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Agricultural Marketing Service, USDA.
Affirmation of interim final rule as final rule.
This final rule adopts, without change, an interim final rule that temporarily changes the substandard and maturity dockage requirements for raisins covered under the Federal marketing order for raisins produced from grapes grown in California (Order). For the 2023-2024 crop year, the minimum requirements for substandard and maturity dockage in the marketing order's handling regulations are relaxed to accommodate raisins adversely impacted by severe weather conditions.
Effective July 25, 2024.
Jeremy Sasselli, Marketing Specialist, or Barry Broadbent, Branch Chief, West Region Branch, Market Development Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 487-5901 or Email:
Small businesses may request information on complying with this regulation by contacting Richard Lower, Assistant to the Director, Market Development Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-8085, or Email:
This action, pursuant to 5 U.S.C. 553, temporarily amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This final rule is issued under Marketing Agreement and Order No. 989, both as amended (7 CFR part 989), hereinafter referred to as the “Order,” and the applicable provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Raisin Administrative Committee (Committee) locally administers the Order and is comprised of growers and handlers of raisins operating within the area of production, and a public member.
The Agricultural Marketing Service (AMS) is issuing this final rule in conformance with Executive Orders 12866, 13563, and 14094. Executive Orders 12866, 13563, and 14094 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 reaffirms, supplements, and updates Executive Order 12866 and further directs agencies to solicit and consider input from a wide range of affected and interested parties through a variety of means. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review.
This final rule has been reviewed under Executive Order 13175—Consultation and Coordination with Indian Tribal Governments, which requires agencies to consider whether their rulemaking actions would have Tribal implications. AMS has determined that this rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.
This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a retroactive effect.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with the United States Department of Agriculture (USDA) a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed no later than 20 days after the date of the entry of the ruling.
This final rule affirming the interim final rule temporarily relaxes the substandard and maturity dockage minimum requirements for incoming raisins covered under the Order for the 2023-2024 crop year. Section 989.58 requires natural condition raisins that do not meet the minimum requirements must be returned by handlers to producers, reconditioned by handlers at the producers' expense, or disposed of in a non-normal outlet such as animal feed at a much-reduced producer price. Provided, however, handlers may acquire natural condition raisins which exceed the tolerance established for maturity under a weight dockage system. Under the Order, handlers acquire raisins from producers under a weight dockage system and adjust the creditable fruit weight acquired according to the percentage of substandard raisins in the lot and/or the percentage of raisins that fall below certain levels of maturity in the lot. Handler payments to producers, and the payment of handler assessments, are based on the creditable weight of raisins acquired by handlers. Due to unusual crop conditions created by extreme weather events which adversely affected the growing conditions of California raisin grape vines, producers and handlers in the industry are seeing a relatively high percentage of the 2023-2024 crop year deliveries of raisins fall outside the minimum requirements of the substandard and maturity dockage
Prior to the 2022-2023 winter, the raisin-growing region in California suffered multiple years of extreme drought, which had long-term detrimental effects on California grape vineyards. Further, over the course of the 2022-2023 winter, temperatures across California were colder than average, rainfall in the San Joaquin Valley exceeded normal levels, and snowfall in the Sierra Nevada greatly exceeded normal levels, leading to one of the largest snowpacks on record. Additionally, in 2023 a series of intense storms brought rain onto the record snowpack, causing rapid snowmelt which had disastrous flooding effects in parts of the San Joaquin Valley, including the historic filling of the Tulare Lake Basin. However, the full effect of such severe weather conditions on raisin grape production only became apparent to producers when dehydrators began their grape dehydrating activities in mid to late August 2023.
During its October 5, 2023, meeting, the Committee determined that rain and cold temperatures into late spring and early summer delayed crop maturity and that record rain and snowmelt created exceptionally high humidity levels throughout the production area, causing some bunch rot and mildew issues. In addition, hurricane Hillary perpetuated these conditions at the end of August 2023 by bringing unseasonal and substantial rainfall throughout the raisin growing region. The crop was also late by at least three weeks, and temperatures in September and into October were below average, which extended the raisin drying period and has delayed deliveries to handlers. Thus, raisins delivered to handlers by producers failed to meet the Order's minimum requirements. This was evident by incoming inspections reported to the Committee since the beginning of the 2023-2024 crop year (August 1) having shown an increase of approximately 160 percent in off-grade natural condition raisins over the average of the past 4 years (29.1 percent versus 11.2 percent). All other varieties of raisins have also shown a 155 percent increase in off-grade over the previous 4-year average (26.0 percent versus 10.2 percent). Relaxing the limits for the 2023-2024 crop year reduces the number of failing lots of raisins that must be returned by handlers to producers, reconditioned by handlers at the producers' expense, or disposed of through non-normal outlets. This final rule provides cost savings to producers by minimizing reconditioning and reinspection costs and avoid further delays affecting producer deliveries in the 2023-2024 crop year. The Committee unanimously recommended this action during its October 5, 2023, meeting.
Section 989.58(a) of the Order provides authority for the establishment of incoming grade, quality, and condition requirements for natural condition raisins that are delivered from producers to handlers. This section also contains authority for handlers to acquire natural condition raisins which fall outside the tolerance established for maturity, which includes substandard raisins, under a weight dockage system.
Section 989.701 of the Order establishes the minimum grade and condition standards for natural condition raisins. Product that does not meet those requirements is considered substandard. Handlers may acquire product that is determined to be substandard under a weight dockage system. The regulations delineating the Order's weight dockage system are contained in §§ 989.212 and 989.213. Under those provisions, handler acquisitions of raisins, and payments to producers for such raisins, are adjusted according to the percentage of substandard raisins in each lot and/or the percentage of raisins that fall below certain levels of maturity of each lot. Product that does not meet the minimum requirements under the weight dockage system is considered off-grade and must be returned to producers, reconditioned, or disposed of in an eligible non-normal market outlet that does not compete with standard raisins.
Section 989.701 of the Order's regulations specifies the minimum quality requirements for natural condition raisins. Lots of raisins may contain a maximum percentage, depending on varietal type, of substandard raisins (raisins that show development less than that characteristic of raisins prepared from fairly well-matured grapes). Specifically, lots of Natural (sun-dried) Seedless, Monukka, Other Seedless, Dipped Seedless, Oleate and Related Seedless, Other Seedless-Sulfured, and Golden Seedless raisins may contain no more than 5 percent, by weight, of substandard raisins. Lots of Muscat, Sultana, and Zante Currant raisins may contain no more than 12 percent, by weight, of substandard raisins.
Section 989.212 provides that handlers may acquire, under an agreement with a producer, raisins that fall outside the tolerance for substandard raisins specified in § 989.701. Specifically, handlers may acquire any lot of Natural (sun-dried) Seedless, Golden Seedless, Dipped Seedless, Monukka, Other Seedless, and Other Seedless—Sulfured raisins which contain from 5.1 through 17.0 percent, by weight, of substandard raisins under a weight dockage system. A handler may also acquire, subject to prior agreement, any lot of Muscat (including other raisins with seeds), Sultana, and Zante Currant raisins containing from 12.1 through 20.0 percent, by weight, of substandard raisins under a weight dockage system. The creditable weight of each lot of raisins acquired by handlers under the substandard dockage system is obtained by multiplying the applicable net weight of the lot of raisins by the applicable dockage factor from the tables in § 989.212. The dockage factor reduces the weight of the raisin lot by an amount approximating the weight of the raisins needed to be removed for the remainder of the lot to meet minimum grade requirements after processing and packing. The weight determined in this manner represents the creditable weight of the raisins which is used as a basis for applicable handler assessments and handler payments to producers for product received. However, those raisins failing to meet the established substandard tolerance levels (17.0 or 20.0 percent, depending on varietal type) must be returned to the producer or reconditioned by the handler (at the producer's expense) to bring the lot up to acceptable quality standards or disposed of in an eligible non-normal market outlet that does not compete with standard raisins.
Because of the adverse crop conditions described above, the industry producers and handlers are dealing with a relatively high percentage of the 2023 crop (marketed over the 2023-2024 crop year) that is falling outside the limits of the substandard dockage systems when delivered to handlers. Further, the Committee has reported that, to date, approximately 29.1 percent of natural
The Committee recommended that the allowable maximum percentage of substandard raisins in producer deliveries that can be acquired under the dockage system be increased, from 17.0 to 21.0 percent for Natural (sun-dried) Seedless, Golden Seedless, Dipped Seedless, Monukka, Other Seedless, and Other Seedless-Sulfured raisins, and from 20.0 to 25.0 percent for Muscat (including other raisins with seeds), Sultana, and Zante Currant raisins. Lots containing more than 21.0 or 25.0 percent, depending on varietal type, of substandard raisins are considered off-grade and require reconditioning before they can be acquired by handlers. This rule makes appropriate changes to § 989.212 to incorporate the Committee's recommendations. The changes apply for the 2023-2024 crop year only.
Increasing the percentage allowed for substandard raisins in incoming fruit is expected to reduce the number of failed lots of raisins returned by handlers to producers or reconditioned by handers at the producers' expense or disposed of in a non-normal outlet such as animal feed at a much-reduced producer price. Under the relaxation, handlers are able to acquire more lots of raisins upon first inspection and not experience the potential delay of waiting for failing lots to be reconditioned. The ability to acquire more raisins upon first inspection helps handlers better meet the needs of the market and save producers the cost of reconditioning and reinspecting failed fruit that would otherwise have passed incoming inspections and be received by handlers.
Section 989.701 of the Order's regulations specifies that lots of certain varietal types of natural condition raisins must contain a minimum percentage of raisins that are well-matured or reasonably well-matured. Specifically, lots of Natural (sun-dried) Seedless, Golden Seedless, Dipped Seedless, Monukka, Other Seedless, and Other Seedless-Sulfured raisins must contain at least 50 percent, by weight, of raisins that are well-matured or reasonably well-matured, or what is commonly referred to by the industry as the “B or better” maturity standard.
Section 989.213 provides that handlers may acquire, under an agreement with a producer, raisins falling outside the tolerance for maturity specified in § 989.701. Specifically, handlers may acquire any lot of Natural (sun-dried) Seedless, Golden Seedless, Dipped Seedless, Monukka, Other Seedless, Other Seedless-Sulfured raisins which contain from 35.0 to 49.9 percent, by weight, of well-matured or reasonably well matured raisins under a weight dockage system. The dockage system is applied similarly to the substandard dockage system previously described. The creditable weight of each lot of raisins acquired by handlers under the maturity dockage system is obtained by multiplying the applicable net weight of the lot of raisins by the applicable dockage factor in the tables in § 989.213. The dockage factor reduces the weight of the raisins needed to be removed for the remainder of the lot to meet minimum maturity requirements after processing and packing. The weight determined in this manner represents the creditable weight of the raisins which is used as a basis for payment of handler assessments and handler payments to producers for product received. Those raisins failing to meet the maturity tolerance level of 35.0 percent are returned to the producer or reconditioned by the handler (at the producer's expense) to bring the lot up to acceptable quality standards. If a lot of raisins is subject to both a maturity and substandard dockage factor, only the highest of the two dockage factors is applied, as stated in § 989.210(d).
In addition, the maturity dockage system is divided into three categories depending on the percentage of well-matured or reasonably well-matured raisins in the lot. The creditable fruit weight of raisins delivered by producers to handlers in the first category, which includes lots containing between 45.0 to 49.9 percent well-matured or reasonably well-matured raisins, is reduced .05 percent for each 0.1 percent the lot is below 50.0 percent down to 45.0 percent. The creditable fruit weight of raisins delivered by producers to handlers in the second category, which includes lots containing between 40.0 to 44.9 percent well-matured or reasonably well-matured raisins, is reduced 0.1 percent for each 0.1 percent the lot is below 44.9 percent down to 40.0 percent. The creditable fruit weight of raisins delivered by producers to handlers in the third category, which includes lots containing between 35.0 to 39.9 percent well-matured or reasonably well-matured raisins is reduced 0.15 percent for each 0.1 percent the lot is below 39.9 percent down to 35.0 percent. Applicable handler assessments and producer payments for product received are reduced accordingly. Because of the adverse crop conditions described above, the industry predicts that a relatively high percentage of the 2023 crop will fall below the 35.0 percent tolerance level for maturity when product is delivered to handlers. So far this crop year, approximately 29.1 percent of natural condition raisins have been off-grade and require reconditioning to enter the market. In addition, approximately 26.0 percent of all other varieties have been off-grade.
The Committee recommended that the minimum allowable level for maturity of raisins delivered by producers that can be acquired under the dockage system be reduced, for the 2023-2024 crop year only, from 35.0 to 30.0 percent under a fourth category in the regulation. The Committee also recommended that the creditable fruit weight of raisin deliveries in this fourth category created for the 2023-2024 crop year, or lots containing between 30.0 to 34.9 percent well-matured or reasonably well-matured raisins, be reduced by 0.2 percent for each 0.1 percent the lot is below 34.9 percent down to 30.0 percent. Applicable handler assessments and producer payments for product received are to be reduced accordingly. Lots containing 29.9 percent or less raisins which are well-matured or reasonably well-matured raisins are considered off-grade and require reconditioning before they can be acquired by handlers. A new paragraph (e) is added to § 989.213 for this fourth category and applies only to product handled during the 2023-2024 crop year.
Similar to relaxing the requirements under the substandard dockage system, reducing the minimum allowable level for maturity for the 2023-2024 crop year is expected to reduce the number of failed lots of raisins returned by handlers to producers or reconditioned by handlers at the producers' expense or disposed of in non-normal outlets. Under this relaxation, handlers are able to acquire more lots of raisins upon first inspection and not continue to experience further delay waiting for failed lots to be reconditioned and reinspected. The ability to acquire more raisins upon first inspection helps handlers better meet the needs of the market and save producers the cost of reconditioning failed fruit that would
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this final rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses are not unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.
There are approximately 1,700 producers of California raisins and approximately 17 handlers subject to regulation under the Order. Small agricultural producers of raisins are defined by the Small Business Administration (SBA) as those having annual receipts equal to or less than $4.0 million (NAICS code 111332, Grape Vineyards) and small agricultural service firms are defined as those whose annual receipts are equal to or less than $34.0 million (NAICS code 115114, Postharvest Crop Activities) (13 CFR 121.201).
Using USDA National Agricultural Statistics Service (NASS) data, the 2022 season average value of utilized production of California processed raisin-type grapes (most of which are dried into raisins) is $376.6 million. Dividing that figure by 1,700 producers yields an annual average revenue per producer of $221,530, well below the SBA large farm size threshold of $4.0 million. Therefore, in terms of average annual sales of processed raisin-type grapes, the majority of California raisin producers may be classified as small entities.
To make a similar computation for handlers, the first step is to estimate a representative handler price received per pound for packaged raisins. Recent USDA purchases under the Commodity Procurement Program provide such an estimate. For the most recent raisin crop year used by the RAC (August 2022-July 2023) the average price paid for packaged raisins purchased by the USDA for feeding programs was $1.56 per pound. For that time period, the RAC provided a list of quantities delivered by handlers. When multiplied by the $1.56 price per pound, the results showed that 5 handlers had annual raisin receipts greater than $34.0 million, the SBA threshold level for a large handler. The remaining 12 handlers out of 17 are small handlers, using the SBA criterion.
This final rule relaxes the substandard and maturity dockage requirements specified in §§ 989.212 and 989.213, respectively, of the Order's handling regulations for the 2023-2024 crop year. These sections allow handlers to acquire raisins from producers that do not meet the Order's minimum quality requirements under a weight dockage system. Under the system, handlers adjust their payments to producers for product received, and the payment of Order assessments, according to the percentage of substandard raisins in the lot and/or the percentage of raisins falling below certain levels of maturity. Because of extreme weather issues which adversely affected the growing conditions of the raisin grape vines for the 2023 crop, the industry predicts that a high percentage of the 2023-2024 crop year raisins delivered by producers to handlers will continue to fall outside the current limits of the dockage systems in the handling regulations. Temporarily relaxing the minimum requirements under the dockage systems for the 2023-2024 crop year is expected to reduce the number of lots of raisins returned by handlers to producers or reconditioned by handlers at the producers' expense or disposed of in a non-normal outlet such as animal feed at a much-reduced producer price.
Relaxing the dockage limits for the 2023-2024 crop year allows handlers to acquire more lots of raisins that would otherwise fail specified tolerances for substandard raisins and maturity. Thus, fewer lots are expected to be returned to producers for reconditioning. Under the revised requirements, transportation costs for hauling raisins to and from the handler's premises for reconditioning and reinspection, estimated at $24 per ton one way, may be eliminated. Producers are also expected to save on reconditioning costs. Producer costs for reconditioning raisins falling below certain maturity levels (usually a “wash and dry” process) are estimated at $275-$300 per ton. Producers may also save on reinspection costs at $15.50 per ton because more of their raisins will meet the relaxed incoming substandard and maturity requirements upon first inspection. In addition, producers whose lots of raisins fall into the extended dockage limits for substandard raisins will not have to incur $60 per ton in costs for “dry reconditioning” expenses.
Relaxing the dockage limits may cause handlers to incur some additional costs; however, such costs are minimal when considering the alternative, that is to receive significantly less product for the 2023-2024 crop year and to not be able to meet market demand. Thus, the benefits of this rule outweigh such costs. While the incoming quality requirements are relaxed, the outgoing quality requirements under the Order will remain unchanged. The burden of removing substandard raisins or raisins falling below certain levels of maturity will be shifted from producers to handlers. However, although handlers will have to undertake the additional burden of cleaning up the fruit, handlers are better prepared than producers to manage the lower quality raisins efficiently and economically because they already have the processing equipment designed to remove the undesirable fruit. Moreover, without this rule, handlers would likely have less fruit available to meet market needs.
The Committee considered several alternatives to the recommended action. An Administrative Subcommittee (Subcommittee) convened on October 3, 2023, to discuss the current crop situation and to submit remediation recommendations to the full Committee. At the meeting, the Subcommittee discussed increasing the allowable amount of substandard fruit from 17.0 to 25.0 percent for Natural (sun-dried) Seedless, Golden Seedless, Dipped Seedless, Monukka, Other Seedless, and Other Seedless-Sulfured. However, many industry members felt that the 25.0 percent was too high for the current conditions in the market, and ultimately the Subcommittee approved recommending a maximum 21.0 percent allowable tolerance for those varieties of substandard incoming fruit. The Subcommittee also considered whether to maintain the dockage for maturity for percentages between 30 and 35 percent at 0.15 percent or to increase it. There were also discussions regarding revising the tolerance for mold under the quality requirements. The majority of the Subcommittee did not favor any changes for mold tolerances. Ultimately,
The Committee's meetings were widely publicized throughout the production area. The raisin industry and all interested persons were invited to attend the meetings and participate in Committee deliberations on all issues. The Subcommittee meeting on October 3, 2023, and subsequent full Committee meeting on October 5, 2023, were each open to the public where any interested parties was able to express views on this issue. In addition, interested persons were invited to submit comments on this final rule, including the regulatory and information collection impacts of this action on small businesses.
An interim final rule concerning this action was published in the
This final rule continues in effect temporary changes to the minimum requirements for substandard and maturity dockage under the Order's handling regulations for the 2023-2024 crop year. The minimum requirements have been temporarily relaxed to accommodate raisins adversely impacted by severe weather conditions. Producers and handlers are aware of this action as it continues in effect the interim final rule effective on December 12, 2023, and need no preparation time to comply. Accordingly, pursuant to 5 U.S.C. 553(d), AMS finds that good cause exists for not postponing the effective date of this final rule until 30 days after publication in the
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178, Vegetable and Specialty Crops. No changes in those requirements are necessary as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.
This final rule would not impose any additional reporting or recordkeeping requirements on either small or large California raisin handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.
AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:
After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that finalizing the interim rule, without change, as published in the
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping requirements.
Rural Housing Service, USDA.
Notification.
The Rural Housing Service (RHS or the Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), is issuing this document for a demonstration program that will establish a new loss mitigation retention option, referred to as the Payment Supplement Account (PSA). The Agency's intention of this demonstration program is to assist borrowers who have experienced a documented hardship that led to an involuntary inability to pay their mortgage obligation, require payment reduction to resume making a monthly payment, and currently have a below market interest rate. This document briefly discusses a special servicing option for servicers to utilize to continue assisting struggling borrowers who seek loss mitigation alternatives, regardless of the nature of their hardship.
The effective date of this demonstration program is July 24, 2024. The duration of the demonstration program is anticipated to continue until July 24, 2026, at which time the RHS may extend the demonstration program (with or without modifications) or terminate it depending on the workload and resources needed to administer the program, feedback from the public, and the effectiveness of the program. RHS will notify the public whether the demonstration program has been extended or terminated.
Stephanie Freeman, Finance and Loan Analyst, Policy, Analysis, and Communications Branch, Single Family Housing Guaranteed Loan Division, Rural Development, U.S. Department of Agriculture, Email:
If you are interested in participating in this demonstration program or if you have any questions, please contact the Loan Servicing Branch at
The SFHGLP is authorized by Section 502(h) of the Housing Act of 1949, as amended, codified at 42 U.S.C. 1472(h); and implemented under 7 CFR part 3555.
The RHS is committed to helping improve the economy and quality of life in rural areas by offering a variety of programs. The Agency offers loans, grants, and loan guarantees to help create jobs, expand economic development, and provide critical infrastructure investments. The RHS also provides technical assistance loans and grants by partnering with agricultural producers, cooperatives, Indian tribes, non-profits, and other local, state, and federal agencies.
Affordable housing is essential to the vitality of communities in rural America. RD's Single Family Housing Programs give families and individuals the opportunity to purchase, build, repair their existing home, or to refinance their current mortgage under certain criteria. Eligibility for these loans, loan guarantees, or grants is based on income which varies according to the average median income for each eligible rural area.
Section 502 Guaranteed Loan Program provides a 90 percent loan note guarantee to approved lenders in efforts to provide low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may purchase, build, rehabilitate, improve or relocate a dwelling in an eligible rural area. Applicant eligibility for this program is determined by the lender pursuant to the criteria set forth in 7 CFR part 3555, subpart D.
The Domestic Policy Council (DPD) and the National Economic Council (NEC) has recently urged agencies to begin implementing workable home retention solutions that would provide subsequent mortgage protections and minimize the borrowers' risk of foreclosure considering the current market conditions. Therefore, the Agency has continued to explore additional home retention options for servicers to further assist borrowers and reduce Agency losses.
The RHS may authorize limited demonstration programs to test new approaches to offering housing under the statutory authority granted to the Secretary, as set forth in 42 U.S.C. 1476(b); 7 CFR 3555.2(b). Demonstration programs are time- and scope-limited programs designed to test new approaches and for those reasons, demonstration programs need not be consistent with all regulatory provisions while active. This demonstration program helps struggling borrowers that are delinquent on their mortgage payments and are unable to obtain a payment reduction utilizing the currently available loss mitigation options.
The Single-Family Housing Guaranteed Loan Program (SFHGLP) provides borrowers with the maximum opportunity to remain successful homeowners and provides servicers with multiple loan servicing options to support borrowers who have experienced a documented hardship. RD continues to explore strategies to improve the quality and effectiveness of our program.
Typically, assistance is accomplished through a combination of rate reduction, term extension, and/or a reduction of the borrower's interest-bearing principal. These assistance options can be accomplished with the utilization of a stand-alone Mortgage Recovery Advance (MRA), also known to the industry as a partial claim. While the Agency's loss mitigation options have continued to deliver assistance to borrowers in default, unprecedented higher interest rates in conjunction with the current economic conditions have impacted the ability and delayed the effectiveness of those relief measures to meaningfully assist borrowers.
Due to the sensitivity of the changes in mortgage rates, rise in consumer debt, and the challenges with mortgage payments associated with the pressures on household finances, the Agency has continued to evaluate additional options for servicers in an effort to further assist borrowers. This demonstration program establishes a new loss mitigation retention option, referred to as the Payment Supplement Account (PSA). The PSA shall be funded by a stand-alone MRA. The PSA assists borrowers who have experienced a documented hardship that led to an involuntary inability to pay their mortgage obligation, require payment reduction to resume making a monthly payment, and currently have a below market interest rate.
7 CFR 3555.304(d) permits the use of an MRA in conjunction with loss mitigation to provide payment relief to borrowers. The MRA allows the servicer to advance funds on behalf of the borrower to satisfy the borrower's arrearage, pay legal fees and foreclosure costs related to a cancelled foreclosure action, and reduce the principal balance of the loan.
The PSA demonstration program shall require the servicer to use a portion of the MRA funds to cure the arrearage and segregate the remaining funds in a separate, non-interest-bearing custodial account to provide monthly payment relief to the borrower. The PSA shall be funded by a stand-alone MRA, which shall be incrementally utilized to first, payoff the arrearages accumulated during a hardship to bring the loan current and second, to supplement the principal portion of the borrower's payment in monthly increments and provide payment relief for three years. The PSA shall remain with the servicer's lien as a non-interest-bearing, recoverable servicing advance. The MRA created under this demonstration program shall not be secured by a second lien in favor of RD, which eliminates the need for notary fees, recording costs, and additional legal fees.
To be eligible under this demonstration program, all the following parameters shall apply:
• The borrower must occupy the home as their primary residence.
• The borrower must have experienced a documented hardship and requires payment reduction to resume making a regular monthly payment. The hardship that caused the borrower's involuntary inability to pay must have been cured. Lenders and servicers may refer to HB-1-3555 Attachment 18-A for guidance on this inquiry.
• There is no reasonable ability for the borrower to cure the delinquency on their own within 12 months without assistance.
• The MRA shall be utilized to cure the arrearage, bring the loan current, and fund a PSA that will be utilized to provide a targeted reduction to the borrower's principal and interest (P&I) payment for three years. At the end of the three years, the borrower shall be responsible for resuming the full amount of their monthly contractual payment.
• The servicer should target a 25 percent principal and interest reduction, not to exceed the principal portion of the principal and interest, for a maximum 3-year total period. If a 25 percent reduction cannot be achieved, offer the achievable reduction, not less
• Three trial timely payments will be required. Guidance on trial payments is available at HB-1-3555 Attachment 18-A.
• The borrower shall sign an agreement to repay the advance in full.
• The servicer shall segregate the funds paid by USDA for the PSA in a separate, non-interest-bearing custodial account (the PSA) characterized by the following:
○ is deposited with a financial institution whose accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA);
○ does not limit the servicer's access to funds for the payment supplement, require an advance notice of withdrawal, or require the payment of a withdrawal penalty; and
○ clearly identifies the funds being held in that account as being derived from and held as part of the PSA Agreement executed by the borrower.
• The servicer must ensure that the funds in the PSA are clearly delineated as funds held as a result of the PSA Agreement executed by the borrower, for use only as provided for in the PSA Agreement. Neither the servicer nor the borrower may exercise discretion in the use and application of the funds from the PSA; funds shall be used and applied only to reduce the principal balance.
○ The MRA utilized to fund the PSA will be limited to 30 percent of the borrower's unpaid principal balance at the time of initial default. If the borrower has previously been provided an MRA they may still be considered for a PSA MRA provided that the combined amount of MRAs do not exceed the 30 percent maximum outlined above.
○ This option is the last option in the loss mitigation waterfall, and it must be determined by the servicer that the borrower is not eligible for any other retention solution prior to solicitation for participation in this pilot.
○ Servicers shall advance their own funds to bring the loan current prior to requesting the MRA to establish the PSA.
○ Servicers may file an MRA claim with RD to recoup the funds they advance on behalf of the borrower and utilized to fund the PSA, subject to the MRA claim filing requirements described in 7 CFR part 3555.
○ The amount of the non-interest-bearing receivable will remain part of the servicer's first lien.
○ The servicer shall agree to repay the amount of the MRA to RD when the first lien matures, the borrower sells or refinances the home, or otherwise pays the loan in full.
○ The servicer shall draw from the PSA monthly, only when the borrower makes their portion of the monthly payment, to provide payment relief. As funds are advanced, the amount drawn will be added to the non-interest-bearing receivable.
○ If a borrower makes the full amount of their monthly contractual payment, the servicer shall still make the monthly draw from the PSA. Any additional funds paid by the borrower shall be applied to curtail the principal balance.
○ A borrower who re-defaults while receiving PSA funds can re-enter the RD loss mitigation waterfall and be evaluated for traditional options, if eligible. Any remaining PSA funds should be applied to the unpaid principal balance as part of that loss mitigation action.
○ If a servicing transfer occurs on the guaranteed loan, the servicer shall ensure that the funds in the PSA awaiting disbursement are transferred to the new servicer at the same time as the mortgage transfer. The new servicer shall assume any remaining obligations of the initial servicer in connection with the ongoing loss mitigation action consistent with the terms of the PSA Agreement.
○ If there is a loss due to a short sale, a deed-in-lieu of foreclosure, or a foreclosure, any remaining funds in the PSA shall be applied towards the principal balance and added to the non-interest-bearing receivable prior to a loss claim being filed.
The servicer may be required to submit additional information about the pilot program outside of the usual electronic reporting process. This enhanced report shall be provided as requested and should include at minimum the number of current and existing PSA MRAs provided under this pilot. Loan servicing and loss claim submissions will be conducted in accordance with the Housing Act of 1949, as amended, and 7 CFR part 3555.
The regulatory waivers for this demonstration program contains no new reporting or recordkeeping burdens under OMB control number 0575-0179 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
In accordance with Federal civil rights laws and USDA civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (
To file a program discrimination complaint, a complainant should complete a Form AD-3027,
(1)
(2)
(3)
U.S. Small Business Administration.
Direct final rule.
This direct final rule amends the U.S. Small Business Administration (SBA or Agency) regulations governing the SBA Disaster Loan Program by revising how it determines whether an applicant has credit elsewhere to modernize and replace the current process. SBA is also increasing the unsecured threshold for physical damage loans under Major Disaster declarations and for Economic Injury Disaster Loans (EIDL) under all disaster declarations.
You may submit comments, identified by the Regulation Identifier Number (RIN) 3245-AI08, through the Federal eRulemaking Portal:
SBA will post all comments on
Robert Blocker, Office of Financial Assistance, Office of Capital Access, Small Business Administration, at
SBA's Disaster Loan Program provides direct assistance to homeowners, renters, businesses, and nonprofits, which is critical to rebuilding communities after a disaster. Pursuant to section 7(b) of the Small Business Act, 15 U.S.C. 636(b) (the Act), SBA is authorized to make direct loans to homeowners, renters, businesses, and non-profit organizations that have been adversely affected by a disaster. The Act authorizes the Administrator to increase the SBA's size limits on unsecured disaster loans for physical damages in Major Disasters and for EIDL loans for all disaster declarations except Military Reservist Economic Injury Disaster Loans (MREIDL). (
With natural disasters increasing in severity and frequency across the United States and its territories, SBA is increasing the maximum unsecured loan limits for home and business loans declared for Major Disasters and for EIDL loans for all disaster declaration types. SBA is also revising the method used to determine whether an applicant has credit elsewhere.
SBA believes these changes are necessary to:
• Address limits due to inflation.
• Increase efficiencies in the administration and delivery of the program to better achieve mission and improve outcomes for economic recovery.
• Increase the percentage of borrowers utilizing the SBA mitigation program which is designed to prevent future disaster damages and reduce future disaster economic impacts.
• Reduce the burden of collateral and improve access to credit in underserved communities which oftentimes have limited access to other sources of capital and historically have seen higher rates of disasters and lower economic survival rates.
Section 123.11 defines the conditions under which SBA will not require collateral for disaster loans. Paragraph (a) provides the dollar thresholds below which collateral generally will not be required for EIDL loans, physical disaster home and business loans, and MREIDL loans. Paragraph (c) defines when SBA will aggregate physical home and business loans and or EIDL loans to the same borrowers and affiliates to determine if collateral is required.
The collateral threshold for major disasters and EIDL across all declaration types, has been at $25,000 since 2014. The collateral threshold for SBA Agency disasters has been $14,000 since 2008, except for a temporary increase to $25,000 in 2015. These amounts have not been updated despite cost and inflationary increases.
SBA is revising paragraphs (a)(1) and (2) to increase the unsecured loan threshold to $50,000 for EIDL loans for all disasters and for physical home and business loans for Major Disaster declarations. SBA believes the current collateral threshold of $25,000 unnecessarily prevents borrowers from receiving adequate funds to completely recover after a disaster. A recent working paper published by the National Bureau of Economic Research (NBER working paper) used SBA disaster loan application and loan performance data to analyze the effect of collateral requirements on borrower behavior and default rates.
SBA expects the increase in the unsecured loan limit will result in increased use by disaster survivors of additional available funds, which may include funds SBA makes available specifically for mitigation uses that minimize the risk and cost of future disasters. Currently, only two percent of borrowers utilize mitigation funds. By increasing the unsecured threshold, we
Historically, home loans make up approximately 80 percent of disaster applications in most disasters. The real estate collateral associated with these loans is primarily the damaged residence of the disaster survivor. Most disaster home borrowers have one or more existing mortgages leaving minimal or no equity value for additional leverage. When SBA requires a lien on those assets, the lien is subordinate to all existing encumbrances and, often does not add recoverable value to SBA's lien position. The subordinate position significantly reduces recovery for SBA in the event of a default and foreclosure. Collateral analysis of SBA loan portfolio from 2018 through 2023, 41 percent of disaster survivors who apply for and receive SBA assistance do not have collateral sufficient to fully secure the loan. Further collateral analysis indicates 13 percent of borrowers do not have adequate equity to secure 20 percent of the loan amount and 7 percent of borrowers have no equity to secure the SBA loan. In practice, the costs of default and foreclosure and the satisfaction of any senior liens on the property significantly diminish SBA's recovery.
This change will expedite disbursement of more funds to borrowers and reduce costs to the Agency for monitoring liens. Most importantly, it will lower costs (lien recording fees, documentary stamps, etc.) to the disaster survivors, while ensuring they have adequate recovery support. Reducing SBA's costs associated with obtaining property reports necessary to secure collateral and preparing security instruments to comply with each state will also reduce the need for both additional disaster contracts and surge staffing to process, disburse, and service secured disaster loans.
The current language of § 123.104 requires SBA to determine whether a disaster survivor has credit elsewhere by analyzing their cash flow and disposable assets. SBA is streamlining the process of determining whether an applicant has credit elsewhere by allowing the use of credit score modeling as a basis of this determination. This change would sync the requirement with what is currently utilized by non-Federal sources. As a result of the changes to § 123.104 SBA also is amending § 123.507(c), as it also references analyzing cash flow and disposable assets.
On April 25, 2014, SBA amended its regulations to allow the use of an applicant's credit score as evidence of repayment ability, 79 FR 22859. The intent of the change was to allow SBA to expedite the processing of applications with strong credit by removing the requirement to analyze cash flow for all loans. Although the change allowed SBA to utilize a more efficient process for determining repayment, there was no coinciding change to streamline the determination of credit elsewhere. Because the current regulation states that credit elsewhere is evaluated based on cash flow and disposable assets, a complete financial analysis still must be performed for every applicant even when credit scores are used as a basis for repayment. To review a disaster survivor's disposable assets, SBA requires home loan applicants to submit a list of assets; business principals to submit a personal financial statement; and, in some cases, business and affiliate entities to submit complete copies of their Federal tax returns. The regulation also requires SBA to review the assets to determine what is disposable. This process is time consuming and subjective.
SBA has determined that a high credit score is the best indication of whether a disaster survivor could obtain financing from non-Federal sources at reasonable terms. The lending industry uses credit scoring for determining both whether to approve credit and what interest rate to provide the borrower. Individual credit scores generally range from 300 to 835. According to the Fair Isaacs Corporation (FICO) loan calculator, borrowers with credit scores of 760 and above receive the lowest mortgage interest rates, and interest rates increase by .225 percentage points in each lower credit score tier.
The current regulation requiring evaluation of cash flow and disposable assets has led to approvals of disaster loans that are not consistent with private sector practices, where credit scores are the primary factor in determining the interest rate. Our analysis of Hurricane Ian business loans shows that the average credit score for loan business principals for loans approved for businesses with credit elsewhere was 775. In comparison, the average credit score for loans approved for businesses without credit elsewhere was comparable, at 776. Additionally, analysis for home loans approved for Hurricane Ian shows the average credit score for homeowners without credit elsewhere was 717. Of those individuals determined to have credit elsewhere, the average credit score was 784. Of that number, 9.4 percent of those had credit scores of 719 or below.
SBA can use FICO Small Business Scoring Service (SBSS) to determine credit available elsewhere for business loan applicants. The SBSS Score ranges from zero to 300 and is calculated based on the business owners' consumer credit bureau data, the business's credit report (
SBA disaster lending has not historically used SBSS scores, so there is no comparable data to show average SBSS scores for current disaster market rate loans compared to below market rate loans or to show what percentage of loans would be at market rate based on a specific SBSS score. However, SBA currently utilizes SBSS scoring for other financial assistance programs, specifically as a prescreening process for 7(a) Small Loans, with a minimum SBSS score of 155; and Community Advantage loans, with a minimum SBSS score of 140. The Disaster Loan Program's implementation of SBSS
SBA's rule will streamline the processing of disaster loans by removing the requirement to evaluate cash flow and disposable assets for all loans. However, SBA may still utilize a review of cash flow as part of the credit elsewhere determination in certain situations. For example, when an applicant has a high credit score but large disaster losses, SBA may evaluate cash flow to determine if the cost of obtaining disaster financing from non-Federal sources would present a hardship to the disaster survivor.
The regulatory changes would allow SBA to automate and streamline more loan processes. Utilizing credit scores to determine credit elsewhere also allows SBA to provide greater clarity to disaster survivors regarding interest rate determinations. Furthermore, determining credit elsewhere by using credit scores would make the process easily adaptable. If a score leads to a large increase or decrease in the percentage of disaster survivors showing credit elsewhere, the score can be adjusted, which would directly impact the percentage.
Agencies typically utilize direct final rulemakings for non-controversial regulatory actions that are unlikely to receive adverse comments. In direct final rulemaking, an agency publishes a final rule with a statement that the rule will go into effect unless the agency receives significant adverse comment within a specified period. Significant adverse comments are comments that provide strong justifications why the rule should not be adopted or for changing the rule. If the agency receives no significant adverse comment in response to the direct final rule, the rule goes into effect. If the agency receives significant adverse comment, the agency withdraws the direct final rule and may instead issue a proposed rulemaking. SBA has determined that the regulatory changes addressed in this direct final rulemaking are non-controversial, and not likely to result in adverse comments.
By permitting the use of credit score modeling, SBA is expending the process of determining whether an applicant has credit elsewhere. This will allow for a quicker approval process because SBA will not be restricted to performing a time-consuming cash flow analysis for each loan. SBA will be able to decrease the time it takes to process all loan applications overall and expedite the processing of applications from victims of disasters. The SBA's disaster loan unsecured loan threshold has not changed in over a decade, even though natural disasters are becoming more severe and frequent across the United States and its territories, as evidenced by more longer hurricane seasons and more frequent wildfires, tornados, floods, and blizzards. All disasters are urgent, necessitating the most efficient and effective path to assistance for survivors. In short, an increase in the SBA's disaster unsecured threshold is necessary to meet the current economic demands of more severe and frequent disasters.
SBA does not anticipate receiving significant adverse comments because the principal effect of these amendments is to reduce delays in loan processing and provide faster assistance. Also, SBA will be able to increase the amount disaster survivors can borrow through the SBA's Disaster Assistance Loan Program while reducing the burdens of pledging collateral to the disaster survivors, such as having to provide the additional documentation required for a secured loan amount and incurring costs associated with lien recording fees, title company fees, etc. Unsecured loans require minimal documentation, such as an executed Note and Loan Authorization and Agreement. Because there is less documentation to collect and review, the SBA can disburse funds below the unsecured loan threshold much more quickly. SBA's disaster loan program offers long-term, low interest, fixed rate loans to disaster survivors, enabling them to replace real or personal property damaged or destroyed in declared disasters. It also offers such loans to affected small businesses and non-profits to help them recover from economic injury caused by such disasters.
The changes in this direct final rule will not require members of the public to adjust their behavior. Rather, the changes will benefit the public by allowing for increased compensation before collateral is required to adequately reflect increases in costs associated with replacing and repairing residential real property and household effects that have been lost or damaged as a result of a disaster, as well as expediting the processing and disbursement of SBA disaster loans. Due to urgent needs for disaster assistance, and the noncontroversial nature of these changes, the SBA concludes immediate action is required to support homeowners, businesses, and their communities as they recover from future disasters.
SBA is issuing this direct final rulemaking in conformance with Executive Orders 12866, 13563, and 14094. Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 reaffirms, supplements, and updates Executive Order 12866 and further directs agencies to solicit and consider input from a wide range of affected and interested parties through a variety of means. The Office of Management and Budget has determined that this rule does not constitute a significant regulatory action under Executive Order 12866, as amended by Executive Order 14094.
SBA has developed this rule in a manner consistent with these requirements and thoroughly examined the costs and benefits as well as availability of regulatory alternatives associated with its implementation; therefore, SBA has drafted an analysis for the public's information below.
This rule amends regulations governing the SBA Disaster Loan Program by revising the Credit Elsewhere Test (CET) to allow credit score modeling in order to streamline disaster loan processing. Additionally, the rule increases the unsecured loan threshold from $25,000 to $50,000 for EIDL loans for all disasters and for physical home and business loans for Major Disaster declarations. The revised
Revision of the Credit Elsewhere Test (CET) and the introduction of the Agency's Unified Lending Platform (ULP), a new processing system, will streamline SBA disaster lending. The benefit of the revised CET for the Agency and borrowers is clarity of evaluation for loan eligibility and interest rate determination, increased program efficiency, and reduction of uncertainty in the process. Revised CET integrated within the ULP will reduce the hiring of temporary personnel in the Disaster Loan Program for each separate disaster lending period. SBA expects the government to benefit from the cost savings enabled by a reduced need for temporary lending personnel with the revised CET within the ULP.
SBA undertook the increase in the collateral threshold in response to evidence that shows an increase in financial well-being for disaster loan borrowers,
The increased threshold for collateral is consistent with increased ability to work within the Agency's statutory authorization in Section 7(b) of the Small Business Act to make loans to individuals and entities that have been adversely affected by disasters. SBA believes that its current collateral requirements are an impediment to increasingly expensive rebuilding efforts, by increasing the collateral threshold SBA will shorten loan cycle time for approved loans. The Agency has noted that loans without collateral requirements are generally fully funded in a single disbursement while secured loans have usually required multiple disbursements. SBA expects a significant reduction in the time required for full disbursement of loan proceeds for the great majority of disaster borrower by increasing the secured loan limit, along with other program improvements within the ULP, resulting in major benefits to borrowers. A faster disbursement of the loans further enhances the restorative work of these loans to homes and businesses.
The adjustment of the collateral threshold and revision of the CET decreases the burden on borrowers to provide documentation that SBA must verify, resulting in savings in disaster staffing and training. The Agency expects that with the higher collateral threshold, the number of loans requiring collateral at original approval will decrease from 46.4 percent to 31 percent of approved disaster loans. SBA estimates the decrease in loan processing costs with the increased collateral threshold is $20.33 per loan, generating $203,300 in savings to the Agency for every 10,000 approved loans. Another example of cost savings is the reduction in property and vesting reports and other information for recording of liens, for which SBA currently contracts with a third-party vendor. A vesting report costs about $25 per property, so a decrease from 46.4 percent to 31 percent of loans requiring this report reduces this particular expense by $38,500 for every 10,000 approved loans.
Assessment of costs in this impact analysis includes those borne by borrowers and by the Agency. Excluding initial procurement costs of the ULP,
The largest source of potential costs for SBA may result from the increase in loans without collateral following the increase in the collateral threshold in § 123.11. With this change, SBA estimates from its experience with loans after Hurricane Ian that 70.98 percent of home loans would be unsecured, an increase from the current unsecured home loan portfolio from Hurricane Ian of 55.3 percent. Based on historical data, this increase in unsecured loans may lead to more defaults, necessitating a higher subsidy rate. The Agency notes the cost savings from the new CET will offset at least some of this cost and with the additional cost savings from the ULP, SBA expects a decrease in the overall costs of the disaster loan program. In the event of default, SBA does expect an impact on the recovery rates from reduced collections from collateral liquidations, but this is in part limited even under current regulations because these disaster loans have been and will continue to be subordinated to existing mortgages.
To consider the impact of increased unsecured loan limits, SBA analyzed the activity from Hurricane Ian, a powerful Category 5 hurricane which made landfall on the west coast of Florida on September 28, 2022, and again in the Carolinas on September 30, 2022. Ian was responsible for 155 fatalities in the United States and caused an estimated $113 billion dollars in damages.
SBA's analysis of Hurricane Ian suggests that if the unsecured home loan limit of $50,000 had been in place, 9,286 of the 13,083 home loans from Hurricane Ian could be unsecured compared to the 7,235 that were at the unsecured threshold or less for that disaster. This represents an overall percentage increase of 15.68%. The increase in the unsecured portfolio for Ian home loans would be 35.50% of the dollar value compared to the actual 22.73% value of the active Ian portfolio. A similar percentage increase to the active home loan portfolio would increase the unsecured portion of home disaster loans by $81,466,615, which is small when compared to the $7.2 billion-dollar active home loan portfolio.
At an estimated subsidy rate of 19bps and a five-year average loan amount of $39,300 for loans impacted by the collateral change, the estimated effect on the subsidy for each increase of 10,000 unsecured loans is $746,700.
The following table represents Hurricane Ian home loans Secured vs Unsecured if the unsecured limit was
The table of Hurricane Ian business loans shows that 1,099 of the business loans for Ian would have been unsecured if the limit was $50,000 compared to the 828 approved for $25,000 or less for that disaster. This represents an overall percentage increase of 13.75%. The increase in the total loan amounts in the unsecured portfolio for Ian business loans would be 8.93% compared to the 5.34% for this disaster. The dollar figure of unsecured business loans for Ian would only increase by $10,557,300 or only 3.6% of the Ian business portfolio. A similar comparison to the current active portfolio finds that 3.6% would only be $67,696,547 of the current $1,880,459,649 disaster business loan portfolio.
Based on SBA's analysis, the Agency determined that the changes enhance the efficiency of the administration and delivery of the Disaster Loan Program. For example, SBA anticipates increasing the unsecured threshold will allow SBA to disburse the majority of approved disaster loans within seven days of approval. Moreover, SBA anticipates the changes will have minimal impact on the overall cost of the Disaster Loan Program. Additionally, SBA expects the changes may motivate borrowers to make use of the disaster loan mitigation program, thereby reducing the extent of damages caused by future disasters. Furthermore, the changes aim to ensure fair and equal access to disaster assistance in underserved communities that may lack access to other sources of capital, requiring these borrowers to pledge collateral to SBA rather than forgoing collateral lien and seeking other sources of affordable capital.
The rule includes increasing the unsecured loan thresholds for physical and EIDL loans from current levels. The alternative may be to modify the increases at a lower or higher amount. By providing updates and adjustments in unsecured loan amounts, including aggregation of loans to one borrower, the Agency has optimized the disaster survivors' options for recovery on more reasonable and equitable terms. SBA has determined that the increase to $50,000 for unsecured disaster loans and the corresponding changes to the loan aggregation rules for a single borrower is the appropriate action. The Agency did not consider any alternative to the new CET, which brings consistency with general lending practices to the loan program and facilitates the implementation of ULP, which is an Agency priority.
For each 10,000 loans, the rule generates savings to the Agency of $203,300 from reduced processing costs and $38,500 from elimination of the recording of liens, for quantifiable savings of $241,500 on each 10,000 unsecured loans. These quantifiable benefits are balanced against an estimated subsidy impact of $746,700 for each 10,000 unsecured loans. Additionally, SBA expects the changes in the rule to make the disaster loans more widely available, which will generate additional benefits to the borrowers and their communities, further balancing the benefits against the costs.
This action meets applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have preemptive effect or retroactive effect.
This rule does not have federalism implications as defined in Executive Order 13132. It will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in the Executive order. As such it does not warrant the preparation of a Federalism Assessment.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Native American Tribal Governments, because it does not have a substantial direct effect on one or more Native American Tribes, on the relationship between the Federal Government and Native American Tribes, or on the distribution of power and responsibilities between the Federal Government and Native American Tribes.
SBA was tasked with developing recommendations for improving how Federal financial management and reporting can incorporate climate-related financial risk, especially as that risk relates to Federal lending programs. The SBA Disaster Loan Program contains eligibility and additional loan
Currently, only two percent of borrowers apply for mitigation funds. Increasing the unsecured threshold will encourage borrowers not only to make full use of funds available to complete not just repairs, but to also to access funds to mitigate future loss from subsequent disasters. This increases survivors' recovery and resiliency against future disasters and achieves the Agency's goal to increase the mitigation program utilization from two percent to 20 percent.
SBA has determined that this final rule does not impose additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C., Chapter 35.
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act or CRA, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. SBA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule under the CRA cannot take effect until 60 days after it is published in the
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, generally requires that when an agency issues a proposed rule, or a final rule pursuant to section 553(b) of the APA or another law, the agency must prepare a regulatory flexibility analysis that meets the requirements of the RFA and publish such analysis in the
Rules that are exempt from notice and comment are also exempt from the RFA requirements, including conducting a regulatory flexibility analysis, such as when—among other exceptions—the agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. SBA Office of Advocacy Guide: How to Comply with the Regulatory Flexibility Act, Ch.1. p.9. Since this rule is exempt from notice and comment, SBA is not required to conduct a regulatory flexibility analysis.
Disaster assistance, Loan programs—business, Small businesses.
For the reasons set forth in the preamble, the SBA amends 13 CFR part 123 as follows:
15 U.S.C. 632, 634(b)(6), 636(b), 636(d), 657n, and 9009.
(a) * * *
(1)
(2)
(ii) For SBA-declared disasters under § 123.3(a)(3) or (6), SBA generally will not require the borrower to pledge collateral to secure a physical disaster home or physical disaster business loan of $14,000 or less.
(c) Sometimes a borrower, including affiliates as defined in part 121 of this title, will have more than one loan after a single disaster. In deciding whether collateral is required, SBA will add up all physical disaster loans to see if they exceed the applicable unsecured threshold outlined in paragraph (a)(2) of this section and all economic injury disaster loans to see if they exceed $50,000.
If you can obtain credit elsewhere, your interest rate is set by a statutory formula, but will not exceed eight (8) percent per annum. If you cannot obtain credit elsewhere, your interest rate is one-half the statutory rate, but will not exceed four (4) percent per annum. Generally, credit elsewhere means that SBA believes you could obtain financing from non-Federal sources on reasonable terms subsequent to the declaration of a disaster. SBA may include the use of credit score to make this determination. If you cannot obtain credit elsewhere, you also may be able to borrow from SBA to refinance existing recorded liens against your damaged real property.
(c) Your small business has used all reasonably available funds from the small business, its affiliates, its principal owners and all available credit elsewhere (as described in § 123.104) to alleviate the small business' economic injury.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E airspace at Brenham, TX. The FAA is taking this action to support new public instrument procedures.
Effective date 0901 UTC, October 31, 2024. The Director of the Federal Register approves this incorporation by reference action under 1 CFR part 51, subject to the annual revision of FAA Order JO 7400.11 and publication of conforming amendments.
A copy of the Notice of Proposed Rulemaking (NPRM), all comments received, this final rule, and all background material may be viewed online at
FAA Order JO 7400.11H, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Raul Garza Jr., Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5874.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes Class E airspace extending upward from 700 feet above the surface at Wash Co Air 1 Base, Brenham, TX, to support instrument flight rule operations at this airport.
The FAA published an NPRM for Docket No. FAA 2024-1392 in the
An FAA database review noted that the incorrect coordinates were used in the NPRM. This Final Rule replaces the incorrect coordinates with the correct coordinates : Lat 30°18′19″ N, long 096°12′19″ W. This action does not change the airspace dimensions or operating requirements.
Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023, and effective September 15, 2023. FAA Order JO 7400.11H is publicly available as listed in the
FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
This action amends 14 CFR part 71 by establishing Class E airspace upward from 700 feet above the surface within a 6.1-mile radius of Wash Co Air 1 Base, Brenham, TX.
This action supports new public instrument procedures.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p.389.
That airspace extending upward from 700 feet above the surface within a 6.1-mile radius of the Wash Co Air 1 Base.
Environmental Protection Agency (EPA).
Final rule.
Under the Clean Air Act (CAA), the Environmental Protection Agency (EPA) is granting a request by the State of Colorado to reclassify the
This rule is effective on July 24, 2024.
The EPA has established a docket for this action under Docket ID No. EPA-R08-OAR-2024-0318 All documents in the docket are listed on the
Amrita Singh, Air and Radiation Division, US EPA, Region 8, Mail-code 8ARD-IO, 1595 Wynkoop Street, Denver, Colorado, 80202-1129, telephone number: (303) 312-6103, email address:
Throughout this document, “reviewing authority,” “we,” “us,” and “our” refer to the EPA.
On October 1, 2015, the EPA strengthened the primary and secondary NAAQS for ozone to a level of 0.070 parts per million, to be assessed using the “design value” metric: the annual fourth-highest daily maximum 8-hour average concentration, averaged over 3 years.
On June 8, 2024, the State of Colorado requested that EPA reclassify the DMNFR Area from “Moderate” to “Serious”. We are approving Colorado's reclassification request under the Act's “voluntary reclassification” provisions: “The Administrator shall grant the request of any State to reclassify a nonattainment area in that State . . . to a higher classification.”
The EPA has determined that this action falls under section 553(b)(B) of the Administrative Procedure Act (APA), which authorizes agencies, upon finding “good cause,” to take rulemaking actions without public notice and comment when these procedures are “impracticable, unnecessary or contrary to the public interest.” We have determined that public notice and comment procedures are unnecessary here because EPA's action to approve voluntary reclassification requests under CAA section 181(b)(3) is nondiscretionary both in its issuance and in its content. Therefore, notice and comment rulemaking procedures would serve no useful purpose in connection with this action.
The EPA also finds that there is good cause under APA section 553(d)(3) for this reclassification to become effective on the date of publication. That section allows an effective date of less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.”
Under Executive Order 12866 (58 FR 51735, October 4, 1993) this final action is not a “significant regulatory action” and therefore is not subject to a requirement for Executive Order 12866 review. With respect to lands under state jurisdiction, voluntary reclassifications under CAA section 181(b)(3) of the CAA are based solely upon requests by the state, and the EPA is required under the CAA to grant them. These actions do not, in and of themselves, impose any new requirements on any sectors of the economy. In addition, because the statutory requirements are clearly defined with respect to the differently classified areas, and because those requirements are automatically triggered by reclassification, reclassification does not impose a materially adverse impact under Executive Order 12866. For those reasons, this final action is also not subject to Executive Order 13211.
In addition, I certify that this final rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule also does not have any tribal implications under Executive Order 13175 (65 FR 67249, November 9, 2000), because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. In addition, tribes are not subject to implementation plan submittal deadlines that apply to states as result of reclassifications.
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. It directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing as appropriate, disproportionately high and adverse human health or environmental effects on their programs, policies, and activities on minority populations and low-income populations in the United States. This reclassification action relates to ozone, a pollutant that is regional in nature, and is not the type of action that could result in the types of local impacts addressed in Executive Order 12898.
This final action does not have federalism implications because it does not have substantial direct effects on the states, on the relationship between the National Government, and the states, nor on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999. This final action does not alter the relationship or the distribution of power and responsibilities established in the CAA.
This rule is not subject to Executive Order 13045, “Protection of the Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because EPA interprets Executive Order 13045 as applying only to those regulatory actions considered significant under section 3(f)(1) of Executive Order 12866 and that also concern environmental health or safety risks that EPA has reason to believe may disproportionally affect children per the definition of “covered regulatory action” in section 2-202 of Executive Order 13045.
Reclassification actions do not involve technical standards, and thus the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an informative collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Congressional Review Act (CRA), 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuits by September 23, 2024. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).
Environmental protection, Air pollution control, Carbon monoxide, Greenhouse gases, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
For the reasons set forth in the preamble, 40 CFR part 81 is amended as follows:
42 U.S.C. 7401,
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) when used as an inert ingredient in a pesticide chemical formulation. Spring Regulatory Sciences, on behalf of Heubach Colorants USA LLC., submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) on food or feed commodities when used in accordance with these exemptions.
This regulation is effective July 24, 2024. Objections and requests for hearings must be received on or before September 23, 2024 and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2024-0103, is available at
Daniel Rosenblatt, Registration Division (7505T), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (202) 566-1030; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Office of the Federal
Under FFDCA section 408(g), 21 U.S.C. 346a(g), any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2024-0103 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before September 23, 2024. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b), although the Office of the Administrative Law Judges, which houses the Hearing Clerk, encourages parties to file objections and hearing requests electronically.
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2024-0103, by one of the following methods.
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•
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Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
In the
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and use in residential settings but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing an exemption from the requirement of a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue . . .” and specifies factors EPA is to consider in establishing an exemption.
EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be shown that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.
Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. In the case of certain chemical substances that are defined as polymers, the Agency has established a set of criteria to identify categories of polymers expected to present minimal or no risk. The definition of a polymer is given in 40 CFR 723.250(b) and the exclusion criteria for identifying these low-risk polymers are described in 40 CFR 723.250(d). Poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) conforms to the definition of a polymer given in 40 CFR 723.250(b) and meets the following criteria that are used to identify low-risk polymers.
1. The polymer is not a cationic polymer nor is it reasonably anticipated to become a cationic polymer in a natural aquatic environment.
2. The polymer does contain as an integral part of its composition at least two of the atomic elements carbon, hydrogen, nitrogen, oxygen, silicon, and sulfur.
3. The polymer does not contain as an integral part of its composition, except as impurities, any element other than those listed in 40 CFR 723.250(d)(2)(ii).
4. The polymer is neither designed nor can it be reasonably anticipated to substantially degrade, decompose, or depolymerize. An available biodegradation study supports that poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)
5. The polymer is manufactured or imported from monomers and/or reactants that are already included on the TSCA Chemical Substance Inventory or manufactured under an applicable TSCA section 5 exemption.
6. The polymer is not a water absorbing polymer with a number average molecular weight (MW) greater than or equal to 10,000 Daltons.
7. The polymer does not contain certain perfluoroalkyl moieties consisting of a CF3- or longer chain length as listed in 40 CFR 723.250(d)(6).
Additionally, the polymer also meets as required the following exemption criteria: specified in 40 CFR 723.250(e):
The polymer's number average MW of 1,370 Daltons is greater than 1,000 and less than 10,000 Daltons. The polymer contains less than 10% oligomeric material below MW 500 (2.2%) and less than 25% oligomeric material below MW 1,000 (16.7%), and the polymer has a combined (total) reactive group equivalent weight greater than or equal to 1,000 for the reactive functional groups listed in 40 CFR 723.250(e)(1)(ii)(B).
Thus, poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) meets the criteria for a polymer to be considered low risk under 40 CFR 723.250. Based on its conformance to the criteria in this unit, no mammalian toxicity is anticipated from dietary, inhalation, or dermal exposure to poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1).
For the purposes of assessing potential exposure under this exemption, EPA considered that poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) could be present in all raw and processed agricultural commodities and drinking water, and that non-occupational non-dietary exposure was possible. The number average MW of poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) is 1,370 Daltons. Generally, a polymer of this size would be poorly absorbed through the intact gastrointestinal tract or through intact human skin. Since poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) conforms to the criteria that identify a low-risk polymer, there are no concerns for risks associated with any potential exposure scenarios that are reasonably foreseeable. The Agency has determined that a tolerance is not necessary to protect the public health.
Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”
EPA has not found poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) to share a common mechanism of toxicity with any other substances, and poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance exemption, therefore, EPA has assumed that poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1) does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at
Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act (FQPA) Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor. Due to the expected low toxicity of poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1), EPA has not used a safety factor analysis to assess the risk. For the same reasons no additional safety factor is needed for assessing risk to infants and children.
Based on the conformance to the criteria used to identify a low-risk polymer, EPA concludes that there is a reasonable certainty of no harm to the U.S. population, including infants and children, from aggregate exposure to residues of poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2-hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium, benzenesulfonate (6:1:1).
An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.
Accordingly, EPA finds that exempting residues of poly(oxy-1,2-ethanediyl), a-hydro-ω-hydroxy-, ether with N-[4-[bis[4-[bis(2 hydroxyethyl)amino]phenyl]methylene]-2,5-cyclohexadien-1-ylidene]-2-hydroxy-N-(2-hydroxyethyl)ethanaminium,
This action establishes a tolerance exemption under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal governments, on the relationship between the National Government and the States or Tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, for the reasons stated in the preamble, EPA is amending 40 CFR chapter I as follows:
21 U.S.C. 321(q), 346a and 371.
Environmental Protection Agency (EPA).
Direct final rule.
Pursuant to the Solid Waste Disposal Act of 1965, as amended (commonly known as the Resource Conservation and Recovery Act (RCRA)), the Environmental Protection Agency (EPA) is taking direct final action to approve revisions to the Commonwealth of Pennsylvania's Underground Storage Tank (UST) program submitted by the Commonwealth of Pennsylvania (Pennsylvania or State). This action also codifies EPA's approval of Pennsylvania's State program and incorporates by reference (IBR) those provisions of Pennsylvania's regulations and statutes that EPA has determined meet the requirements for approval. The provisions will be subject to EPA's inspection and enforcement authorities under sections 9005 and 9006 of RCRA Subtitle I and other applicable statutory and regulatory provisions.
This rule is effective September 23, 2024, unless EPA receives significant negative comments opposing this action by August 23, 2024. If EPA receives significant negative comments opposing this action, EPA will publish a timely withdrawal in the
Submit your comments by one of the following methods:
1.
2.
EPA's policy is that all comments received will be included in the public docket without change and may be available online at
Thomas UyBarreta, (215) 814-2953,
Section 9004 of RCRA authorizes EPA to approve State underground storage tank (UST) programs to operate in lieu of the Federal UST program. EPA may approve a State program if the State demonstrates, pursuant to section 9004(a), 42 U.S.C. 6991c(a), that the State program includes the elements set forth at section 9004(a)(1) through (9), 42 U.S.C. 6991c(a)(1) through (9), and provides for adequate enforcement of compliance with UST standards (section 9004(a), 42 U.S.C. 6991c(a)). Additionally, EPA must find, pursuant to section 9004(b), 42 U.S.C. 6991c(b), that the State program is “no less stringent” than the Federal program in the elements set forth at section 9004(a)(1) through (7), 42 U.S.C. 6991c(a)(1) through (7). States such as Pennsylvania that have received final UST program approval from EPA under section 9004 of RCRA must, in order to retain such approval, revise their approved programs when the controlling Federal or State statutory or regulatory authority is changed and EPA determines a revision is required. In 2015, EPA revised the Federal UST regulations and determined that States must revise their UST programs accordingly.
On March 24, 2022, in accordance with 40 CFR 281.51, Pennsylvania submitted a complete program revision application seeking EPA approval for its UST program revisions (State Application). Pennsylvania's revisions correspond to the EPA final rule published on July 15, 2015 (80 FR 41566), which revised the 1988 UST regulations and the 1988 State program approval (SPA) regulations. As required by 40 CFR 281.20, the State Application contains the following: a transmittal letter requesting program approval; a description of the program and operating procedures; a demonstration of the State's procedures to ensure adequate enforcement; a Memorandum of Agreement outlining the roles and responsibilities of EPA and the implementing agency; an Attorney General's statement in accordance with 40 CFR 281.24 certifying to applicable State authorities; and copies of all relevant State statutes and regulations. EPA has reviewed the State Application and determined that the revisions to Pennsylvania's UST program are no less
This action does not impose additional requirements on the regulated community because the regulations being approved by this rule are already effective in Pennsylvania, and they are not changed by this action. This action merely approves the existing State regulations as meeting the Federal requirements and renders them federally enforceable.
EPA is publishing this direct final rule concurrently with a proposed rulemaking because EPA views this as a noncontroversial action and anticipates no significant negative comment. EPA is providing an opportunity for public comment now.
Along with this direct final rule, EPA is publishing a separate document in the “Proposed Rules” section of this
On September 11, 2003, EPA finalized a rule approving Pennsylvania's UST program, effective that same day (68 FR 53520), to operate in lieu of the Federal program. On March 17, 2006, effective May 16, 2006 (71 FR 13769), EPA codified the approved Pennsylvania program, incorporating by reference the State's statutes and regulatory provisions that are subject to EPA's inspection and enforcement authorities under RCRA sections 9005 and 9006, 42 U.S.C. 6991d and 6991e, and other applicable statutory and regulatory provisions.
On March 24, 2022, in accordance with 40 CFR 281.51, Pennsylvania submitted a complete application for final approval of its UST program revisions adopted on December 21, 2018, effective December 22, 2018. EPA has reviewed Pennsylvania's UST program requirements and determined that such requirements are no less stringent than the Federal regulations and that the criteria set forth in 40 CFR part 281, subpart C are met. As part of the State Application, the Attorney General for Pennsylvania certified that the laws and regulations of Pennsylvania provide adequate authority to carry out a program that is “no less stringent” than the Federal requirements in 40 CFR part 281. EPA is relying on this certification in addition to the analysis submitted by Pennsylvania in making our determination. EPA now makes an immediate final decision, subject to receipt of any significant negative written comments that oppose this action, that Pennsylvania's UST program revisions satisfy all of the requirements necessary to qualify for final approval. Therefore, EPA grants Pennsylvania final approval for the following program changes:
The State also demonstrates that its program provides adequate enforcement of compliance as described in 40 CFR 281.11(b) and part 281, subpart D. Pennsylvania's lead implementing agency, the Pennsylvania Department of Environmental Protection (PADEP), has broad statutory and regulatory authority with respect to USTs to regulate installation, operation, maintenance, closure and UST releases, and to the issuance of orders. The statutory and regulatory authority is found in Pennsylvania's Storage Tank and Spill Prevention Act of 1989 at sections 101 through 2105 (35 P.S. sections 6021.101-6021.2105), and in Pennsylvania's Regulations, Administration of the Storage Tank and Spill Prevention Program, Title 25, Chapter 245, Subchapters A-H (25 Pa. Code sections 245.1-245.708). The procedures the State will follow to prohibit deliveries are set forth in a
Where an approved State program has a greater scope of coverage than required by Federal law, the additional coverage is not part of the federally-approved program and is not federally enforceable (40 CFR 281.12(a)(3)(ii)). The following Pennsylvania requirements are considered “broader in scope” than the Federal program:
• The State regulates aboveground tanks.
• The State
• The State regulates persons who are not owners or operators of USTs under corrective action requirements.
• The State requires site-specific permits before installation and construction of new highly hazardous substance tanks and new field constructed tanks 25 Pa. Code Sections 245.231-.237.
• The State requires that owners or operators of USTs obtain an operating permit. 25 Pa. Code Section 245.203.
• The State charges fees for UST registration. 25 Pa. Code Sections 245.41-43.
• The State requires contractor licensure and certification of persons other than installers. 35 P.S. Chapter 108; 25 Pa. Code 245 Subchapter B.
In accordance with 40 CFR 281.12(a)(3)(ii), the additional coverage listed above is not part of the federally-approved program and is not federally enforceable.
The State
Codification is the process of placing a State's statutes and regulations that comprise the State's approved program into the Code of Federal Regulations (CFR). Section 9004(b) of RCRA, as amended, allows EPA to approve State UST programs to operate in lieu of the Federal program. EPA codifies its authorization of State programs in 40 CFR part 282 and incorporates by reference State statutes and regulations that EPA will enforce under sections 9005 and 9006 of RCRA and any other applicable statutory provisions. The incorporation by reference of State authorized programs in the CFR should substantially enhance the public's ability to discern the current status of the approved State program and State requirements that can be federally enforced. This effort provides clear notice to the public of the scope of the approved program in each State.
EPA incorporated by reference Pennsylvania's approved UST program at 40 CFR 282.88 effective May 16, 2006 (71 FR 13769, March 17, 2006). In this document, EPA is revising 40 CFR 282.88 to include the approved revisions.
One purpose of this
EPA is incorporating by reference the Pennsylvania approved UST program in 40 CFR 282.88. Section 282.88(d)(1)(i) incorporates by reference for enforcement purposes the State's statutes and regulations.
Section 282.88 also references the Attorney General's Statement, Demonstration of Adequate Enforcement Procedures, the Program Description, and the Memorandum of Agreement, which are approved as part of the UST program under Subtitle I of RCRA. These documents are not incorporated by reference.
The EPA retains the authority under sections 9005 and 9006 of Subtitle I of RCRA, 42 U.S.C. 6991d and 6991e, and other applicable statutory and regulatory provisions to undertake inspections and enforcement actions and to issue orders in approved States. If EPA determines it will take such actions in Pennsylvania, EPA will rely on Federal sanctions, Federal inspection authorities, and Federal procedures rather than the State's authorized analogs to these provisions. Therefore,
The public also needs to be aware that some provisions of the State's UST program are not part of the federally-approved State program. Most of these provisions are not part of the RCRA Subtitle I program because they are “broader in scope” than Subtitle I of RCRA. 40 CFR 281.12(a)(3)(ii) states that where an approved State program has a greater scope of coverage than required by Federal law, the additional coverage is not a part of the federally-approved program. As a result, State provisions that are “broader in scope” than the Federal program are not incorporated by reference for purposes of enforcement in part 282. Section 282.88(d)(1)(iii) lists for reference and clarity Pennsylvania's statutory and regulatory provisions that are “broader in scope” than the Federal program and which are not, therefore, part of the approved program being codified in this action. Provisions that are “broader in scope” cannot be enforced by EPA; the State, however, will continue to implement and enforce such provisions under State law.
In addition, as discussed above at I. H. of this preamble, EPA is not approving certain provisions in Pennsylvania's statutory and regulatory definitions of underground storage tank, because the exercise of the authority pursuant to either provision could render the State program scope narrower than the Federal program. 35 P.S. 6021.103(Underground storage tank, paragraph (13)), 25 Pa. Code 245.1(Underground storage tank, subparagraph (xvii)). EPA is not codifying either provision. By so doing, even if in the future Pennsylvania acts to exclude other tanks not already excluded from its UST definitions, the approved program will continue to exclude only those tanks currently excluded. Section 282.88(d)(1)(iii) also lists for reference and clarity these two provisions.
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action as defined in Executive Order 12866 (58 FR 51735, October 4, 1993), as amended by Executive Order 14094 (88 FR 21879, April 11, 2023), because this action approves and codifies State requirements for the purpose of RCRA section 9004 and imposes no additional requirements beyond those imposed by State law. Therefore, this action was not subject to a requirement for Executive Order 12866 review.
This rule does not impose an information collection burden under the provisions of the PRA, 44 U.S.C. 3501
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA, 5 U.S.C. 601
This action does not contain any unfunded mandates as described in UMRA, 2 U.S.C. 1501
This action does not have Tribal implications as specified in Executive Order 13175 (65 FR 67429, November 9, 2000) because currently there are no federally recognized tribes in Pennsylvania. Thus, Executive Order 13175 does not apply to this action.
This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves and codifies State requirements as part of the State RCRA underground storage tank program without altering the relationship or the distribution of power and responsibilities established by RCRA.
EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive order. Therefore, this action is not subject to Executive Order 13045 because it approves a State program.
This rule is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a “significant regulatory action” as defined under Executive Order 12866.
Under RCRA section 9004(b), EPA grants a State's application for approval as long as the State meets the criteria required by RCRA. It would thus be inconsistent with applicable law for EPA, when it reviews a State approval application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. Thus, the requirements of section 12(d) of the NTTAA, 15 U.S.C. 272 note, do not apply to this action.
Executive Order 12898 (59 FR 7629, February 16, 1994) directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations (people of color and/or Indigenous peoples) and low-income populations. Because this action approves pre-existing State rules that are no less stringent than existing Federal requirements and imposes no additional requirements beyond those imposed by State law, and there are no
This action is subject to the CRA, 5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Confidential business information, Hazardous substances, Incorporation by reference, Insurance, Intergovernmental relations, Oil pollution, Penalties, Petroleum, Reporting and recordkeeping requirements, State program approval, Surety bonds, Underground storage tanks, Water pollution control, Water supply.
For the reasons set forth in the preamble, EPA is amending 40 CFR part 282 as follows:
42 U.S.C. 6912, 6991c, 6991d, and 6991e.
(a) The Commonwealth of Pennsylvania is approved to administer and enforce an underground storage tank program in lieu of the Federal program under Subtitle I of the Resource Conservation and Recovery Act of 1976 (RCRA), as amended, 42 U.S.C. 6991
(b) Pennsylvania has primary responsibility for administering and enforcing its federally-approved underground storage tank program. However, EPA retains the authority to exercise its inspection and enforcement authorities under sections 9005 and 9006 of Subtitle I of RCRA, 42 U.S.C. 6991d and 6991e, regardless of whether the State has taken its own actions, as well as under any other applicable statutory and regulatory provisions.
(c) To retain program approval, Pennsylvania must revise its approved program to adopt new changes to the Federal Subtitle I program which makes it more stringent, in accordance with section 9004 of RCRA, 42 U.S.C. 6991c, and 40 CFR part 281, subpart E. If Pennsylvania obtains approval for the revised requirements pursuant to section 9004 of RCRA, 42 U.S.C. 6991c, the newly approved statutory and regulatory provisions will be added to this subpart and notice of any change will be published in the
(d) Pennsylvania has final approval for the following elements of its program application originally submitted to EPA and approved on September 11, 2003, and effective September 11, 2003, and the program revision application submitted to EPA on March 24, 2022, and approved by EPA, effective on September 23, 2024.
(1)
(A) Pennsylvania Statutory Requirements Applicable to the Underground Storage Tank Program, December 2017.
(B) Pennsylvania Regulatory Requirements Applicable to the Underground Storage Tank Program, December 2018.
(ii)
(A) The statutory provisions include:
(
(
(
(B) The regulatory provisions include:
(
(
(
(iii)
(A) Storage Tank and Spill Prevention Act of 1989, Public Law 169, No. 32, PS Sections: 6021.103 as to the definitions
(B) Pennsylvania Code, Chapter 245, Administration of the Storage Tank and Spill Prevention Programs, Sections: 245.1 definitions of “Aboveground field constructed metallic storage tank,” “Aboveground manufactured metallic storage tank,” “Aboveground nonmetallic storage tank,” “Aboveground storage tank,” “Aboveground storage tank system,” “Certification categories,” “Certified company,” “Certified inspector,” “Certified installer” insofar as encompasses activities other than installation, “Environmental audit,” “In-service inspection,” “Large aboveground storage tank,” “Large aboveground storage tank facility,” “Nontank handling project activities,” “Out-of-service inspection,” subparagraphs (i) and (ii) of “Owner,” “Pressure vessel,” “Process vessel,” subparagraph (iii) of “Regulated substance,” “Responsible party” insofar as it includes persons who are not owners or operators of underground storage tanks, “Small aboveground storage tank,” “Spill prevention response plan,” “Stationary tank,” subparagraph (xvii) of “Underground storage tank,” “Underground vault,” and subparagraph (ii) of “Change-in-service,” “Consumptive use,” “Emergency containment,” “Monitoring system,” “Storage tank,” “Storage tank facility,” and “Storage tank system” insofar as each definition includes aboveground storage tanks; 245.21(a) insofar as includes aboveground storage tanks, (b), (c), and (d) insofar as references permits; 245.31(a) and (f) insofar as each requires tests or evaluations be performed by a Department-certified individual, (e); 245.41(a) and (e) insofar as each requires payment of fees, (b) insofar as includes aboveground storage tanks and excludes tanks not excluded by the Federal program, (c)(7), (d); 245.42; 245.43; 245.101-.142 (Subchapter B); 245.201-.237 (Subchapter C); 245.305(g); 245.306(b)(3) and (d); 245.411(a) as to certified inspector; 245.422(b)(1)(ii) as to certified tank liner; 245.423; 245.424(2); 245.425(5); 245.434(1); 245.436(c)(5); 245.441(a)(3)(i) and (ii); 245.501-.562 (Subchapter F); 245.601-.618 (Subchapter G).
(2)
(3)
(4)
(5)
(a) The statutory provisions include:
(1) Pennsylvania Storage Tank and Spill Prevention Act of 1989, Public Law 169, No. 32.
35 P.S. Section 6021.101. Short title.
35 P.S. Section 6021.102. Legislative Findings.
35 P.S. Section 6021.103. Definitions,
35 P.S. Section 6021.109. Construction.
35 P.S. Section 6021.501. Underground storage tank requirements,
35 P.S. Section 6021.502. Interim requirements and discontinued use,
35 P.S. Section 6021.503. Registration,
35 P.S. Section 6021.701. Financial Responsibility,
35 P.S. Section 6021.2102. Saved from Repeal,
35 P.S. Section 6021.2103. Severability.
35 P.S. Section 6021.2104. Repeals.
35 P.S. Section 6021.2105. Effective date.
(b) The regulatory provisions include:
Pennsylvania Code, Chapter 245, Administration of the Storage Tank and Spill Prevention Programs
Section 245.1. Definitions,
Section 245.2. General.
Section 245.21. Tank handling and inspection activities,
Section 245.31. Underground storage tank tightness testing requirements,
Section 245.41. Tank Registration requirements,
Section 245.301. Purpose.
Section 245.302. Scope.
Section 245.304. Investigation and reporting of suspected releases.
Section 245.305. Reporting releases,
Section 245.306. Interim remedial actions,
Section 245.307. Affected or diminished water supplies.
Section 245.308. Onsite storage of contaminated soil.
Section 245.309. Site characterization.
Section 245.310. Site characterization report.
Section 245.311. Remedial action plan.
Section 245.312. Remedial action.
Section 245.313. Remedial action completion report.
Section 245.314. Professional seals.
Section 245.401. Purpose.
Section 245.402. Scope.
Section 245.403. Applicability.
Section 245.404. Variances.
Section 245.405. Codes and Standards.
Section 245.411. Inspection frequency,
Section 245.421. Performance standards for underground storage tank systems.
Section 245.422. Upgrading of existing underground storage tank systems,
Section 245.424. Standards for new field constructed tank systems,
Section 245.425. Reuse of removed tanks,
Section 245.431. Spill and overfill control.
Section 245.432. Operation and maintenance including corrosion protection.
Section 245.433. Compatibility.
Section 245.434. Repairs allowed,
Section 245.435. Reporting and recordkeeping.
Section 245.436. Operator training,
Section 245.437. Periodic testing.
Section 245.438. Periodic operation and maintenance walkthrough inspections.
Section 245.441. General requirements for underground storage tank systems,
Section 245.442. Periodic monitoring requirements for petroleum underground storage tank systems.
Section 245.443. Requirements for hazardous substance underground storage tank systems.
Section 245.444. Methods of release detection for tanks.
Section 245.445. Methods of release detection for piping.
Section 245.446. Release detection recordkeeping.
Section 245.451. Temporary removal from service (out-of-service).
Section 245.452. Permanent closure and changes-in-service.
Section 245.453. Assessing the site at closure or change-in-service.
Section 245.454. Applicability to previously closed underground storage tank systems.
Section 245.455. Closure records.
Section 245.701. Purpose.
Section 245.702. Scope.
Section 245.703. Owner or operator financial responsibility.
Section 245.704. General requirements.
Section 245.705. Owner and operator liability.
Section 245.706. Underground storage tanks not covered by USTIF.
Section 245.707. Coverage amounts for financial responsibility.
Section 245.708. Failure to maintain financial responsibility.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
This rule implements changes to fishing year 2024 recreational management measures for Gulf of Maine (GOM) cod and GOM haddock. The measures are necessary to ensure the recreational fishery achieves, but does not exceed, fishing year 2024 catch limits for GOM cod and GOM haddock. Recreational measures for Georges Bank (GB) cod will remain unchanged in fishing year 2024.
This rule is effective July 24, 2024.
To review the
Mark Grant, Fishery Policy Analyst, (978) 281-9145.
The recreational fishery for GOM cod and GOM haddock is managed under the Northeast Multispecies Fishery Management Plan (FMP). The multispecies fishing year starts on May 1 and runs through April 30 of the following calendar year. The FMP sets sub-annual catch limits (sub-ACL) for the recreational fishery each fishing year for both stocks. These sub-ACLs are a fixed proportion of the overall catch limit for each stock. The FMP also includes proactive recreational accountability measures (AM) to prevent the recreational sub-ACLs from being exceeded and reactive AMs to correct the cause, or mitigate the effects, of an overage if one occurs.
The proactive AM provision in the FMP provides a process for the Regional Administrator, in consultation with the New England Fishery Management Council (Council), to develop recreational management measures for the upcoming fishing year to ensure that the recreational sub-ACL is achieved, but not exceeded. The provisions governing this action can be found in the FMP's implementing regulations at 50 CFR 648.89(f)(3).
The 2024 recreational sub-ACL for GOM cod, established by Framework Adjustment 63 (87 FR 42375, July 15, 2022), is 192 metric tons (mt), and remains the same as the 2023 recreational sub-ACL. The 2024 recreational sub-ACL for GOM haddock, established by Framework Adjustment 66 (89 FR 35755, May 2, 2024), is 759 mt, which is a 4-percent reduction from the 2023 sub-ACL of 793 mt.
The proposed rule for this action (89 FR 43364, May 17, 2024) included information about the bio-economic model simulations that were shared with the Council, its Recreational Advisory Panel (RAP), and its Groundfish Oversight Committee (Committee). That information, and details about the Council, Committee, and RAP discussions, are not described further in this rule.
The RAP, the Committee, and the Council agreed on preferred measures and the Council formally recommended a suite of measures to NMFS on February 2, 2024. The Council recommended maintaining the GOM
This rule also announces that the current recreational measures for GB cod will remain in place for fishing year 2024. The Council reviewed the GB cod recreational catch and effort information provided by NMFS. This information shows that maintaining the status quo measures for GB cod would likely keep recreational catches close to the catch target of 113 mt in fishing year 2024, consistent with regulations for establishing GB cod recreational measures at 50 CFR 648.89(g).
NMFS received two comments on the proposed rule from one individual and from the Massachusetts Division of Marine Fisheries (MADMF).
The measures in this rule are intended to allow the recreational fishery to achieve, but not exceed, the recreational sub-ACLs. The possession limit for a vessel is calculated based on the number of individuals aboard the vessel, including a vessel's captain or crew on a for-hire vessel, or non-fishing passengers on a private vessel. The bio-economic model used to analyze recreational measures accounts for potential possession by a captain or crew and includes all catch. Thus, the measures are designed to constrain catch to the limit or target, even accounting for captain or crew possession. Nevertheless, available data suggest for-hire vessels typically do not fully harvest the possession limit on every trip.
MADMF also raised a concern regarding delays in annual revisions to recreational measures that result in implementing recreational measures after the start of the fishing year. MADMF suggested setting regulatory measures for periods of 2 to 3 years.
NMFS will continue to work to publish a final recreational rule prior to the start of the fishing year. As noted by MADMF in its comment, analyzing recreational measures relies on updating the bio-economic model with catch data from the most recent fishing year. Those data are not available until late in the calendar year. As a result, it is challenging to develop potential measures, consult with the Council, and implement changes prior to the start of the fishing year on May 1.
The Council and its RAP could investigate alternative approaches to setting recreational measures for multiple years. The FMP sets sub-ACLs for the recreational fishery for each fishing year. These sub-ACLs have the potential to differ year to year, based on the most recent science, and static recreational measures may not be sufficient to ensure that the recreational sub-ACL is achieved, but not exceeded. However, there may be approaches to developing recreational measures that may stay in place for multiple years.
This rule implements regulations outlined in the proposed rule, and there are no changes from the proposed measures in this final rule.
NMFS is issuing this final rule pursuant to section 305(d) of the MSA. In a previous action taken pursuant to section 304(b), the FMP was designed to specify the process for NMFS to take this action pursuant to MSA section 305(d). See 50 CFR 648.89(f)(3) and (g). The NMFS Assistant Administrator has determined that this final rule is consistent with the Northeast Multispecies FMP, the MSA, and other applicable law.
The Assistant Administrator for Fisheries finds that there is good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in the date of effectiveness for this action. This final rule must be implemented as soon as possible to reduce the potential for overfishing and avoid regulatory confusion. The regulations governing development and implementation of these measures are designed to facilitate implementation in a timely way for annual and seasonal measures. The fishing year begins May 1 each year, but catch data necessary to update the bio-economic model is not available until late in the previous calendar year. Using the updated model to evaluate potential measures, and the public process for developing such measures, at times can result in implementing measures after May 1, as happened here. Due to timing constraints resulting from the Council-recommend measures being finalized on January 31, 2024, NMFS was unable to publish a proposed rule until May 17, 2024 (89 FR 43364). The comment period for that rule ended on June 3, 2024. NMFS required additional time to consider the comments received and develop this final rule.
Recreational measures also often include seasonal restrictions or modifications designed with timing requirements essential to meeting their conservation and management goals and objectives. A delay in the implementation of measures may result in overages or overfishing. For GOM haddock, less restrictive status quo measures for private recreational fishing vessels have been in effect since May 1, 2024, potentially increasing catch above the levels predicted in the bio-economic model, and raising the likelihood of an overage. GOM haddock is subject to overfishing and these recreational measures are part of the overall set of measures designed for commercial and recreational fishing to prevent overfishing.
Furthermore, anglers and for-hire operators who are subject to this action expect timely implementation to provide regulatory certainty, prevent overages and overfishing, and prevent adverse economic impacts that would arise from an overage. This final rule follows a process for setting yearly measures that is familiar to, and anticipated by, fishery participants. During the development of this rule, and, in particular, after the proposed rule comment period ended, state natural resource agencies sought information from NMFS about the status and timing of the implementation of these measures, because of their need to revise state measures to match Federal measures and to inform their state rulemaking processes. They regularly urged NMFS to finalize the measures as quickly as practicable.
The open season for GOM cod does not begin until September 1. As a result, there will be more than 30 days after publication of this rule before members of the recreational fishing community will be affected by the change to the minimum size for GOM cod and state resource agencies will have greater than 30 days after publication of this rule to follow their state processes for revising recreational measures.
For these reasons, a 30-day delay in the date of effectiveness for this final rule is unnecessary, impracticable, and contrary to the public interest.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification, which was published in the proposed rule, has not changed and is not repeated here. No comments were received regarding this certification. As a result, a final regulatory flexibility analysis was not required and none was prepared.
This final rule contains no information collection requirements under the Paperwork Reduction Act of 1995.
This final rule has been determined to be not significant for purposes of Executive Order 12866.
Fisheries, Fishing, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, NMFS amends 50 CFR part 648 as follows:
16 U.S.C. 1801
(b) * * *
(1) * * *
(c) * * *
(1) * * *
(i) * * *
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain Airbus Canada Limited Partnership Model BD-500-1A10 and BD-500-1A11 airplanes. This proposed AD was prompted by reported events of annunciated horizontal stabilizer trim actuator (HSTA) jams occurring at the end of the cruise phase of flight. This proposed AD would require lubricating the HSTA using an improved method, at a reduced interval, as specified in a Transport Canada AD, which is proposed for incorporation by reference (IBR). The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by September 9, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For Transport Canada material identified in this proposed AD, contact Transport Canada, Transport Canada National Aircraft Certification, 159 Cleopatra Drive, Nepean, Ontario K1A 0N5, Canada; telephone 888-663-3639; email
• You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
Mark Taylor, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Mark Taylor, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; email
Transport Canada, which is the aviation authority for Canada, has issued Transport Canada AD CF-2023-68R1, dated April 30, 2024 (Transport Canada AD CF-2023-68R1) (also referred to as the MCAI), to correct an unsafe condition for certain Airbus Canada Limited Partnership Model BD-500-1A10 and BD-500-1A11 airplanes. The MCAI states there have been reported events of annunciated horizontal stabilizer trim actuator (HSTA) jams occurring at the end of the cruise phase of flight. Investigation revealed water intrusion in the primary ball nut and/or secondary nut housing of the HSTA ballscrew assembly. Water intrusion and subsequent freezing has caused jamming of the HSTA, resulting in the loss of pitch trim capability. Loss of pitch trim capability could result in loss of control of the airplane.
The FAA is proposing this AD to address the unsafe condition on these products.
You may examine the MCAI in the AD docket at
Transport Canada AD CF-2023-68R1 specifies improved procedures for lubricating the HSTA and repeating the lubrication at a reduced interval. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in Transport Canada AD CF-2023-68R1 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate Transport Canada AD CF-2023-68R1 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with Transport Canada AD CF-2023-68R1 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Service information required by Transport Canada AD CF-2023-68R1 for compliance will be available at
The FAA estimates that this AD, if adopted as proposed, would affect 100 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by September 9, 2024.
None.
This AD applies to Airbus Canada Limited Partnership (Type Certificate previously held by C Series Aircraft Limited Partnership (CSALP); Bombardier, Inc.) Model BD-500-1A10 and BD-500-1A11 airplanes, certificated in any category, as identified in Transport Canada AD CF-2023-68R1, dated April 30, 2024 (Transport Canada AD CF-2023-68R1).
Air Transport Association (ATA) of America Code 55, Stabilizers.
This AD was prompted by reported events of annunciated HSTA jams occurring at the end of the cruise phase of flight. Investigation revealed water intrusion in the primary ball nut and/or secondary nut housing of the HSTA ballscrew assembly. The FAA is issuing this AD to address water intrusion and subsequent freezing, which causes jamming of the HSTA, resulting in the loss
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, Transport Canada AD CF-2023-68R1.
(1) Where Transport Canada AD CF-2023-68R1 refers to its effective date, this AD requires using the effective date of this AD.
(2) Where Transport Canada AD CF-2023-68R1 refers to hours air time, this AD requires using flight hours.
(3) Where Paragraph A of Part I of Transport Canada AD CF-2023-68R1 specifies an initial compliance time for performing the lubrication of the HSTA, for this AD, the initial compliance time is at the earlier of the times specified in paragraphs (h)(3)(i) and (ii) of this AD.
(i) Within 1,100 flight hours after the effective date of this AD.
(ii) Within 12 months after the date of the most recent HSTA lubrication task, or within 5 days after the effective date of this AD, whichever occurs later.
(4) Where Paragraph B of Part I of Transport Canada AD CF-2023-68R1 specifies an initial compliance time for performing the lubrication of the HSTA, for this AD, the initial compliance time is at the later of the times specified in paragraphs (h)(4)(i) and (ii) of this AD.
(i) Within 1,100 flight hours or 12 months, whichever occurs first, since the date of issuance of the original airworthiness certificate or the original export certificate of airworthiness.
(ii) Within 5 days after the effective date of this AD.
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Mark Taylor, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; email
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the material listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this material as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Transport Canada AD CF-2023-68R1, dated April 30, 2024.
(ii) [Reserved]
(3) For Transport Canada AD CF-2023-68R1, contact Transport Canada, Transport Canada National Aircraft Certification, 159 Cleopatra Drive, Nepean, Ontario K1A 0N5, Canada; telephone 888-663-3639; email
(4) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2023-21-02, which applies to certain Airbus SAS Model A330-200 series, A330-200 Freighter series, A330-300 series, A330-800 series, and A330-900 series airplanes. AD 2023-21-02 requires revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. Since the FAA issued AD 2023-21-02, the FAA has determined that new or more restrictive airworthiness limitations are necessary. This proposed AD would continue to require certain actions in AD 2023-21-02 and would require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, as specified in a European Union Aviation Safety Agency (EASA) AD, which is proposed for incorporation by reference (IBR). The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by September 9, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For EASA material, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
• You may view this material at the FAA, Airworthiness Products Section,
Vladimir Ulyanov, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 206-231-3229; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Vladimir Ulyanov, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 206-231-3229; email
The FAA issued AD 2023-21-02, Amendment 39-22574 (88 FR 76107, November 6, 2023) (AD 2023-21-02), for certain Airbus SAS Model 330-201, -202, -203, -223, -223F, -243, -243F, -301, -302, -303, -321, -322, -323, -341, -342, -343, -841 and -941 airplanes. AD 2023-21-02 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued AD 2022-0187, dated September 13, 2022 (EASA AD 2022-0187) and AD 2023-0015, dated January 19, 2023 (EASA AD 2023-0015) (which correspond to FAA AD 2023-21-02), to correct an unsafe condition.
AD 2023-21-02 requires revising the existing maintenance or inspection program, as applicable, to incorporate additional new or more restrictive airworthiness limitations. The FAA issued AD 2023-21-02 to address fatigue cracking, accidental damage, and corrosion in principal structural elements; such fatigue cracking, accidental damage, and corrosion could result in reduced structural integrity of the airplane.
Since the FAA issued AD 2023-21-02, EASA superseded AD 2022-0187 and EASA AD 2023-0015 and issued EASA AD 2024-0011, dated January 10, 2024 (EASA AD 2024-0011), for all Airbus SAS Model A330-201, -202, -203, -223, -223F, -243, -243F, -301, -302, -303, -321, -322, -323, -341, -342, -343, -841 and -941 airplanes. EASA AD 2024-0011 states that new or more restrictive airworthiness limitations have been developed.
Airplanes with an original airworthiness certificate or original export certificate of airworthiness issued after October 20, 2023, must comply with the airworthiness limitations specified as part of the approved type design and referenced on the type certificate data sheet; this proposed AD therefore does not include those airplanes in the applicability.
The FAA is proposing this AD to address fatigue cracking, accidental damage, and corrosion in principal structural elements; such fatigue cracking, accidental damage, and corrosion could result in reduced structural integrity of the airplane. You may examine the MCAI in the AD docket at
The FAA reviewed EASA AD 2024-0011. This material specifies new or more restrictive airworthiness limitations for airplane structures.
This proposed AD would also require EASA AD 2022-0187 and EASA AD 2023-0015, which the Director of the Federal Register approved for incorporation by reference as of December 11, 2023 (88 FR 76107, November 6, 2023).
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI and service information referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would retain all requirements of AD 2023-21-02. This proposed AD would also require revising the existing maintenance or inspection program, as applicable, to incorporate additional new or more restrictive airworthiness limitations, which are specified in EASA AD 2024-0011 already described, as proposed for incorporation by reference. Any differences with EASA AD 2024-0011 are identified as exceptions in the regulatory text of this AD.
This proposed AD would require revisions to certain operator maintenance documents to include new actions (
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to retain the IBR of EASA AD 2022-0187 and EASA AD 2023-0015 and incorporate EASA AD 2024-0011 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2024-0011, EASA AD 2022-0187, and EASA AD 2023-0015 through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2022-0187, EASA 2023-0015, or EASA AD 2024-0011 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2024-0011. Service information required by EASA AD 2024-0011 for compliance will be available at
The FAA's process of incorporating by reference MCAI ADs as the primary source of information for compliance with corresponding FAA ADs has been limited to certain MCAI ADs (primarily those with service bulletins as the primary source of information for accomplishing the actions required by the FAA AD). However, the FAA is now expanding the process to include MCAI ADs that require a change to airworthiness limitation documents, such as airworthiness limitation sections.
For these ADs that incorporate by reference an MCAI AD that changes airworthiness limitations, the FAA requirements are unchanged. Operators must revise the existing maintenance or inspection program, as applicable, to incorporate the information specified in the new airworthiness limitation document. The airworthiness limitations must be followed according to 14 CFR 91.403(c) and 91.409(e).
The previous format of the airworthiness limitation ADs included a paragraph that specified that no alternative actions (
The FAA estimates that this AD, if adopted as proposed, would affect 126 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the total cost per operator for the retained actions from AD 2023-21-02 to be $7,650 (90 work-hours × $85 per work-hour).
The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate.
The FAA estimates the total cost per operator for the new proposed actions to be $7,650 (90 work-hours × $85 per work-hour).
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by September 9, 2024.
This AD replaces AD 2023-21-02, Amendment 39-22574 (88 FR 76107, November 6, 2023) (AD 2023-21-02).
This AD applies to Airbus SAS airplanes, identified in paragraphs (c)(1) through (5) of this AD, certificated in any category, with an original airworthiness certificate or original export certificate of airworthiness issued on or before October 20, 2023.
(1) Model A330-201, -202, -203, -223, and -243 airplanes.
(2) Model A330-223F and -243F airplanes.
(3) Model A330-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes.
(4) Model A330-841 airplanes.
(5) Model A330-941 airplanes.
Air Transport Association (ATA) of America Code 05, Time Limits/Maintenance Checks.
This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is issuing this AD to address fatigue cracking, accidental damage, and corrosion in principle structural elements. The unsafe condition, if not addressed, could result in reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
This paragraph restates the requirements of paragraph (j) of AD 2023-21-02, with new terminating action. For airplanes with an original airworthiness certificate or original export certificate of airworthiness issued on or before November 18, 2022: Except as specified in paragraph (h) of this AD, comply with all required actions and compliance times specified in, and in accordance with, European Union Aviation Safety Agency (EASA) AD 2022-0187, dated September 13, 2022 (EASA AD 2022-0187), and AD 2023-0015, dated January 19, 2023 (EASA AD 2023-0015); as applicable. Where EASA AD 2023-0015 affects the same airworthiness limitations as those in EASA AD 2022-0187, the airworthiness limitations referenced in EASA AD 2023-0015 prevail. Accomplishing the revision of the existing maintenance or inspection program required by paragraph (j) of this AD terminates the requirements of this paragraph.
This paragraph restates the exceptions specified in paragraph (k) of AD 2023-21-02, with no changes.
(1) This AD does not adopt the requirements specified in paragraphs (1) and (2) of EASA AD 2022-0187 and of EASA AD 2023-0015.
(2) Paragraph (3) of EASA AD 2022-0187 and of EASA AD 2023-0015 specifies revising “the AMP” within 12 months after the respective EASA AD's effective date, but this AD requires revising the existing maintenance or inspection program, as applicable, within 90 days after December 11, 2023 (the effective date of AD 2023-21-02).
(3) The initial compliance time for doing the tasks specified in paragraph (3) of EASA AD 2022-0187 and of EASA AD 2023-0015 is at the applicable “associated thresholds” as incorporated by the requirements of paragraph (3) of EASA AD 2022-0187 and of EASA AD 2023-0015, or within 90 days after December 11, 2023 (the effective date of AD 2023-21-02), whichever occurs later.
(4) This AD does not adopt the provisions specified in paragraphs (4) and (5) of EASA AD 2022-0187.
(5) Where EASA AD 2022-0187 defines “The ALS,” replace the text “Airbus A330 Airworthiness Limitations Section (ALS) Part 2 Revision 05,” with “Airbus A330 Airworthiness Limitations Section (ALS) Part 2 Revision 05 Issue 02.”
(6) This AD does not adopt the provisions specified in paragraph (4) of EASA AD 2023-0015.
(7) This AD does not require incorporating Section 4, “Damage Tolerant-Airworthiness Limitations Items-Tasks Beyond MPPT,” of “the ALS” specified in EASA AD 2022-0187 and in EASA AD 2023-0015.
(8) This AD does not adopt the “Remarks” section of EASA AD 2022-0187 and of EASA AD 2023-0015.
This paragraph restates the provisions of paragraph (l) of AD 2023-21-02, with a new exception. Except as required by paragraph (j) of this AD, no alternative actions (
Except as specified in paragraph (k) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2024-0011, dated January 10, 2024 (EASA AD 2024-0011). Accomplishing the revision of the existing maintenance or inspection program required by this paragraph terminates the requirements of paragraph (g) of this AD.
(1) This AD does not adopt the requirements specified in paragraphs (1) and (2) of EASA AD 2024-0011.
(2) Paragraph (3) of EASA AD 2024-0011 specifies revising “the approved AMP,” within 12 months after its effective date, but this AD requires revising the existing maintenance or inspection program, as applicable, within 90 days after the effective date of this AD.
(3) The initial compliance time for doing the tasks specified in paragraph (3) of EASA AD 2024-0011 is at the applicable “associated thresholds” as incorporated by the requirements of paragraph (3) of EASA AD 2024-0011, or within 90 days after the effective date of this AD, whichever occurs later.
(4) This AD does not adopt the provisions specified in paragraphs (4) and (5) of EASA AD 2024-0011.
(5) This AD does not adopt the “Remarks” section of EASA AD 2024-0011.
(6) This AD does not require incorporating Section 4, “Damage Tolerant-Airworthiness Limitations Items-Tasks Beyond MPPT,” of “the ALS” specified in EASA 2024-0011.
After the existing maintenance or inspection program has been revised as required by paragraph (j) of this AD, no alternative actions (
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Vladimir Ulyanov, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 206-231-3229; email
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the material listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this material as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(3) The following material was approved for IBR on [DATE 35 DAYS AFTER PUBLICATION OF THE FINAL RULE].
(i) European Union Aviation Safety Agency (EASA) AD 2024-0011, dated January 10, 2024.
(ii) [Reserved]
(4) The following material was approved for IBR on December 11, 2023 (88 FR 76107, November 6, 2023).
(i) European Union Aviation Safety Agency (EASA) AD 2022-0187, dated September 13, 2022.
(ii) European Union Aviation Safety Agency (EASA) AD 2023-0015, dated January 19, 2023.
(5) For EASA AD 2022-0187, EASA AD 2023-0015, and EASA AD 2024-0011, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(6) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(7) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2022-08-08, which applies to certain Airbus SAS Model A318 series airplanes; Model A319-111, -112, -113, -114, -115, -131, -132, and -133 airplanes; Model A320-211, -212, -214, -216, -231, -232, and -233 airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. AD 2022-08-08 requires repetitive special detailed inspections of certain double joggle areas on the fuselage and applicable on-condition actions. This proposed AD continues to require the actions in AD 2022-08-08 and would add airplanes to the applicability, as specified in a European Union Aviation Safety Agency (EASA) AD, which is proposed for incorporation by reference (IBR). The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by September 9, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For EASA material, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
• You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195. It is also available at
Timothy Dowling, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 206-231-3667; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Timothy Dowling, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 206-231-3667; email
The FAA issued AD 2022-08-08, Amendment 39-22011 (87 FR 23755, April 21, 2022) (AD 2022-08-08), for certain Airbus SAS Model A318 series airplanes; Model A319-111, -112, -113, -114, -115, -131, -132, and -133 airplanes; Model A320-211, -212, -214, -216, -231, -232, and -233 airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. AD 2022-08-08 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued AD 2021-0227, dated October 11, 2021 (EASA AD 2021-0227) (which corresponds to FAA AD 2022-08-08), to correct an unsafe condition.
AD 2022-08-08 requires repetitive special detailed inspections of certain areas and applicable on-condition actions. The FAA issued AD 2022-08-08 to address cracks in the double joggle areas at frame (FR) 16 and FR20, right-hand and left-hand sides, which, if not detected and corrected, could reduce the structural integrity of the fuselage.
Since the FAA issued AD 2022-08-08, EASA superseded AD 2021-0227 and issued EASA AD 2023-0212, dated December 6, 2023 (EASA AD 2023-0212) (referred to after this as the MCAI), for certain Airbus SAS Model A318-111, -112, -121, -122 airplanes; Model 319-111, -112, -113, -114, -115, -131, -132, -133, -151N, -153N, and -171N airplanes; Model A320-211, -212, -214, -216, -231, -232, -233, -251N, -252N, -253N, -271N, -272N, and -273N airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, -232, -251N, -251NX, -252N, -252NX, -253N, -253NX, -271N, -271NX, -272N, and -272NX airplanes. The MCAI states that the unsafe condition may also exist on Airbus SAS A318/A320/A321 “NEO” airplanes (
The FAA is proposing this AD to address cracks in the double joggle areas at FR16 and FR20 in the nose forward fuselage, which could reduce the structural integrity of the fuselage. You may examine the MCAI in the AD docket at
Although this proposed AD does not explicitly restate the requirements of AD 2022-08-08, this proposed AD would retain all of the requirements of AD 2022-08-08 and expands the applicability to include Airbus SAS A318/A320/A321 NEO airplanes. Those requirements are referenced in EASA AD 2023-0212, which, in turn, is referenced in paragraph (g) of this proposed AD.
The FAA reviewed EASA AD 2023-0212. This material specifies procedures for repetitive special detailed inspections for cracking of double joggle areas at FR16 and FR20, right-hand and left-hand sides, applicable on-condition actions (repair) and an optional modification of the double joggle area, which terminates the repetitive inspections. The modification includes a rotating probe inspection of certain fastener holes for cracks, a check of the fastener holes for a minimum diameter, and applicable on-condition actions. EASA AD 2023-0212 also specifies that new SRM tasks have been developed that are acceptable for compliance with the corrective actions required by AD 2022-08-08 for airplanes affected by that AD. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would retain all requirements of AD 2022-08-08. This proposed AD would expand the applicability to include Airbus SAS A318/A320/A321 NEO airplanes. This proposed AD would require accomplishing the actions specified in EASA AD 2023-0212 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2023-0212 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2023-0212 through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2023-0212 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2023-0212. Material required by EASA AD 2023-0212 for compliance will be available at
The FAA estimates that this AD, if adopted as proposed, would affect 1,755 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA has received no definitive data on which to base the cost estimates for the on-condition repairs specified in this proposed AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by September 9, 2024.
(1) This AD replaces AD 2022-08-08, Amendment 39-22011 (87 FR 23755, April 21, 2022) (AD 2022-08-08).
(2) This AD affects AD 2023-13-10, Amendment 39-22495 (88 FR 50005, August 1, 2023) (AD 2023-13-10).
This AD applies to Airbus SAS Model airplanes specified in paragraphs (c)(1) through (4) of this AD, certificated in any category, as identified in European Union Aviation Safety Agency (EASA) AD 2023-0212, dated December 6, 2023 (EASA AD 2023-0212).
(1) Model A318-111, -112, -121, and -122 airplanes.
(2) Model A319-111, -112, -113, -114, -115, -131, -132, -133, -151N, -153N, and -171N airplanes.
(3) Model A320-211, -212, -214, -216, -231, -232, -233, -251N, -252N, -253N, -271N, -272N, and -273N airplanes.
(4) Model A321-111, -112, -131, -211, -212, -213, -231, -232, -251N, -251NX, -252N, -252NX, -253N, -253NX, -271N, -271NX, -272N, and -272NX airplanes.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by reports that, during inspections accomplished as specified in certain airworthiness limitation items (ALIs), cracks were detected in the double joggle areas at frame (FR) 16 and FR20 in the nose forward fuselage. The unsafe condition, if not addressed, could result in reduced structural integrity of the fuselage.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2023-0212.
(1) Where paragraphs (2) and (3) of EASA AD 2023-0212 specify “Airbus approved repair instructions,” or “post-repair inspection instructions approved by Airbus,” for this AD, to be acceptable for credit, the repair instructions or post-repair inspection instructions must be approved by the Manager, International Validation Branch, FAA; or EASA; or Airbus SAS's EASA DOA. If approved by the DOA, the approval must include the DOA authorized signature.
(2) Where paragraph (4) of EASA AD 2023-0212 specifies to “contact Airbus for approved repair instructions and, within the compliance time specified therein, accomplish those instructions accordingly” if any cracks are detected, for this AD if any cracking is detected, the cracking must be repaired before further flight using a method approved by the Manager, International Validation Branch, FAA; or EASA; or Airbus SAS's EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.
(3) This AD does not adopt the “Remarks” section of EASA AD 2023-0212.
Although the service information referenced in EASA AD 2023-0212 specifies to submit certain information to the manufacturer, this AD does not include that requirement.
Accomplishing the actions required by this AD terminates ALI Tasks 531153-02-1, 531153-02-2, 531155-02-1, and 531155-02-2, as required by paragraph (o) of AD 2023-13-10 only for the airplanes identified in paragraph (c) of this AD.
The following provisions also apply to this AD:
(1)
(i) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the responsible Flight Standards Office.
(ii) AMOCs approved previously for AD 2022-08-08 are approved as AMOCs for the corresponding provisions of EASA AD 2023-0212 that are required by paragraph (g) of this AD.
(2)
For more information about this AD, contact Timothy Dowling, Aviation Safety
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the material listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this material as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2023-0212, dated December 6, 2023.
(ii) [Reserved]
(3) For EASA AD 2023-0212, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(4) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain General Electric Company (GE) Model CF34-10E2A1, CF34-10E6, CF34-10E6A1, CF34-10E7, and CF34-10E7-B engines having certain high-pressure turbine (HPT) front rotating air seals installed. This proposed AD was prompted by a report of cracks found in the HPT front rotating air seal. This proposed AD would require performing repetitive fluorescent penetrant inspections (FPIs) to detect indications or linear indications (any indication which is four times longer than the width of that same indication) in the HPT front rotating air seal and, if necessary, replacement of the HPT front rotating air seal or HPT rotor disk with parts eligible for installation as applicable. This proposed AD also includes an optional terminating action to the repetitive FPIs. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by September 9, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For material identified in this NPRM, contact General Electric Company, 1 Neumann Way, Cincinnati, OH 45215; phone: (513) 552-3272; email:
• You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call (817) 222-5110.
Alexei Marqueen, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198; phone: (781) 238-7178; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Alexei Marqueen, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.
The FAA received a report of indications found in certain HPT front rotating air seals at the rabbet surface where the affected part interacts with the HPT rotor disk tabs. The manufacturer investigated and determined that the indications were caused by a high edge of contact stress between the HPT rotor disk and the rabbet surface of the HPT front rotating air seal. This condition, if not addressed, could result in uncontained release of the HPT front rotating air seal
The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.
The FAA reviewed GE CF34-10E Service Bulletin 72-0341 R02, dated September 24, 2021. This material provides procedures for repetitive FPIs and eddy current inspections of certain HPT front rotating air seals for indications or linear indications and, if necessary, replacing the affected HPT front rotating air seals or the HPT rotor disk with parts eligible for installation. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This proposed AD would require, at the next piece-part exposure, repetitive FPIs to detect indications (indications) or linear indications (any indication which is four times longer than the width of that same indication) in the HPT front rotating air seal and, if necessary, replacement of the HPT front rotating air seal or HPT rotor disk with parts eligible for installation as applicable. Additionally, replacing the HPT front rotating air seal with an updated design part constitutes optional terminating action for the repetitive FPI.
The FAA estimates that this AD, if adopted as proposed, would affect 300 engines, installed on airplanes of U.S. registry.
The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the following costs to do any necessary replacements that would be required based on the results of the proposed inspections. The agency has no way of determining the number of engines that might need these replacements:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by September 9, 2024.
None.
This AD applies to General Electric Company (GE) Model CF34-10E2A1, CF34-10E6, CF34-10E6A1, CF34-10E7, CF34-10E7-B engines with an installed high-pressure turbine (HPT) front rotating air seal having a part number (P/N) 1865M49P04, 2448M30P02, or 2448M30P03.
Joint Aircraft System Component (JASC) Code 7250, Turbine Section.
This AD was prompted by a report of cracks found in the HPT rotating air front seal. The FAA is issuing this AD to detect indications and linear indications (any indication which is four times longer than the width of that same indication) of the HPT front rotating air seal. The FAA is issuing this AD to prevent failure of the HPT front rotating air seal or HPT rotor disk. The unsafe condition, if not addressed, could result in uncontained release of the HPT front rotating air seal or HPT rotor disk, damage to the engine, and damage to the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) At the next piece-part exposure of the HPT rotor assembly and each piece-part exposure thereafter, after the effective date of this AD, perform a fluorescent penetrant inspection (FPI) of the HPT front rotating air seal for indications or linear indications in accordance with paragraphs 3.B.(1)(a) through (f), of GE CF34-10E Service Bulletin (SB) 72-0341 R02, dated September 24, 2021 (CF34-10E SB 72-0341 R02).
(2) If during any FPI required by paragraph (g)(1) of this AD, there are any indications greater than 0.015 in. (0.38mm) or any linear indications, before further flight, remove the HPT front rotating air seal from service and replace with a part eligible for installation, in accordance with paragraphs 3.B.(1)(g) and (h) of CF34-10E SB 72-0341 R02.
(3) If during any FPI required by paragraph (g)(1) of this AD, there are any indications that extends beyond the rabbet diameter M, as specified in paragraph 3.B.(1)(i), Figure 1, and Figure 4 (Sheet 2) of CF34-10E SB 72-0341 R02, before further flight remove the HPT rotor disk from service and replace with a part eligible for installation, in accordance with paragraph 3.B.(1)(i)2 of CF34-10E SB 72-0341 R02.
Replacing the HPT front rotating air seal with an HPT front rotating air seal having P/N 2929M57P01 constitutes terminating action for the inspections required by paragraph (g)(1) of this AD.
(1) For the purpose of this AD, a “piece-part exposure” is when the HPT front rotating air seal is disassembled from the HPT rotor assembly.
(2) For the purpose of this AD, a “linear indication” is any indication whose length is at least four times greater than its width.
(3) For the purpose of this AD, a “part eligible for installation” is defined as the following, as applicable:
(i) An HPT front rotating air seal that is eligible for installation is an HPT front rotating air seal having P/N 1865M49P04, P/N 2448M30P02, or P/N 2448M30P03 that has passed the inspection required by paragraph (g)(1) of this AD, or an HPT front rotating air seal having P/N 2929M57P01.
(ii) An HPT rotor disk that is eligible for installation is an HPT rotor disk having P/N 1865M51P03 or P/N 1865M51P04 that has not been removed from service as a result of the actions required by paragraph (g)(3) of this AD.
(1) The Manager, AIR-520 Continued Operational Safety Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the AIR-520 Continued Operational Safety Branch, send it to the attention of the person identified in paragraph (k) of this AD and email to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Alexei Marqueen, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198; phone: (781) 238-7178; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the material listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this material as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) General Electric Company CF34-10E Service Bulletin 72-0341 R02, dated September 24, 2021.
(ii) [Reserved]
(3) For material identified in this AD, contact General Electric Company, 1 Neumann Way, Cincinnati, OH 45215; phone: (513) 552-3272; email:
(4) You may view this material at FAA, Airworthiness Products Section, Operational Safety Branch, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call (817) 222-5110.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend United States Area Navigation (RNAV) Route Q-8 and revoke RNAV Route Q-18 in Alaska. The FAA is proposing this action to resolve an issue involving rejected automated flight plans.
Comments must be received on or before September 9, 2024.
Send comments identified by FAA Docket No. FAA-2024-1934 and Airspace Docket No. 23-AAL-60 using any of the following methods:
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FAA Order JO 7400.11H, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Steven Roff, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend the airway structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.
The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.
The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments it receives.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Operations office (see
United States Area Navigation Routes are published in paragraph 2006 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023, and effective September 15, 2023. These updates would be published in the next update to FAA Order JO 7400.11. That order is publicly available as listed in the
FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
RNAV route Q-8 currently extends between the Anchorage, AK, Very High Frequency Omnidirectional Range/Distance Measuring Equipment (VOR/DME) and the Galena, AK, VOR/DME. The FAA is proposing to amend Q-8 by extending the route beyond Galena VOR/DME to the Barrow, AK, VOR/DME. This extension would serve to mitigate the proposal to revoke Q-18.
Q-18 extends between the Galena VOR/DME and the Barrow VOR/DME. The route identifier Q-18 is used both in the United States airspace system and the European airspace system. Due to this, flight plans that are intended to contain Q-18 in the United States are routinely rejected by the automated flight plan system. Attempts to resolve the flight plan conflicts have been unsuccessful. The FAA is proposing to revoke Q-18 in its entirety. The proposed amendment to Q-8 would extend the route to directly overlie Q-18.
The FAA is proposing an amendment to 14 CFR part 71 to amend United States Area Navigation (RNAV) Route Q-8 and revoke RNAV Route Q-18 in Alaska.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking; correction.
This document corrects a notice of proposed rulemaking (REG-133850-13) published in the
Written or electronic comments were to be received by July 15, 2024.
Commenters were strongly encouraged to submit public comments electronically.
Concerning the proposed regulations, contact Livia Piccolo of the Office of Associate Chief Counsel (Income Tax and Accounting), at (202) 317-7007 (not a toll-free number); concerning submissions of comments or the public hearing, Vivian Hayes, (202) 317-6901 (not toll-free number) or by email to
The notice of proposed rulemaking (REG-133850-13) that is the subject of this correction is under section 263A of the Code.
Accordingly, the notice of proposed rulemaking (REG-133850-13) that is the subject of FR Doc. 2024-10579, published on May 15, 2024, is corrected on page 42405, in the third column, by correcting the third line from the bottom of the column to read, “amendments to § 1.263A-11(e) to”.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking; correction.
This document corrects a notice of proposed rulemaking (REG-124593-23) published in the
Written or electronic comments are still being accepted and must be received by August 19, 2024.
Commenters were strongly encouraged to submit public comments electronically via the Federal eRulemaking Portal at
Concerning the proposed regulations, Elizabeth Zanet of the Office of Associate Chief Counsel (Passthroughs and Special Industries), (202) 317-6007 (not a toll-free number); concerning submissions of comments or the public hearing, the Publications and Regulations Section, (202) 317-6901
The notice of proposed rulemaking (REG-124593-23) that is the subject of these corrections is under section 6011 of the Code.
In proposed rule FR Doc. 2024-13282, beginning on page 51476 in the issue of June 18, 2024, make the following corrections:
1. On page 51477, in the first column, under the heading
2. On page 51479 in the first column, the first line of the column is corrected to read “provided under section 732(a)(2), section 732(a)(1)”.
3. On page 51483, in the third column, in the twelfth line of the second full paragraph the language “reduces” is corrected to read “reduce”.
4. On page 51488, in the first column, in the second full paragraph, the second line from the bottom of the paragraph is corrected to read “free number) by September 12,”.
Department of Veterans Affairs.
Proposed rule.
The Department of Veterans Affairs (VA) proposes to amend its regulations that govern the Servicemembers' Group Life Insurance (SGLI) Traumatic Injury Protection (TSGLI) program to correct an unintended amendment that was made in a recent rulemaking amending the TSGLI Schedule of Losses for payments for inability to perform at least two activities of daily living (ADL) as a result of a traumatic injury other than a traumatic brain injury.
Comments must be received on or before September 23, 2024,
Comments must be submitted through
Paul Weaver, Insurance Specialist, Department of Veterans Affairs Insurance Service (310/290B), 5000 Wissahickon Avenue, Philadelphia, PA 19144, (215) 842-2000, ext. 4263. (This is not a toll-free number.)
TSGLI provides up to $100,000 of traumatic injury coverage to all servicemembers enrolled in SGLI, and the coverage provides a financial benefit to seriously injured SGLI insureds to assist them with expenses incurred during long periods of recovery and rehabilitation.
On March 15, 2023, VA published a final rule in the
The current TSGLI Schedule of Losses, as published in the 2023 final rule referenced above, includes a new interval for payment at the 15th consecutive day of ADL loss. 38 CFR 9.21(c)(20) (a “[t]raumatic injury, other than traumatic brain injury, resulting in inability to perform at least 2 activities of daily living . . . [is] payable at the 15th consecutive day of ADL loss [at] $25,000”). The payment schedule retains the original text for the tiered eligibility standards for payments at the 30th, 60th, and 90th consecutive-day intervals, but it does not include payment at the 120th consecutive-day interval.
VA implemented the TSGLI program in December 2005 (see 70 FR 75,940, 75,947), and from that time until the 2023 final rule, VA had applied the same tiered schedule for amounts payable under the TSGLI schedule for an inability to perform at least two ADLs as a result of a traumatic injury other than a traumatic brain injury: $25,000 at the 30th consecutive day of the inability to perform ADLs, with additional payments of $25,000 each at the 60th, 90th, and 120th consecutive day intervals thereafter. This scheduled loss was initially codified at 38 CFR 9.20(e)(7)(xliv), and although the scheduled loss was recodified in subsequent amendments to the TSGLI regulations, VA did not intend to change the tiered schedule for TSGLI payments for an inability to perform ADLs as a result of a traumatic injury other than a traumatic brain injury.
In its recent review of the TSGLI regulation prior to the 2023 final rule, VA determined that the TSGLI payment range for the scheduled losses did not warrant amendment, noting that the then-existing payment amounts in the regulation exceeded payouts under many commercial accidental death and dismemberment insurance policies on which VA's schedule was based and was consistent with Congress's intent concerning VA's administration of the program. See 88 FR 15,908 (discussing VA's decision not to change the TSGLI payment schedule).
VA has considered but declines to adopt the changed tiered schedule for payments based on the loss of ADLs due to traumatic injury other than brain injury listed in current 38 CFR 9.21(c)(20), which is the result of VA's inadvertent error. As an initial matter, we note that the 30-, 60-, 90-, and 120-day intervals under the Schedule of Losses were intended for general applicability under this program, unless otherwise specified. Revisions to the
VA is also obligated to manage TSGLI according to sound actuarial principles (38 U.S.C. 1980A(e)(4) and (5)). See 70 FR 75,940. Further, Congress has expressed its desire that the TSGLI premium remain minimal (151 Cong. Rec. S4095 (2005) (statement of Sen. Craig)). Reducing the first prescribed interval for the most common loss payout under the schedule would substantially increase the benefit costs under the program—which is funded by servicemembers' premiums—and jeopardize the actuarial soundness of the program by placing upward pressure on the TSGLI premium. If the premiums are no longer sufficient to cover program costs, the only way for the program to avoid a funding loss is to increase the premium. See 38 U.S.C. 1980A(a) and (e).
Finally, VA does not have the authority to make unilateral revisions to regulations that govern coverage for loss due to traumatic injury. See 38 U.S.C. 1980A(j) (requiring VA to consult with the Secretary of Defense when promulgating regulations which govern coverage for loss due to traumatic injury). During both the TSGLI Year-One Review and the TSGLI Year-Ten Review, VA consulted, as required by law, with the uniformed services as well as VA, military, and private medical professionals on this issue. VA findings from this consultation confirmed the 30, 60, 90, and 120-day payment intervals. Therefore, VA has determined that it is necessary to correct this error instead of retaining the erroneous amendment containing the currently reduced time periods.
For the reasons explained, VA proposes to amend 38 CFR 9.21(c)(20) to reinstate the tiered schedule for payments for an inability to perform at least two ADLs as a result of a traumatic injury other than a traumatic brain injury beginning at 30 consecutive days, with additional payments at 60, 90, and 120 consecutive days.
Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 (Executive Order on Modernizing Regulatory Review) supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review established in Executive Orders 12866 and 13563. The Office of Information and Regulatory Affairs has determined that this rulemaking is not a significant regulatory action under Executive Order 12866, as amended by Executive Order 14094. The Regulatory Impact Analysis associated with this rulemaking can be found as a supporting document at
The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). The factual basis for this certification is because the regulation affects only individuals and would not directly affect any small entities. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final regulatory flexibility analysis requirements of sections 603 and 604 do not apply.
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.
Although this proposed rule contains collection of information under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), there are no provisions associated with this rulemaking constituting any new collection of information or any revisions to the existing collection of information. The collection of information for 38 CFR 9.21 is currently approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 2900-0919.
The Assistance Listing number and title for the program affected by this document is 64.103, Life Insurance for Veterans.
Life insurance, Military personnel, Veterans.
Denis McDonough, Secretary of Veterans Affairs, approved and signed this document on July 17, 2024, and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs.
For the reasons stated in the preamble, VA proposes to amend 38 CFR part 9 as set forth below:
38 U.S.C. 501, 1965-1980A, unless otherwise noted.
(c) * * *
(20) Traumatic injury, other than traumatic brain injury, resulting in inability to perform at least 2 activities of daily living (ADL):
(i) The amount payable at the 30th consecutive day of ADL loss is $25,000.
(ii) The amount payable at the 60th consecutive day of ADL loss is an additional $25,000.
(iii) The amount payable at the 90th consecutive day of ADL loss is an additional $25,000.
(iv) The amount payable at the 120th consecutive day of ADL loss is an additional $25,000.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to amend the National Emission Standards for Hazardous Air Pollutants (NESHAP) from Hazardous Waste Combustors (HWC) to remove the exemptions and revise other provisions associated with emission standard exemptions for periods of malfunction, to add electronic reporting provisions, to amend emergency safety vent provisions, and to correct other minor provisions. The removal of the exemption for periods of malfunction is predicated on the previous vacatur of emission standard exemptions for periods of startup, shutdown, and malfunction (SSM) from the applicable general provisions. We are also proposing to remove or revise some associated requirements that are unnecessary, inappropriate, or redundant in the absence of the malfunction exemption, such as in recordkeeping and reporting. Emission standards will apply during periods of malfunction as required under the Clean Air Act (CAA). The addition of electronic reporting provisions will provide for simplified reporting by sources and will enhance the availability of data on sources to the EPA and the public. In addition, the EPA is proposing amendments to emergency safety vent provisions and one correction to the rule to correct an inadvertent error in the Code of Federal Regulations (CFR) related to the use of Method 23 to determine compliance with the dioxin and furan standards.
Comments must be received on or before September 9, 2024. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before August 23, 2024.
You may send comments, identified by Docket ID No. EPA-HQ-OAR-2004-0022, by any of the following methods:
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For questions about this proposed action, contact U.S. EPA, Attn: Rachel Smoak, Mail Drop: E143-02, 109 T.W. Alexander Drive, P.O. Box 12055, RTP, North Carolina 27711; telephone number: (919) 541-0253; and email address:
To request a virtual public hearing, contact the public hearing team at (888) 372-8699 or by email at
If a public hearing is requested, the EPA will begin pre-registering speakers for the hearing no later than one (1) business day after a request has been received. To register to speak at the virtual hearing, please use the online registration form available at
The EPA will make every effort to follow the schedule as closely as possible on the day of the hearing; however, please plan for the hearing to run either ahead of schedule or behind schedule.
Each commenter will have four (4) minutes to provide oral testimony. The EPA encourages commenters to provide the EPA with a copy of their oral testimony electronically (via email) by emailing it to
The EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral testimony and supporting information presented at the public hearing.
Please note that any updates made to any aspect of the hearing will be posted online at
If you require the services of a translator or special accommodation such as audio description, please pre-register for the hearing with the public hearing team and describe your needs by July 31, 2024. The EPA may not be
The EPA may publish any comment received to its public docket. 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 (
The
Our preferred method to receive CBI is for it to be transmitted electronically using email attachments, File Transfer Protocol (FTP), or other online file sharing services (
Table 1 of this preamble lists the NESHAP and associated regulated industrial source categories that are the subject of this proposal. Table 1 is not intended to be exhaustive, but rather provides a guide for readers regarding the entities that this proposed action is likely to affect. The proposed standards, once promulgated, will be directly applicable to the affected sources. State, local, and Tribal government entities would not be affected by this proposed action. The source category that is the subject of this proposal is hazardous waste combustors (HWC) regulated under 40 CFR part 63, subpart EEE, the National Emission Standards for Hazardous Air Pollutants from Hazardous Waste Combustors (HWC NESHAP). The HWC NESHAP includes hazardous waste combusting sources from five initial source categories: hazardous waste incinerators, Portland cement manufacturing, clay products manufacturing (including lightweight aggregate kilns), industrial boilers, and hydrochloric acid production furnaces. As defined in the
In addition to being available in the docket, an electronic copy of this action is available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this proposed action at
A memorandum showing the rule edits that would be necessary to incorporate the changes to 40 CFR part 63, subpart EEE proposed in this action is available in the docket (Docket ID No. EPA-HQ-OAR-2004-0022). Following signature by the EPA Administrator, the EPA also will post a copy of this document to
The statutory authority for this action is provided by sections 112 and 301 of the Clean Air Act (CAA), as amended (42 U.S.C. 7401
Hazardous waste combustors are incinerators, cement kilns, lightweight aggregate kilns, boilers, or hydrochloric acid production furnaces that combust hazardous waste for the purpose of waste reduction, thermal energy recovery, and/or production of a product. The HWC NESHAP covers hazardous air pollutant emissions from hazardous waste combustors at major and area sources. The key pollutants the EPA regulates from these sources include polychlorinated dibenzodioxins and furans (PCDD/PCDF), mercury, cadmium, lead, arsenic, beryllium, chromium, hydrogen chloride, chlorine, other hydrocarbon HAP, and non-enumerated metal HAP.
The HWC NESHAP was first promulgated in 1999 and regulated hazardous waste incinerators, cement kilns, and lightweight aggregate kilns.
In a 2008 decision (
In this proposal, we are proposing the following revisions to the HWC NESHAP: (1) removal or revision of provisions associated with emission limit exemptions for periods of malfunction, including some recordkeeping and reporting requirements and General Provisions applicability; (2) amendment to emergency safety vent provisions, including recordkeeping requirements; (3) addition of electronic reporting provisions; and (4) a technical correction related to the use of Method 23 to determine compliance with the PCDD/PCDF standards. The proposed decisions, as well as the rationale for those decisions, are presented below.
We are proposing revisions to the malfunction provisions of the NESHAP in order to ensure that they are consistent with the decision in
With the issuance of the mandate in
We are also proposing several revisions to the General Provisions Applicable to Subpart EEE table (table 1 to subpart EEE) in the HWC NESHAP as is explained in more detail below. We also are proposing to revise certain recordkeeping and reporting requirements related to the malfunction exemption as further described below.
We are not proposing changes to the emissions limits of the HWC NESHAP even though we are removing the exemption from emission limits during periods of malfunction. Periods of startup, normal operations, and shutdown are all predictable and routine aspects of a source's operations. Malfunctions, in contrast, are neither predictable nor routine. Instead, they are, by definition, sudden, infrequent, and not reasonably preventable failures of emissions control, process, or monitoring equipment. (40 CFR 63.2) (Definition of malfunction). The EPA has interpreted CAA section 112 as not requiring emissions that occur during periods of malfunction to be factored into development of CAA section 112 standards. This reading has been upheld as reasonable by the D.C. Circuit since at least 2016.
Because we are proposing amendments to 40 CFR part 63, subpart EEE, we are also proposing related revisions to the recordkeeping and reporting requirements and to table 1 to subpart EEE.
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.6(e) by removing the applicability of 40 CFR 63.6(e)(1)(i), which describes the general duty to minimize emissions. Some of the language in that section is no longer either necessary or appropriate considering the elimination of the malfunction exemption. We are proposing instead to add regulatory text at 40 CFR 63.1206(b)(1) that reflects the general duty to minimize emissions while eliminating the reference to periods covered by a malfunction exemption. The current language in 40 CFR 63.6(e)(1)(i) characterizes what the general duty entails during periods of malfunction. With the elimination of the malfunction exemption, there is no need
We are also proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.6(e) by removing the applicability of 40 CFR 63.6(e)(1)(ii). Section 63.6(e)(1)(ii) imposes requirements that are no longer necessary with the elimination of the malfunction exemption or are redundant with the general duty requirement being added at 40 CFR 63.1206(b)(1).
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.6(e) by removing the applicability of 40 CFR 63.6(e)(3)(i)(A), which requires owners or operators to satisfy the general duty to minimize emissions at all times. The cross-reference to the general duty requirement is redundant with the general duty requirement being added at 40 CFR 63.1206(b)(1).
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.6(f) by removing the applicability of 40 CFR 63.6(f)(1), which requires that non-opacity emission standards apply at all times except as otherwise specified in an applicable subpart. Consistent with
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.6(h) by removing the applicability of 40 CFR 63.6(h)(1), which requires that opacity and visible emission standards apply at all times except as otherwise specified in an applicable subpart. Consistent with
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.7(e) by removing the applicability of 40 CFR 63.7(e)(1), which describes performance testing requirements. The EPA is instead proposing to add a performance testing requirement at 40 CFR 63.1207(g). The performance testing requirements we are proposing to add differ from the General Provisions performance testing provisions in several respects. The regulatory text does not include the language in 40 CFR 63.7(e)(1) that restated the malfunction exemption and language that precluded operations during periods of SSM periods from being considered “representative” for purposes of performance testing. As in 40 CFR 63.7(e)(1), performance tests conducted under this subpart should not be conducted during periods of SSM because conditions may not be representative of normal operating conditions. The EPA is proposing to add language that requires the owner or operator to record the process information that is necessary to document operating conditions during the test and include in such record an explanation to support that such conditions represent normal operation; conducting performance testing under operating conditions representative of the extreme range of normal conditions is consistent with this requirement. The language in 40 CFR 63.7(e) requires that the owner or operator make available to the Administrator such records “as may be necessary to determine the condition of the performance test” but does not specifically require the information to be recorded. The regulatory text the EPA is proposing to add to this provision builds on that requirement and makes explicit the requirement to record the information.
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.8(c) by removing the applicability of 40 CFR 63.8(c)(1)(i), which requires that owners or operators maintain and operate each continuous monitoring system in compliance with the general duty requirement. The cross-reference to the general duty requirement in that subparagraph is not necessary considering other requirements of 40 CFR 63.8 that require good air pollution control practices (40 CFR 63.8(c)(1)) and that set out the requirements of a quality control program for monitoring equipment (40 CFR 63.8(d)).
We are also proposing to revise 40 CFR 63.1211(a), which summarizes reporting requirements, by adding language that requires sources that fail to meet an applicable standard at any time to report the information concerning such events in both the excessive emissions and continuous monitoring system performance report and summary report already required under this rule. We are proposing that the report must contain the start date, start time, end date, end time, and the cause of such events (including unknown cause, if applicable), a list of the affected source or equipment, an estimate of the quantity of each regulated pollutant emitted over any emission limit, and a description of the method used to estimate the emissions.
Examples of such methods would include product-loss calculations, mass balance calculations, measurements when available, or engineering judgment based on known process parameters. The EPA is proposing this requirement to ensure that there is adequate information to determine compliance, to allow the EPA to determine the severity of the failure to meet an applicable standard, and to provide data that may document how the source met the general duty to minimize emissions during a failure to meet an applicable standard.
We are proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.10 by removing the applicability of 40 CFR 63.10(b)(2)(i), which describes the recordkeeping requirements during startup and shutdown. It will continue to be important to know when such startup and shutdown periods begin and end in order to determine compliance with the appropriate standard for normal operations. We are proposing to add recordkeeping requirements to 40 CFR 63.1211(e) that require recordkeeping of startup and shutdown events and require reporting related to all exceedances.
We are also proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.10 by removing the applicability of 40 CFR 63.10(b)(2)(ii), which describes the recordkeeping requirements during a malfunction. The EPA is proposing to add such requirements to 40 CFR 63.1211(e). The regulatory text we are proposing to add differs from the General Provisions it is replacing in that the General Provisions requires the creation and retention of a record of the occurrence and duration of each malfunction of process, air pollution control, and monitoring equipment. The EPA is proposing that sources record the start date, start time, end date, end time, and cause (including an unknown cause, if applicable) of any event in which an affected source fails to meet an applicable standard. The EPA is also
We are also proposing to revise the table 1 to subpart EEE entry for 40 CFR 63.10 by removing the applicability of 40 CFR 63.10(b)(2)(iv)(B), which requires sources to record actions to minimize emissions and record corrective actions. This requirement is now applicable by reference to 40 CFR 63.1211(e).
We are proposing revisions to the emergency safety vent openings provisions to remove the requirement for an emergency safety vent operating plan in 40 CFR 63.1206(c)(4)(ii) and bolster the associated reporting requirements. With the elimination of the exemption for periods of malfunction, affected units are subject to an emission standard during openings of emergency safety events that occur outside of periods of startup and shutdown. The applicability of a standard during such events will ensure that sources have ample incentive to plan for and achieve compliance and thus emergency safety vent operating plans are no longer necessary.
The EPA is proposing that owners or operators of hazardous waste combustor facilities submit electronic copies of required notices of intent to comply (NIC), notifications of compliance (NOC), notifications of changes that may adversely affect compliance, compliance progress reports, excessive emissions and continuous monitoring system performance reports and summary reports, performance test reports, performance evaluation reports, and periodic SSM reports through the EPA's Central Data Exchange (CDX) using the Compliance and Emissions Data Reporting Interface (CEDRI). A description of the electronic data submission process is provided in the memorandum
Additionally, the EPA has identified two broad circumstances in which electronic reporting extensions may be provided. These circumstances are: (1) outages of the EPA's CDX or CEDRI which preclude an owner or operator from accessing the system and submitting required reports, and (2) force majeure events, which are defined as events that will be or have been caused by circumstances beyond the control of the affected facility, its contractors, or any entity controlled by the affected facility that prevent an owner or operator from complying with the requirement to submit a report electronically. Examples of force majeure events are acts of nature, acts of war or terrorism, or equipment failure or safety hazards beyond the control of the facility. The EPA is providing these potential extensions to protect owners or operators from noncompliance in cases where they cannot successfully submit a report by the reporting deadline for reasons outside of their control. In both circumstances, the decision to accept the claim of needing additional time to report is within the discretion of the Administrator, and reporting should occur as soon as possible.
The electronic submittal of the reports addressed in this proposed rulemaking will increase the usefulness of the data contained in those reports, is in keeping with current trends in data availability and transparency, will further assist in the protection of public health and the environment, will improve compliance by facilitating the ability of regulated facilities to demonstrate compliance with requirements and by facilitating the ability of delegated State, local, Tribal, and territorial air agencies and the EPA to assess and determine compliance, and will ultimately reduce burden on regulated facilities, delegated air agencies, and the EPA. Electronic reporting also eliminates paper-based, manual processes, thereby saving time and resources, simplifying data entry, eliminating redundancies, minimizing data reporting errors, and providing data quickly and accurately to the affected facilities, air agencies, the EPA, and the public. Moreover, electronic reporting is consistent with the EPA's plan
On March 20, 2023, 40 CFR part 63, subpart EEE was updated to remove the requirement for Administrator approval to use EPA Method 23 in compliance demonstrations for PCDD/PCDF, reflecting revisions to EPA Method 23 made in March 2023.
The EPA is proposing to allow 180 days from the date of the final rule for compliance with the malfunction exemption removal, emergency safety vent operating plan removal, recordkeeping and reporting and General Provisions revisions, and electronic reporting requirements other than performance test and performance evaluation reports. The EPA is proposing to allow 90 days from the date of the final rule for compliance with electronic submission of performance test and performance evaluation results. Because the proposed technical correction is non-substantive, the EPA is proposing to make it effective immediately upon promulgation of the final rule.
The EPA is proposing changes that affect ongoing compliance for this subpart, namely removing the provisions that provide an exemption from the requirements to meet the standard during periods of malfunction, removing the requirement for an emergency safety vent operating plan, adding electronic reporting provisions, and updating recordkeeping and reporting requirements and General Provisions applicability in keeping with the proposed revisions. Our experience with other similar industries shows that such facilities generally require a period of 180 days to read and understand the amended rule requirements, to evaluate their operations for any changes needed to meet the revised requirements, and to update their operations to reflect their revised requirements.
In contrast, the EPA is proposing no changes to the content of performance test and performance evaluation reports, only the method of reporting. Our experience with requiring electronic reporting of performance tests and performance evaluations in other industries shows that as the ERT has been in use by source testing companies since 2004, less time is necessary for its implementation, and that facilities generally require a period of 90 days to understand and become familiar with the process of submitting performance test and performance evaluation results electronically through the EPA's CEDRI. Accordingly, we propose that 90 days would be sufficient time for facilities with hazardous waste combustors to complete these tasks.
The hazardous waste combustor source category comprises incinerators, cement kilns, lightweight aggregate kilns, solid fuel boilers, liquid fuel boilers, and hydrochloric acid production furnaces that combust hazardous waste. Currently, the EPA has identified 177 hazardous waste combustors at 96 facilities owned by 82 corporate entities. Of these, 70 are incinerators, 67 are liquid fuel boilers, 17 are hydrochloric acid production furnaces, 14 are cement kilns, 7 are solid fuel boilers, and 2 are lightweight aggregate kilns. We estimate that four new hazardous waste combustors may begin operations in the next five years.
We do not anticipate that the proposed amendments to this subpart will impact air quality. The addition of electronic reporting provisions, amendments to the emergency safety vent provisions, and correction of inadvertent errors do not affect the stringency of the standards in 40 CFR part 63, subpart EEE. Because malfunctions are, by definition, not reasonably preventable, we do not expect the removal of the emissions limit exemption for periods of malfunction to impact hazardous air pollutant emissions or, subsequently, air quality.
The EPA estimated costs for this proposed action based on the results of the analysis for information collection activities, as presented in the Paperwork Reduction Act (PRA) section, Economic Impact Analysis memorandum, and accompanying Information Collection Request (ICR) documents in the docket. The EPA estimated the incremental industry costs of the rule to be $2,600 per unit in the first year and $840 in each of the subsequent years. Total incremental industry costs of the rule are estimated to be $470,000 in the first year and $150,000 in each of the subsequent years. These costs are small relative to the estimated revenue of the hazardous waste treatment and disposal industry (approximately $9 billion in 2021).
Because of the low costs, relatively small number of affected existing units (fewer than 200) and because the EPA anticipates 4 affected new sources in the next 5 years, the EPA expects minimal economic impacts under the final rule.
The proposed amendments require electronic submittal of performance tests, deviation reports, and annual compliance reports, which will streamline reporting for affected sources and increase the usefulness of the data and improve data accessibility for the public. The electronic reporting requirements will, therefore, further assist in the protection of public health and the environment and will ultimately result in less burden on the regulated community. No air quality benefits are expected, quantified, or monetized.
For purposes of analyzing regulatory impacts, the EPA relies upon its June 2016 “Technical Guidance for Assessing Environmental Justice in Regulatory Analysis,” which provides recommendations that encourage analysts to conduct the highest quality analysis feasible, recognizing that data limitations, time, resource constraints, and analytical challenges will vary by media and circumstance. The Technical Guidance states that a regulatory action may involve potential EJ concerns if it could: (1) create new disproportionate impacts on communities with EJ concerns; (2) exacerbate existing disproportionate impacts on communities with EJ concerns; or (3) present opportunities to address existing disproportionate impacts on communities with EJ concerns through this action under development.
The EPA's EJ technical guidance states that “[t]he analysis of potential EJ concerns for regulatory actions should address three questions: (A) Are there potential EJ concerns associated with environmental stressors affected by the regulatory action for population groups of concern in the baseline? (B) Are there potential EJ concerns associated with environmental stressors affected by the regulatory action for population groups of concern for the regulatory option(s)
The environmental justice analysis is presented for the purpose of providing the public with as full as possible an understanding of the potential impacts of this proposed action. The EPA notes that analysis of such impacts is distinct from the determinations proposed in this action under CAA section 112, which are based solely on the statutory factors the EPA is required to consider under that section.
To examine the potential for any EJ concerns that might be associated with HWC NESHAP facilities, we performed a proximity demographic analysis, which is an assessment of individual demographic groups of the populations living within 5 km (~3.1 miles) and 50 km (~31 miles) of the facilities. The EPA then compared the data from this analysis to the national average for each of the demographic groups. It should be noted that proximity to affected facilities does not indicate that any exposures or impacts will occur and should not be interpreted as a direct measure of exposure or impact. This limits the usefulness of proximity analyses when attempting to answer questions from EPA's EJ Technical Guidance.
The results show that for populations within 5 km of the 96 hazardous waste combustor facilities, the following demographic groups were above the national average: Black (19 percent versus 12 percent nationally), Hispanic/Latino (21 percent versus 19 percent nationally), people age 0 to 17 years (24 percent versus 22 percent nationally), people living below the poverty level (19 percent versus 13 percent nationally), people below two times the poverty level (38 percent versus 29 percent nationally), and people over the age of 25 without a high school diploma (15 percent versus 12 percent nationally).
The results show that for populations within 50 km of the 96 hazardous waste combustor facilities, the percent of the population that is Black is above the national average (14 percent versus 12 percent nationally).
A summary of the proximity demographic assessment performed is included as Table 2 of this preamble. The methodology and the results of the demographic analysis are presented in the document titled
Because the EPA does not expect this action to impact air quality, this action is not relevant to human health and the EPA's
We solicit comments on this proposed action. The EPA has attempted to ensure that the provisions we are proposing to eliminate are inappropriate, unnecessary, or redundant in the absence of the malfunction exemption. We are specifically seeking comment on whether we have successfully done so. The EPA is also soliciting comment on whether a work practice standard for periods of malfunction for reasons of safety should be set for hazardous waste combustors and, if yes, what the work practice standard should comprise.
The EPA also solicits comment on the proposed compliance dates, and we specifically request submission of information from sources in this source category regarding specific actions that would need to be undertaken to comply with the proposed amended requirements and the time needed to make the adjustments for compliance.
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action as defined in Executive Order 12866, as amended by Executive Order 14094, and is therefore not subject to a requirement for Executive Order 12866 review.
The information collection activities in this proposed rulemaking have been submitted for approval to the Office of Management and Budget (OMB) under the PRA. The Information Collection Request (ICR) document that the EPA prepared has been assigned EPA ICR number 2803.01. You can find a copy of the ICR in the docket for this proposed rulemaking, and it is briefly summarized here.
The goal of this information collection request (ICR) is to collect new monitoring, reporting and recordkeeping data from hazardous waste combustors (HWC) subject to emission standards under 40 CFR part 63, subpart EEE, National Emission Standards for Hazardous Air Pollutants from Hazardous Waste Combustors. The key revisions to this subpart are the removal of exemptions for emissions during malfunction periods in response to
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9.
Submit your comments on the Agency's need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden to the EPA using the docket identified at the beginning of this rulemaking. The EPA will respond to any ICR-related comments in the final rule. You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs using the interface at
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. The small entities subject to the requirements of this action are small businesses in the NESHAP and industrial source categories listed in Table 1 operating hazardous waste combustors. The Agency has determined that, in the 2025 analysis year, 9 potentially affected small entities operating 18 units at 9 facilities may experience an impact of less than 1 percent of revenue under the proposed rulemaking. Details of this analysis are presented in the document titled
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. While this action creates an enforceable duty on the private sector, the cost does not exceed $100 million or more.
This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
This action does not have Tribal implications as specified in Executive Order 13175. The EPA is not aware of any hazardous waste combustor unit owned or operated by Tribal governments. This action will not have substantial direct costs or impacts on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to the proposed amendments.
The EPA interprets Executive Order 13045 as applying only to those
Therefore, this action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk. Since this action does not concern human health, EPA's Policy on Children's Health also does not apply.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
The EPA believes that the human health or environmental conditions that exist prior to this action result in or have the potential to result in disproportionate and adverse human health or environmental effects on communities with environmental justice concerns. As stated in section IV.F of this preamble, we performed a proximity demographic analysis for 96 existing facilities with hazardous waste combustors that are currently subject to 40 CFR part 63, subpart EEE. A total of 1.8 million people live within 5 kilometers (approximately 0.1 miles) of these facilities. The proportion of demographic groups living near these hazardous waste combustors are above the national average for Black, Hispanic or Latino, people aged 0 to 17 years, people below the poverty level, people below two times the poverty level, and people over the age of 25 and without a high school diploma. See section IV.F of this preamble for further results of the analysis.
The EPA believes that this action is not likely to change existing disproportionate and adverse effects on communities with environmental justice concerns. The EPA does not anticipate that the proposed amendments to the subpart will impact air quality because the EPA does not expect any of the proposed provisions to affect hazardous air pollutant emissions, and so is not likely to change existing disproportionate and adverse effects on communities with environmental justice concerns. Because malfunctions are, by definition, not reasonably preventable, we do not expect the removal of the emissions limit exemption for periods of malfunction to impact hazardous air pollutant emissions or, subsequently, air quality. The addition of electronic reporting provisions, amendments to the emergency safety vent provisions, and correction of inadvertent errors are primarily changes to recordkeeping and reporting requirements, and so do not impact hazardous air pollutant emissions.
The information supporting this Executive Order review is contained in section IV.F of this preamble. The demographic analysis is presented in the document titled
Environmental protection, Air pollution control, Hazardous substances, Reporting and recordkeeping requirements.
Environmental Protection Agency (EPA).
Proposed rule.
Pursuant to the Solid Waste Disposal Act of 1965, as amended (commonly known as the Resource Conservation and Recovery Act (RCRA)), the Environmental Protection Agency (EPA) is proposing to approve revisions to the Commonwealth of Pennsylvania's Underground Storage Tank (UST) program submitted by the Commonwealth of Pennsylvania (Pennsylvania or State). This action is based on EPA's determination that these revisions satisfy all requirements needed for program approval. This action also proposes to codify EPA's approval of Pennsylvania's state program and to incorporate by reference those provisions of Pennsylvania's regulations and statutes that we have determined meet the requirements for approval. The provisions will be subject to EPA's inspection and enforcement authorities under sections 9005 and 9006 of RCRA subtitle I and other applicable statutory and regulatory provisions. In the “Rules and Regulations” section of this issue of the
Send written comments by August 23, 2024.
Submit any comments, identified by Docket ID No. EPA-R03-UST-2023-0204, by one of the following methods:
1.
2.
Thomas UyBarreta, (215) 814-2953,
EPA has explained the reasons for this action in the preamble to the direct final rule. For additional information see the direct final rule published in the “Rules and Regulations” section of this issue of the
Office of the Chief Procurement Officer, Department of Homeland Security (DHS).
Proposed rule.
DHS is proposing to amend the Homeland Security Acquisition Regulation (HSAR) provisions that relate to the Kissell Amendment, a section of the American Recovery and Reinvestment Act of 2009 that deals with the acquisition of certain clothing, canvas or textile products and natural and synthetic fabrics. DHS believes these proposed changes would help reduce confusion and provide clarity to the requirements under the Kissell Amendment.
Comments on the proposed rule should be submitted in writing to one of the addresses shown below on or before September 23, 2024, to be considered in the formation of the final rule.
Submit comments identified by HSAR Case 2024-002, Restrictions on Foreign Acquisition Update, using any of the following methods:
•
Submit comments via the Federal eRulemaking portal by entering “HSAR Case 2024-002” under the heading “Enter Keyword or ID” and select “Search.” Select the link “Submit a Comment” that corresponds with “HSAR Case 2024-002.” Follow the instructions provided at the “Submit a Comment” screen. Please include your name, company name (if any), and “HSAR Case 2024-002” on your attached document.
•
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Comments received generally will be posted without change to
Nancy Harvey, Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy and Legislation, at (202) 282-8000 or email at
The Buy American Act of 1933, as amended (BAA), addresses preferences in Federal procurement.
In 2009, the American Recovery and Reinvestment Act of 2009 (Recovery Act), was enacted.
The Kissel Amendment further requires DHS to apply it in a manner consistent with United States obligations under international agreements.
The implementing regulations for the BAA are in the Federal Acquisition Regulation (FAR).
In 2009, DHS published an interim rule with request for comments (“2009 Interim Rule”) amending the HSAR at 48 CFR part 3025, Foreign Acquisitions, and part 3052, Solicitation Provisions and Contract Clauses, incorporating the Kissell Amendment requirements.
The 2009 Interim Rule, among other changes, also created regulatory definitions, such as the term “end product” which, for purposes of 48 CFR 3025.70, and under 48 3052.225-70 “means supplies delivered under a line item of a contract.”
The regulations also provide a list of the types of textile items included in the restriction (such as certain yarn, wool, and cotton), explain the specific application of trade agreements, and require, with some exceptions, the use of domestic goods for procurement of Kissell-covered items.
DHS notes that the DHS Chief Procurement Officer can issue HSAR deviations when necessary to allow components to deviate from the HSAR.
In addition, on March 14, 2013, DHS issued an amendment to Deviation 13-01 (“Deviation Amendment 1”).
DHS is proposing amendments to the HSAR at 48 CFR part 3025, Foreign Acquisitions, and at 48 CFR part 3052, Solicitation Provisions and Contract Clauses, to codify guidance in Deviation 13-01 and Deviation Amendment 1, and make additional revisions consistent with it.
DHS is proposing to amend the HSAR to better clarify how DHS complies with the Kissell Amendment, including proposing to codify certain guidance from Deviation 13-01 and Deviation Amendment 1.
DHS is also proposing to define the term `end item' to mean “supplies delivered under a line item of a contract.”
DHS is further proposing to amend 48 CFR 3025.7000, to explain that this provision applies to the Kissell Amendment, the subject of this subpart; and it would also amend the description of the type of funds to which the Kissell Amendment applies consistent with current practice and Deviation 13-01. The Kissell Amendment applies “with respect to contracts entered into by the Department of Homeland Security 180 days after February 17, 2009.”
Therefore, DHS is proposing to amend HSAR section 3025.7000, to remove the regulatory text added by the 2009 Interim Rule that restricted applicability of the Kissell Amendment to contracts, options and orders entered into on or after August 16, 2009 with funds appropriated or otherwise provided on or before February 17, 2009. This proposed change is consistent with current practice and Deviation 13-01.
DHS is also proposing to revise the introductory text of 48 CFR 3025.7002-1, Restrictions, to codify that the Kissell Amendment applies to all contracts, options and orders entered into on or after August 16, 2009. This proposed change is consistent with current practice and Deviation 13-01.
Similar to the proposed changes discussed above to replace the term `end product' with `end item' DHS is proposing to amend 48 CFR 3025.7002-2, and update the provisions impacting the De Minimis Exception. As discussed above, the De Minimis Exception uses the term end item.
In addition DHS is proposing to make a technical amendment, amending 48 CFR 3025.7002-2(h), to fix a typographical error, and reference 48 CFR 3025.7003-3 when mentioning the regulatory provision for specific application of trade agreements.
Executive Order 12866 (Regulatory Planning and Review), as amended by Executive Order 14094 (Modernizing Regulatory Review), and Executive Order 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.
The Office of Management and Budget (OMB) has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866, as amended by Executive Order 14094. Accordingly, OMB has not reviewed this regulatory action.
This proposed rule would codify requirements as set forth in the Deviation 13-01 and Deviation Amendment 1. To provide clarity and consistency, DHS proposes this HSAR revision to align with existing DHS practice. DHS is not newly implementing the Kissell Amendment, but is, as described above, amending the existing regulation to clarify the type of funds to which the Kissell Amendment, including the De Minimis Exception, applies.
The benefits and costs of a regulation are generally measured against a no-action baseline, which is a reasonable forecast of the way the world would look absent the regulatory action being assessed.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, (Mar. 29, 1996), requires Federal agencies to consider the potential impact of regulations on small businesses, small governmental jurisdictions, and small organizations during the development of their rules. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, or governmental jurisdictions with populations of less than 50,000. The proposed rule would provide clarity and consistency between the HSAR and existing DHS practice as set forth in Deviation 13-01 and Deviation Amendment 1. This proposed rule does not directly mandate any actions or requirements that would result in burdens for small entities. Therefore, DHS certifies this proposed rule would not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,
The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501-35210).
Section 102 of the National Environmental Policy Act of 1969 (NEPA), Public Law 91-190, 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321
DHS Directive 023-01, Rev. 01 and DHS Instruction Manual 023-01-001-01, Rev. 01 (Instruction Manual) establish the policies and procedures DHS and its component agencies use to comply with NEPA and the Council on Environmental Quality regulations for implementing NEPA codified in 40 CFR parts 1500-1508. The CEQ regulations allow Federal agencies to establish, in their implementing procedures, with CEQ review and concurrence, categories of actions (“categorical exclusions”) that experience has shown do not, individually or in the aggregate, have a significant effect on the human environment and, therefore, do not require preparation of an environmental assessment or environmental impact statement. 40 CFR 1501.4, 1507.3(e)(2)(ii). Appendix A of the Instruction Manual lists the DHS categorical exclusions.
Under DHS NEPA implementing procedures, for an action to be categorically excluded, it must satisfy each of the following three conditions: (1) the entire action clearly fits within one or more categorical exclusions; (2) the action is not a piece of a larger action; and (3) no extraordinary circumstances exist that create the potential for a significant environmental effect.
The proposed rule, if finalized, would amend the HSAR to better clarify how DHS complies with the Kissell Amendment. This would include codifying certain guidance from Deviation 13-01 and Deviation Amendment 1 that is currently in effect.
DHS is not aware of any significant impact on the environment, or any change in environmental effect that will result from this proposed rule. DHS finds promulgation of the rule clearly fits within categorical exclusion A3, established in the Department's NEPA implementing procedures.
This proposed rule is a standalone rule and is not part of any larger action. This proposed rule would not result in any major Federal action that would significantly affect the quality of the human environment. Furthermore, DHS has determined that no extraordinary circumstances exist that would create the potential for significant environmental effects. Therefore, this proposed rule is categorically excluded from further NEPA review and documentation.
Government procurement.
Accordingly, for the reasons set forth in the preamble, DHS proposes to amend 48 CFR parts 3025 and 3052 as follows:
5 U.S.C. 301-302, 41 U.S.C. 1303, 41 U.S.C. 1707, 41 U.S.C. 1702, and 48 CFR subpart 1.3.
This subpart implements section 604 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5.
(a) “Commercial,” as applied to an item described in (HSAR) 48 CFR 3025.7002-1, means an item of supply, whether an end item or component, that meets the definition of “commercial item” set forth in (FAR) 48 CFR 2.101.
(b) “Component” means any item supplied to the Government as part of an end item or of another component.
(c) “End item” means supplies delivered under a line item of a contract.
(d) “Non-commercial,” as applied to an item described in (HSAR) 48 CFR 3025.7002-1, means an item of supply, whether an end item or component, that does not meet the definition of “commercial item” set forth in (FAR) 48 CFR 2.101.
The following restrictions implement section 604 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5, and they apply to all contracts, options and orders entered into on or after August 16, 2009. Except as provided in (HSAR) 48 CFR 3025.7002-2, do not acquire, either as end items or components, any item listed in paragraphs (a) or (b) of this section, if the item is directly related to the national security interests of the United States and the item has not been grown, reprocessed, reused, or produced in the United States:
(d) Acquisitions of items listed in (FAR) 48 CFR 25.104.
(g) The acquisition of covered items in 3052.7002-1 (a) and (b) containing non-compliant fibers when the total value of
(h) Acquisitions of items otherwise covered by (HSAR) 48 CFR 3025.7002-1(a) and (b) for which restricting a procurement of the items to those that have been grown, reprocessed, reused, or produced in the United States would be inconsistent with United States obligations under international agreements. Acquisitions of products that are eligible products per (FAR) 48 CFR subpart 25.4 are not covered by these restrictions; see (HSAR) 48 CFR 3025.7002-3 for specific application of trade agreements.
5 U.S.C. 301-302, 41 U.S.C. 1707, 41 U.S.C. 1702, 41 U.S.C. 1303(a)(2), 48 CFR part 1, subpart 1.3, and DHS Delegation Number 0702.
(a) * * *
(1) “Commercial,” as applied to an item described in paragraph (b) of this clause, means an item of supply, whether an end item or component, that meets the definition of “commercial item” set forth in (FAR) 48 CFR 2.101.
(2) “Component” means any item supplied to the Government as part of an end item or of another component.
(3) “End item” means supplies delivered under a line item of this contract.
(4) “Non-commercial,” as applied to an item described in paragraphs (b) or (c) of this clause, means an item of supply, whether an end item or component, that does not meet the definition of “commercial item” set forth in (FAR) 48 CFR 2.101.
(b) The Contractor shall deliver under this contract only such of the following commercial or non-commercial items, either as end items or components, that have been grown, reprocessed, reused, or produced in the United States:
(c) The Contractor shall deliver under this contract only such of the following non-commercial items, either as end items or components, that have been grown, reprocessed, reused, or produced in the United States:
(d) * * *
(2) To the covered items in paragraphs (b) and (c) of this Clause containing non-compliant fibers when the total value of the non-compliant fibers contained in the end item does not exceed 10 percent of the total purchase price of the end item; or
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.
90-Day petition finding; request for information, and initiation of a status review.
We, NMFS, announce a 90-day finding on a petition to list the Alabama shad (
Scientific and commercial information pertinent to the petitioned action must be received by September 23, 2024.
You may submit scientific and commercial information relevant to our review of the status of Alabama shad, identified by “Alabama shad Petition” or by the docket number, NOAA-NMFS-2024-0052 by the following method:
•
Interested persons may obtain a copy of the petition online at the NMFS website:
Calusa Horn, NMFS Southeast Region, at
On January 9, 2024, we received a petition from the Center for Biological Diversity, the Miccosukee Tribe of Indians, Alabama Rivers Alliance, American Whitewater, Black Warrior Riverkeeper, Cahaba Riverkeeper, Chattahoochee Riverkeeper, Choctawhatchee Riverkeeper, Coosa Riverkeeper, Forest Keeper, Healthy Gulf, Healthy Oceans Coalition, Mobile Baykeeper, and Pearl Riverkeeper (Petitioners) to list the Alabama shad (
This is the second petition we have received from the Center for Biological Diversity to list the Alabama shad under the ESA. The first petition was received on April 20, 2010. On February 17, 2011, we published a negative 90-day finding (76 FR 9320) stating that the petition did not present substantial scientific or commercial information indicating that the petitioned action to list Alabama shad may be warranted. On April 28, 2011, in response to the negative 90-day finding, the Center for Biological Diversity filed a notice of intent to sue the Department of Commerce and NMFS for alleged violations of the ESA in making its finding. The Center for Biological Diversity filed the lawsuit in the U.S. District Court for the District of Columbia on January 18, 2012. On June 21, 2013, Center for Biological Diversity and Department of Commerce settled the lawsuit. We agreed to reevaluate the original listing petition, as well as information in our files, and publish a new 90-day finding. On September 19, 2013, we published a 90-day finding with our determination that the petition presented substantial scientific and commercial information indicating that the petitioned action may be warranted (78 FR 57611). On January 12, 2017, we determined that listing Alabama shad as threatened or endangered under the ESA was not warranted and published a 12-month finding in the
Section 4(b)(3)(A) of the ESA of 1973, as amended (16 U.S.C. 1531
Under the ESA, a listing determination must address a species, which is defined to also include subspecies and, for any vertebrate species, any distinct population segment (DPS) that interbreeds when mature (16 U.S.C. 1532(16)). A joint NMFS-U.S. Fish and Wildlife Service (USFWS) (jointly, “the Services”) policy clarifies the agencies' interpretation of the phrase “distinct population segment” for the purposes of listing, delisting, and reclassifying a species under the ESA (61 FR 4722; February 7, 1996). A species, subspecies, or DPS is “endangered” if it is in danger of extinction throughout all or a significant portion of its range, and “threatened” if it is likely to become endangered within the foreseeable future throughout all or a significant portion of its range (ESA sections 3(6) and 3(20), respectively, 16 U.S.C. 1532(6) and (20)). Pursuant to the ESA and our implementing regulations, we determine whether species are threatened or endangered based on any one or a combination of the following five section 4(a)(1) factors: the present or threatened destruction, modification, or curtailment of habitat or range; overutilization for commercial, recreational, scientific, or educational purposes; disease or predation; inadequacy of existing regulatory mechanisms to address identified threats; or any other natural or manmade factors affecting the species' existence (16 U.S.C. 1533(a)(1), 50 CFR 424.11(c)).
ESA-implementing regulations issued jointly by the Services (50 CFR 424.14(h)(1)(i)) define “substantial scientific or commercial information” in the context of reviewing a petition to list, delist, or reclassify a species as credible scientific or commercial information in support of the petitioner's claims such that a reasonable person conducting an impartial scientific review would conclude that the action proposed in the petition may be warranted. Conclusions drawn in the petition without the support of credible scientific or commercial information will not be considered “substantial information.” In reaching the initial (90-day) finding on the petition, we will consider the information described in 50 CFR 424.14(c), (d), and (g) (if applicable). Our determination as to whether the petition provides substantial scientific or commercial information indicating that the petitioned action may be warranted will depend in part on the degree to which the petition includes the following types of information: (1) information on current population status and trends and estimates of current population sizes and distributions, both in captivity and the wild, if available; (2) identification of the factors under section 4(a)(1) of the ESA that may affect the species and where these factors are acting upon the species; (3) whether and to what extent any or all of the factors alone or in combination identified in section 4(a)(1) of the ESA may cause the species to be an endangered species or threatened species (
If the petitioners provide supplemental information before the initial finding is made and states that it is part of the petition, the new information, along with the previously submitted information, is treated as a new petition that supersedes the original petition, and the statutory timeframes will begin when such supplemental information is received.
We may also consider information readily available at the time the determination is made (50 CFR 424.14(h)(1)(ii)). We are not required to consider any supporting materials cited by the petitioners if the petitioners do not provide electronic or hard copies, to the extent permitted by U.S. copyright law, or appropriate excerpts or quotations from those materials (
The “substantial scientific or commercial information” standard must be applied in light of any prior reviews or findings we have made on the listing status of the species that is the subject of the petition (50 CFR 424.14(h)(1)(iii)). Where we have already conducted a finding on, or review of, the listing status of that species (whether in response to a petition or on our own initiative), we will evaluate any petition received thereafter seeking to list, delist, or reclassify that species to determine whether a reasonable person conducting an impartial scientific review would conclude that the action proposed in the petition may be warranted despite the previous review or finding. Where the prior review resulted in a final agency action—such as a final listing determination, 90-day not-substantial finding, or 12-month not-warranted finding—a petitioned action will generally not be considered to present substantial scientific and commercial information indicating that the action may be warranted unless the petition provides new information or analysis not previously considered.
At the 90-day finding stage, we do not conduct additional research, and we do not solicit information from parties outside the agency to help us in evaluating the petition. We will accept the petitioners' sources and characterizations of the information presented if they appear to be based on accepted scientific principles, unless we have specific information in our files that indicates the petition's information is incorrect, unreliable, obsolete, or otherwise irrelevant to the requested action. Information that is susceptible to more than one interpretation or that is contradicted by other available information will not be dismissed at the 90-day finding stage, so long as it is reliable and a reasonable person conducting an impartial scientific review would conclude it supports the petitioners' assertions. In other words, conclusive information indicating the species may meet the ESA's requirements for listing is not required to make a positive 90-day finding. We will not conclude that a lack of specific information alone necessitates a negative 90-day finding if a reasonable person conducting an impartial scientific review would conclude that the unknown information itself suggests the species may be at risk of extinction presently or within the foreseeable future.
To make a 90-day finding on a petition to list a species, we evaluate whether the petition presents substantial scientific or commercial information indicating the subject species may be either threatened or endangered, as defined by the ESA. First, we evaluate whether the information presented in the petition, in light of the information readily available in our files, indicates that the petitioned entity constitutes a “species” eligible for listing under the ESA. Next, we evaluate whether the information indicates that the species faces an extinction risk such that listing, delisting, or reclassification may be warranted; this may be indicated in information expressly discussing the species' status and trends, or in information describing impacts and threats to the species. We evaluate any information on specific demographic factors pertinent to evaluating extinction risk for the species (
Information presented on impacts or threats should be specific to the species and should reasonably suggest that one or more of these factors may be operative threats that act or have acted on the species to the point that it may warrant protection under the ESA. Broad statements about generalized threats to the species, or identification of factors that could negatively impact a species, do not constitute substantial information indicating that listing may be warranted. We look for information indicating that, not only is the particular species exposed to a factor, but that the species may be responding in a negative fashion; then we assess the potential significance of that negative response.
Many petitions identify risk classifications made by nongovernmental organizations, such as the International Union for Conservation of Nature (IUCN), the American Fisheries Society, or NatureServe, as evidence of extinction risk for a species. Risk classifications by such organizations or made under other Federal or State statutes may be informative, but such classification alone will not provide sufficient basis for a positive 90-day finding under the ESA. For example, as explained by NatureServe, their assessments of a species' conservation status do not constitute a recommendation by NatureServe for listing under the ESA, because NatureServe assessments have different criteria, evidence requirements, purposes, and taxonomic coverage than government lists of endangered and threatened species, and therefore these two types of lists should not be expected to coincide (
Alabama shad belong to the family Clupeidae and are closely related to, as well as similar in appearance and life history, to skipjack herring (
We first evaluated whether the petition presented the information indicated in 50 CFR 424.14(c) and (d). We find that the petitioners presented the required information in 50 CFR 424.14(c) and sufficient information requested in § 424.14(d) to allow us to review the petition. The petition contains information on the Alabama shad, including the biological information, current and historical distribution, population status, and threats contributing to the species' status. The petitioners include new literature but also rely heavily on expert opinion and personal communications with State biologists and researchers. The petitioners provide an assessment of new information that has become available since our previous finding (82 FR 4022). The petitioners assert that the new information provides substantial scientific and commercial information indicating that Alabama shad have been extirpated from 90 percent of its historical riverine habitats and is threatened by modification of habitat and curtailment of its range, overexploitation, disease, pollution, climate change, and inadequacy of existing regulatory measures. As previously stated, the substantial scientific or commercial information standard must be applied in light of any prior reviews or findings the Services have made on the listing status of the species. Therefore, we will consider the new information provided in the petition and any new information readily available in our files to determine whether a reasonable person conducting an impartial review would conclude it presents substantial scientific or commercial information indicating that the petitioned action may be warranted.
The petitioners assert that NMFS was incorrect in determining that low population numbers were due to challenges in Alabama shad detectability and general lack of targeted survey and sampling efforts. The petitioners also assert that detection probability and the timing and sampling methods cannot be the sole cause of estimated low abundances. To support this claim, the petitioners reference biologists and researchers who also suggest that the low numbers of Alabama shad are suggestive of long-term declining trends in abundance, rather than an artifact of high natural variability or challenges with species detectability (Rider
For Alabama, our previous determination concluded that it is unknown whether the lack of or low numbers of Alabama shad reported for many river systems (including the Mobile Basin, Conecuh River, and Choctawhatchee River) accurately reflects the abundance in those systems, or whether the lack of or low numbers of Alabama shad is indicative of the lack of targeted studies (82 FR 4022). At that time, directed studies and contemporary abundance data for Alabama shad were lacking for riverine systems in Alabama. Therefore, we concluded the status of Alabama shad within most riverine systems in Alabama was unknown and that low capture rates were likely due in part to sampling bias (82 FR 4022).
The petitioners provide new information that indicates that Alabama shad are largely extirpated from Alabama. Alabama shad historically occurred in the Mobile Basin (
For Florida and Georgia, our previous determination recognized the importance of the ACF population to the viability of the species, stating that, because the spawning population in the
In summary, the petitioners provide several lines of evidence that suggest that the ACF population may be declining based on new but incomplete survey data and the cessation of conservation locking at the JWLD (See The Present or Threatened Destruction, Modification, or Curtailment of the Alabama Shad Habitat or Range), which is blocking migration and preventing access to important spawning habitats.
For Mississippi, the petitioners assert that the Alabama shad have experienced a 50 percent decline in distribution. In our previous determination (82 FR 4022), we found that Pascagoula River, which is a relatively free-flowing river system, had one of the remaining spawning populations of Alabama shad. The petitioners claim that the species is now extirpated from the Tombigbee River (a major tributary of the Mobile River) and the Pearl River, with the remaining population located in the Pascagoula River in decline. Rider
In summary, the new information suggests that the Tombigbee River population may be extirpated, which is cause for concern. While the petitioners assert that the Pearl River population has also collapsed, they did not provide the supporting information. The petition does not include any new survey or status information that was not previously considered by us for Pascagoula River.
For Missouri, our previous determination (82 FR 4022), concluded that Alabama shad likely still spawned in the Missouri River, including several tributaries (
In summary, these findings indicate that the Gasconade and Meramec Rivers likely now represent the only two northernmost systems that provide spawning and habitat for Alabama shad, which is cause for concern. While these studies were not limited to Alabama shad, the studies did occur in the spring, summer, and fall when both juvenile and adult Alabama shad would have been present, and the studies used sampling techniques (
For Arkansas, the petitioners state that Alabama shad have not been recorded in the Arkansas reach of the Mississippi River or the Arkansas River
In summary, the new information presented in the petition indicates potentially significant population declines in the ACF River system in Florida and Georgia and the Choctawhatchee River in Alabama. These two major river systems have long been observed to have the highest abundance of Alabama shad within the species range (Burkaloo
The petitioners assert that Alabama shad is threatened by all five of the ESA section 4(a)(1) factors: present or threatened destruction, modification, or curtailment of its habitat or range; overutilization for commercial and recreational purposes; disease or predation; inadequacy of existing regulatory mechanisms; and other natural or manmade factors. Information in the petition and readily available in our files indicates that the primary threat facing the species is modification of its habitat, and we find that listing the Alabama shad as a threatened or endangered species under the ESA may be warranted based on this threat alone. Therefore, we focus our discussion below on the evidence of this particular threat. However, we note that, in the status review for this species, we will evaluate all ESA section 4(a)(1) factors to determine whether any one factor or a combination of these factors are causing declines in the species or are likely to substantially negatively affect the species within the foreseeable future to such a point that the Alabama shad is at risk of extinction or likely to become so in the foreseeable future.
According to information cited in the petition and readily available in our files, the greatest threats to the Alabama shad are the dams that occur on almost all the major river systems throughout its range. The petitioners assert that over the last century at least 85 dams have been built on rivers within the Alabama shad's historical range. The petitioners provide historical information, new personal communications, relevant literature, and maps that illustrate the prevalence of the dams on rivers throughout the species range. The petitioners further summarize threats within individual rivers, which include changes in temperature, low spring and summer stream flows, passage blockages, droughts, increased sediment, degraded water quality, and poor riparian conditions. For example, the petitioners claim that changes in the flow-regime in the ACF River system have disrupted mainstream and floodplain habitats, modifying features essential for spawning and early life stages (Mickle
The petitioners provide new information indicating riverine habitat connectivity has been severed by several dams that had previously provided Alabama shad passage through conservation locking regimes that are no longer in place (Williams, pers. comm. December 7, 2023; Rider, pers. comm. December 7, 2023). Most notable is the cessation of conservation locking at the JWLD, which the petitioners implicate in population collapses in that system. In our previous determination, we concluded that conservation locking is making a tremendous contribution to Alabama shad in the ACF River system, the bulk of the Alabama shad population in the ACF River system is spawning in the Flint River, and juvenile Alabama shad are able to successfully move downstream to contribute to the adult stock. We also concluded that the conservation locking was providing upstream migration to higher quality spawning and juvenile rearing habitat, which has potentially improved recruitment and led to population increases. At that time when conservation locking occurred, the locks were operated twice a day to correspond with the natural movement patterns of migrating fish during spawning seasons (February through May). In addition, we also noted that the low population estimates recorded from 2013-2015 were in part due to that fact that conservation locking did not occur in 2013 and 2014, and thus Alabama shad did not pass upstream during this period (unless they were transported by researchers), resulting in the subsequent population declines, thus indicating further that conservation locking is needed to maintain the viability of this population.
The petitioner's state that NMFS relied too heavily on the positive effects of conservation locking at the JWLD for the Alabama shad population and that we incorrectly assumed that conservation locking would continue into the foreseeable future. They present new information indicating that conservation locking at the JWLD has largely ceased and therefore Alabama shad are no longer able to access upstream spawning habitat and return to their marine habitats post spawning
The petitioners also assert that conservation locking regime and spillways at the Claiborne and Millers Ferry Locks and Dam are not an effective conservation strategy for Alabama shad (Cromwell 2022). The Claiborne and Millers Ferry Locks and Dam is part of the Alabama-Coosa-Tallapoosa River system and separates the Cahaba River from the Lower Alabama River, Mobile Delta, and the Gulf of Mexico. In our previous determination, we determined that conservation locking at Claiborne and Millers Ferry Locks and Dam would likely provide access to spawning habitat enhancing Alabama shad populations in the river system. The petitioners reference a study that examined fish passage the Claiborne and Millers Ferry Locks and Dams for the smallmouth buffalo, paddlefish, and other migratory fish species (Mckee 2019). The author found that migrating fish in general did not use the locks due to low water levels and lack of attraction flow to encourage fish to move into and exit lock chambers. In addition, they found that the crested spillway is only submerged during flooding events and passage is restricted to fish species that are considered strong swimmers (Mckee 2019; Cromwell 2022; Williams, pers. comm. November 14, 2023). The petitioners and a referenced biologist claim passage at the spillway is highly unlikely for Alabama shad because they are not strong swimmers and are generally unable to use the spillways as passage (Aunins
The petitioners assert that oil spills, leaking wells, and oil infrastructure pose a threat to the Alabama shad in the Gulf of Mexico. The petitioner's include information on two of the largest spills known to have occurred in the Gulf of Mexico, Deepwater Horizon (DWH) spill that occurred in 2010 and Main Pass oil spill that occurred in 2023.
The petitioners included new information on the Main Pass oil spill that released at least 1.1 million gallons into the Gulf of Mexico, the second-largest oil spill after the DWH spill that released 134 million gallons (Budryk 2023; NOAA 2023). The Main Pass oil spill occurred offshore near the Mississippi Delta in the Gulf of Mexico in November 2023. Alabama shad occur in the Mississippi Delta, which serves as their overwintering habitat before they make spring spawning runs (Mickle
In summary, the information provided in the petition and in our files, indicates that conservation locking at the JWLD is no longer occurring, which is likely prohibiting spawning migration of AFC population of Alabama shad that we had previously indicated likely contribute to the viability of the species as a whole because of its large relative size and potential role in enhancing other river populations through outmigration (82 FR 4022). Thus, the cessation of conservation locking at the JWLD is especially concerning as the ACF population is potentially important to the species overall viability. Similarly, it also appears that the conservation locking system at the Claiborne and Millers Ferry Locks and Dams is ineffective at passing Alabama shad due to low water levels and lack of attraction flow. In addition, while the crested spillway may be successful at passing other fish species during flooding events, they do not appear to be effective at passing Alabama shad. The petitioners also provide new information suggesting that species may have been impacted by the Main Pass oil spill while overwintering in the Mississippi Delta. While this information is incomplete, it is cause for concern and warrants further consideration in the status review report. Overall, the information provided by the petitioners and briefly summarized here regarding threats to the Alabama shad from habitat loss, degradation, and modification leads us to conclude that listing the species as threatened or endangered may be warranted.
After reviewing the petition, the literature cited in the petition, and other information readily available in our files, we find that listing Alabama shad (
To ensure that the status review is based on the best available scientific and commercial data, we are soliciting comments and information from interested parties on the status of the Alabama shad. Specifically, we are soliciting information in the following areas:
(1) Species abundance;
(2) species productivity;
(3) species distribution or population spatial structure;
(4) genetic connectivity of historical and contemporary populations;
(5) habitat conditions and associated limiting factors and threats for both the marine and freshwater environments;
(6) data concerning the status and trends of identified limiting factors or threats;
(7) information concerning the impacts of environmental variability and climate change on survival, recruitment, distribution, and/or extinction risk;
(8) the adequacy of existing regulatory mechanisms and whether protections are being implemented and are proving effective in conserving the species;
(9) ongoing or planned efforts to protect and restore the species and its habitat; and
(10) other new information, data, or corrections including, but not limited to, identification of erroneous information in the previous listing determination.
We request that all data and information be accompanied by supporting documentation such as maps, bibliographic references, or reprints of pertinent publications. Please send any comments in accordance with the instructions provided in the
A complete list of all references is available upon request from the Protected Resources Division of the NMFS Southeast Regional Office (see
The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Announcement of availability of a fishery management plan amendment; request for comments.
The Pacific Fishery Management Council (Council) submitted to NMFS Amendment 8 to the Fishery Management Plan (FMP) for the U.S. West Coast Highly Migratory Species (HMS) July 15, 2024. If approved by the Secretary of Commerce (Secretary), these Amendments would update essential fish habitat (EFH) provisions in the existing HMS FMP. This Amendment is intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act (MSA) which requires periodic review and revision of EFH components of FMPs as warranted based on available information.
Comments on the Amendments must be received by September 23, 2024.
You may submit comments on this document, identified NOAA-NMFS-2024-0013 by the following methods:
•
•
Nicole Nasby-Lucas at (858) 334-2826,
NMFS manages the HMS fisheries off the U.S. Pacific Coast under the HMS FMP. The MSA requires that each regional fishery management council submit any FMP amendment it prepares to NMFS for review and approval, disapproval, or partial approval by the Secretary (16 U.S.C. 1854(a)). The MSA also requires that NMFS, upon receiving an FMP amendment, immediately publish a notice in the
The MSA mandates that each FMP describe and identify EFH for the fishery (16 U.S.C. 1853(7)). EFH is defined as “those waters and substrate necessary to fish for spawning, breeding, feeding or growth to maturity” (16 U.S.C. 1802(10)). Under this authority, NMFS and the Council have
The HMS FMP was approved in 2004 and has been amended seven times. The HMS FMP includes three species of pelagic shark (common thresher, shortfin mako, and blue) five species of tunas (albacore, bigeye, Pacific bluefin, skipjack, and yellowfin), striped marlin, swordfish, and dolphinfish (dorado) as species in the management unit. EFH components for each management unit species (MUS) were included in appendix A to the Final Environmental Impact Statement when NMFS approved the HMS FMP and have not been reviewed since that time.
The Council's relevant advisory bodies engaged in the EFH review process and provided recommendations to the Council at their September 2023 Council meeting. The Council considered these recommendations when adopting a draft FMP Amendment for public review. The Council took final action at its November 2023 meeting, adopting the proposed amendment to the HMS FMP.
The proposed amendment would not add any new reporting requirements and would not change any regulatory requirements. This action would only add to or update HMS EFH provisions in the HMS FMP.
Based on recommendations from the Council, NMFS proposes to amend the HMS FMP to update the EFH provisions to ensure compliance with the requirements of the MSA. This FMP amendment includes eight major components that would (1) update the description and identification of EFH, (2) include new maps for each MUS in the HMS FMP, (3) update information on life history, (4) update information on fishing impacts, (5) update information on non-fishing impacts and conservation measures, (6) update text on habitat areas of particular concern (HAPCs), (7) update research and information needs and (8) add a reference to Council's Operating Procedure 22 as a description of the review and revision process. The revised FMP text and appendix F include supporting information and rationale for the modifications adopted by the Council. The supporting information and rationale relevant to the major EFH components are briefly described below.
All comments received by the end of the comment period on the Amendments (see
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and reinstatement under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding: whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques and other forms of information technology.
Comments regarding this information collection received by August 23, 2024 will be considered. Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding: whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques and other forms of information technology.
Comments regarding this information collection received by August 23, 2024 will be considered. Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
An agency may not conduct or sponsor a collection of information
This program helps to ensure requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements can be properly assessed. Periodically USDA solicits grant applications on
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Applicable July 24, 2024.
Nathan Araya (Malaysia), Colin Thrasher (Poland), Brian Smith (Taiwan), and Dennis McClure (the Republic of Türkiye (Türkiye)), AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone:
On April 15, 2024, the U.S. Department of Commerce (Commerce) initiated less-than-fair-value (LTFV) investigations of imports of dioctyl terephthalate from Malaysia, Poland, Taiwan, and Türkiye.
Section 733(b)(1)(A) of the Tariff Act of 1930, as amended (the Act), requires Commerce to issue the preliminary determination in an LTFV investigation within 140 days after the date on which Commerce initiated the investigation. However, section 733(c)(1) of the Act permits Commerce to postpone the preliminary determination until no later than 190 days after the date on which Commerce initiated the investigation if: (A) the petitioner makes a timely request for a postponement; or (B) Commerce concludes that the parties concerned are cooperating, that the investigation is extraordinarily complicated, and that additional time is necessary to make a preliminary determination. Under 19 CFR 351.205(e), the petitioner must submit a request for postponement 25 days or more before the scheduled date of the preliminary determination and must state the reasons for the request. Commerce will grant the request unless it finds compelling reasons to deny the request.
On July 16, 2024, the petitioner
For the reason stated above and because there are no compelling reasons to deny the request, Commerce, in accordance with section 733(c)(1)(A) of the Act, is postponing the deadline for the preliminary determinations by 50 days (
This notice is issued and published pursuant to section 733(c)(2) of the Act and 19 CFR 351.205(f)(1).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
As a result of this expedited sunset review, the U.S. Department of Commerce (Commerce) finds that revocation of the antidumping duty (AD) order on large residential washers from Mexico would be likely to lead to continuation or recurrence of dumping at the levels indicated in the “Final Results of Expedited Sunset Review” section of this notice.
Applicable July 24, 2024.
Mira Warrier, AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-8031.
On February 15, 2013, Commerce published in the
Commerce received a timely, adequate substantive response to the
On April 22, 2024, Commerce notified the U.S. International Trade Commission that it did not receive an adequate substantive response from other interested parties.
The merchandise subject to the
All issues raised in this sunset review are addressed in the Issues and Decision Memorandum, including the likelihood of continuation or recurrence of dumping and the magnitude of the
Pursuant to sections 751(c)(1) and 752(c)(1) and (3) of the Act, Commerce determines that revocation of the
This notice serves as the only reminder to interested parties subject to an administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.
We are issuing and publishing the results in accordance with sections 751(c), 752(c), and 771(i)(1) of the Act and 19 CFR 351.218.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) determines that Citribel nv. (Citribel) did not sell subject merchandise in the United States at prices below normal value during the July 1, 2022, through June 30, 2023, period of review (POR).
Applicable July 24, 2024.
Deborah Cohen, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482- 4521.
On April 2, 2024, Commerce published the preliminary results of the 2022-2023 administrative review of the antidumping duty order on citric acid and certain citrate salts (citric acid) from Belgium
The products covered by this
We determine that the following weighted-average dumping margin exists for the period July 1, 2022, through June 30, 2023:
Normally, Commerce discloses to interested parties the calculations of the final results of an administrative review within five days of a public announcement or, if there is no public announcement, within five days of the date of publication of the notice of final results in the
Consistent with section 751(a)(2)(C) of the Act and 19 CFR 351.212(b), upon completion of the administrative review, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise covered this review. Because the respondent's weighted-average dumping margin or an importer-specific assessment rate is zero or
For entries of subject merchandise during the POR produced by Citribel, for which the producer did not know that its merchandise was destined for the United States, we will instruct CBP to liquidate unreviewed entries at the
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of these final results of this review in the
The following cash deposit requirements will be effective upon publication in the
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during the POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a final reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.
Commerce is issuing and publishing the final results of this review in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(5).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Notice; correction.
The U.S. Department of Commerce (Commerce) published notice in the
Lilit Astvatsatrian, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-6412.
On July 16, 2024, Commerce published in the
In the
The ITC will preliminarily determine, within 25 days after the date on which the ITC receives notification from Commerce of initiation of the investigation, whether there is a reasonable indication that imports of refrigerators from Thailand are materially injuring, or threatening material injury to, a U.S. industry.
This notice is issued and published in accordance with sections 732(c)(2) and 777(i)(1) of the Act, and 19 CFR 351.203(c).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Notice; correction.
The U.S. Department of Commerce (Commerce) published notice in the
Nathan Araya, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3401.
On July 18, 2024, Commerce published in the
In the
Additionally, in the
India:
This notice is issued and published in accordance with section 736(a) of the Tariff Act of 1930, as amended, and 19 CFR 351.211(b).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of open public meeting.
This notice sets forth the proposed schedule and agenda of a forthcoming meeting of the Marine Fisheries Advisory Committee (MAFAC). The members will discuss and provide advice on issues outlined under the
The meeting will be held August 27, 2024, from 2 to 4 p.m. Eastern Time.
Meeting is by webinar and teleconference. Conference call and webinar access information are available at:
Public comment may be provided to MAFAC by one of the following methods:
Submit written comments in advance of the MAFAC public meeting to
Katie Zanowicz, MAFAC Assistant, 301-427-8038,
As required by section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. appendix 2, notice is hereby given of a meeting of MAFAC. The MAFAC was established by the Secretary of Commerce (Secretary) and, since 1971, advises the Secretary on all living marine resource matters that are the responsibility of the Department of Commerce. The charter, summaries of prior meetings, and MAFAC recommendations and reports are located online at
The meeting time and agenda are subject to change. The meeting is convened for MAFAC to deliberate and vote on proposed comment and recommendations on the revised NMFS Ecosystem-Based Fisheries Management Road Map. MAFAC may also discuss various administrative and organizational matters.
The virtual meeting will be held August 27, 2024, from 2 to 4 p.m. Eastern Time. Conference call and webinar access information are available at
This virtual meeting is accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Katie Zanowicz, (301) 427-8038, by August 13, 2024.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public hybrid meeting (in-person/virtual).
The Caribbean Fishery Management Council (CFMC) will hold the 185th public hybrid meeting to address the items contained in the tentative agenda included in the
The 185th CFMC public hybrid meeting will be held on August 13, 2024, from 9 a.m. to 4:45 p.m. A closed session will be held from 5 p.m. to 5:30 p.m., to discuss personnel matters, and on August 14, 2024, from 8:30 a.m. to 4:15 p.m., AST.
You may join the 185th CFMC public hybrid meeting via Zoom, from a computer, tablet or smartphone by entering the following address:
In case there are problems, and we cannot reconnect via Zoom, the meeting will continue using GoToMeeting.
You can join the meeting from your computer, tablet, or smartphone at
Miguel A. Rolón, Executive Director, Caribbean Fishery Management Council, 270 Muñoz Rivera Avenue, Suite 401, San Juan, Puerto Rico 00918-1903; telephone: (787) 398-3717.
The following items included in the tentative agenda will be discussed:
The order of business may be adjusted as necessary to accommodate the completion of agenda items. The meeting will begin on August 13, 2024, at 9 a.m., AST, and will end on August 14, 2024, at 4:15 p.m., AST. Other than the start time on the first day of the meeting, interested parties should be aware that discussions may start earlier or later than indicated in the agenda, at the discretion of the Chair.
For any additional information on this public virtual meeting, please contact Diana Martino, Caribbean Fishery Management Council, 270 Muñoz Rivera Avenue, Suite 401, San Juan, Puerto Rico, 00918-1903, telephone: (787) 226-8849.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of a public meeting.
The Gulf of Mexico Fishery Management Council (Council) will hold a two-hour webinar meeting of its Ecosystem Technical Committee (ETC).
The webinar meeting will be held Friday, August 9, 2024, from 1 p.m. to 3 p.m., EDT.
The meeting will take place via webinar. Registration information will be available on the Council's website by visiting
Dr. Verena Wang, Fishery Biologist, Gulf of Mexico Fishery Management Council;
The meeting will begin with Introductions and Adoption of Agenda, Approval of Minutes and Meeting Summary from the September 2023 meeting and a review of Scope of Work. The committee will review and discuss the Ecosystem Based Fisheries Management Road Map Update along with receiving a presentation and review of a draft comment letter to National Oceanic and Atmospheric Administration (NOAA).
The Committee will receive public comment at the end of the day and discuss any items under Other Business.
The meeting will be broadcast via webinar. You may register for the webinar by visiting
The agenda is subject to change, and the latest version along with other meeting materials will be posted on
Although other non-emergency issues not on the agenda may come before the Committee for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act, those issues may not be the subject of formal action during this meeting. Actions of the Committee will be restricted to those issues specifically identified in the agenda and any issues arising after publication of this notice that require emergency action under Section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take-action to address the emergency.
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to Kathy Pereira, (813) 348-1630, at least 5 days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application.
Notice is hereby given that the NMFS Southeast Fisheries Science Center, 75 Virginia Beach Drive, Miami, FL 33149 (Responsible Party: Mridula Srinivasan, Ph.D.), has applied in due form for a permit to conduct research on cetaceans, and import, export, and receive cetacean parts for scientific research.
Written comments must be received on or before August 23, 2024.
The application and related documents are available for review by selecting “Records Open for Public Comment” from the “Features” box on the Applications and Permits for Protected Species home page,
Written comments on this application should be submitted via email to
Those individuals requesting a public hearing should submit a written request via email to
Shasta McClenahan, Ph.D., or Jennifer Skidmore, (301) 427-8401.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (16 U.S.C. 1361
The applicant requests a 5-year permit to conduct research in the western North Atlantic Ocean, Gulf of Mexico and Caribbean Sea. The objectives are to study cetacean stock structure, geographic range, population size, habitat, movement, vocalizations, reproduction, health status, and behavior. Up to 33 species of cetaceans may be targeted including the following ESA-listed species: blue (
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Concurrent with the publication of this notice in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of SEDAR 93 Review Workshop for Atlantic States Marine Fisheries Commission (ASMFC) Red Drum.
The review of the SEDAR 93 assessment of Atlantic red drum will be conducted via an in-person review workshop. See
The SEDAR 93 ASMFC Red Drum Review Workshop is scheduled for August 13-16, 2024. The meetings on August 13-15 will be held from 8 a.m. until 6 p.m., Eastern, each day. The meeting on August 16 will be held from 8 a.m. until 1 p.m., Eastern. The meeting will be live streamed. Individuals may register by going to the SEDAR website:
Julie A Neer, SEDAR Coordinator, 4055 Faber Place Drive, Suite 201, North Charleston, SC 29405; phone (843) 571-4366; email:
The Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils, in conjunction with NOAA Fisheries and the Atlantic and Gulf States Marine Fisheries Commissions, have implemented the Southeast Data, Assessment and Review (SEDAR) process, a multi-step method for determining the status of fish stocks in the Southeast Region. SEDAR is a three-step process including: (1) Data Workshop; (2) Assessment Process utilizing webinars; and (3) Review Workshop. The product of the Data Workshop is a data report which compiles and evaluates potential datasets and recommends which datasets are appropriate for assessment analyses. The product of the Assessment Process is a stock assessment report which describes the fisheries, evaluates the status of the stock, estimates biological benchmarks, projects future population conditions, and recommends research and monitoring needs. The assessment is independently peer reviewed at the Review Workshop. The product of the Review Workshop is a Summary documenting panel opinions regarding the strengths and weaknesses of the stock assessment and input data. Participants for SEDAR Workshops are appointed by the Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils and NOAA Fisheries Southeast Regional Office, Highly Migratory Species Management Division, and Southeast Fisheries Science Center. Participants include: data collectors and database managers; stock assessment scientists, biologists, and researchers; constituency representatives including fishermen, environmentalists, and non-governmental organizations (NGOs); international experts; and staff of Councils, Commissions, and state and federal agencies.
The items of discussion at the SEDAR 93 Review Workshop are as follows:
Participants will evaluate the data and assessment reports, as specified in the Terms of Reference, to determine if they are scientifically sound.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during these meetings. Action will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
These meetings are accessible to people with disabilities. Requests for auxiliary aids should be directed to the South Atlantic Fishery Management Council office (see
The times and sequence specified in this agenda are subject to change.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public hearings.
The South Atlantic Fishery Management Council (Council) will hold two virtual public hearings pertaining to Amendment 55 to the Fishery Management Plan (FMP) for the Snapper Grouper Fishery in the South Atlantic Region. This amendment establishes a Scamp and Yellowmouth Complex, establishes a rebuilding plan, catch levels, sector allocations, management measures, and accountability measures for the new complex. The amendment also updates the composition and catch levels of the Other South Atlantic Shallow Water Grouper Complex.
The public hearings will take place August 13, 2024 and August 14, 2024, beginning at 6 p.m., EDT. For specific dates and times, see
The hearings will be held via webinar. Webinar registration information is available from the Council's website at:
Kim Iverson, Public Information Officer, SAFMC; phone: (843) 571-4366 or toll free: (866) SAFMC-10; fax: (843) 769-4520; email:
Public hearing documents, an online public comment form, and other materials will be posted to the Council's website at
The most recent stock assessment (SEDAR 68) assessed scamp and yellowmouth grouper combined due to misidentification between the two species and indicated that the stock is overfished but not subject to overfishing. In response to this assessment the Council will need to establish the Scamp Yellowmouth Grouper Complex (which entails adjusting the composition and catch levels of the Other Shallow Water Grouper Complex), establish stock determination criteria for the new complex, a rebuilding plan, annual catch limits, management measures, allocations and sector annual catch limits, and accountability measures.
These meetings are physically accessible to people with disabilities. Requests for auxiliary aids should be directed to the Council office (see
The times and sequence specified in this agenda are subject to change.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Pacific Fishery Management Council's (Pacific Council) Ad Hoc Marine Planning Committee (MPC) will hold an online public meeting.
The online meeting will be held Monday, August 12, 2024, from 10 a.m. to 4 p.m., Pacific Daylight Time or until business for the day has been completed.
This meeting will be held online. Specific meeting information, including a proposed agenda and directions on how to attend the meeting and system requirements, will be provided in the meeting announcement on the Pacific Council's website (see
Kerry Griffin, Staff Officer, Pacific Council; telephone: (503) 820-2409.
The purpose of this online meeting is for the MPC to consider current offshore wind (OSW) energy and aquaculture issues and to provide information and recommendations to the Pacific Council for consideration at its September 2024 meeting. Topics will include updates on Bureau of Ocean Energy Management activities, updates from coastal states and the National Marine Fisheries Service, a Tribal update, fishing community engagement in OSW transmission planning, and other OSW or aquaculture topics, as appropriate.
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt (
Consumer Financial Protection Bureau.
Notice of a new system of records.
In accordance with the Privacy Act of 1974, the Consumer Financial Protection Bureau (CFPB or Bureau) proposes to establish a new CFPB system of records titled, “CFPB.030—Nonbank Registry” (Nonbank Registry). Generally, “nonbanks” are institutions involved in the offering or provision of consumer financial products or services that are not insured depository institutions or insured credit unions (hereinafter referred to as “nonbanks”). The Nonbank Registry system of records covers information collected and maintained as part of the CFPB nonbank registration program. The Nonbank Registry enables certain nonbanks to register with the CFPB through the Bureau's Nonbank Registry portal and to provide additional required information and/or other required documents. The records maintained in the Nonbank Registry enables the CFPB to gather information from registered nonbanks; to monitor and identify consumer risks; to gather information and documents to conduct examinations of registered nonbanks subject to the CFPB's supervisory authority; and to ensure that registered nonbanks subject to the CFPB's supervisory authority are legitimate entities and able to perform their obligations to consumers,
Comments must be received no later than August 23, 2024. The new system of records will be effective August 23, 2024 unless the comments received result in a contrary determination.
You may submit comments, identified by the title and docket number (
•
•
•
All submissions must include the agency name and docket number for this notice. In general, all comments received will be posted without change to
Kathryn Fong, Chief Privacy Officer, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552; (202) 435-7058. If you require this document in an alternative electronic format, please contact
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the CFPB is establishing a new system of records titled, “CFPB.030, Nonbank Registry.” On June 3, 2024, the CFPB published the
The CFPB's exercise of its nonbank registration rulemaking authority expands the category of individuals and records collected and maintained on nonbanks to include those required to register with the CFPB to enable the Bureau to monitor and reduce the risks to consumers posed by these institutions more effectively. The registry also allows the Bureau to monitor trends in enforcement and more effectively utilize Bureau resources. To this end, the CFPB has created the Nonbank Registry portal to facilitate the registration process and information collection maintained in the Nonbank Registry system of records for nonbanks that are required to register with the CFPB in accordance with current or subsequent CFPB regulations. Finally, the CFPB may publish certain information collected and maintained in the Nonbank Registry system of records as is in the public interest and in accordance with CFPB regulations.
CFPB.030—Nonbank Registry.
Unclassified.
Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
Program Director, Systems and Registrations Team, Office of Supervision, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
Public Law 111-203, title X, sections 1022 and 1024, codified at 12 U.S.C. 5512 and 5514.
The purposes of the Nonbank Registry are: (1) To effectively monitor and understand financial markets related to nonbanks or nonbank institutions; (2) To monitor for risks to consumers in the offering or provision of consumer financial products or services; (3) To facilitate the CFPB's risk-based nonbank supervision program; (4) To ensure that registered nonbanks subject to the CFPB's supervisory authority are legitimate entities and are able to perform their obligations to consumers, including their obligations under Federal consumer financial law; and (5) To maintain a central public registry of information on nonbanks to facilitate public awareness and oversight.
The CFPB collects and maintains information on the following individuals:
• Authorized representatives acting on behalf of nonbanks who are authorized to submit information to the Nonbank Registry portal;
• Attesting executives;
• Individuals (
• Individuals, including authorized representatives who submit a question via the Nonbank Registry portal about related regulations or that require technical assistance with the Nonbank Registry; and
• CFPB staff assigned to maintain the Nonbank Registry, including system developers, system administrators, and similar system stakeholders who support the Nonbank Registry and program operations.
Categories of records maintained in this Nonbank Registry include:
• Full names and business contact information (
• Information related to individuals associated with nonbanks found in submitted documents, such as covered orders and related public records, such as court or agency documents, or other documents provided to the Nonbank Registry;
• Annual written statements signed by an attesting executive (or executives) and notification/confirmation of non-registration;
• Names and contact information (
• Access records to CFPB computers and networks (
The information in the Nonbank Registry system of records is collected directly from covered nonbanks and the authorized representatives and executives acting on behalf of the covered nonbanks; CFPB staff; and from individuals that submit questions via the Nonbank Registry portal about related regulations or that require technical assistance.
In addition to those disclosures generally permitted under 5 U.S.C. 552a(b) of the Privacy Act, and consistent with the CFPB's Disclosure of Records and Information Rules, promulgated at 12 CFR part 1070, all or a portion of the records or information contained in this system may be disclosed outside the CFPB as a routine use to:
(1) Appropriate agencies, entities, and persons when (a) the Bureau suspects or has confirmed that there has been a breach of the system of records; (b) the Bureau has determined that as a result of the suspected or confirmed breach there is a risk of harm to individuals, the Bureau (including its information systems, programs, and operations), the Federal Government, or national security; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Bureau's efforts to respond to the suspected or confirmed breach or to prevent, minimize, or remedy such harm.
(2) Another Federal agency or entity, when the Bureau determines that information from this system of records is reasonably necessary to assist the recipient agency or entity in (a) responding to a suspected or confirmed breach or (b) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the Federal government, or national security, resulting from a suspected or confirmed breach.
(3) Another Federal or State agency to (a) permit a decision as to access, amendment, or correction of records to be made in consultation with or by that agency, or (b) verify the identity of an individual or the accuracy of information submitted by an individual who has requested access to or amendment or correction of records.
(4) The Executive Office of the President in response to an inquiry from that office made at the request of the subject of a record or a third party on that person's behalf.
(5) Congressional offices in response to an inquiry made at the request of the individual to whom the record pertains.
(6) Contractors, agents, or other authorized individuals performing work on a contract, service, cooperative agreement, job, or other activity on behalf of the Bureau or the U.S. Government and who have a need to access the information in the performance of their mission, including duties or activities.
(7) The Department of Justice (DOJ) for its use in providing legal advice to the Bureau or in representing the Bureau in a proceeding before a court, adjudicative body, or other administrative body, where the use of such information by the DOJ is deemed by the Bureau to be relevant and necessary to the advice or proceeding, and such proceeding names as a party in interest:
(a) The CFPB;
(b) Any employee of the Bureau in their official capacity;
(c) Any employee of the Bureau in their individual capacity where DOJ has agreed to represent the employee; or
(d) The United States, where the CFPB determines that litigation is likely to affect the Bureau or any of its components.
(8) Appropriate Federal, State, local, foreign, Tribal, or self-regulatory organizations or agencies responsible for investigating, prosecuting, enforcing, implementing, issuing, or carrying out a statute, rule, regulation, order, policy, or license if the information may be relevant to a potential violation of civil or criminal law, rule, regulation, order, policy, or license.
(9) To the National Archives and Records Administration (NARA) or other Federal Government agencies pursuant to records management inspections being conducted under the authority of 44 U.S.C. 2904 and 2906.
(10) A grand jury pursuant either to a Federal or State grand jury subpoena, or to a prosecution request that such record be released for the purpose of its introduction to a grand jury, where the subpoena or request has been specifically approved by a court. In those cases where the Federal Government is not a party to the proceeding, records may be disclosed if a subpoena has been signed by a judge.
(11) A court, magistrate, or administrative tribunal in the course of an administrative proceeding or judicial proceeding, including disclosures to opposing counsel or witnesses (including expert witnesses) in the course of discovery or other pre-hearing exchanges of information, litigation, or settlement negotiations, where relevant or potentially relevant to a proceeding, or in connection with criminal law proceedings.
(12) To members of the public as is in the public interest in accordance with 12 CFR part 1092. Such disclosure would be limited to the names and titles of attesting executives and individuals listed or included in a covered order and related public records, such as court or agency documents, or other documents provided to the registry.
The records are maintained in electronic media.
Records maintained in this system of records are retrievable using a personal identifier, including an individual's name.
The records contained within the Nonbank Registry system of records are considered unscheduled and will be maintained as permanent until there is an approved records schedule for the Nonbank Registry.
External access to the Nonbank Registry via the portal for nonbank user accounts is limited to the nonbank that created the account with the CFPB. Nonbanks will login with a username and password using multi-factor authentication. Internal access to electronic records is restricted to authorized CFPB staff based on role-based access controls using multi-factor authentication.
Individuals seeking access to any record contained in this system of records may inquire in writing in accordance with instructions in 12 CFR 1070.50
Individuals seeking to contest the content of any record contained in this system of records may inquire in writing in accordance with instructions in 12 CFR 1070.50
See “Record Access Procedures” above.
None.
This is a new system of records.
Office of Strategic Capital (OSC), Office of the Under Secretary of Defense for Research and Engineering, Department of Defense (DoD).
Notice; request for information (RFI).
The OSC is seeking information from lenders and other private credit investors regarding capital needs for industries related to the Covered Technology Categories to inform the design and implementation of the DoD Loan Program Office.
Comments must be received by October 22, 2024. Written comments in response to this RFI should be submitted in accordance with the instructions in the
Interested parties may submit comments on this transaction electronically on
Comments can also be sent by mail to Department of Defense, Office of the Assistant to the Secretary of Defense for Privacy, Civil Liberties, and Transparency, 4800 Mark Center Drive, Mailbox #24, Suite 08D09, Alexandria, VA 22350-1700.
Please include your name, company name (if any) and “Information Request on Financing Support for Covered Technology Categories” on any attached document.
Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered.
For questions about this notice, please contact David Vidal, Office of Strategic Capital Director of Credit Programs, at
In December 2022, the Secretary of Defense established OSC to attract and scale private capital to technologies critical to the national security of the United States. Furthermore, in 2024, Congress authorized OSC as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2024. The NDAA states that OSC shall:
(a) develop, integrate, and implement capital investment strategies proven in the commercial sector to shape and scale investment in critical technologies and assets;
(b) identify and prioritize promising critical technologies and assets that require capital assistance and have the potential to benefit the DoD; and
(c) make eligible investments in such technologies and assets, such as supply chain technologies not always supported through direct investment.
The NDAA designates the following 31 categories as a “Covered Technology Category.”
The NDAA authorizes OSC to provide capital assistance, defined as a “loan, loan guarantee, or technical assistance” for eligible investments. Eligible investments are those made in a technology that is (a) in a Covered Technology Category and (b) not solely utilized in defense applications. OSC is seeking public comment on the capital needs of industries and assets related to the Covered Technology Categories to inform the design of DoD Loan Program.
The following statements and questions cover the major topic areas for which OSC seeks comment. They are not intended to limit the topics that may be addressed. Responses may include any topic believed to inform the U.S. Government's efforts in developing recommendations for supporting the design of the DoD Loan Program, regardless of whether the topic is included in this document.
Respondents are encouraged to respond to any or all of the following questions and topic areas. Responses may include estimates, which should be designated as such. Your responses may include supporting data and examples. We welcome submission of publications or studies that support your responses as attachments.
The questions section of this
1. What are your (i) geographical and (ii) business sectoral coverage areas for lending or private credit investment efforts?
2. Do you finance companies that largely produce, integrate, or otherwise use equipment or services with a purpose that aligns with any of the Covered Technology Categories? Please list each Covered Technology Category and define the relationship.
3. What types of financing products do you make available to companies in Question #2?
4. Are there any debt financing gaps in industries or assets related to the Covered Technology Categories (
5. What terms are you offering the market? Please break down (i) the product type, (ii) the transaction size, (iii) the interest rate and credit spread, and (iv) the tenor range by Covered Technology Category.
6. What fees do you typically charge for various debt product types associated with companies in Question #2 (
7. What are the key credit risk categories that lead to a denial of financing to companies within the Critical Technology Categories relevant to your firm (
8. How can the DoD Loan Program partner with financing firms to crowd capital into Covered Technology Categories and their supply chains?
9. Do you believe the Covered Technologies Categories identified in Question #2 would benefit from credit support from the DoD Loan Program? If so, what are the most beneficial forms of credit support (
10. How should the DoD Loan Program be designed to be complementary to, rather than a substitute for private sector debt financing?
11. Do you believe Federal loans and loan guarantees would help enhance the terms you provide to the market? If so, how and why?
12. What is the ideal loan guarantee coverage percentage that would entice you to lend to companies in a Covered Technology Category? Please include the (i) sector, (ii) the company size, and (iii) the debt amount. Additionally, please describe how this loan guarantee coverage percentage enables your firm to finance the companies discussed in Question 2.
13. Have you previously worked with financing tools from the U.S. Government? If so, please specify which (i) government programs your firm engaged in and (ii) what financing tools you utilized (
14. What was the size of the financing tools mentioned above? For example, if the tool used was a loan, please indicate its size (
15. What types of fees were associated with these financing tools (
16. What challenges (i) have you seen, and/or (ii) do you foresee, with Federal credit direct loans and loan guarantees as it relates to Covered Technology Categories?
17. What is your outlook on the five-year macroeconomic projection for the Covered Technology Categories you selected previously? Which, if any, macroeconomic headwinds and tailwinds are most impacting (i) your ability to finance the Covered Technology Categories and (ii) the Covered Technology Categories themselves?
OSC encourages respondents, when addressing the points above, unless raising other challenges related to financing Covered Technology Categories not explicitly asked, to identify which point they are responding to by using the same numbers and heading as set forth above. For example, someone submitting comments responsive to (8), “How can the DoD Loan Program partner with financing firms to crowd capital into Covered Technology Categories and their supply chains?”, would use that same text as a heading followed by the respondent's specific comments responding to it. This formatting will assist OSC in more easily reviewing and summarizing the comments received in response to these specific points of inquiry.
Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential version of the submission. Users submitting a form that contains business confidential information will need to submit a non-confidential version of the same form that does not contain the confidential business information. The non-confidential version of the submission will be placed in the public file on
Office of Strategic Capital (OSC), Office of the Under Secretary of Defense for Research and Engineering, Department of Defense (DoD).
Notice; request for information (RFI).
The OSC is seeking information from companies and trade associations regarding strategic capital needs for industries related to the Covered Technology Categories to inform the design and implementation of the DoD Loan Program.
Comments must be received by October 22, 2024. Written comments in response to this RFI should be submitted in accordance with the instructions in the
Interested parties may submit comments on this transaction electronically on
Comments can also be sent by mail to Department of Defense, Office of the Assistant to the Secretary of Defense for Privacy, Civil Liberties, and Transparency, 4800 Mark Center Drive, Mailbox #24, Suite 08D09, Alexandria, VA 22350-1700.
Please include your name, company name (if any) and “Information Request on Financing Support for Covered Technology Categories” on any attached document.
Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered.
For questions about this notice, please contact David Vidal, Office of Strategic Capital Director of Credit Programs, at
In December 2022, the Secretary of Defense established OSC to attract and scale private capital to technologies critical to the national security of the United States. Furthermore, in 2024, Congress authorized OSC as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2024. The NDAA states that OSC shall:
(a) develop, integrate, and implement capital investment strategies proven in the commercial sector to shape and scale investment in critical technologies and assets,
(b) identify and prioritize promising critical technologies and assets that require capital assistance and have the potential to benefit the DoD, and
(c) make eligible investments in such technologies and assets, such as supply chain technologies not always supported through direct investment.
The NDAA designates the following 31 categories as a “Covered Technology Category.”
The NDAA authorizes OSC to provide capital assistance, defined as a “loan, loan guarantee, or technical assistance” for eligible investments. Eligible investments are those made in a technology that is (a) in a Covered Technology Category and (b) not solely utilized in defense applications. OSC is seeking public comment on the capital needs of industries and assets related to the Covered Technology Categories to inform the design of DoD loan program.
The following statements and questions cover the major topic areas for which OSC seeks comment. They are not intended to limit the topics that may be addressed. Responses may include any topic believed to inform the U.S. Government's efforts in developing recommendations for supporting the design of the DoD Loan Program, regardless of whether the topic is included in this document.
Respondents are encouraged to respond to any or all of the following questions and topic areas. Responses may include estimates, which should be designated as such. Your responses may include supporting data and examples. We welcome submission of publications or studies that support your responses as attachments.
The questions section of this
1. From the Covered Technology Categories referenced in the Background of this
2. What is the 6-digit North American Industry Classification System (NAICS) code for your business? If your business has more than one NAICS code, please list those associated with the Covered Technology Categories noted in your response to Question 1.
3. Does your company largely produce, integrate, or otherwise use equipment and/or services for a purpose that aligns with any of the Covered Technology Categories enumerated in the Background section? Please list each Covered Technology Category and define the relationship.
4. What are the primary technology asset(s)/equipment utilized in your sector for production or provision of services? What is the typical useful life of these technology equipment/assets?
5. Is there a secondary market for the technology equipment/asset(s) noted in Question 4? If so, how is the secondary
6. If applicable, how are these technology equipment/asset(s) transported from the source of origin to your facilities (airship, sea ship, rail, trucks)? If shipped via sea, are you/or your supplier able to transport them on a U.S.-flagged vessel?
7. How long has your company been in business? How many years has your firm operated in the specified Covered Technology Category?
8. What was your company's annual revenue over the past five years? (Please list each year and the respective annual value).
9. What were your company's earnings before interest and taxes (EBIT), and EBIT margins from the past five years? (Please list each year and the respective annual value).
10. What is your company's actual or implied Credit Rating Agency rating (
11. What is the current size of your company by employee count?
12. In which city, state, and countries are your company's headquarters, and manufacturing plants located?
13. In which geographies are your suppliers most concentrated? Please specify the state(s) or country(ies) if foreign.
14. In which geographies are your customers most concentrated? Please specify the state(s) or country(ies) if foreign.
15. Who are the major lenders in your market segment (
16. What percentage of your annual revenue has been spent on Research and Development (R&D) over the past five years? (Please list each year and the respective annual value).
17. What percentage of your annual revenue has been spent on capital expenditures (CapEx) over the past five years? (Please list each year and the respective annual value).
18. How often is capital expenditure (CapEx) funding usually needed (
19. Have you previously used any form of U.S. Government funding? If so, please specify which funding tool(s) your company used and how (
20. Have you ever accessed or attempted to obtain Federal credit (
21. Have Federal credit programs been able to successfully address the funding needs in your market segment? Please explain.
22. Which types of debt financing are currently available to your company for the purposes of working capital, capital/equipment lease or purchases, and acquisition?
23. What are the sources of debt financing in your market segment (
24. On average, how long does it take a company in your market segment to secure the needed debt funding for working capital, capital/equipment purchases or leases, acquisitions, etc.? How critical is the speed of funding availability in your line of business?
25. What are the typical terms for such debt instruments (
26. What are the limitations with existing forms of debt capital available to your company or sector (
27. What are the typical debt instruments used to fund the procurement of the technology assets/equipment in your sector?
28. What forms of working capital funding are available to companies in your market?
29. Have you deferred production expansion due to lack of access to capital or the cost of capital?
30. What is the seniority level of the typical debt instrument in your market? Are there any covenant restrictions preventing additional borrowing that is pari-passu or senior to existing debt on your balance sheet (if any)?
31. What are some of the limitations or challenges in accessing funding in your sector?
32. Are there any niche areas in your sub-sector that struggle with accessing the needed debt capital? Please describe the reasons for this.
33. Would you benefit from OSC offering any of the following types of loan or loan guarantees: working capital loans or lines of credit, asset-backed loans, equipment financing, or acquisition financing?
34. Subject to the criteria and eligibility requirements to be determined by OSC, what factors should OSC consider important when reviewing applications for the DoD Loan Program?
35. What is your outlook on the five-year macroeconomic projection for your industry? What macroeconomic headwinds/tailwinds are most impacting you?
36. Who are the main competitors in your space? Where are they located geographically? Please list the city and state, if known. If the competitor is located overseas, please list the city and country.
37. Do you have foreign competition in your industry? Foreign competition is defined as a competing firm with headquarters outside of the United States. If yes, please list the firm(s) as well as the country they are headquartered in.
38. Are you aware of or facing competition backed by foreign government financing? If so, please identify the competition and the type of foreign government financing provided.
OSC encourages respondents, when addressing the points above, unless raising other challenges related to financing Covered Technology Categories not explicitly asked, to identify which point they are responding to by using the same numbers and heading as set forth above. For example, someone submitting comments responsive to (9), “What is your company's actual or implied Credit Rating Agency rating (
Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential version of the submission. Users submitting a form that contains business confidential information will need to submit a non-confidential version of the same form that does not contain the confidential business information. The non-confidential version of the submission will be placed in the public file on
Office of Elementary and Secondary Education (OESE), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing an extension without change of a currently approved information collection request (ICR).
Interested persons are invited to submit comments on or before September 23, 2024.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Britt Jung, (202) 453-6046.
The Department, in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. The Department is soliciting comments on the proposed information collection request (ICR) that is described below. The Department is especially interested in public comment addressing the following issues: (1) is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
This information collection requests approval for an extension to a previously approved collection that includes annual reporting requirements to comply with the requirements of the GEER/ESF—Governor program and to obtain information on how the funds were used.
The information will be reviewed by U.S. Department of Education (Department) employees to ensure that GEER/ESF—Governor funds are used in accordance with applicable requirements under the CARES Act and CRRSA Act and will be shared with the public to promote transparency regarding the allocation and uses of funds. Furthermore, the information collected will be analyzed to provide aggregate statistics on SEA and LEA use of Education Stabilization Fund (ESF) funds to address the impacts of the COVID-19 virus on students and schools. The collection was used for a similar purpose in the first three years of its administration, with reporting made public in 2021, 2022, and 2024.
Office of Elementary and Secondary Education (OESE), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing a revision of a currently approved information collection request (ICR).
Interested persons are invited to submit comments on or before September 23, 2024.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Britt Jung, (202) 453-6046.
The Department, in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. The Department is soliciting comments on the proposed information collection request (ICR) that is described below. The Department is especially interested in public comment addressing the following issues: (1) is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
This request seeks approval for a revision to the currently approved data collection for the established annual reporting requirements which align with the requirements of the EANS program and obtain information on how the program funds were used. This revision is being requested to make updates to the collection for the upcoming fiscal year and to remove two questions that are no longer relevant. The reported information will be reviewed by U.S. Department of Education (Department) employees to ensure that EANS funds are used in accordance with applicable requirements under the CRRSA Act and ARP Act and will be shared with the public to promote transparency regarding the allocation and use of funds.
Grid Deployment Office, Department of Energy.
Notice of application.
ENMAX Energy Marketing, Inc. (ENMAX or Applicant) has applied for renewed authorization to transmit electric energy from the United States to Canada pursuant to the Federal Power Act.
Comments, protests, or motions to intervene must be submitted on or before August 23, 2024.
Comments, protests, motions to intervene, or requests for more information should be addressed by electronic mail to
Janessa Zucchetto, (240) 474-8226,
The United States Department of Energy (DOE) regulates electricity exports from the United States to foreign countries in accordance with section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)) and regulations thereunder (10 CFR 205.300
Section 202(e) of the FPA provides that an entity which seeks to export electricity must obtain an order from DOE authorizing that export (16 U.S.C. 824a(e)). On April 10, 2023, the authority to issue such orders was delegated to the DOE's Grid Deployment Office (GDO) under Delegation Order No. S1-DEL-S3-2023 and Redelegation Order No. S3-DEL-GD1-2023.
On November 27, 2019, DOE issued Order No. EA-264-D to ENMAX to transmit electric energy from the United States to Canada as a power marketer for a period of five years. On May 30, 2024,
According to the Application, ENMAX is an Alberta, Canada corporation having its principal place of business at Calgary, Alberta, Canada and a wholly owned subsidiary of ENMAX Energy Corporation, which is a wholly owned subsidiary of ENMAX Corporation, which is wholly owned by The City of Calgary.
The Applicant states that although it does not own transmission border facilities, it purchases transmission service from locations in the United States to the border with Canada.
ENMAX represents that its export of electricity will not impair the sufficiency of the United States electric supply because the power exported will only be on transmission lines with available capacity. App. at 5. Additionally, the Applicant states that it will comply with all applicable reliability and technical standards set forth in the relevant licenses and that its proposed exports would not adversely affect transmission facilities or impede the coordinated use of transmission facilities.
The existing international transmission facilities to be utilized by the Applicant have been previously authorized by Presidential permits issued pursuant to Executive Order 10485, as amended, and are appropriate for open access transmission by third parties.
Comments and other filings concerning ENMAX's Application should be clearly marked with GDO Docket No. EA-264-E. Additional copies are to be provided directly to Wesley Manfro, ENMAX Corporation, 141—50 Avenue SE Calgary, AB T2G 4S7,
A final decision will be made on the requested authorization after the environmental impacts have been evaluated pursuant to DOE's National Environmental Policy Act Implementing Procedures (10 CFR part 1021) and after DOE evaluates whether the proposed action will have an adverse impact on the sufficiency of supply or reliability of the United States electric power supply system.
Copies of this Application will be made available, upon request, by accessing the program website at
Grid Deployment Office, Department of Energy.
Notice of application.
Constellation Generation Company LLC (the Applicant) has applied for renewed authorization to transmit electric energy from the United States to Canada pursuant to the Federal Power Act.
Comments, protests, or motions to intervene must be submitted on or before August 23, 2024.
Comments, protests, motions to intervene, or requests for more information should be addressed by electronic mail to .
Janessa Zucchetto, (240) 474-8226,
The United States Department of Energy (DOE) regulates electricity exports from the United States to foreign countries in accordance with section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)) and regulations thereunder (10 CFR 205.300
Section 202(e) of the FPA provides that an entity which seeks to export electricity must obtain an order from DOE authorizing that export (16 U.S.C. 824a(e)). On April 10, 2023, the authority to issue such orders was delegated to the DOE's Grid Deployment Office (GDO) under Delegation Order No. S1-DEL-S3-2023 and Redelegation Order No. S3-DEL-GD1-2023.
On February 10, 2022, DOE issued order No. EA-249-D to Constellation Generation Company LLC to transmit electric energy from the United States to Canada. On June 6, 2024, Constellation Generation Company LLC filed a renewal Application (Application or App.) for an additional five-year term. App. at 1.
According to the Application, Constellation Generation Company LLC is a “Pennsylvania limited liability company with its principal executive offices in Baltimore, Maryland.”
The Applicant states that it has and will continue to export on either firm or interruptible basis and “will not impair the sufficiency of the electric power supply within the United States . . . [or] will not impede or tend to impede the regional coordination of electric utility planning or operations.”
The existing international transmission facilities to be utilized by the Applicant have been previously authorized by Presidential permits issued pursuant to Executive Order 10485, as amended, and are appropriate for open access transmission by third parties.
Comments and other filings concerning Constellation Generation Company LLC's Application should be clearly marked with GDO Docket No. EA-249-E. Additional copies are to be provided directly to Todd Brecher, Constellation Generation Company, LLC, 1310 Point Street, 8th Floor, Baltimore, MD 21231, 410-470-2593,
A final decision will be made on the requested authorization after the environmental impacts have been evaluated pursuant to DOE's National Environmental Policy Act Implementing Procedures (10 CFR part 1021) and after DOE evaluates whether the proposed action will have an adverse impact on the sufficiency of supply or reliability of the United States electric power supply system.
Copies of this Application will be made available, upon request, by accessing the program website at
Grid Deployment Office, Department of Energy.
Notice of application.
AMA QSE, LLC (the Applicant or “AMA”) has applied for authorization to transmit electric energy from the United States to Mexico pursuant to the Federal Power Act.
Comments, protests, or motions to intervene must be submitted on or before August 23, 2024.
Comments, protests, motions to intervene, or requests for more information should be addressed by electronic mail to
Janessa Zucchetto, (240) 474-8226,
The United States Department of Energy (DOE) regulates electricity exports from the United States to foreign countries in accordance with section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)) and regulations thereunder (10 CFR 205.300
Section 202(e) of the FPA provides that an entity which seeks to export electricity must obtain an order from DOE authorizing that export (16 U.S.C. 824a(e)). On April 10, 2023, the authority to issue such orders was delegated to the DOE's Grid Deployment Office (GDO) under Delegation Order No. S1-DEL-S3-2023 and Redelegation Order No. S3-DEL-GD1-2023.
On June 4, 2024, AMA QSE, LLC filed an application (Application or App.) with DOE to transmit electric energy from the United States to Mexico for a five-year term. App. at 1-2.
According to the Application, AMA QSE, LLC is “authorized to do business in the State of Texas and such other states as required by the current nature of its business.” App. at 2. AMA states it “does not currently own or control electric generation or transmission facilities and does not have a power supply of its own in the United States[.]”
The existing international transmission facilities to be utilized by the Applicant have been previously authorized by Presidential permits issued pursuant to Executive Order 10485, as amended, and are appropriate for open access transmission by third parties.
Comments and other filings concerning AMA QSE, LLC's Application should be clearly marked with GDO Docket No. EA-515. Additional copies are to be provided directly to Juan I. Romo, AMA QSE, LLC, 401 Franklin Street, Suite 2400-115, Houston, TX 77002,
A final decision will be made on the requested authorization after the environmental impacts have been evaluated pursuant to DOE's National Environmental Policy Act Implementing Procedures (10 CFR part 1021) and after DOE evaluates whether the proposed action will have an adverse impact on the sufficiency of supply or reliability of the United States electric power supply system.
Copies of this Application will be made available, upon request, by accessing the program website at
This is a supplemental notice in the above-referenced proceeding of FRP Columbia County Solar, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 6, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
This is a supplemental notice in the above-referenced proceeding of FRP Gadsden County Solar, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 6, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
This is a supplemental notice in the above-referenced proceeding of RDAF Energy Solutions, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 6, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Take notice that the Commission received the following Complaints and Compliance filings in EL Dockets:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
The following notice of meeting is published pursuant to section 3(a) of the government in the Sunshine Act (Pub. L. 94-409), 5 U.S.C. 552b:
July 25, 2024, 10 a.m.
Room 2C, 888 First Street NE, Washington, DC 20426.
Open to the public.
Agenda.
*
Debbie-Anne A. Reese, Acting Secretary, Telephone (202) 502-8400.
For a recorded message listing items stricken from or added to the meeting, call (202) 502-8627.
This is a list of matters to be considered by the Commission. It does not include a listing of all documents relevant to the items on the agenda. All public documents, however, may be viewed online at the Commission's website at
A free webcast of this event is available through the Commission's website. Anyone with internet access who desires to view this event can do so by navigating to
Immediately following the conclusion of the Commission Meeting, a press briefing will be held in the Commission Meeting Room. Members of the public may view this briefing in the designated overflow room. This statement is intended to notify the public that the press briefings that follow Commission meetings may now be viewed remotely at Commission headquarters but will not be telecast.
This is a supplemental notice in the above-referenced proceeding of FRP Gilchrist County Solar, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 6, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
The filings are accessible in the Commission's eLibrary system (
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Notice is given that a complaint has been filed with the Federal Maritime Commission (the “Commission”) by S.P.F. Logistics, Inc. (the “Complainant”) against Hapag Lloyd AG (the “Respondent”). Complainant states that the Commission has subject matter jurisdiction over the complaint pursuant to the Shipping Act of 1984, as amended, 46 U.S.C. 40101
Complainant is a California corporation that operates as a licensed motor carrier.
Complainant identifies Respondent as a corporation organized under the laws of Germany with its headquarters located in Hamburg, Germany, that does business in the United States through Hapag Lloyd (America) LLC, a Delaware limited liability company with its principal place of business in Piscataway, New Jersey.
Complainant alleges that Respondent violated 46 U.S.C. 41102(c), as
An answer to the complaint must be filed with the Commission within 25 days after the date of service.
The full text of the complaint can be found in the Commission's electronic Reading Room at
The notificants listed below have applied under the Change in Bank Control Act (Act) (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the applications are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments received are subject to public disclosure. In general, comments received will be made available without change and will not be modified to remove personal or business information including confidential, contact, or other identifying information. Comments should not include any information such as confidential information that would not be appropriate for public disclosure.
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington, DC 20551-0001, not later than August 8, 2024.
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In addition,
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Board of Governors of the Federal Reserve System.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled Compliance Attestation Statement for the Framework for Nucleic Acid Synthesis Screening. The project aims to assist providers and manufacturers of synthetic nucleic acids and benchtop nucleic acid synthesis equipment (providers) in making an attestation that they have instituted a process to screen nucleic acid sequences of concern and verify customer legitimacy, in accordance with the requirements outlaid in the OSTP Framework for Nucleic Acid Synthesis Screening.
CDC must receive written comments on or before September 23, 2024.
You may submit comments, identified by Docket No. CDC-2024-0056 by either of the following methods:
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Please note: Submit all comments through the Federal eRulemaking portal (
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS H21-8, Atlanta, Georgia 30329; Telephone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate 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. Evaluate 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. Enhance the quality, utility, and clarity of the information to be collected;
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
Compliance Attestation Statement for the Framework for Nucleic Acid Synthesis Screening—New—Office of Science (OS), Centers for Disease Control and Prevention (CDC).
This data collection form was developed pursuant to the Framework for Nucleic Acid Synthesis Screening, which was released by the Office of Science and Technology Policy (OSTP) in April of 2024. This framework was directed by the
The Attestation Form will collect basic organizational information and an attestation of compliance from providers and manufacturers of synthetic nucleic acids and benchtop nucleic acid synthesis equipment. Data collected includes organization name, location, website, and type of organization. The form also includes primary and secondary contact information such as name, location, phone number and email address to ensure there is a point of contact with the company in case of questions regarding compliance and record keeping. This data is needed to ensure the self-attestation form can be filed and logged correctly, and to ensure the government can reach out to the correct contact if clarification if necessary.
CDC requests OMB approval for an estimated 20 annual burden hours. There is no cost to respondents other than their time to participate.
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
On May 28, 2010, the Office of Management and Budget (OMB) issued Paperwork Reduction Act (PRA) guidance related to the “generic” clearance process. Generally, this is an expedited process by which agencies may obtain OMB's approval of collection of information requests that are “usually voluntary, low-burden, and uncontroversial collections,” do not raise any substantive or policy issues, and do not require policy or methodological review. The process requires the submission of an
Comments must be received by August 7, 2024.
When commenting, please reference the applicable form number (CMS-10434 #66) and the OMB control number (0938-1188). To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
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To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, please access the CMS PRA website by copying and pasting the following web address into your web browser:
William N. Parham at (410) 786-4669.
Because of system limitations, we are submitting this generic collection of information request on an interim basis under CMS-10434 (OMB 0938-1188). At the appropriate time we will move this request under its proper place (CMS-10398, OMB 0938-1148) and subsequently remove it from CMS-10434 to prevent duplication. The public can monitor the status of such activities at
Following is a summary of the use and burden associated with the subject information collection(s). More detailed information can be found in the collection's supporting statement and associated materials (see
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States have an obligation to conduct redeterminations of eligibility for all individuals enrolled in Medicaid and CHIP in compliance with all existing Federal requirements at 42 CFR 435.916 and 457.343. In March 2023, CMS identified that 35 States were non-compliant with at least one Medicaid/CHIP renewal requirement. To be eligible for temporary increased funding under the Consolidated Appropriations Act (CAA, 2023), these States were required to implement mitigation strategies or take other steps before they were able to begin unwinding. During unwinding, several States were also required to adopt mitigations when CMS identified other issues (
It is critical that States ensure their compliance with all Federal renewal requirements to help individuals eligible for Medicaid or CHIP successfully renew their coverage. To confirm compliance with these regulations, CMS is providing a template for States to indicate their current compliance status with renewal regulations, describe policies and processes, and identify planned mitigations for any identified deficiencies. This template will be completed once by States, with updates provided as States with compliance deficiencies inform CMS of progress and come into compliance with requirements.
Office of the Secretary, HHS.
Notice.
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.
Comments on the ICR must be received on or before September 23, 2024.
Submit your comments to
When submitting comments or requesting information, please include the document identifier 0990-0281-60D and project title for reference, to Sherrette A. Funn, email:
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity
The program is requesting a 3-year extension of the clearance.
OMB No.
Office of the Secretary, Department of Health and Human Services.
Notice of amendment.
The Secretary of Health and Human Services (HHS) is issuing this notice pursuant to the Federal Food, Drug, and Cosmetic (FD&C) Act. On July 18, 2024, the Secretary amended the April 19, 2013, determination made pursuant to the FD&C Act, regarding the avian influenza A (H79N) virus, and determined pursuant to his authority under the Act that there is a significant potential for a public health emergency that has a significant potential to affect national security or the health and security of United States citizens living abroad and that involves biological agents, namely pandemic influenza A viruses and influenza A viruses with pandemic potential.
The section 564(b)(1)(C) determination that was originally issued on April 19, 2013, is amended as of July 18, 2024.
Dawn O'Connell, Administrator and Assistant Secretary for Preparedness and Response, Administration for Strategic Preparedness and Response, Department of Health and Human Services, 200 Independence Avenue SW, Washington, DC 20201, Telephone (202) 205-2882 (this is not a toll-free number).
Under section 564 and 564A of the Federal Food, Drug, and Cosmetic Act (FD&C Act), the U.S. Department of Health and Human Services (HHS) has the ability to take certain steps to help facilitate the availability of medical countermeasures after one of four determinations under section 564(b) is made: (1) a determination by the Secretary of Homeland Security that there is a domestic emergency, or a significant potential for a domestic emergency, involving a heightened risk of attack with a chemical, biological, radiological, or nuclear (“CBRN”) agent or agents; (2) the identification of a material threat by the Secretary of the Homeland Security pursuant to section 319F-2 of the Public Health Service (PHS) Act sufficient to affect national
After any of these four determinations is made, if other applicable statutory criteria are met, HHS may take actions under section 564A of the FD&C Act to help facilitate the availability of certain medical countermeasures. For example, under section 564A(e), the Director of the Centers for Disease Control and Prevention (CDC) may create and issue Emergency Use Instructions to inform health care providers or individuals about the approved, licensed, or cleared conditions of use of “eligible” medical countermeasures (
The Administration for Strategic Preparedness and Response (ASPR) requested that the Secretary amend the April 19, 2013, determination made pursuant to section 564 of the FD&C Act, regarding the avian influenza A (H79N) virus, to apply generally to pandemic influenza A viruses and influenza A viruses with pandemic potential. As described below, broadening the April 19, 2013, determination to apply to pandemic influenza A viruses and influenza A viruses with pandemic potential—rather than just H7N9 specifically—would appropriately cover the range of known and emerging influenza A viruses that present a significant potential for a public health emergency.
On April 19, 2013, pursuant to section 564(b)(1)(C) of the FD&C Act, former Secretary Sebelius determined that there is a significant potential for a public health emergency that has a significant potential to affect national security or the health and security of United States citizens living abroad and that involves the avian influenza A (H7N9) virus. I have determined that the 2013 determination should be amended to cover a broader range of influenza A viruses, namely pandemic influenza A viruses and influenza A viruses with pandemic potential. For purposes of the amended determination, “pandemic influenza A viruses and viruses with pandemic potential” means animal viruses and/or human influenza A viruses circulating in wild birds, domestic animals and/or humans that cause or have significant potential to cause sporadic or ongoing human infections, or historically have caused pandemics in humans, or have mutated to cause pandemics in humans, and for which the majority of the population is immunologically naive. Pandemic influenza A viruses and influenza A viruses with pandemic potential present a significant potential for a public health emergency that has a significant potential to affect national security or the health and security of United States citizens living abroad because influenza A viruses that may initially be only occasionally transmitted to or between humans have the potential to become highly transmissible in humans and can cause significant morbidity and mortality. For example, the A/H1N1 influenza pandemic in 2009 was caused by a reassortant H1N1 that emerged from a combination of genes that had been present in various strains of swine, avian, and human influenza.
H7N9 is another example of an influenza A virus that presents a significant potential for a public health emergency and would be considered an influenza A virus with pandemic potential. H7N9 has demonstrated the ability to transmit from poultry to humans, causing two separate human case clusters involving over 400 people and resulting in over 100 fatalities from 2013 to 2014. While sustained human-to-human transmission was not seen, familial clusters could not be ruled out. Moreover, some patients treated for illness had treatment-emergent resistance, another concern for pandemic potential.
H5N1 is a third example. From 1997 through April 2024, over 50 percent of human cases of influenza A(H5N1) have been fatal. Although H5N1 is not easily transmissible in humans, it has demonstrated the ability to transmit from poultry to humans, and now likely from cattle to humans. On March 25, 2024, U.S. Department of Agriculture reported that milk samples collected from affected cows on two dairy farms in Kansas and one in Texas, as well as an oropharyngeal swab from another dairy in Texas, tested positive for highly pathogenic avian influenza (HPAI), later confirmed to be Type A H5N1. This is the first time that these bird flu viruses were found in cattle. Since the beginning of April 2024, CDC has reported eight HPAI A(H5N1) human cases associated with the dairy cattle outbreak: one in Texas, two in Michigan, and five confirmed in Colorado. All individuals had occupational exposure to infected animals (either cattle or poultry), and none of the cases has involved severe disease. The current risk to human health posed by HPAI A (H5N1) virus is low. But the cases stemming from dairy cattle represent the first instances of likely mammal-to-human transmission of HPAI A(H5N1). Additionally, we cannot be sure that the cases known to be associated with the dairy cattle outbreak represent the full spectrum of disease from this currently circulating HPAI A (H5N1) strain, nor can we be assured that the virus will not mutate to cause more severe disease and/or to become more transmissible (
Broadening the April 19, 2013, determination to apply to pandemic influenza A viruses and influenza A viruses with pandemic potential—rather than just H7N9 specifically—would appropriately cover the range of known and emerging influenza A viruses that present a significant potential for a public health emergency.
Therefore, I have now amended the April 19, 2013, determination to recognize that there is a significant potential for a public health emergency that has a significant potential to affect national security or the health and security of United States citizens living abroad and that involves biological agents, namely pandemic influenza A viruses and influenza A viruses with pandemic potential.
On April 19, 2013, pursuant to section 564(b)(1) of the FD&C Act and subject to the terms of any authorization issued under that section, former Secretary Sebelius declared that circumstances exist justifying the authorization of emergency use of in vitro diagnostics for detection of avian influenza A (H7N9) virus. That declaration remains in effect until that declaration is terminated in accordance with section 564 of the FD&C Act.
U.S. Customs and Border Protection (CBP), Department of Homeland Security.
60-Day notice and request for comments.
The Department of Homeland Security, U.S. Customs and Border Protection (CBP) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the
Comments are encouraged and must be submitted (no later than September 23, 2024) to be assured of consideration.
Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0037 in the subject line and the agency name. Please submit written comments and/or suggestions in English. Please use the following method to submit comments:
Email. Submit comments to:
Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email
CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
U.S. Customs and Border Protection (CBP), Department of Homeland Security.
60-Day notice and request for comments.
The Department of Homeland Security, U.S. Customs and Border Protection (CBP) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the
Comments are encouraged and must be submitted (no later than
Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0058 in the subject line and the agency name. Please submit written comments and/or suggestions in English. Please use the following method to submit comments:
Email. Submit comments to:
Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email
CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Office of the Secretary, Department of Homeland Security (DHS).
Committee management; notice of committee establishment.
In order to facilitate an effective review of the security provided by the U.S. Secret Service to Former President Donald J. Trump on July 13, 2024, the Department of Homeland Security (Department or DHS) is creating an Independent Review Panel (Panel). Pursuant to the Homeland Security Act of 2002, the Department is taking immediate measures to establish this independent panel of experts to inquire into the planning for and actions taken by the U.S. Secret Service and state and local authorities, before, during, and after the July 13, 2024, attempted assassination of Former President Donald J. Trump at a campaign rally in Butler, Pennsylvania. The Panel will also review the governing policies and procedures and provide findings and recommendations to the Secretary of Homeland Security.
Michael J. Miron, Committee Management Officer, Office of Partnership and Engagement, U.S. Department of Homeland Security at
At the direction of the President, the Secretary of Homeland Security is establishing an independent review of the tragic events of July 13, 2024, when a now-deceased assailant attempted to assassinate former President Donald J. Trump at a campaign rally in Butler, Pennsylvania, injuring the former President, killing one person attending the rally, and injuring two others, as reported. The Panel will review the planning for and actions taken by U.S. Secret Service and state and local authorities before, during, and after the July 13, 2024 campaign rally, and the governing policies and procedures. The Panel will provide findings and recommendations to the Secretary of Homeland Security. This time-sensitive and important review will entail discussion of classified information.
The Department has recognized in the past that some highly critical issues cannot be discussed in public without jeopardizing the security and confidentiality of sensitive homeland security information. For example, in 2014, the Department established the United States Secret Service Protective Mission Panel (USSSPMP) to review security processes, procedures, and actions taken after a civilian scaled a fence and entered the White House compound on September 19, 2014. See 79 FR 63141 (Oct. 22, 2014). Discussions between the members of the 2014 Panel involved intelligence and law enforcement sensitive information and remain non-public to avoid disclosing protective mission sensitive information to criminals and our nation's enemies, including sensitive law enforcement techniques and
The Department recognizes the importance of the Federal Advisory Committee Act (FACA), 5 U.S.C. Ch. 10. The FACA, when it applies, generally requires advisory committees to meet in open session and make publicly available associated written materials. It also requires a 15-day notice before any meeting may be closed to public attendance. These requirements, however, would prevent the Department from convening on short notice a panel to discuss the sensitive and classified information surrounding the events of July 13, 2024, in an appropriate setting. The FACA contains several exceptions to its general disclosure rules, but the use of those exceptions is not sufficient to address the proper handling of classified material and the protection of law enforcement sensitive information in this unique context. The information that will be discussed and reviewed by this Panel will be deliberative in nature and will involve classified information that, if discussed in public, would result in the unauthorized disclosure of information that could reasonably be expected to result in threats or damage to national security. Furthermore, the information discussed will involve techniques and procedures for law enforcement investigations. The release of this information would enable criminals and enemies to use that information to circumvent the law and could reasonably be expected to endanger the life or physical safety of individuals.
Section 871 of the Homeland Security Act (HSA) provides the Secretary of Homeland Security with the authority to establish advisory committees and exempt them from the FACA. 6 U.S.C. 451(a). This authority allows the Department a forum to freely and completely review the security procedures, to discuss potential vulnerabilities, and to provide the Department with information and recommendations that otherwise could not be discussed.
The Department respects the principles of open government and has judiciously exercised the authority Congress provided in Section 871 of the HSA. Given that the use of this authority will allow the Department a forum to fully and completely review the issues and make recommendations surrounding the U.S. Secret Service as described above, the Department is invoking that authority.
Collaboration among the panel members must involve many activities to include planning, coordination, protective security implementation, operational activities related to protective service security measures, vulnerabilities, protective measures, best practices, and lessons learned. An effective panel must be able to have ongoing, immediate, and multidirectional communication and coordination under highly exigent circumstances.
In furtherance of the DHS mission to provide protective services, the public interest requires the establishment of the Panel under the authority of 6 U.S.C. 451. The Panel will review the planning for and actions taken by the U.S. Secret Service and state and local authorities before, during, and after the July 13, 2024 campaign rally, and the governing policies and procedures. The Panel will interact with federal officials and representatives from the security and law enforcement communities. The Panel has no authority to establish Federal policy or otherwise undertake inherently governmental functions.
The Department, to the fullest extent possible without compromising the protective security or law enforcement missions, will make the factual findings and recommendations of the Panel available to the public.
The specific membership of the Panel will consist of individuals with expertise in (a) law enforcement, (b) protective security, (c) homeland security, and (d) other experts as the investigation dictates. The Panel members will be designated by the Secretary. The Panel is tasked with making factual findings and recommendations. The Panel may identify and provide to the Secretary interim recommendations requiring immediate implementation prior to completing the full inquiry. This Notice is not a solicitation for membership.
U.S. Citizenship and Immigration Services, Department of Homeland Security.
30-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed revision of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 30 days until August 23, 2024.
All submissions received must include the OMB Control Number 1615-0014 in the body of the letter, the agency name and Docket ID USCIS-2006-0072. Submit comments via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number (240) 721-3000 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
The information collection notice was previously published in the
You may access the information collection instrument with instructions or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate 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) Evaluate 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) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
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Fish and Wildlife Service, Interior.
Notice of receipt of permit applications; request for comments.
We, the U.S. Fish and Wildlife Service, have received applications for permits to conduct activities intended to enhance the propagation or survival of endangered species under the Endangered Species Act. We invite the public and local, State, Tribal, and Federal agencies to comment on these applications. Before issuing any of the requested permits, we will take into consideration any information that we receive during the public comment period.
We must receive written data or comments on the applications by August 23, 2024.
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Karen Marlowe, Permit Coordinator, via telephone at 404-679-7097 or via email at
We, the U.S. Fish and Wildlife Service, invite review and comment from the public and local, State, Tribal, and Federal agencies on applications we have received for permits to conduct certain activities with endangered and threatened species under section 10(a)(1)(A) of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531
With some exceptions, the ESA prohibits take of listed species unless a federal permit is issued that authorizes such take. The definition of “take” in the ESA includes hunting, shooting, harming, wounding, or killing, and also such activities as pursuing, harassing, trapping, capturing, or collecting.
A recovery permit issued by us under section 10(a)(1)(A) of the ESA authorizes the permittee to take endangered or threatened species while engaging in activities that are conducted for scientific purposes that promote recovery of species or for enhancement of propagation or survival of species. These activities often include the capture and collection of species, which would result in prohibited take if a permit were not issued. Our regulations implementing section 10(a)(1)(A) of the ESA for these permits are found at 50 CFR 17.22 for endangered wildlife species, 50 CFR 17.32 for threatened wildlife species, 50 CFR 17.62 for endangered plant species, and 50 CFR 17.72 for threatened plant species.
The ESA requires that we invite public comment before issuing these permits. Accordingly, we invite local, State, Tribal, and Federal agencies and the public to submit written data, views, or arguments with respect to these applications. The comments and recommendations that will be most useful and likely to influence agency decisions are those supported by quantitative information or studies. Proposed activities in the following permit requests are for the recovery and enhancement of propagation or survival of the species in the wild.
Written comments we receive become part of the administrative record associated with this action. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. All submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, will be made available for public disclosure in their entirety.
After the comment period closes, we will make decisions regarding permit issuance. If we issue permits to any of the applicants listed above in this notice, we will publish a subsequent notice in the
We publish this notice under section 10(c) of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
On March 24, 2023, the Drug Enforcement Administration (DEA or Government) issued an Order to Show Cause (OSC) to Deron Kovac, D.M.D. (Registrant). Request for Final Agency Action (RFAA), Exhibit (RFAAX) 1, at 1, 3. The OSC proposed the revocation of Registrant's Certification of Registration
The OSC notified Registrant of his right to file with DEA a written request for hearing, and that if he failed to file such a request, he would be deemed to have waived his right to a hearing and be in default.
Further, “[i]n the event that a registrant . . . is deemed to be in default . . . DEA may then file a request for final agency action with the Administrator, along with a record to support its request. In such circumstances, the Administrator may enter a default final order pursuant to [21 CFR] § 1316.67.”
The Agency finds that, in light of Registrant's default, the factual allegations in the OSC are admitted. According to the OSC, effective October 18, 2022, the Pennsylvania State Board of Dentistry suspended Registrant's dental license. RFAAX 1, at 1. According to Pennsylvania online records, of which the Agency takes official notice, Registrant's dental license remains suspended.
Pursuant to 21 U.S.C. 824(a)(3), the Attorney General is authorized to suspend or revoke a registration issued under 21 U.S.C. 823 “upon a finding that the registrant . . . has had his State license or registration suspended . . . [or] revoked . . . by competent State authority and is no longer authorized by State law to engage in the . . . dispensing of controlled substances.” With respect to a practitioner, DEA has also long held that the possession of authority to dispense controlled substances under the laws of the state in which a practitioner engages in professional practice is a fundamental condition for obtaining and maintaining a practitioner's registration.
According to Pennsylvania statute, “dispense” means “to deliver a controlled substance, other drug or device to an ultimate user or research subject by or pursuant to the lawful order of a practitioner, including the prescribing, administering, packaging, labeling, or compounding necessary to prepare such item for that delivery.” 35 Pa. Stat. and Cons. Stat. Ann. section 780-102(b) (West 2024). Further, a “practitioner” means “a physician . . . dentist . . . or other person licensed, registered or otherwise permitted to distribute, dispense, conduct research with respect to or to administer a controlled substance, other drug or device in the course of professional practice or research in the Commonwealth of Pennsylvania.”
Here, the undisputed evidence in the record is that Registrant lacks authority to practice dentistry in Pennsylvania. As discussed above, an individual must be a licensed practitioner to dispense a controlled substance in Pennsylvania. Thus, because Registrant lacks authority to practice dentistry in Pennsylvania and, therefore, is not authorized to handle controlled substances in Pennsylvania, Registrant is not eligible to maintain a DEA registration. Accordingly, the Agency will order that Registrant's DEA registration be revoked.
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 824(a), I hereby revoke DEA Certificate of Registration No. FK7629340 issued to Deron Kovac, D.M.D. Further, pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(g)(1), I hereby deny any pending applications of Deron Kovac, D.M.D., to renew or modify this registration, as well as any other pending application of Deron Kovac, D.M.D., for additional registration in Pennsylvania. This Order is effective August 23, 2024.
This document of the Drug Enforcement Administration was signed on July 15, 2024, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of DEA. This administrative process in no way alters the legal effect of this
On July 19, 2023, the Drug Enforcement Administration (DEA or Government) issued an Order to Show Cause (OSC) to Donna Winingham, M.D. (Registrant). Request for Final Agency Action (RFAA), Exhibit (RFAAX) 2, at 1, 3. The OSC proposed the revocation of Registrant's Certificate of Registration No. AW1730729 in Templeton, CA 93465.
The OSC notified Registrant of her right to file with DEA a written request for hearing, and that if she failed to file such a request, she would be deemed to have waived her right to a hearing and be in default.
Further, “[i]n the event that a registrant . . . is deemed to be in default . . . DEA may then file a request for final agency action with the Administrator, along with a record to support its request. In such circumstances, the Administrator may enter a default final order pursuant to [21 CFR] § 1316.67.”
The Agency finds that, in light of Registrant's default, the factual allegations in the OSC are admitted. According to the OSC, effective July 30, 2021, the Medical Board of California revoked Registrant's California medical license. RFAAX 2, at 2. According to California's online records, of which the Agency takes official notice, Registrant's California medical license remains revoked.
Pursuant to 21 U.S.C. 824(a)(3), the Attorney General is authorized to suspend or revoke a registration issued under 21 U.S.C. 823 “upon a finding that the registrant . . . has had his State license or registration suspended . . . [or] revoked . . . by competent State authority and is no longer authorized by State law to engage in the . . . dispensing of controlled substances.” With respect to a practitioner, DEA has also long held that the possession of authority to dispense controlled substances under the laws of the state in which a practitioner engages in professional practice is a fundamental condition for obtaining and maintaining a practitioner's registration.
According to California statute, “dispense” means “to deliver a controlled substance to an ultimate user or research subject by or pursuant to the lawful order of a practitioner, including the prescribing, furnishing, packaging, labeling, or compounding necessary to prepare the substance for that delivery.” Cal. Health & Safety Code section 11010 (West 2024). Further, a “practitioner” means a person “licensed, registered, or otherwise permitted, to distribute, dispense, conduct research with respect to, or administer, a controlled substance in the course of professional practice or research in [the] state.”
Here, the undisputed evidence in the record is that Registrant currently lacks authority to practice medicine in California. As discussed above, a physician must be a licensed practitioner to dispense a controlled substance in California. Thus, because Registrant currently lacks authority to practice medicine in California and, therefore, is not currently authorized to handle controlled substances in California, Registrant is not eligible to maintain a DEA registration. Accordingly, the Agency will order that Registrant's DEA registration be revoked.
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 824(a), I hereby revoke DEA Certificate of Registration No. AW1730729 issued to Donna Winingham, M.D. Further, pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(g)(1), I hereby deny any pending applications of Donna Winingham, M.D., to renew or modify this registration, as well as any other pending application of Donna Winingham, M.D., for additional registration in California. This Order is effective August 23, 2024.
This document of the Drug Enforcement Administration was signed on July 15, 2024, by Administrator Anne
On May 15, 2023, the Drug Enforcement Administration (DEA or Government) issued an Order to Show Cause (OSC) to Carrie L. Madej, D.O. (Registrant). Request for Final Agency Action (RFAA), Exhibit (RFAAX) 1, at 1, 3. The OSC proposed the revocation of Registrant's Certificate of Registration No. FM6088997 at the registered address of 527 Luther Bailey Road, Senoia, Georgia 30276.
The OSC notified Registrant of her right to file with DEA a written request for hearing, and that if she failed to file such a request, she would be deemed to have waived her right to a hearing and be in default.
Further, “[i]n the event that a registrant . . . is deemed to be in default . . . DEA may then file a request for final agency action with the Administrator, along with a record to support its request. In such circumstances, the Administrator may enter a default final order pursuant to [21 CFR] § 1316.67.”
The Agency finds that, in light of Registrant's default, the factual allegations in the OSC are admitted. According to the OSC, on January 4, 2023, Registrant surrendered her Georgia medical license, with the surrender made effective on January 6, 2023. RFAAX 1, at 1. According to Georgia online records, of which the Agency takes official notice, Registrant's Georgia medical license remains “Voluntarily Surrendered.”
Pursuant to 21 U.S.C. 824(a)(3), the Attorney General is authorized to suspend or revoke a registration issued under 21 U.S.C. 823 “upon a finding that the registrant . . . has had his State license or registration suspended . . . [or] revoked . . . by competent State authority and is no longer authorized by State law to engage in the . . . dispensing of controlled substances.” With respect to a practitioner, DEA has also long held that the possession of authority to dispense controlled substances under the laws of the state in which a practitioner engages in professional practice is a fundamental condition for obtaining and maintaining a practitioner's registration.
According to Georgia statute, “dispense” means “to deliver a controlled substance to an ultimate user or research subject by or pursuant to the lawful order of a practitioner, including the prescribing, administering, packaging, labeling, or compounding necessary to prepare the substance for that delivery.” Ga. Code Ann. section 16-13-21(9) (2023). Further, a “practitioner” means a “physician . . . or other person licensed, registered, or otherwise authorized under the laws of [Georgia] to distribute, dispense, conduct research with respect to, or administer a controlled substance in the course of professional practice or research in [Georgia].”
Here, the undisputed evidence in the record is that Registrant lacks authority to practice medicine in Georgia. As discussed above, a physician must be a licensed practitioner to dispense a controlled substance in Georgia. Thus, because Registrant lacks authority to practice medicine in Georgia and, therefore, is not authorized to handle controlled substances in Georgia, Registrant is not eligible to maintain a DEA registration. Accordingly, the Agency will order that Registrant's DEA registration be revoked.
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 824(a), I hereby revoke DEA Certificate of Registration No. FM6088997 issued to Carrie Madej, D.O. Further, pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(g)(1), I hereby deny any pending applications of Carrie Madej, D.O., to renew or modify this registration, as well as any other pending application of Carrie Madej, D.O., for additional registration in Georgia. This Order is effective August 23, 2024.
This document of the Drug Enforcement Administration was signed on July 15, 2024, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of DEA. This administrative process in no way alters the legal effect of this document upon publication in the
On May 3, 2023, the Drug Enforcement Administration (DEA or Government) issued an Order to Show Cause (OSC) to John Qian, M.D., (Respondent) of San Diego, CA. OSC, at 1, 7. The OSC proposed the denial of Respondent's application for a DEA Certificate of Registration (Registration), Application Control No. W22061401C, alleging that the issuance of the registration would be inconsistent with the public interest.
A hearing was held before DEA Chief Administrative Law Judge John J. Mulrooney (the Chief ALJ), who, on October 19, 2023, issued his Recommended Rulings, Findings of Fact, Conclusions of Law, and Decision (Recommended Decision or RD), which recommended denial of Respondent's application. RD, at 27. Respondent did not file Exceptions to the RD. Having reviewed the entire record, the Agency adopts and hereby incorporates by reference the entirety of the ALJ's rulings, findings of fact, conclusions of law, and recommended sanction as found in the RD and summarizes and expands upon portions thereof herein.
Respondent was previously registered with the DEA to prescribe controlled substances in California.
Approximately three months later, on May 26, 2022, Respondent filed an application for a new registration. RD, at 3. The Agency issued an OSC on May 3, 2023, proposing that the application be denied based on the same conduct alleged in the 2019 OSC/ISO.
Because the Agency's factual findings in
Respondent also failed to resolve red flags presented by his patients, including failing to adequately address an inconsistent urine drug screen that showed that the patient was taking two controlled substances that had not been prescribed and that posed serious risks when taken with the opioids prescribed by Respondent.
As discussed in more detail below (
Under the CSA, “[a] registration . . . to . . . dispense a controlled substance . . . may be suspended or revoked by the Attorney General upon a finding that the registrant . . . has committed such acts as would render his registration under section 823 of this title inconsistent with the public interest as determined under such section.” 21 U.S.C. 824(a). In making the public interest determination, the CSA requires consideration of the following factors:
(A) The recommendation of the appropriate State licensing board or professional disciplinary authority.
(B) The [registrant's] experience in dispensing, or conducting research with respect to controlled substances.
(C) The [registrant's] conviction record under Federal or State laws relating to the manufacture, distribution, or dispensing of controlled substances.
(D) Compliance with applicable State, Federal, or local laws relating to controlled substances.
(E) Such other conduct which may threaten the public health and safety.
The Agency considers these public interest factors in the disjunctive.
The Government has the burden of proof in this proceeding. 21 CFR 1301.44. The Government satisfied its burden based on the Agency's findings in
Where, as here, the Government has established sufficient grounds to deny Respondent's Application, the burden shifts to Respondent to show why he can be entrusted with the responsibility carried by a registration.
At the 2020 Hearing in
Although Respondent was more contrite at the 2023 Hearing, his acceptance of responsibility lacked the requisite remorse and sincerity to be considered unequivocal.
However, many of Respondent's statements accepting responsibility were undermined by other portions of his testimony, particularly his explanations for why he committed the errors and omissions in
Respondent also occasionally blamed others for his violations. For example, when asked why he failed to refer one of his patients to an addictionologist, he testified that he had made the referral, but it “never got carried out.” RD, at 13 n.37; Tr. 123. And while Respondent admitted to errors in his recordkeeping, he also explained that he was new to electronic medical records (EMRs), the copy forward feature was important for patient flow, and the physician's assistants who worked with him were complaining that the paperwork was arduous. RD, at 14; Tr. 130-33, 161, 163. Respondent also declined an opportunity to accept responsibility for falsifying his medical records. RD, at 14-15; Tr. 143-45. Although he conceded that he probably needed to conduct more detailed examinations, he testified that his examinations had been consistent with his training and that he thought they had been complete.
Respondent was also evasive when asked to address the areas in
Respondent entered a proposed Corrective Action Plan (CAP) into the record, which contains additional statements that detract from his acceptance of responsibility and minimize the Agency's findings in
Further, in
Although it is not necessary to consider Respondent's remedial measures if he has failed to unequivocally accept responsibility,
Second, Respondent asserts that he has implemented a new EMR software that does not allow for patient examination records to be copied forward, but he did not supply any corroborating documentation confirming that the EMR lacks that feature. RD, at 17; Tr. 130. Even if it does, the implementation of a new EMR requires minimal effort and does not address the Agency's underlying concerns that Respondent does not fully appreciate his obligations under the CSA.
Third, as discussed in more detail
Finally, Respondent has been under mandatory monitoring by an MBC-appointed physician, Dr. Bitonte, since January 2021, and Respondent testified that he is willing to retain Dr. Bitonte as a monitor even if his probation with the MBC ends.
In addition to acceptance of responsibility, the Agency considers both specific and general deterrence when determining an appropriate sanction.
Moreover, the Agency agrees with the Chief ALJ that Respondent's actions were egregious.
In sum, Respondent has not offered any credible evidence on the record to rebut the Government's case for denial of his application and Respondent has not demonstrated that he can be entrusted with the responsibility of registration.
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(g)(1), I hereby deny the pending application for a Certificate of Registration, Control Number W22061401C, submitted by John Qian, M.D., as well as any other pending application of John Qian, M.D., for additional registration in California. This Order is effective August 23, 2024.
This document of the Drug Enforcement Administration was signed on July 16, 2024, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of DEA. This administrative process in no way alters the legal effect of this document upon publication in the
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting this Occupational Safety & Health Administration (OSHA)-sponsored information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). Public comments on the ICR are invited.
The OMB will consider all written comments that the agency receives on or before August 23, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Nicole Bouchet by telephone at 202-693-0213, or by email at
The OSHA-7 Form is used by OSHA personnel to report unhealthful and/or unsafe conditions in the workplace. The information is given to OSHA by employees who wish to report unhealthful and/or unsafe conditions at their place of employment. Employee reports are authorized by Section 8(f)(1) of the OSH Act. This information is used by OSHA to evaluate the alleged hazards and to schedule an inspection. The form is available in English and Spanish. For additional substantive information about this ICR, see the related notice published in the
Comments are invited on: (1) whether the collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; (2) the accuracy of the agency's estimates of the burden and cost of the collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information collection; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of automated collection techniques or other forms of information technology.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless the OMB approves it and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid OMB Control Number.
DOL seeks PRA authorization for this information collection for three (3) years. OMB authorization for an ICR cannot be for more than three (3) years without renewal. The DOL notes that information collection requirements submitted to the OMB for existing ICRs receive a month-to-month extension while they undergo review.
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting this Office of Workers' Compensation Programs (OWCP)-sponsored information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). Public comments on the ICR are invited.
The OMB will consider all written comments that the agency receives on or before August 23, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Michelle Neary by telephone at 202-693-6312, or by email at
Form LS-208, Notice of Payments, is used by insurance carriers and self-insured employers to report the payment of benefits under the Longshore and Harbors Workers Compensation Act. For additional substantive information about this ICR, see the related notice published in the
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless the OMB approves it and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid OMB Control Number.
DOL seeks PRA authorization for this information collection for three (3) years. OMB authorization for an ICR cannot be for more than three (3) years without renewal. The DOL notes that information collection requirements submitted to the OMB for existing ICRs receive a month-to-month extension while they undergo review.
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting this Office of Workers' Compensation Programs (OWCP)-sponsored information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). Public comments on the ICR are invited.
The OMB will consider all written comments that the agency receives on or before August 23, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Michelle Neary by telephone at 202-693-6312, or by email at
Form LS-207 is used by insurance carriers and self-insured employers to controvert claims under the Longshore Act and extensions. For additional substantive information about this ICR, see the related notice published in the
Comments are invited on: (1) whether the collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; (2) if the information will be processed and used in a timely manner; (3) the accuracy of the agency's estimates of the burden and cost of the collection of information, including the validity of the methodology and assumptions used; (4) ways to enhance the quality, utility and clarity of the information collection; and (5) ways to minimize the burden of the collection of information on those who are to respond, including the use of automated collection techniques or other forms of information technology.
This information collection is subject to the PRA. A Federal agency generally
DOL seeks PRA authorization for this information collection for three (3) years. OMB authorization for an ICR cannot be for more than three (3) years without renewal. The DOL notes that information collection requirements submitted to the OMB for existing ICRs receive a month-to-month extension while they undergo review.
On January 10, 2024, the Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change SR-OCC-2024-001 pursuant to Section 19(b) of the Securities Exchange Act of 1934 (“Exchange Act”)
On February 23, 2024, pursuant to Section 19(b)(2) of the Exchange Act,
Section 19(b)(2) of the Exchange Act
The Commission is extending the period for Commission action on the proposed rule change. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that the Commission has sufficient time to consider the issues raised by the proposed rule change and to take action on the proposed rule change. Accordingly, pursuant to Section 19(b)(2)(B)(ii)(II) of the Exchange Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Rule 17f-2(d) requires that records created pursuant to the fingerprinting requirements of Section 17(f)(2) of the Act be maintained and preserved by every member of a national securities exchange, broker, dealer, registered transfer agent and registered clearing agency (“covered entities” or “respondents”); permits, under certain circumstances, the records required to be maintained and preserved by a member of a national securities exchange, broker, or dealer to be maintained and preserved by a self-regulatory organization that is also the designated examining authority for that member, broker or dealer; and permits the required records to be preserved on microfilm. The general purpose for Rule 17f-2 is to: (i) identify security risk personnel; (ii) provide criminal record
Approximately 3,800 respondents are subject to the recordkeeping requirements of the rule. Each respondent maintains approximately 68 new records per year, each of which takes approximately 2 minutes per record to maintain, for an annual burden of approximately 2.2666667 hours (68 records times 2 minutes). The total annual time burden for all respondents is approximately 8,613 hours (3,800 respondents times 2.2666667 hours). As noted above, all records maintained subject to the rule must be retained for a period of not less than three years after termination of a covered person's employment or relationship with a covered entity. In addition, we estimate the total annual cost burden to respondents is approximately $38,000 in third party storage costs.
Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by September 23, 2024.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
Please direct your written comments to: Austin Gerig, Director/Chief Data Officer, Securities and Exchange Commission, c/o Oluwaseun Ajayi, 100 F Street NE, Washington, DC 20549, or send an email to:
Pursuant to Section 19(b)(1)
Cboe BZX Exchange, Inc. (“BZX” or the “Exchange”) is filing with the Securities and Exchange Commission (“Commission” or “SEC”) a proposed rule change to modify the fees the Exchange charges Companies seeking a review of a Delisting Determination, public reprimand letter, or written denial of an initial listing application. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Pursuant to Exchange Rule 14.12(h), Companies
The Exchange recognizes that in the past, fees for a written hearing have been lower than fees for an oral one. The Exchange believes that the basis for this historical distinction is unclear, and upon review, found to be unwarranted. The cost to a company that elects a written hearing may be lower because the company's related expenses, such as travel and legal representation, may be avoided. However, the anticipated costs to the Exchange associated with a written hearing are similar to those associated with an oral hearing. The Exchange believes that the fees should reflect that Staff and Panels expend similar resources, time, and effort in ensuring a full and fair hearing for all hearing participants, and both processes afford the same benefit to the issuer. Therefore, while the proposed amendment preserves the availability of a written hearing to any company that requests one, the Exchange proposes to charge the same fee for a written hearing as for an oral one.
While the Exchange has had no Company request a hearing by the Hearings Panel for Tier I or Tier II securities listed on the Exchange, the Exchange expects that the costs of the review process would include significant time and resources to maintain the infrastructure for the processes and to prepare for and conduct individual hearings and appeals.
The Exchange also expects additional costs associated with the Exchange Listing Council's review of every Hearings Panel decision, in determining whether to call that decision for review as described in Rule 14.12(j)(2). In that regard, the Exchange expects to incur expenses related to the Exchange staff that facilitates the call for review process and that provides legal counsel and support to the Exchange's Listing Council members, the cost of obtaining an advisor to the Listing Council, as well as the honorarium paid to the Exchange's Listing Council members. When a matter is called for review, the Exchange expects to incur costs related to the staff in the Listing Qualifications Department, which reviews the Company's submissions to the Exchange's Listing Council and provides the Exchange's Listing Council with Listing Qualification Staff's analysis of the Company's plans and any issues identified by the Exchange's Listing Council in its call for review. The Exchange staff also must manage and coordinate the Exchange's Listing Council docket, maintain the systems that track call for review matters, and draft initial decisions for review by Exchange's Listing Council members. The Exchange believes that these additional costs for the call for review process are appropriately considered as part of the cost of the Hearings Panel review, since every Hearings Panel decision is subject to review by the Exchange's Listing Council and the decision as to whether to call a matter for review rests with the Exchange's Listing Council.
Where a Company appeals a matter to the Exchange's Listing Council, the Exchange expects similar additional costs as well, which the Exchange believes should be borne by the Company through the appeal fee. Specifically, like where a decision is called for review, when a Company appeals a decision the Exchange would incur expenses related to the Exchange staff that facilitates the process and that provides legal counsel and support to the Exchange's Listing Council members, the honorarium paid to the Exchange's Listing Council members, Listings Qualification Staff review and analysis of the Company's submissions to the Exchange's Listing Council, management of the docket, maintaining the systems that track Exchange's Listing Council appellate matters and drafting the initial decisions for review by Exchange's Listing Council members.
Throughout the hearing and Exchange's Listing Council process, the Exchange expects to incur costs to maintain and upgrade its electronic systems for tracking Companies and maintaining a clear record, as required by Exchange and SEC rules.
All of these expenses have presumably increased in the 13 years since the fees were adopted in 2011. Accordingly, the Exchange proposes to increase the fee to request review by a Hearings Panel to $20,000 and the fee for an appeal to the Exchange's Listing Council to $15,000, which the Exchange believes will accurately reflect the Exchange's anticipated costs. The Exchange believes that this is an equitable allocation based on the expenses incurred in connection with
The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
Specifically, the proposed fee increase is reasonable because it will better reflect the Exchange's expected costs related to hearings and appeals. The Exchange has not increased these fees since adopted in 2011, but the expected costs have increased since that time.
The Exchange also believes that the proposed fees are consistent with the investor protection objectives of Section 6(b)(5) of the Act
The Exchange also believes that the proposed changes are consistent with Section 6(b)(7) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. As discussed above, this proposed fee is based on the anticipated increase in costs to the Exchange to provide a delisting review process, which is in turn necessary to ensure investor protection as well as a transparent process for issuers.
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Regulation R, Rule 701 requires a broker or dealer (as part of a written agreement between the bank and the broker or dealer) to notify the bank if the broker or dealer makes certain determinations regarding the financial status of the customer, a bank employee's statutory disqualification status, and compliance with suitability or sophistication standards.
The Commission estimates there are 3,402 registered brokers or dealers that would, on average, notify 1,000 banks approximately two times annually about a determination regarding a customer's high net worth or institutional status or suitability or sophistication standing as well as a bank employee's statutory disqualification status. Based on these estimates, the Commission anticipates that Regulation R, Rule 701 would result in brokers or dealers making approximately 2,000 notifications to banks per year. The Commission further estimates (based on the level of difficulty and complexity of the applicable activities) that a broker or dealer would spend approximately 15 minutes per notice to a bank. Therefore, the estimated total annual third-party disclosure burden for the requirements in Regulation R, Rule 701 is 500
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
Please direct your written comments to: Austin Gerig, Director/Chief Data Officer, Securities and Exchange Commission, c/o Oluwaseun Ajayi, 100 F Street NE, Washington, DC 20549, or send an email to:
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Rule 17Ad-13 requires certain registered transfer agents to file annually with the Commission and the transfer agent's appropriate regulatory authority a report prepared by an independent accountant on the basis of a study and evaluation of the transfer agent's system of internal accounting controls for the transfer of record ownership and the safeguarding of related securities and funds. If the independent accountant's report specifies any material inadequacy in a transfer agent's system, the rule requires the transfer agent to notify the Commission and its appropriate regulatory agency in writing, within sixty calendar days after the transfer agent receives the independent accountant's report, of any corrective action taken or proposed to be taken by
Approximately 100 professional independent transfer agents must file with the Commission one report prepared by an independent accountant pursuant to Rule 17Ad-13 each year. Commission staff estimates that, on average, the annual internal time burden for each transfer agent to submit the independent accountant's report to the Commission is minimal or zero. The time required for an independent accountant to conduct the study and evaluation of a transfer agent's system of internal accounting controls and complete the report varies depending on the size and nature of the transfer agent's operations. Commission staff estimates that, on average, each Rule 17Ad-13 report can be completed by the independent accountant in 120 hours. In light of Commission staff's review of previously filed Rule 17Ad-13 reports and Commission staff's conversations with transfer agents and accountants, Commission staff estimates that 120 hours are needed to perform the study and prepare the report on an annual basis. Commission staff estimates that the average hourly rate of an independent accountant is $291, resulting in an annual external cost burden of $34,920 for each of the approximately 100 professional independent transfer agents. The aggregate total annual external cost for the 100 respondents is approximately $3,492,000.
Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have any practical utility; (b) the accuracy of the Commission's estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by September 23, 2024.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
Please direct your written comments to: Austin Gerig, Director/Chief Data Officer, Securities and Exchange Commission, c/o Oluwaseun Ajayi, 100 F Street NE, Washington, DC 20549, or send an email to:
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Rule 17a-12 is the reporting rule tailored specifically for over-the-counter (“OTC”) derivatives dealers registered with the Commission, and Part II of Form X-17A-5, the Financial and Operational Combined Uniform Single (“FOCUS”) Report, is the basic document for reporting the financial and operational condition of OTC derivatives dealers. Rule 17a-12 requires registered OTC derivatives dealers to file Part II of the FOCUS Report quarterly. Rule 17a-12 also requires that OTC derivatives dealers file audited reports annually.
The reports required under Rule 17a-12 provide the Commission with information used to monitor the operations of OTC derivatives dealers and to enforce their compliance with the Commission's rules. These reports also enable the Commission to review the business activities of OTC derivatives dealers and to anticipate, where possible, how these dealers may be affected by significant economic events.
The Commission estimates that the total hour burden under Rule 17a-12 is approximately 540 hours per year, and the total cost burden is approximately $138,900 per year.
Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by September 23, 2024.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
Please direct your written comments to: Austin Gerig, Director/Chief Data Officer, Securities and Exchange Commission, c/o Oluwaseun Ajayi, 100 F Street NE, Washington, DC 20549, or send an email to:
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
The Exchange proposes to amend BOX Rule 5050 (Series of Options Contracts Open for Trading) to amend the strike interval for options on SPDR® Gold Shares (“GLD”). The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's internet website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend BOX Rule 5050 (Series of Options Contracts Open for Trading) to amend the strike interval for options on SPDR® Gold Shares (“GLD”).
Specifically, the Exchange proposes to amend IM-5050-1(b) to allow for the interval between strike prices of series of options on Exchange-Traded Fund Shares (“ETFs” or “Units”)
Currently, IM-5050-1(b) provides that,
For series of options on Exchange Traded Fund Shares that satisfy the criteria set forth in Rule 5020(h), the interval of strike prices may be $1 or greater where the strike price is $200 or less or $5 or greater where the strike price is over $200. Notwithstanding any other provision regarding the interval of strike prices of series of options on Exchange-Traded Fund Shares in this rule, the interval of strike prices on SPDR® S&P 500® ETF (“SPY”), iShares S&P 500 Index ETF (“IVV”), PowerShares QQQ Trust (“QQQ”), iShares Russell 2000 Index Fund (“IWM”), and the SPDR® Dow Jones® Industrial Average ETF (“DIA”) options will be $1 or greater.
At this time, the Exchange proposes to modify the interval setting regime to be $1 or greater where the strike price is greater than $200 for GLD options, similar to SPY, IVV, QQQ, IWM and DIA. The Exchange believes that the proposed rule change would make GLD options easier for investors and traders to use and more tailored to their investment needs.
GLD is an Exchange-Traded Fund Share designed to closely track the price and performance of the price of gold bullion. GLD is widely quoted as an indicator of gold stock prices and is a significant indicator of overall economic health. Investors use GLD to diversify their portfolios and benefit from market trends. Additionally, GLD is a leading product in its asset class that trades within a “complex” where, in addition to the underlying security, there are multiple instruments available for hedging such as, COMEX Gold Futures; Gold Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen Physical Gold Trust; and GraniteShares Gold Shares. Accordingly, the Exchange believes that offering a wider base of GLD options affords traders and investors important hedging and trading opportunities, particularly in the midst of current price trends. The Exchange believes that not having the proposed $1 strike price intervals above $200 in GLD significantly constricts investors' hedging and trading possibilities. The Exchange therefore believes that by having smaller strike intervals in GLD, investors would have more efficient hedging and trading opportunities due to the lower $1 interval ascension. The proposed $1 interval above the $200 strike price, will result in having at-the-money series based upon the underlying ETF moving less than 1%. The Exchange believes that the proposed strike setting regime is in line with the slower movements of broad-based indices. Considering the fact that $1 intervals already exist below the $200 price point and that GLD have consistently inclined in price toward the $200 level, the Exchange believes that continuing to maintain the current $200 level (above which intervals increase 500% to $5), may have a negative effect on investing, trading and hedging opportunities, and volume. The Exchange believes that the investing, trading, and hedging opportunities available with GLD options far outweighs any potential negative impact of allowing GLD options to trade in more finely tailored intervals above the $200 price point. The proposed strike setting regime would permit strikes to be set to more closely reflect the increasing value in the underlying and allows investors and traders to roll open positions from a lower strike to a higher strike in conjunction with the price movements of the underlying ETF. Under the current rule, where the next higher available series would be $5 away above a $200 strike price, the ability to roll such positions would be impaired. Accordingly, to move a position from a $200 strike to a $205 strike under the current rule, an investor would need for the underlying product to move 2.5%, and would not be able to execute a roll up until such a large movement occurred. The Exchange believes that with the proposed rule change, the investor would be in a significantly safer position of being able to roll his open options position from a $200 to a $201 strike price, which is only a 0.5% move for the underlying. As a result, the proposed rule change will allow the Exchange to better respond to customer demand for GLD strike price more precisely aligned with the smaller, longer-term incremental increases in the underlying ETF. The Exchange believes that the proposed rule change, like the other strike price programs currently offered by the Exchange, will benefit investors by providing investors the flexibility to more closely tailor their investment and hedging decisions using GLD options. Moreover, by allowing series of GLD options to be listed in $1 intervals between strike prices over $200, the proposal will moderately augment the potential total number of options series available on the Exchange. However, the Exchange believes it and the Options Price Reporting Authority (“OPRA”) have the necessary systems capacity to handle any potential additional traffic associated with this proposed rule change. The Exchange also believes that Participants will not have a capacity issue due to the proposed rule change. In addition, the Exchange represents that it does not believe that this expansion will cause fragmentation of liquidity, but rather, believes that finer strike intervals will serve to increase
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Securities Exchange Act of 1934 (the “Act”),
In particular, the proposed rule change will allow investors to more easily use GLD options. Moreover, the proposed rule change would allow investors to better trade and hedge positions in GLD options where the strike price is greater than $200, and ensure that investors in both options are not at a disadvantage simply because of the strike price. The Exchange believes the proposed rule change is consistent with Section 6(b)(1) of the Act, which provides that the Exchange be organized and have the capacity to be able to carry out the purposes of the Act and the rules and regulations thereunder, and the rules of the Exchange. The proposal allows the Exchange to respond to customer demand to allow GLD options to trade in $1 intervals above a $200 strike price. The Exchange does not believe that the proposed rule would create additional capacity issues or affect market functionality. As noted above, ETF options trade in wider $5 intervals above a $200 strike price, whereby options at or below a $200 strike price trade in $1 intervals. This creates a situation where contracts on the same option class effectively may not be able to execute certain strategies such as, for example, rolling to a higher strike price, simply because of the $200 strike price above which options intervals increase by 500%. This proposal remedies the situation by establishing an exception to the current ETF interval regime for GLD options to allow such options to trade in $1 or greater intervals at all strike prices.
The Exchange believes that the proposed rule change, like other strike price programs currently offered by the Exchange, will benefit investors by giving them increased flexibility to more closely tailor their investment and hedging decisions. By way of example, GLD is a leading product in its asset class and it trades within a “complex” where, in addition to the underlying security, there are multiple instruments available for hedging such as, COMEX Gold Futures; Gold Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen Physical Gold Trust; and GraniteShares Gold Shares.
With regard to the impact of this proposal on system capacity, the Exchange believes it and OPRA have the necessary systems capacity to handle any potential additional traffic associated with this proposed rule change. The Exchange believes that its Participants will not have a capacity issue as a result of this proposal. Further, the Exchange believes the proposal does not unfairly discriminate among market participants, as all market participants will be treated in the same manner under this proposal.
Finally, the Exchange notes the proposed rule change is substantively the same as a rule change proposed by Nasdaq ISE, LLC (“ISE”) which the Commission recently approved.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposed rule change will result in additional investment options and opportunities to achieve the investment and trading objectives of market participants seeking efficient trading and hedging vehicles, to the benefit of investors, market participants, and the marketplace in general. Specifically, the Exchange believes that GLD options investors and traders will significantly benefit from the availability of finer strike price intervals above a $200 price point. In addition, the interval setting regime the Exchange proposes to apply to GLD options is currently applied to SPY, IVV, QQQ, IWM and DIA options, which are similarly popular and widely traded ETF products and track indexes at similarly high price levels. Thus, the proposed strike setting regime for GLD options will allow options on this actively traded ETF with index levels at corresponding price levels to trade pursuant to the same strike setting regime. This will permit investors to employ similar investment and hedging strategies for each of these options.
The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents other options exchanges from proposing similar rules to make a finer strike price intervals above a $200 price point available for GLD options. The Exchange notes that the proposed rule change is not a novel proposal, as the Commission recently approved a substantively identical proposal of another exchange.
The Exchange has neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On January 11, 2024, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On February 29, 2024, pursuant to Section 19(b)(2) of the Act,
Section 19(b)(2) of the Act
The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to expand its co-location services.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to expand its co-location services by offering new cabinet, power, and power distribution unit options in the Exchange's expanded data center.
The Exchange's current data center (“NY11”) in Carteret, NJ is undergoing an expansion (“NY11-4”) in response to demand for power and cabinets. NY11-4 is not a new or distinct co-location facility. Instead, NY11-4 is simply an expansion of the existing NY11 data center,
The Exchange submits this filing to propose offering new services in NY11-4, as described below, and to the extent the Exchange offers additional new services, whether in the existing NY11 data halls or in the new NY11-4 data hall, the Exchange will submit additional filings with the Commission.
Currently, co-location customers have the option of obtaining cabinets of various sizes and power densities. Co-location customers may obtain a Half Cabinet,
The Exchange proposes to introduce a new cabinet choice in NY11-4, an “Ultra High Density Cabinet,” with power density greater than 10 kW and less than or equal to 15 kW. Based on demand, the Exchange wishes to introduce the Ultra High Density Cabinet as an option for customers between the High Density Cabinet and the Super High Density Cabinet. The Ultra High Density Cabinet option would only be offered in NY11-4 because of the power configuration necessary for such cabinets, which is not possible or available in other portions of the data center due to different power distribution. Because of the addition of the Ultra High Density Cabinet option in NY11-4, the Super High Density Cabinet in NY11-4 would have power density greater than 15 kW and less than or equal to 17.3 kW.
In addition to the Ultra High Density Cabinet, the Exchange would offer the other, existing cabinet options in NY11-
The Exchange currently provides various cabinet power options, including: 2x20 amp 110 volt, 2x30 amp 110 volt, 2x20 amp 208 volt, 2x30 amp 208 volt, Phase 3 2x 20 amp 208 volt, Phase 3 2x 30 amp 208 volt, 2x60 amp 208 volt, Phase 3 2x 40 amp 208 volt, Phase 3 2x 50 amp 208 volt, Phase 3 2x 60 amp 208 volt, and 2x30 amp 48 volt DC. For NY11-4, the data center operator is bringing in higher voltage power options, which are more consistent with power options used in other data centers across the globe. The Exchange proposes to amend General 8, Section 1(c) to add the cabinet power options for NY11-4, which include: Phase 1 20 amp 240 volt, Phase 1 32 amp 240 volt, Phase 1 40 amp 240 volt, Phase 3 20 amp 415 volt, and Phase 3 32 amp 415 volt. The Exchange also proposes to specify in its Rules that these cabinet power options are specific to NY11-4 and that one of these options must be selected for cabinets in NY11-4. Although different cabinet power options will be offered in NY11 and NY11-4 due to differing power configurations, the new cabinet power options are not inherently preferable to the existing cabinet power options and the Exchange does not anticipate material differences in equipment performance based on the power distribution.
The Exchange also proposes to offer power distribution units (“PDUs”)
Although the timing is subject to change,
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange also believes that the proposal will not be unfairly discriminatory, consistent with the objectives of Section 6(b)(5) of the Act
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
Nothing in the proposal imposes any burden on the ability of other exchanges to compete. The Exchange operates in a highly competitive market in which exchanges and other vendors offer colocation services as a means to facilitate the trading and other market activities of those market participants who believe that colocation enhances the efficiency of their operations. As part of its colocation offering, the Exchange currently offers similar
Nothing in the Proposal burdens intra-market competition because the Exchange's colocation services, including those proposed herein, are available to any customer and customers that wish to order cabinets and power can do so on a non-discriminatory basis. Use of any colocation service is completely voluntary, and each market participant is able to determine whether to use colocation services based on the requirements of its business operations.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On January 12, 2024, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Section 19(b)(2) of the Act
The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,
For the Commission, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to expand its co-location services.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to expand its co-location services by offering new cabinet, power, and power distribution unit options in the Exchange's expanded data center.
The Exchange's current data center (“NY11”) in Carteret, NJ is undergoing an expansion (“NY11-4”) in response to demand for power and cabinets. NY11-4 is not a new or distinct co-location facility. Instead, NY11-4 is simply an expansion of the existing NY11 data center,
The Exchange submits this filing to propose offering new services in NY11-4, as described below, and to the extent the Exchange offers additional new services, whether in the existing NY11 data halls or in the new NY11-4 data hall, the Exchange will submit additional filings with the Commission.
Currently, co-location customers have the option of obtaining cabinets of various sizes and power densities. Co-location customers may obtain a Half Cabinet,
The Exchange proposes to introduce a new cabinet choice in NY11-4, an “Ultra High Density Cabinet,” with power density greater than 10 kW and less than or equal to 15 kW. Based on demand, the Exchange wishes to introduce the Ultra High Density Cabinet as an option for customers between the High Density Cabinet and the Super High Density Cabinet. The Ultra High Density Cabinet option would only be offered in NY11-4 because of the power configuration necessary for such cabinets, which is not possible or available in other portions of the data center due to different power distribution. Because of the addition of the Ultra High Density Cabinet option in NY11-4, the Super High Density Cabinet in NY11-4 would have power density greater than 15 kW and less than or equal to 17.3 kW.
In addition to the Ultra High Density Cabinet, the Exchange would offer the other, existing cabinet options in NY11-4, with the exception of the Low Density Cabinet and Half Cabinet due to a lack of demand for such cabinets. The cabinets in NY11-4 will include certain features, including but not limited to:
The Exchange currently provides various cabinet power options, including: 2x20 amp 110 volt, 2x30 amp 110 volt, 2x20 amp 208 volt, 2x30 amp 208 volt, Phase 3 2x 20 amp 208 volt, Phase 3 2x 30 amp 208 volt, 2x60 amp 208 volt, Phase 3 2x 40 amp 208 volt, Phase 3 2x 50 amp 208 volt, Phase 3 2x 60 amp 208 volt, and 2x30 amp 48 volt DC. For NY11-4, the data center operator is bringing in higher voltage power options, which are more consistent with power options used in other data centers across the globe. The Exchange proposes to amend General 8, Section 1(c) to add the cabinet power options for NY11-4, which include: Phase 1 20 amp 240 volt, Phase 1 32 amp 240 volt, Phase 1 40 amp 240 volt, Phase 3 20 amp 415 volt, and Phase 3 32 amp 415 volt. The Exchange also proposes to specify in its Rules that these cabinet power options are specific to NY11-4 and that one of these options must be selected for cabinets in NY11-4. Although different cabinet power options will be offered in NY11 and NY11-4 due to differing power configurations, the new cabinet power options are not inherently preferable to the existing cabinet power options and the Exchange does not anticipate material differences in equipment performance based on the power distribution.
The Exchange also proposes to offer power distribution units (“PDUs”)
Although the timing is subject to change,
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange also believes that the proposal will not be unfairly discriminatory, consistent with the objectives of Section 6(b)(5) of the Act
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
Nothing in the proposal imposes any burden on the ability of other exchanges to compete. The Exchange operates in a highly competitive market in which exchanges and other vendors offer colocation services as a means to facilitate the trading and other market activities of those market participants who believe that colocation enhances the efficiency of their operations. As part of its colocation offering, the Exchange currently offers similar cabinets and power, as do other exchanges.
Nothing in the Proposal burdens intra-market competition because the Exchange's colocation services, including those proposed herein, are available to any customer and customers
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given of the following determinations: I hereby determine that certain objects being imported from abroad pursuant to agreements with their foreign owners or custodians for temporary display in the exhibition “Wonders of Creation: Art, Science, and Innovation in the Islamic World” at the San Diego Museum of Art, San Diego, California; the McMullen Museum of Art, Boston College, Boston, Massachusetts; and at possible additional exhibitions or venues yet to be determined, are of cultural significance, and, further, that their temporary exhibition or display within the United States as aforementioned is in the national interest. I have ordered that Public Notice of these determinations be published in the
Reed Liriano, Program Coordinator, Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
Notice is hereby given of the following determinations: I hereby determine that certain objects being imported from abroad pursuant to an agreement with their foreign owner or custodian for temporary display in the exhibition “The People of the Land:
Reed Liriano, Program Coordinator, Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
The Surface Transportation Board has received a request from the Harris County Toll Road Authority (WB24-30—6/17/24) for permission to use select data from the Board's 2022 Unmasked Carload Waybill Samples. A copy of this request may be obtained from the Board's website under docket no. WB24-30.
The waybill sample contains confidential railroad and shipper data; therefore, if any parties object to these requests, they should file their objections with the Director of the Board's Office of Economics within 14 calendar days of the date of this notice. The rules for release of waybill data are codified at 49 CFR 1244.9.
Federal Highway Administration (FHWA), Department of Transportation (DOT).
Notice of intent to prepare an environmental impact statement.
The FHWA, in coordination with the Pennsylvania Department of Transportation (PennDOT) is issuing the Notice of Intent (NOI) to solicit comments and advise the public, agencies, and stakeholders that an Environmental Impact Statement (EIS) will be prepared to study potential improvements to US 322 also known as the State College Area Connector Project from Potters Mills, PA to Boalsburg, PA. The project identification number is 112784. This NOI should be reviewed together with the NOI Additional Project Information document, which contains important details about the proposed project and complements the information in this NOI.
Comments on the NOI or the NOI Additional Project Information document are to be received by FHWA through the methods below by August 23, 2024.
This NOI and the NOI Additional Project Information are also available in the docket referenced above at
All submissions should include the agency name, the docket number that appears in the heading of this notice, and the project identification number. All comments received will be posted without change to
FHWA: Julia Moore, Senior Environmental Specialist, Federal Highway Administration, Pennsylvania Division Office, 30 North Third Street, Suite 700, Harrisburg, PA 17101;
It is important to note that the FHWA and PennDOT are committed to public involvement in this project. The FHWA, as Federal lead agency, and PennDOT, as project sponsor, are preparing an EIS to study potential improvements to US 322 also known as the State College Area Connector Project from Potters Mills, PA to Boalsburg, PA. All public comments received in response to this notice will be considered and potential revisions made to the information presented herein as appropriate. The environmental review of alternatives for the transportation project will be conducted in accordance with the requirements of the National Environmental Policy Act (NEPA) of 1969, as amended (42 U.S.C. 4321,
○ I-80 was completed in Pennsylvania in 1970.
○ I-80 through Pennsylvania influenced traffic patterns, particularly an increase in interstate truck traffic. This increase in traffic affected travel conditions within the project area.
○ Roadway safety and quality of life in Centre County communities traversed by these roadways were influenced by the I-80 completion.
○ US 220 study west of the State College area led to the development of a major improvement project for a new north-south interstate through Centre County that culminated with the construction of I-99 extending from Blair County to US 322 (the Mount Nittany Expressway).
○ PA 26 corridor study resulted in the construction of I-99 from US 322 (the Mount Nittany Expressway) north towards I-80.
○ I-80 Exit 161 (Bellefonte Interchange) is under development to replace the existing interchange with a new high-speed interchange and complete the I-99/I-80 connection. Construction of the interchange improvements will complete the goal for a major north-south interstate (I-99) through the center of the Commonwealth connecting two major east-west interstates, the Pennsylvania Turnpike (I-76) and I-80.
○ SCCCTS was initiated in 1998 to evaluate and address transportation needs along the US 322, PA 144, and PA 45 corridors. The SCCCTS project needs identified specific transportation problems in each of the three corridors and on the local road system, as well as needs associated with regional travel patterns. The regional travel pattern need statement addressed the high percentage of through trips (in particular the high volume of truck traffic), high crash rates (including fatalities), poor Level of Service (LOS) (including LOS associated with heavy truck traffic) and increases in travel demand associated with local and regional planned development. However, SCCCTS was terminated in 2004 due to funding shortfalls and the NOI rescinded on July 29, 2019.
○ Following the termination of SCCCTS in 2004, short-term safety improvements along the US 322 were conducted between 2006 and 2015. These improvements included general intersection improvements (
○ PennDOT and FHWA initiated the PMG Transportation Project to improve a 3.75-mile-long section of US 322 in Potter Township within the area locally known as “Potters Mills Gap”. This project area encompassed the southeastern portion of the SCCCTS study area. It was determined that this project had independent utility and addressed a defined purpose and need. The project included the construction of a new limited access four-lane roadway section that started at the Sand Mountain Road intersection and extended west, tying back into existing US 322 with a new interchange and roundabout, west of the PA 144/US 322 intersection.
○ In 2018, PennDOT collected data to update the traffic and environmental information from the former SCCCTS (2004), to identify changes to travel patterns, the transportation network, and environmental conditions. This information supported the 2019 decision by State officials to restart efforts to address regional transportation needs in the US 322, PA 44, and PA 45 area. Nearly, $15 million in State funding was allocated to advance the State College Area Connector Study.
○ In 2020, PennDOT, in cooperation with FHWA and coordination with the Centre County Metropolitan Planning Organization (MPO), initiated the State College Area Connector PEL Study. The PEL process promoted early coordination with the public as well as Federal, State, and local agencies in a transparent and collaborative environment that identified and evaluated transportation needs in the area, and developed and evaluated alternatives while considering community concerns in transportation decision-making early in the planning process. The PEL study identified a range of alternatives and screened them against the purpose and need and potential for environmental impacts. Three Build Alternatives corridors were recommended for further study. These three recommended Build Alternatives and a refined study area are being advanced for NEPA study with a Notice of Intent to prepare an EIS.
The following information provided in the NOI is supplemented with more detail in the NOI Additional Project Information document.
The purpose of this project is to improve roadway congestion by achieving acceptable LOS and to address safety issues by reducing the predicted crash frequency along the US 322 corridor between Potters Mills and Boalsburg. Additionally, the project will aim to provide a transportation network that meets driver expectations.
The preliminary needs identified for the project are that high peak hour traffic volumes cause congestion and result in unacceptable LOS (LOS D [rural only], E, or F) on US 322 roadways and intersections; the existing roadway configurations and traffic conditions contribute to safety concerns in the project area; and the roadway network and configuration in the project area lacks continuity and does not meet driver expectations.
The project purpose and needs were first presented as part of the Pre-NOI/PEL phase of project development and were presented to the State and Federal resource agencies at an agency coordination meeting in July 2020 and to public officials and the general public at a virtual meeting in October 2020. Resource agencies and the public were invited to comment on the Purpose and Need. The purpose and need statements were refined following the PEL study for the US 322 project area. The project-specific purpose and needs were presented to the resource agencies in January 2024. The purpose and needs and supporting documentation, including data and public input summary, will be available in the Draft EIS. No specific comments were received from any of the resource agencies.
As concluded in the PEL Study, the proposed action is anticipated to include construction of an approximately 8-mile four-lane limited access facility from the end of US 322/Mount Nittany Expressway in Boalsburg to the newly constructed limited access portion of US 322 at Potters Mills in Centre County, Pennsylvania. Agencies and the public are invited to comment on the Range of Alternatives for the proposed action. Additional information on the Range of Alternatives is in the NOI Additional Project Information document. The Range of Alternatives proposed to be considered in the EIS include the following:
The No Build Alternative involves taking no action, except routine maintenance and other small projects currently listed in the Centre County Transportation Improvement Program (TIP). The existing two-lane alignment of US 322 between Potters Mills Gap and Boalsburg, Pennsylvania would remain. No new alignments or roadway improvements would be constructed.
The US 322-1S Build Alternative (US 322-1S) would have logical termini at the US 322 (Mt. Nittany Expressway) in Boalsburg and US 322 at Potters Mills Gap. US 322-1S would begin at the existing US 322 interchange with PA 45 near Boalsburg and follow existing US 322 to a point east of the Elks Club Road/Bear Meadows Road intersection. In this area, a two-lane service road would be provided on the north side of the limited access highway to provide connectivity to the local road network. US 322-1S would shift off existing US 322 to the north until it crosses south over US 322 near Neff Road in Tusseyville. The alternative would parallel US 322 to the south before connecting to the newly constructed US 322/PA 144 interchange at Potters Mills Gap. The Build Alternative US 322-1S would be 8.3 miles long.
The US 322-1OEX Build Alternative (US 322-1OEX) is a hybrid of US 322-1S that attempts to maximize the use of the existing US 322 right-of-way. US 322-1OEX would have logical termini at the US 322 (Mt. Nittany Expressway) in Boalsburg and US 322 at Potters Mills Gap. US 322-1OEX would begin at the existing US 322 interchange with PA 45 near Boalsburg and follow existing US 322 to a point east of the Elks Club Road/Bear Meadows Road intersection. In this area, a two-lane service road would be provided on the north side of the limited access highway to provide connectivity to the local road network. US 322-1OEX would shift off existing US 322 to the north until it crosses back to US 322 near Neff Road in Tusseyville. From there it would follow existing US 322 to the newly constructed US 322/PA 144 interchange at Potters Mills Gap, with the inclusion of a two-lane service road to maintain local access for properties adjacent to the new limited access facility. US 322-1OEX would be 8.3 miles long.
The US 322-5 Build Alternative (US 322-5) would have logical termini at the US 322 (Mt. Nittany Expressway) in Boalsburg and US 322 at Potters Mills Gap. US 322-5 would begin at the existing US 322 interchange with PA 45 near Boalsburg and follow existing US 322 to a point east of the Elks Club Road/Bear Meadows Road intersection. A two-lane service road on the north side of the limited access highway would connect to the local road network. US 322-5 would turn southeast off the existing US 322 corridor near Tait Road, and proceed east along the lower slope of Tussey Mountain, paralleling US 322. The corridor would continue paralleling US 322 to the south, crossing over Church Hill Road, Dogtown Road, and Mountain Back Road and connect to the newly constructed US 322/PA 144 interchange at Potters Mills Gap. US 322-5 would be 8.4 miles long.
As part of the PEL process, PennDOT conducted scoping activities for the State College Area Connector Project. Resource data was collected from publicly available web based existing maps and data; direct coordination with various Federal, State, and local government agencies; select site reconnaissance; coordination with private organizations; and public input. This information was used to identify the types of environmental, cultural, and socioeconomic resources present and those likely to be affected. The following resources will be evaluated in the EIS and supporting technical studies: cultural resources (archaeology and historic architecture); hazardous materials; air quality; greenhouse gases and climate change; noise-sensitive areas; natural resources (wildlife and habitat; threatened, endangered, and special concern species; waters of the US; water quality; groundwater; floodplains; and farmlands), visual resources; section 4(f) resources (public recreational facilities, historic properties, and State Game Lands); and socioeconomic resources (communities and community facilities, population and housing, economic resources, land use and right-of-way, and environmental justice). Potential direct, indirect, and cumulative effects will be assessed and documented in the EIS. Preliminary review of the existing conditions with or adjacent to the Build Alternative corridors for the project could result in effects to the following:
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Coordination with the resource agencies also noted concerns for migratory bird species and bat hibernacula in the area. An assessment of the Project's potential effects on threatened and endangered species will be conducted and coordination with the resource agencies conducted, accordingly.
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The analyses and evaluations conducted for the EIS will identify the potential for construction-related (short-term) and operational (long-term) effects (direct, indirect, and cumulative); whether the anticipated effects would be adverse; and mitigation measures for adverse effects. Evaluations under section 4(f) of the USDOT Act of 1966, 23 CFR part 774, and section 6(f) of the Land and Water Conservation Fund Act of 1965, 54 U.S.C. 200302, will be prepared, and consultation under section 106 of the National Historic Preservation Act of 1966, 54 U.S.C. 300101-307108, will be undertaken concurrently with the NEPA process. Additional information on the expected impacts is provided in the NOI Additional Project Information document available for review in the docket established for this project and on the project website as noted in the
A Clean Water Act Section 404 permit decision from the U.S. Army Corps of Engineers (USACE) is anticipated in September 2026. Other anticipated State authorizations include a Pennsylvania Department of Environmental Protection (PADEP) Section 401 Water Quality Certification/Chapter 105 Standard Permit in August 2026. Section 7 consultation under the Endangered Species Act is expected to be concluded in September 2025, and Section 106 consultation under the National Historic Preservation Act is anticipated to be concluded in December 2024. A U.S. Department of Transportation Act of 1966, Individual Section 4(f) authorization is anticipated in April 2026. See the NOI Additional Project Information document for more detail on the anticipated permits and other authorizations. Cooperating Agencies include the USACE, U.S. Fish and Wildlife Service, Environmental Protection Agency, Pennsylvania State Historic Preservation Office, and PADEP. Participating Agencies include the PA Fish and Boat Commission, PA Department of Conservation and Natural Resources, PA Game Commission, PA Department of Agriculture, Centre County Conservation District, Centre County Board of Commissioners, Harris Township Board of Supervisors, College Township Council, Seneca Nation of Indians, and Delaware Tribe of Indians.
PennDOT has conducted agency coordination to inform the purpose and need and preliminary project alternatives, scoping meeting, and other elements outlined in this document. An Agency Coordination Plan was reviewed and agreed to by the Pennsylvania resource agencies, including the Cooperating and Participating agencies. It is a living document that will be updated through the EIS process. The resource agency meetings in Pennsylvania are referred to as Agency Coordination Meetings (ACM). Since PennDOT is the lead agency for this project, the agency meetings are typically held on the ACM's regularly scheduled meeting dates. A total of 12 agency coordination meetings were held between February 2020 and January 2024.
PennDOT conducted public outreach activities during the PEL Study for the State College Area Connector to present information and collect public input. The PEL Study had a Public and Agency Coordination Plan which provided the foundation for the outreach activities.
Additionally, PennDOT conducted four public open house meetings. These meetings solicited public comment on the presented information which included:
In addition, public official kick-off meetings were held in August, September, and November 2020 (Harris Township/August 10, Centre Hall Borough/August 13, Potter Township/August 17, College Township/August 20, Benner Township/September 3, Spring Township/September 8, Centre County/November 24, 2020). These meetings introduced the data presented in the Virtual Open House Meeting.
Combined public official meetings were also held:
• August 31, 2021, in advance of the September 2021 open house meeting.
• March 30, 2022, in advance of the of the April 2022 open house meeting.
• September 7, 2022, in advance of the October 2022 open house meetings.
The public and agency scoping process is continuing with the publication of this NOI. PennDOT will maintain and update the project website, as identified in the
Following the issuance of this notice, FHWA and PennDOT will coordinate with the Participating and Cooperating Agencies to develop study documentation and the Draft EIS.
• The Draft EIS is anticipated to be issued in July 2025.
• The combined Final EIS/Record of Decision is anticipated in July 2026.
• A section 404 permit decision from the USACE is expected in September 2026.
See the NOI Additional Project Information document for schedule details.
To ensure that a full range of issues related to the project are addressed and all potential issues are identified, FHWA invites comments and suggestions from all interested parties. The project team requests comments and suggestions on purpose and needs, potential alternatives and impacts, and the identification of any relevant information, studies, or analyses of any kind concerning impacts affecting the quality of the human environment. Any information presented herein, including the project-specific purpose and need, preliminary range of alternatives and identification of impacts may be revised after consideration of the comments. The purpose of this request is to bring relevant comments, information, and analyses to the agency's attention, as early in the process as possible, to enable the agency to make maximum use of this information in decision making. Comments may be submitted according to the instructions in the
FHWA: Julia Moore, Senior Environmental Specialist, Federal Highway Administration, Pennsylvania Division, 30 North Third Street, Suite 700, Harrisburg, PA 17101; email
Pennsylvania Department of Transportation: Eric Murnyack, PE, Project Manager, 70 PennDOT Drive, Clearfield, PA 16830; email
Federal Highway Administration (FHWA), DOT.
Notice of limitation on claims for judicial review of actions by FHWA and other Federal agencies.
This notice announces action taken by FHWA and other Federal agencies that are final. The actions relate to the Rebuild of the I-695 (Baltimore Beltway) Francis Scott Key Bridge over Patapsco River and its approaches. The actions grant licenses, permits, or approvals for the Project. The emergency Categorical Exclusion (CE) under the National Environmental Policy Act (NEPA) and other documents in the Project file provide details on the Project and FHWA's actions.
By this notice, FHWA is advising the public of final agency actions subject to 23 U.S.C. 139(l)(1). A claim seeking judicial review of the Federal agency actions on the highway project will be barred unless the claim is filed on or before December 23, 2024. If the Federal law that authorizes judicial review of a claim provides a time period of less than 150 days for filing such claim, then that shorter time period still applies.
Valeriya Remezova, Division Administrator, Federal Highway Administration, 31 Hopkins Plaza, Suite 1520, Baltimore, MD 21201, Telephone (410) 962-4440.
Notice is hereby given that FHWA and other Federal agencies have taken final agency actions by issuing approvals for the following emergency bridge rebuild along with its approaches project in Maryland: the Francis Scott Key Bridge (Project).
The actions by the Federal agencies, and the laws under which such actions were taken, are described in the CE and the associated agency records. That information is available by contacting FHWA at the address provided above and can also be viewed and downloaded from the project website at:
This notice applies to all Federal agency decisions as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to:
1. National Environmental Policy Act [42 U.S.C. 4321-4351].
2. Federal-Aid Highway Act [23 U.S.C. 109].
3. Clean Air Act [42 U.S.C. 7401-7671(q)].
4. Section 6(f) of the Land and Water Conservation Fund Act of 1965 [16 U.S.C. 4601-4
5. Section 4(f) of the Department of Transportation Act of 1966 [49 U.S.C. 303].
6. Endangered Species Act [16 U.S.C. 1531-1544 and 1536].
7. Fish and Wildlife Coordination Act [16 U.S.C. 661-667(d)].
8. Migratory Bird Treaty Act [16 U.S.C. 703-712].
9. Bald and Golden Eagle Protection Act [16 U.S.C. 668-668c].
10. Section 106 of the National Historic Preservation Act of 1966, as amended [54 U.S.C. 306101
11. Civil Rights Act of 1964 [42 U.S.C. 2000d
12. Farmland Protection Policy Act [7 U.S.C. 4201-4209].
13. Clean Water Act (Section 319, Section 401, Section 402, Section 404) [33 U.S.C. 1251-1377].
14. Safe Drinking Water Act [42 U.S.C. 300(f)
15. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 [42 U.S.C. 4601
16. Noise Control Act of 1972 [42 U.S.C. 4901
17. Resource Conservation and Recovery Act [42 U.S.C. 6901-6992(k)].
18. Comprehensive Environmental Response, Compensation, and Liability Act [42 U.S.C. 9601-9675].
19. Americans with Disabilities Act of 1990 [42 U.S.C. 12101].
20. Executive Order 11990 Protection of Wetlands.
21. Executive Order 11988 Floodplain Management.
22. Executive Order 12898 Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations.
23. Executive Order 11593 Protection and Enhancement of Cultural Resources.
24. Executive Order 13007 Indian Sacred Sites.
25. Executive Order 13287 Preserve America.
26. Executive Order 13175 Consultation and Coordination with Indian Tribal Governments.
27. Executive Order 11514 Protection and Enhancement of Environmental Quality.
28. Executive Order 13112 Invasive Species.
29. Executive Order 13166 Improving Access to Services for Persons with Limited English Proficiency.
30. Executive Order 13045 Protection of Children From Environmental Health Risks and Safety Risks.
31. Executive Order 14096 Revitalizing Our Nation's Commitment to Environmental Justice for All.
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of final disposition.
FMCSA announces its decision to renew exemptions for 18 individuals from the requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) that interstate commercial motor vehicle (CMV) drivers have “no established medical history or clinical diagnosis of epilepsy or any other condition which is likely to cause loss of consciousness or any loss of ability to control a CMV.” The exemptions enable these individuals who have had one or more seizures and are taking anti-seizure medication to continue to operate CMVs in interstate commerce.
The exemptions were applicable on June 28, 2024. The exemptions expire on June 28, 2026.
Ms. Christine A. Hydock, Chief, Medical Programs Division, FMCSA, DOT, 1200 New Jersey Avenue SE, Washington, DC 20590-0001, (202) 366-4001,
To view comments go to
In accordance with 49 U.S.C. 31315(b)(6), DOT solicits comments from the public on the exemption request. DOT posts these comments, without edit, including any personal information the commenter provides, to
On June 11, 2024, FMCSA published a notice announcing its decision to renew exemptions for 18 individuals from the epilepsy and seizure disorders prohibition in 49 CFR 391.41(b)(8) to operate a CMV in interstate commerce and requested comments from the public (89 FR 49261). The public comment period ended on July 11, 2024, and no comments were received.
FMCSA has evaluated the eligibility of these applicants and determined that renewing these exemptions would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved by complying with § 391.41(b)(8).
The physical qualification standard for drivers regarding epilepsy found in § 391.41(b)(8) states that a person is physically qualified to drive a CMV if that person has no established medical history or clinical diagnosis of epilepsy or any other condition which is likely to cause the loss of consciousness or any loss of ability to control a CMV.
In addition to the regulations, FMCSA has published advisory criteria
FMCSA received no comments in this proceeding.
Based on its evaluation of the 18 renewal exemption applications and comments received, FMCSA announces its decision to exempt the following drivers from the epilepsy and seizure disorders prohibition in § 391.41(b)(8).
As of June 28, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following 18 individuals have satisfied the renewal conditions for obtaining an exemption from the epilepsy and seizure disorders prohibition in the FMCSRs for interstate CMV drivers (89 FR 49261):
The drivers were included in docket number FMCSA-2013-0108, FMCSA-2013-0443, FMCSA-2014-0381, FMCSA-2015-0115, FMCSA-2015-0320, FMCSA-2015-0321, FMCSA-2017-0254, FMCSA-2018-0050, FMCSA-2019-0034, FMCSA-2020-0045, FMCSA-2022-0042, or FMCSA-2022-0043. Their exemptions were applicable as of June 28, 2024 and will expire on June 28, 2026.
In accordance with 49 U.S.C. 31315(b), each exemption will be valid for 2 years from the effective date unless revoked earlier by FMCSA. The exemption will be revoked if the following occurs: (1) the person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained prior to being granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315(b).
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of applications for exemption; request for comments.
FMCSA announces receipt of applications from 11 individuals for an exemption from the hearing requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) to operate a commercial motor vehicle (CMV) in interstate commerce. If granted, the exemptions would enable these hard of hearing and deaf individuals to operate CMVs in interstate commerce.
Comments must be received on or before August 23, 2024.
You may submit comments identified by the Federal Docket Management System Docket No. FMCSA-2024-0013 using any of the following methods:
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To avoid duplication, please use only one of these four methods. See the “Public Participation” portion of the
Ms. Christine A. Hydock, Chief, Medical Programs Division, FMCSA, DOT, 1200 New Jersey Avenue SE, Room W64-224, Washington, DC 20590-0001, (202) 366-4001,
If you submit a comment, please include the docket number for this notice (Docket No. FMCSA-2024-0013), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.
To submit your comment online, go to
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
To view comments go to
In accordance with 49 U.S.C. 31315(b)(6), DOT solicits comments from the public on the exemption requests. DOT posts these comments, without edit, including any personal information the commenter provides, to
Under 49 U.S.C. 31136(e) and 31315(b), FMCSA may grant an exemption from the FMCSRs for no longer than a 5-year period if it finds such exemption would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption. The statutes also allow the Agency to renew exemptions at the end of the 5-year period. FMCSA grants medical exemptions from the FMCSRs for a 2-year period to align with the maximum duration of a driver's medical certification.
The 11 individuals listed in this notice have requested an exemption from the hearing requirement in 49 CFR 391.41(b)(11). Accordingly, the Agency will evaluate the qualifications of each applicant to determine whether granting the exemption will achieve the required level of safety mandated by statute.
The physical qualification standard for drivers regarding hearing found in § 391.41(b)(11) states that a person is physically qualified to drive a CMV if that person first perceives a forced whispered voice in the better ear at not less than 5 feet with or without the use of a hearing aid or, if tested by use of an audiometric device, does not have an average hearing loss in the better ear greater than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a hearing aid when the audiometric device is calibrated to American National Standard (formerly ASA Standard) Z24.5—1951.
This standard was adopted in 1970 and was revised in 1971 to allow drivers to be qualified under this standard while wearing a hearing aid, (35 FR 6458, 6463 (Apr. 22, 1970) and 36 FR 12857 (July 8, 1971), respectively).
On February 1, 2013, FMCSA announced in a Notice of Final Disposition titled, “Qualification of Drivers; Application for Exemptions; National Association of the Deaf,” (78 FR 7479), its decision to grant requests from 40 individuals for exemptions from the Agency's physical qualification standard concerning hearing for interstate CMV drivers. Since that time the Agency has published additional notices granting requests from hard of hearing and deaf individuals for exemptions from the Agency's physical qualification standard concerning hearing for interstate CMV drivers.
Gustavo Aro, 44, holds a class C driver's license in Nevada.
Amber Bivens, 47, holds a class D driver's license in Ohio.
Jerry Burleson, 76, holds a class AMV commercial driver's license (CDL) in Alabama.
Trenton Eash, 22, holds a class E driver's license in Florida.
Kiser Holiday, 26, holds a class A CDL in California.
Camry McCaleb, 27, holds a class C driver's license in Texas.
Jeffrey Moore, 44, holds a class C driver's license in Pennsylvania.
Henry Pauls, 73, holds a class ABCDM CDL in Wisconsin.
Jackson Smith, 24, holds a class D driver's license in New Hampshire.
Robert Webber, 41, holds a class C driver's license in North Carolina.
Jason Wooten, 45, holds a class C driver's license in Georgia.
In accordance with 49 U.S.C. 31136(e) and 31315(b), FMCSA requests public comment from all interested persons on the exemption petitions described in this notice. We will consider all comments received before the close of business on the closing date indicated under the
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of renewal of exemptions; request for comments.
FMCSA announces its decision to renew exemptions for 11 individuals from the hearing requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) for interstate commercial motor vehicle (CMV) drivers. The exemptions enable these hard of hearing and deaf individuals to continue to operate CMVs in interstate commerce.
The exemptions are applicable on August 22, 2024. The exemptions expire on August 22, 2026. Comments
You may submit comments identified by the Federal Docket Management System Docket No. FMCSA-2012-0332, Docket No. FMCSA-2013-0123, Docket No. FMCSA-2013-0124, Docket No. FMCSA-2015-0328, Docket No. FMCSA-2015-0329, Docket No. FMCSA-2017-0059, Docket No. FMCSA-2017-0061, Docket No. FMCSA-2019-0111, Docket No. FMCSA-2021-0013, or Docket No. FMCSA-2022-0032 using any of the following methods:
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•
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To avoid duplication, please use only one of these four methods. See the “Public Participation” portion of the
Ms. Christine A. Hydock, Chief, Medical Programs Division, FMCSA, DOT, 1200 New Jersey Avenue SE, Room W64-224, Washington, DC 20590-0001, (202) 366-4001,
If you submit a comment, please include the docket number for this notice (Docket No. FMCSA-2012-0332, Docket No. FMCSA-2013-0123, Docket No. FMCSA-2013-0124, Docket No. FMCSA-2015-0328, Docket No. FMCSA-2015-0329, Docket No. FMCSA-2017-0059, Docket No. FMCSA-2017-0061, Docket No. FMCSA-2019-0111, Docket No. FMCSA-2021-0013, or Docket No. FMCSA-2022-0032), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.
To submit your comment online, go to
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
To view comments go to
In accordance with 49 U.S.C. 31315(b)(6), DOT solicits comments from the public on the exemption requests. DOT posts these comments, without edit, including any personal information the commenter provides, to
Under 49 U.S.C. 31136(e) and 31315(b), FMCSA may grant an exemption from the FMCSRs for no longer than a 5-year period if it finds such exemption would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption. The statutes also allow the Agency to renew exemptions at the end of the 5-year period. FMCSA grants medical exemptions from the FMCSRs for a 2-year period to align with the maximum duration of a driver's medical certification.
The physical qualification standard for drivers regarding hearing found in 49 CFR 391.41(b)(11) states that a person is physically qualified to drive a CMV if that person first perceives a forced whispered voice in the better ear at not less than 5 feet with or without the use of a hearing aid or, if tested by use of an audiometric device, does not have an average hearing loss in the better ear greater than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a hearing aid when the audiometric device is calibrated to American National Standard (formerly ASA Standard) Z24.5—1951.
This standard was adopted in 1970 and was revised in 1971 to allow drivers to be qualified under this standard while wearing a hearing aid, (35 FR 6458, 6463 (Apr. 22, 1970) and 36 FR 12857 (July 8, 1971), respectively).
The 11 individuals listed in this notice have requested renewal of their exemptions from the hearing standard in § 391.41(b)(11), in accordance with FMCSA procedures. Accordingly, FMCSA has evaluated these applications for renewal on their merits and decided to extend each exemption for a renewable 2-year period.
Interested parties or organizations possessing information that would otherwise show that any, or all, of these
In accordance with 49 U.S.C. 31136(e) and 31315(b), each of the 11 applicants has satisfied the renewal conditions for obtaining an exemption from the hearing requirement. The 11 drivers in this notice remain in good standing with the Agency. In addition, for commercial driver's license (CDL) holders, the Commercial Driver's License Information System and the Motor Carrier Management Information System are searched for crash and violation data. For non-CDL holders, the Agency reviews the driving records from the State Driver's Licensing Agency. These factors provide an adequate basis for predicting each driver's ability to continue to safely operate a CMV in interstate commerce. Therefore, FMCSA concludes that extending the exemption for each of these drivers for a period of 2 years is likely to achieve a level of safety equal to that existing without the exemption.
As of August 22, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following 11 individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers:
The drivers were included in docket number FMCSA-2012-0332, FMCSA-2013-0123, FMCSA-2013-0124, FMCSA-2015-0328, FMCSA-2015-0329, FMCSA-2017-0059, FMCSA-2017-0061, FMCSA-2019-0111, FMCSA-2021-0013, or FMCSA-2022-0032. Their exemptions are applicable as of August 22, 2024 and will expire on August 22, 2026.
The exemptions are extended subject to the following conditions: (1) each driver must report any crashes or accidents as defined in § 390.5T; and (2) report all citations and convictions for disqualifying offenses under 49 CFR parts 383 and 391 to FMCSA; and (3) each driver prohibited from operating a motorcoach or bus with passengers in interstate commerce. The driver must also have a copy of the exemption when driving, for presentation to a duly authorized Federal, State, or local enforcement official. In addition, the exemption does not exempt the individual from meeting the applicable CDL testing requirements. Each exemption will be valid for 2 years unless rescinded earlier by FMCSA. The exemption will be rescinded if: (1) the person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained before it was granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315(b).
During the period the exemption is in effect, no State shall enforce any law or regulation that conflicts with this exemption with respect to a person operating under the exemption.
Based upon its evaluation of the 11 exemption applications, FMCSA renews the exemptions of the aforementioned drivers from the hearing requirement in § 391.41 (b)(11). In accordance with 49 U.S.C. 31136(e) and 31315(b), each exemption will be valid for 2 years unless revoked earlier by FMCSA.
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of final disposition; grant of exemption.
The Federal Motor Carrier Safety Administration (FMCSA) announces its decision to grant a limited 5-year exemption to Convoy Technologies, Inc. (Convoy) to allow motor carriers to operate commercial motor vehicles (CMVs) with the company's Electronic Rear View System (ERVS) camera monitor system (CMS) installed as an alternative to the two rear-vision mirrors required by the Federal Motor Carrier Safety Regulations (FMCSRs). The Agency has determined that granting the exemption would likely achieve a level of safety equivalent to or greater than the level of safety provided by the regulation.
This exemption is effective July 24, 2024 and ending July 24, 2029.
Mr. David Sutula, Chief, Vehicle and Roadside Operations Division, Office of Carrier, Driver, and Vehicle Safety, FMCSA, 1200 New Jersey Avenue SE, Washington, DC 20590-0001; (202) 366-9209;
FMCSA has authority under 49 U.S.C. 31136(e) and 31315(b) to grant exemptions from certain parts of the FMCSRs. FMCSA must publish a notice of each exemption request in the
The Agency reviews safety analyses and public comments submitted and determines whether granting the exemption would likely achieve a level of safety equivalent to, or greater than, the level that would be achieved by the current regulation (49 CFR 381.305(a)). The decision of the Agency must be published in the
Convoy has applied for an exemption from 49 CFR 393.80(a) to allow motor carriers to operate CMVs equipped with the company's ERVS CMS installed as an alternative to the two rear-vision mirrors required by the FMCSRs. A copy of the application is included in the docket referenced at the beginning of this notice.
Section 393.80(a) of the FMCSRs requires that each bus, truck, and truck-tractor be equipped with two rear-vision mirrors, one at each side. The mirrors must be positioned to reflect to the driver a view of the highway to the rear and the area along both sides of the CMV. Section 393.80(a) cross-references the National Highway Traffic Safety Administration's (NHTSA) standards for mirrors on motor vehicles (49 CFR 571.111, Federal Motor Vehicle Safety Standard [FMVSS] No. 111, “Rear Visibility”). Paragraph S7.1 of FMVSS No. 111 provides requirements for mirrors on multipurpose passenger vehicles and trucks with a gross vehicle weight rating (GVWR) greater than 4,536 kg and less than 11,340 kg and each bus, other than a school bus, with a GVWR of more than 4,536 kg. Paragraph S8.1 provides requirements for mirrors on multipurpose passenger vehicles and trucks with a GVWR of 11,340 kg or more.
The ERVS CMS consists of six cameras: two camera assemblies each with two high-definition cameras firmly mounted high on each side of the CMV exterior for optimal visibility, along with the option to add one additional rear-view camera per assembly. Each camera has a specific field of view (FOV) and is enclosed in an aerodynamic package that provides environmental protection for the cameras. Each camera presents a clear image to the driver by means of an internal monitor firmly mounted to the left and right A-pillar of the CMV,
• Expanded FOV: the ERVS provides approximately 25% expansion of driver FOV.
• Left/Right Blind Zone Rear View: a super-wide view angle that reduces left/right blind zones and transmits the images through a high-speed video transmission to produce a clear, real-time display.
• A-pillar Blind Zone Elimination: camera angles provide drivers with full 180-degree views from the side of the CMV, eliminating A-pillar blind zones.
• Front Corner Blind Zone Elimination: a unique forward-facing camera that provides clear visibility over the front right comer of the CMV, a high-risk blind spot that causes crashes.
• HD [high definition] Night Vision System: auto-dimming night vision technology that provides clear imaging and superior nighttime visibility through an HD image display.
• Camera LED [light-emitting diode] Auto Light: a built-in LED light in the camera that automatically adjusts to different road conditions to create a clearer display and appropriate screen brightness in low-light conditions.
• Screen Brightness Auto Adjustment: backlight brightness that adjusts automatically at day and night to reduce low-light and high-light/glare environments and provide optimal image quality.
• Uninterrupted, Fail-Safe Display: the ERVS is made up of multiple cameras to protect against malfunctions in the unlikely event of an individual camera failure. It also features defrosting elements and heat chips to provide continuous camera functioning in cold weather.
• Weather Resilient: unlike traditional mirrors, the ERVS internally mounted displays are protected from the elements; high camera placement and shielded, downward-facing camera orientation protects cameras from inclement weather.
• Fatigue Reduction: the system is ergonomically designed to reduce driver head movements and therefore reduce driver fatigue.
• HD Dual DVR [digital video recorder] Recording and Playback: dual HD recording that can provide important data for accident reconstruction and crash accountability.
Convoy believes that mounting the system as described would maintain a level of safety that is equivalent to, or greater than, the level of safety achieved without the exemption.
FMCSA published a notice of the application in the
Two commenters who opposed the exemption generally discourage the use of cameras to replace mirrors. They highlight the potential dangers of relying solely on electronic systems and advocate for the continued use of traditional mirrors. Their concern is that relying solely on cameras could create unsafe operating conditions in the event of a camera failure.
Although the Agency received two comments opposing this exemption, FMCSA has received numerous positive comments in support of other, similar camera-based mirror system exemptions, such as in Stoneridge, Inc. “MirrorEye Camera Monitor System” (84 FR 5557, February 21, 2019), Vision Systems North America “SmartVision System” (85 FR 2486, January 15, 2020), Robert Bosch, LLC and Mekra Lang North America, LLC (Bosch) “Digital Mirror System” (85 FR 58106, September 17, 2020), and Rosco Vision, Inc. “Commercial Vehicle Digital Camera Monitor System” (87 FR 73386, December 4, 2022). Seventeen motor carriers, associations and individuals supported the Stoneridge application, specifically noting the following benefits: (1) superior total FOV around a CMV, including reduction/elimination of blind spots (2) increased visibility when driving at night and during inclement weather, (3) enhanced vehicle maneuverability in backing, turning, and lane changes through use of trailer scanning, (4) and reduced driver fatigue.
Vision Systems North America's application was supported by 5 motor carriers, associations, and individuals. These commenters specifically noted the following benefits of the camera-based mirror system proposed: (1) improved FOV around a CMV, including reduction/elimination glare and blind spots, (2) increased visibility when driving at night and during inclement weather, and (3) reduced driver fatigue.
The American Bus Association (ABA) commented in support of the Bosch Digital Mirror System. The ABA noted that the Bosch system provided the following visibility benefits: (1) anti-glare, (2) improved visibility at night and during adverse weather conditions, and (3) elimination of blind spots by providing a broader FOV around the vehicle.
In addition to the positive comments received relating to other CMS systems, the Agency has not received any reports of crashes or other safety concerns relating to the previously granted CMS exemption applications.
FMCSA evaluated Convoy's application for exemption and the comments received. For the reasons discussed below, FMCSA grants the exemption to allow motor carriers to install and operate CMVs with the company's ERVS CMS as an alternative to the two rear-vision mirrors required by the FMCSRs. FMCSA believes that the ERVS CMS is likely to achieve a level of safety equivalent to or greater than the level of safety achieved by the regulation.
Section 393.80 cross-references FMVSS No. 111 which requires CMVs with a GVWR of 11,340 kg (25,000 pounds) or more to be equipped with a rearview mirror size of unit magnification of no less than 323 cm
FMCSA notes that CMS are authorized for use in a number of European countries as a legal alternative to the traditional rear-vision mirrors under the requirements of United Nations Economic Commission for Europe (UNECE) R46 which specifies minimum safety, ergonomic, and performance requirements for CMS in place of mandatory inside and outside rearview mirrors for road vehicles. This regulation references ISO (International Organization for Standardization) standard 16505 Rev 2019 which addresses CMS definitions and required performance for use in road vehicles. The specifications for CMS systems in ISO 16505 exceed the FOV requirements in FMVSS No. 111.
FMCSA has reviewed Convoy's exemption application and has determined that its ERVS CMS exceeds both the FOV required by FMVSS No. 111 and the standards of rear-vision mirrors currently installed by manufacturers.
FMCSA acknowledges the concerns of the two individual commenters regarding potential system failure of the ERVS CMS. FMCSA notes that the ERVS CMS is designed with redundancy in the event of camera failure such that if one of the cameras within the camera assembly were to fail, the system automatically adjusts the view of the interior monitor for that side of the vehicle to a full screen view of the remaining working camera. Furthermore, if the entire camera assembly on one side were to fail, the functionality of the other side remains unaffected.
In the event of camera or monitor failure, the CMV would not be subject to an out-of-service (OOS) order because it is not a critical inspection item under CVSA's OOS criteria,
Additionally, under 49 CFR 392.7(a), CMV drivers must satisfy themselves that a vehicle is in safe condition before operating the vehicle. This obligation would include ensuring that both rear-vision mirrors (or in this case, all components of the ERVS CMS including all external cameras and both internal monitors) are in good working order. CMVs are also subject to the periodic inspection requirements under 49 CFR 396.17 which would include an inspection of the ERVS CMS. To further ensure that the ERVS CMS system is properly maintained, the terms and conditions of the exemption specify that motor carriers and drivers operating CMVs equipped with the ERVS CMS must inspect them before operating the vehicle.
FMCSA believes that the ERVS CMS is likely to achieve a level of safety equivalent to or greater than the level of safety that would be achieved by standard rear-view mirrors because it provides a greater FOV, eliminates the blind spots on both sides of the vehicle, provides a monitor with low-light sensitivity feature, and includes a camera heating system, all of which exceed the current requirements of 49 CFR 393.80. The FMCSRs impose several operational controls that will help ensure that the ERVS CMS is functioning properly. Before driving a vehicle, a driver must be satisfied that the vehicle is in safe operating condition, and that any system failures reported have been corrected prior to vehicle re-dispatch. Additionally, the driver must complete a driver vehicle inspection report at the completion of the workday, noting any system defects or failures that occurred during operation of the vehicle.
The Agency grants the exemption for a 5-year period, beginning July 24, 2024 and ending July 24, 2029 unless rescinded earlier by FMCSA. During the exemption period, motor carriers operating CMVs may install and utilize Convoy's ERVS CMS in lieu of the two rear-vision mirrors required by section 393.80 of the FMCSRs. The Agency encourages drivers operating CMVs under this exemption to carry a copy of the exemption in the vehicle.
1. This exemption is limited to Convoy's ERVS CMS installed on CMVs and does not apply to any other camera-based mirror-replacement system/technology.
2. Drivers operating CMVs under this exemption must inspect the ERVS CMS each time before operating the CMV and ensure that it is in proper working order.
3. Drivers operating CMVs under this exemption must inspect the equipment at the end of each day and note any defects in the equipment. The motor carrier must repair any defects noted by the driver before allowing the operation of the CMV.
In accordance with 49 U.S.C. 31315(d), as implemented by 49 CFR 381.600, during the period this
FMCSA does not believe the motor carrier, the drivers, and CMVs covered by the exemption will experience any deterioration of their safety records. However, should this occur, FMCSA will take all steps necessary to protect the public interest, including revocation of the exemption without prior notice. The exemption will be rescinded if: (1) motor carriers and/or CMV drivers fail to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than maintained before it was granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) or 31315(b).
The motor carrier must, in addition to existing periodic inspections required by 49 CFR 396.17, periodically inspect the ERVS CMS. Interested parties possessing information that would demonstrate that motor carriers operating CMVs utilizing Convoy's ERVS CMS installed as an alternative to two rear-vision mirrors are not achieving the requisite statutory level of safety should immediately notify FMCSA by email at
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of final disposition.
FMCSA announces its decision to renew exemptions for 34 individuals from the hearing requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) for interstate commercial motor vehicle (CMV) drivers. The exemptions enable these hard of hearing and deaf individuals to continue to operate CMVs in interstate commerce.
Each group of renewed exemptions were applicable on the dates stated in the discussions below and will expire on the dates provided below.
Ms. Christine A. Hydock, Chief, Medical Programs Division, FMCSA, DOT, 1200 New Jersey Avenue SE, Room W64-224, Washington, DC 20590-0001, (202) 366-4001,
To view comments go to
In accordance with 49 U.S.C. 31315(b)(6), DOT solicits comments from the public on the exemption requests. DOT posts these comments, without edit, including any personal information the commenter provides, to
On June 11, 2024, FMCSA published a notice announcing its decision to renew exemptions for 34 individuals from the hearing standard in 49 CFR 391.41(b)(11) to operate a CMV in interstate commerce and requested comments from the public (89 FR 49259). The public comment period ended on July 11, 2024, and no comments were received.
FMCSA has evaluated the eligibility of these applicants and determined that renewing these exemptions would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved by complying with § 391.41(b)(11).
The physical qualification standard for drivers regarding hearing found in § 391.41(b)(11) states that a person is physically qualified to drive a CMV if that person first perceives a forced whispered voice in the better ear at not less than 5 feet with or without the use of a hearing aid or, if tested by use of an audiometric device, does not have an average hearing loss in the better ear greater than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a hearing aid when the audiometric device is calibrated to American National Standard (formerly ASA Standard) Z24.5—1951.
This standard was adopted in 1970 and was revised in 1971 to allow drivers to be qualified under this standard while wearing a hearing aid (35 FR
FMCSA received no comments in this proceeding.
Based upon its evaluation of the 34 renewal exemption applications and comments received, FMCSA announces its decision to exempt the following drivers from the hearing requirement in § 391.41 (b)(11).
As of June 3, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following nine individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers (89 FR 49259):
The drivers were included in docket number FMCSA-2017-0057, FMCSA-2019-0110, FMCSA-2013-0126, FMCSA-2022-0032, or FMCSA-2022-0033. Their exemptions were applicable as of June 3, 2024 and will expire on June 3, 2026.
As of June 17, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following 15 individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers (89 FR 49259):
The drivers were included in docket number FMCSA-2013-0123, FMCSA-2013-0125, FMCSA-2014-0107, FMCSA-2015-0327, FMCSA-2015-0328, FMCSA-2015-0329, FMCSA-2017-0059, FMCSA-2018-0139, FMCSA-2019-0109, or FMCSA-2020-0024. Their exemptions were applicable as of June 17, 2024 and will expire on June 17, 2026.
As of June 18, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following five individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers (89 FR 49259):
The drivers were included in docket number FMCSA-2020-0025. Their exemptions were applicable as of June 18, 2024 and will expire on June 18, 2026.
As of June 25, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following three individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers (89 FR 49259):
Alfredo Ramirez (TX); Julie Ramirez (TX); and Hayden Teesdale (TX).
The drivers were included in docket number FMCSA-2014-0102. Their exemptions were applicable as of June 25, 2024 and will expire on June 25, 2026.
As of June 29, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following two individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers (89 FR 49259):
Leroy Carter (OH); and Richard Fisher (PA).
The drivers were included in docket number FMCSA-2017-0060. Their exemptions were applicable as of June 29, 2024 and will expire on June 29, 2026.
In accordance with 49 U.S.C. 31315(b), each exemption will be valid for 2 years from the effective date unless revoked earlier by FMCSA. The exemption will be revoked if the following occurs: (1) the person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained prior to being granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136, 49 U.S.C. chapter 313, or the FMCSRs.
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of final disposition.
FMCSA announces its decision to exempt 11 individuals from the hearing requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) to operate a commercial motor vehicle (CMV) in interstate commerce. The exemptions enable these hard of hearing and deaf individuals to operate CMVs in interstate commerce.
The exemptions were applicable on July 16, 2024. The exemptions expire on July 16, 2026.
Ms. Christine A. Hydock, Chief, Medical Programs Division, FMCSA, DOT, 1200 New Jersey Avenue SE, Washington, DC 20590-0001, (202) 366-4001,
To view comments go to
In accordance with 49 U.S.C. 31315(b)(6), DOT solicits comments from the public on the exemption requests. DOT posts these comments, without edit, including any personal information the commenter provides, to
On June 11, 2024, FMCSA published a notice announcing receipt of applications from 11 individuals requesting an exemption from the hearing requirement in 49 CFR 391.41(b)(11) to operate a CMV in interstate commerce and requested comments from the public (89 FR 49264). The public comment period ended on July 11, 2024, and no comments were received.
FMCSA has evaluated the eligibility of these applicants and determined that granting exemptions to these individuals would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved by complying with § 391.41(b)(11).
The physical qualification standard for drivers regarding hearing found in § 391.41(b)(11) states that a person is physically qualified to drive a CMV if that person first perceives a forced whispered voice in the better ear at not less than 5 feet with or without the use of a hearing aid or, if tested by use of an audiometric device, does not have an average hearing loss in the better ear greater than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a hearing aid when the audiometric device is calibrated to American National Standard (formerly ASA Standard) Z24.5—1951.
This standard was adopted in 1970 and was revised in 1971 to allow drivers to be qualified under this standard while wearing a hearing aid (35 FR 6458, 6463 (Apr. 22, 1970) and 36 FR 12857 (July 8, 1971), respectively).
FMCSA received no comments in this proceeding.
Under 49 U.S.C. 31136(e) and 31315(b), FMCSA may grant an exemption from the FMCSRs for no longer than a 5-year period if it finds such exemption would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption. The statutes also allow the Agency to renew exemptions at the end of the 5-year period. However, FMCSA grants medical exemptions from the FMCSRs for a 2-year period to align with the maximum duration of a driver's medical certification.
The Agency's decision regarding these exemption applications is based on relevant scientific information and literature, and the 2008 Evidence Report, “Executive Summary on Hearing, Vestibular Function and Commercial Motor Driving Safety.” The evidence report reached two conclusions regarding the matter of hearing loss and CMV driver safety: (1) no studies that examined the relationship between hearing loss and crash risk exclusively among CMV drivers were identified; and (2) evidence from studies of the private driver's license holder population does not support the contention that individuals with hearing impairment are at an increased risk for a crash. In addition, the Agency reviewed each applicant's driving record found in the Commercial Driver's License Information System, for commercial driver's license (CDL) holders, and inspections recorded in the Motor Carrier Management Information System. For non-CDL holders, the Agency reviewed the driving records from the State Driver's Licensing Agency. Each applicant's record demonstrated a safe driving history. Based on an individual assessment of each applicant that focused on whether an equal or greater level of safety would likely be achieved by permitting each of these drivers to drive in interstate commerce, the Agency finds the drivers granted this exemption have demonstrated that they do not pose a risk to public safety.
Consequently, FMCSA finds further that in each case exempting these applicants from the hearing standard in § 391.41(b)(11) would likely achieve a level of safety equal to that existing without the exemption, consistent with the applicable standard in 49 U.S.C. 31315(b)(1).
The terms and conditions of the exemption are provided to the applicants in the exemption document and include the following: (1) each driver must report any crashes or accidents as defined in § 390.5T; (2) each driver must report all citations and convictions for disqualifying offenses under 49 CFR parts 383 and 391 to FMCSA; and (3) each driver is prohibited from operating a motorcoach or bus with passengers in interstate commerce. The driver must also have a copy of the exemption when driving, for presentation to a duly authorized Federal, State, or local enforcement official. In addition, the exemption does not exempt the individual from meeting the applicable CDL testing requirements.
During the period the exemption is in effect, no State shall enforce any law or regulation that conflicts with this exemption with respect to a person operating under the exemption.
Based upon its evaluation of the 11 exemption applications, FMCSA exempts the following drivers from the hearing standard; in § 391.41(b)(11), subject to the requirements cited above:
In accordance with 49 U.S.C. 31315(b), each exemption will be valid for 2 years from the effective date unless revoked earlier by FMCSA. The exemption will be revoked if the following occurs: (1) the person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained prior to being granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136, 49 U.S.C. chapter 313, or the FMCSRs.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has
Submit comments on or before August 23, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0096 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel LONER is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0096 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Office of Mental Health (OMH), Department of Veterans Affairs (VA).
Notice of a new system of records.
Pursuant to the Privacy Act of 1974, notice is hereby given that VA is establishing a new system of records titled, “Law Enforcement Officer Evaluations (LEO Evals)—VA” (216VA10). This system will be used to assist with the occupational placements of VA police officer candidates and officers undergoing psychological evaluations for hire and annually thereafter. Psychological evaluations, testing, and notes will contain data to assess the applicant's or employee's psychological fitness to meet the functional requirements of a VA police officer position.
Comments on this new system of records must be received no later than August 23, 2024. If no public comment is received during the period allowed for comment or unless otherwise published in the
Comments may be submitted through
Stephania Griffin, Veterans Health Administration (VHA) Chief Privacy Officer, Department of Veterans Affairs, 810 Vermont Avenue NW, (105HIG), Washington, DC 20420,
This system of records is used to assist with occupational placements VA police officer candidates and officers undergoing psychological evaluations for hire and annually thereafter. Psychological evaluations, testing, and notes will contain data to assess the applicant's or employee's psychological fitness to meet the functional requirements of a VA police officer position. VA Handbook 0730, Security and Law Enforcement, appendix A, dated August 11, 2000, describes the medical standards for VA police officer applicants and incumbents. VA Handbook 0730 states that the VA police officers must possess emotional and mental stability. These guidelines are consistent with VA Handbook 0720, Procedures to Arm Department of Veterans Affairs Police, dated January 24, 2000. These standards are based on 5 CFR 339.301.
VA is proposing the following routine use disclosures of information maintained in the system.
1. To a Member of Congress or staff acting upon the Member's behalf when the Member or staff requests the information on behalf of, and at the request of, the individual who is the subject of the record.
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(a) VA or any component thereof;
(b) Any VA employee in his or her official capacity;
(c) Any VA employee in his or her individual capacity where DoJ has agreed to represent the employee; or
(d) The United States, where VA determines that litigation is likely to affect the agency or any of its components is a party to such proceedings or has an interest in such proceedings, and VA determines that use of such records is relevant and necessary to the proceedings.
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(a) Conducting quality assessment and improvement activities; patient safety activities as defined in 42 CFR 3.20; population-based activities relating to improving health or reducing health care costs, protocol development, case management, and care coordination; contacting of health care providers and patients with information about treatment alternatives; and related functions that do not include treatment;
(b) Reviewing the competence or qualifications of health care professionals; evaluating practitioner and provider performance, and health plan performance; conducting training programs for health care practitioners, trainees, and students; training of non-health care professionals; accreditation, certification, licensing, or credentialing activities; or
(c) Health care fraud and abuse detection or compliance.
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The Senior Agency Official for Privacy, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Kurt D. DelBene, Assistant Secretary for Information and Technology and Chief Information Officer, approved this document on June 14, 2024 for publication.
“Law Enforcement Officer Evaluations (LEO Evals—VA” (216VA10).
Unclassified.
These records are the responsibility of the Office of Mental Health (OMH), Veterans Health Administration (VHA), Department of Veterans Affairs (VA). The OMH is located at 810 Vermont Avenue NW, (11MH), Washington, DC 20420. Records are maintained at VA health care facilities. Addresses are listed in VA Appendix 1 of the biennial publication of the VA Privacy Act Issuances.
Christopher Loftis, Ph.D., National Mental Health Director, Office of Mental Health, 810 Vermont Avenue NW, Washington, DC 20420,
VA Handbook 0730; VA Handbook 0720; 5 CFR 339.301.
Records in this system will be used to assist with occupational placements of VA police officer candidates and officers undergoing psychological evaluations for hire and annually thereafter. Psychological evaluations, testing, and notes will contain data to assess the applicant's or employee's psychological fitness to meet the functional requirements of a VA police officer position.
The records in the system are on VA police officer employees and applicants.
Records include demographic information such as name, address, phone number, email address, and the last four of the applicant/employee social security number. Records will also contain information regarding the psychological suitability to meet the functional requirements of the VA police officer position requirements, to include test data, interview notes, screening measures, behavioral history, references, and background data.
Records in this system are provided by VA police officer employees and candidates, VA psychologists and psychiatrists conducting psychological evaluations, VA police chiefs and supervisors, and human resource and occupational health staff.
To the extent that records contained in the system include information protected by The HIPAA Privacy Rule and 38 U.S.C. 7332 that information cannot be disclosed under a routine use unless there is also specific disclosure authority in both provisions.
1. To a Member of Congress or staff acting upon the Member's behalf when the Member or staff requests the information on behalf of, and at the request of, the individual who is the subject of the record.
2.
3.
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(a) VA or any component thereof;
(b) Any VA employee in his or her official capacity;
(c) Any VA employee in his or her individual capacity where DoJ has agreed to represent the employee; or
(d) The United States, where VA determines that litigation is likely to affect the agency or any of its components is a party to such proceedings or has an interest in such proceedings, and VA determines that use of such records is relevant and necessary to the proceedings.
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(a) Conducting quality assessment and improvement activities; patient safety activities as defined in 42 CFR 3.20; population-based activities relating to improving health or reducing health care costs, protocol development, case management, and care coordination; contacting of health care providers and patients with information about treatment alternatives; and related functions that do not include treatment;
(b) Reviewing the competence or qualifications of health care professionals; evaluating practitioner and provider performance, and health plan performance; conducting training programs for health care practitioners, trainees, and students; training of non-health care professionals; accreditation, certification, licensing, or credentialing activities; or
(c) Health care fraud and abuse detection or compliance.
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These records are maintained in paper folders and electronic storage media in VA Information Technology systems.
Records are retrieved by the employee or applicant name, the last four of their social security number, date of evaluation, or by any combination of these identifiers.
Records in this system are retained and disposed of in accordance with the schedule approved by the Archivist of the United States, VHA Records Control Schedule 10-1, Item 6400.3.
1. On an annual basis, employees are required to sign a computer access agreement acknowledging their understanding of confidentiality requirements. In addition, all employees receive annual privacy awareness and information security training.
2. Access to electronic records is deactivated when no longer required for official duties. Recurring monitors are in place to ensure compliance with nationally and locally established security measures.
3. Strict control measures are enforced to ensure that access to and disclosure from all records are limited to VA and the employees whose official duties warrant access to those files.
Individuals seeking information on the existence and content of records in this system pertaining to them should contact the system manager in writing as indicated above or inquire in person at the VA health care facility where services were provided. A request for access to records must contain the requester's full name, address, telephone number, be signed by the requester, and describe the records sought in sufficient detail to enable VA personnel to locate them with a reasonable amount of effort.
Individuals seeking to contest or amend records in this system pertaining to them should contact the system manager in writing as indicated above, or may visit the applicable VA facility. A request to contest or amend records must state clearly and concisely what record is being contested, the reasons for contesting it, and the proposed amendment to the record.
Generalized notice is provided by the publication of this notice. For specific notice, see Record Access Procedure, above.
Under title 5 U.S.C. 552a(k)(6), the head of any agency may exempt any system of records within the agency from certain provisions of the Privacy Act of 1974, if the system of records is testing or examination material used solely to determine police officers qualifications for appointment or fitness for duty in the Federal service, the disclosure of which would compromise the objectivity or fairness of the testing or examination process. The Law Enforcement Officer Evaluation records within this system of records are considered examination material used to determine if an individual has the qualifications to become a VA police officer. The function of the VA Police Service is to provide for the maintenance of law and order and the protection of persons and property on Department property, and having qualified individuals is critical to this function. This system of records has been created to collect testing and examination materials used to determine qualifications for VA police officers' fitness for service within VA.
Based upon the foregoing, the VA Secretary has exempted this system of records, to the extent that it encompasses information pertaining to testing or examination material used solely to determine qualifications for appointment or fitness for duty in the Federal service from the following provisions of the Privacy Act of 1974, as permitted by 5 U.S.C. 552a(k); 5 U.S.C. 552a(c)(3); 5 U.S.C. 552a(d)(1) through (d)(4); 5 U.S.C. 552a(e)(1); 5 U.S.C. 552a(e)(4)(G), (H) and (I); and 5 U.S.C. 552a(f).
Reasons for exemptions: The exemption of information and material in this system of records is necessary to assist in the accomplishment of the law enforcement functions of the VA Police Service by ensuring qualified individuals are determined fit for duty and selected as VA Police Officer. Sharing the testing and examinations materials and records with individuals seeking a position with the VA Police Service would compromise the examination process and undermine VA's ability to ensure qualified individuals are determine fit for service within the VA Police Service.
None.
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission (“Commission”) is adopting rule and form amendments to provide a tailored form to register the offerings of registered index-linked annuities (“RILAs”). Specifically, the Commission is amending the form currently used by most variable annuity separate accounts, Form N-4, to require issuers of RILAs to register offerings on that form as well. To facilitate this amendment, the Commission is also amending certain filing rules and making other related amendments. These changes will implement the requirements relating to RILAs contained in the Consolidated Appropriations Act, 2023. The Commission is also extending the registration, filing, and disclosure requirements that the Commission is adopting for RILA offerings to the offerings of registered market value adjustment annuities. Further, the Commission is adopting other amendments to Form N-4 that will apply to all issuers that use that form. The Commission is applying to RILA and registered market value adjustment annuity advertisements and sales literature a current Commission rule that provides guidance as to when sales literature is materially misleading under the Federal securities laws. Finally, the Commission is adopting technical amendments to Forms N-6 and N-3 to correct errors from prior Commission rulemakings.
Pamela Ellis, Alexis Hassell, Rachael Hoffman, Michael Khalil, Amy Miller, or Gregory Scopino, Senior Counsels; Bradley Gude, Branch Chief; Amanda Hollander Wagner, Senior Special Counsel; or Brian McLaughlin Johnson, Assistant Director, Investment Company Regulation Office, at (202) 551-6792; Min Oh, Senior Counsel; or Elizabeth Bentzinger or Michael Kosoff, Senior Special Counsels, Disclosure Review and Accounting Office, at (202) 551-6921, Division of Investment Management, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-8549.
The Commission is amending the following rules and forms:
The Commission is adopting rule and form amendments (“final amendments”) that are designed to help investors make informed decisions regarding RILAs. To modernize and enhance the registration and disclosure framework for RILAs, we are adopting amendments that will require offerings of RILAs to be registered on Form N-4, the registration form for most variable annuities, as well as adapt that form to accommodate RILAs. These amendments finalize rule and form amendments that the Commission proposed in September 2023.
The amendments implement Congress' directive to the Commission in Division AA, Title I of the Consolidated Appropriations Act, 2023 (“RILA Act”) to adopt a new registration form for RILAs within 18 months of enactment.
The Commission's amendments will result in disclosure requirements for RILAs that are tailored to the particular characteristics of RILAs and comparable to variable annuity disclosure. We are also adopting related amendments to various Commission rules to effectuate the new disclosure requirements for RILAs and for further consistency in the registration, filing, and disclosure framework for RILAs compared to other similar annuity products. These amendments include, among other things: amendments permitting RILA issuers to use summary prospectuses; amendments that will result in the same requirements for RILAs and variable annuities in terms of updating the issuer's prospectus each year; and amendments that address how RILAs will register and pay for new shares, as well as other aspects of the registration and offering process. Furthermore, we are adopting amendments to extend the registration, filing, and disclosure approach we are adopting for RILAs to annuity contracts that offer fixed investment options and apply market value adjustments (“MVAs”) to amounts withdrawn from a fixed option before the end of the fixed option's term, where the offering is required to be registered with the Commission because of the MVA (“registered MVA annuities” and, collectively with RILAs, “non-variable annuities”).
The Commission received comments on the proposal from a variety of interested parties, including life insurance companies, professional and trade associations, a public interest advocacy organization, and individuals.
After consideration of the comments received, we are adopting the proposed
A RILA is one of several types of annuity contracts that insurance companies offer.
RILAs are complex financial products that are sold to retail investors.
Charges and penalties for early withdrawals are another prevalent feature of RILAs. Investors can lose significant money if they withdraw their money early from an investment option or from the contract. This can arise in
In addition to the complexities that RILAs' bounded return structure and potential charges and penalties for early withdrawals entail, under virtually all RILA investments the insurance company may change or remove key features of index-linked options, such as the cap rates, floors, or even the index.
For all of these reasons, providing investors with key information is particularly important in the context of RILAs, since their features are typically complex and their risks may not be apparent or easily understood by prospective investors absent clear disclosure.
Registered MVA annuities are annuity contracts that offer fixed investment options (where the insurance company promises to pay a fixed and stated minimum rate of interest) and apply MVAs to amounts withdrawn before the end of the fixed option's term.
As the Commission explained in the Proposing Release, RILAs and registered MVA annuities differ only with respect to the manner in which interest is calculated and credited.
Existing disclosure for registered MVA annuities has many similarities to disclosure for RILAs. Like RILA disclosure, registered MVA annuity disclosure describes the operation of contract adjustments and the risks associated with such contract adjustments.
RILAs are securities for purposes of the Securities Act.
Registered MVA annuities also are securities for purposes of the Securities Act. They are securities because the MVA feature imposes certain investment risks on purchasers.
In general, the disclosure requirements of Forms S-1 and S-3 are not specifically tailored to particular kinds of securities given the wide range of securities offerings that issuers can register on these forms.
The Form N-4 disclosure requirements for variable annuities, on the other hand, are tailored for variable annuities.
The Proposing Release also details key differences in the current registration process for RILAs versus variable annuities.
In addition to the RILA Act's requirements described above, the RILA Act also requires the Commission to engage in investor testing as part of its rulemaking process and to incorporate the results of the testing in the design of the new registration form for RILAs, with the goal of ensuring that key information is conveyed in terms that a purchaser can understand. Consistent with the RILA Act, the Commission received feedback on individuals' comprehension and views on RILA disclosure through investor testing. Specifically, the Commission's Office of the Investor Advocate (“OIAD”) conducted two rounds of qualitative interviews with a mix of investors across demographic characteristics, locations, and levels of financial literacy who either already owned annuities or had expressed interest in investing in an annuity product. The results of the two rounds of qualitative testing then helped inform a round of quantitative testing with approximately 2,500 participants.
This investor testing, which the Proposing Release and a report describing investor testing that OIAD conducted describe in detail, helped us to identify areas of Form N-4 that we proposed to amend to help ensure that a RILA purchaser receives key information that the purchaser is able to understand.
The investor testing successfully identified a range of barriers to investor understanding of RILAs and associated disclosure. However, with few exceptions, the variations in RILA disclosures presented to participants did not result in significant improvements in investor
The Commission sought comment on this proposed approach, and it also sought comment throughout the Proposing Release on specific areas for improvement that would aid investor comprehension. Furthermore, the Commission requested specific input from the retail investor community through a short feedback flyer seeking input on their experiences with annuities generally and RILAs specifically (“Feedback Flyer”).
The Commission's Investor Advocate also provided comments discussing the investor testing process and supporting the proposed rules, stating the belief that the proposed RILA registration form would make it easier for investors to understand RILAs.
In addition to these statements, the Investor Advocate suggested areas in which “more work can be done to help investors make well-informed decisions about RILAs and other complex financial products.” The Investor Advocate stated that the proposed rule's registration form for RILAs, while informed by investor testing efforts, was not tested itself, and that this represents a missed opportunity in the Commission's rulemaking process. While the RILA Act directed the Commission to “engage in investor testing” when developing the registration form for RILAs, the Act did not require that the entirety of the form be investor tested, and doing so would have been impracticable under the circumstances due to the statutory rulemaking timeline, taking into account the time it takes to develop and execute well-designed and probative investor testing. As a result, investor testing efforts necessarily entailed strategic choices about topics on which to focus. These timing factors also required consideration of disclosure areas where maximizing comprehension could be particularly impactful.
For these reasons, investor testing of RILA registration statement disclosure focused primarily on a sample of RILA-related disclosures that could appear in the KIT, if Form N-4 were amended to address RILA offerings.
While the Investor Advocate states that there is no “data to indicate whether the registration form effectively conveys the information necessary for investors to make well-informed investment decisions about RILAs,” the sample KIT disclosure did include topics that comprise the primary features and risks of RILAs, and the investor testing did identify aspects of this disclosure that investors may find particularly challenging to understand. This in turn provided helpful input in identifying the disclosure areas where clear language, and enhanced focus in the registration statement, could help investors understand unique, and often complex, aspects of RILAs. We discuss these disclosure areas in more depth in Section II below.
The Investor Advocate further stated that, although the Commission has “made commendable efforts to improve the clarity and conciseness of disclosure provided to investors within the existing regulatory disclosure infrastructure,” new and innovative approaches to disclosure are encouraged to significantly reduce investors' disclosure burden. The Investor Advocate encouraged the Commission “to explore more significant departures from the status quo in the realm of disclosure related to RILAs and other complex products.” We agree that exploring innovative disclosure approaches could enhance the investor experience for investors in complex products.
In addition to investor testing focused specifically on sample RILA disclosure, our final amendments—and the current disclosure requirements in Form N-4 that we are building upon—also draw on the Commission's past investor testing efforts, outreach, and other empirical research concerning investors' preferences. This includes, for example, information about summary content and layered disclosure approaches.
The proposed amendments collectively were designed to provide investors with disclosures tailored to RILAs and to highlight key information about these complex products, building on the Commission's layered disclosure framework for variable annuities. The proposed requirements were developed with consideration for clear, concise, and understandable disclosure about RILA features and risks. Certain commenters expressed concern, however, that the proposed disclosure requirements included “excessive repetition,” especially with respect to certain topics.
We agree that no disclosure should be repeated simply for the sake of repetition, and we also agree that repetition in disclosure can have negative effects on investor understanding as commenters expressed. As discussed below, the final form amendments take commenters' concerns into account. There are certain areas where the final amendments reduce the discussion of the same or similar topics in multiple locations, where this reduction could appropriately be made while continuing to promote the goal of highlighting key information about RILAs and enhancing understanding of RILA features and risks.
The final amendments, like the proposal, continue to incorporate the principle of layered disclosure. Layered disclosure aims to provide investors with key information relating to an investment's features, benefits, and risks in a concise and reader-friendly presentation, with more-detailed or technical information available to those investors who find the information valuable. The use of layered disclosure means that the disclosure requirements we are adopting necessarily address particular topics in more than one location in the registration statement. Where this occurs, the disclosure requirements intentionally include summary disclosure in the first “layer,” and additional details building on the summary in the second “layer.”
Additionally, and as discussed in more detail below, there are certain disclosure requirements in Form N-4 as amended that address similar topics as other disclosure requirements, where investors could benefit from considering these topics in several different contexts. This also reflects that, except with respect to certain disclosure items that are designed to be read in tandem, RILA investors may not necessarily read a prospectus from cover to cover, but instead may choose to read sections of the prospectus about topics where they are seeking particular information.
We are adopting rule and form amendments that modernize and enhance the registration, filing, and disclosure framework for RILAs by adapting the existing framework that is familiar to investors and issuers for variable annuity separate accounts to accommodate RILAs. The final amendments implement the RILA Act's mandate.
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Most variable annuity issuers register variable annuity offerings on Form N-4, which the Commission designed to provide investors with product-specific information about annuity contracts, and which utilizes the summary prospectus layered disclosure framework the Commission adopted in 2020 for variable contracts.
Commenters broadly supported registering RILA offerings on Form N-4.
After considering these comments, we are adopting a registration framework that requires the registration of RILA offerings on Form N-4 as proposed. Consistent with the views expressed by commenters, registering RILA offerings on final Form N-4 should benefit investors by requiring tailored disclosures relevant to RILA investors and facilitating the ability of investors to compare similar products. Registering RILA offerings on final Form N-4 also provides greater regulatory uniformity, reducing burdens for both RILA issuers in preparing RILA registration statements and Commission staff in reviewing them.
Finally, one commenter requested the Commission provide guidance regarding the ability of certain RILA contracts currently registered on Form S-3 to rely on 17 CFR 240.12h-7 (“rule 12h-7”) following their transition to Form N-4.
We are adopting amendments to require the offerings of registered MVA annuities to be registered on Form N-4 and, as a result, extend the registration and disclosure requirements we are adopting for RILAs to registered MVA annuities. Similar to the amendments we are adopting for RILAs, these amendments will benefit investors by providing a tailored disclosure regime with clear, relevant, and layered disclosure. Further, by including registered MVA annuities on Form N-4 along with RILAs and variable annuities, investors should benefit from being able to compare and contrast different types of annuity contracts. Both issuers and investors will also benefit by leveraging their existing familiarity with the form.
In the Proposing Release, we solicited comment on whether to require insurance companies to register the offerings of registered MVA annuities on Form N-4, and we detailed the various changes to disclosure that would be necessary to accommodate this change.
At the same time, some commenters generally stated that registered MVA annuities should be permitted, but not required, to register on Form N-4.
After considering comments, we have determined to require insurance companies to register offerings of registered MVA annuities on Form N-4 to provide investors with the tailored information necessary to make an investment decision, as discussed above.
As a result of this change, registered MVA annuities must make the disclosures required in Form N-4 to the extent applicable. For example, they must meet the requirements of the front and back cover pages to the extent the disclosures apply to the offering of registered MVA annuities being registered.
Table 1 outlines the key amendments, including certain conforming amendments, we are adopting to Form N-4 to accommodate offerings of registered MVA annuities:
In addition to these changes to Form N-4, we are providing to registered MVA annuities the same offering and filing framework we are extending to RILAs for the same reason as we are making these changes for RILAs as discussed in more detail below.
Consistent with the proposal, many items of current Form N-4 will apply to RILAs in final Form N-4. These existing items of current Form N-4 will also apply to registered MVA annuities. We are also adopting amendments to Form N-4 to require disclosures specific to RILAs as well as amendments that also will apply to offerings of variable annuities. Some of these disclosures will also apply to registered MVA annuities. Table 2 outlines the substantive amendments we are adopting to Form N-4.
Currently, issuers using Form N-4 are required to include on the front and back cover pages basic identifying information about the issuer and the contract, information on how to review the document (
We proposed to make several changes to the front cover page, including four additional disclosures in Item 1(a).
(1) Changes to Item 1(a)(1) to require disclosure of “the registered separate account's name” whereas this item previously asked for “the registrant's name.”
(2) Changes to Item 1(a)(2) to require disclosure of “the insurance company's name” instead of the current requirement for “the depositor's name.”
(3) Changes to Item 1(a)(3) to require disclosure of the types of
(4) New Item 1(a)(5), which requires disclosure of the types of investment options under the contract and a cross reference to the prospectus appendix providing additional information about each option.
(5) We also are moving certain items to different locations on the front cover page without changing the content of the required disclosure.
We are adding new Items 1(a)(6) and (7) to the front cover page of final Form N-4, which we are adopting with modifications from the proposal, as discussed below. The four items on the back cover page—Item 1(b)—are largely unchanged with the exception of extending the disclosure requirements (suggested by a commenter) of Item 1(b)(3) to include the insurance company, if applicable.
In addition, and as proposed, the additional disclosures on the front cover page also will be required for
The comments that we received on the proposed cover page requirements were mixed. One commenter generally supported these disclosures, stating that the proposal ensured that the most important disclosures about RILAs appear on the cover page.
First, some commenters raised concerns about the volume of disclosures proposed to be included on the cover pages, particularly those related to the maximum losses.
Second, commenters addressed certain specific items the Commission proposed to include on the front cover page. Commenters raised particular concerns with the proposed requirement to disclose as a percentage the maximum amount of loss from negative index performance that an investor could experience after taking into account the minimum guaranteed limit on index loss provided under the contract.
In response to comments opposing the proposed requirement to disclose as a percentage the maximum amount of loss from negative index performance or from a contract adjustment that an investor could experience, the final disclosure requirements are designed to reflect that the risk that an investor could lose a substantial amount of money due to negative index performance is a key risk of a RILA.
Although issuers of other securities like mutual funds and ETFs do not disclose the maximum potential loss associated with those securities, such products also are not generally structured to provide loss protection. For RILAs, in contrast, loss protection is a central feature of the product and an emphasis in RILA marketing.
Commenters also raised concerns with various proposed disclosure requirements' reference to “minimum guaranteed” limits on index loss (or gain), including raising this concern with respect to the cover page.
We understand that not all RILAs provide minimum guaranteed limits on index loss for the life of the contract that could be used to calculate the proposed maximum possible loss due to negative index performance. After considering comments, we are modifying the language of this disclosure requirement to reflect this fact. Under the final amendments, the insurance company must prominently state as a percentage the maximum amount of loss from negative index performance that an investor could experience after taking into account the current limits on index loss provided by the index-linked options under the contract.
We are modifying the proposed language of this disclosure requirement to specify that an insurance company that does not disclose a minimum limit on index loss that will always be available under the contract must prominently state that it does not guarantee that the contract will always offer index-linked options that limit index loss, which would mean risk of loss of the entire amount invested. We are requiring this disclosure because RILAs are long-term investments, with an investor's returns determined by the economic terms available both at the time of investment and during future crediting periods. The guaranteed minimum limits on index losses that always will be available—or the fact that the insurance company makes no guarantee at all—are key considerations for an investor considering a RILA that should be disclosed on the cover page. The final amendments' approach therefore incorporates the proposed requirement to disclose on the front cover page the maximum loss from negative index performance taking into account guaranteed minimum limits on index losses but, in response to comments, provides information on any guaranteed minimum limits without assuming that each RILA offers them.
One commenter stated that it found confusing the proposed requirement to state that the potential for investment loss could be significantly greater than the potential for investment gain.
Finally, one commenter suggested that we amend a current back cover page disclosure requirement regarding the availability of additional information to apply to RILAs.
We are, largely as proposed, amending the requirements for the Overview of the Contract (“Overview”) to include RILAs generally, require disclosure about certain key elements of any index-linked option offered under the contract, and highlight any contract adjustments. Consistent with the inclusion of registered MVA annuities on Form N-4, the Overview also will discuss these annuities, as applicable. As discussed below, this section will precede the KIT.
Under the final amendments, insurance companies that are registering non-variable annuities must provide the same Overview disclosures that are currently required for variable annuities, modified to include certain RILA-specific disclosures. All contracts registered on the form must provide an Overview with a concise description of the contract, including information about: (1) the contract's purpose; (2) the phases of the contract, including a discussion of the available investment options; (3) the primary features of the contract; and (4) contract
In addition to information about the purpose of the contract, under the final amendments, a prospectus that offers index-linked options must include in the Overview (as part of the discussion of the phases of the contract): (1) a statement that the insurance company will credit positive or negative interest at the end of a crediting period to amounts allocated to an index-linked option based, in part, on the performance of the index; (2) a statement that an investor could lose a significant amount of money if the index declines in value; (3) an explanation that the insurance company limits the negative or positive index returns used in calculating interest credited to an index-linked option at the end of its crediting period, accompanied by a brief description and an example of the manner in which such returns may be limited; and (4) disclosure of guaranteed minimum limits on index losses or gains.
As proposed, the Overview also will provide, if applicable, a discussion of contract adjustments that must include a statement that an investor could lose a significant amount of money due to the contract adjustment if amounts are removed from an investment option or from the contract prior to the end of a specified period, accompanied by a brief description of the transactions subject to a contract adjustment.
As proposed, the Overview will precede the KIT. We are reordering these sections based on investor testing results indicating that investors reviewing sample KIT disclosure had difficulty understanding the basic features and concepts of RILA contracts, for example, “index,” “investment term,” “interim value adjustment,” and “buffer.”
We received one comment on this proposed reordering in Form N-4. The commenter stated that the repetition of certain information in both the Overview and the KIT undermines our rationale for proposing to reorder the two sections.
In terms of the proposed content requirements for the Overview section, one commenter generally supported the proposed amendments.
As discussed above, some commenters raised general concerns about disclosure that appears in both the Overview and the KIT and suggested that we reduce or eliminate perceived duplicative disclosure in those two sections to simplify and streamline the prospectus.
One of these commenters stated that the proposal to require RILA issuers to disclose that an investor could lose a “significant amount of money” is inconsistent with existing disclosure for variable annuity products, which requires a statement that “an investor can lose money by investing in the Contract.”
We are adopting the Overview's narrative risk of loss disclosures largely as proposed.
While we are adopting the narrative risk of loss disclosures as proposed, in a change from the proposal and in response to comments raising concerns about duplicative disclosure, we are not adopting the proposed numeric risk of loss disclosures associated with index declines or contract adjustments in the Overview. This change recognizes that the proposed numeric disclosures appear on the cover page, as well as the KIT, and, as one commenter observed, the Overview and the KIT are designed to be read together.
Some commenters sought clarification regarding whether our proposal to require insurers to disclose guaranteed minimum limits on index losses or gains effectively seeks to impose a substantive requirement for insurance companies to offer minimum limits.
For downside protection, we understand some RILA issuers may not offer index-linked options with minimum limits on index losses that will always be available under the contract. Because downside protection is one of the chief selling points for index-linked options, a particular RILA not offering minimums on index losses that will always be available under the contract is material information that must be prominently disclosed in the prospectus. Without downside protection, investors are at risk of losing their entire investment due to poor index performance. And without a minimum rate of downside protection that will always be available under the contract, an investor is considering making a long-term investment without certainty as to the amount of downside protection that will apply to future crediting periods. Likewise, without disclosing a minimum limit on index gains that will always be available under the contract, an investor would not know the extent to which investments in future index-linked options would result in credited interest when there is positive index return. To help ensure that investors have this information while also responding to comments requesting clarification, we are modifying the proposed requirement to disclose guaranteed minimums on index losses. Instead, the final amendments require the insurer to prominently disclose any minimum limits on index losses that will always be available under the contract, or, alternatively, prominently state that the insurer does not guarantee that the contract will always offer index-linked
These changes from the proposal are intended to clarify that this requirement is designed to seek disclosure on the minimum limit on index gains that will always be available under the contract for each type of limit offered. The final amendments also conform this disclosure requirement with our understanding of current practices and the nature of RILA investments—that is, while an insurance company may not offer loss protection, a RILA inherently involves some degree of participation in index gains. The insurance company therefore must disclose the minimum extent to which investors can participate in index gains under the contract. Specifically, the final rule will require the insurer to prominently state, for each type of upside limit being offered (
The KIT requirements in Form N-4 currently require a brief description of key facts about a variable annuity to appear in the prospectus, in a specific sequence and in a standardized presentation.
Commenters generally supported the proposed requirement that insurance companies provide a KIT in RILA registration statements.
The overall format of the final KIT is depicted below:
Form N-4 currently prescribes format requirements for the KIT to enhance the readability and comparability of the disclosure.
Commenters generally supported the application of the current KIT format requirements to RILA offerings.
We are adopting, as proposed, three amendments to the KIT formatting and presentation requirements in Form N-4 that will apply to registration statements both for non-variable and variable annuities. These changes are designed to provide investors with a better understanding of these products and are informed in part by the results of investor testing. First, we are adopting, generally as proposed, a requirement that issuers present information in the KIT in a question-and-answer (“Q&A”) format.
Comments on the Q&A format were mixed.
After considering comments received, we are adopting the Q&A format generally as proposed, except for the Charges or Adjustments for Early Withdrawals and the Risks Related to the Insurance Company line items, each of which we discuss in further detail below. Rephrasing the current line items in a Q&A format should more effectively convey the KIT information to investors and will therefore help non-variable and variable annuity investors make informed investment decisions. As stated in the Proposing Release, the Q&A format should improve investor comprehension of non-variable annuity-specific topics based on the results of our quantitative investor testing.
Second, we are adopting, as proposed, amendments changing the order in which the KIT (Item 2 of current Form N-4) appears relative to the Overview of the Contract (Item 3 of current Form N-4), as discussed above.
Third, as proposed, we are deleting Form N-4's general instruction stating that where the discussion of information required by the Overview of the Contract or KIT also responds to the disclosure requirements in other items of the prospectus, registrants need not include additional disclosure in the prospectus that repeats the information disclosed in the Overview of the Contract or the KIT.
In administering Form N-4, we have observed that this instruction has led to confusion on the part of registrants. Moreover, as discussed above, the layered disclosure framework requires certain disclosure topics to be discussed in multiple locations.
Non-variable annuities typically have implicit fees, expenses, charges, and adjustments for early or mid-term withdrawals that can be confusing or surprising to investors. This was observed in our investor testing regarding RILAs.
We also are requiring specific disclosure on contract adjustments, which can result in investor losses if the investor withdraws money from an investment option, or withdraws money from the non-variable annuity entirely, before the end of a specified period.
Commenters generally opposed one or more of the amendments to the early withdrawal charges line. One commenter specifically opposed the inclusion in the KIT of numeric maximum potential loss disclosure (as a percentage of an investment) due to a negative contract adjustment on the grounds that the KIT's design would not provide adequate context for the disclosure and could therefore lead investors to believe that such losses are likely, even when the risk of loss is remote.
One commenter suggested that the example of the maximum negative adjustment that could be applied (in dollars) assuming a $100,000 investment should not be required if the maximum potential loss (as a percentage of an investment) due to a negative adjustment is retained.
One commenter stated that requiring disclosure relating to interim value adjustments under the “Fees and Expenses” heading is inappropriate because interim value adjustments are not fees but are instead the approximate fair market value of the investments underpinning the RILA.
We also are adopting, largely as proposed, amendments requiring that, where a contract imposes limits on gains on the amount an investor can earn on an index-linked option, insurance companies must disclose that they impose these limits on gains and that they can act as an implicit ongoing fee.
Specifically, insurance companies must disclose that: (1) there is an implicit ongoing fee on index-linked options to the extent that an investor's participation in index gains is limited by the insurance company through the use of a cap, participation rate, or some other rate or measure; (2) this means that the investor's returns may be lower than the index's returns; (3) in return for accepting this limit on index gains, an investor will receive some protection from index losses; and (4) this implicit ongoing fee is not reflected in the tables below. In a change from the proposal, we are modifying the first statement to provide that there is an implicit ongoing fee on index-linked options
Also as proposed, in the case of a contract that offers an index-linked option subject to limits on gains but does not impose any explicit ongoing fees or expenses under the contract, the insurance company will include the disclosure
Lastly in this line item, we are adopting, as proposed, amendments revising the last sentence in the required legend in the lowest and highest annual cost table to include the italicized language: “This estimate assumes that you do not take withdrawals from the Contract, which could add surrender charges
Commenters generally opposed one or more of the amendments to the Ongoing Fees and Expenses line item. One commenter expressed concerns that excluding disclosures of any ongoing fees that may be implicit to index-linked options in the KIT, but requiring variable options to disclose ongoing fees, could result in disparate treatment of these two types of annuities. Specifically, the commenter stated that this will produce unequal disclosure between the two products, which would not be appropriate in light of the similar profit margins to insurance companies generated by the fees.
One commenter assumed the Commission intended that the lowest and highest annual cost table would only be disclosed in registration statements relating to variable options because the table's instructions reference “portfolio company fees and expenses,” which are relevant only to variable options.
Some commenters opposed one or more of the required statements describing implicit fees.
We also received comments that characterizing limits on credited interest as fees could confuse investors about how RILAs operate because investors understand fees as money collected from them, but a limit on credited interest is not money collected from investors.
While contractual limits placed on an investor's gains, such as a cap rate or participation rate, are not fees or charges in a conventional sense, these limits can have the effect of reducing investment returns (
Some commenters opposed requiring insurance companies to disclose that limiting the amount an investor can earn on an index-linked option helps the insurance company make a profit on the option.
One commenter opposed the amendments requiring insurance companies to disclose that in return for accepting a limit on index gains, an investor will receive some protection from index losses.
One commenter raised concerns about the inclusion of the numeric maximum amount of loss an investor could experience from negative index performance as part of this line item.
We are adopting amendments to the instruction to this line item to specify that an insurance company may provide a range of the maximum amount of loss.
We received one comment on this portion of the proposal. The commenter opposed the amendments requiring issuers to state that the contract value will be reallocated at the end of the crediting period according to the investor's instructions, and to disclose the default reallocation in the absence of such instructions.
Largely as proposed, but with some modifications in response to comments, we are adopting amendments requiring insurance companies to provide additional information about any index-linked options offered under the contract to highlight how the insurance company limits the investor's participation in gains and losses of the index.
Comments on the proposed amendments to this line item were mixed. One commenter opposed the requirement that insurance companies disclose examples of each type of limit imposed on an investor's participation in gains and losses of the index.
We received comments suggesting that the difference between a “price return index” and a “total return index” is not currently adequately disclosed to RILA investors.
After considering these comments, we agree that this disclosure is appropriate. Investors should be alerted to the fact that a price return index does not assume the reinvestment of dividends and thus will underperform a total return index and direct investment in securities underlying the index. Accordingly, in a change from the proposal, we are adding a requirement in the KIT that insurance companies disclose, if applicable, that an index is a “price return index,” not a “total return index,” and therefore does not reflect dividends paid on the securities composing the index, or the index deducts fees and costs when calculating index performance, either of which will reduce the index return and will cause the index to underperform direct investment in the securities composing the index.
We received one comment on this portion of the proposal.
After considering this comment, we are retitling this line item in the KIT as described above and permitting a narrative response. Specifically, insurance companies will be directed, consistent with the current form and the proposal,
Currently, the form also generally requires the insurance company to state that it reserves the right to remove or substitute portfolio companies as investment options, if applicable. Insurance companies typically reserve the right to change the index-linked options that are available under a contract as well as key features of available index-linked options. To alert investors that the available index-linked options and key terms of those index-linked options may change in the future, we are adopting, as proposed, amendments to require the insurance company to state any reservation of its rights under the contract, including, if applicable, the right to (1) add or remove index-linked options; (2) change the features of an index-linked option from one crediting period to the next, including the changes to the index and the current limits on gains and limits on index losses (subject to any contractual minimum guarantees); and (3) substitute the index of an index-linked option during its crediting period. We are also adopting, as proposed, amendments to require that insurance companies disclose any right to stop accepting additional purchase payments, which may be significant to investors given the impact this reservation can have on investors' ability to accumulate contract value for retirement, grow the death benefit, and increase optional benefit values. We did not receive comments on any of these amendments.
We also are adopting, as proposed, amendments requiring insurance companies to include the line item under the heading “Taxes,” “What are the Contract's Tax Implications?”
We are adopting amendments to Form N-4 to provide investors with the principal disclosures regarding index-linked options, largely as proposed, and MVA options, in a modification from the proposal, available under the contract, as required in two items of the form. First, investors will be provided with detailed information about the index-linked options and MVA options available under the contract in Item 6 (Description of the Insurance Company, Registered Separate Account, and Investment Options). In addition, investors will be provided with a summary information table, with legends highlighting risks, that outlines the available index-linked options and MVA options in Item 17 (Investment Options Available Under the Contract). These amendments build on the existing disclosure requirements in each form item to help ensure that investors have key information about the annuity contract and available investment options, regardless of whether the contract is a variable annuity, a RILA, a registered MVA annuity, or combination contract offering a variety of these options.
We are adopting amendments to Item 6 of Form N-4 that will, largely as proposed, modify certain existing disclosure requirements concerning the insurance company, registered separate account, and variable options, and expand the item to include new disclosures for any index-linked and fixed options offered under the contract. To address the inclusion of registered MVA annuities on Form N-4, we are adopting changes to the proposed requirements to address fixed options subject to a contract adjustment. Items 6(a)-(c) will continue to require a concise discussion about the insurance company, registered separate account, and variable options. The amendments in Item 6(d) will require new disclosures about key aspects of any index-linked option offered under the contract, while Item 6(e) will add disclosures for fixed options generally, including MVA options.
We are adopting the amendments to Items 6(a)-(c) as proposed. As discussed in the Proposing Release, these provisions largely retain the current requirement to provide a concise discussion about the insurance company, registered separate account, and variable options, slightly modified to implement certain definitional changes and minor restructuring to accommodate the addition of RILAs to the form.
One commenter addressed proposed Item 6(a), which would, if applicable, require a filer to indicate that the insurance company is relying on the exemption provided by rule 12h-7 under the Exchange Act.
We received no comments on the proposed amendments to Item 6(b) (Registered Separate Account) or 6(c) (Variable Options), and we are adopting those sub-items as proposed.
We are adopting amendments to Item 6(d) that will require an insurance company to disclose information about the key features of the index-linked options currently offered under the contract.
One commenter expressly supported our proposal to require detailed disclosure about index-linked options in the prospectus, stating that “the disclosure items and instructions under proposed new Item 6(d) are helpful and appropriate,” and “would generally provide investors with the information they need to understand how the index-linked options operate, while also providing enough flexibility in the instructions to describe RILAs in the market today and to allow for future innovation.”
Under the final amendments, the prospectus must describe the index-linked options currently offered under the contract. As proposed, the description must state that the insurance company will credit positive or negative interest at the end of a crediting period to amounts allocated to an index-linked option based, in part, on the performance of the index and—to dispel potential investor confusion relating to the reference to an index—that an investment in an index-linked option is not an investment in the index or in any index fund.
We are adopting, as proposed, the requirement to state that an investor could lose a significant amount of money if the index declines in value.
As proposed, to emphasize the risks associated with an early withdrawal from an index-linked option, the prospectus must state that an investor could lose a significant amount of money due to the contract adjustment if amounts are removed from an index-linked option prior to the end of its crediting period.
Substantially as proposed, to inform investors of the possibility that their investment options could be unilaterally changed without action on their part, the insurance company will be required to state, if applicable, that it can add or remove index-linked options and change the features of an index-linked option from one crediting period to the next, including the index and current limits on gains and limits on index losses, subject to any contractual minimum guarantees.
Lastly, similar to the current requirement for variable options, and substantially as proposed, a prospectus that offers index-linked options must state that certain information regarding the features of each currently offered index-linked option is available in an appendix to the prospectus, with a cross-reference to that appendix.
One commenter addressed the proposed description of index-linked options currently offered under the contract with concerns regarding the narrative and numeric risk of loss disclosures.
Including risk of loss statements along with descriptions of the index-linked options that are offered under the contract (in the location in the prospectus that requires the greatest amount of detail about index-linked options) will result in a more complete understanding of the options the contract offers. The potential risk of loss associated with an index option is a key piece of information for investors to consider alongside other index-option-specific details disclosed in response to this item of Form N-4. Accordingly, the final amendments will require statements regarding the risk of loss associated with index declines, subject to conforming modifications as discussed above in the context of similar cover page disclosure. We are also adopting the requirement to include a statement about risk of loss associated with negative contract adjustments, as proposed, for the same reasons.
We received mixed comments about the proposed requirement to disclose current limits on index gains (or “current [upside] rates”) in the prospectus.
The proposal was designed to address concerns about frequently changing upside rates by contemplating that insurance companies could update upside rate information using a prospectus supplement filed pursuant to rule 497 under the Securities Act, rather than being required to update the registration statement to reflect each change.
Commenters urged the Commission to permit insurance companies to follow their current practice of disclosing current upside rates on a dedicated web page on the insurer's website.
Commenters who suggested that current upside rates should be posted online instead of included directly in the prospectus recommended additional measures to effectuate the suggested approach. One commenter suggested that as a condition to allowing insurers to post current upside rates to the insurer's website, we could impose a recordkeeping requirement and require the issuer to consent to subjecting the posted rate information to prospectus or registration statement liability.
After considering comments, we have determined to permit insurance companies to disclose current upside rates in the prospectus either by disclosing the information directly in the prospectus, as proposed, or by including a website address where the current rates can be found and incorporating by reference the information on the website into the prospectus.
In addition, in response to comments and to provide a longer and lasting historical record of recent upside rate information, which investors may wish to consider, and which Commission staff, third-party market participants, and others could use to analyze RILA offerings individually and the RILA market as a whole, all upside rate information for the prior calendar year
As discussed in the Proposing Release, we are requiring the insurance company to explain how it selects rates for limiting index losses and gains to help investors understand how the features of a particular index-linked option will impact that option's risk/return profile. Giving investors information about the factors the insurance company considers in determining current limits—which are key features of an index-linked option—may help manage their expectations regarding how the product operates.
As proposed, we are requiring insurers to generally describe the crediting periods of the index-linked options available under the contract (
Each index-linked option has an “index crediting methodology” that explains how interest is calculated and credited to the contract. The final amendments will, as proposed, require insurance companies to explain the index crediting methodologies used for index-linked options and provide numeric examples reflecting how these methodologies work.
Specifically, we are requiring insurance companies to describe, for each index crediting methodology, how interest is calculated and credited at the end of a crediting period based on the interest crediting formula or performance measure (
We are also requiring, as proposed, the prospectus for contracts that offer index-linked options to include a bar chart for each index showing the index's annual return for each of the last 10 calendar years (or for the life of the index, if less than 10 years), with the corresponding numeric performance adjacent to each bar.
As proposed, these bar charts must also be accompanied by the following legend in the format specified in the form:
The bar chart shown below provides the Index's annual returns for the last 10 calendar years (or for the life of the Index if less than 10 years), as well as the Index returns after applying a hypothetical 5% cap and a hypothetical −10% buffer. The chart illustrates the variability of the returns from year to year and shows how hypothetical limits on Index gains and losses may affect these returns. Past performance is not necessarily an indication of future performance.
This requirement is designed to provide context for the index-linked options that the RILA contract offers to help inform an investor deciding whether to invest in a RILA.
Commenters generally supported, or did not oppose, the proposed inclusion of bar charts showing annual index returns. One commenter stated that the proposed bar chart “is a helpful disclosure that will provide information about historical index performance, while also providing another tool to help investors understand bounded return structures.”
We are not modifying the standardized rates as commenters suggest. As discussed in the Proposing Release, we proposed the hypothetical 5% cap rate and −10% buffer rate, which are higher than typical minimum levels of caps and floors that will always be available under a contract, but lower than typical currently-offered levels, to help investors understand how caps and buffers affect the index return. The bar chart with the overlay of standardized rates is merely an example designed to convey to investors that by selecting a product with caps and buffers, their returns will differ from that of the index. As emphasized in the accompanying legend, the performance reflected in the bar chart is not the performance of any index-linked option, and an investor's returns will differ from that of the index, perhaps significantly. Its purpose is to help investors understand how the product's limit features operate; it is not designed to convey an index-linked option's actual returns.
In addition, while a standardized 5% cap may be lower than many current caps, on balance it is better to select a standardized cap that is too low than too high, as an illustration with a standardized cap that is higher than the cap that the index-linked option actually offers (or may offer in the future) could suggest that the index-linked option may credit more interest than the option actually does. Based on staff experience, the standardized 5% cap also is higher than most guaranteed minimum caps insurance companies currently disclosed in RILA prospectuses. Moreover, using current upside rates, which change frequently, or considering requests on a case-by-case basis to use a different overlay, would undermine comparability across products and require insurers to frequently update the prospectus. The same concerns about frequent updates to the registration statements that commenters identified in connection with the proposal to include current upside rates in the prospectus also would apply to the bar chart presentation if it were based on current upside rates. Accordingly, we are adopting, as proposed, the hypothetical 5% cap rate and −10% buffer rate to provide for a consistent presentation across products designed to help investors understand a RILA's bounded return structure.
Two commenters suggested that the proposed bar chart disclosures should more clearly convey to investors that a RILA tracks a price return index and not a total return index, and the resulting effects on performance.
To help investors understand how these crediting methods work, we are also requiring, as proposed, an insurance company to include a numeric example to illustrate the mechanics of each index crediting methodology.
We received one comment on this aspect of the proposal that sought clarification regarding what assumptions, such as fees, product features elected, the age of the contract, and/or interim value adjustments should be made when calculating the examples.
The index underlying an index-linked option is a central feature of the investment, as the investor's return will be based on the index's performance, subject to applicable limits on gains and losses. We therefore are requiring the insurance company to provide for each index a brief description of the types of investments that compose the index and where the investor can find additional information about the index.
The form includes three instructions to this general requirement under the final amendments.
Second, if the index is an exchange-traded fund (“ETF”), the disclosure must clarify whether the index's performance (for purposes of determining the amounts credited in the index-linked option) is based on the ETF's net asset value or closing value. If the performance is based on the ETF's share price, the disclosure must clarify the impact of using the share price as opposed to total return.
Third, the disclosure must also state, if applicable, that the index is a price return index, not a total return index, and therefore does not reflect dividends paid on the index's underlying securities. The disclosure also must state, if applicable, that the index deducts fees and costs when calculating index performance. In these cases, the disclosure must explain that this will reduce index return and cause the index to underperform a direct investment in the securities composing the index. This is important disclosure because an index that does not reflect dividends paid on underlying securities, or that deducts fees and costs, will have a lower return, all else equal, than an index that includes dividends and does not deduct fees and costs.
The insurance company also must state that it reserves the right to substitute an index prior to the end of the crediting period.
To help investors anticipate what may happen at the end of an index-linked option's crediting period, the final amendments will require the insurance company to state whether an investor will receive advanced notice of a maturing index-linked option, how an investor may provide instructions on reallocating contract value at the end of the crediting period, and any automatic default allocation in the absence of such instructions.
Finally, we are requiring the insurance company to describe any other material aspects of the index-linked option to ensure that any other item not discussed above that could inform an investment decision is disclosed.
In addition to variable options and index-linked options, annuity contracts commonly include fixed investment options, such as traditional, unregistered fixed options, unregistered index options, and MVA options.
Form N-4 generally requires registrants to describe the fundamental features and risks of an annuity contract, including those, like fixed options, that are distinct from the variable options offered through the registered separate account.
The final amendments will, with modifications from the proposal, require insurance companies to disclose basic information about fixed options, generally covering the same areas as for index-linked options but tailored for the specifics of a fixed option. Specifically, as proposed, registrants will be required to describe the fixed options currently offered under the contract and state that information regarding the features of each currently-offered fixed option, including its name, term, and minimum guaranteed interest rate is available in an appendix with cross-references.
In a change from the proposal and to address the inclusion of registered MVA annuities on Form N-4, under the final amendments the prospectus must state, if applicable, that an investor could lose a significant amount of money due to a contract adjustment if amounts are removed from a fixed option prior to the end of its term, describe the transactions subject to a contract adjustment, and provide cross references to related disclosure in the prospectus.
One commenter opposed requiring insurers to provide specific disclosures about fixed options in the prospectus on the grounds that the Commission lacks the authority pursuant to section 10(a) of the Securities Act to prescribe the specific content, format, and location of any prospectus disclosures about unregistered fixed options.
All material aspects of the contract should be described in the prospectus, and a fixed option is a material aspect of a RILA or variable contract. Therefore including this information in a registration statement for the offering of these contract securities is necessary and appropriate in the public interest or for the protection of investors.
We therefore do not agree, as a commenter suggests, that the provision of such information should be voluntary. This approach would deprive investors of material information regarding an investment decision in an annuity contract. In addition, requiring this basic information about fixed options will provide increased efficiencies now that we also are requiring registered MVA annuities to register on Form N-4 (since this information is a necessary component of registered MVA annuity disclosure).
We received one comment regarding the proposed instruction that would require insurers to disclose the minimum guaranteed interest rate as a numeric rate, rather than referring to any minimums permitted under State law.
After considering this comment, we are adopting the proposed approach—requiring disclosure of the minimum guaranteed interest rate as a numeric rate—in the final amendments.
We are amending the requirements for the required appendix of investment options available under the contract, largely as proposed, to include a discussion of the index-linked options and fixed options available under the contract. This item currently requires a variable annuity issuer to include in an appendix to the prospectus a table that consolidates certain summary information about each portfolio company offered under the contract. The current appendix is designed to provide investors with an overview of variable options available under the contract in a uniform, tabular presentation that promotes comparison, because the investment experience of an investor in a variable annuity will largely depend on the underlying investments available under the contract.
To reflect the expanded scope of the appendix, and as proposed, we are amending the current heading to “Investment Options Available Under the Contract.”
The current appendix requires a separate table indicating what portfolio companies are available or restricted under the benefits offered under a variable contract. Because fixed options and index-linked options—like variable options—can vary by benefit offered under the contract, we are adopting amendments, as proposed, that would require this table for all investment options (not only variable options), with no other changes.
We received one comment regarding the disclosures for variable options in the required appendix.
To accommodate the inclusion of index-linked options in the appendix, we are adding a new table titled “Index-Linked Options,” as proposed.
Similar to the requirements for variable annuities, the table for index-linked options will be prefaced with a legend, largely as proposed. Specifically, the legend will state that the table lists index-linked options currently available under the contract. Further, because insurance companies typically change the index-linked options available over time, the legend will specify that the insurance company may change the features of the index-linked options listed in the table, offer new index-linked options, or terminate existing index-linked options, and that the insurance company will provide the investor with written notice before making any changes, other than changes to current limits on index gains.
In addition, to help ensure that investors have convenient access to current upside rates, the legend will require insurance companies to state that information about current limits on index gains are available at a specified website address, if such information is incorporated by reference into the prospectus from a website, as described above.
We are also adopting, in a modification from the proposal, instructions to specify that the website included in the legend must be the same website that includes information about current rates on index gains that an insurance company may choose to incorporate by reference into the prospectus under Item 6.
We anticipate that insurance companies generally will rely on the incorporation by reference approach because insurers generally disclose current limits on index gains on their websites today and based on commenter feedback about the challenges in providing this information directly in the prospectus. We therefore assume that all insurance companies will include a website address with current limits on index gains in this legend. However, to accommodate the possibility that an insurance company may not choose to incorporate by reference current upside rate information from a website, we are, in a change from the proposal, adding an instruction directing such an insurer to provide in (in lieu of the website address) a cross-reference to the current limits on index gains disclosed elsewhere in the prospectus.
Lastly, set off from the rest of the legend and with emphasis, we are, largely as proposed, adopting the requirement to include a statement that if amounts are removed from an index-linked option before the end of its crediting period, the insurance company may apply a contract adjustment (or will apply a contract adjustment, as appropriate).
As proposed, the legend will be followed by a table that lists and highlights key elements of each index-linked option available under the contract. Specifically, the table will, largely as proposed, require, in sequential columns, the identification of (1) each index by name; (2) type of index; (3) crediting period, indicating the duration of the index-linked option in years; (4) index crediting methodology; (5) current limits on index loss if held to the end of the crediting period; and (6) minimum limit on index gain for each index-linked option.
As proposed, the description of the type of index will be a brief statement of the type of index (
As proposed, to ensure investors only receive disclosure relevant to them, RILAs will only be permitted to include in the table those index-linked options that are available under the contract, and must indicate if any of the options are restricted (
We are also adopting instructions, largely as proposed, stating that if the index's return does not reflect the full investment performance of the assets tracked by the index, the table must include a footnote that states the index is a price return index, not a total return index, and does not reflect dividends paid on the securities composing the index, and/or that the index deducts fees and costs when calculating index performance, as applicable. In these cases, the footnote must state that this will reduce the index's return and cause the index to underperform a direct investment in the securities composing the index.
In a change from the proposal, we are requiring a new disclosure item immediately below the index-linked options table to provide investors information about minimum limits on index losses and gains that will always be available under the contract.
Consistent with the approach we are adopting with respect to the Item 6 disclosure requirements (Description of the Insurance Company, Registered Separate Account, and Investment Options), we are requiring in the appendix summary information about fixed options currently available under the contract.
In a change from the proposal to accommodate the inclusion of registered MVA annuities on Form N-4, we are requiring a legend stating that if amounts are withdrawn from a fixed option before the end of its term, the insurer may (or, as appropriate, will) apply a contract adjustment, which may result in a significant reduction in contract value.
One commenter opposed our proposal to include specific information about fixed options in the appendix altogether, consistent with its objections regarding our proposal to include fixed option disclosures in Item 6, and instead suggested that any disclosure regarding fixed options be voluntary and not subject to a specified disclosure format.
An investment in a contract offering index-linked options exposes investors to unique risks that may be different from those that are common to other investment products, including contracts that solely offer variable options. We are amending Item 5 to address certain principal risks that are particularly relevant to investors in RILAs. We are adopting these requirements largely as proposed, with conforming changes to ensure consistency with other prospectus disclosure requirements as discussed below. It is not necessary to include any changes from the proposal to address the inclusion of registered MVA annuities on Form N-4, because the proposed risk disclosure requirements addressed risks associated with negative contract adjustments.
In addition to restructuring the current item to incorporate the proposed risk disclosure requirements addressing index-linked options, we are adopting certain structural changes that are designed to clarify existing requirements but are not anticipated to result in substantively different disclosure requirements for contracts offering variable options. These changes also will consolidate certain risk disclosures insurance companies currently provide for variable annuities in other sections of the prospectus. We are requiring these risk disclosures in a single location to communicate risks more consistently and effectively to investors. As the Commission has previously explained, the requirements for principal risk disclosure in the prospectus are designed to provide a consolidated presentation of principal risks.
One commenter addressed the proposed amendments to Item 5. This commenter stated that it did not oppose our proposal to require registrants to provide index-linked option risk of loss disclosures in Item 5, stating that this section of the prospectus is intended for readers who want more detailed information about risks, and the Item 5 disclosure requirements provide registrants with the ability to give appropriate context that an investor may need to better understand those risks.
As proposed, the principal risk disclosure item of Form N-4 will be restructured into separate sub-items while also making certain changes from the current version designed to clarify existing disclosure obligations.
The approach we are adopting will retain the current requirement for registrants to explain the principal risks of purchasing a contract but will also require, largely as proposed, an explanation of the principal risks associated with market risk, including the risks of negative investment performance.
Although disclosures that address certain risks of index-linked options will be required in other locations in the prospectus, we are requiring that RILA issuers include certain risk factors, such as disclosures related to maximum potential loss from index performance, in the consolidated summary of principal risks associated with the contract. Including this statement and others in Item 5 will help investors assess the particular risks associated with RILAs in the context of the other required principal risk disclosures, a premise to which a commenter agreed.
Under the final amendments, the next sub-item, which concerns the risks of early withdrawal, will require the prospectus to disclose that contracts are unsuitable as short-term savings vehicles and explain the limitations on access to cash value through withdrawals, including surrender charges, negative contract adjustments, and loss of interest.
The next sub-item, which concerns the principal risks associated with index-linked options, will, substantially as proposed, include new risk disclosure requirements tailored to address unique risks associated with these investment options.
To help ensure that RILA prospectuses address certain key risks, the instructions to this disclosure requirement will, as proposed, specify that discussion of the principal risks related to index-linked options must include the principal risks relating to: (1) limiting positive index returns; (2) the possibility of losses despite limits on negative index returns; (3) interest crediting methodologies; (4) the impact of contract fees on the amount of interest credited; and (5) the reallocation of contract value at the end of an index-linked option's crediting period.
An additional new sub-item will require, as proposed, a description of the principal risks associated with any contract benefits (
Another new sub-item will require, as proposed, an explanation of the principal risks associated with the insurance company's ability to meet its guarantees under the contract, including risks relating to its financial strength and claims-paying ability, which as described below may be of particular concern for investors who allocate contract value to index-linked options.
Lastly, we are adopting as proposed a final new sub-item, which will require a description of the principal risks relating to any material reservation of rights under the contract, including if applicable the right to: (1) remove or substitute portfolio companies; (2) add or remove index-linked options and change the features of an index-linked option from one crediting period to the next; (3) stop accepting additional purchase payments; and (4) impose investment restrictions or limitations on transfers.
We are adopting amendments to Form N-4, largely as proposed, to require specific disclosures regarding contract adjustments and other implicit RILA-specific costs that can result in a significant erosion of investment principal. The required disclosures, set forth in Items 4, 7, and 22(d) of Form N-4, are designed to provide investors with a better understanding of the mechanics of these costs and the associated potential for loss. We are also adopting revisions to the existing provisions of these items, applicable to all issuers registering offerings on Form N-4, to clarify certain terminology.
The fee table of Form N-4 provides detailed information on the fees and expenses investors will pay when buying, owning, and surrendering or making withdrawals from the contract, as well as those paid each year during the time the investor owns the contract. We are amending the fee table to require specific disclosures regarding contract adjustments and other costs to investors specific to RILAs, including a detailed description of contract adjustments in the prospectus that will be proximate and similar to other disclosures regarding fees and expenses. We are adopting amendments to the fee table largely as proposed, with certain modifications after considering comments discussed below.
Insurance companies currently must include a transaction expenses table in their prospectuses, describing fees and expenses investors must pay when buying, owning, and surrendering or making withdrawals in connection with a contract. To provide proximate and similar disclosure for non-variable annuity-specific costs, we are adopting, with some changes to the proposal, a requirement that insurance companies additionally include the maximum negative contract adjustment that may be imposed, to be expressed as a percentage of contract value at the start of the crediting period or the amount withdrawn, as applicable. The proposal would have required this disclosure to appear in the transaction expenses table that Form N-4 issuers currently include in their prospectuses. In response to comments questioning the disclosure of contract adjustments in the transaction expenses table, and in a change from the proposal, we are adding a separate adjustments table, which will follow the transaction expenses table. Finally, to provide investors notice of the circumstances where they might be subject to this cost, we are also adopting, as proposed, a requirement that insurance companies include a footnote describing all transactions potentially subject to a contract adjustment.
The commenters who addressed the proposed amendments to the transaction expenses table opposed including the maximum negative contract adjustment, asserting that contract adjustments are a product feature based on market risk rather than a type of fee or expense.
The transaction expenses table discloses all transaction expenses paid directly by the investor, such as sales loads or surrender charges, including when those transaction expenses are fees or expenses paid due to an investor withdrawal.
For these reasons, the maximum negative contract adjustment should be disclosed proximate to the transaction expenses currently disclosed in the transaction expenses table, including sales loads imposed on purchases, deferred sales loads, surrender charges, and transfer fees. Including the maximum negative contract adjustment disclosure proximate to the transaction expense disclosure helps ensure that investors have access, in one place, to full disclosure regarding the economic consequences of withdrawing money from an index option or the contract. Nonetheless, we appreciate that maximum negative contract adjustments may not be as clearly identified by investors as transaction “expenses” per se as other items in this table. To address this concern, we have added a separate adjustments table, which will follow the transaction expenses table. The table will be preceded by an
The transaction expenses table also currently requires registrants to describe the maximum exchange fee that investors could incur for any exchange or transfer of contract value from the registrant to another investment company, or between sub-accounts or to the insurance company's general account. In a change relevant to all Form N-4 issuers, we are adopting, as proposed, a terminology change, replacing the term “exchange fee” with “transfer fee,” as this term better reflects that, in the staff's experience, the vast majority of such fees are imposed on transfers of contract value among investment options under the contract.
Form N-4 issuers currently must include an annual contract expenses table in their prospectuses, detailing the fees and expenses that investors pay each year in administrative expenses, base contract expenses, and optional benefit expenses. Currently, base contract expenses must be expressed as a percentage of average account value. In a change relevant to all Form N-4 issuers, we are adopting, as proposed, an amendment that will also allow base contract expenses to be expressed as a percentage of average account value or contract value. Index-linked and fixed MVA options do not generally use the concept of average account values (as variable annuities do), but they do have a concept of contract value. Making this change will therefore facilitate including those investment options on the form as it allows them to accurately express base contract expenses. We do not anticipate that this change will substantively affect variable annuities' existing disclosure and we received no comments on this aspect of the proposal.
Additionally, to place investors on notice of the unique and ongoing trade-off costs associated with RILAs that may not be captured by this table, we are requiring, in part as proposed, insurance companies to include the following statement in the table with respect to index-linked options:
As proposed, the disclosure included a sentence stating that “Imposing this limit helps us make a profit on the Index-Linked Option.” Some commenters were opposed to including the statement that an insurance company limits gains on an index-linked option in order to help the insurer make a profit.
In a change from the proposal, after considering the comments discussed above, insurance companies will not be required to state that limits on index earnings help insurance companies make a profit on index-linked options. Instead, insurance companies will be required to include a sentence stating that “This means your returns may be lower than the Index's returns.”
In another change from the proposal, the disclosure referring to limits on “an Index-Linked Option” was revised to “[certain of] the Index-Linked Options.” Because the disclosure related to the entire contract whose offering is being registered, this phrasing did not account for variances between index-linked options offered in that contract where, for example, some index-linked options have limits on upside participation but others do not. One commenter stated that cap rates and participation rates do not limit the amount an investor can earn in all scenarios, such as when an issuer does not impose a limit on an
Form N-4 currently requires issuers to include in the prospectus an annual portfolio company expenses table, disclosing the minimum and maximum total operating expenses charged by the portfolio companies offered by variable annuity contracts that may be periodically charged to investors during the time they own the contract. This includes costs incurred by portfolio companies directly and, if the portfolio company invests in other mutual funds, the fees and expenses the portfolio company indirectly incurs from these investments. In a change that will apply to variable annuity prospectuses, we are adopting, as proposed, a requirement that registrants disclose that expenses shown in this table may change over time and may be higher or lower in the future. This modification will help to ensure that investors understand that these charges may increase over time, notwithstanding that these charges are described as maximum expenses. Additionally, this disclosure is similar to disclosures we are requiring of non-variable annuities that are also subject to change, specifically disclosures related to changing upside and downside limits.
Form N-4 issuers currently must provide an example in their prospectuses that is designed to allow variable annuity investors to compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. We are amending, as proposed, the example requirements to clarify, in relation to variable annuities and combination contracts that have variable options, that the example is designed to permit investors to compare costs of investing solely in
Item 7 currently requires registrants to provide a brief description in their prospectuses of all current charges deducted from purchase payments, investor accounts, assets of the registrant, or any other source.
Specifically, we are adopting a requirement that insurance companies must: (1) disclose (as a percentage) the maximum potential loss that could result from a negative contract adjustment; (2) define the period during which any contract adjustment would apply; and (3) describe all transactions subject to a contract adjustment.
The detailed disclosure on the method of calculating the contract adjustment will, as proposed, appear in the SAI, as opposed to the prospectus.
Some commenters stated that the proposal generally mischaracterizes contract adjustments as charges.
Given that Item 7, as amended, includes significant disclosure related to contract adjustments, we agree, as one commenter recommended, that changing Item 7 from “Charges” to “Charges and Adjustments” is appropriate and provides a clear and accurate description of the specific disclosure that investors will find in disclosure provided in response to Item 7. However, similar to the inclusion of limits on upside gains as a “fee” or “expense,” as discussed above,
We are adopting, as proposed, amendments to Item 22, which addresses the purchase of securities being offered, to require specific, detailed contract adjustment disclosures to appear in insurance companies' SAIs. As discussed above, insurance companies will be required to provide in simple terms an explanation of the manner in which contract adjustments are determined in their prospectuses, while noting that further detail is available in the SAI and providing a cross reference to that information. To complement the discussion required in the prospectus by Item 7, Item 22(d) will require issuers to explain fully the operation of any contract adjustment that can be applied under the contract. This more detailed explanation will not take the place of the prospectus discussion, but will describe the technical, detailed aspects of the operation of the adjustment, including any formulas and an explanation of such formulas used to calculate the adjustment, and at least one numeric example to illustrate the application of the contract adjustment. This numeric example will be required to include a negative adjustment, reflect surrender charges (if applicable), and disclose the percentage change in contract value as a result of the adjustment.
The one commenter who addressed these amendments supported them as an effective use of layered disclosure.
The mechanics of contract adjustments under a non-variable annuity are typically complex, and often involve factors or formulas that can be difficult for many investors to understand.
We are also, as proposed, applying certain existing SAI disclosure requirements to insurance companies about the purchase of non-variable annuity securities being offered. Specifically, we are requiring insurance companies to describe the manner in which the securities are offered to the public by addressing any exchange privileges between investment options not described in the prospectus.
We are adopting new Item 31A to Form N-4 to require census-type information regarding non-variable annuities offered in connection with the registration statement. Item 31A will require an insurance company to provide the following information regarding any non-variable annuity offered through the registration statement, as of the most recent calendar year-end in a tabular format: (1) the name of each contract; (2) the number of contracts outstanding; (3) the total value of investor allocations attributable to index-linked and/or MVA options; (4) the number of contracts sold during the prior calendar year; (5) the gross premiums received during the prior calendar year; (6) the amount of contract value redeemed during the prior calendar year; and (7) whether the contract is a “combination contract,” that is, a contract that offers variable options in addition to index-linked or MVA options.
We are adopting the proposed requirements for census-type information to provide improved transparency to investors and others by supplementing the information available in the marketplace for the non-variable annuity contracts registered on Form N-4. The information will help us carry out regulatory responsibilities, including monitoring risk and trends, formulating policy and guidance, and reviewing registration statements. Moreover, third parties, including data aggregators, academics, and the press, as well as financial professionals who recommend or provide advice on non-variable annuities, are also likely users of this data which may ultimately help inform investor decisions. Requiring this high-level reporting will permit the Commission to identify trends occurring in this market segment over time and assist with allocating the Commission's resources in administering Form N-4. Also, because providing this information on Form N-4 will result in having information provided to the Commission as of a uniform date for all offerings of non-variable annuities registered on this form, regardless of the date the annual amendment is filed, this information will provide for increased comparability across issuers and contracts and give data points over time with which to compare.
We disagree with the comment suggesting that requiring this information to be disclosed will result in private and confidential information being disclosed that will aid competitors. The information that will be reported will complement the parallel census-type information that is currently required to be reported annually on Form N-CEN by registered unit investment trusts offering variable annuities.
In addition to the information discussed above, and in a change from the proposal, Item 31A of final Form N-4 also requires that insurance companies provide, for any contract with index-linked options offered through the registration statement, the current limits on index gains in effect for each index-linked option during the
Given the potentially large volume of this information, insurance companies will be permitted to file this information as an exhibit to, rather than directly in, the registration statement itself.
We are adopting a disclosure requirement, rather than a recordkeeping requirement as one commenter suggested, because disclosing this information in the registration statement will integrate this information more seamlessly into the existing methods of data collection required by the form. Furthermore, requiring filers to submit this information on EDGAR also will make it more accessible to the Commission and the public than a recordkeeping requirement. Under the final rule, historical current rate information filed on EDGAR will also be structured, consistent with the requirement to tag current rate information disclosed directly in the prospectus.
We are adopting, largely as proposed, amendments to include certain other modifications to Form N-4 and related rules designed to accommodate the inclusion of offerings of non-variable annuities on the form. These include amendments to Form N-4's facing sheet, definitions, exhibit list, and required representations, as well as amendments to certain Securities Act rules that help to implement the registration of non-variable annuities on Form N-4. These amendments are discussed below.
We are adopting, largely as proposed, amendments to include a new check box section on the facing sheet. Specifically, an issuer will be required to identify in this new section: (1) if it is a new registrant, defined, as applicable, as a registered separate account or insurance company that has not filed a Securities Act registration statement or amendment thereto within 3 years preceding this filing;
One commenter provided several specific suggestions on the proposed amendments to the facing sheet.
The commenter also suggested that the new check-the-box section include a box for smaller reporting companies, as is the case with Form S-1 and Form S-
We are adopting, largely as proposed, amendments to General Instruction A to update the existing definitions in Form N-4 and to add new definitions to accommodate the inclusion of non-variable annuities on Form N-4. We are implementing these proposed definitions throughout the form. However, unless otherwise stated, the proposed amendments to the definitions in General Instruction A do not alter the existing obligations under Form N-4 for offerings of variable annuities. These changes provide a standard set of definitions to convey form provisions in a consistent and efficient manner without the need for lengthy descriptions in each instance and clarify which form provisions apply to which categories of issuers and investment products.
For a number of these definitions, we did not receive any comments and are adopting them as proposed. These are the definitions of the terms contract, crediting period, index, insurance company, investment option, portfolio company, registrant, and registered separate account.
We did, however, receive comments on other definitions. Specifically, we proposed a new definition for “index-linked option” to General Instruction A. The definition was proposed to cover RILAs and index-linked options offered in combination contracts, as an investment option offered under any contract, pursuant to which the value of the contract, either during an accumulation period or after annuitization, or both, will earn positive or negative interest based, in part, on the performance of a specified index.
We proposed definitions of “contract adjustment” and “crediting period” to refer to these non-variable annuity-centric concepts in the form and to help clarify when the relevant disclosures would be required.
We are adopting these definitions, including that of the term “contract adjustment,” as proposed. The definition is sufficiently specific to adjustments “to the value of the Contract” that are “positive or negative” and applied to withdrawals “before the end of a specified period,” which would not cover the examples that concerned the commenter. For example, while the investment base for an index-linked option reflects a positive or negative contract adjustment resulting from that option's daily interim valuation, any change in the investment base as a result of a withdrawal is a
One commenter suggested the Commission provide guidance that registrants would generally not be required to use the defined terms in the form so long as the terminology used by the insurance company clearly conveys the meaning of, or provides comparable information to, the terminology included in the form.
We are amending, as proposed, rule 405 under the Securities Act to add the new defined terms “form available solely to investment companies registered under the Investment Company Act of 1940” and “registered index-linked annuity” for purposes of Securities Act rules. We did not receive any comments on this part of our proposal. We are also, as discussed above, adding a defined term “registered market value adjustment annuity” to rule 405 in order to apply the appropriate Securities Act rules to registered MVA annuities.
The amendments to rule 405 are designed to apply specific Securities Act rules to insurance companies issuing non-variable annuities to ensure consistency across Form N-4 filers. Certain Securities Act rules apply only to registration statements that are prepared on a form available solely to a registered investment company or a business development company. These rules are 17 CFR 230.480 (“rule 480”), 17 CFR 230.481 (“rule 481”), 17 CFR 230.483 (“rule 483”), and 17 CFR 230.484 (“rule 484”) under the Securities Act, and include forms such as Forms N-1A, N-2, N-3, N-4, N-5, and N-6. These rules prescribe requirements relating to: information given with the title of securities; information contained in registration statements; exhibits filed as part of the registration statement; and undertakings required with respect to requests for acceleration.
By virtue of moving non-variable annuities, which are not issued by a registered investment company, onto Form N-4, Form N-4 would be outside the scope of this description absent these amendments that we are adopting. As such, the new defined term “form available solely to investment companies registered under the Investment Company Act of 1940” specifies that these rules apply to registration statements filed on Form N-4. Specifically, we are amending rule 405 to state that “a form available solely to investment companies registered under the Investment Company Act of 1940” includes the form used to register the offering of securities of a registered non-variable annuity for purposes of the Securities Act of 1933. By operation of this amendment, registration statements relating to the offering of non-variable annuities on Form N-4 are subject to rules 480, 481, 483, and 484.
We also are adding a definition of “registered index-linked annuity” to rule 405, which provides consistent definitions for select terms used throughout the Securities Act rules, to simplify references to RILAs in the proposed Securities Act rule amendments.
As discussed in the Proposing Release,
Further, in addition to the requirements of rule 484, we are amending Form N-4 to include certain
We are adopting amendments, largely as proposed, to make the remaining requirements and disclosure items on the existing Form N-4 applicable to non-variable annuities without substantive changes to the current requirements and disclosure items.
Largely as proposed, non-variable annuity offerings registered on Form N-4 will need to comply with the general instructions of that form. These general instructions are structured to include four parts: (A) Definitions; (B) Filing and Use of Form; (C) Preparation of the Registration Statement; and (D) Incorporation by Reference.
Collectively, the general instructions, as they existed prior to the amendments to Form N-4, are designed to require clear disclosure to investors about the variable annuity contracts currently registered on the form and to make clear how issuers must prepare and file their registration statements. Requiring insurance companies to prepare registration statements relating to the offering of non-variable annuities in accordance with these instructions will likewise facilitate the provision of clear disclosure to investors and provide clear direction to these issuers on how to prepare and file their registration statements. Further, applying these requirements to non-variable annuities will help ensure the comparability of different annuity offerings, for example, by ensuring that the filings are held to the same plain English, multiple contract disclosure, timing, website, and incorporation by reference standards.
We received one comment on the proposed general instructions.
The table below summarizes disclosures in the existing Form N-4 about the annuity contract, how it operates, and how it is serviced by the insurance company. We are amending Form N-4 to apply these requirements to the registration statements of offerings of non-variable annuities with a minor change to the existing form—insurance companies will be required to indicate in Item 12 whether charges or contract adjustments will apply in the event of a contract surrender or withdrawal.
These requirements apply to existing Form N-4 issuers because these disclosures provide investors in these products with a concise presentation of material information about the annuity contract they would be purchasing, as well as other information that provides necessary context about the contracts such as management service disclosures.
In addition to disclosures about the contract, we are adopting amendments to Form N-4 that will require that insurance companies make certain disclosures relating to the issuer and offering consistent with the form's current requirements. The table below summarizes these items, omitting items in Form N-4 that, by their terms, will not apply to non-variable annuities. We received no comments on these proposed amendments and are adopting them as proposed. However, in a modification from the proposal, because offerings of registered MVA annuities will be registered on Form N-4, as amended, these amendments also apply to disclosure regarding registered MVA annuities, as applicable.
Information about the issuer and the offering process are relevant when purchasing an annuity contract, including in the context of a non-variable annuity.
Under the final amendments, Form N-4 filers will be required to tag in Inline XBRL certain specified disclosures.
Certain of the final amendments' new structured data requirements will apply, as proposed, to issuers of non-variable annuities that register on Form N-4. Specifically, these include, as applicable, requirements to tag specified portions of the overview and the more in-depth descriptions of index-linked options and contract adjustments that issuers include in their prospectuses, the disclosure of census-type information regarding contracts with index-linked options and MVA options, and information disclosed about changes in and disagreements with accountants.
Certain of the final amendments' new tagging requirements will apply to all Form N-4 filers as applicable. All Form N-4 filers must tag the descriptions of fixed options available under the contract, including any fixed options subject to contract adjustments.
Comments regarding our proposal to require RILA registration statements to be tagged using Inline XBRL were mixed. One commenter supported extending Inline XBRL requirements to RILAs, suggesting that all investors would benefit from tagging as it would facilitate access to data about RILAs through a structured, machine-readable format.
After considering these comments, we are adopting these requirements largely as proposed, with certain conforming and other changes described below. As a result, non-variable annuity issuers must tag those prospectus disclosures that Form N-4 currently requires to be tagged in Inline XBRL.
Census-type information about variable annuity contracts, which parallels the SAI disclosure we are adopting to require for contracts with index-linked options and/or MVA options, is currently reported in structured data format.
The benefits of structured data as a general matter are supported by empirical data of public usage of similar structured data.
In a change from the proposal and in response to comments, the Inline XBRL requirements we are adopting will not require insurance companies to tag the new statement regarding the risk of loss of the entire amount invested associated with an investment in a variable option.
As proposed, the new Inline XBRL tagging requirements will only apply to contracts being sold to new investors. The result of this approach is that prospectus disclosure for contracts that are no longer being sold to new investors do not need to be tagged, as this disclosure has less utility for current investors and other market participants. This is consistent with the existing approach for Form N-4 issuers.
We are requiring non-variable annuity issuers to submit Interactive Data Files as follows, consistent with the approach for issuers of variable annuities registered on Form N-4:
• For most post-effective amendments, Interactive Data Files must be filed either concurrently with the filing, or in a subsequent amendment that is filed on or before the date that the post-effective amendment that contains the related information becomes effective;
• For initial registration statements (and post-effective amendments other than as described in the bullet
• For any form of prospectus filed pursuant to rule 497(c) or (e), Interactive Data Files must be submitted concurrently with the filing.
This approach facilitates the timely availability of important information in a structured format for investors, investment professionals, and other data users yielding substantial benefits. For data aggregators responding to investor demand for the data, the availability of the required disclosures in the Inline XBRL format concurrent with filing or before the date of effectiveness allows them to quickly process and share the data and related analysis with investors. Like other issuers, non-variable annuity issuers could request temporary and continuing hardship exemptions for the inability to timely file electronically the Interactive Data File.
We are adopting, largely as proposed, amendments to rule 498A to permit RILA issuers, as well as issuers of “combination contracts” offering a combination of index-linked options and variable options, to use a summary prospectus to satisfy their statutory prospectus delivery obligations.
Rule 498A uses a layered disclosure approach designed to provide investors directly with key information relating to the contract's terms, benefits, and risks in a concise and reader-friendly presentation, with more detailed information available elsewhere. Investors will continue to have access to the statutory prospectus of non-variable annuities and other information about these non-variable annuities online, with paper or electronic copies of this information upon request.
Commenters that spoke to this issue largely supported the extension of rule 498A to RILAs as proposed, stating that a summary prospectus framework for RILAs would be as successful for those products as it has been for variable insurance products and that investors and registrants alike would benefit from the rule's layered disclosure framework that would align RILAs with the treatment of variable annuities.
The amendments to rule 498A broaden the scope of the rule to address non-variable annuities.
As with variable contracts, final rule 498A involves the use of two distinct types of summary prospectuses for non-variable annuity contracts. An “initial summary prospectus,” covering contracts offered to new investors, includes certain key information about the contract's most salient features, benefits, and risks, presented in plain English in a standardized order. The rule amendments also require “updating summary prospectuses” to be provided to existing investors in non-variable annuity contracts as a condition to relying on the rule. The updating summary prospectus includes a brief description of certain changes to the contract that occurred during the previous year, as well as a subset of the information required to appear in the initial summary prospectus. Certain key information about the investment options that the contract offers (including as applicable index-linked options and fixed options) must be provided in both the initial summary prospectus and updating summary prospectus.
As under rule 498A for variable contracts, the use of summary prospectuses for non-variable annuity contracts is voluntary. This is appropriate to provide non-variable annuity issuers with sufficient time to transition to a summary prospectus regime, as well as to recognize that there could be different relative benefits of using a summary prospectus for certain non-variable annuity issuers and investors in these contracts.
As with an initial summary prospectus for a variable annuity, an initial summary prospectus for a non-variable annuity contract must only describe a single contract that the insurance company currently offers for sale.
Like other summary prospectuses that rule 498A for variable contracts addresses, we are adopting as proposed a standardized presentation for non-variable annuity initial summary prospectuses to require certain disclosure items that would be most relevant to investors to appear at the beginning of the initial summary prospectus, followed by supplemental information.
The chart in Table 7 below outlines the information that must appear in an initial summary prospectus for a non-variable annuity contract. These are the same content requirements for an initial summary prospectus for a variable contract, with the exception of the ordering of the Overview of the Contract and KIT disclosures. We are adopting these content requirements as proposed. The Commission has historically viewed these items as providing annuity
Further, as discussed above, the Overview of the Contract disclosures (previously Item 3 of Form N-4, but now re-numbered as Item 2) must precede the KIT (previously Item 2 of Form N-4, but now re-numbered as Item 3), due to the context that the Overview section provides and based upon our experience with the form and taking into account the results of investor testing.
A non-variable annuity initial summary prospectus is permitted to include a table of contents. A table of contents must show the page number of the various sections or subdivisions of the summary prospectus, and immediately follow the cover page in any initial summary prospectus delivered electronically.
The topics of the contents included in an initial summary prospectus—as well as the required headings under which these contents must appear—are the same for a non-variable annuity summary prospectus as they are for a summary prospectus of a variable annuity registered on Form N-4.
• Disclosure provided under the heading “Overview of the Contract” (Item 2 of Form N-4), where disclosure for RILA contracts must include specific information about index-linked options currently offered under the contract, and disclosure for RILAs and registered MVA annuities must include information about interim value adjustments or market value adjustments that could affect an investor's contract value;
• Disclosure provided under the heading “Important Information You Should Consider About the Contract” (Item 3 of Form N-4), where the instructions vary for non-variable annuities as opposed to variable annuities;
• Disclosure provided under the heading “Additional Information About Fees” (Item 4 of Form N-4), where the instructions vary for non-variable annuities as opposed to variable annuities; and
• Disclosure under the heading “Appendix: Investment Options Available Under the Contract” (Item 17 of Form N-4), where RILA contract disclosure includes a different summary table for index-linked options offered under the contract than the summary table of variable options offered under a variable annuity. In addition, the disclosure includes a summary table for fixed options offered under the contract (which could be applicable for RILAs, registered MVA annuities, or variable annuities, depending on the investment options the contract offers).
Each of these disclosure items, which also appears in a non-variable annuity statutory prospectus, is discussed in more detail in Section II.C. above.
One commenter suggested that because a RILA has the term “registered” in its name, the Commission should require the cover pages of both an initial summary prospectus and an updating summary prospectus to include the legend that is required to be on the cover pages of registration statements—namely, that the Commission has not approved or disapproved of the securities or passed upon adequacy of the disclosure of in the prospectus.
After considering the commenter's suggestion, the Commission has determined to amend rule 498A to require the legend required by rule 481 under the Securities Act on the cover pages of initial and updating summary prospectuses for RILAs or combination contracts that offer index-linked options along with other investment options. Many RILAs whose offerings are registered with the Commission use the term “registered” in their names and, accordingly, clarification about the term “registered” is important to the extent that this term may cause confusion. The legend required by rule 481 on RILAs' and combination contracts' summary prospectus cover pages is anticipated to communicate important information to an investor about what “registered” means in this context. Further, the legend required by rule 481 will alert investors about the limits of the Commission's registration process. We do not anticipate that the disclosure required by the legend would be so lengthy as to dissuade an investor from reviewing the summary prospectus. We recognize that previously the Commission determined not to require the legend required by rule 481 under the Securities Act on initial and updating summary prospectus cover pages for variable annuities and mutual funds.
As proposed and as under current rule 498A for variable contracts, insurance companies under final rule 498A will not send an updated initial summary prospectus to investors each year. Instead, insurance companies will send an updating summary prospectus, which will provide a brief description of certain changes with respect to the contract that occurred within the prior year.
Because the Commission designed the initial summary prospectus for someone making an initial investment decision, existing non-variable annuity investors will benefit more from receiving a shorter-form document including a brief summary of the changes to the contract, than from receiving the initial summary prospectus year after year.
Unlike an initial summary prospectus, which only can describe a single contract that the insurance company currently offers for sale, an updating summary prospectus for a non-variable annuity may describe one or more contracts covered in the statutory prospectus to which the updating summary prospectus relates, as proposed and as under current rule 498A for variable contracts.
Updating summary prospectuses for non-variable annuities, like initial summary prospectuses, must include specific disclosure items appearing in a prescribed order, under relevant corresponding headings.
The updating summary prospectus for a non-variable annuity must include a concise description of certain changes to the contract made after the date of the most recent updating summary prospectus or statutory prospectus that was sent or given to investors. These changes appear under the heading “Updated Information About Your Contract,” with a required legend following the heading.
The topics for which a change necessitates a description in the updating summary prospectus, as proposed, are the same for non-variable annuities as for variable annuities registered on Form N-4. We do not anticipate that disclosures addressing these topics in a contract statutory prospectus will change frequently, and thus providing investors with a notice and a brief description of any changes that do occur may be more informative than repeating all the disclosures each year.
Substantially as proposed, we are amending rule 498A to specify that, in the context of a RILA contract updating summary prospectus, the change of availability of investment options includes a change to any of the features of the index-linked options disclosed in the table that Item 17(b)(1) of Form N-4 requires (that is, the features that are disclosed in the table in the appendix of investment options that will appear in a RILA contract summary prospectus).
The topics of the additional contents included in an updating summary prospectus—as well as the required headings under which these contents must appear—are, as proposed, the same for non-variable annuities and for variable annuities registered on Form N-4.
• Disclosure provided under the heading “Important Information You Should Consider About the Contract” (Item 3 of Form N-4), where instructions to the required table are specific to non-variable annuities as opposed to variable annuities; and
• Disclosure under the heading “Appendix: Investment Options Available Under the Contract” (Item 17 of Form N-4), where RILA contract disclosure will include a different summary table for index-linked options offered under the contract than the summary table of variable options offered under a variable annuity. In addition, the disclosure includes a summary table for fixed options offered under the contract (which could be applicable for RILAs, registered MVA annuities, or variable annuities, depending on the investment options the contract offers).
Investors who receive a non-variable annuity initial or updating summary prospectus will have access to more detailed information about the non-variable annuity, either by reviewing the information online, or by requesting the information to be sent in paper or electronically. In this respect, the final amendments include the same requirements for non-variable annuities as for variable contracts. These requirements further the layered disclosure framework that rule 498A creates for variable contracts and will, under the final amendments, similarly create for non-variable annuities. Those insurance companies that issue non-variable annuities, to the extent that they also issue variable annuity contracts that use summary prospectuses under rule 498A, therefore, should be generally familiar with the practice of making this information available online and be able to integrate it with existing processes for variable annuities. Similar to what the Commission expressed in the context of variable annuity summary prospectuses, permitting non-variable annuity investors to access the contract statutory prospectus in several ways (online and by physical or electronic delivery) maximizes the accessibility and usability of this information for all investors, including investors who continue to prefer to access information through paper resources.
As discussed above, commenters stated that investors and registrants will benefit from rule 498A's layered disclosure framework, with access to more detailed information available online and electronically or in paper format on request.
Under the final amendments and as proposed, an insurance company relying on rule 498A to satisfy prospectus delivery obligations with respect to non-variable annuities (like a variable annuity issuer relying on this rule before the final amendments), must make the contract's current initial summary prospectus, updating summary prospectus, statutory prospectus, and SAI (together, the “required online contract documents”) available online.
As proposed, both initial summary prospectuses and updating summary prospectuses for non-variable annuities, like variable annuity summary prospectuses, must define any “special terms” elected by the registrant, using any presentation that clearly conveys their meaning to investors.
Satisfying each of these requirements regarding online accessibility of contract statutory prospectuses and certain other documents relating to the contract is, as proposed, a condition for an insurance company to rely on rule 498A to satisfy prospectus delivery obligations with respect to non-variable annuities.
Like current rule 498A, final rule 498A as proposed includes additional requirements for non-variable annuity summary prospectuses.
• Certain requirements regarding the delivery of paper or electronic copies of the required online contract documents upon request;
• The requirement that a contract summary prospectus must be given greater prominence than any materials that accompany the contract summary prospectus;
• Requirements that: (1) the required online documents be presented in a format that is convenient for reading and printing, and (2) a person be able to retain electronic versions of these documents in a format that is convenient for reading and printing; and
• The requirement for any website address that is included in an electronic version of the summary prospectus to be an active hyperlink.
Failure to comply with these additional requirements will not, however, negate a person's ability to rely on the rule to satisfy prospectus delivery obligations.
We are adopting, as proposed, amendments to permit RILA issuers to provide financial statements on Form N-4 in the same way that insurance companies currently provide financial statements on Form N-4. We are also extending these amendments to registered MVA annuities. As a result, the financial statements filed in connection with a registration statement that relates to the offering of either of these securities may be prepared in accordance with SAP to the same extent as currently permitted for insurance companies' financial statements filed on that form.
As discussed in the Proposing Release, Instruction 1 to Item 26(b) of Form N-4 currently permits insurance companies that are the depositors of variable annuity separate accounts to prepare their financial statements for use in a registration statement filed on Form N-4 in accordance with SAP if the depositor would not have to prepare its financial statements in accordance with GAAP except for use in that registration statement or other registration statements filed on Forms N-3, N-4, or N-6 (the forms used to register insurance products that are issued by investment companies).
Commenters supported permitting RILA issuers to provide financial statements on Form N-4 in the same way that insurance companies offering variable annuities currently provide financial statements on Form N-4.
One commenter suggested that we eliminate or more clearly explain the instruction to Form N-4 that says that an insurance company cannot use SAP financial statements if it prepares GAAP financial statements for a corporate parent that is a GAAP filer.
Amendments permitting insurance companies registering offerings of RILAs and registered MVA annuities to rely on Instruction 1 to Item 26 to provide SAP financial statements to the same extent as they do when registering offerings of variable annuities on Form N-4 alleviate the cost burdens that would be imposed by requiring GAAP financial statements in cases where the insurance company is not otherwise required to prepare financial statements in accordance with GAAP and provide for the consistent treatment of financial statements for all insurance companies that meet the circumstances permitted by Form N-4.
Requiring insurance companies to register offerings of non-variable annuities on Form N-4 will also provide those companies greater flexibility to update their registration statements without the need to update certain financial statements. Under section 10(a)(3) of the Securities Act, insurance companies currently are generally required to file a post-effective amendment annually to update their audited fiscal year-end financial statements as they relate to offerings of non-variable annuities.
We are also adopting, as proposed, a requirement for RILA issuers to provide information relating to changes in and disagreements with accountants on accounting and financial disclosure as detailed in 17 CFR 229.304 (“Item 304 of Regulation S-K”) in the SAI. We are also extending this requirement to registered MVA annuity issuers. Additionally, non-variable annuities will be required to provide as an exhibit any letter from the insurance company's former independent accountant regarding its concurrence or disagreement with the statements made by the insurance company in the registration statement concerning the resignation or dismissal as the insurance company's principal accountant. Prior to these amendments, non-variable annuities provided these items on Forms S-1, 8-K, and 10-K, as applicable. These items are designed to address the practice of “opinion shopping” for an auditor willing to support a proposed accounting treatment designed to help a company achieve its reporting objectives even though that treatment might frustrate reliable reporting.
Some insurance companies issue index-linked life insurance products that have a similar payment structure to RILAs, resulting in similar regulatory treatment as RILAs currently. Some commenters stated that these life insurance policies should be permitted to register on Form N-6,
We are adopting, largely as proposed, amendments to require insurance companies to pay securities registration fees relating to RILA offerings using the same method used for variable annuities.
Without the adoption of these final amendments, insurance companies, like most issuers, would need to register a specific amount of securities when registering non-variable annuities. Indeed, until now, issuers of non-variable annuities were required to pay a registration fee for such securities to the Commission at the time of filing a registration statement on Form S-1 or S-3.
The final amendments are designed to require insurance companies to use the same framework to pay securities registration fees for non-variable annuities that they do for variable annuities. Insurance companies offer non-variable annuities in a manner substantially similar to variable annuities and similarly will benefit from paying registration fees on an annual net basis and from registering offerings of an indeterminate number of securities. The final amendments provide registration fee payment parity for an insurance company that may offer one or more related insurance products, including index-linked options offered as part of combination annuity contracts.
The fee calculation method is consistent with the continuous offering of non-variable annuities to investors. These investors may make additional allocations or other investment decisions over time with respect to an investment in non-variable annuities. One effect of this was that, prior to these rule amendments, insurance companies, unlike other Form S-1 or S-3 issuers, could have increased difficulty in using the filing fees associated with unsold non-variable annuities of a particular offering to offset the filing fees due for a subsequent registration statement. This was because many insurance companies could not easily terminate an offering of non-variable annuities, a necessary step to recoup fees paid on unsold securities for use in a separate offering.
We also are amending Form 24F-2 to indicate when insurance companies can take credits for redemptions of non-variable annuity securities not claimed
While generally supportive of the proposal, commenters had some specific recommendations on how we could modify Form 24F-2. One commenter recommended that a separate line item be added to Form 24F-2 for unsold interests that were registered using Forms S-1 and S-3 registration statements.
Proposed Instruction C.4 to Form 24F-2 provided a special rule for RILAs that clarified that the value of any expiring annuity contract or investment option that is rolled over into a new crediting period should be reported both as securities sold and as securities redeemed, resulting in a net-zero calculation to the extent that these amounts are the same. One commenter stated, in discussing this proposed approach, that transfers from index-linked options to options (and variable options to index-linked options) should be viewed as substantially similar to rollovers of crediting periods from a registration fee payment perspective. The commenter stated that, in both cases, simultaneous purchases and redemptions of equal amounts occur, and thus both should be afforded comparable treatment in the context of registration fee payment.
One commenter asked us to confirm that RILA issuers could file a single Form 24F-2 annually to pay registration fees for all ongoing RILA offerings and pay registration fees on a net basis across all such offerings rather than having to make multiple Form 24F-2 filings and pay registration fees on a RILA offering-by-offering basis as with variable product separate account registration fee payments because paying registration fees in the aggregate across all RILA offerings would allow companies to more effectively use their unsold interests registered on Forms S-1 or S-3.
The final amendments, which we are adopting as proposed, will require RILA issuers to use the same framework for filing post-effective amendments to the registration statement that other issuers on Form N-4 use. We are also adopting
Prior to the adoption of these final amendments, our rules provided different processes for insurance companies when registering offerings of non-variable annuities on Forms S-1 and S-3, as compared to those of variable annuities on Form N-4, to update and keep current a registration statement or prospectus. Form N-4 was used by separate accounts that are unit investment trusts that offer variable contracts to register their securities under the Investment Company Act and to register an indefinite amount of continuously-sold securities under the Securities Act. As such, these issuers had a system of updating their disclosures that facilitates that structure. Issuers on Form N-4 typically update their registration statements annually through a post-effective amendment filed in accordance with rule 485 to, among other things, comply with Securities Act requirements.
Prior to the final amendments that we are adopting today, insurance companies had to follow the processes operating companies use, when these insurance companies were updating non-variable annuity registration statements. Operating companies that are engaged in a continuous offering of securities, like these issuers, are similarly required to update their registration statement each year and may update their registration statement for changes other than to bring the financial statements up to date.
In addition to differences in the post-effective amendment process, insurance companies also followed, prior to the adoption of the final amendments, different processes to file non-variable annuity prospectuses than current Form N-4 filers, relying on rule 424 rather than rule 497. Although these rules provide for similar processes, certain differences affected these insurance companies. For example, rule 424 requires an issuer to file a prospectus only if the issuer makes substantive changes or additions to a previously-filed prospectus, whereas rule 497 requires funds to file every prospectus that varies from any previously-filed prospectus.
Consistent with the other elements of this proposal, the final amendments are designed to provide parity between non-variable annuities and variable annuities that are currently registered on Form N-4. Non-variable annuities, like variable annuities, are longer-term investment products that are continuously offered and must maintain a current registration statement and up-to-date prospectus for new investors as well as for existing investors that may be able to make additional contributions
Requiring insurance companies to rely on rules 485 and 497 in connection with non-variable annuities also will provide a uniform post-effective amendment and prospectus filing framework for all issuers using Form N-4 and provide insurance companies that may offer one or more related insurance products, including index-linked or MVA options offered as part of combination annuity contracts, consistent filing requirements across related products. This also should result in enhanced efficiencies as these issuers would no longer be required to manage distinct filing processes for related products. In addition, employing the framework provided by rules 485 and 497 will provide Commission staff with an increased degree of administrative efficiency by facilitating the review of amendments containing material changes to non-variable annuity registration statements while permitting amendments with non-material changes to become effective immediately.
As proposed, we are prohibiting the use of rule 172 in connection with RILA offerings. We are also prohibiting its use in connection with registered MVA annuity offerings. Under rule 172, a final prospectus is deemed to precede or accompany a security for sale for purposes of Securities Act section 5(b)(2) as long as the final prospectus meeting the requirements of Securities Act section 10(a) is filed or the issuer will make a good faith and reasonable effort to file the final prospectus with the Commission as part of the registration statement within the required rule 424 prospectus filing timeline.
Registered investment companies, including variable annuity separate accounts, are excluded from rule 172 and therefore must deliver a prospectus to investors.
As proposed, we are amending rule 156 to make its provisions applicable to RILA sales literature, and, in a change from the proposal, we are also applying these changes to registered MVA annuities in light of the similarities in the products.
Under the Federal securities laws applicable to all securities (including non-variable annuity offerings), it is unlawful for any person to use materially misleading communications in connection with the offer or sale of any security.
Rule 156 provides guidance on whether a statement involving a material fact is misleading in sales literature, depending on an evaluation of the context in which it is made, with the rule providing four non-exhaustive factors to guide in this determination.
Several commenters expressed support for the proposed amendments to rule 156 and no commenters opposed them.
Some commenters also expressed concerns about the potential for confusion about other RILA features.
One commenter also expressed concerns about representations concerning tax deferral and death benefits in RILA advertisements.
This same commenter stated that focusing on RILA marketing practices is important because investors may not read an entire prospectus and thus may rely on marketing materials for information about a RILA's complex features. This commenter, however, suggested that RILA issuers should be permitted (or even required) to produce fair presentations of performance, which the commenter believed would allow investors to see how RILAs operate under real market conditions. This commenter agreed that providing fair representations of RILA performance is difficult because the rates offered by insurance companies are constantly changing but suggested that RILA performance presentations could be required to use average cap rates over a calendar year, while prohibiting those presentations from using back-tested index performance or performance of the RILA prior to the product's launch. As described above, rule 156 is an interpretive rule that provides factors to weigh in considering whether, in the specific context of sales literature, a statement involving a material fact is or might be misleading for purposes of the Federal securities laws. Because rule 156 does not prohibit or permit any particular representations or presentation, we disagree with the commenter's suggestion that we impose a requirement under rule 156 regarding the use of cap rates in providing representations as to historical RILA performance.
After considering these comments, we are adopting the amendments to rule 156 as proposed, with the added application to registered MVA annuities. As discussed below, these amendments address commenter concerns about potentially misleading statements in RILA sales literature by providing insurance companies with guidance about the contextual analysis to use in determining whether a particular representation in non-variable annuity advertising could be materially misleading.
For example, as stated above, commenters expressed concern about the potential for investors to be misled in connection with representations in RILA marketing materials about a lack of ongoing fees. Final rule 156(b)(4) provides that representations about fees or expenses associated with an investment in a non-variable annuity could be misleading “because of
Similarly, final rule 156(b)(1)(ii)'s extension to non-variable annuity sales literature also addresses some of the commenter concerns we received regarding RILA features that, when described in marketing materials, may require additional context to ensure they are not misleading. Final rule 156(b)(1)(ii) provides that a statement in non-variable annuity sales literature could be misleading because of “[t]he absence of explanations, qualifications, limitations or other statements necessary or appropriate to make such statement not misleading.” Whether a given explanation, qualification, or limitation is necessary or appropriate to make statements in sales literature not misleading will depend on the facts and circumstances in each case. The examples that follow are areas where an insurance company should consider the need for further explanation, qualifications, or limitations, but are not intended to suggest that that further explanation, qualifications, or limitations are necessary in each case in order to make the examples not misleading.
For example, where a RILA advertisement includes statements regarding index returns, under this provision, consideration should be given as to whether the insurance company needs to explain the difference between a price return index and a total return index, including how that difference can affect an investor's returns, or if an advertisement describes a RILA as a growth product, whether qualification of the statement is necessary in light of relevant RILA features, such as the existence and extent of any limitations on upside index performance.
If RILA sales literature discuss these aspects of the contract without adequately explaining these limitations or the insurer's discretion to alter key features, that omission could make the advertisement misleading. For instance, if sales literature advertises a particular feature of a RILA's bounded return structure (including,
Additionally, under these provisions of final rule 156, insurance companies should also consider whether representations that highlight downside protections of a RILA (
Lastly, final rule 156(b)(2)(i) states that “[r]epresentations about past or future investment performance could be misleading because of statements or omissions made involving a material fact, including situations where: [p]ortrayals of past income, gain, or growth of assets convey an impression of the net investment results achieved by an actual or hypothetical investment which would not be justified under the circumstances, including portrayals that omit explanations, qualifications, limitations, or other statements necessary or appropriate to make the portrayals not misleading.” In the context of non-variable annuity advertising, under this provision, consideration should be given to whether illustrations about the operation of a non-variable annuity or its features could be misleading. This could be the case in a RILA advertisement because, for example, it uses assumptions (such as limits on gains or index performance that includes dividends, whereas the RILA's index does not include dividends) that are not currently offered or exceed what could be reasonably anticipated, or use “cherry picked” data.
Similarly in the case of RILA and registered MVA annuity advertising, with regard to the commenter concern regarding the potential for statements that exaggerate the benefits of tax deferral, under final rule 156(b)(2)(i) consideration should be given to whether portrayals of the tax-deferred value of the annuity, especially where this value is compared to the value of a taxable account, should reflect the advantages of taxable accounts (
In addition to the prohibition against using materially misleading communications in connection with the offer or sale of any security, Congress has imposed advertising restrictions to the extent that certain advertisements are considered prospectuses under the Securities Act.
Rule 482 also requires enhanced disclosures in fund advertisements designed to convey balanced information to prospective investors, including standardized methodologies that certain funds must use if they wish to include performance data in their advertisements.
Further, Congress expressly directed the Commission to adopt rules that permit registered investment companies to use prospectuses that include information the substance of which is not included in the statutory prospectus, and that are deemed to be
As explained in the Proposing Release, we determined extending rule 482 to RILA issuers was not warranted currently. This conclusion largely followed from our understanding that the rule's emphasis on providing standardized performance data requirements would be conceptually difficult to apply to RILAs and inconsistent with current RILA advertising practices.
Several commenters suggested that we amend rule 482 to extend its provisions to RILAs despite the concerns discussed in the Proposing Release.
Thus, according to these commenters, amending rule 482 to include RILAs would bring regulatory uniformity both between RILAs whose offerings have, until this rulemaking, been registered on different forms (
While some commenters acknowledged our concerns about the inapplicability of rule 482's standardized performance provisions to RILAs, they suggested that these concerns could be addressed either by excluding RILAs from those provisions, or subjecting the ability of RILA advertisements to use rule 482 to a condition that they not contain historical performance data for the RILA or any particular index-linked option.
A number of these commenters suggested that if the Commission were unwilling to amend rule 482 to include RILA sales literature, in the alternative, we should amend rule 433 to allow all RILAs to use free writing prospectuses without meeting the prospectus delivery requirements in order to make such requirements consistent for all RILA issuers without regard to their seasoned status.
Consistent with the proposal, we have determined not to extend rule 482 to RILA issuers at this time. As discussed, commenters raised broader concerns about the impact of the prospectus delivery requirements in rule 433 and how they may operate to impede the ability of some insurance companies to engage in broad-based advertising for RILA offerings. Commenter suggestions that we amend rule 482 to include RILA advertising (so that
In response to commenters, however, we are, in a modification from the proposal, making a technical amendment to rule 433 in order to maintain the status quo for insurance companies that can meet that rule's conditions to use a free writing prospectus in connection with the offering of non-variable annuities without meeting the prospectus delivery requirements, notwithstanding their use of Form N-4 going forward.
Certain Commission letters, or portions thereof, providing 3-13 Exemptions in connection with the registration of an offering of RILAs and registered MVA annuities on Form S-1 will be withdrawn or rescinded in light of the change to permit RILAs and registered MVA annuities to provide SAP financial statements on final Form N-4 in the same way that other insurance companies offering variable annuities are permitted on current Form N-4. On the compliance date of the final amendments, some letters, or portions thereof, will be moot, superseded, or otherwise inconsistent with the final amendments and, therefore, will be withdrawn or rescinded.
Commenters generally supported or stated that they did not oppose withdrawing or rescinding these 3-13 Exemptions.
We are not withdrawing or rescinding 3-13 Exemptions, or portions thereof, providing exemptions from the GAAP financial statement requirements with respect to annuity products other than RILAs and registered MVA annuities. With respect to RILAs, this is consistent
On the compliance date of the final amendments, 3-13 Exemptions that will be withdrawn or rescinded include all of the 3-13 Exemptions listed below to the extent they relate to RILAs and registered MVA annuities.
The Commission is adopting as proposed a technical amendment to Form N-6 to reflect the correct placement of an amendment to this form that the Commission adopted in 2020 in the release titled “Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets” (herein referred to as the “Exempt Offering Framework Adopting Release”).
In addition, we are adopting technical amendments to the definition of “Summary Prospectus” in Forms N-3 and N-6 to reflect the lack of subparagraphs in rule 498A(a). When these definitions were originally adopted, they inadvertently referred to subparagraphs that did not appear in rule 498A(a).
The effective date for all rules and forms associated with the final amendments is September 23, 2024, which is 60 days from the date of publication of the final amendments in the
We proposed a six-month delayed effective date for all amendments except for the final Form N-4, amended rule 498A, and technical amendments to Form N-6 which we did not propose to delay. Commenters generally supported or did not oppose the proposed effective date for final Form N-4, final rule 498A, or the technical amendment to Form N-6 and agreed that this approach was consistent with the RILA Act.
We reasoned in the proposing release that the six-month delayed effective date for certain amendments would provide the Commission with the necessary time to prepare the EDGAR system to accommodate transitioning RILA offerings onto the proposed framework. After further consideration and preparation, we have determined that the EDGAR system will be ready to accommodate the transition as of the effective date and an additional 6-month delayed effective date for certain amendments will be unnecessary. A single effective date for all of the amendments adopted in this release will provide filers with a simpler timeline that reduces confusion about the logistics of filing.
We proposed a compliance date of one year after publication of the final amendments in the
Commenters generally supported the proposed timeline or supported the proposed timeline except as applied to certain amendments. In particular, one commenter stated that the compliance date would allow sufficient time for all insurers to prepare for compliance with the final amendments, but urged the Commission to modify the approach to better accommodate insurance companies currently registering RILA offerings on Form S-3.
We agree that RILA filers should not have different compliance periods based on whether they currently file on Form S-1 or S-3 and did not intend to provide different compliance periods based on the Securities Act form an insurance company is currently using. We therefore are providing a compliance date of May 1, 2026 rather than an approach based on the timing of an insurance company's annual update. Accordingly, all issuers of non-variable annuities that have previously registered offerings of securities on Forms S-1 or Form S-3 will be required to file a post-effective amendment to their registration statement pursuant to final rule 485(a) that will be effective on or before May 1, 2026, using final Form N-4.
The Proposing Release stated that, in appropriate circumstances, we would consider requests by registrants with respect to existing variable annuity contracts to file post-effective amendments pursuant to rule 485(b)(1)(vii) when these post-effective amendments make conforming changes to comply with the proposed amendments to Form N-4.
Commenters were mixed regarding our proposed approach of not having a separate Inline XBRL compliance period. One commenter supported the proposed approach, stating that service providers are accustomed to Inline XBRL requirements and will be able to transition RILAs within our proposed compliance period.
We are not creating a separate, longer compliance period for filers to comply with the Inline XBRL requirements because we have determined that compliance by May 1, 2026 is feasible. Insurance companies already have experience with Inline XBRL tagging. In this regard, 22 of the 23 insurers that issue RILAs also offer products that are subject to tagging requirements on Forms N-3, N-4, or N-6 or otherwise have experience tagging registration statements.
One commenter stated that registration on Form N-4 should be optional for registered MVA annuity offerings that no longer involve the issuance of new contracts (
One commenter asked that we clarify whether a registrant can choose to comply with only a portion of final Form N-4 prior to the end of the compliance period.
In a change from the proposal, we are not providing a compliance period for the amendments to rule 156 after the amended rule is effective.
We appreciate that these amendments will result in changes in practices for insurance companies, both in updating disclosures and in registering contract offerings. The final amendments also could result in insurance companies reviewing their sales literature in light of the final amendments to rule 156. In considering these changes, insurance companies are encouraged to contact the Commission staff with any questions they may have about these issues.
Pursuant to the Congressional Review Act,
We are mindful of the costs imposed by, and the benefits obtained from, our rules. Section 3(f) of the Exchange Act, section 2(b) of the Securities Act, and section 2(c) of the Investment Company Act state that when the Commission is engaging in rulemaking under such titles and is required to consider or determine whether the action is necessary or appropriate in (or, with respect to the Investment Company Act, consistent with) the public interest, the Commission shall consider whether the action will promote efficiency, competition, and capital formation, in addition to the protection of investors. Further, section 23(a)(2) of the Exchange Act requires the Commission to consider, among other matters, the
We are adopting amendments to our rules designed to carry out the requirements of Section 101(b) Division AA, Title I of the Consolidated Appropriations Act, 2023, to establish a registration form for RILAs. The Commission is amending the form currently used by most variable annuity separate accounts, Form N-4, to require insurance companies to register offerings of RILAs, as well as registered MVA annuities on that form as well. To facilitate this amendment, the Commission is also amending certain filing rules and making other related amendments to Form N-4 that apply to all issuers that use that form. The final amendments also require insurance companies to comply with rule 156, a current Commission rule that provides guidance as to when sales literature is materially misleading under the Federal securities laws to RILA and registered MVA annuity advertisements and sales literature.
While the Commission has developed a set of specific registration forms for variable insurance contracts and their issuers, insurance companies that offer non-variable annuities cannot use those forms because those issuers are not investment companies. Currently, insurance companies register the offerings of non-variable annuities on the Securities Act registration forms that are typically used to register traditional debt or equity offerings, Forms S-1 and S-3. Because Forms S-1 and S-3 are not tailored to the particular characteristics of non-variable annuities (or indeed insurance products more generally), these forms include a number of disclosure requirements that may be less material to investors when evaluating an insurance product like a RILA or registered MVA annuity and do not include line-item requirements mandating specific information that is of importance to investors in these products. The inclusion of disclosures that are of little relevance to their investors and the omission of information that is of importance to their investors limits the usefulness of the information investors currently receive about RILAs and registered MVA annuities and thus their ability to make informed investment decisions. In addition, Forms S-1 and S-3 require the use of GAAP financial statements, rather than the SAP financial statements that the State insurance regulators require. SAP financial statements, which focus on an issuer's ability to meet its obligations under its insurance contracts, as regulated by State law, provide material information for investors evaluating RILAs and registered MVA annuities and assessing an issuer's solvency. For those insurers that will be able to include or incorporate SAP financial statements in the Form N-4 registration statement, investors will benefit from the lower cost burdens on issuers provided by the use of SAP financial statements, to the extent that those savings are passed along to investors.
We have considered the potential costs and benefits that will result from the final rules in Section IV.C., as well as the potential effects on efficiency, competition, and capital formation in Section IV.D. Certain potential economic effects of the final amendments will stem from the statutory mandate, while others will stem from the discretion we are exercising in amending Form N-4, rule 498A, the filing and prospectus delivery rules, as well as the communication rules applicable to non-variable annuities. We also consider certain alternatives to our approach to implementing the statutory mandate, as discussed in Section IV.E. Where possible, we have attempted to quantify the economic effects. In some cases, however, we are unable to quantify the economic effects because we lack the information necessary to provide a reasonable and reliable estimate. For example, the final amendments could reduce the amount of time and effort investors require to make an investment decision. We do not have data on the extent to which the final amendments would reduce the amount of time and effort investors require to make an investment decision, or the value of that time and effort to investors. Also, because the final amendments facilitate not only the evaluation and comparison among non-variable annuities, but also facilitate the comparison of non-variable annuities to other annuity products, we may observe a change in investment in annuities. We do not have data that would allow us to estimate the extent to which we may observe a change in investment in annuities. Nevertheless, as described more fully below, the Commission is providing both a qualitative assessment and quantified estimate of the economic effects, where feasible. The Commission has sought comment on all aspects of the economic analysis, especially any data or information that would better enable a quantification of economic effects, and the analysis below takes into consideration relevant comments received.
The final amendments affect issuers of and investors in RILAs, issuers of and investors in registered MVA annuities, as well as issuers of and investors in variable annuities currently registered on Form N-4.
As of May 1, 2024, there were 104 RILAs registered with the Commission issued by 29 insurance companies.
RILA contracts offer a variety of index-linked options. Specifically, RILA contracts offer index-linked options whose returns are linked, in part to, indices such as the S&P 500, Russell 2000, and NASDAQ-100. RILA contracts offer index-linked options with less well-known indices and ETFs as well, but with much lower frequency.
As discussed in Section I, index-linked options whose returns are based, in part, on the same index may nevertheless have different elements that contribute to an investor's returns. Notably, different index-linked options whose returns are linked to the same index may offer different crediting periods (the set length of time for measuring growth of contract value based on the performance of the linked index—for example, one or three years), crediting methodologies, and buffer or floor levels.
The final amendments also affect issuers of and investors in registered MVA annuities. As of May 1, 2024, there were 53 registered MVA annuities registered with the Commission issued
Table 10 provides information on the dollar amount of RILA sales over the past eight years.
Additionally, the final amendments affect issuers of and investors in variable annuities currently registered on Form N-4. As of 2019, there were a total of 2,396 unique variable annuity products offered by a total of 33 companies.
The number of insurance companies currently offering securities registered as RILAs with the Commission is 29, from 24 insurance company complexes. Out of these 29 insurance companies, 20 register RILAs on Form S-1, while the remaining 9 use Form S-3.
The number of insurance companies currently offering registered MVA annuities registered with the Commission is 16, from 14 insurance company complexes.
In 2023 there were an estimated 82.3 million individuals aged 45-64 and 59.3 million individuals aged 65 or older in the United States, representing 25 percent and 18 percent of the total population, respectively.
Individuals may face meaningful burdens (
Decision making limitations may be particularly problematic in the context
As discussed in Section I above, non-variable annuities are securities for purposes of the Securities Act, and public offerings of non-variable annuities, therefore, must be registered with the Commission.
Form S-1 is available to any issuer (except foreign governments and issuers of asset-backed securities) to register securities for which no other registration form is authorized or prescribed. A registration statement on Form S-1 contains extensive disclosure about all aspects of the issuer's business and financial condition and consists of two parts: a prospectus (Part I), and additional information not required to be included in the prospectus (Part II), but that is publicly available on EDGAR. Form S-1 allows incorporation by reference only on a very limited basis. The prospectus must contain financial statements meeting the requirements of Regulation S-X, which generally requires audited financial statements prepared in accordance with GAAP.
Form S-3 is a “short-form” registration statement under the Securities Act that can be used by companies that have been subject to reporting obligations under the Exchange Act for at least one year and that satisfy certain other requirements.
Registration using Form S-3 offers issuers advantages over registration using Form S-1. First, Form S-3 allows significant incorporation by reference, which allows for shorter prospectuses and makes Form S-3 easier to complete. Also, Form S-3 also allows for forward incorporation by reference, eliminating the need to file post-effective amendments to keep registration statements current.
A Form S-3 filed by a non-WKSI must be declared effective by the Commission.
Under the Federal securities laws applicable to all securities (including non-variable annuity offerings), it is unlawful for any person to use materially misleading communications in connection with the offer or sale of any security.
As discussed in Section I above, in 2022 Congress enacted the RILA Act directing the Commission to adopt a new registration form for RILAs within 18 months of enactment (
Annuities can play a role in helping investors save for retirement and receive guaranteed lifetime income during retirement.
Variable annuities accumulate savings based on the performance of the underlying investment options chosen by an investor. Typically, investors are able to choose among investment options that pass on the returns of a wide variety of mutual funds such as equity funds, bond funds, funds that combine equities and bonds, actively managed funds, index funds, domestic funds, and international funds.
RILAs are an index-linked product that can be purchased by individual investors as part of both qualified and non-qualified retirement accounts.
At the end of a crediting period, the issuer credits a RILA investor's contract value with “interest” (which can be either positive or negative) that is based on the performance of a specified index, subject to restrictions on the upside, through a cap and/or “participation rate,” as well as some form of downside protection.
Also, unlike variable annuities, most RILAs do not include any direct ongoing fees or charges to the investor. Insurance companies, however, potentially can benefit from offering RILAs in at least three ways.
While most RILAs do not include any explicit ongoing fees or charges to the investor, RILAs typically have charges for early or mid-term withdrawals. As discussed in Section II.C.3.b, charges for early or mid-term withdrawals could include surrender charges and contract adjustments.
RILAs differ from other annuity contracts in other ways as well. Variable annuities involve a direct investment of premiums into subaccount(s) that correspond to one, or more, of many mutual funds. RILA premiums, on the other hand, are not directly invested into the assets of the underlying index, and typically investors can only choose among index-linked options whose returns are based on a small number of mainstream indexes.
Like RILAs, registered MVA annuities have an accumulation phase divided into one or more crediting periods followed by a payout phase. Also like RILAs, registered MVA annuities apply contract adjustments upon withdrawals prior to term maturity. Unlike RILAs, however, registered MVA annuities' credited interest is not linked to the performance of an index. Registered MVA annuities offer a rate of return that is determined by the insurance company for a set period, subject to a specified minimum.
Additionally, non-variable annuities and variable annuities differ with respect to their use of proceeds. As discussed in Section II.C.5, variable annuity proceeds are held in separate accounts insulated from the insurance company's general account and, therefore, are insulated from the issuer's general account creditors. Variable annuity proceeds in unitized sub-accounts must be invested as the investor chooses and returns are credited to the account directly. On the other hand, contract values, benefits, and guarantees provided by non-variable annuities are paid out of assets held in the insurance company's general account or a non-unitized separate account, and may not be insulated from the claims of the insurer's general creditors (and thus subject to the insurance company's claims-paying ability).
Also, non-variable annuity proceeds can be invested as the issuer sees fit. We understand that insurance companies are able to invest RILA proceeds in derivative securities that closely approximate the issuer's liabilities from RILA contracts.
Unlike variable annuity offerings that are registered on Form N-4, insurance companies register non-variable annuity offerings on Forms S-1 or S-3. Forms S-1 and S-3 include a number of disclosure requirements that are specific to the insurance company issuing the non-variable annuity that the Commission does not require in the registration statements for offerings of variable annuities.
The final amendments require that insurance companies use Form N-4 to register the offering of RILAs and registered MVA annuities and we are adapting Form N-4 for that purpose.
The following sections discuss the specific benefits deriving from the contents and requirements of the form in detail. In addition to these benefits, expanding the scope of Form N-4 to include RILAs and registered MVA annuities will benefit investors by making it easier for them to evaluate and compare non-variable annuities, and also to compare other annuity products with non-variable annuities. For example, investors may require less effort to evaluate and compare annuity products that register using the same form and may find the focus of Form N-4 on insurance-product specific information helpful in evaluating and comparing these annuity products. Additionally, investors in combination contracts will benefit by receiving one prospectus that describes the entire contract and available investment options, rather than two prospectuses that separately describe variable and non-variable options (and that repeat information about contract features that variable- and non-variable annuity contracts have in common). To the extent that investors require less effort to evaluate and compare these annuity products, investors may be more likely to make decisions that better align with their investment goals. Commenters broadly agreed that the proposed amendments to Form N-4 would provide RILA investors with more meaningful and helpful disclosures as compared to the more generic disclosures required on Forms S-1 and S-3.
One commenter, who agreed with the Commission's proposal to amend Form N-4 to include existing disclosures for registered MVA annuities that are filed on Form S-1 or S-3, requested that MVA issuers be permitted to continue to register MVA contracts no longer offered for sale to new investors on Form S-1 or S-3.
The final amendments are designed to help investors make informed investment decisions regarding the annuity products that are registered on Form N-4. The registration process on Form N-4 uses a layered disclosure approach designed to provide investors with key information relating to the contract's terms, benefits, and risks in a concise and reader-friendly presentation, with access to more detailed information for those investors who want it. Providing investors with key information is particularly
In particular, the final amendments update the contents of Form N-4 to specifically address non-variable annuities, including by: (1) amending the form's general instructions; (2) amending the requirements for front and back cover pages; (3) updating the Key Information Table (or “KIT”); (4) providing new principal disclosures regarding non-variable annuity investment options; and (5) providing for new contract adjustment and fee disclosures. The final amendments also include certain other technical and conforming amendments to Form N-4 and related rules designed to accommodate the inclusion of non-variable annuity offerings on that form as well as requiring the insurance company to provide disclosure in response to the remaining items on Form N-4 to the extent applicable.
The final amendments require RILA and registered MVA annuity offerings registered on Form N-4 to comply with the general instructions of that form, including requirements related to: (1) using document design techniques that promote effective communication; (2) organizing information to make it easier for investors to understand; (3) including information in the prospectus or SAI not otherwise required so long as the additional information is not incomplete, inaccurate, or misleading, and does not obscure or impede understanding of the information that is required; (4) requiring Form N-4 filers to define special terms used in the prospectus in any presentation that clearly conveys meaning to investors; (5) allowing insurance companies to describe multiple contracts that are essentially identical in a single prospectus; (6) making available the dates of both the prospectus and SAI; (7) providing an interactive data file related to certain information on the form; (8) requiring insurance companies to include active hyperlinks, or other means of facilitating access that leads directly to the relevant website, for an electronic version of the prospectus; and (9) the use of incorporation by reference. The general instructions are designed to require clear and consistent disclosure to investors about annuity contracts currently registered on the form and to make clear how filers must prepare and file their registration statements.
One commenter stated that the proposed amendments would delete the last sentence of General Instruction C.3.(a), which states that information required in the KIT or the overview section need not be repeated elsewhere in the prospectus. That commenter stated that excessive repetition adds to the length of the prospectus without any commensurate value to investors.
Clear disclosure benefits investors by making it easier for investors to evaluate and compare offerings. Concise and decision-useful disclosures can help facilitate the investment decision-making process. Also, the presentation of information in a consistent manner will facilitate not only the evaluation and comparison among RILA and registered MVA annuity offerings, but also will facilitate the comparison of non-variable annuities to other annuity products.
The final amendments make certain changes to information currently required on the front and back pages of a prospectus for all registrants on Form N-4. Like variable annuities registered on Form N-4, RILAs and registered MVA annuities are required to present certain information on the front and back cover pages of the prospectus. The final amendments require several new cover page disclosures for all Form N-4 issuers. One set of changes provides additional information distinguishing among the investment options available in the annuities registering on Form N-4 and cross-reference the prospectus appendix that provides additional information about each option. These changes could help investors better understand what investment options are available under the contract, in an easily identifiable location. Some commenters suggested that the proposed cover page disclosures were too voluminous given the purpose of the front cover page and could cut against the form's layered disclosure approach, thereby reducing the benefits to investors.
Some commenters also raised concerns about specific required front and back cover disclosures.
As required for current Form N-4 issuers, the final amendments require RILA and registered MVA annuity issuers to provide a Key Information Table in their registration statements. The KIT includes a summary of five areas: (1) fees, expenses, and adjustments; (2) risks; (3) restrictions; (4) taxes; and (5) conflicts of interest. The KIT is important summary disclosure for investors that is included in the prospectus, and the final amendments to the KIT requirements are intended to highlight important considerations related to non-variable annuities, including certain unique and/or opaque aspects of non-variable
In a change for all Form N-4 issuers, the final amendments change the order in which the KIT appears relative to the Overview of the Contract disclosures in the prospectus. We received one comment on this aspect of the proposal. The commenter stated that the repetition of information required in the Overview of the Contract and KIT would reduce the benefits of the KIT.
Overall, the final KIT requirements (like the KIT requirements for variable annuities prior to these amendments) are designed to provide a brief description of key facts about RILAs and registered MVA annuities in a specific sequence and in a standardized presentation that is designed to be easy to read and navigate. A standardized presentation that is designed to be easy to read and navigate benefits investors by making it easier for investors to evaluate and compare non-variable annuity offerings. Also, the standardized presentation of information could facilitate not only the evaluation and comparison among non-variable annuity offerings, but also could facilitate the comparison of RILAs and registered MVA annuities to other annuity products.
The final amendments to Form N-4 require disclosures that will provide investors with information about all annuities whose offerings are registered on Form N-4 as well as with specific information about RILAs and registered MVA annuities and non-variable options under the contract. With regard to Form N-4 issuers generally, the final amendments require registrants to disclose market risk, early withdrawal risk, contract benefits risk, insurance company risk, and the risk of contract changes. With regard to specific information about non-variable annuities, the final amendments include requirements related to: (1) information about non-variable annuities generally and an overview of certain key elements of any index-linked option offered under the contract; (2) a more in-depth description of any index-linked investment options available under the contract; (3) the inclusion of an appendix that consolidates certain summary information related to any index-linked options and fixed options available under the contract (which will accompany similar information about variable options offered under a “combination” contract); and (4) certain principal risk disclosures relating to investing in the non-variable annuity contract that the prospectus describes.
The final requirements are designed to provide additional information regarding the risk of investing in Form N-4 products generally, as well as the unique aspects of non-variable annuities and certain summary and detailed information about index-linked options available under a non-variable annuity contract. The information should benefit investors by making it easier for investors to evaluate and compare variable and non-variable annuity products registered on Form N-4. The required disclosure relating to index-linked and fixed options available under a contract should benefit investors by facilitating the comparison of these investment options to other investment options available under the contract, as well as to investment options that other non-variable annuity contracts offer.
The final amendments permit insurance companies to disclose current upside rates in the prospectus either by disclosing the information directly in the prospectus, as proposed, or by including a website address where the current upside rates can be found and incorporating by reference the information on the website into the prospectus.
RILA and registered MVA annuity investors have the ability to withdraw or transfer their money before the end of a
The final amendments to Form N-4 require specific disclosures with respect to contract adjustments. Currently, Form N-4 requires variable annuity registrants to provide comprehensive information on the fees and expenses that investors will pay when buying, owning, and surrendering a contract, including expenses paid each year during the time the investor owns the contract. Although RILAs and registered MVA annuities typically do not charge the explicit fees and expenses common to variable annuities, they do typically utilize contract adjustments. Since negative adjustments may result in substantial costs to investors, it is important to include a detailed description of contract adjustments in the registration statement.
Specifically, the final amendments expand current disclosure requirements to address contract adjustments that could affect investors' contract value when buying, owning, and surrendering or making withdrawals from an investment option. The final amendments also require certain other specific disclosures about contract adjustments, such as requiring disclosures about the maximum potential loss that an investor could experience in connection with a negative contract adjustment.
Some commenters opposed certain changes to Item 4 and Item 7, arguing that the changes would mischaracterize the nature or magnitude of the quantities being disclosed, thereby reducing the benefits of the disclosures to investors.
Some commenters on the proposal raised concerns about the inclusion of the maximum potential loss as part of the fee table disclosure requirements in Item 4, stating that contract adjustments do not reflect fees.
The final amendments include certain other amendments to Form N-4 and related rules designed to accommodate the inclusion of RILA and registered MVA annuity offerings on Form N-4. These include amendments to Form N-4's facing sheet, definitions, exhibit list, and required representations, as well as amendments to certain Securities Act rules. Because these other amendments to Form N-4 and related rules are designed to accommodate the inclusion of non-variable annuity offerings on Form N-4, the benefits that could accrue as a result of these other amendments are those that result from RILA issuers registering offerings on Form N-4 rather than Form S-1 or Form S-3. For example, amending Form N-4 and related rules to accommodate the inclusion of non-variable annuity offerings on Form N-4 benefits investors because Form N-4 should make it easier for investors to evaluate and compare non-variable annuities, and also to compare other annuity products with non-variable annuities.
The final amendments also amend Form N-4's required exhibits list to add new Item 27(p) for all issuers, which requires the filing of any power of attorney included pursuant to rule 483(b). While this exhibit is already required to be filed with a Form N-4 registration statement under rule 483(b), practices differ regarding the placement of a required power of attorney exhibit within the exhibit list. This amendment will benefit investors in comparing these exhibits for all annuity products whose offerings are registered using Form N-4 by standardizing the location of these exhibits in the registration statement. Facilitating the comparison of annuity products could benefit investors by helping them to invest in non-variable annuities in a manner that is consistent with their overall financial needs and objectives.
The final amendments also add new Item 31A in Form N-4 to require census-type information regarding non-variable annuities offered in connection with the applicable registration statement. Under this new item, insurance companies have to provide information regarding any non-variable annuity offered through the registration statement, as of the most recent calendar year-end, including (1) the name of each contract; (2) the number of contracts outstanding; (3) the total value of investor allocations attributable to index-linked or fixed options; (4) the number of contracts sold during the prior calendar year; (5) the gross premiums received during the prior calendar year; (6) the amount of contract value redeemed during the prior calendar year; and (7) whether the contract is a combination contract.
One commenter stated that the information in Item 31A would not be useful to investors in making investment decisions and would require insurance companies to publicly reveal “private and confidential” information that could be used by competitors. We
The final amendments also amend Item 34 of Form N-4 to require insurance companies to include two specific undertakings in their registration statements on Form N-4: (1) to file, during any period in which offers or sales are made, through a post-effective amendment to their registration statement, any prospectus required by section 10(a)(3) of the Securities Act and; (2) that, for the purposes of determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. These undertakings are the same as two undertakings insurance companies were required to provide in registration statements registered on Forms S-1 or S-3. It remains appropriate for insurance companies to continue to furnish these representations concerning post-effective amendments to a registration statement as, under the final amendments, non-variable annuities may be continuously offered on a registration statement for an indefinite amount of time.
The final amendments require RILA and MVA annuity issuers to provide disclosure in response to the remaining items on Form N-4 to the extent applicable. These are items that we have previously determined are relevant in the context of variable annuity offerings. Requiring RILA and MVA annuity filers to provide disclosure in response to the remaining items on Form N-4 to the extent applicable will help ensure that comparable information is provided in a standardized, consistent manner for all filers using Form N-4.
Standardized, consistent disclosure of comparable information benefits investors by making it easier for investors to evaluate and compare RILA and registered MVA annuity offerings. Also, the presentation of information in a standardized, consistent manner across all filers using Form N-4 will facilitate not only the evaluation and comparison among non-variable annuities, but also the comparison of non-variable annuities to variable annuities. Further, certain investors, while aware of variable annuities, simply may not be aware of RILAs and registered MVA annuities as investment options. Presentation of information in a standardized, consistent manner on Form N-4 could increase investor awareness of RILAs and registered MVA annuities as investing options. Facilitating the comparison of annuity products could benefit investors by helping them to invest in non-variable annuities in a manner that is consistent with their overall financial needs and objectives.
The final amendments require many of the newly added disclosures on Form N-4 to be structured (
As discussed in Section II.C.10., one commenter stated that the Inline XBRL requirements would be beneficial to all investors because they would facilitate access to data about non-variable annuities in a structured, machine-readable format.
Inline XBRL has value for companies and insurance products, investors, investment professionals, and third parties such as data aggregators, financial analysts and other data users because it will make the tagged disclosures more readily accessible for aggregation, comparison, filtering, and other analysis. The Inline XBRL requirement will facilitate access to data about non-variable annuities, which could improve investor understanding of the disclosed information and indirectly benefit insurance companies.
The final amendments to rule 498A permit non-variable annuity issuers, as well as issuers of “combination contracts” offering a combination of index-linked options and variable options, to use a summary prospectus to satisfy statutory prospectus delivery obligations. Investors will continue to have access to the non-variable annuity statutory prospectus and other information about the non-variable annuity contract online, with paper or electronic copies of this information upon request. The current summary prospectus rule for variable contracts uses a layered disclosure approach designed to provide investors directly with key information relating to the contract's terms, benefits, and risks in a concise and reader-friendly presentation, with more detailed information available elsewhere. The final amendments to rule 498A broaden the scope of the rule to expand the layered disclosure approach to non-variable annuity contracts.
As discussed in Section II.D above, the final amendments to rule 498A involve the use of two distinct types of summary prospectuses for non-variable annuity contracts, employing the same approach the rule currently uses for variable contracts. An “initial summary prospectus,” covering contracts offered to new investors, will include certain key information about the contract's most salient features, benefits, and risks, presented in plain English in a standardized order. The rule amendments also require “updating summary prospectuses” to be provided to existing investors in non-variable annuity contracts. The updating summary prospectus includes a brief description of certain changes to the contract that occurred during the previous year, as well as a subset of the information required to appear in the initial summary prospectus. Certain key information about the index-linked options that the contract offers as investment options will be provided in both the initial summary prospectus and updating summary prospectus.
The final amendments create a choice for insurance companies. Insurance companies may meet their prospectus delivery obligations by providing the statutory prospectus, or by providing a summary prospectus and making statutory prospectuses and other required documents available online. Those insurance companies that expect to benefit by providing summary prospectuses would choose to rely on the final amendments to meet their prospectus delivery obligations. For example, as discussed in Section II.F.3, we understand that non-variable annuity issuers typically deliver prospectuses to accompany or precede other communications, such as annuity applications. It is possible that providing layered disclosure through a summary contract prospectus regime (including costs of delivering initial summary and updating summary prospectuses and making statutory prospectuses and other documents available online) could result in reduced costs for issuers.
If insurance companies choose to meet their prospectus delivery obligations by delivering summary prospectuses to investors, with other documents available online, investors will then have a choice as well. Under the layered disclosure framework we are adopting for non-variable annuities, investors will receive information in the form of a summary prospectus, with more detailed information available online if the investor chooses to access it.
The presentation required for the initial summary prospectus may reduce the investor effort required to compare non-variable annuity contracts, to consider different index-linked options that RILAs offer, or to compare non-variable annuity contracts with each other and with variable annuity contracts, when an investor considers a new investment. Information provided in a concise, user-friendly presentation could allow investors to compare information across contracts and as a result, may lead investors to make decisions that better align with their investment goals.
The final amendments require a standardized presentation for non-variable annuity initial summary prospectuses to require certain disclosure items that will be most relevant to investors to appear at the beginning of the initial summary prospectus, followed by supplemental information. An initial summary prospectus must contain the information required by the rule, and only that information, in the order specified by the rule.
Standardized, consistent disclosure of comparable information benefits investors by making it easier for investors to evaluate and compare non-variable offerings. Also, the presentation of information in a standardized, consistent manner will facilitate not only the evaluation and comparison among non-variable offerings, but also will facilitate the comparison of non-variable annuities to other variable annuities. Further, certain investors, while aware of variable annuities, simply may not be aware of RILAs and registered MVA annuities as investment options. Presentation of information in a standardized, consistent manner in an initial summary prospectus could increase investor awareness of RILAs and registered MVA annuities as investing options.
In addition, given the time required to review a statutory prospectus, non-variable annuity investors may benefit from summary prospectuses because they offer a shorter alternative to statutory prospectus disclosure. There is evidence that suggests that consumers benefit from summary disclosures.
Also, investors allocate their attention selectively,
To the extent summary prospectuses increase readership of non-variable annuity contract disclosures, they could improve the quality and efficiency of portfolio allocations made on the basis of disclosed information for those investors who otherwise will not have read the statutory prospectus.
The required presentation for the initial summary prospectus may also reduce the investor effort required to compare non-variable annuity contracts, to consider different index-linked options that a RILA offers, or to compare non-variable annuity contracts with each other and with variable annuity contracts, when an investor considers a new investment. Information provided
Further, the final framework for non-variable annuity contract summary and statutory prospectuses also includes design elements to facilitate investor use. In particular, the final amendments include requirements for linking both within the electronic version of a contract statutory prospectus and between the electronic versions of the contract statutory prospectus and the contract summary prospectus. The linking requirement will permit investors who use the electronic versions of contract prospectuses to quickly navigate between related sections within the contract statutory prospectus and back and forth between related sections of the contract summary prospectus and the contract statutory prospectus. Further, the final amendments also require that investors either be able to view the definition of each special term used in an online summary prospectus upon command, or to move directly back and forth between each special term and the corresponding entry in any glossary or list of definitions that the summary prospectus includes. This requirement will facilitate understanding of terms that may be confusing or unfamiliar among investors viewing the documents online.
The updating summary prospectus for RILAs and registered MVA annuities will have many of the same benefits for investors associated with the initial summary prospectus discussed above, with respect to presenting key information in an easier and less time-consuming manner for investors. Specifically, because many terms of the non-variable annuity contract do not change from year-to-year, the contract statutory prospectus may contain large amounts of disclosure that is duplicative of disclosure that the investor has previously received. Those changes that do occur may be important to investors, but the disclosure about these changes could be difficult for the investor to identify given the volume of prospectus disclosure that investors would otherwise receive, and the current lack of a requirement to identify new or changed information.
Under the final amendments, the updating summary prospectus will include a concise description of important changes affecting the statutory prospectus disclosure relating to certain topics that occurred within the prior year—namely: (1) the availability of investment options under the contract, (2) the overview of the contract, (3) the KIT, (4) certain information about fees, (5) benefits available under the contract, (6) purchases and contract value, and (7) surrenders and withdrawals. These are topics that are most likely to entail contract changes and, for the reasons previously noted, are the types of contract changes most likely to be important to investors because they affect how investors evaluate non-variable annuity contracts and are relevant to investors when considering whether to continue in the existing option (if available) or transfer funds to a different option. The updating summary prospectus, if used by issuers to satisfy their prospectus delivery obligations, will likely reduce the burden on investors and increase their understanding of their contract by highlighting certain changes to the contract made during the previous year, while forgoing the repetition of most information that had remained unchanged.
The final amendments permit RILA and registered MVA annuity issuers to provide financial statements on amended Form N-4 in the same way that insurance companies currently provide financial statements on that form.
The final amendments also require insurance companies registering non-variable annuities to provide information relating to changes in and disagreements with accountants on accounting and financial disclosure as detailed in 17 CFR 229.304 (“Item 304 of Regulation S-K”). Further, insurance companies will be required to provide as an exhibit any letter from the insurance company's former independent accountant regarding its concurrence or disagreement with the statements made by the insurance company in the registration statement concerning the resignation or dismissal as the insurance company's principal accountant. These items are currently provided by RILAs and registered MVA
The final filing rules will provide benefits to insurance companies. Registering an indeterminate amount of securities benefits insurance companies by eliminating the risk that a non-variable annuity issuer may inadvertently oversell securities with respect to a registration statement on Form N-4. The payment of fees on an annual net basis furthermore should lead to a reduction in overall filing fees relating to non-variable annuities. For example, insurance companies will no longer pay fees on registered, but unsold, securities. To the extent that there are cost savings for issuers, some of those savings may potentially be passed on to investors.
Second, the final amendments require RILA and registered MVA annuity issuers to apply rule 497 under the Securities Act when appropriate to file non-variable annuity prospectuses and prospectus supplements with the Commission. Under the final amendments, a non-variable annuity issuer is required to file every prospectus relating to a non-variable annuity offering that varies in form from a previously filed prospectus before it is first used. This approach—rather than requiring filing only if the issuer makes substantive changes from or additions to a previously-filed prospectus—may benefit both investors and issuers. The requirement that insurance companies file every prospectus that varies in form from a previously filed prospectus before it is first used could facilitate investor evaluation and comparison by making publicly available the most timely information currently available to investors. We expect this benefit to be minimal, however, because rule 424 under the Securities Act requires non-variable annuity issuers only to file prospectuses that contain substantive changes. Prospectuses required to be filed under rule 497 that will not be required to file under rule 424, then, will be prospectuses updated with minor, non-substantive changes and likely of limited informational benefit to investors.
Issuers may benefit from applying rule 497 as well. The final amendments facilitate a uniform post-effective amendment and prospectus filing framework for all Form N-4 filers, which will provide insurance companies with more consistent filing requirements across similar products. This, in turn, could benefit insurance companies by making it easier to execute such offerings and may decrease compliance costs.
As discussed above, certain issuers use a short-form registration statement on Form S-3, which requires less information than Form S-1 and allows for significant incorporation by reference. Certain issuers also can rely on rule 430B under the Securities Act to omit certain information from the “base” prospectus when the registration statement becomes effective and later provide that information in a subsequent Exchange Act report (forward) incorporated by reference, a prospectus supplement, or a post-effective amendment. Issuers registering annuity product offerings on Form N-4, on the other hand, have limited ability to incorporate information by reference into their registration statements and cannot forward incorporate information from subsequently filed Exchange Act reports. Issuers registering annuity product offerings on Form N-4 also cannot rely on rule 430B to omit certain information from the base prospectus. Under the final amendments, then, non-variable annuity investors will generally have all the information available in one location (other than current rates, which will be permitted to be incorporated by reference from a website) rather than needing to separately access the information on a website or request the incorporated materials. As a result, costs to investors for assembling and assimilating necessary information could decrease, with a potentially stronger effect for investors that may not have the technical capabilities or monetary resources to search efficiently through multiple information sources.
We are amending rule 156 to make its provisions applicable to RILA and registered MVA annuity sales literature. Rule 156 is an interpretive rule that provides factors to be weighed in considering whether a statement
For example, rule 156(b)(1)(ii) provides that a statement could be misleading because of the absence of explanations, qualifications, limitations or other statements necessary or appropriate to make such statement not misleading. Under this provision, where made applicable to non-variable annuity sales literature, consideration should be given about whether an advertisement will be materially misleading if it markets the investment as a growth investment, a loss-avoidance vehicle, or a customizable product in the absence of qualifying explanations or statements. Similarly, under the provision, where made applicable to non-variable annuity sales literature, consideration should be given about whether an advertisement will be materially misleading if sales literature advertises a particular feature of the product's bounded return structure that is not available for the life of the product without providing additional context as to the issuer's discretion to make changes.
Further, rule 156(b)(4), prior to these amendments, provided that representations about fees or expenses associated with an investment in a fund could be misleading because of statements or omissions made involving a material fact, including situations where portrayals of the fees and expenses associated with an investment in the fund omit explanations, qualifications, limitations, or other statements necessary or appropriate to make the portrayals not misleading. The final amendments change this provision to also address representations about the fees or expenses associated with a non-variable annuity contract and provide guidance about the contextual analysis to use in determining whether a particular representation in a non-variable annuity advertising could be materially misleading. As discussed in Section II.G.1., when complying with this provision in the context of non-variable annuity sales literature, under final rule 156(b)(4), insurance companies are prompted to consider whether representations or portrayals either of a non-variable annuity's costs or charges, or optional benefits that are subject to a contract adjustment, would necessitate qualifying statements or explanations regarding the economic costs to the investor to receive an advertised benefit or those generally associated with the non-variable annuity.
Also, rule 156(b)(2)(i) states that representations about past or future investment performance could be misleading because of statements or omissions made involving a material fact. This includes situations where portrayals of past income, gain, or growth of assets convey an impression of the net investment results achieved by an actual or hypothetical investment which would not be justified under the circumstances, including portrayals that omit explanations, qualifications, limitations, or other statements necessary or appropriate to make the portrayals not misleading. Under the provision, where made applicable to non-variable annuity sales literature, consideration should be given about whether illustrations about the operation of a non-variable annuity or its features could be misleading because, for example, they use assumptions that are not currently offered or exceed what could be reasonably anticipated or use “cherry picked” data.
By reducing the potential for misleading or fraudulent statements in non-variable annuity sales literature, applying rule 156 to RILAs and registered MVA annuities provides investors with protections and helps ensure that investors receive the information necessary to make informed decisions about these products. Ensuring that investors receive the information necessary to make informed decisions could benefit investors by facilitating investor evaluation of RILAs and registered MVA annuities as well as investor comparison of non-variable annuities to other annuity products.
We are also making a technical amendment to rule 433 to maintain the status quo for insurance companies that can meet that rule's conditions to use a free writing prospectus in connection with the offering of non-variable annuities without meeting the prospectus delivery requirements, notwithstanding their use of Form N-4 going forward. Absent such an amendment, the rulemaking would have the effect of imposing new, universal prospectus delivery requirements in connection with RILA marketing materials, even for RILA issuers that would otherwise be eligible to rely on rule 433 by virtue of registering on Form S-3. Because the technical amendment to rule 433 maintains the status quo for insurance companies that can meet the rule's conditions to use a free writing prospectus in connection with the offering of non-variable annuities without the prospectus delivery requirements, we do not believe this amendment to rule 433 will create additional economic effects.
The final amendments will likely lead to certain additional costs for insurance companies registering non-variable annuities. These costs will likely vary across insurance companies, depending on their existing lines of business. Costs may also vary depending on the extent to which insurance companies will, as a result of the final amendments, create prospectuses that vary in form from previously filed prospectuses and the frequency of certain events, such as changes in accountants and disagreements with accountants on accounting and financial disclosure. Generally, the costs will be lower for insurance companies that currently offer products that register on Form N-4, for those insurance companies that do not change or remove key features of non-variable annuities frequently, and for those insurance companies that do not experience changes in, and disagreements with, accountants on accounting and financial disclosure. The costs of the final amendments may also be mitigated to the extent that insurance companies already provide the same or similar disclosures on Forms S-1 and S-3, 8-K, and 10-K, as applicable, as are required by the final amendments.
The costs to insurance companies will be composed of both direct compliance costs and indirect costs. Direct costs for insurance companies will consist of internal costs (for compliance attorneys and other non-legal staff, such as computer programmers, to prepare and review the required disclosure) and external costs (including filing fees, outside legal and accounting fees, as well as any costs associated with outsourcing all or a portion of the Form N-4 filing responsibilities to a filing agent, software consultant, or other third-party service provider).
The final amendments could lead to certain costs for investors as well. Direct costs that will be incurred by the insurance companies in coming into compliance with the final amendments ultimately may be passed on to investors. Investors also may bear costs associated with certain final amendments such as the change in filing rules as well as an insurance companies' option to use a summary prospectus.
Under the final amendments, insurance companies will register non-variable and variable annuity contract offerings on final Form N-4. In addition, the Commission is adopting other amendments to Form N-4 that will apply to all issuers that use that form.
Insurance companies will also incur compliance costs to tag many of the newly required Form N-4 disclosures (as well as those prospectus disclosures that Form N-4 currently requires to be tagged) in Inline XBRL. Various XBRL and Inline XBRL preparation solutions have been developed and used by operating companies and investment companies to fulfill their structuring requirements, and some evidence suggests that, for smaller operating companies, XBRL compliance costs have decreased over time.
Insurance companies that choose to provide summary prospectuses are required to make statutory prospectuses and other materials available online. We estimate the average annual cost to comply with the final website posting requirements of the rule to be around $900 for each insurance company that
For their part, insurance companies only supply RILAs and registered MVA annuities to the extent they expect the benefits derived from providing the contracts to be greater than the costs of supplying the contract. For issuers, costs include not only those costs associated with producing and servicing non-variable annuities, but also those costs associated with meeting various statutory and regulatory obligations.
These costs borne by both insurance companies and individuals are examples of market “frictions.” Market frictions have the effect of reducing the benefits from (
These increases in efficiency could lead investors to save more appropriately to meet their retirement goals. For example, for existing non-variable annuity investors the final amendments may increase the likelihood that investors choose to invest more or less money in non-variable annuities in a manner that is consistent with their overall financial needs and objectives—a level that may be higher or lower than current levels. Similarly, the final amendments may lead existing investors to choose to allocate their money into different investment options that the non-variable annuity offers, or different non-variable annuities (or other insurance products like variable annuities) that best meet their needs.
As stated in the Proposing Release, if there are insurance companies who limited their participation in the non-variable annuity market prior to the final amendments as a result of the requirement to register non-variable annuity offerings on Form S-1 or Form S-3 or because of the costs of current prospectus delivery requirements, those insurance companies might increase participation in the non-variable annuity market (
While stating that certain provisions of the proposed rule would promote market competition, this commenter did express concern—specific to RILAs—that the proposed requirement to disclose a guaranteed minimum limit on index losses for the life of the contract for each index-linked option would unreasonably constrain insurance companies from offering competitive upside rates or even certain classes of index-linked options altogether and might have an inadvertent chilling effect on product innovation and, in turn, investor choice.
The final amendments might also affect competition by requiring that information about non-variable annuities be presented in a concise, user-friendly way, which could allow investors to compare information across products. Requiring non-variable annuity issuers to tag certain key information in Inline XBRL could further facilitate comparisons of information across registrants by making it easier for investors (directly or through third-party data aggregators) to extract and aggregate information through automated means for analysis and comparison, which could increase competition among non-variable annuity issuers for investor capital. For example, the final amendments require issuers to distill certain key product information into tables. The presentation of this information in a table facilitates evaluation among different non-variable annuities as well as comparison to variable annuities. Greater comparison among different non-variable annuities as well as comparison to variable annuities could lead to greater competition. Furthermore, by reducing the costs associated with aggregating data across non-variable annuities, the final Inline XBRL requirement could reduce barriers to entry for third-party data aggregators and induce competition among firms that supply information about non-variable annuities to investors, including other third-party aggregators and sales agents. Accordingly, we do
The effect on competition between insurance companies could be limited, however, to the extent non-variable annuity investors rely on an agent to help them select their non-variable annuity contract and the investment options under the contract and do not have access to broad comparisons across different non-variable annuities (or among different investment options that non-variable annuities offer) at the time of sale.
The final Inline XBRL requirements could increase the efficiency of capital formation to the extent that making disclosures available in a structured format reduces some of the information barriers that make it costly for non-variable annuity issuers to find appropriate sources of new investors. Smaller issuers may benefit more from enhanced exposure to investors. If tagging certain disclosures in a structured format increases the availability, or reduces the cost, of collecting and analyzing key information about non-variable annuities, smaller non-variable annuity issuers may benefit from improved coverage by third-party information providers and data aggregators.
The final amendments require the registration of RILA offerings on Form N-4. As an alternative, we considered requiring insurance companies to register RILA offerings on an entirely new form. Most variable annuities use Form N-4, which has disclosure requirements tailored to these investments that provide investors with key information about a variable annuity's terms, benefits, and risks, along with information about the insurance company and the offering. Currently, insurance companies register RILA offerings on Forms S-1 or S-3, which allow registering general debt or equity offerings. Forms S-1 and S-3 require issuers to disclose not only information about the offering itself, but also extensive information about the registrant issuing the securities. In addition, registrants must include financial statements prepared in accordance with GAAP, unless an exemption has been granted pursuant to 17 CFR 210.3-13 that permits an insurance company to substitute SAP financials for GAAP financials. Form N-4, on the other hand, allows insurance companies to file financial statements prepared in accordance with SAP if they do not otherwise prepare GAAP financial statements.
A completely new registration form for RILA offerings could negatively affect investors' ability to compare different RILAs with variable annuities that register on Form N-4 (including contracts that offer index-linked options along with other investment options such as variable options or fixed investment options). Furthermore, given that we are amending Form N-4 to add information to capture aspects specific to RILAs, but many of the current form requirements are relevant to the registration of RILA offerings, a completely new and separate form for RILAs would not offer much (if any) benefit to investors in terms of new information compared to the final amendments to Form N-4. Since most variable annuity issuers already use Form N-4 to register their securities, and many RILA contracts are offered as “combination” contracts, the amended Form N-4 will efficiently provide investors with product-specific information about these combination contracts. As a result, investors will be able to compare annuity products, and the investment options that these products offer, with less time and effort.
Requiring RILA offerings to be registered on Form N-4 rather than on an entirely new form will also be more efficient for insurance companies since they will generally follow the same procedures they already use for the registration of variable annuities.
The Commission will also benefit from using Form N-4 for RILAs because the disclosure requirements for variable annuities and RILAs will be located in one form only, and registration statements for these products will be subject to the same filing and review processes.
The Commission is making amendments to Form N-4 so that insurance companies are required to register non-variable annuity offerings using that form. While the substance of many of the requirements in Form N-4 does not change from the current version of the form, we are updating some items to include disclosures specifically tailored to non-variable annuities. In certain limited circumstances, we have changed the disclosure requirements provided on the form for all filers, including those registering variable annuities.
As an alternative, we could have required more or less tailoring of the form for non-variable annuities. A larger number of amendments tailored to non-variable annuities than the number we adopted would be more costly for insurance companies registering non-variable annuity offerings because insurance companies that offer combination contracts (or that otherwise register variable annuities on Form N-4) would have to make more changes to their disclosure. For example, we could have required insurance companies to provide a diagram in the KIT to illustrate surrender charges and contract adjustments during different time periods of the contract, or illustrations showing how caps, floors, and/or buffers could affect an investor's returns across different market scenarios.
Also, we could have required insurance companies to provide information related to the economic tradeoffs associated with index-linked options. For example, we could have required RILA issuers to compare a hypothetical investment in the index-linked option to the value, or cost, of a combination of (i) derivatives that would provide the index-linked option's investment exposure; (ii) a fixed-income component; and (iii) the standard insurance features offered with the index-linked option, similar to the analysis conducted by the staff in the Proposing Release.
Conversely, a smaller number of amendments tailored to non-variable annuities than the number we are adopting would be less costly for insurance companies. Since insurance companies already use Form N-4 to register variable annuities, and most non-variable annuity issuers offer variable annuities registered on Form N-4, the costs of complying with the disclosure requirements of the amended form will not be substantial.
The amendments to Form N-4 will promote investor understanding of non-variable annuity contracts by presenting information in a clear and concise manner. We are not adopting a larger number of amendments tailored to non-variable annuities because they may add too much, or less relevant, information, which may overwhelm investors who may not have the time or capacity to process all the information.
The adopted rule requires many of the newly added disclosures on Form N-4 to be tagged in Inline XBRL, in addition to those prospectus disclosures that Form N-4 currently requires to be tagged. Alternatively, the Commission could have limited the tagging requirement to only those disclosures being added to Items of Form N-4 that are already tagged in Inline XBRL. Under this alternative, disclosures relating to: the overview of the contract; the description of the Insurance company, registered separate account, and investment options; charges; purchases and contract value; purchase of securities being offered; disagreements with and changes to accountants; information about contracts with index-linked options and fixed options subject to a contract adjustment; and fee representations and undertakings would not be tagged.
Limiting the scope of tagging requirements in this manner would result in reduced compliance burdens for insurance companies, which would be required to apply fewer tags to their disclosures on Form N-4 filings. However, the alternative would also remove the informational benefits associated with making those disclosures available in a machine-readable manner. Furthermore, because Form N-4 filers already have Inline XBRL tagging obligations with respect to certain of the form's disclosure requirements, the burden reductions resulting from such an alternative would be limited. Therefore, we are not excluding the newly added disclosures on Form N-4 from the Inline XBRL tagging requirements.
We are amending several rules and forms that will modify the registration, offering, and communications processes for non-variable annuities under the Securities Act. We also are amending Form N-4 and related rules that will apply to all issuers of that form.
The Commission published notice soliciting comments on the collection of information requirements in the Proposing Release and submitted the proposed collections of information to OMB for review and approval in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. While the Commission received no comments specifically addressing the estimated PRA burdens and costs that the Proposing Release described, the Commission did receive comments discussing the burdens of implementing certain aspects of the proposal. We discuss those comments below, along with discussing updated estimates of the collection of information burdens associated with the final amendments. We also discuss below the collection of information burdens associated with amendments to rule 498A and Investment Company Interactive Data, as well as Forms N-4 and 24F-2, which are filed with the Commission and are not kept confidential. A description of the amendments, including the need for the information and its use, as well as a description of the likely respondents, can be found in Section II above, and a discussion of the economic effects of the amendments can be found in Section III above.
We are amending rule 498A to permit insurance companies registering offerings of non-variable annuities, as well as issuers of “combination contracts” offering a combination of variable and non-variable options, to use a summary prospectus to satisfy statutory prospectus delivery obligations. Consistent with current rule 498A, the use of summary prospectuses for non-variable annuities will be voluntary, but the rule's requirements will be mandatory for issuers that elect to send or give a summary prospectus in reliance upon rule 498A. We also are making certain amendments to Form N-4 that will affect the variable annuity summary prospectuses currently provided to investors. The amendments to rule 498A are part of a layered disclosure approach that is designed to provide investors with a summary prospectus to help them make informed investment decisions regarding non-variable annuities, as discussed in more detail above. These amendments will result in a change in our current estimate of the burdens associated with this collection of information, specifically to account for these additional requirements for issuers that use rule 498A currently and to add non-variable annuities to the estimates.
The respondents to these collections of information will be insurance companies registering offerings of non-variable annuities and registered variable annuity separate accounts. The information provided under rule 498A will not be kept confidential.
The Commission did not receive public comments regarding the PRA estimates for rule 498A in the Proposing Release. Commenters that discussed rule 498A voiced support for the proposal to extend rule 498A to non-variable annuities.
In our most recent Paperwork Reduction Act submission for Rule 498A, we estimated for rule 498A a total aggregate annual hour burden of 7,634 hours, and a total aggregate annual external cost burden of $9,094,866.
Under the final amendments, insurance companies will register non-variable and variable annuity contract offerings on Form N-4, as amended, to address the features and risks of non-variable annuities, including RILAs and registered MVA annuities. In addition, we are adopting other amendments to Form N-4 that will apply to all issuers that use that form. For example, the final amendments will switch the order of the Key Information Table and Overview of the Contract items, require issuers to present information in the KIT in a Q&A format, and to require more specific principal risk disclosures. These amendments will result in a change in our current estimate of the burdens associated with this collection of information, specifically to account for these additional requirements for issuers that use Form N-4 currently and to add non-variable annuities to the estimates.
The Commission received no comments specifically addressing the estimated PRA burdens for the proposed amendments to Form N-4. Rather, as discussed above, the Commission received comments supporting the ability of non-variable annuities to register on Form N-4.
As discussed in the proposal, Form N-4 generally imposes two types of reporting burdens on issuers that use the form: (1) the burden of preparing and filing the initial registration statement; and (2) the burden of preparing and filing post-effective amendments to a previously effective registration statement. In our most recent Paperwork Reduction Act submission for Form N-4, we estimated for Form N-4 a total aggregate annual hour burden of 292,487 hours, and a total aggregate annual external cost burden of $33,348,866.
At proposal, we presented our information collection estimates by the product type that would be registered on Form N-4. Our proposed information collection estimates addressed RILAs and the initial burdens that a RILA issuer would incur to register a non-variable annuity on Form N-4 and file post-effective amendments; these estimates were the majority of the burden associated with the proposed amendments to rule 498A. We also included information collection estimates that would apply to variable annuity issuers that currently register their offerings on Form N-4, which were more incremental in nature. For each of these proposed information collection estimates—those associated with RILAs and those associated with variable annuities—we based our proposed information collection estimates on average burdens that we anticipated issuers would incur.
We are adopting amendments that require not only issuers of variable annuities and RILAs, as proposed, to register offerings of these annuity products on Form N-4, but also require issuers of registered MVA annuities to register offerings of these annuities on Form N-4. Accordingly, our final information collection estimates reflect these additional registrants as well as updated data since the proposal.
Our final information collection estimates reflect that our per-entity and per-response estimates have not changed from our proposed information collection estimates. This is because we received no comments specifically addressing the estimated PRA burdens for the proposed amendments to Form N-4, and also we do not anticipate that any of the changes from the proposal we are adopting will make any substantive modifications to the per-entity and per-response estimates or impose any additional substantive recordkeeping or information collection requirements within the meaning of the PRA compared to the proposal. Our final information collection estimates, like our proposed information collection estimates, are based on average burdens that we anticipate issuers will incur in registering annuity offerings and filing post-effective amendments on Form N-4. For ease of administration and in a change from the proposed approach to calculating these estimates, our final information collection estimates do not separately address the Form N-4 burdens that issuers of different types of annuities (
We estimate that there will be 1,235 responses that will be subject to collection of information requirements under the final amendments to Form N-4.
Under the amendments, insurance companies will be required to pay applicable securities registration fees relating to non-variable annuities in arrears on Form 24F-2. Consistent with the other elements of this rulemaking, these amendments are designed to require insurance companies to use the same framework to pay securities registration fees for non-variable annuities that they do for variable annuities. Form 24F-2 is the annual notice of securities sold by certain funds that accompanies the payment of registration fees with respect to the securities sold during the fiscal year, net of securities redeemed or repurchased during the year. Compliance with Form 24F-2 is mandatory. Responses to this form are not kept confidential.
The Commission did not receive public comments regarding the PRA estimates for Form 24F-2 in the Proposing Release. Commenters generally supported the proposal to require insurance companies to pay fees in arrears on Form 24F-2 and did not indicate that they found this fee payment method burdensome.
In our most recent Paperwork Reduction Act submission for Form 24F-2, we estimated for Form 24F-2 a total aggregate annual hour burden of 20,464 hours, and a total aggregate annual external cost burden of $0.
The Investment Company Interactive Data collection of information references current requirements for certain registered investment companies and BDCs to submit to the Commission in Inline XBRL certain information provided in response to specified form and rule requirements included in their registration statements and Exchange Act reports. We are amending Form N-4, as well as rule 405 of Regulation S-T, that will require certain new structured data reporting requirements for insurance companies that register offerings of non-variable annuities.
Insurance companies that use Form N-4 to register variable annuities are currently required to tag certain registration statement disclosure items using Inline XBRL.
The Commission did not receive public comments regarding the PRA estimates associated with the Investment Company Interactive Data requirements in the Proposing Release. Commenters who referenced this aspect of our proposal did not mention the hourly or monetary cost burden of the interactive data requirement.
In our most recent Paperwork Reduction Act submission for the Investment Company Interactive Data collection of information, we estimated a total annual hour burden of 327,571 hours, and a total annual external cost burden of $16,791,000.
The table below summarizes our PRA estimates for the burdens associated with the tagging requirements that would apply to non-variable annuities that file with the Commission on Form N-4.
The Commission certified, pursuant to section 605(b) of the Regulatory Flexibility Act of 1980 (“Regulatory Flexibility Act”)
While the final amendments include some modifications to the Commission's proposal, we do not believe that these modifications alter the basis upon which the certification in the Proposing Release was made. With regard to the specific changes from the proposal regarding registered MVA annuities, we do not believe these modifications alter the basis upon which the certification in the Proposing Release was made either, as we do not expect any insurance companies that issue registered MVA annuities to be treated as small entities. Similarly, because we do not expect any insurance companies that issue registered MVA annuities or RILAs to be treated as small entities, and the amendments to rule 433 will affect only a subset of those insurance companies, the amendments to rule 433 do not change the basis upon which the certification in the Proposing Release was made. Accordingly, we certify that
The amendments contained in this Release are being adopted under the authority set forth in the Securities Act, particularly sections 6, 7, 8, 10, 19, and 28 thereof [15 U.S.C. 77a
Advertising, Confidential business information, Investment companies, Reporting and recordkeeping requirements, Securities.
Administrative practice and procedure, Reporting and recordkeeping requirements, Securities.
Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
For reasons set forth in the preamble, we are amending title 17, chapter II of the Code of Federal Regulations as follows:
15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78
Sections 230.400 to 230.499 issued under secs. 6, 8, 10, 19, 48 Stat. 78, 79, 81, and 85, as amended (15 U.S.C. 77f, 77h, 77j, 77s).
Sec. 230.457 also issued under secs. 6 and 7, 15 U.S.C. 77f and 77g.
(a) Under the Federal securities laws, including section 17(a) of the Securities Act of 1933 (15 U.S.C. 77q(a)) and section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b)) and § 240.10b-5 of this chapter (Rule 10b-5) thereunder, it is unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, to use sales literature which is materially misleading in connection with the offer or sale of registered non-variable annuity securities or securities issued by an investment company. Under these provisions, sales literature is materially misleading if it:
(1) Contains an untrue statement of a material fact; or
(2) Omits to state a material fact necessary in order to make a statement made, in the light of the circumstances of its use, not misleading.
(b) Whether or not a particular description, representation, illustration, or other statement involving a material fact is misleading depends on evaluation of the context in which it is made. In considering whether a particular statement involving a material fact is or might be misleading, weight should be given to all pertinent factors, including, but not limited to, those listed below.
(1) A statement could be misleading because of:
(i) Other statements being made in connection with the offer of sale or sale of the securities in question;
(ii) The absence of explanations, qualifications, limitations or other statements necessary or appropriate to make such statement not misleading; or
(iii) General economic or financial conditions or circumstances.
(2) Representations about past or future investment performance could be misleading because of statements or omissions made involving a material fact, including situations where:
(i) Portrayals of past income, gain, or growth of assets convey an impression of the net investment results achieved by an actual or hypothetical investment which would not be justified under the circumstances, including portrayals that omit explanations, qualifications, limitations, or other statements necessary or appropriate to make the portrayals not misleading; and
(ii) Representations, whether express or implied, about future investment performance, including:
(A) Representations, as to security of capital, possible future gains or income, or expenses associated with an investment;
(B) Representations implying that future gains or income may be inferred from or predicted based on past investment performance; or
(C) Portrayals of past performance, made in a manner which would imply that gains or income realized in the past would be repeated in the future.
(3) A statement involving a material fact about the characteristics or attributes of an investment company or registered non-variable annuity could be misleading because of:
(i) Statements about possible benefits connected with or resulting from services to be provided or methods of operation which do not give equal prominence to discussion of any risks or limitations associated therewith;
(ii) Exaggerated or unsubstantiated claims about management skill or techniques, characteristics of the investment company or registered non-variable annuity or an investment in such company or securities, services, security of investment or funds, effects of government supervision, or other attributes; and
(iii) Unwarranted or incompletely explained comparisons to other investment vehicles or to indexes.
(4) Representations about the fees or expenses associated with an investment in the fund or registered non-variable annuity could be misleading because of statements or omissions made involving a material fact, including situations where portrayals of the fees and expenses associated with an investment in the fund or registered non-variable annuity omit explanations, qualifications, limitations, or other statements necessary or appropriate to make the portrayals not misleading.
(c) For purposes of this section, the term
(d) Nothing in this section may be construed to prevent a business development company or a registered closed-end investment company from
(d)
(1) Offering of any investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1
(2) A business combination transaction as defined in § 230.165(f)(1);
(3) Offering registered on Form S-8 (§ 239.16b of this chapter); or
(4) Offering of any registered non-variable annuity securities.
(1) That is deemed a security;
(2) That is offered or sold in a registered offering;
(3) That is issued by an insurance company that is the subject to the supervision of either the insurance commissioner or bank commissioner of any State or any agency or officer performing like functions as such commissioner;
(4) That is not issued by an investment company; and
(5) Whose contract value, either during the accumulation period or after annuitization or both, will earn positive or negative interest based, in part, on the performance of any index, rate, or benchmark.
(1) That is deemed a security;
(2) That is offered or sold in a registered offering;
(3) That is issued by an insurance company that is subject to the supervision of either the insurance commissioner or bank commissioner of any State or any agency or officer performing like functions as such commissioner;
(4) That is not issued by an investment company; and
(5) Whose contract value may reflect a positive or negative adjustment (based on calculations using a predetermined formula, a change in interest rates, or some other factor or benchmark) if amounts are withdrawn before the end of a specified period.
(b) This section shall not apply to any registration statement pertaining to a registered non-variable annuity, securities issued by a face-amount certificate company, or redeemable securities issued by an open-end management company or unit investment trust under the Investment Company Act of 1940 or any registration statement filed by any foreign government or political subdivision thereof.
(f) This section shall not apply with respect to prospectuses of an investment company registered under the Investment Company Act of 1940 (other than a registered closed-end investment company) or prospectuses that pertain to a registered non-variable annuity. References to “form of prospectus” in paragraphs (a), (b), and (c) of this section shall be deemed also to refer to the form of Statement of Additional Information.
(b) * * *
(1)
(i) Offerings of securities registered on Form S-3 (§ 239.13 of this chapter) pursuant to General Instruction I.B.1, I.B.2, I.C., or I.D. thereof or on Form SF-3 (§ 239.45 of this chapter) or on Form N-2 (§§ 239.14 and 274.11a-1 of this chapter) pursuant to General Instruction A.2 with respect to the same transactions;
(ii) Offerings of securities registered on Form F-3 (§ 239.33 of this chapter) pursuant to General Instruction I.A.5, I.B.1, I.B.2, or I.C. thereof;
(iii) Any other offering not excluded from reliance on this section and Rule 164 of securities of a well-known seasoned issuer;
(iv) Any other offering not excluded from reliance on this section and Rule 164 of securities of an issuer eligible to use Form S-3 or Form F-3 for primary offerings pursuant to General Instruction I.B.1 of such Forms or an issuer eligible to use General Instruction A.2 of Form N-2 to register a primary offering described in General Instruction I.B.1 of Form S-3; and
(v) Offerings of registered non-variable annuity securities registered on Form N-4 (§ 239.17b of this chapter) where the issuer would otherwise be eligible to use Form S-3 (§ 239.13 of this chapter) pursuant to General Instruction I.B.1, I.B.2, I.C, or I.D.
(e)(1) Notwithstanding paragraph (a) of this section, where a registration statement relates to an offering of registered non-variable annuity securities, an issuer shall be deemed to register an offering of an indeterminate amount of such securities and shall, not later than 90 days after the end of any fiscal year during which it has publicly offered such securities, pay a
(2) When registering an offering of an indeterminate amount of registered non-variable annuity securities pursuant to paragraph (e)(1) of this section, the securities sold will be considered registered, for purposes of section 6(a) of the Act, if the registration fee has been paid and the issuer has filed a Form 24F-2 filing pursuant to paragraph (e)(1) of this section not later than the end of the 90-day period.
(3) A registration statement filed in accordance with the registration fee payment provisions of paragraph (e)(1) of this section will be considered filed as to the securities identified in the registration statement for purposes of this section and section 5 of the Act when it is received by the Commission, if it complies with all other requirements under the Act, including this part.
(4) For purposes of this section, if an issuer ceases operations, the date the issuer ceases operations will be deemed to be the end of its fiscal year. In the case of a liquidation, merger, or sale of all or substantially all of the assets (“merger”) of the issuer, the issuer will be deemed to have ceased operations for the purposes of this section on the date the merger is consummated; provided, however, that in the case of a merger of an issuer or a series of an issuer (“Predecessor”) with another issuer or a series of an issuer (“Successor”), the Predecessor will not be deemed to have ceased operations and the Successor will assume the obligations, fees, and redemption credits of the Predecessor incurred pursuant to this section if the Successor:
(i) Had no assets or liabilities, other than nominal assets or liabilities, and no operating history immediately prior to the merger;
(ii) Acquired substantially all of the assets and assumed substantially all of the liabilities and obligations of the Predecessor; and
(iii) The merger is not designed to result in the Predecessor merging with, or substantially all of its assets being acquired by, an issuer (or a series of an issuer) that would not meet the conditions of paragraph (e)(4)(i) of this section.
(5) An issuer paying the fee required by paragraph (e)(1) of this section or any portion thereof more than 90 days after the end of the fiscal year of the issuer shall pay to the Commission interest on unpaid amounts, calculated based on the interest rate in effect at the time of the interest payment by reference to the “current value of funds rate” on the Treasury Department's Bureau of Fiscal Service internet site at
(6) An immaterial or unintentional failure to comply with a requirement of this paragraph (e) will not result in a violation of section 6(a) of the Act (15 U.S.C. 77f(a)), so long as:
(i) A good faith and reasonable effort was made to comply with the requirement; and
(ii) In the case of a late payment of a registration fee, the issuer pays the registration fee and any interest due thereon as soon as practicable after discovery of the failure to pay the registration fee.
(u) Where an issuer elects or is required to register an offering of an indeterminate amount of exchange-traded vehicle securities in accordance with § 230.456(d) (Rule 456(d)) or registered non-variable annuity securities in accordance with § 230.456(e) (Rule 456(e)), the registration fee is to be calculated in the following manner:
(1) Determine the aggregate sale price of such securities sold during the fiscal year.
(2) Determine the sum of:
(i) The aggregate redemption or repurchase price of such securities redeemed or repurchased during the fiscal year; and
(ii) The aggregate redemption or repurchase price of such securities redeemed or repurchased during a prior fiscal year that were not used previously to reduce registration fees payable to the Commission, if the prior fiscal year ended no earlier than August 1, 2021 in the case of exchange traded vehicle securities, or September 23, 2024 in the case of registered non-variable annuity securities.
(3) Subtract the amount in paragraph (u)(2) of this section from the amount in paragraph (u)(1) of this section. If the resulting amount is positive, the amount is the net sales amount. If the resulting amount is negative, it is the amount of redemption credits available for use in future years to offset sales.
(4) The registration fee is calculated by multiplying the net sales amount by the fee payment rate in effect on the date of the fee payment. If the issuer determines that it had net redemptions or repurchases for the fiscal year, no registration fee is due.
(a) * * *
(1) Except as otherwise provided in this section, a post-effective amendment to a registration statement filed by a registered open-end management investment company, unit investment trust or, separate account as defined in section 2(a)(37) of the Investment Company Act of 1940 [15 U.S.C. 80a-2(a)(37)] or to register an offering of a registered non-variable annuity securities shall become effective on the sixtieth day after the filing thereof, or a later date designated by the registrant on the facing sheet of the amendment, which date shall be no later than eighty days after the date on which the amendment is filed.
(b)
(c) For investment companies filing on §§ 239.15A and 274.11A of this chapter (Form N-1A), §§ 239.17a and 274.11b of this chapter (Form N-3), §§ 239.17b and 274.11c of this chapter (Form N-4), or §§ 239.17c and 274.11d of this chapter (Form N-6), or an offering of registered non-variable annuities being filed on Form N-4, within five days after the effective date of a registration statement or the commencement of a public offering after the effective date of a registration statement, whichever occurs later, 10 copies of each form of prospectus and form of Statement of Additional Information used after the effective date in connection with such offering shall be filed with the Commission in the exact form in which it was used. Investment companies filing on Forms N-1A, N-3, N-4, or N-6 and issuers of registered non-variable annuities filing on Form N-4 must, if applicable pursuant to General Instruction C.3.(g) of Form N-1A, General Instruction C.3.(h) of Form N-3, General Instruction C.3.(h) of Form N-4, or General Instruction C.3.(h) of Form N-6, submit an Interactive Data File (as defined in § 232.11 of this chapter).
(e) For investment companies filing on §§ 239.15A and 274.11A of this chapter (Form N-1A), §§ 239.17a and 274.11b of this chapter (Form N-3), §§ 239.17b and 274.11c of this chapter (Form N-4), or §§ 239.17c and 274.11d of this chapter (Form N-6), or an offering of registered non-variable annuities being filed on Form N-4, after the effective date of a registration statement, no prospectus that purports to comply with Section 10 of the Act (15 U.S.C. 77j) or Statement of Additional Information that varies from any form of prospectus or form of Statement of Additional Information filed pursuant to paragraph (c) of this section shall be used until five copies thereof have been filed with, or mailed for filing to the Commission. Investment companies filing on Forms N-1A, N-3, N-4, or N-6 and issuers of registered non-variable annuities filing on Form N-4 must, if applicable pursuant to General Instruction C.3.(g) of Form N-1A, General Instruction C.3.(h) of Form N-3, General Instruction C.3.(h) of Form N-4, or General Instruction C.3.(h) of Form N-6, submit an Interactive Data File (as defined in § 232.11 of this chapter).
(a)
(i) In the context of a Registrant on Form N-4 or Form N-6, an Investment Option under any Contract pursuant to which the value of the Contract (for a Form N-4 Registrant, either during an accumulation period or after annuitization, or both) varies according to the investment experience of a Portfolio Company;
(ii) In the context of a Registrant on Form N-3, any portfolio of investments in which a Registrant on Form N-3 invests and which may be selected as an option by the investor.
(b)
(1)
(2)
(i) The Insurance Company's name;
(ii) The name of the Contract, and the Class or Classes if any, to which the Initial Summary Prospectus relates;
(iii) A statement identifying the document as a “Summary Prospectus for New Investors”;
(iv) The approximate date of the first use of the Initial Summary Prospectus;
(v) The following legend, which for Initial Summary Prospectuses of Contracts registered on Form N-4 would be included along with the statements described in Item 1(a)(6) through (8) of Form N-4:
This Summary Prospectus summarizes key features of the [Contract].
Before you invest, you should also review the prospectus for the [Contract], which contains more information about the [Contract's] features, benefits, and risks. You can find this document and other information about the [Contract] online at [___]. You can also obtain this information at no cost by calling [___] or by sending an email request to [___].
You may cancel your [Contract] within 10 days of receiving it without paying fees or penalties [although we will apply the Contract Adjustment]. In some States, this cancellation period may be longer. Upon cancellation, you will receive either a full refund of the amount you paid with your application or your total contract value. You should review the prospectus, or consult with your investment professional, for additional information about the specific cancellation terms that apply.
Additional information about certain investment products, including [type of Contract], has been prepared by the Securities and Exchange Commission's staff and is available at
(A) A Registrant may modify the legend so long as the modified legend contains comparable information.
(B) The legend must provide a website address, other than the address of the Commission's electronic filing system; toll-free telephone number; and email address that investors can use to obtain the Statutory Prospectus and other materials, request other information about the Contract, and make investor inquiries. The website address must be specific enough to lead investors directly to the Statutory Prospectus and other materials that are required to be accessible under paragraph (h)(1) of this section, rather than to the home page or other section of the website on which the materials are posted. The website could be a central site with prominent links to each document. The legend may indicate, if applicable, that the Statutory Prospectus and other information are available from a financial intermediary (such as a broker-dealer) through which the Contract may be purchased or sold. If a Registered Separate Account that has an effective registration statement on Form N-3 relies on § 270.30e-3 of this chapter to transmit a report, the legend must also include the website address required by § 270.30e-3(c)(1)(iii) of this chapter if different from the website address required by this paragraph (b)(2)(v)(B).
(C) The paragraph of the legend regarding cancellation of the Contract may be omitted if not applicable. If this paragraph is included in the legend, the paragraph must be presented in a manner reasonably calculated to draw investor attention to that paragraph.
(D) The legend may include instructions describing how a shareholder can elect to receive prospectuses or other documents and communications by electronic delivery.
(vi) For a RILA Contract and any Contract that offers Index-Linked Options along with other Investment Options, the statement required by rule 481(b)(1) under the Securities Act [17 CFR 230.481(b)(1)].
(3)
(ii) Include on the bottom of the back cover page or the last page of the Initial Summary Prospectus the EDGAR contract identifier for the contract in type size smaller than that generally used in the prospectus (
(4)
(5)
(i) Under the heading “Important Information You Should Consider About the [Contract],” the information required by Item 2 of Form N-3, Item 3 of Form N-4, or Item 2 of Form N-6.
(ii) Under the heading “Overview of the [Contract],” the information required by Item 3 of Form N-3, Item 2 of Form N-4, or Item 3 of Form N-6.
(iii) Under the heading “Standard Death Benefits,” the information required by Item 10(a) of Form N-6.
(iv) Under the heading “Benefits Available Under the [Contract],” the information required by Item 11(a) of Form N-3 or Item 10(a) of Form N-4. Under the heading “Other Benefits Available Under the [Contract],” the information required by Item 11(a) of Form N-6.
(v) Under the heading “Buying the [Contract],” the information required by Item 12(a) of Form N-3, Item 11(a) of Form N-4, or Item 9(a) through (c) of Form N-6.
(vi) Under the heading “How Your [Contract] Can Lapse,” the information required by Item 14(a) through (c) of Form N-6.
(vii) Under the heading “Making Withdrawals: Accessing the Money in Your [Contract],” the information required by Item 13(a) of Form N-3, Item 12(a) of Form N-4, or Item 12(a) of Form N-6.
(viii) Under the heading “Additional Information About Fees,” the information required by Item 4 of Form N-3, Item 4 of Form N-4, or Item 4 of Form N-6.
(ix) Under the heading “Appendix: [Portfolio Companies][Investment Options] Available Under the Contract,” include as an appendix the information required by Item 18 of Form N-3, Item 17 of Form N-4, or Item 18 of Form N-6. Alternatively, an Initial Summary Prospectus for a Contract registered on Form N-3 may include the information required by Item 19 of Form N-3, under the heading “Additional Information About Investment Options Available Under the Contract.”
(c)
(1)
(2)
(3)
(i) The Insurance Company's name;
(ii) The name of the Contract(s) and the Class or Classes, if any, to which the Updating Summary Prospectus relates;
(iii) A statement identifying the document as an “Updating Summary Prospectus”;
(iv) The approximate date of the first use of the Updating Summary Prospectus; and
(v) The following legend, which must meet the requirements of paragraphs (b)(2)(v)(A), (B), and (D) of this section, as applicable, and for Updating Summary Prospectuses of Contracts registered on Form N-4 would be included along with the statements described in Item 1(a)(6) through (8) of Form N-4:
The prospectus for the [Contract] contains more information about the [Contract], including its features, benefits, and risks. You can find the current prospectus and other information about the [Contract] online at [___]. You can also obtain this information at no cost by calling [___] or by sending an email request to [___].
Additional information about certain investment products, including [type of Contract], has been prepared by the Securities and Exchange Commission's staff and is available at
(vi) For a RILA Contract and any Contract that offers Index-Linked Options along with other Investment Options, the statement required by rule 481(b)(1) under the Securities Act [17 CFR 230.481(b)(1)].
(4)
(i) The legend required by paragraph (b)(3)(i) of this section; and
(ii) The EDGAR contract identifier(s) for each contract in type size smaller than that generally used in the prospectus (
(5)
(6)
(i) If any changes have been made with respect to the Contract after the date of the most recent Updating Summary Prospectus or Statutory Prospectus that was sent or given to investors with respect to the availability of Investment Options (for Registrants on Form N-3 and Form N-4) or Portfolio Companies (for Registrants on Form N-6) under the Contract (including, for RILA Contracts, a change to any of the features of the Index-Linked Options disclosed in the table that Item 17(b)(1) of Form N-4 requires, and for Contracts that offer Fixed Options, a change to any of the features of the Fixed Options disclosed in the table that Item 17(c) of Form N-4 requires), or the disclosure that the Registrant included in response to Item 2 (Key Information), Item 3 (Overview of the Contract), Item 4 (Fee Table), Item 11 (Benefits Available Under the Contract), Item 12 (Purchases and Contract Value), or Item 13 (Surrenders and Withdrawals) of Form N-3; Item 2 (Overview of the Contract), Item 3 (Key Information), Item 4 (Fee Table), Item 10 (Benefits Available Under the Contract), Item 11 (Purchases and Contract Value), or Item 12 (Surrenders and Withdrawals) of Form N-4; and Item 2 (Key Information), Item 3 (Overview of the Contract), Item 4 (Fee Table), Item 9 (Premiums), Item 10 (Standard Death Benefits), Item 11 (Other Benefits Available Under the Contract), Item 12 (Surrenders and Withdrawals), or Item 14 (Lapse and Reinstatement) of Form N-6, include the following as applicable, under the heading “Updated Information About Your [Contract]”:
(A) The following legend: “The information in this Updating Summary Prospectus is a summary of certain [Contract] features that have changed since the Updating Summary Prospectus dated [date]. This may not reflect all of the changes that have occurred since you entered into your [Contract].”
(B) As applicable, provide a concise description of each change specified in paragraph (c)(6)(i) of this section. Provide enough detail to allow investors to understand the change and how it will affect investors, including indicating whether the change only applies to certain Contracts described in the Updating Summary Prospectus.
(ii) In addition to the changes specified in paragraph (c)(6)(i) of this section, a Registrant may provide a concise description of any other information relevant to the Contract within the time period that paragraph (c)(6)(i) of this section specifies, under the heading “Updated Information
(iii) Under the heading “Important Information You Should Consider About the [Contract],” provide the information required by Item 2 of Form N-3, Item 3 of Form N-4, or Item 2 of Form N-6.
(iv) Under the heading “Appendix: [Portfolio Companies][Investment Options] Available Under the [Contract],” include as an appendix the information required by Item 18 of Form N-3, Item 17 of Form N-4, or Item 18 of Form N-6. Alternatively, an Updating Summary Prospectus for a Contract registered on Form N-3 may include, under the heading “Additional Information About [Investment Options] Available Under the [Contract],” the information required by Item 19 of Form N-3.
(d)
(2) A Registrant may incorporate by reference into a Summary Prospectus any or all of the information contained in the Registrant's Statutory Prospectus and Statement of Additional Information, and any information from the Registrant's reports under § 270.30e-1 of this chapter that the Registrant has incorporated by reference into the Registrant's Statutory Prospectus, provided that:
(i) The conditions of paragraphs (b)(2)(v)(B), (c)(3)(v), and (h) of this section are met;
(ii) A Registrant may not incorporate by reference into a Summary Prospectus information that paragraphs (b) and (c) of this section require to be included in an Initial Summary Prospectus or Updating Summary Prospectus, respectively; and
(iii) Information that is permitted to be incorporated by reference into the Summary Prospectus may be incorporated by reference into the Summary Prospectus only by reference to the specific document that contains the information, not by reference to another document that incorporates such information by reference.
(3) For purposes of § 230.159, information is conveyed to a person not later than the time that a Summary Prospectus is received by the person if the information is incorporated by reference into the Summary Prospectus in accordance with paragraph (d)(2) of this section.
(e)
(f)
(1) A Summary Prospectus is sent or given no later than the time of the carrying or delivery of the Contract security (an Initial Summary Prospectus in the case of a purchase of a new Contract, or an Updating Summary Prospectus in the case of additional purchase payments in an existing Contract);
(2) The Summary Prospectus is not bound together with any materials except Portfolio Company Prospectuses for Portfolio Companies available as Variable Options under the Contract, provided that:
(i) All of the Portfolio Companies are available as investment options to the person to whom such documents are sent or given; and
(ii) A table of contents identifying each Portfolio Company Prospectus that is bound together, and the page number on which each document is found, is included at the beginning or immediately following a cover page of the bound materials.
(3) The Summary Prospectus that is sent or given satisfies the requirements of paragraph (b) or (c) of this section, as applicable, at the time of the carrying or delivery of the Contract security; and
(4) The conditions set forth in paragraph (h) of this section are satisfied.
(g)
(1) It is proved that prior to or at the same time with such communication a Summary Prospectus was sent or given to the person to whom the communication was made;
(2) The Summary Prospectus is not bound together with any materials, except as permitted by paragraph (f)(2) of this section;
(3) The Summary Prospectus that was sent or given satisfies the requirements of paragraph (b) or (c) of this section, as applicable, at the time of such communication; and
(4) The conditions set forth in paragraph (h) of this section are satisfied.
(h)
(i) In the case of reliance on paragraph (f) of this section, the date that the Contract security is carried or delivered; or
(ii) In the case of reliance on paragraph (g) of this section, the date that the communication is sent or given.
(2) The materials that are accessible in accordance with paragraph (h)(1) of this section must be presented on the website in a format, or formats, that:
(i) Are human-readable and capable of being printed on paper in human-readable format;
(ii) Permit persons accessing the Statutory Prospectus or Statement of Additional Information for the Contract to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading; provided that, in the case of the Statutory Prospectus, the table of contents is either required by § 230.481(c) or contains the same section headings as the table of contents required by § 230.481(c); and
(iii) Permit persons accessing a Summary Prospectus to move directly back and forth between:
(A) Each section of the Summary Prospectus and any section of the Statutory Prospectus and Contract
(B) Links located at both the beginning and end of the Summary Prospectus, or that remain continuously visible to persons accessing the Summary Prospectus, and tables of contents of both the Statutory Prospectus and the Contract Statement of Additional Information that meet the requirements of paragraph (h)(2)(ii) of this section.
(iv) Permit persons accessing the Summary Prospectus to view the definition of each special term used in the Summary Prospectus (as required by paragraph (e) of this section) upon command (
(3) Persons accessing the materials specified in paragraph (h)(1) of this section must be able to permanently retain, free of charge, an electronic version of such materials in a format, or formats, that meet each of the requirements of paragraphs (h)(2)(i) and (ii) of this section.
(4) The conditions set forth in paragraphs (h)(1) through (3) of this section shall be deemed to be met, notwithstanding the fact that the materials specified in paragraph (h)(1) of this section are not available for a time in the manner required by paragraphs (h)(1) through (3) of this section, provided that:
(i) The Registrant has reasonable procedures in place to ensure that the specified materials are available in the manner required by paragraphs (h)(1) through (3) of this section; and
(ii) The Registrant takes prompt action to ensure that the specified documents become available in the manner required by paragraphs (h) through (3) of this section, as soon as practicable following the earlier of the time at which it knows or reasonably should have known that the documents are not available in the manner required by paragraphs (h)(1) through (3) of this section.
(i)
(2)
(3)
(i) The materials that are accessible in accordance with paragraph (h)(1) of this section must be presented on the website in a format, or formats, that are convenient for both reading online and printing on paper; and
(ii) Persons accessing the materials that are accessible in accordance with paragraph (h)(1) of this section must be able to permanently retain, free of charge, an electronic version of such materials in a format, or formats, that are convenient for both reading online and printing on paper.
(4)
(5)
(j)
(i) An Initial Summary Prospectus is used for each currently offered Contract described under the related registration statement;
(ii) A summary prospectus is used for the Portfolio Company (if the Portfolio Company is registered on Form N-1A); and
(iii) The current summary prospectus, Statutory Prospectus, Statement of Additional Information, and most recent annual and semi-annual reports to shareholders under § 270.30e-1 of this chapter for the Portfolio Company are publicly accessible, free of charge, at the same website address referenced in paragraph (h)(1) of this section, and are accessible under the conditions set forth in paragraphs (h)(1), (h)(2)(i) and (ii), and (h)(3) and (4) of this section, with respect to the availability of documents relating to the Contract.
(2)
(3)
15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78
(a) Registered investment companies, business development companies, and offerings of registered non-variable annuities must indicate their investment company type, based on whether the registrant's last effective registration statement or amendment (other than a merger/proxy filing on Form N-14 (§ 239.23 of this chapter) was filed on Form N-1 (§§ 239.15 and 274.11 of this chapter), Form N-1A (§§ 239.15A and 274.11A of this chapter), Form N-2 (§§ 239.14 and 274.11a-1 of this chapter), Form N-3 (§§ 239.17A and 274.11b of this chapter), Form N-4 (§§ 239.17b and 274.11c of this chapter), Form N-5 (§§ 239.24 and 274.5 of this chapter), Form N-6 (§§ 239.17c and 274.11d of this chapter), Form S-1 (§ 239.11 of this chapter), Form S-3 (§ 239.13 of this chapter), or Form S-6 (§ 239.16 of this chapter) in those EDGAR submissions identified in the EDGAR Filer Manual.
(b) Registered investment companies or offerings of registered non-variable annuities whose last effective registration statement or amendment (other than a merger/proxy filing on Form N-14 (§ 239.23 of this chapter) was filed on Form N-1A (§§ 239.15A and 274.11A of this chapter), Form N-3 (§§ 239.17A and 274.11b of this chapter), Form N-4 (§§ 239.17b and 274.11c of this chapter), or Form N-6 (§§ 239.17c and 274.11d of this chapter) must, under the procedures set forth in the EDGAR Filer Manual:
(1) Provide electronically, and keep current, information concerning their existing and new series and/or classes (or contracts, in the case of separate accounts), including series and/or class (contract) name and ticker symbol, if any, and be issued series and/or class (or contract) identification numbers;
(2) Deactivate for EDGAR purposes any series and/or class (or contract, in the case of separate accounts) that are no longer offered, go out of existence, or deregister following the last filing for that series and/or class (or contract, in the case of separate accounts), but the registrant must not deactivate the last remaining series unless the registrant deregisters; and
(3) For those EDGAR submissions identified in the EDGAR Filer Manual, include all series and/or class (or contract) identifiers of each series and/or class (or contract) on behalf of which the filing is made.
(a) * * *
(3) Be submitted using Inline XBRL:
(i) If the electronic filer is not a management investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a
(A) A filing that contains the disclosure this section requires to be tagged; or
(B) An amendment to a filing that contains the disclosure this section requires to be tagged if the amendment is filed no more than 30 days after the earlier of the due date or filing date of the filing and the Interactive Data File is the first Interactive Data File the electronic filer submits; or
(ii) If the electronic filer is a management investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a
(b) * * *
(1) If the electronic filer is not a management investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a
(i) The complete set of the electronic filer's financial statements (which includes the face of the financial statements and all footnotes);
(ii) As applicable, all schedules set forth in Article 6A of Regulation S-X (§§ 210.6A-01-210.6A-05) and Article 12 of Regulation S-X (§§ 210.12-01-210.12-29), and all schedules prepared by plans in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001
(iii) The disclosure set forth in paragraph (b)(4) of this section.
(2) If the electronic filer is an open-end management investment company registered under the Investment Company Act of 1940, a separate account (as defined in Section 2(a)(14) of the Securities Act) registered under the Investment Company Act of 1940 (15 U.S.C. 80a
(i) Items 2, 3, and 4 of §§ 239.15A and 274.11A of this chapter (Form N-1A), as well as any information provided in response to Item 27A(b)-(h) of Form N-1A included in any report to shareholders filed on §§ 249.331 and 274.128 of this chapter (Form N-CSR);
(ii) Items 2, 4, 5, 11, 18 and 19 of §§ 239.17a and 274.11b of this chapter (Form N-3);
(iii) Items 2(b)(2), 2(d), 3, 4, 5, 6(a) (instruction), 6(d), 6(e), 7(e), 10, 17, 26(c), or 31A of §§ 239.17b and 274.11c of this chapter (Form N-4);
(iv) Items 2, 4, 5, 10, 11, and 18 of §§ 239.17c and 274.11d of this chapter (Form N-6);
(v) Any disclosure provided in response to Item 18 of §§ 249.331 and 274.128 of this chapter (Form N-CSR), or
(vi) Item 11 of § 274.12 of this chapter (Form N-8B-2) pursuant to Instruction 2, including to the extent required by § 239.16 of this chapter (Form S-6); as applicable.
15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78l, 78m, 78n, 78o(d), 78o-7 note, 78u-5, 78w(a), 78ll, 78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 80a-30, 80a-37; and sec. 71003 and sec. 84001, Pub. L. 114-94, 129 Stat. 1321, unless otherwise noted.
Form N-3 is attached as Appendix B to this document. Form N-3 does not appear in the Code of Federal Regulations.
Form N-4 is attached as Appendix A to this document. Form N-4 does not appear in the Code of Federal Regulations.
Form N-6 is attached as Appendix C to this document. Form N-6 will not appear in the Code of Federal Regulations.
Form 24F-2 shall be used as the annual report filed by face amount certificate companies, open-end management companies, unit investment trusts, and registered non-variable annuities pursuant to §§ 230.456, 230.457, or 270.24f-2 of this chapter for reporting securities sold during the fiscal year.
Form 24F-2 is attached as Appendix D to this document. Form 24F-2 will not appear in the Code of Federal Regulations.
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78
Form 24F-2 shall be used as the annual report filed by face amount certificate companies, open-end management companies, unit investment trusts, and registered non-variable annuities pursuant to §§ 230.456, 230.457, or 270.24f-2 of this chapter for reporting securities sold during the fiscal year.
By the Commission.
The following appendices will not appear in the Code of Federal Regulations.
“Summary Prospectus” has the meaning provided by paragraph (a) of rule 498A under the Securities Act [17 CFR 230.498A(a)].
“Summary Prospectus” has the meaning provided by paragraph (a) of rule 498A under the Securities Act [17 CFR 230.498A(a)].
Item 30. Exhibits
3. The Registrant may redact specific provisions or terms of exhibits required to be filed by paragraphs (g) and (j) of this Item if the Registrant customarily and actually treats that information as private. If it does so, the Registrant should mark the exhibit index to indicate that portions of the exhibit have been omitted and include a prominent statement on the first page of the redacted exhibit that certain identified information has been excluded from the exhibit because it is both not material and the type that the Registrant treats as private or confidential. The Registrant also must include brackets indicating where the information is omitted from the filed version of the exhibit.
If requested by the Commission or its staff, the Registrant must promptly provide on a supplemental basis an unredacted copy of the exhibit and its materiality and privacy or confidentiality analyses. Upon evaluation of the Registrant's supplemental materials, the Commission or its staff may require the Registrant to amend its filing to include in the exhibit any previously redacted information that is not adequately supported by the Registrant's analyses. The Registrant may request confidential treatment of the supplemental material submitted under this Instruction 3 pursuant to rule 83 of the Commission's Organizational Rules [17 CFR 200.83] while it is in the possession of the Commission or its staff. After completing its review of the supplemental information, the Commission or its staff will return or destroy it, if the Registrant complies with the procedures outlined in rule 418 under the Securities Act [17 CFR 230.418].
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments on proposed authorization and possible renewal.
NMFS has received a request from Hilcorp Alaska, LLC (Hilcorp) for authorization to take marine mammals incidental to production drilling support activities in Cook Inlet, Alaska. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to incidentally take marine mammals during the specified activities. NMFS is also requesting comments on a possible one-time, 1-year renewal that could be issued under certain circumstances and if all requirements are met, as described in Request for Public Comments at the end of this notice. NMFS will consider public comments prior to making any final decision on the issuance of the requested MMPA authorization and agency responses will be summarized in the final notice of our decision.
Comments and information must be received no later than August 23, 2024.
Comments should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service and should be submitted via email to
Reny Tyson Moore, Office of Protected Resources, NMFS, (301) 427-8401.
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the monitoring and reporting of the takings. The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
On August 2, 2023, NMFS received a request from Hilcorp for an IHA to take marine mammals incidental to production drilling support activities in Cook Inlet, Alaska. Following NMFS' review of the application, Hilcorp submitted revised versions on September 29, 2023, December 27, 2023, February 29, 2024, and April 8, 2024. The application was deemed adequate and complete on April 12, 2024. Hilcorp's request is for take of 12 species of marine mammals, by Level B harassment. Neither Hilcorp nor NMFS expect serious injury or mortality to result from this activity and, therefore, an IHA is appropriate.
NMFS previously issued an IHA to Hilcorp for similar work (87 FR 62364, October 1, 2022). Hilcorp complied with all the requirements (
Hilcorp plans to use three tug boats to tow and hold, and up to four tug boats to position, a jack-up rig to support production drilling at existing platforms in middle Cook Inlet and Trading Bay, Alaska, on 6 non-consecutive days between September 14, 2024, and September 13, 2025. Noise produced by tugs under load with a jack-up rig may result in take, by Level B harassment, of twelve marine mammal species.
The IHA would be effective from September 14, 2024, through September 13, 2025. As noted above, Hilcorp proposes to conduct the jack-up rig towing, holding, and positioning activities on 6 non-consecutive days
Hilcorp's proposed activities would take place in middle Cook Inlet and Trading Bay, Alaska, extending north from Rig Tenders Dock on the eastern side of Cook Inlet near Nikiski to an area approximately 32 kilometers (km) south of Point Possession, west to the Tyonek platform in middle Cook Inlet, south to the Dolly Varden platform in Trading Bay, and across Cook Inlet to the Rig Tenders Dock. For the purposes of this project, lower Cook Inlet refers to waters south of the East and West Forelands; middle Cook Inlet refers to waters north of the East and West Forelands and south of Threemile River on the west and Point Possession on the east; Trading Bay refers to waters from approximately the Granite Point Tank Farm on the north to the West Foreland on the south; and upper Cook Inlet refers to waters north and east of Beluga River on the west and Point Possession on the east. A map of the specific area in which Hilcorp plans to operate is provided in figure 1 below.
Hilcorp proposes to conduct production drilling activities from existing platforms in middle Cook Inlet and Trading Bay between September 14, 2024, and September 13, 2025, during which period there would be a need for an estimated six days of tug activity. For the preceding months (September 2023 to September 2024), Hilcorp is operating under an existing IHA (See 87 FR 62364, October 14, 2022). In 2024, the Spartan 151 jack-up rig (or an equivalent rig) will be mobilized for production drilling from the Rig Tenders Dock in Nikiski and towed to an existing platform under the aforementioned 2023-2024 IHA. Tug activities associated with the current IHA request would include one demobilization effort of a jack-up rig (Spartan 151 or equivalent rig) from an existing platform to Rig Tenders Dock in Nikiski, one jack-up rig relocation between existing
Development drilling activities occur from existing platforms within Cook Inlet through either well slots or existing wellbores in existing platform legs, and no well construction occurs during production drilling. All Hilcorp platforms have potential for development drilling activities. Drilling activities from platforms within Cook Inlet are accomplished by using conventional drilling equipment from a variety of rig configurations.
Some platforms in Cook Inlet have permanent drilling rigs installed that operate using power provided by the platform power generation systems; other platforms do not have drill rigs, and the use of a mobile drill rig is required. Mobile offshore drill rigs may be powered by the platform power generation system (if compatible with the platform power generation system) or may self-generate power with the use of diesel-powered generators.
While traveling with the jack-up rig during the proposed moves, the most common configuration is two tugs positioned side by side (approximately 30 to 60 m apart), pulling from the front of the jack-up rig, and one tug approximately 200 m behind the front tugs positioned behind the jack-up rig, applying tension on the line as needed for steering and straightening. While positioning the jack-up rig on a platform, the tugs may be fanned out around the jack-up rig to provide the finer control of movement necessary to safely position the jack-up rig on the platform.
Upon arrival and readiness to position the rig adjacent to a platform, a fourth tug would be on standby to provide assistance. The fourth tug would not be expected to extend assistance beyond one hour. The horsepower of each of the tugs used during the proposed activities may range between 4,000 and 8,000. Specifications of the tugs anticipated for use are provided in table 1 below. If these specific tugs are not available, the tugs contracted would be of similar size and power to those listed in table 1.
The amount of time the tugs are under load transiting, holding, and positioning the jack-up rig in Cook Inlet would be tide-dependent. The amount of operational effort (
A high slack tide would be preferred to position the jack-up rig on an existing platform or well site. The relatively slow current and calm conditions at a slack tide would enable the tugs to perform the fine movements necessary to safely position the jack-up rig within several feet of the platform. Additionally, positioning and securing the jack-up rig at high slack tide rather than low slack tide would allow for the legs to be pinned down (jack the legs down onto the sea floor) at an adequate height to ensure that the hull of the jack-up rig remains above the water level of the subsequent incoming high tide. Because 12 hours elapse between each high slack tide, tugs are generally under load for those 12 hours, even if the towed distance is small, as high slack tides are preferred to both attach and detach the jack-up rig from the tugs. Once the tugs are on location with the jack-up rig at high slack tide (12 hours from the previous departure), there is a 1 to 2-hour window when the tide is slow enough for the tugs to initiate positioning the jack-up rig and pin the legs to the seafloor on location. The tugs are estimated to be under load, generally at half-power conditions or less, for up to 14 hours from the time of departure through the initial positioning attempt of the jack-up rig. One additional tug may engage during positioning activities to assist with fine movements necessary to place the jack-up rig. The fourth tug is estimated to engage with the three tugs during a positioning attempt for up to 1 hour at half power.
If the first positioning attempt takes longer than anticipated, the increasing current speed would prevent the tugs from safely positioning the jack-up rig on location. If the first positioning attempt is not successful, the jack-up rig would be pinned down at a nearby location and the tugs would be released from the jack-up rig and no longer under load. The tugs would remain nearby, generally floating with the current. Approximately an hour before the next high slack tide, the tugs would re-attach to the jack-up rig and reattempt positioning over a period of 2 to 3 hours. Positioning activities would generally be at half power. If a second attempt is needed, the tugs would be under load holding or positioning the jack-up rig on a second day for up to 5 hours. Typically, the jack-up rig can be successfully positioned over the platform in one or two attempts.
During a location-to-location transport (
Although the variability in power output from the tugs can range from an estimated 20 percent to 90 percent throughout the hours under load with the jack-up rig, as described above, the majority of the hours (spent transiting, holding, and positioning) occur at half power or less. See the Estimated Take of Marine Mammals section of this proposed notice of issuance for more detail on assumptions related to power output.
Proposed mitigation, monitoring, and reporting measures are described in detail later in this document (please see Proposed Mitigation and Proposed Monitoring and Reporting).
Sections 3 and 4 of the application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history of the potentially affected species. NMFS fully considered all of this information, and we refer the reader to these descriptions, instead of reprinting the information. Additional information regarding population trends and threats may be found in NMFS' Stock Assessment Reports (SARs;
Table 2 lists all species or stocks for which take is expected and proposed to be authorized for this activity and summarizes information related to the population or stock, including regulatory status under the MMPA and Endangered Species Act (ESA) and potential biological removal (PBR), where known. PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS' SARs). While no serious injury or mortality is anticipated or proposed to be authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of the status of the species or stocks and other threats.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS' stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS' U.S. 2022 SARs. All values presented in table 2 are the most recent available at the time of publication (including from the draft 2023 SARs) and are available online at:
As indicated above, all 12 species (with 15 managed stocks) in table 2 temporally and spatially co-occur with the activity to the degree that take is reasonably likely to occur. In addition, the northern sea otter may be found in Cook Inlet, Alaska. However, northern sea otters are managed by the U.S. Fish and Wildlife Service and are not considered further in this document.
The stock structure for gray whales in the Pacific has been studied for a number of years and remains uncertain as of the most recent (2022) Pacific SARs (Carretta
An Unusual Mortality Event (UME) for gray whales along the West Coast and in Alaska occurred from December 17, 2018 through November 9, 2023. During that time, 146 gray whales stranded off the coast of Alaska. The investigative team concluded that the preliminary cause of the UME was localized ecosystem changes in the whale's Subarctic and Arctic feeding areas that led to changes in food, malnutrition, decreased birth rates, and increased mortality (see
Gray whales are infrequent visitors to Cook Inlet, but may be seasonally present during spring and fall in the lower inlet (Bureau of Ocean Energy Management (BOEM), 2021). Migrating gray whales pass through the lower inlet during their spring and fall migrations to and from their primary summer feeding areas in the Bering, Chukchi, and Beaufort seas (Swartz, 2018; Silber
In 2020, a young male gray whale was stranded in the Twentymile River near Girdwood for over a week before swimming back into Turnagain Arm. The whale did not survive and was found dead in west Cook Inlet later that month (NMFS, 2020). One gray whale was sighted in Knik Arm near the Port of Alaska (POA) in Anchorage in upper Cook Inlet in May of 2020 during observations conducted during construction of the Petroleum and Cement Terminal project (61N Environmental, 2021). The sighting occurred less than a week before the reports of the gray whale stranding in the Twentymile River and was likely the same animal. In 2021, one small gray whale was sighted in Knik Arm near Ship Creek, south of the POA (61N Environmental, 2022a). Although some sightings have been documented in the middle and upper Inlet, the gray whale range typically only extends into the lower Cook Inlet region.
The 2022 NMFS Alaska and Pacific SARs described a revised stock structure for humpback whales which modifies the previous designated stocks to align more closely with the ESA-designated Distinct Population Segments (DPSs) (Carretta
The Hawaii stock consists of one demographically independent population (DIP) (Hawaii—Southeast Alaska/Northern British Columbia DIP) and the Hawaii—North Pacific unit, which may or may not be composed of multiple DIPs (Wade
The Mexico—North Pacific stock is likely composed of multiple DIPs, based on movement data (Martien
The Western North Pacific stock consists of two units—the Philippines/Okinawa—North Pacific unit and the Marianas/Ogasawara—North Pacific unit. The units are managed as a single stock at this time, due to a lack of data available to separately assess them (NMFS, 2019, 2022d, 2023a). Recognition of these units is based on movements and genetic data (Oleson
The most comprehensive photo-identification data available suggest that approximately 89 percent of all humpback whales in the Gulf of Alaska are from the Hawaii stock, 11 percent are from the Mexico stock, and less than 1 percent are from the Western North Pacific stock (Wade, 2021). Individuals from different stocks are known to intermix in feeding grounds. There is no designated critical habitat for humpback whales in or near the Project area (86 FR 21082, April 21, 2021), nor does the project overlap with any known biologically important areas.
Humpback whales are encountered regularly in lower Cook Inlet and occasionally in mid-Cook Inlet; sightings are rare in upper Cook Inlet. Eighty-three groups containing an estimated 187 humpbacks were sighted during the Cook Inlet beluga whale aerial surveys conducted by NMFS from 1994 to 2012 (Shelden
Two stocks of minke whales occur within U.S. waters: Alaska and California/Oregon/Washington (Muto
Minke whales are most abundant in the Gulf of Alaska during summer and occupy localized feeding areas (Zerbini
In U.S. Pacific waters, fin whales are seasonally found in the Gulf of Alaska, and Bering Sea and as far north as the northern Chukchi Sea (Muto
Fin whales' range extends into lower Cook Inlet; however, their sightings are infrequent, and they are mostly spotted near the inlet's entrance. Fin whales are usually observed as individuals traveling alone, although they are sometimes observed in small groups. Rarely, large groups of 50 to 300 fin whales can travel together during migrations (NMFS, 2010). Fin whales in Cook Inlet have only been observed as individuals or in small groups. From 2000 to 2022, 10 sightings of 26 estimated individual fin whales in lower Cook Inlet were observed during NMFS aerial surveys (Shelden
Five stocks of beluga whales are recognized in Alaska: the Beaufort Sea stock, eastern Chukchi Sea stock, eastern Bering Sea stock, Bristol Bay stock, and Cook Inlet stock (Young
In June 2023, NMFS released an updated abundance estimate for CIBWs in Alaska that incorporates aerial survey data from June 2021 and 2022 and accounted for visibility bias (Goetz
Threats that have the potential to impact this stock and its habitat include the following: changes in prey availability due to natural environmental variability, ocean acidification, and commercial fisheries; climatic changes affecting habitat; predation by killer whales; contaminants; noise; ship strikes; waste management; urban runoff; construction projects; and physical habitat modifications that may occur as Cook Inlet becomes increasingly urbanized (Moore
In its Recovery Plan (82 FR 1325, January 5, 2017), NMFS identified several potential threats to CIBWs, including: (1) high concern: catastrophic events (
The designation identified the following Primary Constituent Elements, essential features important to the conservation of the CIBW:
(1) Intertidal and subtidal waters of Cook Inlet with depths of less than 9 m mean lower-low water (MLLW) and within 8 km of high- and medium-flow anadromous fish streams;
(2) Primary prey species, including four of the five species of Pacific salmon (chum (
(3) The absence of toxins or other agents of a type or amount harmful to CIBWs;
(4) Unrestricted passage within or between the critical habitat areas; and
(5) The absence of in-water noise at levels resulting in the abandonment of habitat by CIBWs.
CIBWs feed on a wide variety of prey species, particularly those that are seasonally abundant. From late spring through summer, most CIBW stomachs sampled contained salmon, which corresponded to the timing of fish runs in the area. Anadromous smolt and adult fish aggregate at river mouths and adjacent intertidal mudflats (Calkins, 1989). All five Pacific salmon species (
The nutritional quality of Chinook salmon in particular is unparalleled, with an energy content four times greater than that of a Coho salmon. It is suggested the decline of the Chinook salmon population has left a nutritional void in the diet of the CIBWs that no other prey species can fill in terms of quality or quantity (Norman
In fall, as anadromous fish runs begin to decline, CIBWs return to consume fish species (cod and bottom fish) found in nearshore bays and estuaries. Stomach samples from CIBWs are not available for winter (December through March), although dive data from CIBWs tagged with satellite transmitters suggest that they feed in deeper waters during winter (Hobbs
During spring and summer, CIBWs generally aggregate near the warmer waters of river mouths along the northern shores of middle and upper Cook Inlet where prey availability is high and predator occurrence is low (Moore
Data from tagged whales (14 tags deployed July 2000 through March 2003) show that CIBWs use upper Cook Inlet intensively between summer and late autumn (Hobbs
The NMFS Marine Mammal Lab has conducted long-term passive acoustic monitoring demonstrating seasonal shifts in CIBW concentrations throughout Cook Inlet. Castellote
Goetz
CIBWs are believed to mostly calve in the summer, and breed between late spring and early summer (NMFS, 2016b), primarily in upper Cook Inlet. The only known observed occurrence of calving occurred on July 20, 2015, in the Susitna Delta area (T. McGuire, personal communication, March 27, 2017). The first neonates encountered during each field season from 2005 through 2015 were always seen in the Susitna River Delta in July. The photographic identification team's documentation of the dates of the first neonate of each year indicate that calving begins in mid-late July/early August, generally coinciding with the observed timing of annual maximum group size. Probable mating behavior of CIBWs was observed in April and May of 2014, in Trading Bay. Young CIBWs are nursed for 2 years and may continue to associate with their mothers for a considerable time thereafter (Colbeck
During Apache's seismic test program in 2011 along the west coast of Redoubt Bay, lower Cook Inlet, a total of 33 CIBWs were sighted during the survey (Lomac-MacNair
Along the west coast of North America, seasonal and year-round occurrence of killer whales has been
Killer whales have been sighted near Homer and Port Graham in lower Cook Inlet (Shelden
During the 2015 SAExploration seismic program near the North Foreland, two killer whales were observed (Kendall
The Pacific white-sided dolphin is divided into three stocks within U.S. waters. The North Pacific stock includes the coast of Alaska, including the project area. Pacific white-sided dolphins are common in the Gulf of Alaska's pelagic waters and Alaska's nearshore areas, British Columbia, and Washington (Ferrero and Walker, 1996, as cited in Muto
In the eastern North Pacific Ocean, harbor porpoise range from Point Barrow, along the Alaska coast, and down the west coast of North America to Point Conception, California. The 2022 Alaska SARs describe a revised stock structure for harbor porpoises (Young
Harbor porpoises occur most frequently in waters less than 100 m deep (Hobbs and Waite, 2010) and are common in nearshore areas of the Gulf of Alaska, Shelikof Strait, and lower Cook Inlet (Dahlheim
Harbor porpoises occur throughout Cook Inlet, with passive acoustic detections being more prevalent in
An increase in harbor porpoise sightings in upper Cook Inlet was observed over recent decades (
During Apache's 2012 seismic program in middle Cook Inlet, 137 groups of harbor porpoises comprising 190 individuals were documented between May and August (Lomac-MacNair
Dall's porpoises are found throughout the North Pacific, from southern Japan to southern California north to the Bering Sea. All Dall's porpoises in Alaska are of the Alaska stock. This species can be found in offshore, inshore, and nearshore habitat. The Dall's porpoise range in Alaska includes lower Cook Inlet, but very few sightings have been reported in upper Cook Inlet. Observations have been documented near Kachemak Bay and Anchor Point (Owl Ridge, 2014; BOEM, 2015). Shelden
Two DPSs of Steller sea lion occur in Alaska: the western DPS and the eastern DPS. The western DPS includes animals that occur west of Cape Suckling, Alaska, and therefore includes individuals within the Project area. The western DPS was listed under the ESA as threatened in 1990 (55 FR 49204, November 26, 1990), and its continued population decline resulted in a change in listing status to endangered in 1997 (62 FR 24345, May 5, 1997). Since 2000, studies indicate that the population east of Samalga Pass (
There is uncertainty regarding threats currently impeding the recovery of Steller sea lions, particularly in the Aleutian Islands. Many factors have been suggested as causes of the steep decline in abundance of western Steller sea lions observed in the 1980s, including competitive effects of fishing, environmental change, disease, contaminants, killer whale predation, incidental take, and illegal and legal shooting (Atkinson
NMFS designated critical habitat for Steller sea lions on August 27, 1993 (58 FR 45269), including portions of the southern reaches of lower Cook Inlet. The critical habitat designation for the Western DPS of was determined to include a 37-km (20-nautical mile) buffer around all major haul-outs and rookeries, and associated terrestrial, atmospheric, and aquatic zones, plus three large offshore foraging areas, none of which occurs in the project area. There is no designated critical habitat for Steller sea lions in the mid- or upper inlet, nor are there any known BIAs for Steller sea lions within the project area. Rookeries and haul out sites in lower
Steller sea lions are opportunistic predators, feeding primarily on a wide variety of seasonally abundant fishes and cephalopods, including Pacific herring (
Most Steller sea lions in Cook Inlet occur south of Anchor Point on the east side of lower Cook Inlet, with concentrations near haulout sites at Shaw Island and Elizabeth Island and by Chinitna Bay and Iniskin Bay on the west side (Rugh
Several surveys and monitoring programs have documented Steller sea lions throughout Cook Inlet, including in upper Cook Inlet in 2012 (Lomac-MacNair
Harbor seals inhabit waters all along the western coast of the United States, British Columbia, and north through Alaska waters to the Pribilof Islands and Cape Newenham. NMFS currently identifies 12 stocks of harbor seals in Alaska based largely on genetic structure (Young
Harbor seals inhabit the coastal and estuarine waters of Cook Inlet and are observed in both upper and lower Cook Inlet throughout most of the year (Boveng
Harbor seals haul out on rocks, reefs, beaches, and drifting glacial ice (Young
Recent research on satellite-tagged harbor seals observed several movement patterns within Cook Inlet (Boveng
Harbor seals have been sighted in Cook Inlet during every year of the aerial surveys conducted by NMFS and during all recent mitigation and monitoring programs in lower, middle, and upper Cook Inlet (61N Environmental, 2021, 2022a, 2022b, and 2022c; Fairweather Science, 2020; Kendall
California sea lions live along the Pacific coastline spanning an area from central Mexico to Southeast Alaska and typically breed on islands located in southern California, western Baja California, and the Gulf of California (Carretta
Few observations of California sea lions have been reported in Alaska and most observations have been limited to solitary individuals, typically males that are known to migrate long distances. Occasionally, California sea lions can be found in small groups of two or more and are usually associated with Steller sea lions at their haul outs and rookeries (Maniscalco
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Not all marine mammal species have equal hearing capabilities (
The pinniped functional hearing group was modified from Southall
For more detail concerning these groups and associated frequency ranges, please see NMFS (2018) for a review of available information.
This section provides a discussion of the ways in which components of the specified activity may impact marine mammals and their habitat. The Estimated Take of Marine Mammals section later in this document includes a quantitative analysis of the number of individuals that are expected to be taken by this activity. The Negligible Impact Analysis and Determination section considers the content of this section, the Estimated Take of Marine Mammals section, and the Proposed Mitigation section, to draw conclusions regarding the likely impacts of these activities on the reproductive success or survivorship of individuals and whether those impacts are reasonably expected to, or reasonably likely to, adversely affect the
Effects on marine mammals during the specified activity are expected to potentially occur from three to four tugs towing, holding, and or positioning a jack-up rig. Underwater noise from Hilcorp's proposed activities have the potential to result in Level B harassment of marine mammals in the action area.
This section contains a brief technical background on sound, on the characteristics of certain sound types, and on metrics used relevant to the specified activity and to a discussion of the potential effects of the specified activity on marine mammals found later in this document. For general information on sound and its interaction with the marine environment, please see: Erbe and Thomas (2022); Au and Hastings (2008); Richardson
Sound is a vibration that travels as an acoustic wave through a medium such as a gas, liquid or solid. Sound waves alternately compress and decompress the medium as the wave travels. In water, sound waves radiate in a manner similar to ripples on the surface of a pond and may be either directed in a beam (narrow beam or directional sources) or sound may radiate in all directions (omnidirectional sources), as is the case for sound produced by tugs under load with a jack-up rig considered here. The compressions and decompressions associated with sound waves are detected as changes in pressure by marine mammals and human-made sound receptors such as hydrophones.
Sound travels more efficiently in water than almost any other form of energy, making the use of sound as a primary sensory modality ideal for inhabitants of the aquatic environment. In seawater, sound travels at roughly 1,500 meters per second (m/s). In air, sound waves travel much more slowly at about 340 m/s. However, the speed of sound in water can vary by a small amount based on characteristics of the transmission medium such as temperature and salinity.
The basic characteristics of a sound wave are frequency, wavelength, velocity, and amplitude. Frequency is the number of pressure waves that pass by a reference point per unit of time and is measured in hertz (Hz) or cycles per second. Wavelength is the distance between two peaks or corresponding points of a sound wave (length of one cycle). Higher frequency sounds have shorter wavelengths than lower frequency sounds, and typically attenuate (decrease) more rapidly with distance, except in certain cases in shallower water. The amplitude of a sound pressure wave is related to the subjective “loudness” of a sound and is typically expressed in dB, which are a relative unit of measurement that is used to express the ratio of one value of a power or pressure to another. A sound pressure level (SPL) in dB is described as the ratio between a measured pressure and a reference pressure, and is a logarithmic unit that accounts for large variations in amplitude; therefore, a relatively small change in dB corresponds to large changes in sound pressure. For example, a 10-dB increase is a 10-fold increase in acoustic power. A 20-dB increase is then a 100-fold increase in power and a 30-dB increase is a 1000-fold increase in power. However, a 10-fold increase in acoustic power does not mean that the sound is perceived as being 10 times louder. The dB is a relative unit comparing two pressures; therefore, a reference pressure must always be indicated. For underwater sound, this is 1 microPascal (μPa). For in-air sound, the reference pressure is 20 microPascal (μPa). The amplitude of a sound can be presented in various ways; however, NMFS typically considers three metrics: sound exposure level (SEL), root-mean-square (RMS) SPL, and peak SPL (defined below). The source level represents the SPL referenced at a standard distance from the source, typically 1 m (Richardson
SEL (represented as dB referenced to 1 micropascal squared second (re 1 μPa
RMS SPL is equal to 10 times the logarithm (base 10) of the ratio of the mean-square sound pressure to the specified reference value, and given in units of dB (International Organization for Standardization (ISO), 2017). RMS is calculated by squaring all of the sound amplitudes, averaging the squares, and then taking the square root of the average (Urick, 1983). RMS accounts for both positive and negative values; squaring the pressures makes all values positive so that they may be accounted for in the summation of pressure levels (Hastings and Popper, 2005). This measurement is often used in the context of discussing behavioral effects, in part because behavioral effects, which often result from auditory cues, may be better expressed through averaged units than by peak SPL. For impulsive sounds, RMS is calculated by the portion of the waveform containing 90 percent of the sound energy from the impulsive event (Madsen, 2005).
Peak SPL (also referred to as zero-to-peak sound pressure or 0-pk) is the maximum instantaneous sound pressure measurable in the water, which can arise from a positive or negative sound pressure, during a specified time, for a specific frequency range at a specified distance from the source, and is represented in the same units as the RMS sound pressure (ISO, 2017). Along with SEL, this metric is used in evaluating the potential for permanent threshold shift (PTS) and temporary threshold shift (TTS) associated with impulsive sound sources.
Sounds are also characterized by their temporal components. Continuous sounds are those whose sound pressure level remains above that of the ambient or background sound with negligibly small fluctuations in level (ANSI, 2005) while intermittent sounds are defined as sounds with interrupted levels of low or no sound (National Institute for Occupational Safety and Health (NIOSH), 1998). A key distinction between continuous and intermittent sound sources is that intermittent sounds have a more regular (predictable) pattern of bursts of sounds and silent periods (
Sounds may be either impulsive or non-impulsive (defined below). The distinction between these two sound types is important because they have differing potential to cause physical effects, particularly with regard to noise-induced hearing loss (
Impulsive sound sources (
Non-impulsive sounds can be tonal, narrowband, or broadband, brief or prolonged, and may be either continuous or non-continuous (ANSI, 1995; NIOSH, 1998). Some of these non-impulsive sounds can be transient signals of short duration but without the essential properties of impulses (
Even in the absence of sound from the specified activity, the underwater environment is characterized by sounds from both natural and anthropogenic sound sources. Ambient sound is defined as a composite of naturally-occurring (
A number of sources contribute to background and ambient sound, including wind and waves, which are a main source of naturally occurring ambient sound for frequencies between 200 Hz and 50 kilohertz (kHz) (Mitson, 1995). In general, background and ambient sound levels tend to increase with increasing wind speed and wave height. Precipitation can become an important component of total sound at frequencies above 500 Hz, and possibly down to 100 Hz during quiet times. Marine mammals can contribute significantly to background and ambient sound levels, as can some fish and snapping shrimp. The frequency band for biological contributions is from approximately 12 Hz to over 100 kHz. Sources of background sound related to human activity include transportation (surface vessels), dredging and construction, oil and gas drilling and production, geophysical surveys, sonar, and explosions. Vessel noise typically dominates the total background sound for frequencies between 20 and 300 Hz. In general, the frequencies of many anthropogenic sounds, particularly those produced by construction activities, are below 1 kHz (Richardson
Transmission loss (
The sum of the various natural and anthropogenic sound sources at any given location and time depends not only on the source levels, but also on the propagation of sound through the environment. Sound propagation is dependent on the spatially and temporally varying properties of the water column and sea floor, and is frequency-dependent. As a result of the dependence on a large number of varying factors, background and ambient sound levels can be expected to vary widely over both coarse and fine spatial and temporal scales. Sound levels at a given frequency and location can vary by 10 to 20 dB from day to day (Richardson
In-water activities associated with the project that have the potential to incidentally take marine mammals through exposure to sound would be tugs towing, holding, and positioning the jack-up rig. Unlike discrete noise sources with known potential to harass marine mammals (
The introduction of anthropogenic noise into the aquatic environment from tugs under load is the primary means by which marine mammals may be harassed from Hilcorp's specified activity. In general, animals exposed to natural or anthropogenic sound may experience physical and psychological effects, ranging in magnitude from none to severe (Southall
NMFS defines a noise-induced threshold shift (TS) as a change, usually an increase, in the threshold of audibility at a specified frequency or portion of an individual's hearing range above a previously established reference level (NMFS, 2018). The amount of threshold shift is customarily expressed in dB. A TS can be permanent or temporary. As described in NMFS (2018) there are numerous factors to consider when examining the consequence of TS, including but not limited to the signal temporal pattern (
Depending on the degree (elevation of threshold in dB), duration (
Many studies have examined noise-induced hearing loss in marine mammals (see Finneran (2015) and Southall
The amount and onset of TTS depends on the exposure frequency. Sounds below the region of best sensitivity for a species or hearing group are less hazardous than those near the region of best sensitivity (Finneran and Schlundt, 2013). At low frequencies, onset-TTS exposure levels are higher compared to those in the region of best sensitivity (
Relationships between TTS and PTS thresholds have not been studied in marine mammals, and there is no PTS data for cetaceans, but such relationships are assumed to be similar to those in humans and other terrestrial mammals. PTS typically occurs at exposure levels at least several decibels above that inducing mild TTS (
Behavioral responses to sound are highly variable and context-specific and any reactions depend on numerous intrinsic and extrinsic factors (
Habituation can occur when an animal's response to a stimulus wanes with repeated exposure, usually in the absence of unpleasant associated events (Wartzok
Available studies show wide variation in response to underwater sound; therefore, it is difficult to predict specifically how any given sound in a particular instance might affect marine mammals perceiving the signal (
Changes in dive behavior can vary widely and may consist of increased or decreased dive times and surface intervals as well as changes in the rates of ascent and descent during a dive (
Disruption of feeding behavior from anthropogenic sound exposure is usually inferred by observed displacement from known foraging areas, the appearance of secondary indicators (
Variations in respiration naturally vary with different behaviors and alterations to breathing rate as a function of acoustic exposure can be expected to co-occur with other behavioral reactions, such as a flight response or an alteration in diving. However, respiration rates in and of themselves may be representative of annoyance or an acute stress response. Various studies have shown that respiration rates may either be unaffected or could increase, depending on the species and signal characteristics, again highlighting the importance in understanding species differences in the tolerance of underwater noise when determining the potential for impacts resulting from anthropogenic sound exposure (
Avoidance is the displacement of an individual from an area or migration path as a result of the presence of a sound or other stressors, and is one of the most obvious manifestations of disturbance in marine mammals (Richardson
A flight response is a dramatic change in normal movement to a directed and rapid movement away from the perceived location of a sound source. The flight response differs from other avoidance responses in the intensity of the response (
Behavioral disturbance can also impact marine mammals in more subtle ways. Increased vigilance may result in costs related to diversion of focus and attention (
Many animals perform vital functions, such as feeding, resting, traveling, and socializing, on a diel cycle (24-hour cycle). Disruption of such functions resulting from reactions to stressors such as sound exposure are more likely to be significant if they last more than one diel cycle or recur on subsequent days (Southall
Neuroendocrine stress responses often involve the hypothalamus-pituitary-adrenal system. Virtually all neuroendocrine functions that are affected by stress—including immune competence, reproduction, metabolism, and behavior—are regulated by pituitary hormones. Stress-induced changes in the secretion of pituitary hormones have been implicated in failed reproduction, altered metabolism, reduced immune competence, and behavioral disturbance (
The primary distinction between stress (which is adaptive and does not normally place an animal at risk) and “distress” is the cost of the response. During a stress response, an animal uses glycogen stores that can be quickly replenished once the stress is alleviated. In such circumstances, the cost of the stress response would not pose serious fitness consequences. However, when an animal does not have sufficient energy reserves to satisfy the energetic costs of a stress response, energy resources must be diverted from other functions. This state of distress will last until the animal replenishes its energetic reserves sufficient to restore normal function.
Relationships between these physiological mechanisms, animal behavior, and the costs of stress responses are well-studied through controlled experiments and for both laboratory and free-ranging animals (
Norman (2011) reviewed environmental and anthropogenic stressors for CIBWs. Lyamin
Marine mammals vocalize for different purposes and across multiple modes, such as whistling, echolocation click production, calling, and singing. Changes in vocalization behavior in response to anthropogenic noise can occur for any of these modes and may result from a need to compete with an increase in background noise or may reflect increased vigilance or a startle
Under certain circumstances, marine mammals experiencing significant masking could also be impaired from maximizing their performance fitness in survival and reproduction. Therefore, when the coincident (masking) sound is human-made, it may be considered harassment when disrupting or altering critical behaviors. It is important to distinguish TTS and PTS, which persist after the sound exposure, from masking, which occurs during the sound exposure. Because masking (without resulting in TS) is not associated with abnormal physiological function, it is not considered a physiological effect, but rather a potential behavioral effect (though not necessarily one that would be associated with harassment).
The frequency range of the potentially masking sound is important in determining any potential behavioral impacts. For example, low-frequency signals may have less effect on high-frequency echolocation sounds produced by odontocetes but are more likely to affect detection of mysticete communication calls and other potentially important natural sounds such as those produced by surf and some prey species. The masking of communication signals by anthropogenic noise may be considered as a reduction in the communication space of animals (
Marine mammals at or near the proposed project site may be exposed to anthropogenic noise which may be a source of masking. Vocalization changes may result from a need to compete with an increase in background noise and include increasing the source level, modifying the frequency, increasing the call repetition rate of vocalizations, or ceasing to vocalize in the presence of increased noise (Hotchkin and Parks, 2013). For example, in response to vessel noise, CIBWs may shift the frequency of their echolocation clicks and communication signals, reduce their overall calling rates, and or increase the emission of certain call signals to prevent masking by anthropogenic noise (Lesage
Masking occurs in the frequency band that the animals utilize, and is more likely to occur in the presence of broadband, relatively continuous noise sources such as tugging. Since noises generated from tugs towing and positioning are mostly concentrated at low frequency ranges, with a small concentration in high frequencies as well, these activities likely have less effect on mid-frequency echolocation sounds by odontocetes (toothed whales) such as CIBWs. However, lower frequency noises are more likely to affect detection of communication calls and other potentially important natural sounds such as surf and prey noise. Low-frequency noise may also affect communication signals when they occur near the frequency band for noise and thus reduce the communication space of animals (
In consideration of the range of potential effects (PTS to behavioral disturbance), we consider the potential exposure scenarios and context in which species would be exposed to tugs under load with a jack-up rig during Hilcorp's planned activities. CIBWs may be present in low numbers during the work; therefore, some individuals may be reasonably expected to be exposed to elevated sound levels However, CIBWs are expected to be transiting through the area, given this work is proposed primarily in middle Cook Inlet (as described in the Description of Marine Mammals in the Area of Specified Activities section), thereby limiting exposure duration, as CIBWs in the area are expected to be headed to or from the concentrated foraging areas farther north near the Beluga River, Susitna Delta, and Knik and Turnigan Arms. Similarly, humpback whales, fin whales, minke whales, gray whales, killer whales, California sea lion, and Steller sea lions are not expected to remain in the area of the tugs. Dall's porpoise, harbor porpoise, and harbor seal have been sighted with more regularity than many other species during oil and gas activities in Cook Inlet but due to the transitory nature of these species, they are unlikely to remain close to a tug under load for the full duration of the noise-producing activity. In fact, during Hilcorp's jack-up rig-based monitoring efforts in 2023, only one Dall's porpoise, two harbor seals, and one harbor porpoise were observed across four different sightings, and observations only lasted 1 to 5 minutes (Horsley and Larson, 2023). Because of this and the relatively low-level sources, the likelihood of PTS and TTS over the course of the tug activities is discountable. Harbor seals may linger or haul-out in the area but they are not known to do so in any large number or for extended periods of time (there are no known major haul-outs or rookeries coinciding with the anticipated transit routes). Here we find there is small potential for TTS over the course of tug activities but again, PTS is not likely due to the nature of tugging. Potential for PTS and TTS due to pile driving is discussed further in the Estimated Take section.
Given most marine mammals are likely transiting through the area, exposure is expected to be brief but the
While in some cases marine mammals have exhibited little to no obviously detectable response to certain common or routine industrialized activity (Cornick
Hilcorp's proposed activities could have localized, temporary impacts on marine mammal habitat, including prey, by increasing in-water sound pressure levels. Increased noise levels may affect acoustic habitat and adversely affect marine mammal prey in the vicinity of the project areas (see discussion below). Elevated levels of underwater noise would ensonify the project areas where both fishes and mammals occur and could affect foraging success. Additionally, marine mammals may avoid the area during rig towing, holding, and or positioning; however, displacement due to noise is expected to be temporary and is not expected to result in long-term effects to the individuals or populations.
The total area likely impacted by Hilcorp's activities is relatively small compared to the available habitat in Cook Inlet. Avoidance by potential prey (
Fishes utilize the soundscape and components of sound in their environment to perform important functions such as foraging, predator avoidance, mating, and spawning (
Fish react to sounds that are especially strong and/or intermittent low-frequency sounds, and behavioral responses such as flight or avoidance are the most likely effects. Short duration, sharp sounds can cause overt or subtle changes in fish behavior and local distribution. SPLs of sufficient strength have been known to cause injury to fishes and fish mortality (summarized in Popper
Fish have been observed to react when engine and propeller sounds exceed a certain level (Olsen
Zooplankton is a food source for several marine mammal species, as well as a food source for fish that are then preyed upon by marine mammals. Population effects on zooplankton could have indirect effects on marine mammals. Data are limited on the effects of underwater sound on zooplankton species, particularly sound from ship traffic and construction (Erbe
In summary, given the relatively small areas being affected, as well as the temporary and mostly transitory nature of the tugging, any adverse effects from Hilcorp's activities on any prey habitat or prey populations are expected to be minor and temporary. The most likely impact to fishes at the project site would be temporary avoidance of the area. Any behavioral avoidance by fish of the disturbed area would still leave significantly large areas of fish and marine mammal foraging habitat in the nearby vicinity. Thus, we preliminarily conclude that impacts of the specified activities are not likely to have more than short-term adverse effects on any prey habitat or populations of prey species. Further, any impacts to marine mammal habitat are not expected to result in significant or long-term consequences for individual marine mammals, or to contribute to adverse impacts on their populations.
This section provides an estimate of the number of incidental takes proposed for authorization through the IHA, which will inform NMFS' consideration of “small numbers,” the negligible impact determinations, and impacts on subsistence uses.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes would be by Level B harassment only, in the form of behavioral reactions and or TTS for individual marine mammals resulting from exposure to Hilcorp's acoustic sources (
As described previously, no serious injury or mortality is anticipated or proposed to be authorized for this activity. Below we describe how the proposed take numbers are estimated.
For acoustic impacts, generally speaking, we estimate take by considering: (1) acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and, (4) the number of days of activities. We note that while these factors can contribute to a basic calculation to provide an initial prediction of potential takes, additional information that can qualitatively inform take estimates is also sometimes available (
NMFS recommends the use of acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur PTS of some degree (equated to Level A harassment).
Hilcorp's proposed activity includes the use of continuous sources (tugs towing, holding, and positioning a jack-up rig), and therefore the RMS SPL threshold of 120 is applicable.
These thresholds are provided in table 4 below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS' 2018 Technical Guidance, which may be accessed at:
Here, we describe operational and environmental parameters of the activity that are used in estimating the area ensonified above the acoustic thresholds, including source levels and transmission loss coefficient.
The sound field in the project area is the existing background noise plus additional noise resulting from tugs under load with a jack-up rig. Marine mammals are expected to be affected via sound generated by the primary components of the project (
Hilcorp's literature review identified no existing data on sound source levels of tugs towing jack-up rigs. Accordingly, for this analysis, Hilcorp considered data from tug-under-load activities, including berthing and towing activities. Austin and Warner (2013) measured 167 dB RMS for tug towing barge activity in Cook Inlet. Blackwell and Greene (2002) reported berthing activities in the POA with a source level of 179 dB RMS. Laurinolli
The rig manager for Hilcorp, who is experienced with towing jack-up rigs in Cook Inlet, described operational conditions wherein the tugs generally operate at half power or less for the majority of the time they are under load (pers. Comm., Durham, 2021). Transits with the tide (lower power output) are preferred for safety reasons, and effort is made to reduce or eliminate traveling against the tide (higher power output). The Roberts Bank Terminal 2 study (2014) allowed for a comparison of source levels from the same vessel (Seaspan Resolution tug) at half power versus full power. Seaspan Resolution's half-power (
The 50 percent (or less) power output scenario occurs during the vast majority of tug towing jack-up rig activity, as described in the
Further modeling was done to account for one additional tug working for one hour at 50 percent power during jack-up rig positioning, a stationary activity. This is equivalent in terms of acoustic energy to three tugs operating at 180.0 dB RMS (each of them) for 4 hours, joined by a fourth tug for 1 hour, increasing the source level to 186.0 dB RMS only during the 1-hour period (the logarithmic sum of four tugs working together at 180.0 dB RMS). An SEL of 185.1 dB was used to account for the cumulative sound exposure when calculating Level A harassment by adding a 4th tug operating at 50 percent power for 20 percent of the 5-hour period. This is equivalent in terms of acoustic energy to 3 tugs operating at 185.0 dB for 4 hours, joined by a fourth tug for 1 hour, increasing the source level to 186.0 dB only during the 1-hour period. The use of the 20 percent duty cycle was a computational requirement and, although equal in terms of overall energy and determination of impacts, should not be confused with the actual instantaneous SPL (see section 6.2.1.1 of Hilcorp's application for additional computational details).
In summary, Hilcorp has proposed to use a source level of 185.0 dB RMS to calculate the stationary Level B harassment isopleth where three tugs were under load for 4 hours with a 50 percent power output and a source level of 186.0 dB RMS to calculate the stationary Level B harassment isopleth where four tugs were under load for 1 hour with a 50 percent power output. Further, Hilcorp has proposed to use a source level of 185.1 dB SEL to calculate the stationary Level A harassment isopleths where three tugs were underload for 4 hours and then one tug joined for 1 additional hour. Lastly, Hilcorp proposed to use the 185.0 dB RMS level to model the mobile Level A harassment isopleths for three tugs under load with a 50 percent power output. NMFS concurs that Hilcorp's proposed source levels are appropriate.
Modeling was conducted using the dBSea software package. The fluid parabolic equation modeling algorithm was used with 5 Padé terms to calculate the TL between the source and the receiver at low frequencies (
Detailed broadband sound transmission loss modeling in dBSea used the source level of 185 dB RMS calculated in one-third octave band levels (31.5 Hz to 64,000 Hz) for frequency dependent solutions. The frequencies associated with tug sound sources occur within the hearing range of marine mammals in Cook Inlet. Received levels for each hearing marine mammal group based on one-third octave auditory weighting functions were also calculated and integrated into the modeling scenarios of dBSea. For modeling the distances to relevant PTS thresholds, a weighting factor adjustment was not used; instead, the data on the spectrum associated with their source was used and incorporated the full auditory weighting function for each marine mammal hearing group.
The tugs towing the jack-up rig represent a mobile sound source, and tugs holding and positioning the jack-up rig on a platform are more akin to a stationary sound source. In addition, three tugs would be used for towing (mobile) and holding and positioning (stationary) and up to four tugs could be used for positioning (stationary). Consequently, sound TL modeling was undertaken for the various stationary and mobile scenarios for three and four tugs to generate Level A and Level B harassment threshold distances.
For acoustic modeling purposes of the stationary Level A harassment thresholds, two locations representative of where tugs will be stationary while they position the jack-up rig were selected in middle Cook Inlet near the Tyonek platform and in lower Trading Bay where the production platforms are located. To account for the mobile scenarios, the acoustic model generated Levels A and Level B harassment distances along a representative route from the Rig Tenders dock in Nikiski to the Tyonek platform, the northernmost platform in Cook Inlet (representing middle Cook Inlet), as well as from the Tyonek Platform to the Dolly Varden platform in lower Trading Bay, then from the Dolly Varden platform back to the Rig Tenders Dock in Nikiski. Note that this route is representative of a typical route the tugs may take; the specific route is not yet known, as the order in which platforms will be drilled with the jack-up rig is not yet known. These results were used to calculate Level A and Level B harassment exposure estimates from mobile tugs
For mobile Level B harassment and stationary Level B harassment with three tugs, the average distance to the 120 dB RMS threshold was based on the assessment of 100 radials at 25 locations across seasons (May, July, and October) and represents the average Level B harassment zone for each season and location (table 5). The result is a mobile and stationary Level B harassment zone of 3,850 m when three tugs are used (table 5). For stationary Level B harassment with four tugs, the average distance to the 120 dB RMS threshold was based on 100 radials at two locations, one in Trading Bay and one in middle Cook Inlet, across seasons (May, July, and October) and represents the average Level B harassment zone for each season and location. The result is a stationary Level B harassment zone of 4,453 m when four tugs are in use (table 6). NMFS concurs that 3,850 m and 4,453 m are appropriate estimates for the extent of the Level B harassment zones for Hilcorp's towing, holding, and positioning activities when using three and four tugs, respectively.
The average Level A harassment distances for the stationary, four tug scenario were calculated assuming a SEL of 185.1 dB for a 5-hour exposure duration (table 7). For the mobile, three tug scenario, the average Level A harassment distances were calculated assuming a SEL of 185.0 dB with an 18-second exposure period (table 8). This 18-second exposure was derived using the standard TL equation (Source Level−TL = Received Level) for determining threshold distance (R [m]), where TL = 15Log10. In this case, the equation was 185.0 dB−15Log10 = 173 dB. Solving for threshold distance (R) yields a distance of approximately 6 m, which was then used as the preliminary
Tugs are anticipated to be towing the jack-up rig between platforms and considered a mobile sound source for 6 hours in a single day per jack-up rig move. Tugs are anticipated to be towing the jack-up rig and considered a mobile source during demobilization and mobilization to/from Rig Tenders Dock in Nikiski for 9 hours. One jack-up rig move between platforms is planned during the IHA period. Tugs are anticipated to be holding or positioning the jack-up rig at the platforms or Rig Tenders Dock during demobilization and mobilization and are considered a stationary sound source for 5 hours in the first day and 5 hours in the second day if a second attempt to pin the jack-up rig is required. A second attempt was built into the exposure estimate for each pinning event; three total pinning events are anticipated during the IHA period for production drilling.
The ensonified area for a location-to-location transport for production drilling represents a rig move between two production platforms in middle Cook Inlet and/or Trading Bay and includes 6 mobile hours over an average distance of 16.77 km in a single day and 5 stationary hours on the first day and 5 stationary hours on a second day. The 5 stationary hours are further broken into 4 hours with three tugs under load and 1 hour with four tugs under load. One location-to-location jack-up rig move is planned for the IHA period.
The ensonified area for production drilling demobilization and mobilization represents a rig move from a production platform in middle Cook Inlet to Rig Tenders Dock in Nikiski and reverse for mobilization and includes 9 mobile hours over a distance of up to 64.34 km in a single day and 5 stationary hours on the first day and 5 stationary hours on a second day, which are further broken into the same three tugs working for 4 hours and four tugs working for 1 hour as mentioned above. A summary of the estimated Level A and Level B harassment distances and areas for the various tugging scenarios if provided in table 9.
In this section we provide information about the occurrence of marine mammals, including density or other relevant information which will inform the take calculations.
Densities for marine mammals in Cook Inlet were derived from NMFS' Marine Mammal Laboratory (MML) aerial surveys, typically flown in June, from 2000 to 2022 (Rugh
For CIBWs, two densities were considered as a comparison of available data. The first source considered was directly from the MML aerial surveys, as described above. Sighting data collected during aerial surveys was collected and then several correction factors were applied to address perception, availability, and proximity bias. These corrected sightings totals were then divided by the total area covered during the survey to arrive at a density value. Densities were derived for the entirety of Cook Inlet as well as for middle and lower Cook Inlet. Densities across all three regions are low and there is a known effect of seasonality on the distribution of the whales. Thus, densities derived directly from surveys flown in the summer might underestimate the density of CIBWs in lower Cook Inlet at other ice-free times of the year.
The other mechanism for arriving at CIBW density considered here is the Goetz
Here we describe how the information provided above is synthesized to produce a quantitative estimate of the take that is reasonably likely to occur and proposed for authorization.
As described above, Hilcorp's tug towing rig activity considers a total of three rig moves across 6 days (one 2-day location-to-location jack-up rig move, one 2-day demobilization effort, and one 2-day mobilization effort). For the location-to-location move, Hilcorp assumed 6 hours of mobile (towing) and 5 hours of stationary (holding and positioning) activities on the first day, and 5 hours of the stationary activity (4 hours with three tugs and 1 hour with four tugs) on the second day to account for two positioning attempts (across 2 days). For the demobilization and mobilization efforts, Hilcorp assumed 9 hours of mobile and 5 hours of stationary (4 hours with three tugs and 1 hour with four tugs) activities on the first day, and 5 hours of stationary (4 hours with three tugs and 1 hour with four tugs) activities on the second day (across 2 days for each effort, for a total of 4 days of tugs under load with a jack-up rigs).
Take by Level A harassment was estimated by multiplying the ensonified Level A harassment areas per tugging activity scenario for each functional hearing group (table 9) by the estimated marine mammal densities (table 10) to get an estimate of exposures per day. This value was then multiplied by the number of days per move and the number of moves of that type of activity scenario. The estimated exposures by activity scenario were then summed to result in a number of exposures for all tug towing rig activity. Based on this analysis, only Dall's porpoise, harbor porpoise, and harbor seals had estimated take by Level A harassment that were greater than zero: 0.001, 0.018, and 0.006, respectively. Given these small estimates, NMFS does not propose to authorize take by Level A harassment related to Hilcorp's tugging activity. For mobile tugging, the distances to the PTS thresholds for HF cetaceans and phocids are smaller than the overall size of the tug and rig configuration (
The ensonified Level B harassment areas calculated per activity scenario (three tug stationary, four tug stationary, and three tug mobile for the location-to-location move and the demobilization and mobilization efforts) for a single day (see table 9) were multiplied by marine mammal densities to get an estimate of exposures per day. This was then multiplied by the number of days per move and the number of moves of that type of activity scenario to arrive at the number of estimated exposures per activity type. These exposures by activity scenario were then summed to result in a number of exposures per year for all Hilcorp's proposed tug under load activities (table 11). As exposure estimates were calculated based on specific potential rig moves or well locations, the density value for CIBWs that was carried through the estimate was the higher density value for that particular location (table 10). There are no estimated exposures based on this method of calculation for California sea lions and pacific white-sided dolphins because the assumed density of these species in the project area is 0.00 animals per km
During annual aerial surveys conducted in Cook Inlet from 2000 to 2016, humpback group sizes ranged from one to 12 individuals, with most groups comprised of 1 to 3 individuals (Shelden
Minke whales usually travel in groups of two to three individuals (NMFS, 2023b). During Cook Inlet-wide aerial surveys conducted from 1993 to 2004, minke whales were encountered three times (1998, 1999, and 2006), all were observed off Anchor Point (Shelden
During Apache's 2012 seismic program, nine sightings of a total of nine gray whales were observed in June and July (Lomac-MacNair
Fin whales most often travel alone, although they are sometimes seen in groups of two to seven individuals. During migration they may be in groups of 50 to 300 individuals (NMFS, 2010). During the NMFS aerial surveys in Cook Inlet from 2000 to 2018, 10 sightings of 26 estimated individual fin whales were recorded in lower Cook Inlet (Shelden
Killer whale pods typically consist of a few to 20 or more animals (NMFS, 2023c). During seismic surveys conducted in 2019 by Hilcorp in lower Cook Inlet, 21 killer whales were observed. Although also observed as single individuals, killer whales were recorded during this survey in groups ranging in size from two to five individuals (Fairweather Science, 2020). One killer whale group of two individuals was observed during the 2015 SAExploration seismic program near the North Foreland (Kendall and Cornick, 2015). Based on recent documented sightings, observed group sizes, and the established presence of killer whales in Cook Inlet, NMFS is proposing to authorize 10 takes by Level B harassment for killer whales. This would facilitate two sightings with a group size of five individuals, which represents the upper end of recorded group size in recent surveys conducted in Cook Inlet.
The total estimated take for CIWB was calculated to be 9.529 individuals based on recorded densities and estimated durations that tugs would be under load with a jack-up rig (table 11). The 2018 MML aerial survey (Shelden and Wade, 2019) reported a median beluga group size estimate of approximately 11 whales, although estimated group sizes were highly variable (ranging from 2 to 147 whales) as was the case in previous survey years (Boyd
Dall's porpoises are usually found in groups averaging between 2 and 12 individuals (NMFS, 2023d). During seismic surveys conducted in 2019 by Hilcorp in lower Cook Inlet, Dall's porpoises were recorded in groups ranging from two to seven individuals (Fairweather Science, 2020). The 2012
Harbor porpoises are most often seen in groups of two to three (NMFS, 2023e); however, based on observations during project-based marine mammal monitoring, they can also occur in larger group sizes. Shelden
Recent data specific to Pacific white-sided dolphins within Cook Inlet is lacking, and the calculated exposure estimate is zero based on the paucity of sightings of this species in this region (table 11). However, Pacific-white sided dolphins have been observed in Cook Inlet. During an aerial survey in May 2014, Apache observed three Pacific white-sided dolphins near Kenai. No large groups of Pacific white-sided dolphins have been reported within Cook Inlet, although acoustic detections of several Pacific white-sided dolphins were recorded near Iniskin Bay during Hilcorp's 3D seismic survey in 2020. Prior to this, only one other survey in the last 20 years noted the presence of Pacific white-sided dolphins (three animals) within Cook Inlet. As a result of the dearth of current data on this species, an accurate density for Pacific white-sided dolphins in the specific project region has not been generated. However, based on the possibility of this species in the project area, NMFS proposes to authorize three takes by Level B harassment for Pacific white-sided dolphins, the maximum number of Pacific white-sided dolphins that have been recorded in the somewhat recent past are present in Cook Inlet. This is consistent with NMFS' IHA for Hilcorp's previous tugging activities (87 FR 62364, October 14, 2022).
Harbor seals are often solitary in water but can haul out in groups of a few to thousands (Alaska Department of Fish and Game (ADF&G), 2022). Given their presence in the study region, NMFS proposes to authorize 355 takes by Level B harassment for harbor seals, which is commensurate with the calculated exposure estimate based on harbor seal densities and Hilcorp's estimated durations for tugs under load with a jack-up rig (table 11).
Steller sea lions tend to forage individually or in small groups (Fiscus and Baines, 1966) but have been documented feeding in larger groups when schooling fish were present (Gende
While California sea lions are uncommon in the specific geographic region, two were seen during the 2012 Apache seismic survey in Cook Inlet (Lomac-MacNair
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stock for taking for certain subsistence uses. NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity or other means of effecting the least practicable adverse impact upon the affected species or stocks, and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, NMFS considers two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat, as well as subsistence uses. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned); and
(2) The practicability of the measures for applicant implementation, which may consider such things as cost and impact on operations.
There is a discountable potential for marine mammals to incur PTS from the project, as source levels are relatively low, non-impulsive, and animals would have to remain at very close distances for multiple hours to accumulate acoustic energy at levels that could damage hearing. Therefore, we do not believe there is reasonable potential for Level A harassment and we are not proposing to authorize it. However, Hilcorp will implement a number of
The tugs towing a jack-up rig are not able to shut down while transiting, holding, or positioning the rig. Hilcorp would maneuver the tugs towing the jack-up rig such that they maintain a consistent speed (approximately 4 knots [7 km/hr]) and avoid multiple changes of speed and direction to make the course of the vessels as predictable as possible to marine mammals in the surrounding environment, characteristics that are expected to be associated with a lower likelihood of disturbance.
During activities involving tugs under load with a jack-up rig, Hilcorp would implement a clearance zone of 1,500 m centered around the jack-up rig for non-CIBW species and a clearance zone that extends as far as PSOs can feasibly observe for CIBWs. The 1,500 m proposed clearance zone is consistent with previous authorizations for tugging activities (87 FR 62364, October 14, 2022), and was determined to be appropriate as it is approximately twice as large as largest Level A harassment zone (table 10) and is a reasonable distance within which cryptic species (
Hilcorp would employ two NMFS-approved PSOs to conduct marine mammal monitoring to a distance out to the greatest extent possible for all mobile and stationary tugging activity. Prior to new commencing activities during daylight hours or if there is a 30-minute lapse in operational activities, the PSOs would observe the clearance zones described above for 30 minutes (
During nighttime hours or low/no-light conditions, night-vision devices (NVDs) shown to be effective at detecting marine mammals in low-light conditions (
Hilcorp would operate with the tide, resulting in a low power output from the tugs towing the jack-up rig, unless human safety or equipment integrity are at risk. Due to the nature of tidal cycles in Cook Inlet, it is possible that the most favorable tide for the towing operation would occur during nighttime hours. Hilcorp would operate the tugs towing the jack-up rigs at night if the nighttime operations result in a lower power output from the tugs by operating with a favorable tide.
Out of concern for potential disturbance to CIBWs in sensitive and essential habitat, Hilcorp would maintain a distance of 2.4 km from the MLLW line of the Susitna River Delta (Beluga River to the Little Susitna River) between April 15 and November 15. The dates of applicability of this exclusion area have been expanded based on new available science, including visual surveys and acoustic studies, which indicate that substantial numbers of CIBWs continue to occur in the Susitna Delta area through at least mid-November (M. Castellote, pers. comm., T. McGuire, pers. comm.). In addition, Hilcorp would coordinate with local Tribes as described in its Stakeholder Engagement Plan (see Appendix C in Hilcorp's application), notify the communities of any changes in the operation, and take action to avoid or mitigate impacts to subsistence harvests.
For transportation of a jack-up rig to or from the Tyonek platform, in addition to the two PSOs stationed on the rig during towing, one additional PSO would be stationed on the Tyonek platform to monitor for marine mammals. The PSO would be on-watch for at least 1 hour before tugs are expected to arrive (scheduled to approach the Level B harassment threshold).
Based on our evaluation of Hilcorp's proposed measures, NMFS has preliminarily determined that the proposed mitigation measures provide the means of effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stock for subsistence uses.
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present while conducting the activities. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Hilcorp would abide by all monitoring and reporting measures contained within the IHA, if issued, and their Marine Mammal Monitoring and Mitigation Plan (see appendix D of Hilcorp's application). A summary of those measures and additional requirements proposed by NMFS is provided below.
A minimum of two NMFS-approved PSOs must be stationed on the tug or jack-up rig for monitoring purposes for the entirety of jack-up rig towing, holding, and positioning operations. PSOs would be independent of the activity contractor (for example, employed by a subcontractor) and have no other assigned tasks during monitoring periods. At least one PSO would have prior experience performing the duties of a PSO during an activity pursuant to a NMFS-issued Incidental Take Authorization or Letter of Concurrence. Other PSOs may substitute other relevant experience (including relevant Alaska Native traditional knowledge), education (degree in biological science or related field), or training for prior experience performing the duties of a PSO.
PSOs would also have the following additional qualifications:
(a) The ability to conduct field observations and collect data according to assigned protocols;
(b) Experience or training in the field identification of marine mammals, including the identification of behaviors;
(c) Sufficient training, orientation, or experience with the tugging operation to provide for personal safety during observations;
(d) Sufficient writing skills to record required information including but not limited to the number and species of marine mammals observed; dates and times when tugs were under load with the jack-up rig; dates, times, and reason for implementation of mitigation (or why mitigation was not implemented when required); and marine mammal behavior; and
(e) The ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
PSOs would be positioned aboard the tug or the jack-up-rig at the best practical vantage points that are determined to be safe, ideally an elevated stable platform from which a single PSO would have an unobstructed 360-degree view of the water or a total 360-degree view between all PSOs on-watch. Generally, one PSO would be on the port side and one PSO would be on the starboard side. Additionally, when towing the jack-up rig to the Tyonek platform, an additional PSO would be stationed on the Tyonek platform 1 hour before tugs are expected to arrive (
Hilcorp would submit interim monthly reports for all months in which tug towing, holding, or positioning of the jack-up rig occurs. Monthly reports would be due 14 days after the conclusion of each calendar month, and would include a summary of marine mammal species and behavioral observations, delays, and tugging activities completed (
A draft final summary marine mammal monitoring report would be submitted to NMFS within 90 days after the completion of the tug towing jack-up rig activities for the year or 60 calendar days prior to the requested issuance of any subsequent IHA for similar activity at the same location, whichever comes first. The draft summary report would include an overall description of all work completed, a narrative regarding marine mammal sightings, and associated marine mammal observation data sheets (data must be submitted electronically in a format that can be queried such as a spreadsheet or database). Specifically, the summary report would include:
• Date and time that monitored activity begins or ends;
• Activities occurring during each observation period, including (a) the type of activity (towing, holding, positioning), (b) the total duration of each type of activity, (c) the number of attempts required for positioning, (d) when nighttime operations were required, and (e) whether towing against the tide was required;
• PSO locations during marine mammal monitoring;
• Environmental conditions during monitoring periods (at the beginning and end of the PSO shift and whenever conditions change significantly), including Beaufort sea state, tidal state, and any other relevant weather conditions including cloud cover, fog, sun glare, overall visibility to the horizon, and estimated observable distance;
• Upon observation of a marine mammal, the following information:
○ Name of PSO who sighted the animal(s) and PSO location and activity at time of sighting;
○ Time of sighting;
○ Identification of the animal(s) (
○ Distance and location of each observed marine mammal relative to the tug boats for each sighting;
○ Estimated number of animals (min/max/best estimate);
○ Estimated number of animals by cohort (adults, juveniles, neonates, group composition,
○ Animal's closest point of approach and estimated time spent within the harassment zone;
○ Description of any marine mammal behavioral observations (
• Number of marine mammals detected within the harassment zones, by species; and
• Detailed information about implementation of any mitigation (
If no comments are received from NMFS within 30 days, the draft summary report would constitute the final report. If comments are received, a final report addressing NMFS comments must be submitted within 30 days after receipt of comments.
In the event that personnel involved in Hilcorp's tugging activities discover an injured or dead marine mammal, Hilcorp would report the incident to the Office of Protected Resources, NMFS (
• Time, date, and location (latitude and longitude) of the first discovery (and updated location information if known and applicable);
• Species identification (if known) or description of the animal(s) involved;
• Condition of the animal(s) (including carcass condition if the animal is dead);
• Observed behaviors of the animal(s), if alive;
• If available, photographs or video footage of the animal(s); and
• General circumstances under which the animal was discovered.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
To avoid repetition, the discussion of our analysis applies to all the species listed in table 11, except CIBWs, given that many of the anticipated effects of this project on different marine mammal stocks are expected to be relatively similar in nature. For CIBWs, there are meaningful differences in anticipated individual responses to activities, impact of expected take on the population, or impacts on habitat; therefore, we provide a separate independent detailed analysis for CIBWs following the analysis for other species for which we propose take authorization.
NMFS has identified several key factors which may be employed to assess the level of analysis necessary to conclude whether potential impacts associated with a specified activity should be considered negligible. These include (but are not limited to) the type and magnitude of taking, the amount and importance of the available habitat for the species or stock that is affected, the duration of the anticipated effect on the individuals, and the status of the species or stock. The potential effects of the specified activity on humpback whales, minke whales, gray whales, fin whales, killer whales, Dall's porpoises, harbor porpoises, Pacific white-sided dolphins, Steller sea lions, harbor seals, and California sea lions are discussed below. These factors also apply to CIBWs; however, an additional analysis for CIBWs is provided in a separate sub-section below.
Tugs under load with the jack-up rig, as outlined previously, have the potential to disturb or displace marine mammals. Specifically, the specified activities may result in take, in the form of Level B harassment, from underwater sounds generated by tugs towing, holding, and positioning a jack-up rig. Potential takes could occur if marine mammals are present in zones ensonified above the thresholds for Level B harassment, identified above, while activities are underway.
Hilcorp's planned activities and associated impacts would occur within a limited, confined area of the affected species or stocks' range over a total of 6 days between September 14, 2024, and September 13, 2025. The intensity and duration of take by Level B harassment would be minimized through use of mitigation measures described herein. Further the amount of take proposed to be authorized is small when compared to stock abundance (see tables 2 and 11). In addition, NMFS does not anticipate that serious injury or mortality would occur as a result of Hilcorp's planned activity given the nature of the activity, even in the absence of required mitigation.
Exposures to elevated sound levels produced during tugs under load with the jack-up rig may cause behavioral disturbance of some individuals within the vicinity of the sound source. Behavioral responses of marine mammals to tugs under load with the jack-up rig are expected to be mild, short term, and temporary. Effects on individuals that are taken by Level B harassment, as enumerated in the Estimated Take section, on the basis of reports in the literature as well as monitoring from other similar activities conducted by Hilcorp (Horsley and Larson, 2023), would likely be limited to behavioral response such as increased swimming speeds, changing in directions of travel and diving and surfacing behaviors, increased respiration rates, or decreased foraging (if such activity were occurring) (Ridgway
Tugs pulling, holding, and positioning a jack-up rig are slow-moving as compared to typical recreational and commercial vessel traffic. Assuming an animal was stationary, exposure from the moving tug configuration (which comprises most of the tug activity being considered) would be on the order of minutes in any particular location. The slow, predictable, and generally straight path of this activity is expected to further lessen the likelihood that sound exposures at the expected levels would result in the harassment of marine mammals. Also, this slow transit along a predictable path is planned in an area of routine vessel traffic where many large vessels move in slow straight-line paths, and some individuals are expected to be habituated to these sorts of sounds. While it is possible that animals may swim around the project area, avoiding closer approaches to the boats, we do not expect them to abandon any intended path. Further, most animals present in the region would likely be transiting through the area; therefore, any potential exposure is expected to be brief. Based on the characteristics of the sound source and the other activities regularly encountered in the area, it is unlikely Hilcorp's plannedactivities would be of a duration or intensity expected to result in impacts on reproduction or survival.
Further, most of the species present in the region would only be present temporarily based on seasonal patterns or during transit between other habitats. These temporarily present species would be exposed to even shorter periods of noise-generating activity, further decreasing the impacts. Most likely, individual animals would simply move away from the sound source and be temporarily displaced from the area. Takes may also occur during important feeding times. The project area though represents a small portion of available foraging habitat and impacts on marine mammal feeding for all species should be minimal.
We anticipate that any potential reactions and behavioral changes are expected to subside quickly when the exposures cease and, therefore, we do not expect long-term adverse consequences from Hilcorp's proposed activities for individuals of any species. The intensity of Level B harassment events would be minimized through use of mitigation measures described herein, which were not quantitatively factored into the take estimates. Hilcorp would use PSOs to monitor for marine mammals before commencing any tugging activity, which would minimize the potential for marine mammals to be present within Level B harassment zones when tugs are under load. Further, given the absence of any major rookeries or areas of known biological significance for marine mammals (
Theoretically, repeated, sequential exposure to elevated noise from tugs under load with a jack-up rig over a long duration could result in more severe impacts to individuals that could affect a population (via sustained or repeated disruption of important behaviors such as feeding, resting, traveling, and socializing; Southall
Hilcorp's tugs under load with a jack-up rig are also not expected to have significant adverse effects on any marine mammal habitat as no physical impacts to habitat are anticipated to results from the specified activities and any impacts to marine mammal habitat (
Impacts to marine mammal prey species are also expected to be minor and temporary and to have, at most, short-term effects on foraging of individual marine mammals, and likely no effect on the populations of marine mammals as a whole. Overall, as described above, the area anticipated to be impacted by Hilcorp's planned activities is very small compared to the available surrounding habitat, and does not include habitat of particular importance. The most likely impact to prey would be temporary behavioral avoidance of the immediate area. When tugs are under load with the jack-up rig, it is expected that some fish would temporarily leave the area of disturbance (
Finally, Hilcorp will minimize potential exposure of marine mammals to elevated noise levels by delaying tugs being under load with the jack-up rig if marine mammals are observed during the pre-clearance monitoring period. Hilcorp would also implement vessel maneuvering measures to reduce the likelihood of disturbing marine mammals during any periods when marine mammals may be present near the vessels. Lastly, Hilcorp would also reduce the impact of their activity by conducting tugging operations with favorable tides whenever feasible.
In summary and as described above, the following factors (with additional analyses for CIBWs included below) primarily support our preliminary determinations that the impacts resulting from the activities described for this proposed IHA are not expected
• No takes by mortality, serious injury, or Level A harassment are anticipated or proposed to be authorized;
• Exposure would likely be brief given the short duration of the specified activity and the transiting behavior of marine mammals in the action area;
• Marine mammal densities are low in the project area; therefore, there will not be substantial numbers of marine mammals exposed to the noise from the project compared to the affected population sizes;
• Take would not occur in places and/or times where take would be more likely to accrue to impacts on reproduction or survival, such as within ESA-designated or proposed critical habitat, BIAs (other than for CIBWs as described below), or other habitats critical to recruitment or survival (
• The project area represents a very small portion of the available foraging area for all potentially impacted marine mammal species;
• Take would only occur within middle Cook Inlet and Trading Bay—a limited, confined area of any given stock's home range;
• Monitoring reports from previous projects where tugs were under load with a jack-up rig in Cook Inlet have documented little to no observable effect on individuals of the same species impacted by the specified activities;
• The required mitigation measures (
• The intensity of anticipated takes by Level B harassment is low for all stocks consisting of, at worst, temporary modifications in behavior, and would not be of a duration or intensity expected to result in impacts on reproduction or survival.
All tug towing, holding, or positioning would be done in a manner implementing best management practices to preserve water quality, and no work would occur around creek mouths or river systems leading to prey abundance reductions. In addition, no physical structures would restrict passage, though impacts to the acoustic habitat are relevant and discussed here. While the specified activity would occur within CIBW Critical Habitat Area 2, and the CIBW small and resident BIA, monitoring data from Hilcorp's activities suggest that the presence of tugs under load with a jack-up rig do not discourage CIBWs from transiting throughout Cook Inlet and between critical habitat areas and that the whales do not abandon critical habitat areas (Horsley and Larson, 2023). In addition, large numbers of CIBWs have continued to use Cook Inlet and pass through the area, likely traveling to critical foraging grounds found in upper Cook Inlet, while noise-producing anthropogenic activities, including vessel use, have taken place during the past 2 decades (
Generation of sound may result in avoidance behaviors that would be limited in time and space relative to the larger availability of important habitat areas in Cook Inlet; however, the area ensonified by sound from the specified activity is anticipated to be small compared to the overall available critical habitat for CIBWs to feed and travel. Therefore, the specified activity would not create a barrier to movement through or within important areas. We anticipate that disturbance to CIBWs would manifest in the same manner as other marine mammals described above (
Although data demonstrate that CIBWs are not abandoning the planned project area during anthropogenic activities, results of an expert elicitation (EE) at a 2016 workshop, which predicted the impacts of noise on CIBW survival and reproduction given lost foraging opportunities, helped to inform our assessment of impacts on this stock. The 2016 EE workshop used conceptual models of an interim population consequences of disturbance (PCoD) for marine mammals (NRC, 2005; New
For each of the noise effect mechanisms chosen for EE, the experts provided a set of parameters and values that determined the forms of a relationship between the number of days of disturbance a female CIBW experiences in a particular period and the effect of that disturbance on her energy reserves. Examples included the number of days of disturbance during the period April, May, and June that would be predicted to reduce the energy reserves of a pregnant CIBW to such a level that she is certain to terminate the pregnancy or abandon the calf soon after birth, the number of days of disturbance in the period April-September required to reduce the energy reserves of a lactating CIBW to a level where she is certain to abandon her calf, and the number of days of disturbance where a female fails to gain sufficient energy by the end of summer to maintain themselves and their calves during the subsequent winter. Overall, median values ranged from 16 to 69 days of disturbance depending on the question. However, for this elicitation, a “day of disturbance” was defined as any day on which an animal loses the ability to forage for at least one tidal cycle (
In summary and as described above, the additional following factors primarily support our preliminary determination that the impacts resulting from this activity are not expected to adversely affect the CIBWs through effects on annual rates of recruitment or survival:
• The area of exposure would be limited to habitat primarily used for transiting, and not areas known to be of particular importance for feeding or reproduction;
• The activities are not expected to result in CIBWs abandoning critical habitat nor are they expected to restrict passage of CIBWs within or between critical habitat areas; and
• Any disturbance to CIBWs is expected to be limited to temporary modifications in behavior, and would not be of a duration or intensity expected to result in impacts on reproduction or survival.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the proposed monitoring and mitigation measures, NMFS preliminarily finds that the total marine mammal take from the proposed activity will have a negligible impact on all affected marine mammal species or stocks.
As noted previously, only take of small numbers of marine mammals may be authorized under sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. When the predicted number of individuals to be taken is fewer than one-third of the species or stock abundance, the take is considered to be of small numbers (86 FR 5322, January 19, 2021). Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
For all stocks whose abundance estimate is known, the amount of taking is less than one-third of the best available population abundance estimate (in fact it is less than 2 percent for all stocks, except for CIBWs whose proposed take is 5.38 percent of the stock; table 12). The number of animals proposed for authorization to be taken from these stocks therefore, would be considered small relative to the relevant stocks abundances even if each estimated take occurred to a new individual.
Abundance estimates for the Mexico-North Pacific stock of humpback whales are based upon data collected more than 8 years ago and, therefore, current estimates are considered unknown (Young
A lack of an accepted stock abundance value for the Alaska stock of minke whale did not allow for the calculation of an expected percentage of the population that would be affected. The most relevant estimate of partial stock abundance is 1,233 minke whales in coastal waters of the Alaska Peninsula and Aleutian Islands (Zerbini
There is no stock-wide abundance estimate for Northeast Pacific fin whales. However, Young
The Alaska stock of Dall's porpoise has no official NMFS abundance estimate for this area, as the most recent estimate is greater than 8 years old. As described in the 2022 Alaska SAR (Young
Based on the analysis contained herein of the proposed activity (including the proposed mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS preliminarily finds that small numbers of marine mammals would be taken relative to the population size of the affected species or stocks.
In order to issue an IHA, NMFS must find that the specified activity will not have an “unmitigable adverse impact” on the subsistence uses of the affected marine mammal species or stocks by Alaskan Natives. NMFS has defined “unmitigable adverse impact” in 50 CFR 216.103 as an impact resulting from the specified activity: (1) That is likely to reduce the availability of the species to a level insufficient for a harvest to meet subsistence needs by: (i) Causing the marine mammals to abandon or avoid hunting areas; (ii) Directly displacing subsistence users; or (iii) Placing physical barriers between the marine mammals and the subsistence hunters; and (2) That cannot be sufficiently mitigated by other measures to increase the availability of marine mammals to allow subsistence needs to be met.
Hilcorp's towing, holding, and positioning of the jack-up rig would occur offshore and north of Kenai and the Village of Salmatof. The last ADF&G subsistence survey conducted in Kenai was in 1998 (Fall
Tugs towing, holding, or positioning a jack-up rig on the Tyonek platform in the North Cook Inlet Unit in middle Cook Inlet would occur approximately 10 km from the Native Village of Tyonek. Tyonek, on the western side of middle Cook Inlet, has a subsistence harvest area that extends south from the Susitna River to Tuxedni Bay (Stanek
The only non-ESA-listed marine mammal available for subsistence harvest in Cook Inlet is the harbor seal (Wolfe
Any harassment to marine mammal stocks if it were to occur would be limited to minor behavioral changes (
To further minimize any potential effects of their action on subsistence activities, Hilcorp has outlined their communication plan for engaging with subsistence users in their Stakeholder Engagement Plan (appendix C of Hilcorp's application). This includes using traditional/subsistence knowledge to inform planning for the activity. Hilcorp would be required to abide by this plan and update the plan accordingly.
Based on the description of the specified activity, the measures described to minimize adverse effects on the availability of marine mammals for subsistence purposes, and the proposed mitigation and monitoring measures, NMFS has preliminarily determined that there will not be an unmitigable adverse impact on subsistence uses from the POA's proposed activities.
Section 7(a)(2) of the Endangered Species Act of 1973 (ESA; 16 U.S.C. 1531
NMFS is proposing to authorize take of fin whale, humpback whale (Mexico DPS and Western North Pacific DPS), fin whale (Northeastern Pacific stock), beluga whale (Cook Inlet), and Steller sea lion (Western DPS), which are listed under the ESA. The Permits and Conservation Division has requested initiation of section 7 consultation with NMFS AKRO for the issuance of this IHA. NMFS will conclude the ESA consultation prior to reaching a determination regarding the proposed issuance of the authorization.
As a result of these preliminary determinations, NMFS proposes to an IHA to Hilcorp for the use of tugs to tow, hold, and position a jack-up rig in support of their oil and gas activities in Cook Inlet, Alaska from September 14, 2024 through September 13, 2025, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. Drafts of the proposed IHA can be found at:
We request comment on our analyses, the proposed authorization, and any other aspect of this notice of proposed IHA and the draft EA for the proposed tugging activities. We also request comment on the potential renewal of this proposed IHA as described in the paragraph below. Please include with your comments any supporting data or literature citations to help inform decisions on the proposed IHA or a subsequent renewal IHA.
On a case-by-case basis, NMFS may issue a one-time, 1-year renewal IHA following notice to the public providing an additional 15 days for public comments when (1) up to another year of identical or nearly identical activities as described in the Description of Proposed Activity section of this notice is planned or (2) the activities as described in the Description of Proposed Activity section of this notice would not be completed by the time the IHA expires and a renewal would allow for completion of the activities beyond that described in the
• A request for renewal is received no later than 60 days prior to the needed renewal IHA effective date (recognizing that the renewal IHA expiration date cannot extend beyond 1 year from expiration of the initial IHA).
• The request for renewal must include the following:
(1) An explanation that the activities to be conducted under the requested renewal IHA are identical to the activities analyzed under the initial IHA, are a subset of the activities, or include changes so minor (
(2) A preliminary monitoring report showing the results of the required monitoring to date and an explanation showing that the monitoring results do not indicate impacts of a scale or nature not previously analyzed or authorized.
• Upon review of the request for renewal, the status of the affected species or stocks, and any other pertinent information, NMFS determines that there are no more than minor changes in the activities, the mitigation and monitoring measures will remain the same and appropriate, and the findings in the initial IHA remain valid.
Consumer Financial Protection Bureau.
Proposed rule; request for public comment.
The Consumer Financial Protection Bureau (Bureau or CFPB) is proposing a rule that would amend regulations originally issued in 2013 regarding the responsibilities of mortgage servicers. The proposed amendments would streamline existing requirements when borrowers seek payment assistance in times of distress, add safeguards when borrowers seek help, and revise existing requirements with respect to borrower assistance. The proposed rule would also require servicers to provide certain communications in languages other than English, such as when a borrower is seeking payment assistance with their mortgage. The proposed rule, if finalized, would increase the likelihood that investors and borrowers can avert the costs of avoidable foreclosure.
Comments must be received on or before September 9, 2024.
You may submit comments, identified by Docket No. CFPB-2024-0024 or RIN 3170-AB04, by any of the following methods:
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All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information.
George Karithanom, Regulatory Implementation and Guidance Program Analyst, Office of Regulations, at 202-435-7700 or
The following abbreviations and acronyms are used in this proposed rule:
Mortgage servicers handle the day-to-day management of mortgage loans and work with borrowers when they need help making their payments. Poor default servicing of home mortgages can have serious repercussions for both individual borrowers and the larger economy. The foreclosure crisis that began in 2007 demonstrated the risks. Leading up to that crisis, servicers did not have robust default servicing practices and generally lacked accountability when they failed to address borrower needs. Between July 2007 and August 2009, approximately 1.8 million homeowners lost their homes to foreclosure while another 5.2 million homeowners faced foreclosure initiation.
In 2013, the CFPB finalized comprehensive mortgage servicing rules in response to these widespread servicing failures.
The COVID-19 pandemic demonstrated that approaches to loss mitigation not contemplated in the 2013 Mortgage Servicing Final Rule could be successful and necessary for borrowers, servicers, and investors. During the COVID-19 pandemic, large numbers of borrowers were placed in long-term forbearance, with the vast majority successfully resuming payments. Additionally, macroeconomic factors, such as shifts in interest rates, require new approaches to default servicing practices. Loss mitigation approaches that were successful in the wake of the foreclosure crisis, such as reducing the interest rate to the current market rate in order to lower payments, are significantly less successful under current market conditions.
The changes in default servicing and market conditions have highlighted several areas where the prescriptive rules that the CFPB initially put in place may no longer be optimally effective for borrowers or servicers, and where more flexibility is needed in order to respond to future changes in the macroeconomic environment. Thus, the CFPB is proposing to remove certain prescriptive requirements from the existing rules. At the same time, the CFPB recognizes the continuing need to protect borrowers from harms such as unnecessary fees and avoidable foreclosures that can occur due to default mortgage servicing failures. Therefore, the CFPB is also proposing certain new procedural safeguards designed to protect borrowers from these harms while creating strong incentives for servicers to review borrowers for loss mitigation assistance quickly and accurately.
To achieve these goals, the CFPB is proposing and seeking comment on several topics, including four key groups of changes related to assisting borrowers during loss mitigation and early intervention, as well as seeking comment on a fifth key issue related to credit reporting. None of the proposed new requirements would apply to small servicers (as defined in Regulation Z § 1026.41(e)(4)(ii)).)).
The CFPB is also proposing to remove currently required loss mitigation notices that would no longer be necessary under the new proposed framework, such as those notifying a borrower about whether a loss mitigation application is complete or incomplete.
The 2007 foreclosure crisis led to a broad downturn in the economy and left lasting effects on the mortgage servicing industry. The foreclosure crisis was brought on, in part, by mortgage servicing failures and the lack of a standardized loss mitigation infrastructure.
A lack of regulatory oversight at the Federal level and fragmented oversight at the State level also contributed to the crisis. The CFPB was created in 2011 to increase accountability in government by consolidating consumer financial protection authorities, which previously existed across several different Federal agencies. The creation of the CFPB increased Federal accountability with respect to consumer financial protection, which had not been the primary focus of any single Federal agency. Prior to the CFPB's creation, no Federal agency had comprehensive tools to set the rules for and oversee all consumer markets. The result was a system without effective rules or consistent enforcement, which was a significant factor in the foreclosure crisis.
Prior to 2007, the mortgage industry had never experienced such a sizable number of loss mitigation applications and foreclosures simultaneously.
In the period preceding the foreclosure crisis, loan modifications were rare, and borrowers were unlikely to receive any redress, with only approximately 3 percent of seriously delinquent loans obtaining a loan modification.
The U.S. Department of the Treasury (Treasury) introduced MHA at the beginning of 2009. Treasury designed MHA to assist mortgage borrowers at risk of foreclosure by providing government-backed loss mitigation programs. MHA was the first program of its kind and had a major influence on future loss mitigation programs.
The cornerstone program under MHA was the Home Affordable Modification Program (HAMP), which offered permanently reduced mortgage payments to qualifying borrowers.
However, the program fell short of its original projected target of the number of homeowners who would be assisted with the program. The HAMP application process was extensive and required borrowers to submit several documents to be evaluated for the program; for example, it required proof of financial hardship, income tax returns, bank statements, and paystubs.
Although both borrowers and servicers faced challenges in keeping up with the documentation requirements of HAMP, the program provided several protections for distressed borrowers. Among other things, HAMP provided foreclosure protections to any borrower who submitted a HAMP loss mitigation application and established program guidelines that prohibited a servicer from referring a loan to foreclosure or conducting a scheduled foreclosure sale until the borrower was either evaluated for HAMP and determined to be ineligible, or the servicer had made reasonable attempts to solicit the borrower and was unsuccessful.
In February 2012, 49 State attorneys general, the District of Columbia, and the Federal government entered the National Foreclosure Settlement
The CFPB finalized the 2013 Mortgage Servicing Final Rule in the wake of the widespread default servicing failures of the preceding years.
Regulation X requires that a mortgage servicer obtain a complete loss mitigation application from a borrower prior to making a determination as to what loss mitigation option or options, if any, it may offer to the borrower.
The 2013 Mortgage Servicing Final Rule does contain limited exceptions to the general requirement that servicers cannot offer borrowers loss mitigation options based on an incomplete loss mitigation application. For example, it allows servicers to offer short-term forbearance programs or short-term repayment plans to borrowers based on an incomplete loss mitigation application.
The concept of a low-to-no documentation loan modification was introduced in the years following the foreclosure crisis. For example, the Government Sponsored Enterprises (GSEs) Fannie Mae
During the COVID-19 pandemic, mortgage delinquencies increased to levels not seen since the foreclosure crisis.
In February of 2021, the Federal Housing Administration (FHA), the Federal Housing Finance Agency (FHFA), the United States Department of Agriculture (USDA), and the Department of Veterans Affairs (VA) all announced they were extending their forbearance programs beyond the minimum 180 days required by the CARES Act.
As part of the overarching Federal approach to help borrowers resume their mortgage payments, there was widespread adoption by servicers of streamlined evaluations for permanent loan modifications, which allowed borrowers to quickly be evaluated for and enter loss mitigation programs, preventing avoidable foreclosures. Of borrowers who exited forbearance, 29.4 percent obtained a streamlined payment deferral to bring their loans current.
Based on the success of the shift towards streamlined loan modifications during the COVID-19 pandemic, the CFPB has preliminarily concluded that the streamlined loss mitigation offers contributed to performance for these loans after loss mitigation programs were implemented. The loan performance of these loans was superior to performance under the HAMP approach. The re-default rate for all mortgages that exited COVID-19 loss mitigation programs was at the relatively low rate of 10 percent as of June 7, 2022.
The CFPB has amended the 2013 Mortgage Servicing Final Rule several times. Prior to the COVID-19 pandemic, these amendments were primarily based on information gained about aspects of the 2013 Mortgage Servicing Final Rule that posed implementation challenges or required further clarification.
In 2021, the CFPB proposed, and then finalized with changes another rule to extend access to additional COVID-19-related loss mitigation options without requiring evaluation of a complete loss mitigation application.
Consistent with section 1022(b)(2)(B) of the CFPA, the CFPB has consulted with the appropriate prudential regulators and other Federal agencies, including regarding consistency with any prudential, market, or systemic objectives administered by these agencies.
The CFPB is issuing this proposed rule pursuant to its authority under RESPA and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), including the authorities discussed below. The CFPB is issuing this proposed rule in reliance on the same authority relied on in adopting the relevant provisions of the 2013 RESPA Servicing Final Rule, as discussed in detail in the Legal Authority section and Section-by-Section Analysis of the 2013 RESPA Servicing Final Rule.
Section 19(a) of RESPA, 12 U.S.C. 2617(a), authorizes the CFPB to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of RESPA, which include its consumer protection purposes. In addition, section 6(j)(3) of RESPA, 12 U.S.C. 2605(j)(3), authorizes the CFPB to establish any requirements necessary to carry out section 6 of RESPA. Section 6(k)(1)(E) of RESPA, 12 U.S.C. 2605(k)(1)(E) further authorizes the CFPB to prescribe regulations that are appropriate to carry out RESPA's consumer protection purposes.
The consumer protection purposes of RESPA, as articulated in the 2013 RESPA Servicing Final Rule and several subsequent rules amending it, include ensuring that servicers respond to borrower requests and complaints in a timely manner and maintain and provide accurate information, helping borrowers prevent avoidable costs and fees, and facilitating review for foreclosure avoidance options. The amendments to Regulation X in this notice of proposed rulemaking are intended to achieve some or all these purposes.
Specifically, and as described further below, the CFPB preliminarily believes that a more flexible approach to the loss mitigation process requirements in Regulation X would more effectively assist borrowers with preventing avoidable foreclosure due in part to the increased prevalence in recent years of streamlined loss mitigation options. Streamlining and simplifying the loss mitigation process while providing new borrower protections, as the CFPB is proposing to do, would facilitate review for foreclosure avoidance options and help borrowers prevent avoidable costs and fees.
Section 1022(b)(1) of the Dodd-Frank Act, 12 U.S.C. 5512(b)(1), authorizes the CFPB to prescribe rules “as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.” RESPA is a Federal consumer financial law.
The authority granted to the CFPB in Dodd-Frank Act section 1032(a) is broad and empowers the CFPB to prescribe rules regarding the disclosure of the “features” of consumer financial protection products and services generally. Accordingly, the CFPB may prescribe rules containing disclosure requirements even if other Federal consumer financial laws do not specifically require disclosure of such features.
Dodd-Frank Act section 1032(c) provides that, in prescribing rules pursuant to Dodd-Frank Act section 1032, the CFPB “shall consider available evidence about consumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services.”
As discussed above, the CFPB seeks to improve upon the outcomes from the
At the time the CFPB finalized the existing overall complete application framework in the 2013 Mortgage Servicing Final Rule, described in part II and below, the CFPB stated that significant consumer benefits would result from requiring that borrowers be considered for all loss mitigation options in a single process. The CFPB stated that borrowers incurred more significant burdens in the market as evaluations occurred sequentially over time and borrower documents and information had to be continuously updated to make such documents and information current. The CFPB stated that the 2013 Mortgage Servicing Final Rule eliminated the need for borrowers to submit multiple applications for different loss mitigation options and provided for more efficient compliance by servicers with the requirements of the rule.
As detailed in part II, the loss mitigation landscape has changed dramatically over the past several years. The CFPB has preliminarily determined that streamlined loss mitigation options and the ability to do sequential review, with appropriate consumer safeguards, can help borrowers access loss mitigation more quickly and increase borrowers' chances of being able to avoid foreclosure.
Both industry and consumer groups have urged the CFPB to revise the existing regulatory framework to permit additional flexibility. In response to the CFPB's 2022 Request for Information Regarding Mortgage Refinances and Forbearances,
Under the existing rule, a borrower's foreclosure protections are largely based on whether and when the borrower has submitted a complete loss mitigation application to the servicer. As defined in existing § 1024.41(b), a complete application is an application in connection with which the servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower. In general, only if a servicer receives a complete application more than 37 days before a foreclosure sale must the servicer halt certain foreclosure activity while evaluating the borrower for all available loss mitigation options. Borrowers are also protected by a series of procedural requirements in existing § 1024.41(b) through (i), including notice requirements informing the borrower of what documents must be submitted and when, evaluation timeframes for servicers and related notices, and certain exceptions for when a servicer can offer a borrower any loss mitigation option based on an incomplete application. The limited number of exceptions for evaluation based on an incomplete application include specific requirements for each exception.
The CFPB proposes to remove most of the application-based framework from § 1024.41, including the entirety of § 1024.41(b). As discussed in detail below, the CFPB also proposes to replace the existing prohibitions on foreclosure referral and sale in § 1024.41(f)(2) and (g) with a streamlined set of foreclosure procedural safeguards in revised § 1024.41(f)(2) and (3). The procedural safeguards refer to a loss mitigation review cycle and a request for loss mitigation assistance, which are proposed as new defined terms. The CFPB proposes to delete existing § 1024.41(g) in its entirety and to remove the temporary COVID-19 procedural safeguards at § 1024.41(f)(3). In addition, as discussed in part IV.C, the CFPB separately proposes new loss mitigation determination notice requirements in revised § 1024.41(c) that incorporate certain aspects of existing § 1024.41(c)(1), (c)(4) and (d) and proposes other revisions to existing § 1024.41(e), (h), (i) and (k) to conform to the other changes discussed throughout this notice. The CFPB would retain both the pre-foreclosure review period in existing § 1024.41(f)(1) and the small servicer requirements in existing § 1024.41(j) unchanged. Section 1024.41 generally does not apply to small servicers, but the pre-foreclosure review period in existing § 1024.41(f)(1) does apply to small servicers, and will continue to apply to small servicers if this proposal is finalized.
Under proposed § 1024.41(f)(2), a loss mitigation review cycle begins when a borrower makes a request for loss mitigation assistance more than 37 days before a foreclosure sale. Once the cycle begins, the servicer would be required to ensure that one of the following procedural safeguards is met before making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, or if applicable, before advancing the foreclosure process: (1) the servicer has reviewed the borrower for all available loss mitigation options and no available loss mitigation options remain, the servicer has sent the borrower all notices required by § 1024.41(c) and (e), if applicable, and the borrower has not requested any appeal within the applicable time period or, if applicable, all of the borrower's appeals have been denied; or (2) the borrower has not
The CFPB proposes a new definition, loss mitigation review cycle, in § 1024.31 to describe the period of time that the proposed procedural safeguards in § 1024.41(f)(2)(i)-(ii) and (f)(3) would be in effect. Loss mitigation review cycle would mean a continuous period of time beginning when the borrower requests loss mitigation assistance, provided the request is made more than 37 days before a foreclosure sale. A loss mitigation review cycle would end when a servicer implements a loss mitigation solution for the borrower so that the borrower's loan is brought current, or when one of the procedural safeguards in paragraph (f)(2)(i) or (ii) are met.
A loss mitigation review cycle would continue while a borrower is in a temporary or trial loss mitigation period, such as a forbearance or loan modification trial payment plan, and the loan has not yet been brought current. The loss mitigation review cycle would continue during forbearance. Borrowers in forbearance would typically need additional loss mitigation assistance to become current. The cycle would also continue during a trial payment plan, to provide the borrower an adequate opportunity to perform on the plan and become current. If the trial is unsuccessful and the borrower is not brought current, the servicer must ensure that one of the procedural safeguards in paragraph (f)(2)(i) or (ii) is met before the cycle ends and the servicer can begin or advance foreclosure.
The CFPB proposes to add request for loss mitigation assistance as a new defined term in § 1024.31 to mean any oral or written communication, occurring through any usual and customary channel for mortgage servicing communications, whereby a borrower asks a servicer for mortgage relief. Thus, a loss mitigation review cycle would begin as soon as the borrower simply asks for mortgage relief or otherwise indicates that they need mitigation assistance. As discussed in detail below, the CFPB intends for the definition of request for mortgage relief to be construed broadly.
After the 120-day pre-foreclosure review period provided in § 1024.41(f)(1) elapses, the existing rules make certain foreclosure safeguards provided in § 1024.41 contingent on the borrower having submitted a complete loss mitigation application. As a result, if a loan is more than 120 days delinquent and the borrower has yet to submit a complete loss mitigation application, the existing rules allow servicers to initiate, continue, or conduct foreclosures against borrowers while they participate in the loss mitigation review process, a practice known as “dual tracking.” Dual tracking can cause substantial consumer harm to borrowers and investors alike. For example, dual tracking can result in inconsistent and confusing communications, servicing errors, and additional costs to borrowers. These types of harms increase the risk that borrowers will not complete the loss mitigation process successfully, which in turn can lead to foreclosures that borrowers and investors otherwise could have avoided.
The proposed rule would significantly reduce the periods during which dual tracking could occur by establishing procedural safeguards against foreclosure that begin as soon as the borrower makes a request for loss mitigation assistance and that continue for the entire loss mitigation review cycle. The CFPB anticipates that beginning foreclosure protections earlier in the loss mitigation process would provide an additional incentive for servicers to review borrowers for loss mitigation quickly and accurately. This incentive will be particularly important if the CFPB finalizes the other proposed changes to § 1024.41, many of which would remove prescriptive timelines for servicers' review of borrowers' requests for loss mitigation assistance.
Under the proposed rule, a borrower could make a request for loss mitigation assistance either orally or in writing. Borrowers currently ask their servicers to review them for loss mitigation assistance both orally and in writing, and excluding either oral or written communications could unduly restrict a borrower's ability to request review for loss mitigation assistance. However, to ensure that a request for loss mitigation assistance is directed to appropriate servicer personnel, the proposed definition also specifies that the request must come through the servicer's usual and customary channels for mortgage servicing communications. Because a request for loss mitigation assistance halts foreclosure initiation or advancement until the foreclosure procedural safeguards are met, the CFPB has preliminarily determined that servicers should be able to expect borrowers to reach out to personnel capable of either escalating or acting on their requests for loss mitigation assistance. As a result, certain borrower communications would not meet the definition of a request for loss mitigation assistance. For example, requests for mortgage relief made through informal channels, such as social media messaging or handwritten notes on payment coupons, would not constitute a request for loss mitigation assistance under the proposed rule unless the servicer used such informal channels for mortgage servicing communications.
The proposed rule further specifies that a request for loss mitigation assistance is to be construed broadly. A borrower does not need to use a specific form or any specific language to submit a request for loss mitigation assistance that triggers the proposed foreclosure procedural safeguards in § 1024.41(f)(2). Additionally, a servicer should presume that a borrower who experiences a delinquency as defined in § 1024.31 has made a request for loss mitigation assistance when they contact the servicer unless they clearly express some other intention. For example, a borrower who calls to inform the servicer that they will make a payment tomorrow has, absent more, not made a request for loss mitigation assistance.
The proposed rule provides three examples of communications that would be considered requests for loss mitigation assistance while also clarifying that these examples are not exhaustive. The first proposed example provides that a request for loss mitigation assistance includes any communication in which a borrower expresses an interest in pursuing a loss mitigation option, as defined in existing § 1024.31. Therefore, a request for loss mitigation assistance would include any request from a borrower for temporary or long-term relief, including options that allow borrowers who are behind on their mortgage payments to remain in their homes or to leave their homes without a foreclosure, such as, without limitation, refinancing, trial or permanent modification, repayment of the amount owed over an extended period of time, forbearance of future payments, short-sale, deed-in-lieu of foreclosure, and loss mitigation
The third proposed example provides that a request for loss mitigation assistance includes any communication in which, in response to a servicer's unsolicited offer of a loss mitigation option, a borrower expresses an interest in pursuing the loss mitigation option offered or any other loss mitigation option. The CFPB intends this example to clarify that an unsolicited offer of a loss mitigation option from a servicer would be considered a request for loss mitigation assistance if, in response to the offer, the borrower expressed any interest in exploring an alternative to foreclosure, even if the borrower expresses disinterest in the specific unsolicited offer. The CFPB preliminarily views this clarification as necessary to ensure that a borrower's response to a servicer's unsolicited offer of loss mitigation would trigger the procedural safeguards against foreclosure in proposed § 1024.41(f) as long as such response included a request for some form of mortgage relief.
Additionally, the proposed rule would establish a process that is similar to the process provided in existing comment 31 (
The proposed rule also would address servicer's options for handling requests for loss mitigation assistance received from potential successors in interest. Existing comments 41(b)-1.i and .ii currently address servicers' options for reviewing and evaluating loss mitigation applications received from potential successors in interest. The proposed rule would renumber these comments as comments 41(f)(2)-7.i and ii and then amend them to reflect the new foreclosure protections in § 1024.41(f)(2).
Specifically, proposed comment 41(f)(2)-7.i would provide that, if a servicer receives a request for loss mitigation assistance from a potential successor in interest before confirming that person's identity and ownership interest in the property, the servicer may, but is not required to, comply with the foreclosure procedural safeguards in § 1024.41(f)(2) with respect to that person. The proposed comment also would clarify how § 1024.41(i)'s limitation on duplicative requests applies to that person.
Proposed comment 41(f)-7.ii would provide that, if a servicer receives a request for loss mitigation assistance from a potential successor in interest and elects not to comply with the foreclosure procedural safeguards before confirming that person's status, the servicer must comply with those safeguards with respect to that person as soon as the person becomes a confirmed successor in interest and must treat the request for loss mitigation assistance as if it had been received on the date that the servicer confirmed the successor in interest's status.
The CFPB is seeking comment on these proposed requirements and associated commentary and, in particular, requests comment on the following issues:
(i) Should the proposed definition of a request for loss mitigation assistance limit the communication channels through which borrowers may make requests for loss mitigation assistance? What alternative channels should the CFPB consider, if any?
(ii) Are there additional examples of requests for loss mitigation assistance the CFPB should provide?
(iii) Should the rule require servicers to provide borrowers with notices that acknowledge when borrowers have made requests for loss mitigation assistance? If so, what information should such notice provide? What potential challenges and burdens might such notice create for servicers?
As noted above, the CFPB is proposing procedural safeguards that, under certain circumstances, limit any actions that advance the foreclosure process beginning when borrowers have requested loss mitigation assistance. Under existing § 1024.41(f) and (g), servicers are prohibited from making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process under certain circumstances, as well as from moving for foreclosure judgment or order of sale or conducting a foreclosure sale under other circumstances. These restrictions not only apply to servicers, but also foreclosure counsel retained by servicers. However, currently, servicers may still proceed with other interim foreclosure actions, such as mediation or arbitration, even if those actions may not be beneficial to the borrower or may be unnecessary for borrowers that shortly thereafter obtain loss mitigation.
The CFPB has heard from some stakeholders that while some foreclosure actions can prompt borrowers to cure delinquency, other actions that advance the foreclosure process after a borrower has requested loss mitigation assistance and while the servicer is evaluating them for such assistance can confuse borrowers and affect the success of that request. Additionally, borrowers and servicers may accrue foreclosure costs (often the responsibility of the borrower under the loan contract) that could be avoided if foreclosure actions were paused during loss mitigation review. For example, servicer foreclosure counsel and borrower attorneys may both continue to file required affidavits and responses in foreclosure litigation, drafting and preparing responses and filings that may not eventually be required if the borrower is approved for loss mitigation. The legal fees and filing costs for such actions, which are often paid by the borrower either out of their own funds or added to the balance of the borrower's mortgage, could be
When finalizing existing § 1024.41(f) and (g) in 2013, the CFPB stated it recognized foreclosure processes were complex. To balance the needs of borrowers, servicers, and investors, the CFPB limited foreclosure prohibitions to foreclosure initiation and sale but did not prohibit interim actions. However, since that time, the CFPB has heard that many servicers now typically place a complete hold on foreclosure activity upon receipt of a complete loss mitigation application. Given this shift in industry practice, in proposing to replace the existing complete application framework as discussed above, the CFPB has preliminarily determined that building on that shift in industry practice by including foreclosure advancement in the foreclosure procedural safeguards, in addition to initiation and sale, will help address concerns about borrower confusion and costs related to interim foreclosure actions that advance the foreclosure process. Applying the foreclosure procedural safeguards to foreclosure advancement might also help provide servicers with additional incentive to quickly and accurately review loss mitigation requests so that they can proceed with foreclosure activity (if the proposed procedural safeguards are met) when necessary. As a result, the CFPB is proposing to require that when a borrower requests loss mitigation assistance more than 37 days before a foreclosure sale, a servicer is required to ensure that one of the safeguards discussed below in this part is met before it makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, or if applicable, before advancing the foreclosure process. If a borrower requests loss mitigation assistance more than 37 days before a foreclosure sale, but the foreclosure process advances without one of the safeguards being met, the foreclosure advancement would constitute a violation of this regulation, if finalized as proposed.
Under the proposed rule, advancing the foreclosure process would include any judicial or non-judicial actions that advance the foreclosure process and were not yet completed prior to the borrower's request for a loss mitigation option. Such actions might include, for example, certain filings, such as those related to mediation, arbitration, or reinstatement that take place prior to final order or sale; certain affidavits, motions, and responses that advance the foreclosure process; or recordings or public notices that occur before a final foreclosure judgment or sale. The CFPB is not proposing to require servicers to dismiss pending foreclosures. However, actions such as necessary filings to pause the foreclosure proceedings may be required until the safeguards are met. The CFPB is seeking comment on all aspects of these proposed requirements and in particular requests comment on the following issues:
(i) Should the CFPB provide or codify additional detail as to the meaning of advancing the foreclosure process, and if so, what details should it provide?
(ii) Are there State or local foreclosure laws or requirements that might affect a servicer's ability to comply with this requirement, and if so, how?
(iii) Should the CFPB consider excepting any interim foreclosure actions, such as mediation or arbitration, where the borrower would prefer to participate in those meetings, and if so, should the CFPB identify any minimum standards for servicers to determine borrower preference regarding participation in those meetings?
The CFPB proposes that the procedural safeguards in § 1024(f)(2) would apply during a loss mitigation review cycle, as defined in § 1024.31. As long as a borrower requests loss mitigation assistance more than 37 days before a foreclosure sale, the servicer would be required to ensure that one of the procedural safeguards in § 1024.(f)(2)(i) or (ii) is met before making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, or if applicable, before advancing the foreclosure process. The CFPB preliminarily determines that this proposed approach will create incentives for servicers to review borrowers for loss mitigation quickly and accurately and will also effectively protect borrowers from avoidable foreclosures and certain fees.
Under the first proposed procedural safeguard in § 1024.41(f)(2)(i), a servicer would be able to begin or advance the foreclosure process if the servicer has reviewed the borrower for loss mitigation and no available loss mitigation options remain, the servicer has sent the borrower all notices required by proposed § 1024.41(c)(1) and (h)(4) if applicable, and the borrower has not requested any appeal within the applicable time period or, if applicable, all of the borrower's appeals have been denied.
Existing comment 31 (Request for Loss Mitigation Assistance)-2, which the CFPB is not proposing to amend, provides that a loss mitigation option is available through the servicer if it is an option for which the borrower may apply, even if the borrower ultimately does not qualify for that option. For purposes of proposed § 1024.41, a loss mitigation option would not be available if (1) the borrower affirmatively opts out of review for that option; (2) the servicer offers the borrower the option and the borrower rejects it; or (3) the servicer finds the borrower ineligible for the option.
The CFPB is proposing to retain existing § 1024.41(a), which clarifies that § 1024.41 imposes no duty on a servicer to provide a borrower with any specific loss mitigation option. The CFPB acknowledges that a servicer must follow applicable investor guidelines regarding which loss mitigation options, if any, are available to the borrower and for which the borrower may qualify.
Under the proposed framework, a servicer would not be required to collect a complete loss mitigation application for all available options prior to making a determination about whether to deny or offer a loss mitigation option to a borrower. As a result, the servicer would have more flexibility to review a borrower for loss mitigation options sequentially rather than simultaneously, although a simultaneous review would be permitted. While the CFPB expects that this approach would create incentives for servicers to conduct loss mitigation reviews and place borrowers into loss mitigation options quickly, the CFPB recognizes that more complex situations may arise. For example, under the proposed framework, a borrower may decline an offer for a specific type of loss mitigation and seek first to learn what other options exist. The servicer may evaluate the borrower for additional options and the borrower may later decide that they would like to accept the offer that they previously declined. Investor guidelines, including what are commonly referred to as waterfalls, will continue to determine whether any loss mitigation option is available and whether the borrower qualifies for a given option.
Similarly, the CFPB encourages a servicer to re-review a borrower for an option for which the borrower was previously denied during the same loss mitigation review cycle. Such a review may be due to changed borrower circumstances or other reasons, subject to investor requirements. The CFPB is proposing changes to § 1024.41(i) and deleting no longer applicable commentary regarding duplicative requests to align that provision with the new proposed regulatory framework. The proposed language clarifies that servicers must comply with the requirements of § 1024.41 for a borrower's request for loss mitigation assistance during the same loss mitigation review cycle unless one of the procedural safeguards is met.
A loss mitigation review cycle would continue while a borrower is in a temporary or trial loss mitigation period, such as a forbearance or loan modification trial payment plan, and the loan has not yet been brought current. Thus, if a borrower were placed in a loan modification trial payment plan and missed a payment or otherwise became unable to perform on the trial plan, the servicer would not be permitted to advance the foreclosure process immediately. Rather, the servicer would be required to review the borrower for any remaining available loss mitigation options.
The CFPB requests comment on all aspects of proposed § 1024.41(f)(2)(i), including the advantages and disadvantages of permitting a sequential review process.
Under the second proposed procedural safeguard in § 1024.41(f)(2)(ii), a servicer would be able to begin or advance the foreclosure process if the servicer has regularly taken steps to identify and obtain any information and documents necessary from the borrower to determine which loss mitigation options, if any, it will offer to the borrower, and, if the servicer has made a loss mitigation determination, has regularly taken steps to reach the borrower regarding that determination, but the borrower has not communicated with the servicer for at least 90 days.
The CFPB preliminarily determines that allowing a servicer to proceed with foreclosure for a borrower who has been unresponsive for less than 90 days may encourage less rigorous and less effective servicer outreach. The CFPB proposes comment 41(f)(2)(ii)-3 to clarify that servicers cannot delay or procrastinate in their efforts to obtain information or documentation necessary to evaluate a borrower for loss mitigation, and that servicers cannot delay or procrastinate in their efforts to notify borrowers of available loss mitigation options. Accordingly, comment 41(f)(2)(ii)-3 states that, although a servicer has flexibility to establish its own requirements regarding the documents and information necessary for a loss mitigation review, throughout the loss mitigation review cycle, the servicer must regularly communicate the status of the loss mitigation review to the borrower, which includes requesting documentation and information that the servicer requires from the borrower and communicating available loss mitigation options.
This proposed procedural safeguard, requiring that the servicer has regularly taken steps to identify and obtain any information and documents necessary from the borrower and has regularly taken steps to reach the borrower, is intended to ensure that servicers are making efforts to be in regular contact with borrowers during the loss mitigation review cycle before moving forward in circumstances where a borrower is unresponsive. This safeguard is based on the existing rule's requirement that servicers exercise reasonable diligence in obtaining documents and information from the borrower to complete the loss mitigation application. In exercising reasonable diligence, servicers must promptly communicate with borrowers about the status of their application, any missing documents or information the servicer needs to evaluate the borrower for loss mitigation, and any deadlines by which the borrower should submit the documents or information the servicer needs. Once a servicer obtains all the information and documentation from the borrower to evaluate the loss mitigation application, the servicer is required to communicate to the borrower that the application is complete, and later communicate what loss mitigation options, if any, it can offer to the borrower.
While the proposed loss mitigation framework removes most of the existing requirements regarding incomplete and complete loss mitigation applications, the CFPB has preliminarily determined that the proposed procedural safeguard requiring that servicers regularly communicate with borrowers at various stages of the loss mitigation review cycle before servicers can begin or advance foreclosure will protect borrowers from avoidable foreclosure. Moreover, while the CFPB proposes to replace the term “reasonable diligence” with the “regularly taken steps” phrasing that uses simpler language, it does not intend to reduce or lessen a servicer's existing obligation to identify and obtain needed information and to communicate with borrowers about their loss mitigation determination status. For example, under the proposed rule, servicers would still be required to reach out to borrowers through multiple live and written methods, including the borrower's preferred method if so indicated.
Even as the CFPB expects servicers to be in regular contact with borrowers seeking loss mitigation, including borrowers who have been unresponsive for a period of time, the CFPB acknowledges that it would be harmful to borrowers, servicers, and investors if a servicer was never able to begin or advance the foreclosure process. The CFPB preliminarily believes 90 days is a sufficient timeframe to allow borrowers to respond to a servicer's communication attempts. The CFPB's proposal of 90 days is similar to the timeframe used for the unresponsive borrower provision of the temporary special COVID-19 loss mitigation procedural safeguards put in place in 2021.
The CFPB also proposes several changes to commentary to clarify proposed § 1024.41(f)(2)(ii). The CFPB proposes to make minor amendments to existing comment 41(f)(3)(ii)(C)-1 and transfer it to proposed comment 41(f)(2)(ii)-1. Existing comment 41(f)(3)(ii)(C)-1 provided clarity regarding when a borrower was considered to be unresponsive for purposes of the now expired temporary special COVID-19 loss mitigation procedural safeguards in § 1024.41(f)(3). The CFPB is proposing to remove the last sentence of comment 41(f)(3)(ii)(C)-1, since that sentence was primarily applicable to borrowers who may not have communicated with their servicer at all since becoming delinquent. The CFPB preliminarily determines that the subject sentence has limited utility for the new proposed procedural safeguards in § 1024.41(f). The CFPB is also proposing to relocate existing comment
The CFPB requests comment on all aspects of proposed § 1024.41(f)(2)(ii) and, in particular, requests comment on the following issues:
(i) Does 90 days provide borrowers with a sufficient amount of time to respond to a servicer's communication and avoid foreclosure? If not, what amount of time is sufficient?
(ii) Does the CFPB's proposal to require servicers to regularly take steps to obtain information and to regularly take steps to contact borrowers before making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, or if applicable, before advancing the foreclosure process, adequately provide servicers with the appropriate incentives to make regular attempts to obtain missing information or contact the borrower regarding loss mitigation determinations? Should the CFPB consider more specific requirements, or provide additional clarification in the commentary, for determining when a servicer has “regularly taken steps” in accordance with proposed § 1024.41(f)(2)(ii)? Are there ways that the CFPB could further simplify and streamline these proposed requirements?
The CFPB recognizes that the 2021 Mortgage Servicing Final Rule's temporary special COVID-19 procedural safeguards included an exception for abandoned property, generally stating that the servicer may begin the foreclosure process if the property securing the mortgage loan is abandoned according to the laws of the State or municipality where the property is located. As described in the preamble to that rule, this procedural safeguard was specific to the circumstances of the COVID-19 pandemic, including the extended foreclosure moratorium, and the expected surge in foreclosure activity. The CFPB stated that this safeguard was not intended to define abandoned property or principal residence more broadly for purposes of Regulation X. The CFPB requests comment on all aspects of proposed § 1024.41(f)(2)(ii), including on whether the CFPB should include an abandoned property exception in this rulemaking, and, if so, what the content of that exception should be.
The CFPB proposes to replace the temporary COVID-19 procedural safeguards at § 1024.41(f)(3) with a proposed requirement that during a loss mitigation review cycle, no fees beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract shall accrue on the borrower's account.
The CFPB preliminarily determines that borrowers who have made a request for loss mitigation assistance should not continue accruing fees that make it harder for them to resolve the delinquency and avoid foreclosure. In addition, the CFPB preliminarily determines that fee protections may create incentives for servicers under the proposed new framework to efficiently process a borrower's request for loss mitigation assistance and evaluate them for loss mitigation solutions quickly and accurately.
The CFPB has previously acknowledged that the waiver of delinquency-related fees benefits borrowers who are already experiencing financial hardship. In the 2020 Mortgage Servicing Interim Final Rule and the 2021 Mortgage Servicing Final Rule (COVID-19-related mortgage servicing rules finalized in line with section 4022 of the CARES Act,
The proposed fee protection would be broad, and would restrict the accrual of interest, penalties, and fees during the loss mitigation review cycle. Though this broad prohibition may result in servicers making payments to third party companies for delinquency-related services that servicers may not be able to recoup, as stated above, the CFPB preliminarily determines that this result may further create incentives for servicers to process loss mitigation applications quickly and accurately in order to minimize costs and lost revenue.
As discussed in detail above, the CFPB proposes to amend the existing § 1024.41 loss mitigation framework to simplify the loss mitigation process for borrowers and servicers, and to provide more flexibility to servicers while continuing to protect borrowers from avoidable foreclosures and certain fees. As a result of the proposed amendments, the CFPB proposes to remove most of the application-based framework from § 1024.41. Specifically, the CFPB proposes to remove the existing provisions regarding loss mitigation application reviews and notices in § 1024.41(b); complete application evaluations and notices in § 1024.41(c)(1); “anti-evasion” facially-complete applications, and exceptions for short-term loss mitigation options and COVID-19-related options in § 1024.41(c)(2); notices of complete application in § 1024.41(c)(3); and the associated commentary. The CFPB is also proposing to remove § 1024.41(c)(4), which generally requires a servicer to exercise reasonable diligence in obtaining information or documentation not in the borrower's control; however, as discussed in detail in part IV.C, the CFPB plans to incorporate the general requirements of existing § 1024.41(c)(4) into proposed § 1024.41(c)(2). The CFPB is also proposing a technical edit to § 1024.38(b)(2)(vi). This proposed technical edit would remove the reference to the notice requirement in existing § 1024.41(b)(2)(i)(B), which the CFPB proposes to remove.
The CFPB preliminarily determines that these provisions are no longer necessary under the proposed loss mitigation framework. Under the new
The CFPB also proposes conforming changes to § 1024.41(k) and its associated commentary. Generally, existing § 1024.42(k) addresses servicers' obligations and borrower protections following a mortgage servicing transfer when a loss mitigation application is pending. Primarily, the proposed conforming changes would replace the terms loss mitigation application and complete loss mitigation application with references to a request for loss mitigation assistance. The CFPB also proposes to make other changes throughout § 1024.41(k) and its associated commentary to conform to the changes discussed elsewhere in this proposal.
The CFPB requests comment on all aspects of its proposal to remove the existing loss mitigation framework in § 1024.41 and associated commentary. In particular, the CFPB requests comment on whether the CFPB should consider alternatives that would retain parts of the existing § 1024.41 loss mitigation framework. For example, consumer advocates have suggested the CFPB amend the definition of “complete application” in existing § 1024.41(b)(1) to include a list of specific documents that a borrower must submit. If so, how would their retention combine with the proposed § 1024.41 loss mitigation framework?
In addition to removing language relating to the COVID-19 pandemic, as discussed in part IV.G, the CFPB proposes to amend the early intervention requirements in § 1024.39 in three other ways. First, it proposes to amend the content of § 1024.39(b) written notices to require that those notices include certain additional information, such as the name of the investor currently holding the borrower's mortgage. Second, it proposes to create alternative early intervention notice requirements in § 1024.39(e) for borrowers performing under the terms of a forbearance agreement. Third, it proposes to amend comments 39(a)-4.i.A and 39(a)-6 so that those comments reflect the procedural safeguards established by proposed § 1024.41(f).
The CFPB proposes to require a servicer to include additional information in the written early intervention notices required under § 1024.39(b)(2) to more fully inform the borrower about loss mitigation options that may be available from the owner or assignee of the borrower's loan. Under these proposed requirements, a servicer would provide contact information for borrowers to access a list of such loss mitigation options, the name of the investor,
Servicers are currently required to provide a delinquent borrower with a written early intervention notice containing certain information no later than 45 days into the borrower's delinquency and at specified intervals thereafter while the borrower remains delinquent.
As discussed in part IV.A, the CFPB is proposing to allow servicers to review borrowers for loss mitigation options sequentially rather than requiring that servicers evaluate a borrower for all available options at the same time. As a result, under the proposed rule, a borrower may only receive information about the option for which they were most recently reviewed. Borrowers could benefit, however, from more information at the beginning of the process in order to better understand their options.
The CFPB is proposing to require servicers to include two additional resources for borrowers, the details of which would be disclosed under § 1024.39(b)(2)(ii). In addition to the telephone number to access servicer personnel assigned pursuant to existing § 1024.40(a) and the servicer's mailing address, the CFPB is proposing that the written early intervention notice must also include the telephone number where the borrower can access a list of all loss mitigation options that may be available from the owner or assignee of the borrower's loan and a website to access the same list of all loss mitigation options that may be available from the owner or assignee of the borrower's loan. The telephone number provided may be the same as the telephone number to access servicer personnel, which is already required to be included in the written early intervention notice under Regulation X's continuity of contact provision pursuant to § 1024.40(a). The website would be a resource where borrowers in delinquency could obtain information about all loss mitigation options that the owner or assignee of their loan may make available. Servicers may outsource the development and maintenance of the website, but must ensure that the information available is accessible, accurate, and complete.
The CFPB is proposing that the servicer disclose the name of the owner or assignee of the borrower's loan along with a statement providing a brief description of each type of loss mitigation option that is generally available from the investor of the borrower's loan under § 1024.39(b)(2)(iii). The CFPB is proposing that the servicer disclose the name of the owner or assignee of the loan both for transparency and so that borrowers and their housing counselors may better navigate the loss mitigation
The CFPB is proposing to amend the existing § 1024.39(b)(2)(iii) requirement that servicers include a statement providing a brief description of examples of loss mitigation options that may be available from the investor. Under the proposed rule, servicers would be required to include a statement providing a brief description of each type of loss mitigation option that is generally available from the investor. The existing framework allows servicers to list generic examples of loss mitigation options, without specifying a number of examples or requiring that all types or categories of loss mitigation options are listed on the written early intervention notice. The proposed amendment would instead require servicers to provide greater specificity to borrowers based on the types of loss mitigation that the investor offers, but would strike a balance by still not necessarily requiring a description of all individual programs that may be available from the investor on the borrower's loan in the written early intervention notice itself. For example, types of loss mitigation options could include forbearance, deferral, and loan modification. Under the proposed rule, if the investor offers various forbearance, deferral, and loan modification programs, each such category would constitute a different type of loss mitigation option and servicers need only give a brief description of each category, even if there were multiple programs under each category made available by the investor. Consistent with this change, the CFPB is proposing to make conforming terminology amendments to existing comments 39(b)(2)(iii)-1 and 39(b)(2)(iii)-2.
The CFPB is proposing to amend § 1024.39(b)(2)(iv) to include a statement informing the borrower how to make a request for loss mitigation assistance, and no longer require the inclusion of a statement informing the borrower about how to obtain more information about loss mitigation options from the servicer. The proposed additions in § 1024.39(b)(2)(ii) and (iii) would otherwise require the servicer to provide more information about loss mitigation options that may be available, without a request for more information from the borrower. The borrower would still receive the telephone number to access servicer personnel and the servicer's mailing address should the borrower wish to seek additional information about loss mitigation assistance beyond that which would already be made available through the proposed requirements. For consistency, the CFPB is proposing to make conforming terminology amendments to existing comment 39(b)(2)(iv)-1.
The CFPB is also proposing to remove model clauses MS-4(A) and MS-4(B) in appendix MS-4, as well as relevant regulatory text in § 1024.39(b)(3), which allows servicers to use model clauses MS-4(A) and MS-4(B) to comply with the requirements of § 1024.39(b). The CFPB proposes these changes because the language in model clauses MS-4(A) and MS-4(B) would no longer align with the proposed rule's requirements.
Under the existing rules, servicers generally must provide early intervention live contact and written notices to delinquent borrowers, including borrowers performing pursuant to the terms of a forbearance. In response to its September 2022 Request for Information (RFI),
The CFPB proposes to address these concerns by creating alternative early intervention notice requirements for borrowers performing pursuant to the terms of a forbearance. These proposed requirements would replace the current temporary COVID-19 related live contact provisions at § 1024.39(e) and would consist of three provisions, proposed § 1024.39(e)(1), (2), and (3). As discussed in more detail below, proposed § 1024.39(e)(1) would provide that servicers may forgo the live contact and written early intervention notice requirements of § 1024.39(a) and (b) while a borrower is in a forbearance; proposed § 1024.39(e)(2) would provide that servicers must provide delinquent borrowers with forbearance-specific live contact and written early intervention notices prior to the scheduled end date of their forbearance; and proposed § 1024.39(e)(3) would establish procedures for resuming compliance with § 1024.39(a) and (b) after a borrower's forbearance period ends.
The CFPB proposes to add a new § 1024.39(e)(1) that would partially exempt servicers from the requirements of § 1024.39(a) and (b) while a borrower performs pursuant to the terms of a forbearance. As noted above, providing borrowers with early intervention notices while they are in forbearance may create borrower confusion. For example, a borrower who just entered into a forbearance may think that the servicer failed to process the forbearance if, shortly after executing the agreement, they receive a written early intervention notice encouraging them to contact their servicer to learn more about loss mitigation options and how to apply. Additionally, where the borrower and servicer have entered into a forbearance, borrower-servicer communication is already established, obviating the need for early intervention notices as a tool to prompt such communication.
The CFPB proposes to add a new § 1024.39(e)(2) that would require servicers to attempt to establish live contact with and to send written notices to delinquent borrowers nearing the scheduled end of their forbearance. Specifically, proposed § 1024.39(e)(2)(i) would provide that servicers must make good faith efforts to establish live contact with delinquent borrowers at least 30 days, but no more than 45 days, before the scheduled end of their forbearance. During such live contact, servicers would be required to notify delinquent borrowers of the date their forbearance is scheduled to end and of the availability of loss mitigation options, if appropriate, as set forth in § 1024.39(a). Similarly, proposed § 1024.39(e)(2)(ii) would provide that servicers must send delinquent borrowers a written notice at least 30 days, but no more than 45 days, before the scheduled end of their forbearance. This written notice would disclose the date that the borrower's current forbearance is scheduled to end as well as the content of the written notice as set forth in proposed § 1024.39(b)(2)(i) through (v).
These live contact and written notice requirements would apply only to delinquent borrowers because delinquent borrowers typically will need to apply for additional loss mitigation options. In contrast, if a borrower were to cure their delinquency during their forbearance period, the information provided by proposed § 1024.39(e)(2) would not be relevant to the borrower and, in fact, could confuse the borrower by incorrectly stating that they were delinquent.
The CFPB proposes that servicers must provide the live contact and written notices described in proposed § 1024.39(e)(2)(i) and (ii) at least 30 days, but no more than 45 days, before the scheduled end of a borrower's forbearance for several reasons. First, this timing should help maximize the likelihood that borrowers have time to apply for additional loss mitigation while being close enough to the end of forbearance that it is sensible for them to do so. Second, the CFPB understands that some mortgage investors already require servicers to contact borrowers at least 30 days before the scheduled end of their forbearance.
The CFPB further proposes to tie the timing requirements described in proposed § 1024.39(e)(2)(i) and (ii) to the scheduled end of the borrower's forbearance rather than the actual end date of the borrower's forbearance because a consumer may leave a forbearance early or the parties may agree to extend the forbearance period. As a result, tying the timing requirements to the scheduled end of the borrower's forbearance would provide servicers a more certain date for compliance purposes. If a borrower's forbearance ended before the servicer either sent the written notice described in proposed § 1024.39(e)(2)(ii) or attempted to establish live contact as described in proposed § 1024.39(e)(2)(i), proposed § 1024.39(e)(3) would provide servicers with procedures for resuming compliance with § 1024.39(a) and (b).
The live contact and written notice requirements described in proposed § 1024.39(e)(2)(i) and (ii) would parallel the live contact and written notice requirements described in § 1024.39(a) and (b)(2), respectively, except that they also would require the servicer to disclose the date that the borrower's forbearance is scheduled to end. The CFPB proposes this approach for two reasons. First, borrowers who remain in forbearance for many months are likely to benefit from a reminder about the need to work with their servicer if they wish to obtain a permanent loan modification. Second, because proposed § 1024.39(e)(1) would partially exempt servicers from the requirements of § 1024.39(a) and (b) while a borrower performs pursuant to the terms of a forbearance agreement, borrowers who remain in forbearance for many months also likely would not receive the early intervention notices required by § 1024.39(a) and (b) for several months and likely would benefit from receiving such information again given the lapse of time since they were previously provided such notices.
Proposed § 1024.39(e)(3) would provide that, when a forbearance ends for any reason, including, but not limited to, the borrower's successful completion of a forbearance or the borrower's nonperformance under the terms of a forbearance, a servicer that was exempt from § 1024.39(a) and (b) pursuant to § 1024.39(e)(1) must resume compliance with § 1024.39(a) and (b) after the next payment due date following the forbearance end date. This proposed approach would align with the approach used in § 1024.39(c)(2) for resuming compliance with § 1024.39(a) and (b) after the borrower has become a debtor in a bankruptcy proceeding.
Existing § 1024.39(b)(1) provides that a servicer is not required to provide the written notice required by § 1024.39(b) more than once during any 180-day period. Because it would be functionally identical to the § 1024.39(b) written notice, the § 1024.39(e)(2)(ii) written notice is a suitable substitute for the § 1024.39(b) written notice and should reset the start date for calculating the 180-day period in § 1024.39(b). To this end, proposed § 1024.39(e)(3) would clarify that, for purposes of providing the written notice required by § 1024.39(b) after resuming compliance, the 180-day period referenced in § 1024.39(b) begins with the date the
Promptly after establishing live contact, § 1024.39(a) requires a servicer to inform a delinquent borrower about the availability of loss mitigation options “if appropriate.” Existing comment 39(a)-4.i states that it is appropriate for a servicer to inform a delinquent borrower about the availability of loss mitigation options if the borrower notifies the servicer of a material adverse change in their financial circumstances that is likely to cause them to experience a long-term delinquency for which loss mitigation options may be available.
The CFPB proposes to amend the example in comment 39(a)-4.i.A to clarify that it is appropriate for a servicer to inform a delinquent borrower about the availability of loss mitigation options if the borrower notifies the servicer of a hardship for which a loss mitigation option may be available. The CFPB proposes this change to make clear that it would be appropriate to inform borrowers about the availability of loss mitigation options whenever a loss mitigation option may be available to the borrower, irrespective of the projected length of the borrower's delinquency or the extent to which the borrower's financial circumstances have changed.
Existing comment 39(a)-6 clarifies, among other things, that:
[i]f the servicer has established and is maintaining ongoing contact with the borrower under the loss mitigation procedures under § 1024.41, including during the borrower's completion of a loss mitigation application or the servicer's evaluation of the borrower's complete loss mitigation application, or if the servicer has sent the borrower a notice pursuant to § 1024.41(c)(1)(ii) that the borrower is not eligible for any loss mitigation options, the servicer complies with § 1024.39(a) and need not otherwise establish or make good faith efforts to establish live contact.
To reflect the new loss mitigation requirements in proposed § 1024.41, discussed in part IV.A, proposed comment 39(a)-6 would replace the phrase “maintaining ongoing contact with the borrower under the loss mitigation procedures under § 1024.41” with the phrase “maintaining regular contact with the borrower during a loss mitigation review cycle under § 1024.41” and would strike examples referencing the borrower's completion of a loss mitigation application, the borrower's complete loss mitigation application, and the § 1024.41(c)(1)(ii) notice.
The CFPB requests comment on all aspects of proposed § 1024.39(e) and, in particular, requests comment on the following issues:
(i) Do the live contact and written notice requirements in proposed § 1024.39(e)(2)(i) and (ii) align with existing investor requirements for contacting borrowers before the end of their forbearance period?
(ii) Would borrowers in a forbearance who are no longer delinquent for purposes of § 1024.39 benefit from additional servicer contact before the scheduled end of their forbearance period? If so, what information should servicers provide to such borrowers during such contact?
The CFPB proposes to amend Regulation X to clarify that inaccurate loss mitigation determinations are a covered error under the existing error resolution provisions in § 1024.35. In addition, the CFPB proposes to amend the current loss mitigation appeal process provisions in § 1024.41(h) to clarify how they relate to the procedures in § 1024.35 and to expand them to cover all loss mitigation determinations, instead of only loan modification denials. Lastly, the CFPB proposes to amend comment 41(h)(3)-1 to remove all references to a complete application, conforming to changes the CFPB proposes to make throughout § 1024.41, as discussed above.
The CFPB is aware of confusion about whether the “catch-all” category in the error resolution procedures in § 1024.35(b)(11) includes loss mitigation determinations. Although the CFPB did not explicitly specify loss mitigation determinations as a covered error category in the 2013 Mortgage Servicing Final Rule, it has always intended for the catch-all to cover a broad range of errors—including errors related to loss mitigation determinations. However, courts have interpreted this issue inconsistently, with some courts finding that the catch-all does include loss mitigation determinations, and others finding that it does not. Thus, the CFPB believes that it should provide clarity on this issue in a manner that is consistent with its longstanding interpretation and original intent.
Given the interrelatedness of the subject matter and policy goals of the two provisions, the CFPB proposes to amend both the error resolution provision in § 1024.35 and the appeal process provision in § 1024.41(h) as described below.
Regulation X's error resolution provisions in § 1024.35 currently implement RESPA sections 6(k)(1)(C) and 6(e), requiring a servicer to comply with several specific procedural requirements, including conducting a reasonable investigation, for any written notice from the borrower that asserts a covered error and that meets other specified criteria. Under RESPA, servicers must respond to qualified requests to address errors related to “allocation of payments, final balances for purposes of paying off the loan, or avoiding foreclosure, or other standard servicer's duties.” 12 U.S.C. 2605(k)(1)(C). Section 1024.35 lists ten specifically enumerated categories of covered errors, plus a catch-all for “any other error relating to the servicing of a borrower's mortgage loan.”
The CFPB has consistently viewed servicer activities related to whether a borrower is able to avoid foreclosure—including loss mitigation determinations—as core duties of mortgage servicing, fitting squarely within RESPA and Regulation X's coverage and purpose. As defined in § 1024.31, a loss mitigation option is an alternative to foreclosure. Borrowers request loss mitigation options to avoid foreclosure, and, if a servicer makes an error related to a loss mitigation determination, that error ultimately may result in a foreclosure. Losing a home due to an avoidable foreclosure may be one of the greatest financial harms that can come to a mortgage borrower. Thus, the CFPB has consistently viewed servicer errors related to loss mitigation determinations as errors relating to the servicing of a borrower's mortgage loan.
In promulgating the 2013 Mortgage Servicing Final Rule, the CFPB considered but declined to add an enumerated category in § 1024.35 for a servicer's failure to correctly evaluate a borrower for a loss mitigation option.
The CFPB stated that it intended the catch-all error provision to be broad and flexible. RESPA expressly prohibits
The CFPB emphasized that its approach to loss mitigation was not limited to the loss mitigation procedures set forth in § 1024.41 but involved a coordinated use of tools in different provisions of the rules, including the error resolution procedures in § 1024.35.
The CFPB's 2016 Mortgage Servicing Final Rule reiterated the CFPB's view that § 1024.35's error resolution requirements have always applied to errors related to loss mitigation determinations. At that time, the CFPB was considering whether to extend the period during which a borrower could exercise appeal rights in cases where servicing of the borrower's loan has been transferred. The CFPB explained that it decided not to provide such an extension, but noted that even absent appeal rights, borrowers may still submit a notice of error relating to the loss mitigation or foreclosure process and to the servicing of the loan, and servicers must comply with the notice of error provisions.
However, as noted above, the catch-all has not always been interpreted as broadly as the CFPB intended in the 2013 Mortgage Servicing Final Rule. Given the inconsistent application, the CFPB has preliminarily determined that both servicers and borrowers would benefit from the CFPB expressly clarifying that errors related to loss mitigation determinations are subject to the error resolution procedures in § 1024.35. Thus, the CFPB proposes to amend § 1024.35(b)(11) to specify that it covers a servicer's failure to make an accurate loss mitigation determination.
The proposed additional language would not create additional rights for consumers or extra burdens for servicers. Rather the additional language regarding inaccurate loss mitigation determinations is intended to merely clarify what the CFPB has always considered to be a covered error under the catch-all provision.
The CFPB anticipates that this provision would work together with proposed § 1024.41(c), which would require servicers to provide more specific information to borrowers in loss mitigation determination offer and denial notices, allowing borrowers to have more insight into specific reasons for servicers' loss mitigation determinations and whether those inputs were accurate. Proposed § 1024.35(b)(11) would not, however, cover challenges to investor requirements or specifications, such as, for example, a requirement that a borrower complete a trial period before being offered a loan modification.
Section 1024.41(h) currently permits a borrower to appeal a denial of a loan modification program as long as the borrower's complete loss mitigation application is timely received, and the borrower appeals within specific timeframes. Different personnel must review an appeal than those responsible for evaluating the borrower's complete loss mitigation application. Within 30 days of a borrower making an appeal, the servicer must provide a notice to the borrower stating the servicer's determination.
The CFPB recognizes that an appeal process similar to that in existing § 1024.41(h) may be useful when a borrower believes an error has occurred in a loss mitigation determination. A borrower may be more familiar with the concept of an appeal and thus might be more likely to submit an appeal to a servicer rather than a notice of error under § 1024.35. Thus, the CFPB is proposing to retain a revised appeals process in § 1024.41(h). As described in proposed § 1024.41(h)(2), however, when the appeal meets the error resolution procedural requirements of § 1024.35, the proposed rule would require servicers to treat it as a notice of error and to comply with those procedural requirements.
Similarly, proposed § 1024.41(h)(2) would provide that if a borrower submits a notice of error under § 1024.35 relating to a loss mitigation determination, the notice of error is also an appeal under § 1024.41(h) if the borrower submits notice of error within 14 days after the servicer provides its loss mitigation determination. The CFPB also proposes to amend § 1024.41(h)(4) to require that, when a notice of error is also an appeal, a servicer must complete the notice of error response requirements in § 1024.35 prior to making a determination about the borrower's appeal under § 1024.41(h). As a result, the proposed rule would require servicers to respond to a notice of error within 30 days, the time allowed under existing § 1024.41(h)(4) for an appeal, even in those circumstances when § 1024.35 allows servicers more than 30 days to respond to notices of error.
In addition, if a borrower contests a loss mitigation determination in a manner that does not satisfy the procedural requirements of § 1024.35, the proposed rule would require a servicer to continue to treat the borrower's statement as an appeal under § 1024.41(h) and to respond to it in accordance with its policies and procedures for appeals.
The appeal rights in § 1024.41(h) currently apply only to loan modification denials; they do not cover other types of loss mitigation. In the 2013 Mortgage Servicing Final Rule, the CFPB explained that it was limiting the appeal provision to loan modification denials because this approach maintained consistency with existing appeals and escalation processes established under State law or Federal regulatory agency requirements, including obligations pursuant to the National Mortgage Settlement and the California Homeowner Bill of Rights. This limited approach was consistent with a national focus on loan modifications as a necessary and under-used tool for addressing the historic rates of foreclosures. As discussed in part II, default mortgage servicing has changed dramatically in the intervening years. As a result, the CFPB proposes to amend § 1024.41(h) to apply to all loss mitigation determinations, not just loan modification denials. This proposed change would require servicers to provide appeal determination notices. As discussed below in this part, in the case of a loss mitigation offer, the primary benefit to borrowers of requiring detailed determination notices is to assist the borrower with potential appeals or notices of error in cases where the terms of the offer may depend on borrower-provided inputs. By providing details on the inputs used as basis for the determination, the proposed notices may enable borrowers to recognize errors in determinations and to file a notice of error or an appeal.
Finally, the CFPB proposes to amend § 1024.41(h)(1) to remove the reference to the servicer receiving a complete loss mitigation application 90 days or more before a foreclosure sale, because it would no longer be applicable under the proposed framework.
The CFPB proposes to amend the loss mitigation determination notice and loan modification denial notice provisions in existing § 1024.41(c) and (d) to require that servicers provide determination notices regarding both offers and denials as well as all types of loss mitigation options, instead of just loan modifications. Under the proposed rule, servicers would provide borrowers with additional information in connection with their loss mitigation determinations, including, for example, the specific reason or reasons for the determination to offer or deny loss mitigation assistance and any key borrower-provided inputs that served as the basis of the determination. The CFPB also proposes requirements regarding offers of loss mitigation from a servicer when a borrower has not requested loss mitigation assistance. The CFPB proposes to make conforming changes to relevant existing commentary and renumber certain provisions for alignment with the proposed changes.
Additionally, under this proposal, existing § 1024.41(c)(4), which relates to denials of loss mitigation solely because the servicer lacks required documents or information not in the borrowers' control and associated determination notices, would be relocated to § 1024.41(c)(2) with certain revisions.
Section 1024.41(c) currently requires servicers to evaluate a borrower for all available loss mitigation options upon receipt of a complete application and to provide, among other information, a notice stating the servicer's determination of which loss mitigation options, if any, it will offer to the borrower. Under existing § 1024.41(d), if the servicer denies the borrower any trial or permanent loan modification option, the notice must include information such as the specific reason or reasons for the servicer's determination, but this requirement does not apply to determinations on loss mitigation options other than loan modifications.
As discussed above in part IV.A, the CFPB proposes to replace the existing loss mitigation framework with a new framework that will allow servicers to review borrowers for loss mitigation options sequentially. Accordingly, the CFPB proposes to amend § 1024.41(c) to remove references to complete applications and related timing requirements so that it instead focuses on loss mitigation determination notice requirements more generally. The notices would add new specific information as well as include some of the information required under existing § 1024.41(c), such as the amount of a time a borrower has to accept or to reject an offer and the right to appeal.
Under existing § 1024.41(d), borrowers only receive the specific reason or reasons for a loss mitigation determination when that determination is a denial. The CFPB preliminarily determines that servicers should be required to disclose the same information for loss mitigation offers in order to inform borrowers about the information relied upon while conducting the review, as this information could require correction or serve as the basis for an appeal. As noted in part II, non-loan modification loss mitigation options, such as forbearances, deferrals, and partial claims, have become increasingly common in recent years. The CFPB therefore also proposes to broaden the determination notice requirements to apply more generally to all types of loss mitigation offers and denials, not solely denials of loan modifications.
In addition to disclosing the amount of time the borrower has to accept or to reject an offer, notice of the borrower's right to appeal the loss mitigation determination, and the specific reason or reasons for that loss mitigation determination, the CFPB is proposing to require that servicers include the additional information discussed below in determination notices.
Servicers may rely on a variety of borrower-provided and non-borrower-provided inputs when determining whether to offer or to deny loss mitigation assistance to a borrower. Borrower-provided inputs, for example, can include information such as household income. Non-borrower provided inputs, for example, can include property valuations and credit scores. The CFPB proposes to require disclosure of the key borrower-provided inputs that served as the basis for the determination. For example, if a servicer relied on income information provided by the borrower, the servicer would be required to state that this information served as the basis for the determination and to provide the income figure relied upon. The CFPB preliminarily determines that borrowers would benefit from being made aware of the specific information that went into the servicer's determination so that they have an opportunity to correct any errors, file an appeal, or both. Errors could prevent a borrower from being appropriately evaluated for all available loss mitigation options for which they may be eligible, and therefore lead to a foreclosure action that could have been avoided. Allowing the borrower insight into the specific borrower-provided inputs in the written determination notice may help ensure the borrower promptly contacts the servicer and seeks a correction where there is an error. The CFPB preliminarily determines that providing this information to borrowers may prevent avoidable foreclosures.
The CFPB is not requiring proactive disclosure of all non-borrower provided inputs, although a borrower or the borrower's representative would be able to access this information via mail, telephone, or website, as detailed in the notice. Such information may not be useful to the borrower when they are simply used in the review process and do not serve as the basis for the determination. For example, a servicer could deny a loan modification after reviewing the borrower's income information, credit score, and the property's present value. Under the proposed rule, if the servicer only relied on the borrower's income in making the determination, the servicer would only be required to disclose the borrower's income relied on and not the property value or credit score. If, however, credit score was determinative for the servicer, the servicer would be required to disclose the credit score as the specific reason for the determination. The CFPB is aware that certain borrower-provided inputs constitute sensitive consumer information. As the CFPB has previously noted, it expects servicers and other financial institutions to take appropriate measures to protect consumer data.
The CFPB proposes that determination notices must include a telephone number, mailing address, and website to access a list of non-borrower provided inputs, if any, that the servicer
Consistent with allowing for sequential loss mitigation review, the CFPB proposes that a written determination notice must include a telephone number and website to access a list of all loss mitigation options that may be available from the investor. This proposed requirement mirrors the CFPB's proposed requirements as to the written early intervention notice, such that the borrower would be able to access this resource readily at this stage of the loss mitigation review process rather than solely at the point of early intervention. Making this information more accessible to the borrower is expected to allow borrowers to assess their options in deciding whether to use their appeal rights, file a notice of error, accept or decline an offer, or request review for a different loss mitigation option.
Under the proposed rule, the servicer would be responsible for ensuring that the website is accessible, contains accurate information, and that the lists are complete, but the servicer may outsource the development and/or maintenance of the website to a third party. The requirement that this information also be available via telephone is intended to ensure that borrowers who may not have access to the internet are still able to receive this information. The telephone number may be, but is not required to be, the same as the telephone number that a servicer may provide in order for the borrower to contact assigned personnel under the continuity of contact provision pursuant to § 1024.40(a)(2). The CFPB anticipates that this requirement should not overly burden servicers because it is the same information made available in the written early intervention notice provided pursuant to § 1024.39(b).
The CFPB also proposes to require servicers to disclose additional information about remaining loss mitigation options, including previously offered options that the borrower did not accept, and whether offered options will remain available if the borrower requests review for additional options prior to accepting or rejecting an offer. Informing the borrower of all other loss mitigation options that are still available, if applicable, along with a clear statement describing the next steps the borrower must take to be reviewed for those options, could be useful for the borrower to engage with the servicer as to what loss mitigation assistance they could still request following the determination. If no loss mitigation options remain available, then the servicer would be required to include a statement that the servicer has reviewed the borrower for all available loss mitigation options and none remain. Additionally, the servicer would be required to include a list of any loss mitigation options that were previously offered that remain available, but that the borrower did not accept at the time. If the loss mitigation determination results in an offer, the servicer would be required to include a statement informing the borrower whether the offered option would remain available if the borrower were to request further review for other loss mitigation options prior to accepting or rejecting the offer. If the determination results in a loss mitigation offer of a forbearance, the servicer would be required to include a statement informing the borrower of the specific payment terms and duration of the forbearance. This proposed disclosure requirement regarding forbearances is similar to an existing disclosure requirement in current § 1024.41(c)(2)(iii). As noted above, the CFPB is proposing to delete that existing provision. However, the CFPB expects that it would continue to benefit borrowers to have a written notice confirming that their servicer is aware of and agrees to a forbearance for a certain period of time.
Existing § 1024.41(c)(4) generally prohibits a servicer from denying a loss mitigation application due solely to missing information not in the borrower's or servicer's control unless the servicer has exercised reasonable diligence to obtain that information and has been unable to obtain it for a significant period of time following the 30-day period during which servicers are generally required to make a determination on a complete loss mitigation application under current § 1024.41(c)(1)(ii). If the servicer does deny such a loss mitigation application, they must send a written notice informing the borrower of the missing information, that the servicer has requested the information, and that the servicer will evaluate the borrower for all available loss mitigation options promptly upon receiving it. The CFPB is proposing to replace current § 1024.41(c)(4) and related commentary with proposed § 1024.41(c)(2), which would have similar requirements but also include certain changes to align with the other proposed changes in § 1024.41.
As noted in part IV.A, the CFPB is proposing to remove existing § 1024.41(c)(1)(ii). Thus, the regulatory text in current § 1024.41(c)(4) and related commentary pertaining to the 30-day review period in existing § 1024.41(c)(1)(ii) would no longer be relevant under the new proposed loss mitigation framework. Instead, proposed § 1024.41(c)(2)(i) would prohibit servicers from denying a loss mitigation application due solely to missing information not in the borrower's or servicer's control unless the servicer has regularly taken steps to obtain the missing information and has been unable to obtain the information for at least 90 days. For example, if a servicer receives a request for loss mitigation on a Monday and requests information not in the borrower's or servicer's control on the following Friday, assuming the servicer regularly took steps to obtain the missing information, the servicer may send a written notice to the borrower, in accordance with proposed § 1024.41(c)(2), 90 days from the Friday it requested the information not in the borrower's or servicer's control. While every situation will vary, the CFPB expects that regularly taking steps would minimally include repeated attempted contact throughout the 90-day period with the relevant third party from whom the servicer needs to obtain the information. Requiring that the servicer has regularly taken steps to obtain any information and documents necessary from a party other than the borrower or the servicer is intended to ensure that servicers are making efforts to obtain needed information before denying a loss mitigation application due to missing information. While the CFPB proposes to replace the term reasonable diligence with the regularly taking steps phrasing that uses simpler language, it does not intend to reduce or to lessen a servicer's current obligation to obtain missing documents or information not in the borrower's control. The CFPB's proposal of 90 days is similar to the timeframe used for the unresponsive borrower provision in proposed § 1024.41(f)(2)(ii). The CFPB
Proposed § 1024.41(c)(2)(ii) also would require servicers to provide a notice to borrowers if they deny such an application. The notice requirements in proposed § 1024.41(c)(2)(iii) would retain aspects of the notice requirements in existing § 1024.41(c)(4), including requiring a statement that the servicer will complete its evaluation of the borrower for all available loss mitigation options promptly upon receiving the missing third-party information, but also would provide borrowers with additional information. Existing § 1024.41(c)(4) does not allow the servicer to state a period of time after which the servicer will not complete its loss mitigation evaluation even if the servicer receives the missing information. As noted in part IV.A, the CFPB is proposing a new § 1024.41 loss mitigation framework that would generally require a servicer to exhaust review for all available loss mitigation options prior to advancing foreclosure, and this new framework allows for the possibility of sequential loss mitigation review. The CFPB preliminarily determines that it is important for a servicer to be able to determine with certainty whether it has met the procedural safeguards in proposed § 1024.41(f)(2)(i) to(ii) and can move forward with foreclosure. This is especially the case if a servicer elects or is required by the loan's investor to conduct review for loss mitigation options sequentially, which could involve a lengthy overall process. Therefore, the CFPB is proposing to require a servicer to inform the borrower that the servicer will complete its evaluation of the request for loss mitigation assistance if the servicer receives the referenced missing documents or information within 14 days of providing the missing information determination notice to the borrower. This proposed timeframe is similar to the timeframe during which a servicer must allow a borrower to appeal a loan modification denial pursuant to existing § 1024.41(h)(2).
Proposed § 1024.41(c)(2)(iii) also would require servicers to provide borrowers with the information contained in proposed § 1024.41(c)(1)(iv) through (ix), which includes, among other things, a list of all other loss mitigation options that are still available to the borrower and a statement describing the next steps the borrower must take to be reviewed for those loss mitigation options, or a statement that the servicer has reviewed the borrower for all available loss mitigation options and none remain. The CFPB preliminarily determines that providing this information would aid borrowers in protecting their rights, which may include filing an appeal pursuant to proposed § 1024.41(h), a notice of error pursuant to § 1024.35, or both.
The CFPB requests comment on all aspects of proposed § 1024.41(c)(2). In particular, the CFPB is interested in whether a more prescriptive standard would be helpful for determining whether a servicer took regular steps to obtain missing information not in the borrower's or servicer's control, or if there is clearer language to convey the concept of “regularly taking steps” that still allows for flexibility over a variety of circumstances over time.
The CFPB understands that servicers may frequently and routinely review borrowers for loss mitigation, using automated processes required by investors, without a borrower request and solely based on information already on record.
The CFPB preliminary determines that, in these circumstances, borrowers would not necessarily benefit from notices of denials, but that the additional information regarding available options in notices of offers would be helpful to borrowers deciding whether to seek additional loss mitigation assistance. The CFPB proposes that servicers provide the borrower with a notice when it offers a loss mitigation option, even when the servicer has reviewed no borrower-provided information. The notice would be required to include the amount of time the borrower has to accept or reject the offer of loss mitigation, and information notifying the borrower, among other things, of remaining available loss mitigation options and investor information.
The CFPB proposes to remove comment 41(c)(1)-1 because the new proposed framework refers to the servicer's review of a borrower's request for loss mitigation assistance, and the language would be updated throughout Regulation X consistent with this change. The new proposed removal of comment 41(c)(1)-1 does not constitute a substantive change in how the CFPB views the relationship between an investor and servicer, including with respect to reviewing requests for loss mitigation assistance in accordance with CFPB regulations. The CFPB also proposes to make conforming edits to current comments 41(d)-1 through -4 in accordance with the changes to the loss mitigation determination notice requirement described above. Under the proposed rule, comment 41(d)-1 would no longer discuss disclosure requirements if a denial was based on investor criteria, such as a waterfall, because the current obligation to approve or deny every loss mitigation option following the servicer's receipt of a complete loss mitigation application would no longer apply under the new proposed framework. Instead, even if a borrower qualifies for a loss mitigation option, other options may still remain available for them rather than be automatically denied because of the position of the option in the investor's waterfall.
The CFPB proposes to remove comment 41(d)-2 because a net present value (NPV) calculation is no longer a frequently used calculation in the loss mitigation review process. Therefore, requiring disclosure of the key borrower-provided inputs that served as the basis of the determination, and all non-borrower provided inputs available via telephone or on a website, should allow borrowers and their representatives to better identify critical information and allow for future changes to servicer practices in loss mitigation evaluations. Additionally, the CFPB proposes to remove comment 41(d)-3 because servicers would be required to send specific determination notices for both offers and denials of all forms of loss mitigation, not solely for denials of loan modification options.
Finally, the CFPB proposes to update comment 41(d)-4 to apply the requirement that the specific reason or reasons for the denial be listed in the notice to all determinations, and not solely denials. The CFPB also proposes to remove references to the investor's hierarchy of eligibility criteria in comment 41(d)-4. As noted above, borrowers who are offered a loss mitigation option may remain eligible for other loss mitigation options in the investor's waterfall for which they have not yet been reviewed. Additionally, in connection with the proposed removal
The CFPB proposes to update § 1024.41(e)(1) to remove references to a complete loss mitigation application and instead apply the existing timing requirements to a borrower's request for loss mitigation assistance. Under the new proposed framework, which allows for sequential review for loss mitigation assistance, the timing requirements of § 1024.41(e)(1) would be triggered by a borrower's initial request for loss mitigation assistance, regardless of whether the servicer subsequently reviews the borrower for additional loss mitigation options. For example, if a foreclosure sale is scheduled for December 1 and a borrower makes a request for loss mitigation assistance on August 1, the borrower would be entitled to the 14-day period to accept or reject any offered loss mitigation option because the initial request for loss mitigation assistance occurred 90 days or more before a scheduled foreclosure sale. This would be the case regardless of when the servicer makes the offer to the borrower.
The CFPB requests comment on all aspects of its proposal to amend Regulation X's requirements related to loss mitigation determination notices and, in particular, requests comment as to whether there are opportunities for further simplification and streamlining of the loss mitigation determination notices.
The CFPB is proposing several requirements that would provide borrowers with limited English proficiency greater access to mortgage servicing communications in languages other than English. These proposed requirements are a first step towards the goal of ensuring that all borrowers have access to information they need, when they need it, regardless of the language they may use to communicate. In general, the proposed rule would require mortgage servicers to accurately provide or make available in multiple languages certain written and oral communications under the CFPB's mortgage servicing early intervention and loss mitigation provisions, including any applicable amendments to those provisions as discussed within this proposed rule. The proposed rule would also impose certain requirements aimed at helping to ensure that borrowers who receive marketing for a loan in a language other than English receive the identified early intervention and loss mitigation communications accurately in that same language. Finally, the CFPB is also proposing conforming edits to § 1024.32(a)(2), which currently provides for optional servicing disclosures in languages other than English.
Based on the most recently available 2022 American Community Survey of 1-Year Estimates from the United States Census, almost one fourth of the population is estimated to reside in a household that speaks a language other than English.
CFPB outreach and market monitoring has shown that when borrowers with limited English proficiency are not able to access early intervention and loss mitigation communications in their preferred language or when they obtain inaccurate translations of these communications, those borrowers may have reduced ability to receive effective loss mitigation assistance and may experience avoidable foreclosures.
Based on discussions with stakeholders, the CFPB understands that there are some mortgage servicers that are successfully addressing borrower language needs. These servicers effectively determine which languages are necessary for the geographic areas in which they do business, the investors they serve, and their business models. In determining which languages are best for their business, these servicers can quickly adapt as those borrower needs or business models change. They can provide informed translations and interpretation services, accurately conveying information to many borrowers in their preferred language, and do so in hundreds of languages.
However, these efforts are not universal across the mortgage market. Borrowers, consumer advocates, and industry stakeholders have expressed concern that borrowers' ability to access mortgage information in their preferred
The CFPB expects mortgage servicers to assist borrowers with limited English proficiency. As noted in the 2016 Mortgage Servicing Final Rule, this includes communicating with borrowers clearly in the borrower's preferred language, where possible, and especially when lenders advertise in the borrower's preferred language.
In order to meet the language access goals identified above and in recognition of the successful industry practices noted above, the CFPB is proposing to require servicers to provide (1) Spanish-language translations of certain written communications to all borrowers; (2) upon borrower request, translation or interpretation services of certain written and oral communications in the requested language (as long as it is one of the “servicer-selected languages” discussed below), as well as brief translated statements on certain written communications in five servicer-selected languages identifying the availability of translations in those languages and how the borrower can request those translations (
The CFPB is not including proposed regulation text for these proposed requirements as there may be multiple ways to structure the specific requirement options detailed above, which will vary based on the aspects of the proposed rule ultimately finalized. The CFPB recognizes that public input will help design an effective intervention, including potentially identifying additional relevant details or alternative approaches, and is eager to consider those suggestions as it drafts regulatory text. Though the CFPB is currently proposing to limit these requirements to delinquency-related communications, it may also consider additional language access and translation requirements in future rulemakings.
The CFPB is seeking comment generally on current language access practices and standards in the mortgage servicing industry that could help further inform the final rule, and specifically:
(i) What is the capacity and availability of translation and interpretation services used by servicers, including third-party translation services? Have servicers experienced difficulty obtaining translation or interpretation services, and if so, what are the details of those difficulties?
(ii) What difficulties have borrowers experienced obtaining translation or interpretation services?
(iii) Are there servicers that specialize in servicing mortgage loans for borrowers who speak languages other than English and Spanish, and if so, do they also originate mortgages using those languages?
(iv) Are there details the CFPB should provide on the extent to which and how servicers currently translate or engage interpretation services for less frequently spoken languages in the United States?
(v) How accurate are translations and interpretations of mortgage servicing communications currently and what practices are used to ensure accuracy? Are there factors that affect the enforceability of requiring accuracy that the CFPB might consider? Are there bona fide errors that may occur that the CFPB should consider?
(vi) Are there any relevant State laws that may affect provision of mortgage servicing communications in languages other than English?
(vii) Are there additional flexibilities the CFPB should consider to help ensure servicers are able to properly tailor these requirements to the language needs of their borrowers?
The CFPB is proposing that the written communication requirements discussed in this part would apply to the (1) written early intervention notices required under § 1024.39(b), including any changes set forth in this proposal, (2) the § 1024.39(e)(2) proposed written notices for borrowers whose forbearances will end soon, and (3) written notices regarding loss mitigation currently required under § 1024.41, as well as any content changes or additions set forth in this proposal, as discussed above. Collectively, these notices are referred to in this part as the specified written communications. The CFPB is proposing that the requirements discussed in this part would apply to the notices identified above, but would not apply to the website referred to in those notices. For example, the proposed requirements would apply to the early intervention notice, but not the website listing loss mitigation options that the CFPB is proposing to require servicers to reference in that notice. The CFPB is seeking comment on whether it should make subject to these requirements any other written communications required by the CFPB's mortgage servicing rules (such as the transfer of servicing notice, etc.) or the website that the CFPB is proposing to require servicers to reference in certain notices.
The CFPB is proposing that the oral communication requirements discussed in this part would apply to (1) live contact communications required under § 1024.39(a) and, if finalized, § 1024.39(e), and (2) oral communications made in compliance with a servicer's continuity of contact requirements under § 1024.40. These communications are referred to in this part as the specified oral communications. The CFPB is seeking comment on whether it should make subject to these requirements any additional oral communications required by the CFPB's mortgage servicing rules.
The CFPB is proposing to require that servicers accurately translate each of the specified written communications into Spanish and provide the Spanish versions with the English versions to all borrowers. As noted above, Spanish-speaking households account for almost one in eight households and a majority of households with limited English proficiency nationally. The CFPB has preliminarily determined that the number of Spanish-speaking households warrant provision of requiring Spanish translations of the specified written communications to all mortgage borrowers.
The CFPB is proposing that translations provided by the servicer in Spanish must be accurate. Inaccurate translations would violate not only this translation requirement, but also the underlying communication content requirements. The CFPB is not proposing specific format requirements (
The CFPB seeks comment on these proposed requirements and on whether it should consider (1) format or readability requirements and (2) providing flexibility or exceptions (for example, for servicers without any Spanish-speaking borrowers).
The CFPB also aims to address the language access needs of the 10 percent of United States households with limited English proficiency that speak a language other than English or Spanish. First, the CFPB is proposing to require that servicers, upon borrower request, provide accurate translations of the specified written communications to borrowers in certain servicer-selected languages. Second, the CFPB is proposing to require that servicers, upon borrower request, make available and establish a connection (
The CFPB is proposing to require that servicers must ensure that the translations and interpretation services used under this proposed requirement are accurate. Failure to provide accurate translations or interpretations would result in a violation of not only this proposed requirement, but also the underlying requirements.
The CFPB is proposing to provide individual servicers with discretion to select the languages used for translation and interpretation, but also proposes caveats to that discretion. The servicer would be required to select languages that (1) collectively address the needs of at least a significant majority of their non-Spanish speaking borrowers with limited English proficiency (although interpretation services must also be made available in Spanish), and (2) must include the five languages identified for the translation and interpretation availability statement, as discussed below. The CFPB acknowledges that servicers may need to reevaluate the language decisions periodically, to ensure they continue to meet the standard for discretion. The CFPB has also identified alternative methods for determining the languages for which servicers must be able to provide translations and discusses those alternatives in part IV.D below.
The CFPB has preliminarily determined that allowing a servicer discretion to select which languages it uses to comply with this proposed requirement will best serve borrowers over time as language demographics and servicer business strategies may change. The CFPB recognizes that the composition of the United States population is not static, and the utilization of various languages in the United States will change. Additionally, regional language usage may differ from national language usage. Permitting individual servicer discretion also allows for flexibility as a servicer changes its business strategies, such as when a servicer shifts the regions in which it primarily services mortgage loans. The flexibility would also prevent servicers from being required to translate the specified written communications in languages that are
The CFPB is seeking comment on these proposed requirements and specifically requests comment on:
(i) Should the CFPB provide minimum standards for identifying translator or interpreter services, such as requiring “qualified” translators or interpreters, and if so, what the requirements should be?
(ii) Should the CFPB provide minimum standards for language selection, such as standards related to significant majority determinations, and if so, what they should be?
(iii) Should the CFPB require servicers to periodically reevaluate the language determinations?
(iv) Are there certain languages that the CFPB should consider specifying as required for translation or interpretation, no matter the preferences of the servicer's borrowers?
To increase borrower awareness of the availability of the translations and interpretations discussed above, the CFPB is proposing to require servicers to provide five brief statements, accurately translated into five languages other than English or Spanish, in the English version of the specified written communications. Under the proposed rule, these statements would identify the availability of translated versions of the specified written communications and interpretation services for the specified oral communications in those five languages and how the borrower can request those translations or interpretation services (
According to stakeholder feedback, borrowers that prefer languages other than English or Spanish may not be aware that translations or interpretations are available from their servicer or may not know how to obtain those services in their preferred language.
For the languages selected for the translation and interpretation availability statements, the CFPB is proposing that servicers must select five of the most frequently used languages from the languages spoken collectively by a significant majority of their borrowers with limited English proficiency that prefer languages other than English and Spanish, as discussed above. The CFPB has preliminarily determined to limit the number of languages to five languages. Based on examples reviewed by the CFPB of the specified written communications currently in use with this type of statement, it appears that five statements would be feasible to include on the specified written communications without affecting their readability or significantly adding length.
The CFPB is not proposing specific model language for the translation and interpretation availability statements for several reasons. Regulation X currently provides flexibility to servicers to develop their own terminology and scripts to use for many of their required written and oral communications. The CFPB also recognizes that some servicers already provide these types of statements in certain of their written communications. To reduce implementation costs for those currently providing statements that would comply with this proposal, the CFPB has preliminarily determined servicers should have the flexibility to determine the terminology and phrasing for the statements.
The CFPB is seeking comment on these proposed requirements and specifically requests comment on:
(i) Are there current process or technology limitations that may prevent a servicer from complying with this proposed requirement, and if so, what they are?
(ii) Are there certain languages that the CFPB should consider specifying as required for the translation and interpretation availability statements?
(iii) Should the CFPB consider requiring more or fewer than five languages for the translation and interpretation availability statements? Should the CFPB address situations where the languages spoken collectively by a significant majority of a servicers' borrowers with limited English proficiency are fewer than five different languages?
(iv) How are servicers currently notifying borrowers of the availability of translations or interpretation services, including the language or languages currently used?
The CFPB is also proposing that, if a borrower received marketing for their mortgage loan before origination in a language other than English, and the servicer knows or should have known of that marketing, the servicer must comply with the translation and interpretation service requirements in part IV.D for that language, even if it is not a language selected by the servicer under that requirement. For example, if a servicer knows or should have known that a mortgage it services was marketed to a borrower in Navajo, then, under the proposed rule, it would be required to provide accurate Navajo translations of the specified written communications upon the borrower's request and must engage accurate Navajo interpreter services under the conditions specified in the proposed rule upon the borrower's request. Failure to provide accurate translations or interpretations would result in a violation of not only this requirement, but also the underlying requirements of the specified written or oral communications, as applicable.
When marketing for financial products is provided in a borrower's preferred language, the CFPB has preliminarily determined that such marketing might falsely imply to the borrower (or sometimes explicitly promise) that future communication regarding that financial product will also be available in that language, regardless of any disclaimers that might be used. Borrowers with limited English proficiency might shop for mortgage products based on the implied or explicit promise of future in-language communications to ensure that they can better understand the terms of and communications about the mortgage product.
The CFPB recognizes that servicers may not have direct involvement in the
The CFPB is seeking comment on these proposed requirements and specifically requests comment on:
(i) What information is currently in a loan's servicing file or information readily available elsewhere that might inform servicers of the language that was used to market the borrower's mortgage loan before origination?
(ii) How prevalent is it for institutions that originate a mortgage to retain servicing rights for that mortgage?
(iii) Should the requirement described be limited to only those servicers that originated the mortgages at issue, or are there other exceptions that should be created?
(iv) Should the CFPB consider other ways to help ensure implied or explicit promises about the future availability of language access made to borrowers during marketing are upheld?
As discussed above, the CFPB is proposing to permit individual servicers discretion to determine the languages used to comply with the requirements above. Regarding this servicer discretion, the CFPB is proposing the languages selected should be based on the collective needs of a significant majority of a servicer's non-Spanish-speaking borrowers with limited English proficiency. The CFPB is seeking comment on whether the proposed servicer discretion described above is the appropriate method to determine how many and which languages a servicer should use or whether alternative methods, such as a list maintained by a designated source outside the regulation, or a threshold or ranking system established by the CFPB would be better suited for the proposed requirements.
Because the CFPB is proposing to require translations for the specified written and oral communications, the CFPB is also proposing conforming amendments to existing § 1024.32(a)(2). Section 1024.32(a)(2) currently provides servicers the option of providing borrowers with servicing disclosures required under subpart C of Regulation X in languages other than English, provided that the disclosures are also made available in English upon a recipient's request. The CFPB is proposing to amend this requirement to make clear that this optionality remains as to subpart C, except as otherwise required by the sections this proposal would amend to require translations for the written communications discussed in part IV.D.
Through the CFPB's market monitoring activities, the CFPB is aware of a select number of specific instances where mortgage servicers may be furnishing information about borrowers undergoing loss mitigation review that raise questions about accuracy and consistency.
First, the CFPB has learned that some servicers furnish information indicating a consumer is delinquent in making a payment even after a borrower and servicer have agreed to some type of loss mitigation option, and the borrower is performing according to the terms of that loss mitigation option. For example, the CFPB is aware of situations where the servicer has agreed to reduce a borrower's monthly payment by modifying the underlying mortgage loan agreement, but the servicer continues to furnish negative credit reporting information after the borrower performs on the modified agreement. The CFPB has heard that this occurs when the servicer has not implemented the loss mitigation option in their servicing system in a timely manner and instead continues to report delinquency based on the loan terms that were in place prior to the loss mitigation option. Continuing to report delinquency based on the loan terms in place before the loss mitigation agreement may raise questions about the accuracy and consistency of credit reports.
Second, the CFPB has learned that some servicers may be using the Metro 2 Format and associated Consumer Data Industry Association (CDIA) guidance inconsistently, or not at all, when reporting tradeline data when the borrower is affected by a natural disaster.
The CFPB is aware that some creditors already make policy decisions to not factor in certain types of negative credit reporting information, such as late payments, that are associated with the “AW” code when assessing credit risk. By excluding the “AW” code from credit reports for certain borrowers that the servicer knows are affected by a natural disaster but not others that the servicer also knows are affected by a natural disaster, servicers may undermine the utility of credit reporting data for future creditors.
The CFPB also understands that some servicers furnish tradeline data without context that could give creditors more complete and accurate information about a borrower's potential credit risk. For example, some servicers do not consistently report a mortgage in forbearance using the forbearance code set forth under CDIA's guidance on reporting accounts placed in forbearance as a result of a natural or declared disaster.
Inaccurate information may result in lenders inaccurately assessing a borrower's credit risk for several years after the information appears on a credit report. Moreover, the information in these reports is used by many different types of businesses, such as insurers, landlords, and employers, to make eligibility and other decisions about borrowers. Thus, inaccurate information in a credit report may have far-reaching effects on a borrower.
In light of the concerns mentioned above, the CFPB is considering a variety of solutions that could improve the accuracy and consistency of credit reporting information furnished by servicers. These solutions could include adding to or amending CFPB regulations to ensure servicers report accurate information or amending furnisher guidance to improve or enhance the guidance provided to furnishers on how to report tradeline data. The CFPB seeks to learn more about furnishing concerns so that it can better understand how to address them.
The CFPB is requesting comment about possible approaches it could take to ensure mortgage servicers are furnishing accurate and consistent credit reporting information for borrowers undergoing loss mitigation review. In particular, the CFPB requests comments on the following issues:
(i) What servicer practices may result in the furnishing of inaccurate or inconsistent information about mortgages undergoing loss mitigation review?
(ii) What protocols or practices do servicers currently use to ensure that mortgages are being reported accurately and consistently? Are there specific protocols or practices for ensuring loans in forbearance or borrowers affected by a natural disaster are reported accurately and consistently?
(iii) Would it be helpful to have a special code that would be used to flag all mortgages undergoing loss mitigation review in tradeline data?
(iv) What steps should the CFPB take to ensure servicers furnish accurate and consistent tradeline data?
The CFPB is proposing to amend existing § 1024.38(c)(1) to specify that the requirement to retain records that document actions taken with respect to a borrower's mortgage loan account includes retention of records evidencing compliance with Regulation X. The CFPB is also proposing to amend existing comment 38(c)(1)-1 with an example illustrating these requirements as they would apply if this proposal's amendments to the loss mitigation framework are finalized.
In the 2013 Mortgage Servicing Final Rule, the CFPB noted that the record retention requirement and timeframe were necessary for servicer compliance with specific legal obligations and to ensure that the CFPB and other regulators have an opportunity to supervise servicers' compliance with applicable laws effectively. However, the CFPB has heard from stakeholders that some servicers may be interpreting the existing requirement to be more limited. Existing § 1024.38(c)(1) requires that a servicer retain records of actions taken with respect to a borrower's mortgage loan account. That category of actions is broad, and it includes actions taken to evidence compliance with Regulation X. To make clearer that servicers must retain records that evidence compliance with Regulation X, the CFPB is proposing to amend § 1024.38(c)(1). The CFPB is also proposing to amend comment 38(c)(1)-1 to provide an example illustrating requirements regarding methods of record retention if this proposal's amendments to the loss mitigation framework are finalized. The proposed comment notes that a servicer could use a computer program to create and retain records of the date a borrower makes a request for loss mitigation assistance, so long as the servicer ensures it can easily access those records. The CFPB notes that, if this proposal is finalized, a servicer would also be required to create and retain records of additional actions taken to evidence compliance with its requirements, such as creating and retaining records demonstrating the date the servicer stops advancement of the foreclosure process or creating and retaining records that demonstrate the servicer's steps regularly taken to identify and obtain information and documents necessary for loss mitigation review or to notify a borrower of a loss mitigation determination.
The CFPB is seeking comment on these proposed requirements and, in particular, whether the CFPB should provide minimum standards to evidence compliance or specific requirements for recordkeeping, including whether it should provide data standards for mortgage servicers.
In response to the COVID-19 pandemic, the CFPB amended §§ 1024.31, 1024.39, 1024.41 and related commentary in its June 2020 and June 2021 servicing rules. Among other things, the CFPB added COVID-19-related hardship as a defined term, added temporary COVID-19-related additional early intervention live contact requirements, added temporary special COVID-19-related loss mitigation procedural safeguards, added temporary exceptions from the general anti-evasion requirements for certain COVID-19 related loss mitigation options, and addressed servicer's contact and reasonable diligence requirements relating to delinquent borrowers exiting a short-term payment forbearance program made available to borrowers experiencing a COVID-19-related hardship.
Because both the temporary additional early intervention live contact requirements and the temporary special COVID-19 loss mitigation procedural safeguards have expired and the COVID-19 Public Health Emergency expired on May 11, 2023,
In addition to the changes discussed in part IV above, the proposed rule would amend regulatory text in 1024.35(9) and (10), 1024.38(b)(2)(iv)-(vi) and (b)(3)(iii), 1024.40(b)(1)(ii)-(iv) and (b)(2)(ii) and various commentary to § 1024.31, 1024.38, 1024.39, and 1024.41 to conform with other changes in the proposed rule. For example, the proposed rule would update commentary to § 1024.38 regarding servicer policies and procedures to delete references to a complete application and instead refer to a borrower making a request for loss mitigation assistance.
In recent years, some borrowers are hearing from companies that claim to own or have the right to collect on long-dormant second mortgages, also known as zombie mortgages. Many borrowers, having not received any notices or periodic statements for years, concluded that these second mortgages had been modified along with the first mortgage, discharged in bankruptcy, or forgiven. These companies often demand the outstanding balance on the second mortgage, plus fees and interest, and threaten to foreclose if the borrower does not or cannot pay. The CFPB is concerned about homeowners who may be facing foreclosure threats and other collection activity because of long-dormant second mortgages.
The CFPB issued an April 2023 advisory opinion providing guidance on
As noted in part II, non-loan modification loss mitigation options, including deferrals, have become increasingly common in recent years. In a deferral, missed payments are typically moved to the end of the loan term and generally become due when a borrower refinances, sells, or otherwise terminates their mortgage. The CFPB wants to ensure that borrowers are not taken by surprise when these amounts become due. The CFPB therefore requests comment on whether there are actions it could take, including amending existing rules, to help ensure that borrowers are regularly reminded of deferred amounts that may be due at the end of their loan terms.
In 2016, the CFPB finalized three sets of rule changes relating to successors in interest. First, the CFPB adopted definitions of successor in interest for purposes of Regulation X's subpart C and Regulation Z that are modeled on the categories of transfers protected under section 341(d) of the Garn-St. Germain Depository Institutions Act of 1982. Second, the CFPB finalized rules relating to how a mortgage servicer confirms a successor in interest's identity and ownership interest. Third, the CFPB finalized rules providing that a confirmed successor in interest is a borrower for purposes of § 1024.17 and subpart C of Regulation X and a consumer for purposes of § 1026.20(c) through (e), 1026.36(c), 1026.39, and 1026.41 of Regulation Z.
Despite these added protections, the CFPB has received reports from housing counselors and consumer advocates indicating that potential successors in interest continue to encounter delays and other communication difficulties when contacting servicers in an effort to confirm their successor in interest status. These challenges can have downstream implications for successors in interest by interfering with their ability to obtain loss mitigation reviews and to trigger foreclosure protections. Additionally, the CFPB has received reports from housing counselors and consumer advocates indicating that there are categories of homeowners who do not fit the current Regulation X definition of a successor in interest, such as, for example, non-relatives who receive property upon the death of a borrower or co-owners who do not sign their home's promissory note. Often servicers will not allow such homeowners to access information about the mortgage on their home or to apply for loss mitigation.
The CFPB seeks comment on additional actions it could take, including amending existing rules, to better protect potential successors in interest, confirmed successors in interest, and homeowners who do not fit the current Regulation X definition of a successor in interest. The CFPB also seeks data and information on the prevalence of consumer protection issues relating to these consumers.
Section 1024.5(c)(1) provides that state laws that are inconsistent with RESPA and Regulation X are preempted, but only to the extent of that inconsistency. Comment 5(c)(1)-1 provides that State laws that give greater protection to consumers are not inconsistent with and are not preempted by RESPA or Regulation X. The CFPB recognizes that some States impose their own mortgage servicing requirements and that those requirements may be based on the early intervention and loss mitigation requirements in the CFPB's current mortgage servicing rules, resulting in some overlap if this proposal to amend those requirements were finalized.
The CFPB is requesting comment on possible preemption interventions it could undertake if this proposal is finalized. The CFPB seeks comment on the following:
(ii) Are there specific burdens or costs caused by any potential inconsistency or overlap between the CFPB's proposal, if finalized, and State laws related to early intervention and loss mitigation?
The CFPB proposes that all changes proposed herein, except for the proposed language access requirements discussed in part IV.D, take effect 12 months after publication of a final rule in the
The CFPB proposes that the proposed language access provisions discussed in part IV.D take effect 18 months after publication of a final rule in the
The CFPB also seeks comment on whether it should allow servicers to comply early with any or all of the proposed provisions. With respect to provisions that have a proposed effective date of 12 months after publication of a final rule in the
In developing this proposed rule, the CFPB has considered the proposed rule's potential benefits, costs, and impacts as required by section 1022(b)(2)(A) of the Dodd-Frank Act.
The discussion below relies on information that the CFPB has obtained from industry, other regulatory agencies, and publicly available sources, including reports published by the CFPB. These sources form the basis for the CFPB's consideration of the likely impacts of the proposed rule. The CFPB provides estimates, to the extent possible, of the potential benefits and costs to consumers and covered persons of the proposed rule given available data. However, as discussed further below, the data with which to quantify the potential costs, benefits, and impacts of the proposed rule are generally limited.
Considering these data limitations, the analysis below generally includes a qualitative discussion of the benefits, costs, and impacts of the proposed rule. General economic principles and the CFPB's expertise in consumer financial markets, together with the limited data that are available, provide insight into these benefits, costs, and impacts.
Small servicers—generally, those that service 5,000 or fewer mortgage loans, all of which the servicer or affiliates own or originated—are exempt from all new requirements under the proposed rule.
In evaluating the benefits, costs, and impacts of this proposed rule, the CFPB considers the impacts of the proposed rule against a baseline in which the CFPB takes no action. This baseline includes the Mortgage Servicing Final Rules as currently in effect.
This section discusses the benefits and costs to consumers and covered persons of the following main provisions in the proposed rule: (1) the replacement of the complete application framework with a streamlined process that allows for the possibility of sequential loss mitigation reviews and includes proposed foreclosure procedural safeguards throughout a loss mitigation review cycle; (2) ensuring consumers are informed of all available loss mitigation options early in the process and changes to early intervention requirements when consumers are in forbearance; (3) fee protections during a loss mitigation review cycle; (4) changes to loss mitigation determination notice requirements; (5) clarification of notice of error requirements and appeal rights; and (6) new language access requirements discussed in the preamble.
The primary goal of these proposed amendments would be to reduce avoidable foreclosures, including by getting homeowners into loss mitigation solutions more quickly. These proposed amendments aim to address this goal by removing certain prescriptive requirements from the existing rules and proposing certain procedural safeguards to protect borrowers and align servicer incentives with reviewing borrowers for loss mitigation assistance quickly and accurately. As such, the discussion below of the primary costs and benefits to consumers and covered persons focuses on proposed changes in the rule as they relate to the goals of reducing avoidable foreclosures and protecting borrowers from harms that can occur during the loss mitigation review process.
The CFPB also would amend existing record retention requirements to clarify that they include retention of records evidencing compliance with the regulation overall. For covered persons who are not already retaining these records, the CFPB anticipates that this proposed amendment would impose at most minimal costs to update policies and procedures since the relevant records are already produced through compliance with the existing rule, and storage systems are already in place to comply with other record retention requirements.
Proposed amendments to § 1024.41 would replace the existing rule's complete application framework with a streamlined process that allows for the possibility of sequential loss mitigation reviews. A loss mitigation review cycle would begin when the borrower requests loss mitigation assistance and would terminate at the time the mortgage is successfully brought current or one of the procedural safeguards in proposed § 1024.41(f)(2) is met. Certain procedural safeguards against foreclosure would persist during the loss mitigation review cycle. Under the proposed rule, investors could still require that servicers perform a simultaneous review for all available loss mitigation options. However, the proposed rule would allow flexibility for sequential loss mitigation reviews with corresponding proposed foreclosure procedural safeguards throughout a loss mitigation review
Generally, the goal of this proposed amendment would be to reduce avoidable foreclosure by aligning servicer incentives so that servicers could review borrowers for loss mitigation options quickly and accurately. There are two primary considerations of costs and benefits to consumers in this proposed rule. The first relates to preventing borrower harm by preventing avoidable foreclosures and other consequences of delinquency. For example, for borrowers experiencing financial distress, allowing flexibility for an expedited review of loss mitigation options may prevent the borrower from incurring costs associated with the foreclosure process and experiencing negative impacts to their credit reporting. As outlined below, the cost of foreclosure to borrowers is large and manifests through both monetary and non-monetary costs.
The second consideration relates to the potential consequences for borrowers' consideration of all available loss mitigation options. The existing rule provides that once an application is complete, the servicer must evaluate the borrower for all loss mitigation options simultaneously. This includes options for the borrower to sell their home or liquidation options even if the borrower has indicated they would like to remain in the home. The proposed framework would allow servicers to evaluate borrowers more quickly and would provide flexibility to the servicer so that the servicer would not need to review the borrower for non-retention options in instances where the borrower has indicated they would like to remain in the home, for example. Upon informing the borrower of the results of a loss mitigation review, the new framework also would require servicers to provide information about other available loss mitigation options. This will allow borrowers to ask for review for other loss mitigation options that they may prefer.
Both the proposed loss mitigation review framework and proposed foreclosure procedural safeguards would play an important role in reducing the probability that a borrower enters foreclosure and that an avoidable foreclosure is completed, which would otherwise cause borrowers to lose their homes, incur expenditures associated with the foreclosure process and incur non-monetary costs associated with foreclosure. The proposed loss mitigation review framework would provide greater flexibility to servicers to evaluate borrowers for loss mitigation options more quickly and accurately. The CFPB expects that the proposed loss mitigation review framework would increase access to loss mitigation for many borrowers, allowing more borrowers to be evaluated for loss mitigation options than they otherwise would have and reducing avoidable foreclosures. Furthermore, the proposed rule would expand foreclosure procedural safeguards to begin the moment the borrower requests loss mitigation assistance as opposed to the existing rule's foreclosure protections, which generally begin only after the receipt of a complete loss mitigation application. The proposed rule would prevent servicers from initiating or advancing foreclosure proceedings against borrowers from the moment they request loss mitigation assistance until the mortgage is successfully brought current or one of the procedural safeguards in proposed § 1024.41(f)(2) is met. The CFPB expects that the proposed foreclosure procedural safeguards would reduce the probability of foreclosure, as described in more detail below.
The proposed loss mitigation review framework would be expected to reduce avoidable foreclosures by increasing the likelihood that a borrower receives a loss mitigation option sooner. The CFPB understands there are a subset of borrowers who fail to complete a loss mitigation application despite significant improvements in mortgage servicing practices since the 2013 Mortgage Servicing Rules. The barriers to completing a loss mitigation application were well demonstrated during HAMP. Responses to the American Survey of Mortgage Borrowers
Under the existing rule, servicers generally are required to collect documentation for all the options that may be available to the borrower prior to making a determination as to what loss mitigation option or options the servicer may offer to the borrower. This framework proved beneficial for many borrowers. However, as discussed above, it remains the case that some borrowers do not complete the application for loss mitigation assistance in a timely manner or at all. The requirement to obtain and submit documents that may not be relevant to options the borrower is interested in may contribute to borrowers' difficulties in completing an application. Moreover, delays in processing an application can occur when a borrower submits a partial application or otherwise. This delay can result in the borrower needing to resubmit documents that may have become stale (
For some borrowers, the ability to enter a particular loss mitigation option may be the only way for them to become or remain current and avoid foreclosure. Delays in loss mitigation review can directly lead to foreclosure and the borrower losing their home. For example, some loss mitigation programs are subject to a cap of 12 cumulative deferred past due principal and interest payments,
Furthermore, reducing the hurdles to obtain a loss mitigation option may benefit borrowers who would successfully complete a loss mitigation application and receive and accept a loss mitigation option under the current framework. To the extent those borrowers receive a loss mitigation option more quickly under the proposal than under the existing rule, their period of delinquency would be reduced. This will reduce negative impact on their credit history. It also would reduce their exposure to fees associated with default, such as late fees, property inspection fees, and foreclosure-related fees.
The CFPB does not have data enabling us to estimate how much the proposed provision would shorten loss mitigation processes. Interviews with servicers conducted for the CFPB's 2019 RESPA Servicing Assessment indicate that the requirement to evaluate the borrower for all options at once is time-consuming for servicers.
The CFPB also believes that the proposed foreclosure procedural safeguards would benefit consumers significantly by providing them with foreclosure protections more quickly. Under the proposed rule, borrowers would have protection from foreclosure as soon as they indicate that they need mortgage assistance as opposed to waiting until an application is complete. This means most borrowers would receive foreclosure protections earlier in the process. Moreover, because many borrowers do not complete a loss mitigation application under the existing rules, these borrowers would receive foreclosure protections under the proposed rule, which could increase their likelihood of accessing loss mitigation. The CFPB expects that by receiving foreclosure protections earlier in the process borrowers would have an increased likelihood of avoiding foreclosure.
The proposed rule also could prevent some foreclosures by requiring that servicers evaluate borrowers for other available loss mitigation options if the initially chosen loss mitigation option is not successfully implemented (
The CFPB does not have data to estimate how many borrowers would avoid foreclosure due to this additional opportunity for evaluation. However, the CFPB understands that some borrowers who accept a loss mitigation option and enter a trial payment plan do not succeed at bringing their loan current through that option. Borrowers in this situation who have not yet been reviewed for all available loss mitigation options might be able to become current or remain in their home under the proposed rule if they were approved for and successfully completed a different loss mitigation option after failing a trial payment plan.
For borrowers who avoid foreclosure due to the proposed provision, the per borrower benefits would be substantial. Estimates of the cost of foreclosure to consumers are large and include substantial monetary and non-monetary costs. Some of these costs are borne directly by the borrower and others are borne by non-borrowers. In the CFPB's June 2021 Final Rule, we estimated an average per-borrower benefit of avoiding foreclosure of at least $30,100 or $35,300 in 2023 dollars.
In addition to the above estimate, there would be significant benefits to the borrower of avoiding foreclosure with respect to their credit profile. Foreclosure has a significant impact on a borrower's credit score that can make it difficult to access future credit.
The CFPB does not have data to estimate the number of borrowers experiencing financial distress who would not complete a loss mitigation application under existing rules and would not therefore receive a loss mitigation offer but would receive a loss mitigation offer under the proposed rule. The CFPB also does not have data to predict how many borrowers would experience foreclosure but for a loss mitigation solution received under the proposed loss mitigation review framework. However, existing evidence suggests that the number of borrowers who would receive a loss mitigation solution under the proposed rule might be substantial. At the national level, a November 2023 report from Intercontinental Exchange (ICE) Mortgage Technology estimates that 751,000 loans were at least 60 days delinquent. The same report estimates 214,000 total loans in active foreclosure in September.
The proposed loss mitigation review framework may create costs for borrowers if it prevents them from considering and receiving loss mitigation options that they would prefer to those for which they are initially considered. For example, under the proposal, a borrower might be considered for and receive an offer of payment deferral without having provided the documentation required to be considered for a loan modification. This could be harmful to borrowers that would, instead, benefit from a loan modification and who may not understand the difference between the two loss mitigation options. Assuming the borrower is eligible for both options but does not know this, an immediate offer of deferral may induce the borrower to accept that option because they do not realize there are other options available that may be more fitting for their circumstances. Borrowers who receive a streamlined offer may not understand all the loss mitigation options they may have been eligible for if they had submitted a complete application.
In the 2013 RESPA Servicing Final Rule, the CFPB explained that borrowers would benefit from the complete application requirement, in part, because borrowers would generally be better able to choose among available loss mitigation options if the servicer is required to review them for all options and present any options for which they are eligible simultaneously. The CFPB acknowledges that borrowers accepting an offer without being reviewed for all available options could be prevented from considering loss mitigation options that they may prefer to the initial option for which they are reviewed. However, if a borrower is interested in and eligible for another form of loss mitigation, the proposed rule would allow them to request and receive a review for all available options that they have not already been reviewed for after the servicer's initial offer. In addition, other proposed revisions to the early intervention notice requirements in the proposed rule, discussed below in (2), are designed to ensure the borrower has access to information about and the opportunity to seek review for all options for which they may qualify. These parts of the proposal should mitigate the risk that a borrower is not evaluated for all options in which they may have an interest.
The CFPB's 2019 RESPA Servicing Rule Assessment also showed that servicers generally only offered borrowers one loss mitigation option even under the existing rule's complete application framework. Investor-required evaluation rules sometimes prescribe sequential review and automatically deny a borrower all other options for which the borrower qualifies.
The primary benefits to servicers would be a reduction in costs for collecting and processing paperwork associated with loss mitigation applications. Evaluating a complete application for all loss mitigation options is more resource intensive than evaluating eligibility for a single option or subset of options. Thus, if a servicer evaluates a borrower for fewer than all loss mitigation options—as the proposed rule would allow—the servicer will save resources, avoiding parts of the evaluation process that would have occurred under the existing complete application framework. These benefits could be especially beneficial to servicers when a borrower applies for options that are designed to be streamlined and made available quickly with no or minimal paperwork. In those cases, the servicer would avoid
The CFPB understands that the process of conducting an evaluation for all loss mitigation options and communicating the determination to consumers can require considerable staff time. Among other things, servicers must communicate with borrowers, exercise diligence to obtain all documents and information needed for review of any potentially available loss mitigation options, and review of all possible options, even ones in which the borrower may not be interested. In the CFPB's 2019 RESPA Servicing Assessment and based on interviews with servicers, the CFPB discussed that the requirement of evaluation for all options at once and a decision letter on outcomes for all options was the costliest provision of the 2013 Rule for servicers.
The proposal would also remove the existing requirement in § 1024.41(b)(2) that a servicer send, within five days of receiving the borrower's loss mitigation application, a written notice containing information about the completeness of the borrower's loss mitigation application and any needed documents and information. The removal of this notice requirement would constitute a cost savings to servicers.
The total number of loss mitigation applications servicers receive annually may vary considerably with market conditions that affect borrower delinquency rates. To come up with a rough estimate, we consider the 1.8 percent rate of delinquent borrowers at the end of 2023,
The proposed rule may increase costs to servicers if it delays foreclosures that would have occurred under the existing rule. The CFPB understands that the cost of servicing nonperforming loans is greater than the cost of servicing performing loans. By delaying initial foreclosure proceedings, servicers may have to advance principal and interest payments to investors and continue to fund escrow. Once the foreclosure process has started there continues to be an array of fees, which vary by state. Only some of these fees are recoverable for the servicer when the foreclosure is completed. In addition, servicers may incur significant penalties if foreclosure is initiated after the foreclosure start deadline outlined in the servicer agreement. For example, the Federal Housing Administration penalizes servicers that do not refer by 180 days after initial delinquency,
Relative to the existing rule, the proposed foreclosure procedural safeguards may begin earlier (when the borrower first requests loss mitigation assistance rather than when there is a complete application) and potentially end later (such as, for example, when a loss mitigation option is successfully implemented rather than when the borrower enters an option that may not be successfully implemented). The proposed foreclosure procedural safeguards also would continue for a borrower who fails a trial payment plan if the borrower has not yet been reviewed for all available options; and those protections would generally continue until the borrower has either been reviewed for all available options and none remain, another loss mitigation option has been successfully implemented, the loan is brought current, or the borrower remains unresponsive for a specified period of time despite the servicer regularly taking steps to reach the borrower. Assuming some borrowers in that situation would ultimately face foreclosure, the proposed foreclosure procedural safeguards could be more costly for the servicer than a prompt foreclosure following the borrower's initial failure of the trial payment plan.
The CFPB expects that the costs of beginning foreