requesting a variance to the OOL transitioned animal sourcing prohibition must submit a request in writing to its certifying agent. The operation must provide documentation to support the request ( e.g., contracts, evidence of forced/sale closure, family records, wills or trusts, bankruptcy filings, tax documentation, records to support size standard).

The certifying agent must review the request to determine whether it agrees with the reasons listed at § 205.236(d) and whether the documentation provided by the operation justifies the need for the variance. Within ten days of receipt, the certifying agent must submit the request to AMS, including the original request and supporting documentation, and recommend either granting or denying the variance. The certifying agent must provide the reasons for their recommendation and include any documentation that supports their recommendation. AMS then determines whether to grant the variance request.

In general, compliance with USDA organic regulations requires information to be collected and maintained by USDA. In the final rule, AMS provided for a variance request process at § 205.236(d)(1). Certified operations may request a variance from the prohibition on the movement of transitioned animals for specific circumstances. This is a new variance process with information collection burden for which there has not been public comment. In this information collection request, AMS is seeking public comment on the information collection impacts due to the new variance procedures described at § 205.236(d)(1).

AMS has identified six respondent types in its currently approved information collection (0581-0191): certified operations (producers and handlers), certifying agents, inspectors, foreign governments, state organic programs, and petitioners. All these entities must have procedures, personnel, time, and space for recordkeeping. Any of these entities may wish to comment on the recordkeeping requirements of the OOL variance request process. Only two respondent types—certified operations (producers, specifically) seeking a variance and their certifying agents (accredited for livestock)—are expected to have information collection impacts in this new collection:

Certifying agents. Certifying agents are State, private, or foreign entities who are accredited by USDA to certify domestic and foreign producers and handlers as organic in accordance with OFPA and the USDA organic regulations. Each entity wanting to be an agent seeks accreditation from USDA, submitting information documenting its business operations and program expertise. Certifying agents determine if a producer or handler meets organic requirements, using detailed information from the operation documenting its specific practices and on-site inspection reports from organic inspectors. Administrative costs for reporting, disclosure of information, and recordkeeping vary among certifying agents. Factors affecting costs include the number and size of clients, the categories of certification provided, and the type of systems maintained.

When an entity applies for accreditation as a certifying agent, it must provide a copy of its procedures for complying with recordkeeping requirements (§ 205.504(b)(3)). Once accredited, agents must make their records available for inspection and copying by authorized representatives of the Secretary (§ 205.501(a)(9)). USDA charges certifying agents for the time required to do these document reviews.

Recordkeeping requirements for certifying agents are divided into three categories of records with varying retention periods: (1) records obtained from applicants for certification and certified operations, maintained five years, the same as OFPA's requirement for the retention of records by certified operations; (2) records created by certifying agents regarding applicants for certification and certified operations, maintained ten years, consistent with OFPA's requirement for maintaining all records concerning activities of certifying agents; and (3) records created or received by certifying agents regarding accreditation, maintained five years, consistent with OFPA's requirement for renewal of agent's accreditation (§ 205.510(b)).

Comments

FHFA invites comments on all aspects of the proposed rule and will take all comments into consideration before issuing a final rule. Copies of all comments will be posted without change, and will include any personal information you provide such as your name, address, email address, and telephone number, on the FHFA website at http://www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public through the electronic rulemaking docket for this proposed rule also located on the FHFA website.

Federal agency oversight of fair housing and fair lending laws, as well as strategic planning to address barriers faced by renters and borrowers, are important in promoting sustainable housing opportunities  1 for underserved communities. 2 The proposed rule would address barriers to sustainable housing opportunities for underserved communities by codifying existing FHFA practices in regulation and adding new requirements. Collectively, the actions in the proposed rule would improve FHFA's fulfillment of its statutory purposes and its oversight of the regulated entities and their fulfillment of their statutory purposes.

The proposed rule would codify in regulation much of FHFA's existing practices and programs regarding fair housing and fair lending oversight of its regulated entities, the Equitable Housing Finance Plan program for the Enterprises, and requirements for the Enterprises to collect and report language preference, homeownership education, and housing counseling information. The proposed rule would make changes to the Equitable Housing Finance Plan program to promote greater accountability for the Enterprises and public transparency, add oversight of unfair or deceptive acts or practices to FHFA's fair housing and fair lending oversight programs, require additional certification of compliance by the Enterprises, and establish more precise standards related to fair housing, fair lending, and principles of equitable housing for regulated entity boards of directors (boards).

Fannie Mae and Freddie Mac are federally chartered housing finance enterprises whose purposes include providing stability to the secondary market for residential mortgages; providing ongoing assistance to the secondary market for residential mortgages (including activities related to mortgages on housing for low- and moderate-income families) by increasing the liquidity of mortgage investments and improving distribution of investment capital available for residential mortgage financing; and, promoting access to mortgage credit throughout the United States, including central cities, rural areas, and underserved areas, by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing. 3

The Federal Home Loan Bank System (the System) provides a stable and reliable source of liquidity for its members and provides support for affordable housing and community development for the communities they serve. It was established in 1932 by the Federal Home Loan Bank Act, 4 and today consists of 11 regional Federal Home Loan Banks (the Banks) and the System's fiscal agent, the Office of Finance. Each Bank is a separate, government-chartered, member-owned corporation.

Congress established FHFA to oversee the regulated entities to ensure that the purposes of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety and Soundness Act), as amended, the authorizing statutes, and any other applicable laws are carried out. 5 In doing so, Congress recognized that the regulated entities have important public purposes reflected in their authorizing statutes, and that they need to be managed safely and soundly so that they continue to accomplish their public missions. 6

With respect to the public purposes of the Enterprises, a number of statutory and regulatory authorities that apply to FHFA and the Enterprises speak to the need to advance equity for homebuyers, homeowners, and tenants in the housing market. 7 FHFA's principal duties include ensuring that the Enterprises operate consistent with safety and soundness and with the public interest. 8 FHFA and the Enterprises also have statutory and other commitments to advance equitable solutions for borrowers and tenants in the housing market. The Enterprises' authorizing statutes, for example, provide that one of their purposes is to promote access to mortgage credit throughout the nation (including central cities, rural areas, and underserved areas). 9 The authorizing statutes require the Enterprises, as part of their annual housing reports, to assess their underwriting standards, policies, and business practices that affect low- and moderate-income families or cause racial disparities, along with any revisions to these standards, policies, or practices that promote affordable housing or fair lending. 10

The Housing Goals and Duty to Serve requirements are critical elements for ensuring that the Enterprises fulfill their mission and charters and serve low- and moderate-income families and underserved populations. 11 The Safety and Soundness Act provides that, in meeting these requirements, the Enterprises are required to take affirmative steps to assist primary lenders to make housing credit available in areas with concentrations of low-income and minority families. 12 The Safety and Soundness Act also requires the Enterprises to transfer an amount equal to 4.2 basis points for each dollar of unpaid principal balance of new purchases to the U.S. Department of Housing and Urban Development's (HUD) administration of the Housing Trust Fund and the U.S. Department of the Treasury's administration of the Capital Magnet Fund. 13 Both funds are designed to support affordable housing initiatives by providing capital for the production or preservation of affordable housing and related economic development activities. For the 2022 year, the Enterprises transferred $545 million into the funds. 14

Several provisions of the Federal Home Loan Bank Act denote the public purposes of the Banks, including their role in making secured long-term advances to members to support residential housing finance, specific community support requirements, establishment of a community investment program and an affordable housing program, compliance with housing goals, and the requirement that certain directors have experience in public interest areas. 15 FHFA launched a comprehensive review of the System in August 2022. 16 Among the areas FHFA has explored as part of the review are the Banks' role in promoting affordable, sustainable, equitable, and resilient housing and community investment, including rental housing, and in addressing the unique needs of tribal communities, communities of color, rural communities, and other financially vulnerable and underserved communities. Numerous commenters during the public input phases of the initiative suggested establishing or expanding requirements for housing and community development lending plans for the Banks, and these and other suggestions are currently under consideration separately and apart from this proposed rulemaking.

Under the Fair Housing Act, all Federal agencies having regulatory or supervisory authority over financial institutions, including FHFA, are required to administer their programs and activities relating to housing and urban development in a manner that affirmatively furthers the purposes of the Fair Housing Act, which includes providing for fair housing throughout the United States. 17 FHFA has included considerations of fair housing and fair lending in rulemaking since its establishment. 18 FHFA has also issued a policy statement on fair lending which describes its regulatory and oversight authorities to supervise and enforce fair lending laws with respect to its regulated entities. 19 FHFA has issued orders to Fannie Mae and Freddie Mac for regular and special reports related to fair housing and fair lending. 20 FHFA has issued guidance for the Enterprises on fair housing and fair lending supervisory expectations. 21 FHFA coordinates with HUD on fair lending and fair housing oversight, 22 and has established a fair lending oversight data system in part to facilitate cooperation in interagency fair housing and fair lending oversight. 23 FHFA has also implemented the referral program for potential mortgage pricing disparities across mortgage lenders based on the Enterprises' data, as required by Congress in section 1128 of the Housing and Economic Recovery Act of 2008 (HERA). 24 FHFA also established the Equitable Housing Finance Plan program for the Enterprises to develop a framework for addressing barriers to sustainable housing opportunity for underserved communities through strategic planning and public participation. 25 FHFA joined other agencies in issuing the Interagency Statement on Special Purpose Credit Programs Under the Equal Credit Opportunity Act and Regulation B in 2022. 26

Ongoing disparities and challenges in the housing market persist, limiting sustainable housing opportunities for underserved communities. The following section discusses some of these disparities and challenges by way of example. Both Enterprises' 2022-2024 Equitable Housing Finance Plans also include extensive discussions of barriers to sustainable housing opportunities. 27 The inclusion or discussion of a particular disparity, challenge, or underserved community is not an indication of FHFA's views on the needs of a community or what actions FHFA's regulated entities should take.

The national homeownership rate has ranged from around 45 percent in some eras to around 65 percent in recent years. 28 However, there have been persistent gaps in the homeownership rate by race and ethnicity. In the fourth quarter of 2022, the White homeownership rate was 74.5 percent, the Black homeownership rate was 44.9 percent, the Latino homeownership rate was 48.5 percent, and the Asian, Native Hawaiian and Pacific Islander homeownership rate was 61.9 percent. 29 The Black and White homeownership gap, at 29.6 percentage points as of the fourth quarter of 2022, has persisted over time, though there have been some modest reductions in the gap since 2019. Even when the racial homeownership rate is stratified by household income, there continue to be significant disparities in homeownership amongst racial groups, even in the highest income brackets. For example, for households with an income over $150,000, there exists a 10 percentage point gap between Black and White families. 30

A household's home is often its largest financial asset and key to wealth building and intergenerational wealth transfers. The homeownership gap therefore contributes significantly to wealth gaps for underserved communities. The Federal Reserve, in a 2019 survey, found that White families have the highest level of both median and mean family wealth: $188,200 and $983,400, respectively. 31 In contrast, Black families' median and mean wealth is less than 15 percent that of White families, at $24,100 and $142,500, respectively. These wealth disparities have grown between 2003 and 2018. 32 One study estimated that the total racial wealth gap is $10.14 trillion. 33 This lack of intergenerational wealth transfers reduces the likelihood that older generations can assist with down payments, educational costs, and unexpected financial events, including natural disasters and medical emergencies. Black families are also less likely to receive or expect to receive an inheritance, and, if they do, it is, on average, less than that of White households. 34 Moreover, many Black, Latino, and Asian households provide financial assistance to older generations, which slows their ability to save for a down payment. 35

For many underserved communities, it is critical to examine disaggregated data and data at the community level. 36 Failing to disaggregate may result in failure to identify significant disparities facing unique race/ethnicity subgroups for the purpose of identifying barriers and improving housing policy. For example, although Asians and Pacific Islanders as a whole have homeownership rates above 60 percent, Korean Americans' homeownership rate is 54 percent and Nepalese Americans' homeownership rate is 33 percent. 37 Geographically, while the overall homeownership gap between Black and White homeowners is 29.6 percentage points, in Minneapolis the gap rises to 50 percentage points. 38

There are also disparities in mortgage underwriting that may be obscured by looking at aggregated data. 39 For Latino communities, Mexican applicants have slightly higher approval rates than Latino applicants as a whole, but Puerto Rican and “Other Hispanic” applicants have lower approval rates. Among Asian applicants, the Vietnamese, Filipino, and “Other Asian” communities experience lower approval rates than White applicants, despite Asian applicants, as a whole, having similar approval rates to White applicants. Similarly, when the Pacific Islander group is disaggregated, it becomes clear that Samoan and “Other Pacific Islander” applicants have significantly lower approval rates than Native Hawaiian and Chamorro applicants.

In addition to racial and ethnic gaps across homeownership and wealth, there are other underserved communities experiencing significant challenges in accessing sustainable housing opportunities. This includes families living on tribal land, in rural areas, and in rental homes. Almost half of renters are cost-burdened, paying more than 30 percent of their income on housing, compared to only 22 percent of homeowners. 40 As an increasing proportion of households wish to age in place, there is often a lack of housing opportunities that provide for mobility and other physical impairments. By 2035, the population 80 and over is expected to double from its level in 2016. More than 10 million households headed by someone over 65 are cost-burdened, with the median older renter having net wealth under $6,000 in 2019. 41 Two percent of total housing inventory is accessible for people with mobility disabilities, while 14 percent of Americans have mobility disabilities. 42 Other populations, including persons identifying as lesbian, gay, bisexual, transgender, or queer (LGBTQ+), continue to report facing challenges in accessing the housing finance system. A study found that same-sex applicants are 73.12 percent more likely to be denied for a mortgage. 43 Households with limited English proficiency (LEP), or who are more comfortable transacting in a language other than English, may also experience barriers to housing opportunities and housing sustainability. Often, LEP borrowers will rely on their English-proficient child, who may not be familiar with mortgage lending terms, as a translator. 44 As a result, this can leave the borrower without a full understanding of mortgage terms and conditions.

Disparities are present in the mortgage market for several underserved communities. For example, in 2022 Black families comprised about 14 percent of the total U.S. population, but only about 7 percent of the loans that Fannie Mae and Freddie Mac purchased. American Indian and Alaska Native families comprised about 3 percent of the total U.S. population, but only about 1 percent of the loans that Fannie Mae and Freddie Mac purchased. In contrast, White families comprised about 62 percent of the U.S. population, but they comprised about 68 percent of Fannie Mae and Freddie Mac acquisitions. 45

FHFA has released data on Fannie Mae and Freddie Mac's automated underwriting systems, presenting gaps in approval rates for applicants from certain groups over time compared to other groups. These underwriting tools complete credit risk assessments on loan applicants to determine whether a loan is eligible for sale to the Enterprises. Although the move to a more automated, less subjective system to assess creditworthiness in mortgage market underwriting was an important step in eliminating bias in subjective underwriting decisions, further improvements in automated underwriting to reduce gaps would promote better access to sustainable housing opportunities. In 2022, White applicants' automated underwriting system applications had approval rates of about 84 and 85 percent for the automated underwriting systems of Fannie Mae and Freddie Mac, respectively; Black applicants had approval rates of about 70 and 69 percent; Latino applicants had approval rates of about 78 percent and 73 percent; Asian applicants had approval rates of about 84 and 85 percent; American Indian and Alaska Native applicants had approval rates of about 78 and 75 percent; and Native Hawaiian and Pacific Islander applicants had approval rates of about 78 and 74 percent. 46

Home Mortgage Disclosure Act (HMDA) data also shows higher denial rates by lenders for many underserved communities. For example, an analysis of the 2020 HMDA data found a denial rate of 27.1 percent for Black applicants compared to 13.6 percent for White applicants. 47 The trend in higher denial rates has persisted in HMDA data for many years. 48 A 2019 study of mortgage pricing found that Black and Latino borrowers pay 7.9 and 3.6 basis points more in interest for mortgages, even when controlling for several factors. 49 FHFA conducts an annual screening, preliminary findings, and referral process for lenders pursuant to the Safety and Soundness Act and describes the results in its Annual Report to Congress. Based on the results of FHFA's 2019 and 2020 analysis, more than 36 percent of FHFA's preliminary findings were based on an annual percentage rate disparity of 10 basis points or more, with the most common preliminary findings and referrals for Latino and Black borrowers. 50

The Federal Home Loan Bank of San Francisco entered into a research and product development initiative with a research institution to address issues related to the racial homeownership gap. 51 A study resulting from this partnership noted that the heavy reliance on certain credit attributes in the current mortgage underwriting process to the exclusion of other attributes limits opportunities for people of color. 52

Additional mortgage market disparities and challenges remain with respect to rural areas, manufactured housing, and other market segments. FHFA's Duty to Serve program works to address many of these disparities. 53

FHFA's Uniform Appraisal Dataset (UAD) Aggregate Statistics highlight that properties located in minority tracts have a higher proportion of appraised values less than the contract price. According to the 2021 appraisal statistics, 23.3 percent of homes in high minority tracts (80.1-100 percent) experienced an appraised value less than the contract price. 54 This is compared to 13.4 percent of homes in White tracts (0-50 percent) and 19.2 percent in minority tracts (50.1-80 percent). 55 Additionally, FHFA identified examples with direct references to the racial and ethnic composition of the neighborhood in appraisal reports. 56 Freddie Mac's research showed that properties in minority tracts are more likely than properties in White tracts to receive an appraisal lower than the contract price. 57 A Fannie Mae publication concluded that White borrowers' homes were overvalued at higher rates across all neighborhoods, but stronger effects were present for White borrowers in Black neighborhoods. 58 Additional research has also highlighted and analyzed disparities in property valuation. 59 Consumer groups have begun to conduct fair housing paired testing of appraisers, resulting in the filing of complaints. 60 Rural markets also experience challenges related to appraiser availability and appraisal cost. 61

The proposed rule would codify in regulation FHFA's existing fair lending oversight functions with respect to the regulated entities, including conducting supervisory examinations, issuing examination findings, requiring regular and special reporting and data, and enforcement. The proposed oversight would be substantially the same as FHFA's current fair lending oversight functions, but would establish FHFA's oversight of potential unfair or deceptive acts or practices by the regulated entities and would require the regulated entities to file certifications of compliance with fair lending and fair housing laws with regular and special reports. It would additionally establish more precise standards related to fair housing and fair lending and principles of equitable housing for regulated entity boards of directors.

The proposed rule would codify FHFA's current requirements for the Enterprises' Equitable Housing Finance Plans. The proposed plan requirements would be substantially the same as FHFA's current requirements for the Enterprises' plans, but would establish additional public disclosure and reporting requirements and expanded program requirements. Codifying the Enterprises' plan requirements with additions in a regulation would make the Enterprises' obligations more explicit and transparent to the public and would also establish greater accountability mechanisms through FHFA's statutory enforcement and compliance authorities.

The proposed rule has some similar elements to the HUD's affirmatively furthering fair housing rules and requirements. 62 HUD's framework provides helpful guidance and information on an equity planning process that affirmatively furthers fair housing. HUD's framework has informed FHFA in its development of the proposed rule, but FHFA has also taken into account the unique features of the Enterprises, its experience in overseeing the program to date, and the views of stakeholders as part of FHFA's requests for input and listening sessions to develop the proposed rule.

The proposed rule would require the Enterprises to collect, maintain, and report data on language preference, homeownership education, and housing counseling for applicants and borrowers. The Enterprises collect this data through their automated underwriting systems and loan delivery. The Enterprises also provide a standard form for collection of the data—the Supplemental Consumer Information Form. The proposed rule would codify the FHFA policy announced in May 2022 for mandatory use of the Supplemental Consumer Information Form. 63 Consistent with current policy, the proposed rule would not require applicants and borrowers to respond to a language preference question, and applicants and borrowers may be provided with the option to not respond to a question about language preference as part of the information collection to satisfy the proposed rule.

Section 4513b of the Safety and Soundness Act (12 U.S.C. 4513b(b)) requires FHFA to establish prudential management and operations standards for its regulated entities, authorizes FHFA to establish such standards by regulation or guideline, and establishes a corrective action framework if a regulated entity fails to meet a prudential standard. 64 To implement section 4513b, FHFA has adopted a Prudential Management and Operations Standards (PMOS) regulation, at 12 CFR part 1236, and an Appendix to that regulation. The PMOS regulation is primarily procedural; for example, it addresses FHFA determinations that a regulated entity has failed to meet a standard; provides that FHFA may base that determination on an examination, inspection, or any other information; and addresses the contents and filing deadlines for corrective plans. 65 The PMOS regulation also codifies FHFA's authority to require a regulated entity to submit a PMOS corrective plan in conjunction with other required submissions. 66 If a regulated entity fails to submit a corrective plan or fails to implement an approved corrective plan, the PMOS regulation addresses FHFA's statutory authority to order the regulated entity to correct the deficiency or to undertake additional corrective or remedial measures as FHFA may require.

The Appendix sets forth substantive prudential management and operational standards (Standards) that FHFA has established as guidelines, including a statement on General Responsibilities of the Board and Management and ten numbered Standards. These Standards contain many elements that are relevant to components of the proposed rule, such as responsibilities for boards and senior management with respect to appropriate business strategies and policies; standards for internal controls and information systems; maintenance of records; alignment of the overall risk profile with mission objectives; internal audit; compliance with laws, regulations, and supervisory guidance; and others. Therefore, compliance with the proposed rule, if finalized, would be subject to applicable Standards and could be addressed through the PMOS corrective framework.

Separately, the proposed rule would establish Subpart C, Enterprise Equitable Housing Finance Planning, except for § 1293.26, as a prudential standard within the meaning of section 4513b. FHFA has determined that it is legally appropriate and would be sound policy to identify that subpart as a prudential standard. The Enterprise equitable housing finance planning framework, as discussed above, is consistent with the Enterprises' authorizing statute obligations and FHFA's statutory charges related to ensuring regulated entities operate consistent with the public interest and that FHFA furthers fair housing in its oversight of the regulated entities. In addition to the more general application of the PMOS framework through the Standards discussed above, this designation of the equitable housing finance planning framework as a Standard by regulation would provide FHFA access to section 4513b corrective measures, if necessary, to address deficiencies in equitable housing finance planning or implementation by an Enterprise. Section 1293.26 is proposed to be excluded from the designation because that section articulates a broader concept related to ensuring Enterprise boards appropriately consider the equitable housing finance plan alongside other longstanding mission responsibilities in their oversight of an Enterprise and not the required elements and process for an Equitable Housing Finance Plan.

Section 4513b makes clear that corrective actions pursuant to the PMOS framework are in addition to any enforcement action FHFA would be authorized to take, if FHFA determined that an Enterprise has violated any regulation. 67 Thus the PMOS framework does not limit FHFA's authorities and FHFA will determine the appropriate supervisory response based on the facts and circumstances of any failure or violation.

All communities in the United States deserve access to sustainable housing opportunities and well-functioning housing markets. As acknowledged through the Duty to Serve requirements, housing goals framework, and the Agency and the regulated entities' public purposes, enumerated protected classes under fair housing and fair lending laws are not the only underserved communities in the United States. The proposed rule's incorporation of broad protections for consumers under prohibitions against unfair or deceptive acts or practices, and defining underserved communities broadly for the purposes of Equitable Housing Finance Plans, will help ensure the Agency and the regulated entities focus on underserved communities throughout the United States, consistent with the Enterprises' Charter Acts, the Agency's public interest duty, and the purposes of the Fair Housing Act. The proposed rule will add to the Agency's existing set of programs and tools to accomplish these goals.

By codifying many of FHFA's existing requirements and policies regarding fair lending oversight, Enterprise Equitable Housing Finance Plans, and language preference and homeownership education and housing counseling data collection, as well as expanding certain requirements, the proposed rule serves a number of policy purposes and would provide a number of policy benefits.

Consistent oversight of fair housing and fair lending, along with public participation and accountability, have been key issues that impact the fair housing and fair lending compliance by financial institutions and housing market actors. Codifying the requirements and policies through rulemaking will provide greater public transparency and input regarding the existing programs, as well as greater assurance of the Agency's commitment. Codifying existing fair housing and fair lending requirements and enhancing them will provide greater oversight and accountability regarding the regulated entities' fair housing and fair lending compliance and therefore benefit the public who are ultimately protected by fair housing and fair lending laws.

Strategic planning for improvements in fair housing has been a key component of fulfilling commitments to affirmatively further fair housing and is an important way in which progress toward providing for fair housing throughout the United States can be made. Codifying Equitable Housing Finance Plans in regulation and providing additional standards through rulemaking will ensure that fair housing issues can be addressed proactively in addition to reactively through supervision and examinations.

Establishing enhanced standards and transparency for fair housing and fair lending generally, and for the Equitable Housing Finance Plans, may also have the benefit of providing greater market assurance with respect to the regulated entities' compliance with applicable laws, thereby supporting liquidity in the secondary mortgage market and support for underserved communities.

Subpart A of the proposed rule would provide general information, rules, definitions, and compliance and enforcement provisions that apply to all of proposed part 1293. Proposed § 1293.1(a) would provide general information and rules, including fair lending oversight of the regulated entities, equitable housing finance planning by the Enterprises, and data collection and reporting by the regulated entities (currently only including requirements for the Enterprises). Proposed § 1293.1(b) would provide that nothing in proposed part 1293 permits or requires a regulated entity to engage in any activity that would otherwise be inconsistent with the Safety and Soundness Act, the authorizing statutes, or other applicable law. FHFA believes it is important to reiterate in the proposed rule that activities must be in keeping with safety and soundness. Without safety and soundness underlying the regulated entities' activities, they cannot truly promote fair housing, fair lending, and principles of housing equity. As discussed later, FHFA is also adding the prohibition on unfair or deceptive acts or practices to the laws it oversees with respect to the regulated entities. FHFA believes that underscoring the importance of safety and soundness and avoiding unfair or deceptive acts or practices complements and enhances the pursuit of solutions that further fair housing, fair lending, and principles of housing equity and makes clear that predatory products or activities would not be in furtherance of the proposed rule. Proposed § 1293.1(c) would provide that nothing in proposed part 1293 creates a private right of action.

Proposed § 1293.2 would provide definitions that apply to proposed part 1293.

The proposed definition of “Equitable Housing Finance Plan” (plan) is a key component of subpart C of the proposed rule. It is a three-year public plan developed with public engagement and adopted by each Enterprise describing how each Enterprise will overcome barriers to sustainable housing opportunities faced by one or more underserved communities through objectives, meaningful actions, and measurable goals. The plan is a key element of the proposed rule, and its requirements are more fully described in proposed §§ 1293.22 and 1293.25. The proposed definition of “annual plan update” (update) is a public update to a plan for the second or third year of a planning cycle. The proposed definition of “performance report” (report) is an annual public report by an Enterprise on its performance under a plan and other information on equitable housing and fair lending that meets the requirements of proposed § 1293.23 and any other FHFA requirements.

The proposed definition of “barrier” is an important element of a plan. As part of a plan, an Enterprise would be required to identify barriers faced by an underserved community. The proposed definition includes Enterprise actions, products, or policies as well as aspects of the housing market that can reasonably be influenced by an Enterprise's actions, products, or policies that contribute to an underserved community's limited share of sustainable housing opportunities, difficulties in accessing those sustainable housing opportunities, or the continuing adverse effects of discrimination affecting their participation in the housing market. The proposed definition focuses on an Enterprise's own actions, products, or policies because these are what an Enterprise can most easily change. Including aspects of the housing market that can reasonably be influenced by an Enterprise's actions, in addition to an Enterprise's own actions, products, or policies, encourages actions that serve the public interest, promote access to mortgage credit throughout the nation, and further fair housing.

The proposed definition of “fair housing and fair lending laws” provides an enumeration of Federal fair housing and fair lending laws to which the regulated entities are subject and FHFA oversees pursuant to the fair lending oversight described in the proposed rule. The “fair housing and fair lending laws” are the Fair Housing Act, the Equal Credit Opportunity Act, and implementing regulations. Additionally, with respect to an Enterprise, the “fair housing and fair lending laws” include 12 U.S.C. 4545 and implementing regulations.

The proposed definition of “sustainable housing opportunity” relates to the scope and type of the benefits that the plans should seek to achieve for underserved communities through meaningful actions. The proposed definition includes both rental and homeownership opportunities that include one or more characteristics important to the needs of a tenant or homeowner within its scope and includes several illustrative characteristics of the concept, including affordability, habitability, resilience to climate impacts, quality, locational benefits, accessibility, long-term sustainability, and accommodations for short-term hardships. These are important features of housing opportunities that should help focus the Enterprises' plans. Further standards related to the proposed definition are provided in proposed § 1293.25.

The proposed definition of “underserved community” is an important element of a plan. An Enterprise chooses one or more underserved communities on which to focus for a planning cycle. “Underserved community” would be defined as a group of people with shared characteristics or an area that is subject to current discrimination or has been subjected to past discrimination that has or has had continuing adverse effects on the group or area's participation in the housing market, historically has received or currently receives a lower share of the benefits of Enterprise programs and activities providing sustainable housing opportunities, or that otherwise has had difficulty accessing these benefits compared with groups of people without the shared characteristic or other areas. The proposed definition includes characteristics protected by fair lending laws applicable to the Enterprises, but the definition is not limited to such characteristics. The definition provides illustrative examples, if supported by adequate information under the requirements of proposed § 1293.25. The proposed definition makes clear that a variety of groups or areas could be chosen by an Enterprise. The inclusion or exclusion of any particular group from the illustrative examples is not an indication of FHFA's views about whether or not that group constitutes an underserved community or whether it should be the focus of a plan.

Proposed § 1293.3 reiterates general FHFA authority related to compliance and enforcement for proposed part 1293, inclusive of all aspects of the proposed rule. FHFA has broad authority for compliance and enforcement. This section notes FHFA's ability to conduct examinations related to proposed part 1293, including fair lending compliance, equitable housing finance, and other matters. It also notes FHFA's ability to issue adverse examination findings and take various forms of enforcement actions and issue civil money penalties under 12 U.S.C. 4511(b), 4513b, 4631, and 4636. This section is similar to other sections of FHFA regulations related to oversight of specific programmatic areas  68 and the FHFA fair lending policy statement. 69

Some examples of how FHFA's compliance and enforcement authority could be used with respect to fair lending oversight, equitable housing finance, or data collection or reporting include, but are not limited to:

• If FHFA found that a regulated entity had insufficient compliance management around fair lending laws or the proposed rule, FHFA could issue adverse examination findings and factor the insufficient compliance management into supervisory ratings;

• If FHFA found that a regulated entity had violated the Fair Housing Act, FHFA could issue adverse examination findings, factor the non-compliance into supervisory ratings, and enter into a consent order with the regulated entity requiring corrective action, additional remedies, and civil money penalties;

• If an Equitable Housing Finance Plan, annual update, performance report, or an Enterprise's actions taken under the program did not meet the requirements of this proposed rule, FHFA could issue an adverse examination finding, factor non-compliance into supervisory ratings, and issue a prudential management operating standard notice requiring the entity to submit a corrective plan; and

• If FHFA found that a regulated entity had not complied with required data collection or reporting, FHFA could issue an adverse examination finding, factor non-compliance into supervisory ratings, and enter into a written agreement with the regulated entity.

Neither this section of the proposed rule or the examples given above are intended to limit FHFA's authority in any way. This section merely restates some of the most applicable FHFA authority.

Proposed § 1293.4 would provide that nothing in the proposed rule would in any way limit the authority of the agency under other provisions of applicable law and regulations.

Subpart B of the proposed rule applies to all regulated entities and provides standards related to compliance, responsibilities of boards of directors, reports, data, and certification. Proposed § 1293.11 addresses regulated entity compliance with fair housing and fair lending laws. Proposed § 1293.11(a) states that regulated entities must comply with the Fair Housing Act, the Equal Credit Opportunity Act, and 12 U.S.C. 4545 for the Enterprises. Proposed § 1293.11(b) would provide that the regulated entities must comply with 15 U.S.C. 45 (Section 5 of the Federal Trade Commission Act), which prohibits unfair or deceptive acts or practices. The prohibition against unfair or deceptive acts or practices is an important protection under Federal law for consumers and other market actors against predatory and deceptive actions, 70 and FHFA has determined it would be appropriate to oversee the regulated entities for compliance with this statute. Violations of these laws by the regulated entities would, in addition, violate § 1293.11(a) and (b) as proposed. 71 The Safety and Soundness Act empowers FHFA to oversee its regulated entities' compliance with “other applicable law,” 12 U.S.C. 4511(b)(2), and to engage in enforcement for noncompliance with law. 72 Other Federal financial regulators examine and oversee their regulated entities on these or similar bases as part of consumer protection under similar authority. 73 While FHFA is including unfair or deceptive acts or practices in the proposed rule because they are similar to fair lending laws in the intent to ensure fair treatment, FHFA understands unfair or deceptive acts or practices to encompass a broad scope of activities harmful to individuals that go beyond illegal discrimination.

Proposed § 1293.11(c) would establish more precise standards related to fair housing and fair lending and the prohibition on unfair or deceptive acts or practices for regulated entity boards of directors in carrying out their existing responsibility under FHFA's Corporate Governance regulation (12 CFR part 1239) to direct the operations of the regulated entities in conformity with FHFA regulations. FHFA's Corporate Governance regulation provides that the ultimate responsibility for a regulated entity's oversight rests with the board of directors, and that directors have a duty to direct the operations of a regulated entity in conformance with the authorizing statutes, the Safety and Soundness Act, and FHFA regulations. 74 Board and management oversight of fair housing and fair lending compliance has long been recognized as a critical component of a well-functioning compliance management system. Federal financial regulators regularly examine their regulated entities for sufficient fair lending compliance management, and rate regulated entities based in part on Board and Management Oversight. 75 Consent orders for fair housing and fair lending violations frequently include specific requirements for enhanced Board and Management Oversight. 76 The standard articulated in the proposed rule is intended to provide more clarity and guidance to directors in how to incorporate the proposed rule into the pre-existing duty under the Corporate Governance regulation to direct operations in conformity with FHFA regulations. The proposed rule's language on “appropriately considering” compliance with fair housing and fair lending laws and the prohibition on unfair or deceptive acts or practices are intended to be flexible and tailored to the particular consideration at hand, while reinforcing the broad application of fair housing and fair lending laws and the prohibition on unfair or deceptive acts or practices on a regulated entity's operations and the board's ultimate responsibility for the regulated entity's oversight.

Proposed § 1293.12 would provide that FHFA may require the regulated entities to provide to FHFA regular and special reports, including the provision of data, concerning fair lending and fair housing. FHFA has issued fair lending reporting orders to Fannie Mae and Freddie Mac requiring regular reports. 77 FHFA has not issued fair lending reporting orders to the Banks, and FHFA is not proposing to require specific reports of the Banks through this proposed rule. FHFA would plan to issue such reporting orders at an appropriate time, if deemed necessary.

Proposed § 1293.12 also provides that each regular report related to fair housing and fair lending shall include a certification of the regulated entity's compliance with fair housing and fair lending laws and the prohibition on unfair or deceptive acts or practices in addition to any other required certification or declaration (such as a declaration under 12 U.S.C. 4514(a)(4)). Under FHFA's regular and special report authority under 12 U.S.C. 4514(a)(4), each report must contain a declaration from an officer that the report is true and correct to the best of such officer's knowledge and belief. This section would add an additional requirement for a certification that the regulated entity complies with fair housing and fair lending laws and the prohibition on unfair or deceptive acts or practices for reports related to fair housing and fair lending. This certification requirement would provide additional incentive to the boards and management of the regulated entities to ensure compliance with fair housing and fair lending laws in their operations. Both Enterprises require their seller/servicers to attest to compliance with fair housing and fair lending laws. 78 Certifications related to compliance are commonly used by other Federal agencies, including with respect to Federal housing grants, such as Community Development Block Grants, and consent decrees and settlement agreements by the Department of Justice and HUD in housing and lending discrimination cases.

FHFA is not proposing to include the specific certification language in the rule, instead merely the general requirement. FHFA believes this would allow flexibility for FHFA to make changes to the specific certification language when necessary. However, FHFA seeks comment on the following certification language: “[Regulated entity] complies and has complied in all material respects with, and maintains policies, procedures, and internal controls to assure compliance with fair housing and fair lending laws and the prohibition on unfair or deceptive acts or practices.” If a regulated entity did not believe it could certify to that or similar language for a particular period, such as because FHFA had identified fair lending non-compliance in a supervisory examination that the regulated entity was still remediating, and the regulated entity would not be able to complete remediation by the time of certification, it could notify FHFA in advance to discuss additional stipulations to the language.

Proposed § 1293.21 provides general information that Subpart C of the proposed rule, entitled Enterprise Equitable Housing Finance Planning, sets forth the Enterprises' duty to engage in equitable housing finance planning and establishes standards and procedures related to public engagement and FHFA's oversight of the Enterprises' planning and actions. It provides for general timing requirements when a date falls on a non-business day. It also provides that submission requirements and publication dates provided in the proposed rule may be altered or waived by the Director by publication of a public order. As discussed above, it also designates Subpart C, except for § 1293.26, as a prudential standard.

Proposed § 1293.22 provides rules related to plans and updates.

Proposed § 1293.22(a) would establish the general requirement for each Enterprise to adopt a plan covering a three-year period, with optional updates in the second and third year of the plan period.

Proposed § 1293.22(b) establishes general content requirements for the plan, including an identification of barriers to sustainable housing opportunities faced by one or more underserved communities, objectives that define the outcomes the plan seeks to accomplish that address the identified barriers, meaningful actions that describe the high-impact activities that the Enterprise will undertake to accomplish or further the identified objectives, which may span one or more years (including extending beyond the period covered by the plan); specific, measurable, and time-bound goals for those actions; and summaries of the Enterprise's public engagement in developing the plan.

Proposed § 1293.22(c) would establish a requirement for an Enterprise to submit a plan to FHFA for review on or before September 30 of the year prior to the first year covered by the plan.

Proposed § 1293.22(d) would establish general content requirements for an update, including all changes the Enterprise is making to its plan and a summary of any additional public engagement.

Proposed § 1293.22(e) would establish a requirement for an Enterprise to submit an update to FHFA for review on or before February 15 of the year covered by the update.

Proposed § 1293.22(f) would establish standards for FHFA's review of plans and updates. It would provide that FHFA may review each plan and update prior to publication and may require removal of any confidential or proprietary information; require removal of any content that is not consistent with part 1293, the Safety and Soundness Act, the authorizing statutes, or other applicable law; provide any feedback for consideration; and exercise any other authority of FHFA. Inclusion of confidential or proprietary information in plans and updates would be inappropriate and reveal sensitive information that is not required under the proposed rule. Further, FHFA's review may identify proposals and plan content that are contrary to the Enterprise's authorizing statutes, the Safety and Soundness Act, or other applicable law. FHFA also retains all other existing authority that may be needed in particular circumstances to address issues that arise during the review of a plan or update. Given that a plan may only contain limited information about a proposed action, FHFA may identify issues with the activity through other processes, such as prior approval of new products, or its supervision and oversight of the Enterprises. FHFA's review of the plan would not preclude using these processes and FHFA's full authorities if it were to later identify issues with the action, and the public engagement opportunities throughout the plan cycle would give FHFA additional information from the public for this purpose.

Proposed § 1293.22(g) would provide that FHFA's review does not constitute a prior approval of a plan or update or any action described therein and that all actions included in a plan are subject to all applicable FHFA and other requirements and authorities. For example, a meaningful action that met the criteria for a new activity or new product would be subject to the process described in FHFA's prior approval for Enterprise products regulation. 79 FHFA believes that the process established by the proposed rule would help support the prior approval for Enterprise products regulation by providing both FHFA and the public information about activities being considered by the Enterprises that may later trigger the requirements of the regulation.

Proposed § 1293.22(h) would provide that plans and updates must include disclaimer language indicating the implementation of actions may be subject to change based on certain factors. The disclaimer language in the current plans is: “DISCLAIMER: Implementation of the activities and objectives in [Enterprise]'s Equitable Housing Finance Plan may be subject to change based on factors including, without limitation, FHFA review for compliance with [Enterprise]'s statutory charter, specific FHFA approval requirements and safety and soundness standards, FHFA guidance and directives, regulatory requirements, Senior Preferred Stock Purchase Agreement obligations, and adverse market or economic conditions, as applicable.” FHFA seeks comment on this disclaimer language and any changes that should be made.

Proposed § 1293.22(i) would provide that each Enterprise shall publish its plan on January 15 of the first year covered by the plan, and each annual update on April 15 of the second and third year covered by the plan. It would also provide that the Enterprise maintain the plan on its website thereafter and that it ensures that the plans or updates are accessible to persons with disabilities.

Proposed § 1293.22(j) would provide that from time to time, FHFA may issue public guidance on plans and updates.

Proposed § 1293.23 would provide rules related to annual performance reports (reports). Proposed § 1293.23(a) would establish the general requirement for each Enterprise to publicly report on its plan progress and provide other information related to equitable housing and fair lending annually for the prior year in a report.

Proposed § 1293.23(b) would establish requirements for the contents of the report, including: a narrative assessment about the program; performance details for each objective, measurable goal, and meaningful action; general outcomes categorized by group; summary of resources dedicated to the plan; and an assessment of the Enterprise's underwriting that includes several elements. The report section on underwriting is similar in nature to the authorizing statutes' requirements for assessing underwriting standards that may yield disparate results based on the race of the borrower, including revisions thereto that may promote fair lending, and reporting on this assessment under the Annual Housing Activities Report. 80 FHFA believes that the proposed rule provides an opportunity to incorporate this concept into a fair lending-focused report and provide details based on it into reporting under the Equitable Housing Finance Plans.

Proposed § 1293.23(c) would establish a requirement for an Enterprise to submit a report to FHFA for review on or before February 15 annually.

Proposed § 1293.23(d) would establish standards for FHFA's review of reports. The standards would align with the review standards for plans and updates.

Proposed § 1293.23(e) would establish a requirement for an Enterprise to publish its report on April 15 annually. It would also require that the report be maintained on the Enterprise's website and that the Enterprise ensures that reports are accessible to persons with disabilities.

Proposed § 1293.23(f) would establish that FHFA may issue public guidance on reports and also notes that FHFA may require additional information in reports through other authorities, such as its authority to require regular reports under 12 U.S.C. 4514. FHFA believes that this authority may be helpful in establishing reporting requirements in an expedited fashion for specific plans given the differing nature of underserved communities and activities that may be included in plans and the ongoing public engagement that is a part of the process established by the proposed rule.

Proposed § 1293.24 establishes requirements related to public engagement. Proposed § 1293.24(a) provides that on or before June 15 annually, FHFA will conduct public engagement to gather public input for the Enterprises and for FHFA to consider. FHFA's 2021 request for input and listening session on the initial Equitable Housing Finance Plan program provided valuable input and the proposed rule would therefore codify these or similar types of public engagement as a requirement for future plans. 81

Proposed § 1293.24(b) of the proposed rule would provide that the Enterprises are required to consult with stakeholders, including members of underserved communities and housing market participants, in development of a plan and update and describe such consultation in the plan.

Proposed § 1293.25 would establish program standards for various elements of the Equitable Housing Finance Plan process. These requirements are intended to provide a foundational logic model and theory of change for a particular plan. 82

Proposed § 1293.25(a) would establish requirements for selecting one or more underserved communities to be the focus of a plan. It would establish a requirement that an Enterprise's choice of an underserved community be supported by information and documented in the plan. It would also provide several factors that an Enterprise must consider in selecting an underserved community, but would also allow for the consideration of other factors.

Proposed § 1293.25(b) would establish requirements for objectives. It would require objectives to be logically tied to one or more identified barriers and facilitate establishing meaningful actions and measurable goals. Objectives establish the overall direction and focus for the plan by defining the outcomes the plan seeks to accomplish. Given that the definition of an underserved community can include both a group of people with a shared characteristic or an area, in some cases objectives could seek to provide place-based solutions to address the needs of a specific area or may seek to provide people the opportunity to obtain sustainable housing opportunities more broadly. The U.S. Supreme Court has made clear that both strategies may be appropriate and comply with the Fair Housing Act depending on the circumstances. 83 FHFA expects that an Enterprise would choose appropriate strategies in developing its objectives after considering the needs of an underserved community and feedback from public engagement.

Examples of objectives, if developed to meet the requirements of the proposed rule, could include:

• Developing and providing secondary market support for special purpose credit programs that promote sustainable housing opportunities for an underserved community;

• Increasing sustainable housing opportunities for individuals in the mortgage market, such as by expanding the number of qualified borrowers of an underserved community, or making changes to underwriting standards, business practices, repurchase requirements, pricing, fees, and procedures to promote fair lending or provide greater access to sustainable housing opportunities;

• Increasing sustainable housing opportunities for renters of an underserved community living in or seeking to live in multifamily properties financed by the Enterprise's loan purchases, such as by prohibiting source of income discrimination (including rental subsidies and vouchers), providing other tenant protections, or requiring reporting of on-time payments;

• Reducing the homeownership gap for an underserved community with a significant homeownership rate disparity;

• Reducing disparities in acceptance rates for an underserved community with a significant disparity in the Enterprise's automated underwriting system;

• Reducing disparities in the share of loans acquired by the Enterprise that serve an underserved community with a significant disparity in the share of loans acquired by the Enterprise compared to the share of loans originated to members of that underserved community in the overall mortgage market;

• Reducing disparities in negative outcomes for an underserved community in servicing, loan modifications, and loss mitigation;

• Reducing disparities in negative outcomes for an underserved community in tenant screening, repayment options, and evictions;

• Increasing the supply of, and equitable access to, high-quality affordable rental housing for an underserved community;

• Reducing underinvestment and undervaluation in formerly redlined areas or areas that are otherwise underserved or undervalued;

• Increasing the supply of, and equitable access to, high-quality affordable and accessible housing for persons with disabilities and that is available in the most integrated setting appropriate to the needs of an individual with a disability;

• Increasing the supply of, and equitable access to, high-quality affordable housing for families with children in areas with access to high-quality educational, transportation, economic, and other important opportunities;

• Increasing sustainable housing opportunities for veterans;

• Promoting or requiring improvements in: fair lending standards and compliance, marketing and outreach to members of an underserved community who are less likely to apply for certain housing opportunities, the estimation of race and ethnicity for mortgage applicants or housing market participants where race and ethnicity data has not been self-reported, and fair lending self-testing by primary lenders or other market participants that do business with the Enterprises;

• Conducting, and making available publicly, research on advancing equity and sustainable housing opportunities for an underserved community;

• Conducting ethnographic or consumer research on how to effectively serve an underserved community and disseminating it to market participants to improve quality of communications and increase community trust;

• Releasing data publicly on how an Enterprise or the market is performing in serving an underserved community, the effects of an Enterprise's policies on an underserved community, and how an Enterprise's actions may improve performance or address such effects; and

• Providing support to HUD program participants in affirmatively furthering fair housing.

The inclusion or exclusion of any particular objective from the illustrative list is not an indication of FHFA's views about whether or not that objective should or should not be undertaken as part of a plan. The list is intended to illustrate the flexibility of the proposed rule.

Proposed § 1293.25(c) would establish requirements for meaningful actions. It would require that meaningful actions be logically tied to one or more measurable goals and one or more objectives for an identified underserved community and that they support sustainable housing opportunities. It would also require that meaningful actions reflect significant additional action above and beyond actions that also serve other Enterprise objectives and goals and reflect more than de minimis action. It would also require that meaningful actions reflect a commitment commensurate with an Enterprise's prominence in the housing market, its available resources, its dedication of resources to other important efforts, the needs of underserved communities, market conditions, and safety and soundness. It would also require that meaningful actions comply with the Safety and Soundness Act, the authorizing statutes, and other applicable law. Finally, it would require that meaningful actions not be actions that are required to remediate supervisory findings or required as a result of enforcement actions.

Proposed § 1293.25(d) would establish requirements for measurable goals. It would require measurable goals to be logically tied to one or more meaningful actions in a plan, be specific, be time-bound, be focused on outcomes, and facilitate measuring Enterprise progress, comparing Enterprise performance, and ensuring public accountability.

Proposed § 1293.26 would provide equitable housing and other mission-related responsibilities for Enterprise boards. As discussed above, board oversight is an important element of successful corporate governance, and FHFA's Corporate Governance regulation establishes a requirement for directors to direct the operations of regulated entities in conformity with FHFA regulations. The proposal would provide that Enterprise boards appropriately consider the objectives, actions, and goals of the Enterprise's Equitable Housing Finance Plan, while also appropriately considering its affordable housing goals and Duty to Serve plans and targets, and its other mission-related obligations, in the board's oversight of the Enterprise and the Enterprise's business activities. The proposed rule's language on “appropriately considering” the equitable housing and other mission responsibilities is intended to be flexible and tailored to the particular consideration at hand, while reinforcing that the plan should work in concert with the Enterprise's other mission activities and operations as a whole. This proposed section helps clearly articulate the ultimate responsibility of the board for oversight of the Equitable Housing Finance Plan, the Enterprise's affordable housing goals and Duty to Serve plans and targets, and its other mission-related obligations, and that they should work in concert with the Enterprise's operations as a whole. 84

Proposed § 1293.31 provides for certain required Enterprise data collection and reporting related to fair housing and fair lending. It would require the Enterprises to collect, maintain, and report data on language preference, homeownership education, and housing counseling for applicants and borrowers. The proposed rule would be substantially the same as the policy announced by FHFA in May 2022. 85 The Enterprises currently collect this data through the automated underwriting systems and loan delivery and have established data standards for collection of the information. The Enterprises have also issued a standard form for collection of the data—the Supplemental Consumer Information Form.

FHFA issued a request for input in 2017 that addressed improving language access in mortgage lending and mortgage servicing. 86 As part of that request for input as well as through ongoing engagement, stakeholders have noted the value of collecting the information and certain issues related to its collection. Certain applicants or borrowers may not wish to disclose the information; consistent with current practice by the Enterprises, the proposed rule would not require a response from applicants and borrowers and they could be provided with the option to not respond to a question about language preference as part of the information collection to satisfy the proposed rule. Providing the applicant or borrower the option to not respond is consistent with the collection of data on race and ethnicity in the mortgage market. 87 Certain stakeholders have also raised concerns about collecting the information in compliance with the Equal Credit Opportunity Act and Regulation B. The Consumer Financial Protection Bureau has specified that collection of language preference information does not violate Regulation B. 88

Information about homeownership education and housing counseling provides valuable insight into these programs. In July 2022, the Mortgage Industry Standards Maintenance Organization formed a new working group related to housing counseling data. 89 FHFA's National Survey of Mortgage Originations (NSMO) includes questions related to homeownership education and housing counseling. 90 Researchers have used the NSMO data to explore homeownership education and housing counseling's effects on borrowers. 91 Prior research has also explored the effects of homeownership education and housing counseling on borrowers. 92 Consistent collection of homeownership education and housing counseling data can facilitate research and market changes to further make use of homeownership education and housing counseling to assist borrowers.

FHFA believes that the information collected on language preference, homeownership education, and housing counseling for applicants and borrowers can support efforts to promote sustainable housing opportunities for underserved communities and could underlie elements of future Equitable Housing Finance Plans.

Considering the timing aspects of the proposed rule together, in the year prior to new plans, FHFA would conduct public engagement on or before June 15 ( e.g., FHFA would conduct public engagement on or before June 15, 2024, to inform planning and oversight related to the 2025-2027 plans). An Enterprise would submit the plan to FHFA for review by September 30 in the year prior to the three-year period covered by the plan; the Enterprise would then publish the plan on its website on January 15 of the first year covered by the plan ( e.g., a Freddie Mac plan covering 2025-2027 would be submitted to FHFA on September 30, 2024, and published by Freddie Mac on January 15, 2025). FHFA would conduct public engagement on or before June 15 in the first year of the plan cycle ( e.g., FHFA would conduct public engagement on or before June 16, 2025, because it is the first business day after June 15). Updates and reports would be submitted to FHFA by February 15 of the second year of the plan cycle and published by an Enterprise on April 15 ( e.g., a 2026 Freddie Mac update to a 2025-2027 plan would be submitted to FHFA on February 16, 2026, because it is the first business day after February 15, and published by Freddie Mac on April 15, 2026). FHFA would conduct public engagement on or before June 15 of the second year of the plan cycle ( e.g., FHFA would conduct public engagement on or before June 15, 2026). Updates and reports would be submitted to FHFA by February 15 of the third year of the plan cycle and published by an Enterprise on April 15 ( e.g., a 2027 Freddie Mac update to a 2025-2027 plan would be submitted to FHFA on February 16, 2027, because it is the first business day after February 15, and published by Freddie Mac on April 15, 2027). FHFA would conduct public engagement on or before June 15 in the third year of the plan ( e.g., FHFA would conduct public engagement on or before June 15, 2027).

Establishing expected dates by rule for submission, public engagement, and publication provides certainty and transparency to the public and the Enterprises, while permitting the Director to change the dates by public order if necessary in exigent circumstances.

Under the proposed rule, both the Enterprises and the Banks would be subject to proposed subpart A (§§ 1293.1 through 1293.3) and subpart B (§§ 1293.11 through 1293.12), including general provisions related to fair housing and fair lending laws, compliance, examinations, oversight, and enforcement. Additionally, both the Banks and Enterprises would be covered by FHFA's ability to require regular and special reports and the requirement to certify compliance in regular reports. However, FHFA has not currently issued any reporting orders requiring regular or special fair housing and fair lending reports from the Banks. The Equitable Housing Finance Plan and broader equitable housing finance planning requirements described specifically in subpart C (§§ 1293.21 through 1293.26) would apply only to the Enterprises and would codify in regulation and expand on the existing equitable housing framework for the Enterprises that FHFA established. As discussed above, as part of FHFA's comprehensive review of the Banks, commenters have suggested incorporating equitable housing considerations for the Banks and this idea is currently under consideration. FHFA requests public comment on whether FHFA should codify a similar framework to subpart C for the Banks in regulation and what elements of the framework should be included, modified, or excluded if FHFA were to apply such a framework to the Banks through regulation. FHFA also requests comment on other ways to incorporate principles of equitable housing for the Banks that would meet the same objective. Proposed subpart D (§ 1293.31) could include data collection and reporting requirements that would apply to both the Enterprises and the Banks, but currently as proposed the requirements would apply only to the Enterprises.

When promulgating regulations or taking other actions that relate to the Banks, section 1313(f) of the Safety and Soundness Act, as amended by section 1201 of HERA, requires the Director to consider the differences between the Banks and the Enterprises with respect to the Banks' cooperative ownership structure; mission of providing liquidity to members; affordable housing and community development mission; capital structure; and joint and several liability. 93 In preparing the proposed rule, the Director has considered the differences between the Banks and the Enterprises as they relate to the above factors and has determined that none of the statutory factors would be adversely affected by the proposed rule. The Director is requesting comments from the public about whether differences related to these factors should result in a revision of the proposed rule as it relates to the Banks.

As stated above, FHFA invites comments on all aspects of the proposed rule and will take all comments into consideration before issuing a final rule. In addition to comments specifically requested within the description of the proposed rule above, FHFA also requests comment on the questions set forth below. The most helpful comments reference the specific questions listed, explain the reason for any changes, and include supporting data.

1. The rule currently does not define equity. FHFA seeks comments on whether the rule should define equity. If the rule should define equity, what would be an appropriate definition?

2. How can FHFA improve fair lending compliance oversight of the regulated entities?

3. Are there other applicable consumer compliance and/or consumer protection statutes and regulations that FHFA should include in this section?

4. Are there any benefits or other issues FHFA should be aware of in considering adding unfair or deceptive acts or practices to its compliance and enforcement for regulated entities?

5. How should FHFA approach assessing compliance with non-fair lending consumer protection authorities such as unfair or deceptive acts or practices? Would additional guidance be helpful to regulated entities as they assess their overall compliance management?

6. Are there alternatives FHFA should consider to the language and approach for fair lending compliance certifications?

7. Is the three-year timeline for the plans adopted by the Enterprises appropriate?

8. Should FHFA issue an evaluation of the Enterprises? Should the rule include required evaluation metrics for the progress reports?

9. Should the rule include required or optional priority goals? If so, who should determine which priority goals are applicable?

10. From year to year, what should be the scope of updates to the Equitable Housing Finance Plans?

11. Should the focus of an Equitable Housing Finance Plan be limited to one underserved community at a time?

12. Does the rule provide for sufficient public engagement?

13. Developing or supporting special purpose credit programs is one type of meaningful action that an Enterprise could take under an Equitable Housing Finance Plan, but the rule would not establish any special purpose credit programs under 12 CFR 1002.8(a)(1) in the regulation itself. Should FHFA adopt any special purpose credit programs under 12 CFR 1002.8(a)(1) and, if so, what type of program(s) should be adopted?

14. Are the minimum requirements for performance reports sufficient or should performance reports contain any additional information not included in the rule?

15. Should the Banks be required to comply with a framework similar to that of the Equitable Housing Finance Plans by regulation?

16. What elements of the framework should be included, modified, or excluded if FHFA were to apply such a framework to the Banks by regulation?

17. Are there other ways to incorporate principles of equitable housing for the Banks that would meet the same objective?

The proposed rule would not contain any information collection requirement that would require the approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ). Therefore, FHFA has not submitted any information to OMB for review.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the Agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities. FHFA has considered the impact of this proposed rule under the Regulatory Flexibility Act. FHFA certifies that this proposed rule, if adopted as a final rule, will not have a significant economic impact on a substantial number of small entities because the regulation would apply only to the regulated entities, which are not small entities for purposes of the Regulatory Flexibility Act.

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

Submit your comments, identified by Docket ID No. EPA-R07-OAR-2023-0201, at w ww. r egulations.gov. Once submitted, comments cannot be edited or removed from Regulations.gov . The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e. on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit w ww. e pa.gov/dockets/commenting-epa-dockets.

The EPA is proposing to partially approve and partially disapprove a SIP revision submitted by the State of Missouri on February 17, 2022. In its submission, MoDNR requested that AOC No. APCP-2015-118 between MoDNR and Evergy (formerly Kansas City Power & Light) submitted in 2016, and amended in 2018 (Amendment #1), be replaced with Amendment #2 to the AOC in the SIP. The EPA is proposing to approve these SIP revisions, with the exception of Amendment #2 paragraph 12.A. The revisions proposed for approval meet the requirements of the Clean Air Act. The EPA is proposing disapproval of Amendment #2 paragraph 12.A. because this provision potentially allows Lake Road to burn fuel oil with a sulfur content greater than the sulfur content limit of 15 parts per million (ppm) on a temporary basis. Paragraph 12.A. is severable from Amendment #2 because it is a new paragraph that was not previously included in the 2016 AOC and Amendment #1 and is not approved in the SIP. The technical support document (TSD) included in this docket discusses our review and analysis of Amendment #2 and provides support for our proposed action.

In 1997, a monitor in St. Joseph (Buchanan County), Missouri measured a violation of the 1971 24-hour SO 2 NAAQS. At the time of the 1997 violation, Buchanan County was designated as “Better than National Standards” (equivalent to “attainment”) for the 1971 24-hour SO 2 NAAQS. To address the violation, the State of Missouri and the St. Joseph Light and Power (SJLP) Company entered into a Consent Decree that required SO 2 control measures at the SJLP Lake Road power generating facility, hereinafter referred to as the “2000 Consent Decree.”  1 The 2000 Consent Decree was submitted by the State of Missouri in order to maintain attainment of the 1971 24-hour SO 2 NAAQS and was not submitted because of a SIP call. On November 15, 2001, the EPA approved the 2000 Consent Decree as a revision to Missouri's SIP (66 FR 57389, November 15, 2001).

On June 22, 2010, the EPA established a new 1-hour SO 2 standard (“the 2010 SO 2 NAAQS”) and revoked the existing 24-hour and annual primary SO 2 standards (75 FR 35520, June 22, 2010, at 75 FR 35592). The EPA directed States to continue implementing any attainment and maintenance requirements of the 1971 24-hour SO 2 NAAQS until the requirements were subsumed by any new planning and control requirements associated with the 2010 SO 2 NAAQS (75 FR 35520, June 22, 2010, at 75 FR 35580). Accordingly, areas designated as nonattainment for the 2010 SO 2 NAAQS or areas that do not meet the requirements of a SIP call for the 1971 SO 2 NAAQS remain subject to the 1971 SO 2 NAAQS until the area submits, and EPA approves, an attainment plan for the 2010 SO 2 NAAQS. See 40 CFR 50.4(e). However, the EPA also stated that any existing SIP provisions under Clean Air Act (CAA) sections 110, 191 and 192 for the 1971 24-hour SO 2 NAAQS remain in effect (75 FR 35520, June 22, 2010, at 75 FR 35581).

On January 9, 2018, Buchanan County was designated as Attainment/Unclassifiable for the 2010 SO 2 NAAQS (83 FR 1098, January 9, 2018) and therefore the State of Missouri was not required to submit a SIP providing for attainment of the SO 2 NAAQS under sections 191 and 192 of the CAA. However, because the 2000 Consent Decree was approved pursuant to section 110 of the CAA, the provisions of the Consent Decree remain in effect notwithstanding EPA's revocation of the 1971 24-hour SO 2 NAAQS and designation of Buchanan County as Attainment/Unclassifiable for the 2010 SO 2 NAAQS.

Kansas City Power & Light (KCPL) acquired SJLP's Lake Road facility in 2008. On March 30, 2015, KCPL notified the MoDNR of its intent to cease the combustion of coal in Boiler No. 6 at the facility by April 16, 2016, to comply with the Mercury Air Toxics Standards rule, 40 CFR part 63, subpart UUUUU. KCPL also requested to use natural gas instead of coal as the primary fuel and to designate No. 2 fuel oil the secondary fuel of Boiler No. 6.

Because the 2000 Consent Decree stipulated the type of fuel to be used in each combustion unit, including Boiler No. 6, MoDNR and KCPL entered into an AOC on March 30, 2016, that included the substantive requirements from the 2000 Consent Decree and revised the fuel requirements for Boiler No. 6.

On June 13, 2018, the MoDNR and KCPL issued Amendment #1 to the 2016 AOC to require low sulfur coal as the primary fuel in Boiler No. 5, rather than a blend of high and medium sulfur coal as required by the 2000 Consent Decree and the 2016 AOC. The EPA approved the 2016 AOC and Amendment #1 into Missouri's SIP at 40 CFR 52.1320(d)(32) and (33) in August 2019. 2

Evergy became the current owner and operator of Lake Road after KCPL and Westar Energy merged to become Evergy in 2018. In 2021 MoDNR and Evergy revised the AOC for Lake Road by issuing Amendment #2 that consolidates all requirements into a single document, lowers the fuel oil sulfur content limit from 500 ppm to 15 ppm, eliminates SO 2 emission rate limits that are no longer necessary due to the more stringent fuel oil sulfur content limits, makes the retirement of Boiler No. 3 permanent and enforceable, and streamlines reporting and record keeping requirements. Amendment #2 does not revise the SO 2 emission rate limit of 1.349 pounds per million British thermal units (lb/MMBtu) for Boiler No. 5. Amendment #2 also adds language in paragraph 12.A. that allows MoDNR to grant temporary exemptions to the fuel oil requirements due to unforeseen circumstances.

In its submission, MoDNR included an analysis of SO 2 emissions from the Lake Road facility between 2002 through 2020. MoDNR's analysis demonstrated that Lake Road SO 2 emissions have decreased by 94.84 percent from 2002 through 2020, attributable to the 2000 Consent Decree and the fuel requirements provided in the 2016 AOC, Amendment #1, and Amendment #2. MoDNR states that Amendment #2 will ensure the SO 2 emissions decreases at Lake Road over the past 20 years remain permanent and further assist with maintenance and attainment of both the 1971 and 2010 SO 2 NAAQS.

Section 110(l) of the CAA prohibits the EPA from approving a SIP revision that interferes with any applicable requirement concerning attainment and reasonable further progress or any other applicable requirement of the CAA. Based on our analysis of Amendment #2, the EPA proposes to conclude that the SIP revision, with the exception of paragraph 12.A., is in accordance with the requirements of section 110(l) of the CAA. The EPA proposes to disapprove Amendment #2 paragraph 12.A. because it potentially allows the facility to burn fuel oil with sulfur content that exceeds the 15 ppm sulfur content limit on a temporary basis. The EPA's analysis of Amendment #2 can be found in the TSD included in this docket.

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 November 1, 2021, to December 9, 2021, and received no comments. In addition, as explained above and in more detail in the TSD which is part of this docket, the revisions proposed for approval meet the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

As explained in section II and further in the TSD, EPA is proposing to disapprove Amendment #2 paragraph 12.A. regarding temporary exemptions from fuel requirements.

We are processing this as a proposed action because we are soliciting comments on this proposed action. Final rulemaking will occur after consideration of any comments. We are publishing the proposed rule in the Federal Register to partially approve and partially disapprove the SIP submission. Any parties interested in commenting must do so by the date listed in the DATES section of the document. For further information about commenting on this proposed rule, see the ADDRESSES section of the document. If the EPA receives adverse comment, we will address all public comments in the subsequent final rule based on the proposed rule.

In this document, the EPA is proposing to include regulatory text in an EPA final rule that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to add the incorporation by reference of the Missouri Amendment #2 to Administrative Order on Consent state effective October 18, 2021, between MoDNR and Evergy related to controlling sulfur dioxide (SO 2 ) emissions at the Lake Road power plant, as discussed in Section II of this preamble and as set forth below in the proposed 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).

Also, in this document, as described in the proposed amendments to 40 CFR part 52 set forth below, EPA is proposing to remove provisions of the EPA-Approved Missouri Administrative Order on Consent and Amendment #1 (state effective September 27, 2018) from the Missouri State Implementation Plan, which was incorporated by reference in accordance with the requirements of 1 CFR part 51. As described in the proposed amendments to 40 CFR part 52 set forth below, EPA is also proposing to remove an outdated reference to the St. Joseph Light and Power So 2 consent agreement (state effective May 21, 2001).

The EPA reviewed demographic data, which provides an assessment of individual demographic groups of the populations living within a 2-mile radius of the Lake Road facility Census 2010 Summary Report available on Environmental Justice Screen (EJSCREEN). The EPA then compared the data to the state average for each of the demographic groups using 2010 state census data from the United States Census Bureau. The results of this analysis are being provided for informational and transparency purposes. The results of the demographic analysis indicate that, for populations within the 2-mile radius of the Lake Road facility, the percent people of color (persons who reported their race as a category other than White alone (not Hispanic or Latino)) is less than the national average (16 percent versus 21 percent). Within people of color, the percent of the population that is Black or African American alone is lower than the state average (3 percent versus 12 percent) and the percent of the population that is American Indian/Alaska Native is similar to the state average (1 percent versus 1 percent). The percent of the population that is two or more races is similar to the state average (3 percent versus 3 percent). The percent of people with low income within the 2-mile radius of the Lake Road facility is higher than the state average (41 percent versus 31 percent).

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Clean Air Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. 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); and

• Is not subject to requirements of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because this rulemaking does not involve technical standards;

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).

Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, Feb. 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. The EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”

The air agency did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA performed an environmental justice analysis, as is described above in the section titled, “Environmental Justice Considerations.” The analysis was done for the purpose of providing additional context and information about this rulemaking to the public, not as a basis of the action. In addition, there is no information in the record upon which this decision is based inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.

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

The addition reads as follows:

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the individual will take actions to harm the individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

The Patient Protection and Affordable Care Act (ACA)  1 generally  2 requires that in order to enroll in a Qualified Health Plan (QHP) through an Exchange, an individual must be either a citizen or national of the United States or be “lawfully present” in the United States. 3 The ACA also generally requires that individuals be “lawfully present” in order to be eligible for insurance affordability programs such as premium tax credits (PTC), 4 advance payments of the premium tax credit (APTC), 5 and cost-sharing reductions (CSRs);  6 additionally, enrollees in a Basic Health Program (BHP) are required to meet the same citizenship and immigration requirements as QHP enrollees. 7 Further, the ACA required that individuals be “lawfully present” in order to qualify for the Pre-Existing Condition Insurance Plan Program (PCIP), which expired in 2014. 8 The ACA does not define “lawfully present” beyond specifying that an individual is only considered lawfully present if they are reasonably expected to be lawfully present for the period of their enrollment. 9 The ACA also requires the Centers for Medicare & Medicaid Services (CMS) to verify that Exchange applicants are lawfully present in the United States. 10

As such, consistent with its statutory authority under the ACA and in order to facilitate the operation of its programs, CMS issued regulations in 2010 to define “lawfully present” for the purposes of determining eligibility for PCIP (75 FR 45013); in 2012 for purposes of determining eligibility to enroll in a QHP through an Exchange by cross-referencing the existing PCIP definition (77 FR 18309); and in 2014 to cross-reference the existing definition for purposes of determining eligibility to enroll in a BHP (79 FR 14111). In this proposed rule, we propose to amend these three regulations in order to update the definition of “lawfully present” at 45 CFR 152.2, which is used to determine whether a consumer is eligible to enroll in a QHP through an Exchange and for a BHP. Exchange regulations apply this definition to the eligibility standards for APTC and CSRs by requiring an applicant to be eligible to enroll in a QHP to be eligible for APTC and CSRs. 11 Accordingly, in this proposed rule, when we refer to the regulatory definition of “lawfully present” used to determine whether a consumer is eligible to enroll in a QHP through an Exchange, we also are referring to the regulatory definition used to determine whether a consumer is eligible for APTC and CSRs.

We propose a similar definition of “lawfully present” applicable to eligibility for Medicaid and Children's Health Insurance Program (CHIP) in States that elect to cover “lawfully residing” pregnant individuals and children under section 214 of the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) (hereinafter “CHIPRA 214 option”), now codified at section 1903(v)(4) of the Social Security Act (the Act) for Medicaid and section 2107(e)(1)(O) of the Act for CHIP. In July 2010, CMS interpreted “lawfully residing” to mean individuals who are “lawfully present” in the United States and who are residents of the State in which they are applying under the State's Medicaid or CHIP residency rules. 12 The definitions of “lawfully present” and “lawfully residing” used for Medicaid and CHIP are currently set forth in a 2010 State Health Official (SHO) letter (SHO #10-006) and further clarified in a 2012 SHO letter (SHO #12-002). 13

We propose several modifications to the definition of “lawfully present” currently articulated at 45 CFR 152.2 and described in the SHO letters for Medicaid and CHIP. First, we propose to remove an exception that excludes Deferred Action for Childhood Arrivals (DACA) recipients from the definitions of “lawfully present” used to determine eligibility to enroll in a QHP through an Exchange, a BHP, or Medicaid and CHIP under the CHIPRA 214 option. If this proposal is finalized, DACA recipients would be considered lawfully present for purposes of eligibility for these insurance affordability programs  14 based on a grant of deferred action, just like other similarly situated noncitizens who are granted deferred action. We also propose to incorporate additional technical changes into the proposed “lawfully present” definition at 45 CFR 152.2, as well as to the proposed “lawfully present” definition at 42 CFR 435.4.

These proposed definitions are solely for the purposes of determining eligibility for specific Department of Health and Human Services (HHS) health programs and are not intended to define lawful presence for purposes of any other law or program. We also note that this proposed rule would not provide any noncitizen relief or protection from removal, or convey any immigration status or other authority for a noncitizen to remain in the United States under existing immigration laws or to become eligible for any immigration benefit available under the U.S. Department of Homeland Security (DHS)'s or Department of Justice's purview.

CMS's target effective date for this rule is November 1, 2023, to ensure the provisions are effective during the Open Enrollment Period for individual market Exchanges, the next of which will begin on November 1, 2023. We are considering this target date because Open Enrollment is an important opportunity for consumers to shop for and enroll in insurance coverage, and implementation of these changes would be most effective during a period when there are many outreach and enrollment activities occurring from CMS, State Exchanges, Navigator and assister groups, and other interested parties. We note that, if this rule is finalized as proposed, DACA recipients would qualify for the Special Enrollment Period at 45 CFR 155.420(d)(3) for individuals who become newly eligible for enrollment in a QHP through an Exchange due to newly meeting the requirement at 45 CFR 155.305(a)(1) that an enrollee be lawfully present. However, we still believe that proposing to align this rule's effective date with the individual market Exchange Open Enrollment Period would reduce barriers to enrollment for consumers due to the previously mentioned outreach and enrollment activities occurring during this time and the longer period of time individuals have to enroll in a QHP through an Exchange during the individual market Exchange Open Enrollment Period compared with a Special Enrollment Period. Further, even though the individual market Exchange Open Enrollment Period is, among the programs addressed in this proposed rule, currently only applicable to Exchanges, we believe that it is important to align effective dates across Exchanges, BHP, Medicaid and CHIP in order to promote consistency, and because eligibility for these programs is typically evaluated through a single application. 15

We seek comment on the feasibility of this target effective date and whether to consider a different target effective date when we finalize this proposed rule. CMS is committed to working with State agencies and providing technical assistance regarding implementation of these proposed changes, if finalized. At the same time, CMS understands that State Medicaid and CHIP agencies are experiencing a significant increase in workload following the end of the Medicaid continuous enrollment condition established under section 6008(b)(3) of the Families First Coronavirus Response Act, as amended by section 5131 of the Consolidated Appropriations Act, 2023, and we seek comment about the impact of this workload or any other operational barriers to implementation for State Exchanges, and State Medicaid, CHIP, and BHP agencies. While CMS believes that there are advantages to implementing these provisions, if finalized, on the proposed November 1, 2023 target effective date, CMS will consider the comments received on this issue as we evaluate the feasibility of a November 1, 2023 effective date or different effective dates, if this proposal is finalized.

We propose to remove the definition of “lawfully present” currently at 45 CFR 152.2 and insert the proposed definition of “lawfully present” at 45 CFR 155.20. The regulations at 45 CFR 152.2 apply to the PCIP program, which ended in 2014. Further, we are proposing to update BHP regulations at 42 CFR 600.5 that currently cross-reference 45 CFR 152.2 to instead cross-reference the definition proposed in this rule at 45 CFR 155.20. While we do not expect the definition at 45 CFR 152.2 to be used for any current CMS programs, we are proposing to modify the regulation at 45 CFR 152.2 to cross-reference Exchange regulations at 45 CFR 155.20 to help ensure alignment of definitions for other programs. We seek comment on whether, alternatively, we should strike the definition of “lawfully present” currently at 45 CFR 152.2 instead of replacing it with a cross-reference to 45 CFR 155.20.

The ACA generally requires that in order to enroll in a QHP through an Exchange, an individual must be a “citizen or national of the United States or an alien lawfully present in the United States.”  16 While individuals who are not eligible to enroll in a QHP are also not eligible for APTC, PTC, or CSRs to lower the cost of a QHP, the ACA specifies that individuals who are not lawfully present are also not eligible for such insurance affordability programs. 17 The ACA does not offer a definition of “lawfully present.”  18

In a recent rulemaking, DHS referred to its definition of “lawful presence” in 8 CFR 1.3, reiterating that it is a “specialized term of art” that does not confer lawful status or authorization to remain in the United States, but instead describes noncitizens who are eligible for certain benefits as set forth in 8 U.S.C. 1611(b)(2) ( Deferred Action for Childhood Arrivals, final rule, 87 FR 53152 (August 30, 2022) (“DHS DACA Final Rule”)). DHS also stated that HHS and “other agencies whose statutes independently link eligibility for benefits to lawful presence may have the authority to construe such language for purposes of those statutory provisions” (87 FR 53152). We discuss this authority in further detail later in this section.

CMS first established a regulatory definition of “lawfully present” for purposes of the PCIP program in 2010 (75 FR 45013). In that 2010 rulemaking, CMS adopted the definition of “lawfully present” already established for Medicaid and CHIP eligibility for children and pregnant individuals under the CHIPRA 214 option articulated in SHO #10-006 (hereinafter “2010 SHO”) to have the maximum alignment possible across CMS programs establishing eligibility for lawfully present individuals. The definition of “lawfully present” articulated in the 2010 SHO was also informed by DHS regulations codified at 8 CFR 1.3(a) defining “lawfully present” for the purpose of eligibility for certain Social Security benefits, with some revisions necessary for updating or clarifying purposes, or as otherwise deemed appropriate for the Medicaid and CHIP programs consistent with the Act.

In March 2012, CMS issued regulations regarding eligibility to enroll in a QHP through an Exchange that cross-referenced the definition of “lawfully present” set forth in the 2010 PCIP regulations (77 FR 18309). As the DACA policy had not yet been established, the definitions of “lawfully present” set forth in the 2010 SHO, the 2010 PCIP regulations, and the 2012 QHP regulations did not explicitly reference DACA recipients. However, these definitions specify that individuals granted deferred action are considered lawfully present for purposes of eligibility to enroll in a QHP through an Exchange, a BHP, or Medicaid and CHIP under the CHIPRA 214 option. In June 2012, DHS issued the memorandum “Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children,” establishing the DACA policy. 19 DHS explained in this memorandum that DACA is a form of deferred action, and the removal forbearance afforded to a DACA recipient is identical for immigration purposes to the forbearance afforded to any individual who is granted deferred action in other exercises of enforcement discretion. DHS provided that the DACA policy was “necessary to ensure that [its] enforcement resources are not expended on these low priority cases.”  20 DHS did not address DACA recipients' ability to access insurance affordability programs through an Exchange, a BHP, and Medicaid or CHIP under the CHIPRA 214 option.

In August 2012, CMS amended its regulatory definition of “lawfully present” at 45 CFR 152.2, used for both PCIP and Exchange purposes, to add an exception stating that an individual granted deferred action under DHS' DACA policy was not considered lawfully present (77 FR 52614), thereby treating DACA recipients differently from other deferred action recipients for purposes of these benefits programs. CMS also issued the 2012 SHO excluding DACA recipients from the definition of “lawfully residing” for purposes of Medicaid or CHIP eligibility under the CHIPRA 214 option. In 2014, CMS issued regulations establishing the framework governing a BHP, which also adopted the definition of “lawfully present” at 45 CFR 152.2, thereby aligning the definition of “lawfully present” for a BHP with Exchanges, Medicaid and CHIP. As a result, DACA recipients, unlike all other deferred action recipients, are not currently eligible to enroll in a QHP through an Exchange, or for APTC or CSRs in connection with enrollment in a QHP through an Exchange, nor are they eligible to enroll in a BHP or for Medicaid or CHIP under the CHIPRA 214 option because they are not considered lawfully present for purposes of these programs. In both the August 2012 rulemaking and the 2012 SHO that excluded DACA recipients from CMS definitions of “lawfully present,” CMS reasoned that, because the rationale that DHS offered for adopting the DACA policy did not pertain to eligibility for insurance affordability programs, these benefits should not be extended as a result of DHS deferring action under DACA.

HHS has now reconsidered its position, and is proposing to change its interpretation of the statutory phrase “lawfully present” to treat DACA recipients the same as other deferred action recipients as described in current regulations in paragraph (4)(iv) of the definition at 45 CFR 152.2. Under the proposed rule, DACA recipients would be considered lawfully present to the same extent as other deferred action recipients for purposes of the ACA at 42 U.S.C. 18032(f)(3) for the Exchange, and 42 U.S.C. 18051(e) for a BHP. To align the eligibility standards across insurance affordability programs for noncitizens considered “lawfully present,” we are also proposing to establish rules in the Medicaid and CHIP programs to recognize that DACA recipients are “lawfully residing” in the United States, just like other deferred action recipients, for purposes of the CHIPRA 214 option, as discussed in section II.D.1. of this proposed rule.

Since HHS first interpreted “lawfully present” to exclude DACA recipients in 2012, new information regarding DACA recipients' access to health insurance coverage has emerged. While a 2021 survey of DACA recipients found that DACA may facilitate access to health insurance through employer-based plans, 34 percent of DACA recipient respondents reported that they were not covered by health insurance. 21 Individuals without health insurance are less likely to receive preventative or routine health screenings, and may delay necessary medical care, incurring high costs and debts. 22 The 2021 survey of DACA recipients also found that 47 percent of respondents attested to having experienced a delay in medical care due to their immigration status and 67 percent of respondents said that they or a family member were unable to pay medical bills or expenses. 23 The COVID-19 public health emergency has also highlighted the need for this population to have access to high quality, affordable health coverage. According to a demographic estimate by the Center for Migration Studies, over 200,000 DACA recipients served as essential workers during the COVID-19 public health emergency. 24 This figure encompasses 43,500 DACA recipients who worked in health care and social assistance occupations, including 10,300 in hospitals and 2,000 in nursing care facilities. 25 During the height of the pandemic, essential workers were disproportionately likely to contract COVID-19. 26 27 These factors emphasize how increasing access to health insurance would improve the health and well-being of many DACA recipients currently without coverage. In addition to improving health outcomes, these individuals could be even more productive and better economic contributors to their communities and society at large with improved access to health care. A 2016 study found that a worker with health insurance is estimated to miss 77 percent fewer workdays than an uninsured worker. 28

By including DACA recipients in the definition of “lawfully present,” this proposed rule is aligned with the goals of the ACA—specifically, to lower the number of people who are uninsured in the United States and make affordable health insurance available to more people. Further, DACA recipients represent a pool of relatively young, healthy adults; at an average age of 29 per U.S. Citizenship and Immigration Services (USCIS) data, they are younger than the general Exchange population. 29 As such, there may be a slight effect on the Exchange or BHP risk pools as a result of this proposed change, discussed further in the Regulatory Impact Analysis in section VI.C. of this proposed rule.

In previously excluding DACA recipients from the definition of “lawfully present,” CMS had posited that the broadly accepted conventions of lawful presence should be set aside if the program or status in question was not established with the explicit objective of expanding access to health insurance affordability programs. However, given the broad aims of the ACA to increase access to health coverage, we now assess that this rationale for excluding certain noncitizen groups from such coverage was not only not statutorily mandated, it failed to best effectuate congressional intent in the ACA. Additionally, HHS previously reasoned that considering DACA recipients eligible for insurance affordability programs was inconsistent with the limited relief that the DACA policy was intended to afford. However, on further review and consideration, it is clear that the DACA policy was intended to provide recipients with the stability and assurance that would allow them to obtain education and lawful employment, and integrate as productive members of society. Extending health benefits to these individuals is consistent with those fundamental goals of DACA. It is also evident that there was no statutory mandate to distinguish between recipients of deferred action under the DACA policy and other deferred action recipients.

The proposed change to no longer exclude DACA recipients from CMS definitions of “lawfully present” aligns with both the longstanding DHS definition of lawful presence under 8 CFR 1.3 and DHS's explanation of this definition in the DHS DACA Final Rule. In a January 20, 2021 memorandum, “Preserving and Fortifying Deferred Action for Childhood Arrivals,” the President directed the Secretary of Homeland Security and the Attorney General to take appropriate steps consistent with applicable law to act to preserve and fortify DACA. 30

Following the issuance of this memorandum, DHS issued a proposed rule, “Deferred Action for Childhood Arrivals,” on September 28, 2021 (86 FR 53736), and the DHS DACA Final Rule on August 30, 2022, with an effective date of October 31, 2022. 31 Among other things, the DHS DACA Final Rule reiterated USCIS' longstanding policy that a noncitizen who has been granted deferred action is deemed “lawfully present”—a specialized term of art that Congress has used in multiple statutes—for example, for purposes of 8 U.S.C. 1611(b)(2). The DHS DACA Final Rule also reiterated that DACA recipients do not accrue “unlawful presence” for purposes of 8 U.S.C. 1182(a)(9).

We are aware that DHS received public comments about “HHS' exclusion of DACA recipients from participation in Medicaid, the Children's Health Insurance Program (CHIP), and the ACA health insurance marketplace.” (87 FR 53152). In response, DHS noted that it did not have the authority to make changes to the definitions of “lawfully present” used to determine eligibility for insurance affordability programs and affirmed that such authority rests with HHS (87 FR 53152). While review of the DHS DACA Final Rule in part prompted HHS to revisit its own interpretation of “lawfully present,” the changes proposed in this rule reflect a desire to align with longstanding DHS policy predating the DHS DACA Final Rule, under which deferred action recipients have been considered “lawfully present” for purposes of certain Social Security benefits under 8 CFR 1.3.

In light of DHS's clarifications, HHS sees no persuasive reasons to treat DACA recipients differently from other noncitizens who have been granted deferred action. Accordingly, HHS proposes to amend our regulations at 42 CFR 600.5 and 45 CFR 152.2 and 155.20, and establish regulations at 42 CFR 435.4 and 457.320, so that DACA recipients would be considered lawfully present for purposes of eligibility for health insurance coverage through an Exchange, a BHP, and for eligibility under the CHIPRA 214 option in Medicaid and CHIP, just like other individuals granted deferred action. Specifically, we are proposing to amend QHP regulations at 45 CFR 155.20 to remove the current cross-reference to 45 CFR 152.2 and to instead add a definition of “lawfully present” for purposes of determining eligibility to enroll in a QHP through an Exchange. In section II.B. of this rule, we propose to remove the definition of “lawfully present” currently in the PCIP regulations at 45 CFR 152.2 and add a cross reference to 45 CFR 155.20 to ensure alignment across programs. In the definition proposed at 45 CFR 155.20, we propose to remove the existing exception in 45 CFR 152.2 that excludes DACA recipients from the definition of “lawfully present,” and clarify that references to noncitizens who are granted deferred action who are lawfully present for purposes of this provision include DACA recipients. Under this proposed change, we estimate that approximately 129,000 DACA recipients would enroll in a QHP through an Exchange, a BHP, or Medicaid or CHIP under the CHIPRA 214 option. Proposed changes to Medicaid and CHIP under the CHIPRA 214 option and BHP are included under sections II.D. and II.E. of this proposed rule.

In addition to including DACA recipients in the definition of “lawfully present” for the purposes of eligibility for health insurance coverage through an Exchange, a BHP, and for eligibility under the CHIPRA 214 option in Medicaid and CHIP, CMS is proposing several other clarifications and technical adjustments to the definition proposed at 45 CFR 155.20, as compared to the definition currently at 45 CFR 152.2.

First, in paragraph (1) of the proposed definition of “lawfully present” at 45 CFR 155.20, we propose some revisions as compared to paragraph (1) of the definition currently at 45 CFR 152.2. In the current regulations at 45 CFR 152.2, paragraph (1) provides that qualified aliens, as defined in the Personal Responsibility and Work Opportunity Act (PRWORA) at 8 U.S.C. 1641, are lawfully present. Throughout the proposed definition at 45 CFR 155.20, we propose a nomenclature change to use the term “noncitizen” instead of “alien” when appropriate to align with more modern terminology. Additionally, in paragraph (1) of the proposed definition at 45 CFR 155.20, we propose to cite the definition of “qualified noncitizen” at 42 CFR 435.4, rather than the definition of “qualified alien” in PRWORA. The definition of “qualified noncitizen” currently at 42 CFR 435.4 includes the term “qualified alien” as defined at 8 U.S.C. 1641(b) and (c). We note that for purposes of Exchange coverage and APTC eligibility, citizens of the Freely Associated States (FAS) living in the United States under the Compacts of Free Association (COFA), commonly referred to as COFA migrants, are not considered qualified noncitizens because the statutory provision at 8 U.S.C.1641(b)(8) making such individuals qualified noncitizens only applies to Medicaid. Similarly, for purposes of BHP eligibility, COFA migrants are not considered qualified noncitizens by cross-referencing the BHP definition of “lawfully present” at 42 CFR 600.5 to 45 CFR 155.20. Please see section II.D.3. of this proposed rule, where we discuss this further and we seek comment on whether to provide a more detailed definition of “qualified noncitizen” at 42 CFR 435.4. Pending such comments, and to ensure alignment across CMS programs, we propose that the Exchange regulations at 45 CFR 155.20 define “qualified noncitizen” by including a citation to the Medicaid regulations at 42 CFR 435.4, rather than to PRWORA.

Further, in the current definition of “lawfully present” at 45 CFR 152.2, CMS included in paragraph (2), a noncitizen in a nonimmigrant status who has not violated the terms of the status under which they were admitted or the status to which they have changed since their admission. In this rule, we propose in paragraph (2) of 45 CFR 155.20, modifying this language such that a noncitizen in a valid nonimmigrant status would be deemed lawfully present. Determining whether an individual has violated the terms of their status is a responsibility of DHS, not CMS. Accordingly, this proposed change would ensure coverage of noncitizens in a nonimmigrant status that has not expired, so long as DHS has not determined those noncitizens have violated their status.

Exchanges would continue to submit requests to verify an applicant's nonimmigrant status through a data match with DHS via the Federal data services hub using DHS' Systematic Alien Verification for Entitlements (SAVE) system. If SAVE indicates that the applicant has no eligible immigration status, the applicant would not be eligible for coverage. As such, this modification will simplify the eligibility verification process, so that a nonimmigrant's immigration status can be verified solely using the existing SAVE process, and reduce the number of individuals for whom an Exchange or State agency may need to request additional information. We also believe this change will promote simplicity, consistency in program administration, and program integrity given the reliance on a Federal trusted data source, while eliminating the agency's responsibility to understand and evaluate the minute complexities of the various immigration statuses and regulations.

We also propose a minor technical change in paragraph (4) of the proposed definition of “lawfully present” at 45 CFR 155.20, as compared to the definition of “lawfully present” currently in paragraph (4)(i) at 45 CFR 152.2, to refer to individuals who are “granted,” rather than “currently in” temporary resident status, as this language more accurately refers to how this status is conferred. We similarly propose a minor technical change in paragraph (5) of the proposed definition of “lawfully present” at 45 CFR 155.20, as compared to the definition of “lawfully present” currently in paragraph (4)(ii) at 45 CFR 152.2, to refer to individuals who are “granted,” rather than “currently under” Temporary Protected Status (TPS), as this language more accurately refers to how DHS confers this temporary status upon individuals.

Paragraph (4)(iii) of the current definition at 45 CFR 152.2 provides that noncitizens who have been granted employment authorization under 8 CFR 274a.12(c)(9), (10), (16), (18), (20), (22), or (24) are considered lawfully present. In paragraph (6) of the proposed definition of “lawfully present” at 45 CFR 155.20, we propose to cross reference 8 CFR 274a.12(c) in its entirety in order to simplify the regulatory definition and verification process. We are proposing this modification to the regulatory text to include all noncitizens who have been granted an Employment Authorization Document (EAD) under 8 CFR 274a.12(c), as USCIS has authorized these noncitizens to accept employment in the United States. USCIS may grant noncitizens employment authorization under this regulatory provision based on the noncitizen's underlying immigration status or relief granted, an application for such status or other immigration relief, or other basis. Almost all noncitizens granted an EAD under 8 CFR 274a.12(c) are already considered lawfully present under existing regulations, either at in paragraph (4)(iii) of the defintion at 45 CFR 152.2 or within 45 CFR 152.2 more broadly. This modification would add only two minor categories to the proposed definition: noncitizens granted employment authorization under 8 CFR 274a.12(c)(35) and (36). Individuals covered under 8 CFR 274a.12(c)(35) and (36) are noncitizens with certain approved employment-based immigrant visa petitions who are transitioning from an employment-based nonimmigrant status to lawful permanent resident (LPR) status, and their spouses and children, for whom immigrant visa numbers are not yet available. These EAD categories act as a “bridge” to allow these noncitizens to maintain work authorization after their nonimmigrant status expires while they await an immigrant visa to become available. Because these individuals were previously eligible for insurance programs by virtue of their nonimmigrant status, the proposed rule would simply allow their eligibility to continue until they are eligible to apply to adjust to LPR status.

This change to consider “lawfully present” all individuals with an EAD granted under 8 CFR 274a.12(c) is beneficial because Exchanges can usually verify that an individual has been granted an EAD under 8 CFR 274a.12(c) in real time through SAVE, at the initial step of the verification process. Thus, the proposed revision to the definition would help to streamline and expedite verification of status for individuals who have been granted an EAD under this regulatory provision.

Further, to reduce duplication and confusion, we propose to remove the clause currently in paragraph (4)(ii) of the defintion in 45 CFR 152.2, referring to “pending applicants for TPS who have been granted employment authorization,” as these individuals would be covered under proposed paragraph (6) of the definition of “lawfully present” at 45 CFR 155.20.

We propose a minor technical modification to the citation in paragraph (7) of the definition of “lawfully present” to more accurately describe Family Unity beneficiaries. Family Unity beneficiaries are individuals who entered the United States and have been continuously residing in the United States since May 1988, and who have a family relationship (spouse or child) to a noncitizen with “legalized status.”  32 The current definition of “lawfully present” at 45 CFR 152.2 includes Family Unity beneficiaries eligible under section 301 of the Immigration Act of 1990 (Pub. L. 101-649, enacted November 29, 1990), as amended. However, DHS also considers as Family Unity beneficiaries individuals who are granted benefits under section 1504 of the Legal Immigration and Family Equity (LIFE) Act Amendments of 2000 (enacted by reference in Pub. L. 106-554, enacted December 21, 2000), referred to hereinafter as the LIFE Act Amendments. In this rule, we propose to amend the definition to include individuals who are granted benefits under section 1504 of the LIFE Act Amendments for consistency with DHS's policy to consider such individuals Family Unity beneficiaries.

As discussed previously, in paragraph (9) of the proposed definition of “lawfully present” at 45 CFR 155.20, we propose an additional clause clarifying that all recipients of deferred action, including DACA recipients, are lawfully present for purposes of 45 CFR part 155, which concerns eligibility to enroll in a QHP through an Exchange, and by cross-reference at 42 CFR 600.5, eligibility for a BHP.

In paragraph (10) of the proposed definition of “lawfully present” at 45 CFR 155.20, we propose to clarify that individuals with a pending application for adjustment of status are not required to have an approved immigrant visa petition in order to be considered lawfully present. We propose this change because in some circumstances, DHS does not require a noncitizen to have an approved immigrant visa petition to apply for adjustment of status. For example, USCIS allows noncitizens in some employment-based categories, as well as immediate relatives of U.S. citizens, to concurrently file a visa petition with an application for adjustment of status. Further, there are some scenarios where individuals need not have an approved visa petition at all, such as individuals applying for adjustment of status under the Cuban Adjustment Act. In addition, the DHS SAVE verification system generally does not currently return information to requestors on the status of underlying immigrant visa petitions associated with the adjustment of status response. This proposed modification would simplify verification for these noncitizens, reduce the burden on States and individual applicants, and align with current DHS procedures.

Paragraph (5) of the current definition of “lawfully present” pertains to applicants for asylum, withholding of removal, or relief under the Convention Against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment (hereinafter “Convention Against Torture”). In this rule, we are proposing to move this text to paragraph (12) of the definition of “lawfully present” at 45 CFR 155.20, and remove the portion of the text pertaining to noncitizens age 14 and older who have been granted employment authorization, as these individuals are noncitizens granted employment authorization under 8 CFR 274a.12(c)(8), and as such, are included in paragraph (6) of our proposed definition of “lawfully present” at 45 CFR 155.20. This proposed change is intended to reduce duplication and will not have a substantive impact on the definition of “lawfully present.”

We further propose to remove the requirement in the current definition that individuals under age 14 who have filed an application for asylum, withholding of removal, or relief under the Convention Against Torture have had their application pending for 180 days to be deemed lawfully present. We originally included this 180-day waiting period for children under 14 in our definition of “lawfully present” to align with the statutory waiting period before applicants for asylum and other related forms of protection can be granted an EAD. We now propose to change this so that children under 14 are considered lawfully present without linking their eligibility to the 180-day waiting period for an EAD. We note that children under age 14 are generally are not permitted to work in the United States under the Fair Labor Standards Act, 33 and as such, the EAD waiting period has no direct nexus to their eligibility for coverage. Under the proposed rule, Exchanges and States would continue to verify that a child has the relevant pending application or is listed as a dependent on a parent's  34 pending application for asylum or related protection using DHS's SAVE system. This proposed modification captures the same population of children that were previously covered as lawfully present, without respect to how long their applications have been pending.

In paragraph (13) of the proposed definition of “lawfully present” at 45 CFR 155.20, we propose to include individuals with an approved petition for Special Immigrant Juvenile (SIJ) classification. The definition currently at paragraph (7) of 45 CFR 152.2 refers imprecisely to noncitizens with a “pending application for [SIJ] status” and therefore unintentionally excludes from the definition of “lawfully present,” children whose petitions for SIJ classification have been approved but who cannot yet apply for adjustment of status due to lack of an available visa number. 35 Due to high demand for visas in this category, for many applicants it can take several years for a visa number to become available. SIJs are an extremely vulnerable population and as such, we propose to close this unintentional gap so that all children with an approved petition for SIJ classification are deemed lawfully present.

In May 2022, USCIS began considering granting deferred action to noncitizens with approved petitions for SIJ classification but who are unable to apply for adjustment of status solely due to unavailable immigrant visa numbers. Accordingly, based on the proposed changes at 45 CFR 155.20, SIJs could be considered “lawfully present” under three possible categories, as applicable: paragraph (9) deferred action; paragraph (10) a pending adjustment of status application; or paragraph (13) a pending or approved SIJ petition. While paragraph (9) would cover individuals with approved SIJ petitions who cannot apply for adjustment of status, there may be a small number of SIJs with approved petitions whose request for deferred action has not yet been decided, for whom DHS has declined to defer action, or who were not considered for deferred action. The proposed modification to paragraph (13) of the definition of “lawfully present” at 45 CFR 155.20 would capture individuals who have established eligibility for SIJ classification but do not qualify under paragraph (9) or (10) of the proposed definition of “lawfully present” at 45 CFR 155.20, and eliminate an unintentional gap in the definition.

We also propose a nomenclature change to the definitions currently at 45 CFR 152.2 to use the term “noncitizen,” rather than “alien” in the definition proposed at 45 CFR 155.20 to align with more modern terminology.

We propose to add a new section at 45 CFR 155.30 addressing the severability of the provisions proposed in this rule. In the event that any portion of a final rule is declared invalid, CMS intends that the various provisions of the definition of “lawfully present” be severable, and that the changes we are proposing with respect to the definitions of “lawfully present” in 45 CFR 155.20 would continue even if some of the proposed changes to any individual category are found invalid. The severability of these provisions is discussed in detail in section III. of this proposed rule.

Section 214 of CHIPRA is currently codified at sections 1903(v)(4)(A) and 2107(e)(1)(O) of the Act to allow States and territories an option to provide Medicaid and CHIP benefits to children under age 21 (under age 19 for CHIP) and pregnant individuals who are “lawfully residing” in the United States, without a 5-year waiting period, provided that they meet all other eligibility requirements in the State (for example, income). When States elect to cover pregnant individuals and children under the CHIPRA 214 option, this coverage includes the 60-day postpartum period or, at State option, the 12-month postpartum period (including for adolescents who become pregnant), 36 when they are lawfully residing and meet all other eligibility requirements in the State. While the Medicaid and CHIP statutes do not define “lawfully residing”, we have previously recognized that this term is broader than the definition of “qualified noncitizen”, discussed in section II.D.3. of this proposed rule.

As discussed previously in this rule, on July 1, 2010, CMS issued the 2010 SHO letter providing guidance for State Medicaid and CHIP agencies to implement section 214 of CHIPRA. In the 2010 SHO letter, CMS interpreted “lawfully residing” to mean individuals who are “lawfully present” in the United States and who are residents of the State in which they are applying under the State's Medicaid or CHIP residency rules. 37 The term “lawfully present” is defined in the 2010 SHO and was based on the definition of “lawfully present” that is now codified at 8 CFR 1.3 with some revisions necessary for updating or clarifying purposes, or as otherwise determined appropriate for the Medicaid and CHIP programs consistent with the Act.

On August 28, 2012, CMS issued the 2012 SHO, excluding DACA recipients from being considered lawfully residing for Medicaid and CHIP under the CHIPRA 214 option. 38 The 2012 SHO established CMS' current interpretation of “lawfully present” indicating that DACA recipients, unlike other recipients of deferred action, are not considered lawfully present for purposes of eligibility for Medicaid and CHIP under section 214 of CHIPRA. In the 2012 SHO, CMS reasoned that because the rationale that DHS offered for adopting the DACA policy did not pertain to eligibility for Medicaid and CHIP, eligibility for these benefits should not be extended as a result of DHS deferring action under DACA. In so reasoning, CMS relied on the description of the DACA policy offered by DHS in its “Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children” memorandum, which explained that the DACA policy was “necessary to ensure that [its] enforcement resources are not expended on these low priority cases.”  39 The DHS memorandum did not address the availability of health insurance coverage through the Exchange, a BHP, Medicaid or CHIP. As such, DACA recipients are not currently eligible for Medicaid or CHIP programs under the CHIPRA 214 option.

We are proposing to define the terms “lawfully present” and “lawfully residing” at 42 CFR 435.4. For the same reasons as the proposed changes at 45 CFR 155.20, described in section II.C.1. of this proposed rule, and to ensure alignment across CMS programs, the proposed definition of “lawfully present” would remove the exclusion of DACA recipients and clarify that they are included in the broader category of those granted deferred action as lawfully residing in the United States for purposes of Medicaid and CHIP eligibility under the CHIPRA 214 option. We are also proposing to add a cross-reference to this definition at 42 CFR 457.320(c) for purposes of determining eligibility for CHIP. Thus, under the proposed rule, DACA recipients who are children under 21 years of age (under age 19 for CHIP) or pregnant, including during the postpartum period, 40 would be eligible for Medicaid and CHIP benefits in States that have elected the option in their State plan to cover all lawfully residing children or pregnant individuals under the CHIPRA 214 option. These individuals would still need to meet all other eligibility requirements for coverage in the State. 41 We propose the definition of “lawfully residing” to match the definition as defined in the 2010 SHO, discussed previously in this rule—that an individual is “lawfully residing” if they are “lawfully present” in the United States and are a resident of the State in which they are applying under the State's Medicaid or CHIP residency rules.

Further, as discussed in section II.C.2. of this proposed rule regarding modifications to the lawfully present definition proposed in 45 CFR 155.20, we propose in 42 CFR 435.4 each of the same clarifications and minor technical changes. The proposed definition of “lawfully present” in 42 CFR 435.4 would mirror the current definition of “lawfully present” as defined in the 2010 SHO letter with the clarification and minor technical changes described previously in this proposed rule. We are proposing these rules to align with the proposed definition of “lawfully present” across programs and for the same rationales described in section II.C.2. of this proposed rule.

The “lawfully present” definition proposed at 42 CFR 435.4 is identical to the definition proposed at 45 CFR 155.20, except for two additional paragraphs related to the territories. Consistent with the 2010 SHO definition of “lawfully present,” paragraph (14) of the proposed definition of “lawfully present” at 42 CFR 435.4 provides that individuals who are lawfully present in American Samoa are considered lawfully present. CMS is not proposing a change from its current policy described in the 2010 SHO regarding individuals who are lawfully present in American Samoa. Paragraph (15) of the proposed definition of “lawfully present” at 42 CFR 435.4 provides a revised description of lawfully present individuals in the Commonwealth of the Northern Mariana Islands (CNMI) under 48 U.S.C. 1806(e), as compared to paragraph (8) of the definition of “lawfully present” in the 2010 SHO. The 2010 SHO definition covered individuals described in 48 U.S.C. 1806(e)(1), which granted continued lawful presence in the CNMI to certain noncitizens who were lawfully present at that time under former CNMI immigration law. This statutory provision expired on November 28, 2011. However, in the Northern Mariana Islands Long-Term Legal Residents Relief Act (Public Law 116-24, enacted June 25, 2019), Congress subsequently added a new paragraph (6) to section 1806(e) of the Act, creating a new immigration status of “CNMI Resident” for certain long-term residents of the CNMI. Our proposed definition of “lawfully present” at 45 CFR 435.4 includes CNMI Residents at paragraph (15), with an update to reflect the current statute regarding individuals who are CNMI residents. Similar language is not included in the definition at 45 CFR 155.20 because American Samoa and the CNMI do not have Exchanges.

We also propose a nomenclature change to the definitions of “citizenship,” “noncitizen,” and “qualified noncitizen” in 42 CFR 435.4 in order to remove the hyphen in the term “non-citizen” and use the term “noncitizen” throughout those definitions to align with terminology used by DHS.

We propose to add a new section at 42 CFR 435.12 addressing the severability of the provisions proposed in this rule. In the event that any portion of a final rule might be declared invalid, CMS intends that the various provisions of the definition of “lawfully present” be severable, and that the changes we are proposing with respect to the definitions of “lawfully present” in § 435.4 would continue even if some of the proposed changes to any individual category are found invalid. The severability of these provisions is discussed in detail in section III. of this proposed rule.

As previously discussed, the proposed definition of “lawfully present” includes an individual who is a “qualified noncitizen”. Under our current Medicaid regulations, a “qualified non-citizen” is defined at 42 CFR 435.4 and includes an individual described in 8 U.S.C. 1641(b) and (c). The definition is currently used for determining Medicaid eligibility under our regulation at 42 CFR 435.406, and the definition would also be important for determining eligibility of individuals who are seeking CHIPRA section 214 benefits. We are considering whether the current definition of qualified noncitizen at 42 CFR 435.4 should be modified to provide greater clarity and increase transparency for the public. Specifically, we are considering whether the definition should be modified to expressly provide all of the categories of noncitizens covered by 8 U.S.C. 1641(b) and (c), as well as additional categories of noncitizens that Medicaid agencies are required to cover as a result of subsequently enacted

I. Background

PHMSA published the HM-219D NPRM  1 on March 3, 2023, in response to 18 petitions for rulemaking submitted by the regulated community between May 2018 and October 2020 that requested PHMSA address a variety of provisions, including but not limited to those pertaining to packaging, hazard communication, and the incorporation by reference of certain documents. These proposed revisions maintain or enhance the existing high level of safety under the Hazardous Materials Regulations while providing clarity and appropriate regulatory flexibility in the transport of hazardous materials. On April 6, 2023, PHMSA received a comment to the HM-219D NPRM docket submitted by Worthington Industries requesting that PHMSA rescind certain elements of the HM-219D NPRM or (in the alternative) extend the comment period for responding to the NPRM.

PHMSA initially provided a 60-day comment period for the HM-219D NPRM, which closes on May 2, 2023. In response to a request to extend the comment period from Worthington Industries, PHMSA is extending the comment period for an additional 45 days. The comment period will now close on June 16, 2023. This extension provides the public with an additional 45 days and should provide adequate opportunity for the public to submit comments; however, PHMSA may at its discretion extend the comment period further if necessary. To the extent possible, PHMSA will also consider late-filed comments.

Table of Contents I. Executive Summary A. Purpose of Regulatory Action B. Statutory Authority C. Questions About Transit Worker Safety Reporting Programs II. Section-by-Section Analysis III. Regulatory Analyses and Notices I. Executive Summary A. Purpose of Regulatory Action

This Notice of Proposed Rulemaking (NPRM) proposes to amend the Public Transportation Agency Safety Plans (PTASP) regulation at 49 CFR part 673 with new requirements that would incorporate explicit statutory changes in the Bipartisan Infrastructure Law, enacted as the Infrastructure Investment and Jobs Act (Pub. L. 117-58; November 15, 2021). The Bipartisan Infrastructure Law amends FTA's safety program at 49 U.S.C. 5329(d) by adding to the PTASP requirements for public transportation systems that receive Federal financial assistance under 49 U.S.C. chapter 53 (chapter 53).

In response to these statutory changes, this NPRM proposes several revisions to the PTASP regulation, including requirements for the development, update, and approval of Agency Safety Plans (ASP); the establishment of a Safety Committee; cooperation with frontline transit worker representatives in the development of ASPs; the establishment of a safety risk reduction program for transit operations to improve safety by reducing the number and rates of safety events, injuries, and assaults on transit workers based on data submitted to the National Transit Database (NTD); the establishment of safety performance targets for risk reduction programs; the establishment of de-escalation training for certain transit workers; and the incorporation of guidelines from the CDC or a State health authority regarding exposure to infectious diseases into the agency's SMS processes. FTA also proposes revisions to 49 CFR part 673 based on coordination and alignment with other FTA programs and forthcoming safety rulemakings.

Prior to publishing this NPRM, FTA engaged in stakeholder outreach regarding the new Bipartisan Infrastructure Law PTASP requirements. In accordance with the Department of Transportation's Guidance on Communication with Parties outside of the Federal Executive Branch (Ex Parte Communications), 1 FTA has added a memorandum summarizing these communications to the docket for this rulemaking. Where FTA has incorporated stakeholder suggestions into its regulatory proposals, FTA discusses such suggestions in the corresponding sections below.

Congress directed FTA to establish a comprehensive Public Transportation Safety Program, one element of which is the requirement for PTASP, in the Moving Ahead for Progress in the 21st Century Act (Pub. L. 112-141; July 6, 2012) (MAP-21), which was reauthorized by the Fixing America's Surface Transportation Act (Pub. L. 114-94; December 4, 2015). To implement the requirements of 49 U.S.C. 5329(d), FTA issued a final rule on July 19, 2018, that added part 673, “Public Transportation Agency Safety Plans,” to title 49 of the Code of Federal Regulations (83 FR 34418).

The Bipartisan Infrastructure Law continues the Public Transportation Safety Program and adds to the PTASP requirements for public transportation systems that receive Federal financial assistance under chapter 53.

The Bipartisan Infrastructure Law made several changes to 49 U.S.C. 5329(d). This proposed rule would revise portions of part 673 to incorporate these new requirements. The Bipartisan Infrastructure Law amended 49 U.S.C. 5329(d)(1)(B) to require that each recipient serving an urbanized area with a population of fewer than 200,000 (small urbanized area) develop its ASP in cooperation with frontline employee representatives.

In addition, the Bipartisan Infrastructure Law added several new requirements that apply to each recipient of Urbanized Area Formula Program funds under 49 U.S.C. 5307 (section 5307) that serves an urbanized area with a population of 200,000 or more (large urbanized area). The statute requires these agencies to undertake the following activities:

• Establish a Safety Committee that is convened by a joint labor-management process and consists of an equal number of (1) frontline employee representatives, selected by a labor organization representing the plurality of the frontline workforce employed by the recipient or, if applicable, a contractor to the recipient, to the extent frontline employees are represented by labor organizations; and (2) management representatives. (49 U.S.C. 5329(d)(5)). This Safety Committee has responsibility, at a minimum, for:

○ Approving the transit agency's ASP and any updates to the ASP before approval by the agency's Board of Directors or equivalent entity (49 U.S.C. 5329(d)(1)(A));

○ Setting safety performance targets for the safety risk reduction program using a three-year rolling average of the data submitted by the transit agency to the NTD (49 U.S.C. 5329(d)(4)(A));

○ Identifying and recommending risk-based mitigations or strategies necessary to reduce the likelihood and severity of consequences identified through the agency's safety risk assessment (49 U.S.C. 5329(d)(5)(A)(iii)(I));

○ Identifying mitigations or strategies that may be ineffective, inappropriate, or were not implemented as intended (49 U.S.C. 5329(d)(5)(A)(iii)(II)); and

○ Identifying safety deficiencies for purposes of continuous improvement (49 U.S.C. 5329(d)(5)(A)(iii)(III)).

• Establish a risk reduction program for transit operations to improve safety by reducing the number and rates of accidents, injuries, and assaults on transit workers based on data submitted to the NTD, including:

○ A reduction of vehicular and pedestrian accidents involving buses that includes measures to reduce visibility impairments for bus operators that contribute to accidents, including retrofits to buses in revenue service and specifications for future procurements that reduce visibility impairments; and

○ The mitigation of assaults on transit workers, including the deployment of assault mitigation infrastructure and technology on buses, including barriers to restrict the unwanted entry of individuals and objects into bus operator workstations when a risk analysis performed by the Safety Committee determines that such barriers or other measures would reduce assaults on and injuries to transit workers ((49 U.S.C. 5329(d)(1)(I)).

• Allocate not less than 0.75 percent of its section 5307 funds to safety-related projects eligible under section 5307 (safety set-aside). In the event the transit agency fails to meet a safety risk reduction program safety performance target:

○ Allocate the transit agency's safety set-aside in the following fiscal year to projects that are reasonably likely to assist the agency in meeting the target, including modifications to rolling stock and de-escalation training (49 U.S.C. 5329(d)(4)).

• Ensure the agency's comprehensive staff training program includes maintenance personnel and de-escalation training. (49 U.S.C. 5329(d)(1)(H)(ii)).

In addition, the Bipartisan Infrastructure Law requires that each agency's ASP address strategies to minimize exposure to infectious diseases, consistent with guidelines of the CDC or a State health authority (49 U.S.C. 5329(d)(1)(D)).

This NPRM does not propose any new requirements related to transit worker safety reporting programs. Through voluntary review of ASPs and technical assistance provided by its PTASP Technical Assistance Center, FTA has observed that many transit agencies have incorporated mechanisms to allow for confidential close call/near-miss reporting as part of their transit worker safety reporting programs. FTA is interested in hearing from the transit industry and other interested stakeholders regarding any experience establishing confidential reporting methods for transit workers and would appreciate feedback to the following questions:

• Have transit agencies offered transit workers methods to submit confidential reports of near-misses or safety concerns?

○ If so, please share a brief summary of such methods, including how transit agencies ensure reports are submitted confidentially.

○ How many reports do such programs receive annually?

○ How has this reporting improved or not improved transit agencies' ability to manage safety risk?

○ What challenges, if any, have transit agencies encountered, including in protecting information to ensure reports remain confidential, and in taking action on reports that are redacted?

○ What has been the annual cost of operating such programs?

• Have transit agencies participated in a close-call or near-miss reporting program facilitated by a third party to protect the confidentiality of reporters?

○ If so, please share a brief summary of how the program works, including whether transit agencies receive only de-identified reports specific to the agency, or if de-identified reports are shared with all participants in the program.

○ How many reports do transit agencies receive annually?

○ How has this participation improved or not improved transit agencies' ability to manage safety risk?

○ What are the annual estimated costs for participation in such programs?

• If transit agencies do not have a confidential close-call or near-miss reporting program, have such agencies assessed the feasibility of establishing a program? What are the expected benefits and barriers that transit agencies have identified, if any?

Respondents may respond to any question and do not need to respond to all questions.

FTA proposes several terminology changes that would apply throughout part 673. FTA proposes to change the term “agency” to “transit agency” for clarity. FTA also proposes to replace the term “employee” with “transit worker” for consistency with the changes to section 673.5 discussed below. Similarly, where FTA incorporates Bipartisan Infrastructure Law requirements involving transit employees into the regulation, FTA uses the term “transit worker.”

In addition, FTA proposes three terminology changes to ensure the regulatory language aligns with SMS terminology commonly used in the transit industry. FTA would:

• Replace the term “risk” with “safety risk,”

• Replace the term “mitigation” with “safety risk mitigation,” and

• Replace the term “consequence” with “potential consequence.”

This section sets forth the applicability of the PTASP regulation. Currently, the regulation applies to any State, local governmental authority, and any other operator of a public transportation system that receives Federal financial assistance under 49 U.S.C. chapter 53. FTA has deferred applicability to operators that only receive Federal financial assistance under 49 U.S.C. 5310 or 5311, or both 49 U.S.C. 5310 and 5311.

Through guidance, FTA has consistently interpreted this provision to mean that the PTASP regulation applies to two categories of recipients: (1) section 5307 recipients; and (2) rail transit agencies. For consistency with this existing practice, FTA proposes revising section 673.1(b) to clarify that the exception for section 5310 and section 5311 recipients does not apply to operators of rail fixed guideway public transportation systems. Accordingly, this change clarifies FTA's existing practice that all rail transit agencies must meet the requirements of part 673 if they receive Federal financial assistance under chapter 53.

This section sets forth the definitions of key terms used in the regulation. FTA proposes several changes to this section for clarity, as well as several changes related to Bipartisan Infrastructure Law requirements.

FTA proposes adding, amending, and deleting several definitions in section 673.5. These modifications provide greater clarity and are not intended to change the application of any existing requirements.

FTA would remove the definitions of “accident,” “event,” “incident,” “occurrence,” and “serious injury” from section 673.5. In their place, FTA would add a single term: “safety event.” This change is intended to simplify the classification of safety events.

FTA proposes to add a definition of “emergency” to clarify requirements related to emergency response and preparedness plans. This definition would mirror the statutory definition in 49 U.S.C. 5324.

FTA would replace the existing term “Equivalent Authority” with “equivalent entity” to conform with the statutory term used in 49 U.S.C. 5329(d)(1)(A).

FTA would add definitions for the terms “near-miss” and “roadway” to clarify new requirements that FTA is proposing to the regulation.

FTA proposes to add a definition of “public transportation.” This definition mirrors the statutory definition provided in 49 U.S.C. 5302. Similarly, FTA would add definitions of the terms “potential consequence,” “recipient,” “direct recipient,” and “subrecipient” for clarity. All of these terms are used frequently in the regulation, but they were not defined previously in this section.

FTA proposes to make minor edits to the definition of “rail fixed guideway public transportation system” for clarity.

FTA would modify the existing terms “risk” and “risk mitigation” by adding the word “safety” before each to ensure regulatory language aligns with SMS terminology commonly used in the transit industry.

FTA would modify the definition of “Safety Management Policy,” “Safety Management System,” and “Safety Risk Management” for clarity and to ensure regulatory language aligns with SMS terminology commonly used in the transit industry.

FTA would modify the definition of “small public transportation provider” to align with the definition of Tier II Provider in FTA's Transit Asset Management regulation (49 CFR 625). This is consistent with FTA's existing interpretation of small public transportation provider. FTA notes that certain transit agencies will meet the definition of both “small public transportation provider” and “large urbanized area provider.” This would occur if the small public transportation provider serves a large urbanized area. In such cases, the transit agency must meet all large urbanized area provider requirements, including establishing a Safety Committee and safety risk reduction program.

Finally, FTA would amend the definition of “transit agency” to clarify FTA's existing practice that PTASP applies only to rail transit agencies and section 5307 recipients and subrecipients, as discussed above.

FTA proposes adding definitions to section 673.5 related to the new Bipartisan Infrastructure Law PTASP requirements.

The Bipartisan Infrastructure Law amended 49 U.S.C. 5302 to add a definition of “assault on a transit worker.” FTA would incorporate the statutory definition of this term into section 673.5 without change.

FTA proposes to add a definition of “CDC,” which relates to the statutory requirement in 49 U.S.C. 5329(d)(1)(D) about minimizing exposure to infectious diseases. In addition, FTA proposes to add definitions for the terms “joint labor-management process,” “safety committee,” and “safety set aside.” Each of these terms relates to Bipartisan Infrastructure Law requirements for Safety Committees and safety risk reduction programs.

Many of the Bipartisan Infrastructure Law PTASP requirements only apply to section 5307 recipients and subrecipients that serve an urbanized area with a population of 200,000 or more (large urbanized area). FTA proposes to capture this category of transit agencies by adding a new defined term to section 673.5: “large urbanized area provider.” For clarity, FTA also proposes to define the term “urbanized area.” The proposed definition mirrors how the term is defined in 49 U.S.C. 5302.

FTA would make a minor change to the definition of “State Safety Oversight Agency” to add a citation to the State Safety Oversight Agency (SSOA) inspection provision at 49 U.S.C. 5329(k), which was added by the Bipartisan Infrastructure Law.

Finally, FTA would add a definition of “transit worker” that includes employees, contractors, and volunteers working on behalf of the transit agency. This definition would ensure that transit worker-related requirements, such as training, will apply to volunteers, such as volunteer transit operators who are a crucial part of the staff at some transit agencies, especially in rural areas.

This section establishes general PTASP requirements. FTA proposes revising section 673.11(a) to remove language about the initial regulatory deadline for establishing an ASP because the deadline has already passed. FTA also proposes to add the word “State” to clarify that States have a role in ASP development for certain small public transportation providers. This is a clarification that does not change any existing requirements.

The Bipartisan Infrastructure Law amended 49 U.S.C. 5329(d) to require that the Safety Committee of section 5307 recipients that serve a large urbanized area must approve the ASP and any updates to the ASP. Per statute, this approval must occur before the transit agency's Board of Directors or equivalent entity approves the ASP or update. FTA proposes revising section 673.11(a)(1) to incorporate this statutory requirement. The requirement to obtain Safety Committee approval applies only to large urbanized area providers. For all other transit agencies, the existing requirement for Board or equivalent entity approval remains unchanged.

Section 673.11(a)(3) provides that ASPs must include safety performance targets based on the safety performance measures established under FTA's National Public Transportation Safety Plan (NSP). FTA proposes to clarify FTA's existing practice that the safety performance targets are set annually. FTA also proposes revising this section to clarify that performance targets for the safety risk reduction program under section 673.20 are required only for large urbanized providers.

FTA proposes revising section 673.11(a)(6) to add paragraph (ii) requiring rail transit agencies to include or incorporate by reference in their ASPs the policies and procedures regarding rail transit workers on the roadway. This requirement relates to FTA's forthcoming Roadway Worker Protection (RWP) proposed rule. This RWP proposal is responsive to National Transportation Safety Board (NTSB) recommendations related to roadway worker protection.

FTA also proposes revising section 673.11(a)(6) to add paragraph (iii) requiring rail transit agencies to include or incorporate by reference in their ASPs the policies and procedures to provide access to facilities and required data regarding the SSOA's risk-based inspection programs. This proposal relates to Bipartisan Infrastructure Law requirements regarding SSOA risk-based inspection programs at 49 U.S.C. 5329(k).

FTA proposes adding section 673.11(a)(7) to require large urbanized area providers to include in their ASP a safety risk reduction program that meets the requirements of section 673.20. Agencies may choose to document safety risk reduction program elements in the Safety Risk Management and Safety Assurance sections of their ASP.

FTA is not proposing any changes to 673.11(d), which requires a State to draft and certify an ASP for a small public transportation provider that is located in that State. However, FTA wants to make clear that a small public transportation provider may also be a large urbanized area provider and thus required to have an ASP with the attendant provisions, such as a Safety Committee and risk reduction program. FTA proposes striking the current language at section 673.11(e) to remove reference to the “System Safety Program Plan” under part 659. The requirement to have a System Safety Program Plan has been replaced by the requirement to have an ASP, and FTA rescinded part 659 on February 7, 2022 (87 FR 6783). In response to this change, FTA would redesignate existing paragraph (f) as paragraph (e). In the new section 673.11(e), FTA proposes minor wording changes for clarity.

This section sets forth certification requirements. FTA proposes revising section 673.13(a) to remove an outdated initial certification deadline and to clarify FTA's existing practice that a direct recipient or State's initial PTASP certification must occur by the start of operations. In addition, FTA proposes to revise section 673.13 to clarify that only direct recipients and States must certify compliance with part 673. This is not a change to FTA's current practice. FTA notes for clarity that subrecipients are not required to certify compliance with PTASP; direct recipients certify on behalf of their subrecipients.

In a new section 673.17, FTA proposes requirements for transit agency cooperation with frontline transit worker representatives, as required by the Bipartisan Infrastructure Law. In section 673.17(a), FTA would incorporate the statutory requirement that a large urbanized area provider must establish a Safety Committee. Section 673.17(b) incorporates the statutory requirement that a transit agency that is not a large urbanized area provider must develop its ASP in cooperation with frontline transit worker representatives, as required by the Bipartisan Infrastructure Law. In this section, FTA also proposes that such providers must include or incorporate by reference in the ASP a description of how frontline transit worker representatives cooperate in the development and update of the ASP.

FTA proposes creating a new subpart C, “Safety Committee and Safety Risk Reduction Program” that incorporates Bipartisan Infrastructure Law requirements for Safety Committees and Safety Risk Reduction Programs.

The Bipartisan Infrastructure Law requires that transit agencies serving a large urbanized area establish a Safety Committee that meets certain requirements. FTA proposes a new section 673.19(a) in response to the statutory requirement that the Safety Committee be convened by a joint-labor management process and adds a requirement that the Safety Committee be appropriately scaled to the size, scope, and complexity of the transit agency.

In section 673.19(b), FTA incorporates the statutory requirement that the Safety Committee consist of an equal number of frontline transit worker representatives and management representatives. FTA notes that there must be an equal number of frontline transit worker representative and management representative voting members on the Safety Committee. However, this requirement does not prohibit designation of additional non-voting participants, such as management representative alternates who may serve in a voting capacity in the event of a management representative voting member absence, or frontline transit worker representative alternates who may serve in a voting capacity in the event of a frontline transit worker representative voting member absence. FTA also proposes a requirement that the Safety Committee include frontline transit worker representatives from major transit service functions to the extent practicable.

The Bipartisan Infrastructure Law requires that the frontline transit worker representatives be selected by a labor organization representing the plurality of the frontline workforce. FTA incorporates this statutory requirement into section 673.19(b). FTA also proposes a requirement that the Safety Committee include frontline transit worker representatives from major transit service functions to the extent practicable. FTA also proposes that if a transit agency's frontline transit workers are not represented by a labor organization, the transit agency must adopt a mechanism to ensure that frontline transit workers select frontline transit worker representatives for the Safety Committee. FTA is proposing this requirement to ensure that in situations where frontline transit workers are not represented by a labor organization, frontline transit workers select the frontline transit worker representatives.

FTA proposes section 673.19(c), which requires that certain policies and procedures about the composition, responsibilities, and operations of the Safety Committee be included or incorporated by reference in the ASP. One of these proposed policies and procedures addresses how the Safety Committee will manage disputes and tie votes to ensure it carries out its operations. Through outreach meetings with FTA, some stakeholders voiced concerns that Safety Committees could become deadlocked. This has the potential to delay the development or update of an agency's ASP and the operation of the agency's SMS. FTA finds this concern to be valid and therefore proposes that ASPs include policies or procedures to address this situation. Additional details about FTA's stakeholder outreach meetings can be found in the docket to this rulemaking.

FTA proposes section 673.19(d), which identifies statutorily required activities that the Safety Committee must take, including ASP review and approval, setting annual safety performance targets to support the safety risk reduction program, and support of SMS activities. The proposed activities of the Safety Committee implement requirements of the Bipartisan Infrastructure Law.

The Bipartisan Infrastructure Law requires recipients serving large urbanized areas to establish a safety risk reduction program for transit operations to improve safety by reducing the number and rates of accidents, injuries, and assaults on transit workers based on data submitted to the NTD, including: (1) a reduction of vehicular and pedestrian accidents involving buses, including measures to reduce visibility impairments for bus operators that contribute to accidents; and (2) the mitigation of assaults on transit workers, including the deployment of assault mitigation infrastructure and technology on buses. Section 5329(d)(1)(I) describes specific mitigations for reducing safety events, including retrofits to buses in revenue service and specifications for future procurements that reduce visibility impairments, and barriers to restrict the unwanted entry of individuals and objects into the workstations of bus operators.

To incorporate this requirement, FTA proposes a new section 673.20(a), which requires large urbanized area providers to establish a safety risk reduction program that includes the two statutory areas discussed above. FTA proposes that a key element of this program would be the consideration of safety risk mitigations consistent with proposed sections 673.20(a)(2) through (a)(4).

In these sections, FTA proposes that when carrying out the Safety Risk Management (SRM) process for risk relating to vehicular and pedestrian safety events involving transit vehicles, and for risk relating to assaults on transit workers, a large urbanized area provider must consider specific mitigations. These safety risk mitigations are based on the mitigations listed in 49 U.S.C. 5329(d)(1)(I) described above. However, section 673.20(a)(2) would require consideration of operator visibility impairment mitigations for any type of transit vehicles, not just buses. Similarly, section 673.20(a)(3) would require consideration of assault mitigation infrastructure and technology in any type of transit vehicle and in transit facilities, not just buses. FTA believes that tying the safety risk reduction program to transit agencies' existing Safety Risk Management (SRM) process will support and reinforce consistent application of SMS practices for all safety risk mitigation, including for the two statutory areas identified in section 5329(d)(1)(I).

FTA is proposing this requirement pursuant to 49 U.S.C. 5329(d)(1)(I) and 49 U.S.C. 5329(d)(1)(C) and (D). In using the word “including” when describing the risk reduction program, 49 U.S.C. 5329(d)(1)(I)(i) and (ii) outline a non-exclusive list of program elements. FTA therefore believes that requiring consideration of additional mitigations in the risk reduction program is appropriate. In addition, 49 U.S.C. 5329(d)(1)(C) and (D) require that each agency's ASP include “methods for identifying and evaluating safety risks throughout all elements of the public transportation system,” and “strategies to minimize the exposure of the public, personnel, and property to hazards and unsafe conditions,” respectively. As described in FTA's 2018 PTASP final rule, “[e]ach of these requirements is consistent with the second component of SMS—Safety Risk Management.” (83 FR 34418, at 34453). The proposed requirement to consider specific mitigations through the SRM process would enable agencies to evaluate visibility impairment and transit worker assault safety risks more effectively, and would enable them to minimize the exposure of the public, personnel, and property to related hazards and unsafe conditions. FTA believes that this requirement will lead to improved safety performance at all applicable transit agencies.

To incorporate the statutorily required role of the Safety Committee, FTA proposes section 673.20(a)(4). Pursuant to this section, when a Safety Committee performs a safety risk analysis, determines that particular safety risk mitigations would reduce assaults on transit workers and injuries to transit workers, and recommends such mitigations to the Accountable Executive, the transit agency must implement one or more of these recommended mitigations. Consistent with existing PTASP regulation requirements, the Accountable Executive retains direction over the human and capital resources needed to develop and maintain the ASP and has ultimate accountability for the agency's safety performance. Accordingly, if in exercising this responsibility the Accountable Executive determines that safety risk mitigations recommended by the Safety Committee are not feasible or effective in improving the agency's overall safety performance, it may decline to implement such mitigation. The Accountable Executive should document such decisions consistent with the recordkeeping requirements of section 673.31.

The Bipartisan Infrastructure Law requires that the Safety Committees of recipients serving large urbanized areas establish performance targets for the safety risk reduction program using a 3-year rolling average of data submitted by the recipient to the NTD. FTA proposes to incorporate those requirements into section 673.20(b) and proposes that these targets must be set on an annual basis. These targets will be based on performance measures and standards that FTA will propose in a separate action, the National Public Transportation Safety Plan, which is to be published for public comment at a later date. As required by the Bipartisan Infrastructure Law, these performance measures for a safety risk reduction program must be included in the National Public Transportation Safety Plan (49 U.S.C. 5329(b)(2)(A)). Once those performance measures are established in the National Public Transportation Safety Plan, transit agencies will use these measures to set targets for the safety risk reduction program, as required by 49 U.S.C. 5329(d).

Some large urbanized area providers that qualify as Reduced Reporters for NTD reporting purposes may not currently report detailed safety event information to the NTD. FTA is considering revisions to NTD safety data forms to support more granular data collection from these transit agencies. However, these revisions have not gone into effect yet. Accordingly, for purposes of annual safety performance target setting for the safety risk reduction program, FTA is proposing to require that the Safety Committees of large urbanized area providers set these targets only based on the level of detail the transit agency is required to report to the NTD. If a transit agency has not been required to report three years of data to the NTD relating to a performance measure yet, the Safety Committee would not set a risk reduction performance target for that specific measure yet. Target setting for the performance measure would begin once the transit agency has been required to report three years of data to the NTD corresponding to the performance measure.

FTA is not proposing to require that a defined amount of annual reduction be reflected in the safety risk reduction program performance targets. FTA believes that Safety Committees should have flexibility regarding the amount of annual reduction defined by their targets, as long as the methodology uses a three-year rolling average of data reported to the NTD and the targets reflect an annual reduction.

FTA also proposes section 673.20(d), which leverages the continuous improvement processes established under section 673.27(d) to require that transit agencies monitor their safety performance against the annual safety performance targets the Safety Committee sets for the safety risk reduction program.

Section 673.20(e) incorporates Bipartisan Infrastructure Law requirements addressing failure to meet an annual safety performance target set under the safety risk reduction program. This includes the requirement that if a large urbanized area provider does not meet one of the safety risk reduction performance targets, it must allocate at least 0.75% of its section 5307 funds in the following fiscal year to safety-related projects eligible under section 5307 that are reasonably likely to assist the agency in meeting the target in the future. FTA proposes that large urbanized area providers that do not meet an established target assess the associated safety risk using the methods or processes established under section 673.25(c) and mitigate associated safety risk based on the results of the safety risk assessment.

FTA proposes redesignating existing subpart C as subpart D, Safety Management Systems.

In section 673.23(a), FTA proposes adding a requirement for the transit agency's Safety Management Policy to include a description of the transit agency's Safety Committee or approach to cooperation with frontline transit worker representatives, as applicable. This ensures the policy describes the coordination with frontline transit workers required under the Bipartisan Infrastructure Law.

Section 673.23(b) currently requires agencies to establish and implement a safety reporting process. FTA proposes two changes to this paragraph. First, FTA proposes to replace the words “safety conditions” with “safety concerns,” and to add a few examples of safety concerns. This change describes the reporting process requirement more accurately. Second, with respect to required protections for transit workers who report, FTA also proposes to delete the words “safety conditions to senior management.” This wording is duplicative of information already conveyed in the paragraph. This is a minor change that does not alter any existing requirements.

In section 673.23(d)(1), FTA proposes adding a requirement for the Accountable Executive to receive and consider safety risk mitigation recommendations of the Safety Committee. This additional Accountable Executive responsibility ensures that the Safety Committee has a meaningful voice in safety-related decision-making. Further, in section 673.23(d)(3), FTA proposes to require that large urbanized area providers establish the necessary authorities, accountabilities, and responsibilities for the management of safety for the Safety Committee. In section 673.23(d)(5), FTA proposes adding the Safety Committee to the list of groups which the transit agency may designate as key staff in developing, implementing, and operating the transit agency's SMS. This addition relates to Bipartisan Infrastructure Law Safety Committee requirements and requires large urbanized area providers to address new Safety Committee requirements through the Safety Management Policy component of their SMS.

FTA proposes amending section 673.25(b)(2) to clarify existing requirements for transit agencies to consider certain data and information as a source for hazard identification. In addition, the Bipartisan Infrastructure Law requires ASPs to address minimizing exposure to infectious diseases, consistent with guidelines from the CDC or a State health authority. In response to this statutory requirement, FTA proposes also amending section 673.25(b)(2) to require transit agencies to consider data and information from the CDC or a State health authority regarding exposure to infectious disease as a source for hazard identification. FTA also proposes that transit agencies consider safety concerns identified through the transit agency's Safety Assurance activities. FTA proposes this change to establish the link more clearly between Safety Risk Management and Safety Assurance activities.

In section 673.25(c)(2), FTA proposes wording changes to clarify the application of existing safety risk assessment requirements and the connection between safety risk assessment and safety risk mitigation. One of these changes clarifies that safety risk assessments should ultimately inform the prioritization of safety risk mitigation activity rather than simply the prioritization of identified hazards. This change is intended to clarify FTA's original intent that safety risk assessment activity informs the prioritization of safety resources to mitigate safety risk.

In section 673.25(d)(1), FTA proposes minor wording changes consistent with the changes proposed in section 673.5. FTA also proposes that the safety risk management process of large urbanized area providers must address the role of the agency's Safety Committee. This ensures that the SMS of these providers incorporates the Safety Committee's statutorily required responsibilities relating to safety risk management.

FTA proposes adding section 673.25(d)(2), which would require transit agencies to consider guidance provided by an oversight authority, if applicable, and FTA as a source for safety risk mitigation. In response to Bipartisan Infrastructure Law requirements, this paragraph would also require agencies to consider CDC or State health authority guidelines to prevent or control exposure to infectious diseases.

FTA proposes amending the continuous improvement requirement in section 673.27(d)(1) to specify that a transit agency must establish a process to assess its safety performance annually. FTA proposes that the process include identifying deficiencies in the transit agency's SMS and in the agency's safety performance against its safety performance targets, including safety performance targets required for all transit agencies at section 673.11(a)(3) and safety performance targets set by the Safety Committees of large urbanized area providers for the safety risk reduction program as required at section 673.20(b). This updated requirement clarifies FTA's intent for the frequency and substance of this performance assessment, and addresses industry concerns that the regulation did not specify a timeline for assessing safety performance. For large urbanized area providers, FTA also proposes that the continuous improvement process must address the role of the transit agency's Safety Committee. This ensures that the SMS of these providers incorporates the Safety Committee's statutorily required responsibilities relating to continuous improvement.

FTA further proposes to require that rail transit agencies must address internal safety review requirements established by SSOAs as part of the continuous improvement element of Safety Assurance. FTA proposes minor wording changes in section 673.25(d)(2) for clarity.

In section 673.27(a), FTA proposes to extend the continuous improvement requirements to small public transportation providers. In the current regulation, small public transportation providers are exempt from this requirement. This change is responsive to the Bipartisan Infrastructure Law, which requires large urbanized area providers to establish a Safety Committee and a safety risk reduction program that involves key elements of continuous improvement, such as safety performance target setting, safety performance monitoring, and the identification of safety deficiencies and safety performance issues. Certain small public transportation providers meet the definition of large urbanized area provider and are therefore subject to these statutory requirements. Additionally, under the existing rule, all small public transportation providers already are required to set safety performance targets based on the safety performance measures established in the NSP. FTA does not believe that the continuous improvement requirements will be burdensome for small public transportation providers. Based on the experience that these providers have gained by operating an SMS and carrying out required safety performance measurement activities, FTA expects they will be able to formalize these continuous improvement activities and document them in their ASP.

In addition, FTA proposes a change to the safety performance monitoring and measurement requirements in section 673.27(b). FTA proposes that for large urbanized area providers, these activities must address the role of the agency's Safety Committee. This ensures that the SMS of these providers incorporates the Safety Committee's statutorily required responsibilities relating to safety performance monitoring and measurement.

Pursuant to 49 U.S.C. 5329(d)(1)(H), each agency's ASP must include a comprehensive staff training program. The Bipartisan Infrastructure Law amended this provision to require that large urbanized area providers include maintenance workers and de-escalation training in their training programs.

To incorporate the de-escalation training requirement, FTA proposes adding language to section 673.29(a) that would require transit agencies to include de-escalation training in their comprehensive safety training program. This requirement would apply to all agencies, not just large urbanized area providers. FTA is proposing this requirement pursuant to 49 U.S.C. 5329(d)(1)(H)(i). In using the word “including” when describing the comprehensive safety training program, 49 U.S.C. 5329(d)(1)(H)(i) outlines a nonexclusive list of program elements. FTA therefore believes that requiring de-escalation training for operations personnel and personnel directly responsible for safety at all transit agencies is appropriate. FTA believes this is appropriate and necessary to enhance the safety outcomes for all transit workers and users of transportation, not just those in large urbanized areas.

FTA also proposes that the training program must include training on safety concern identification and reporting. This training requirement would address a common industry need for greater understanding of how to report safety concerns through safety reporting programs.

This section would also incorporate the statutory requirement that large urbanized area providers must include maintenance workers in their training programs in new section 673.29(a)(2).

In section 673.29(b), FTA proposes to require transit agencies to integrate the results of cooperation with frontline transit worker representatives and joint labor-management Safety Committee activities into their safety communication activities. FTA proposes this modified requirement to address the communication impacts resulting from the new requirements for cooperation with frontline transit worker representatives and joint labor-management Safety Committee activities and to make sure that the results of these activities are communicated throughout the organization.

FTA proposes establishing a new subpart E for Safety Plan Documentation and Recordkeeping.

FTA proposes a minor edit to the safety plan documentation requirements in section 673.31 to clarify that a transit agency must make documents available upon request by a State having jurisdiction.

Executive Order 12866 (“Regulatory Planning and Review”), as supplemented by Executive Order 13563 (“Improving Regulation and Regulatory Review”), directs Federal agencies to assess the benefits and costs of regulations, to select regulatory approaches that maximize net benefits when possible, and to consider economic, environmental, and distributional effects. It also directs the Office of Management and Budget (OMB) to review significant regulatory actions, including regulations with annual economic effects of $100 million or more. OMB has determined that the proposed rule is not significant within the meaning of Executive Order 12866 and has not reviewed it under that order.

The proposed rule, which implements amendments made by the Bipartisan Infrastructure Law, would add requirements for transit agencies subject to the existing regulation for Public Transportation Agency Safety Plans. The applicable agencies include all rail transit agencies and all transit agencies receiving section 5307 funding. Agencies would need to incorporate de-escalation training into their safety training programs and would need to incorporate guidelines for infectious disease exposure into their safety management system processes. In addition, small public transportation providers would need to establish continuous improvement processes to assess safety performance; current regulation requires transit providers to establish processes but exempts small providers.

The proposed rule would also create requirements for transit agencies based on the urbanized areas they serve. Agencies serving urbanized areas with 200,000 or more people would need to establish safety committees, safety risk reduction programs with safety performance targets, and include maintenance workers in their safety training programs. The agencies would need to allocate at least 0.75 percent of their section 5307 funding to eligible safety projects. If an agency did not meet a safety performance target, it would need to allocate its set-aside funding to projects that are reasonably likely assist the agency in meeting the target. Agencies serving urbanized areas with fewer than 200,000 people would need to develop their agency safety plans in cooperation with frontline transit worker representatives.

The proposed rule would reduce the risk of fatalities and injuries for transit workers, bus passengers, drivers, and pedestrians if transit agencies adopt safety risk mitigations that they would not have adopted under current agency safety plans or spending levels. FTA expects that agencies would be more likely to adopt mitigations to reduce the risk of bus collisions and transit worker assault. Example mitigations include bus sensors and surveillance systems to detect objects and pedestrians, or bus operator barriers to protect drivers. At the same time, some mitigations like de-escalation training for transit operators have already been widely adopted. FTA currently does not have information to determine what additional mitigations agencies would adopt due to the proposed rule and has therefore not estimated the associated benefits.

FTA seeks information from commenters to estimate the benefits of the proposed rule. What safety interventions would agencies be more likely to adopt as a result of developing risk reduction programs or explicitly considering bus collisions and transit worker assaults?

Transit agencies may incur economic costs to adopt safety interventions if the proposed rule leads to changes in safety plans or spending levels. While the proposed rule would require agencies to allocate at least 0.75 percent of section 5307 funds to eligible safety projects, the resulting changes in spending are unknown for two reasons. First, FTA does not have information to estimate the risk reduction targets agencies would set or the likelihood that agencies would not meet the targets. Second, if an agency spends more of its section 5307 funding on safety interventions but can offset the increased spending by spending less of its state and local funding, then total spending may increase by a smaller amount or even remain unchanged.

Transit agencies would also incur costs to meet the new administrative and reporting requirements. To estimate the costs, FTA subject-matter experts estimated the number of transit agencies affected, the number and type of staff involved, and the time needed (Table 1). FTA determined that the requirements would affect 428 agencies in large urbanized areas and 280 agencies in small urbanized areas. Within an agency, safety managers, operations managers, and frontline worker representatives would spend the most time to meet the requirements each year. FTA then used the estimates to calculate costs for the first ten years of the rule from 2023—the assumed effective date of the rule—to 2032.

The estimates in Table 1 account for current transit agency practices. For de-escalation training, almost all agencies established programs after the Transportation Security Administration issued a security directive in January 2021 requiring mask use on public transportation. 2 The directive, which is no longer in effect as of April 2022, 3 required agencies to brief employees responsible for enforcing the directive. Agencies established de-escalation training programs as part of their briefings, and FTA developed free online training resources allowing frontline employees to complete training by themselves. 4 For agency safety plans, FTA has the understanding that most agencies already involve frontline worker representatives; for that reason, the estimated hours and staff for frontline worker involvement only cover new reporting requirements.

Some agencies also began meeting requirements after FTA issued a Dear Colleague letter in February 2022 describing statutory changes in the Bipartisan Infrastructure Law. 5 In that case, however, FTA keeps the agencies in its cost analysis because agencies would not have incorporated the requirements without the Congressional mandate.

To estimate the value of staff time spent on the requirements, FTA used occupational wage data from the Bureau of Labor Statistics as of May 2021 (Table 2). 6 FTA used median hourly wages for workers in the Transit and Ground Passenger Transportation industry (North American Industry Classification System code 485000) as a basis for the estimates, multiplied by 1.62 to account for employer benefits. 7

The administrative and reporting requirements of the proposed rule have estimated costs of $2.4 million in the first year in 2021 dollars and annual costs of $4.9 million in later years (Table 3). The largest annual costs are for de-escalation training ($2.2 million) and the safety committees ($2.1 million).

Table 4 summarizes the economic effects of the proposed rule over the ten-year analysis period. The rule would have total costs of $46.8 million in 2021 dollars and annualized costs of $3.3 million at a 7 percent discount rate (discounted to 2023) and $3.9 million at 3 percent. To quantify benefits and assess net benefits, FTA would need information on the safety interventions transit agencies would adopt.

Background

The monkfish fishery is jointly managed under the Monkfish Fishery Management Plan (FMP) by the New England and the Mid-Atlantic Fishery Management Councils. The fishery extends from Maine to North Carolina from the coast out to the end of the continental shelf. The Councils manage the fishery as two management units, with the Northern Fishery Management Area (NFMA) covering the Gulf of Maine and northern part of Georges Bank, and the Southern Fishery Management Area (SFMA) extending from the southern flank of Georges Bank through Southern New England and into the Mid-Atlantic Bight to North Carolina.

The monkfish fishery is primarily managed by landing limits and a yearly allocation of monkfish days-at-sea (DAS) calculated to enable vessels participating in the fishery to catch, but not exceed, the target total allowable landings (TAL) and the annual catch target (ACT), which is the TAL plus an estimate of expected discards, for each management area.

We are proposing to adjust the NFMA and SFMA quotas for fishing years 2023 through 2025 (Table 1), based on the Councils' recommendations.

On October 26, 2022, the New England Council's Scientific and Statistical Committee (SSC) recommended acceptable biological catch (ABC) levels in the NFMA and SFMA for fishing years 2023-2025 based on the I-smooth method applied during the 2022 Monkfish Management Track Assessment. The I-smooth method is a model-free method for developing catch advice that applies a trawl-survey derived multiplier to recent 3-year catch, and was selected for use for monkfish in the absence of an analytic model for either stock. At its December 2022 meeting, the New England Council delayed final action on Framework 13 and remanded the ABC recommendations back to the SSC for further consideration. Specifically, the New England Council requested that the SSC consider setting ABCs for the FY 2023-2025 as the average of the I-smooth approach and a modified I-smooth that applies the trawl survey multipliers to the recent ABCs as an alternative method for determining catch advice. The Mid-Atlantic Council concurred with the New England Council's delay and remand during its December 2022 meeting. On January 20, 2023, the SSC met, considered the New England Council requested method for determining catch advice, and made an updated ABC recommendation. On January 25, 2023, The New England Council approved the updated specifications for 2023-2025, and the Mid-Atlantic Council did the same on February 7, 2023. The Councils' recommendations are based on the results of the 2022 assessment update and the January 20, 2023, recommendations of the New England Council's SSC.

The Council recommended specifications include a 25-percent decrease in the ABC and annual catch limit (ACL) in the NFMA and a 52-percent decrease in the ABC and ACL in the SFMA, when compared to the 2020-2022 specifications. Discards, calculated using the median of the most recent 10 years of data, decreased in both areas, but more significantly in the SFMA. After accounting for discards, the Councils recommend a 20-percent decrease in the TAL for the NFMA and a 41-percent decrease in the TAL for the SFMA. Despite these changes, both Councils recommend no adjustments to day-at-sea allocations or landing limits.

At the end of each fishing year, we evaluate catch information and determine if the quota has been exceeded. The regulations at 50 CFR 648.96(d) require the Councils to revise the monkfish ACT if it is determined that the annual catch limit was exceeded in any given year, or for NMFS to revise the monkfish ACT if the Councils fail to take action. We would publish a notice in the Federal Register of any revisions to these proposed specifications if an overage occurs. We expect, based on preliminary 2022 year-end accounting, that no adjustment is necessary for fishing year 2023. We will provide notice of the 2024 and 2025 quotas prior to the start of each respective fishing year.

Under current regulations, each vessel possessing a limited access monkfish permit is annually allocated a total of 46 DAS, of which up to 37 may be used in the SFMA. This total allocation is reduced by an amount necessary to reserve 500 DAS from the entire fishery for the Monkfish Research Set-Aside (RSA) Program reach year. In addition, vessels may carryover up to 4 unused DAS from one fishing year to the next. The amount of DAS ultimately available to a vessel for a given fishing year is the sum of the initial allocation, plus any eligible DAS carried over and less the annual RSA deduction.

To ensure that the fishery is able to meet, but not exceed, the new TALs proposed for 2023-2025, both Councils recommended that Framework 13 include a set of changes to the yearly DAS allocation. First, the initial allocation of DAS that could previously be used in any area would be split into separate DAS allocations for each of the NFMA and SFMA. The Councils recommended that each limited access vessel be allocated 35 DAS for the NFMA and 37 DAS for the SFMA. Second, the 37 DAS restriction for the SFMA would be removed and replaced with a new limit that would restrict vessels from using more than 46 allocated DAS total during each fishing year. Finally, the annual deduction of RSA DAS from each limited access vessel's DAS allocation would be applied proportionally to the separate DAS allocations for the NFMA and SFMA. The DAS carryover provisions would not be changed by this action; vessels would be eligible for up to 4 carryover DAS in each fishing year that would not count against the allocation limits in either area or the general allocated DAS usage restriction.

To reduce bycatch of small monkfish, both Councils recommended an increase in the minimum gillnet mesh size for vessels on a monkfish DAS or fishing in the Gulf of Maine/Georges Bank Dogfish and Monkfish Gillnet Fishery Exemption from 10 inches (25.4 cm) to 12 inches (30.5 cm) diamond mesh. This change would go into effect at the beginning of May 1, 2026. The additional time would allow any affected vessels not already using the larger mesh size time to make the transition as part of the normal operation and replacement of worn nets. We expect that the delayed implementation will reduce the overall cost of this measure to industry.

Using our authority under section 305(d) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), we are clarifying the regulation at § 648.92(b)(2)(iii)(B) that describes the interaction between the Northeast (NE) multispecies DAS leasing program at § 648.82(k) and monkfish DAS balances for category C, D, F, G, or H vessels that choose to lease NE multispecies DAS.

When a category C, D, F, G, or H vessel leases NE multispecies DAS to another vessel(s), a certain number of monkfish DAS owned by the lessor vessel become unavailable for use. The current regulatory text does not clearly explain the method used to determine the number of monkfish DAS owned by the lessor vessel that may become unavailable in such transactions. In addition, the current numerical example does not match preceding written examples, and may be confusing.

The proposed changes to § 648.92(b)(2)(iii)(B) are intended to more clearly describe the interaction between the NE multispecies DAS leasing program and monkfish DAS balances for category C, D, F, G, or H vessels that choose to lease NE multispecies DAS. The proposed changes do not substantively change the way in which monkfish DAS balances are affected by leases of NE multispecies DAS.

NMFS is issuing this rule pursuant to sections 304(b)(1)(A) and 305(d) of the Magnuson-Stevens Fishery Conservation and Management Act, which provide specific authority for implementing this action. Section 304(b)(1)(A) authorizes NMFS to initiate an evaluation of proposed regulations to determine whether they are consistent with the fishery management plan, plan amendment, the Magnuson-Stevens Act and other applicable law, and if that determination is affirmative, publish the regulations in the Federal Register for public comment.

Additionally, this rule contains a regulatory correction being issued pursuant to MSA section 305(d) that is necessary to carry out the Monkfish FMP. The correction is necessary to carry out the Monkfish FMP because it clarifies regulations describing how monkfish DAS are managed in relation to the Northeast multispecies DAS leasing program. A clear description of this process is necessary for the public and industry to understand it and make decisions regarding to management of DAS. Though this correction is being included in this proposed rule to implement Framework 13, it is not part of Framework 13 as approved by the Councils. The lack of clarity in the current regulatory text was discovered after the approval of Framework 13 by the Councils, and could not be included. Making this correction pursuant to 305(d) authority allows for the correction to be implemented more quickly than otherwise possible. Though the correction is consistent with the FMP and review was not necessary, the Council did receive the opportunity to review and deem the change to the regulatory text necessary and appropriate.

The NMFS Assistant Administrator has determined that this proposed rule is consistent with the Monkfish FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

NMFS finds that a 15-day comment period for this action provides a reasonable opportunity for public participation in this action, while also ensuring that the final specifications are in place as close to start of the monkfish fishing year on May 1, 2023, as possible. This action was jointly developed by the New England and Mid-Atlantic Fishery Management Councils as part of the annual Framework Adjustment process, during which final action by the Councils was expected in December 2022. However, the Council process was delayed in order to provide time for the New England Fishery Management Council's Scientific and Statistical Committee to re-evaluate its ABC recommendations for 2023 through 2025. This action could not be proposed sooner as a result of the delay in this process. Stakeholder and industry groups have been involved with the development of this action and have participated in public meetings throughout the past year. A prolonged comment period and subsequent potential delay in implementation would be contrary to the public interest, as it would extend the amount of time in which no specifications are in place for fishing year 2023, rather than replacing them with the quotas proposed in this rule, which are based on the best available science. The fishery may continue to operate under current DAS and trip limit regulations without specifications in fishing year 2023, but an extended delay could lead to confusion.

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

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) that this action, if adopted, would not have a significant economic effect on a substantial number of small entities.

As outlined in the preamble of this rule, the purpose of this action is to implement Framework 13 to the Monkfish FMP. Framework 13 would set monkfish specifications for fishing years 2023-2025, make changes to the yearly allocation of DAS to vessels issued limited access monkfish permits, and increase the minimum mesh size for gillnet vessels from 10 to 12 inches. The specifications in this rule include a TAL for the NFMA in fishing years 2023 through 2025 that is 20 percent lower the TAL in fishing years 2020 through 2022 and a TAL for the SFMA in fishing years 2023 through 2025 that is 41 percent lower than the TAL in fishing years 2020 through 2022. This framework is needed to establish allowable monkfish harvest levels that will prevent overfishing.

We issued 492 limited access monkfish permits and 1,198 open access monkfish permits as of June 1, 2022, for a total of 1,692 permits potentially regulated by this action. Each vessel may be individually owned or part of a larger corporate ownership structure, and for RFA purposes, it is the ownership entity that is ultimately regulated by the proposed action. The current ownership data set is based on calendar year 2021 permits and contains gross sales associated with those permits for calendar years 2019 through 2021. Ownership data collected from permit holders indicate there are 1,207 distinct business entities that held at least one permit that could be directly regulated by this proposed action in 2021. Of these 1,207 entities, 804 are commercial fishing entities, and 137 are for-hire entities.

For the purposes of the Regulatory Flexibility Act, we define a small business in the commercial harvesting sector as a firm with receipts (gross revenues) of up to $11 million for commercial fishing businesses. Of the 804 commercial fishing entities, 793 are categorized as small entities and 11 are categorized as large entities, per the NOAA Fisheries guidelines. All 137 for-hire entities are categorized as small businesses. In 2021, 266 of the 1,207 entities had zero monkfish revenue.

This action is expected to have minimal economic impacts on both large and small entities. Although the proposed action would set TALs lower than what was in place in fishing year 2021, actual landings in that year were far less than the TALs proposed in this action. Because we expect landings to remain constant relative to fishing year 2021, we expect TAL reductions to pose no cost on the fleet relative to 2021 activity. Additionally, the proposed DAS allocation changes are expected to constrain only four vessels based on previous fishing activity; the vast majority of small firms are not impacted by the proposed DAS allocation change. Finally, the increased mesh size regulations do not become effective until 2026 (after the final year of the specifications in this action) and are estimated to impact eight vessels. The delay in implementation allows affected vessels to replace their nets as they become worn out as part of regular net replacement. This cost thus would not be directly tied to the proposed mesh size regulation, but instead is a regular fishing operation cost.

This action is not expected to have a significant impact on a substantial number of small entities. Nearly all monkfish entities (99 percent) are considered small entities. Regulated small entities identified in this analysis are expected to experience no impacts. No impacts are expected to the 12 regulated large entities, as they have little dependence on monkfish revenue. Small entities would not be placed at a competitive disadvantage relative to large entities, and the regulations would not reduce the profit for any small entities. As a result, an initial regulatory flexibility analysis is not required and none has been prepared.

For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 648 as follows: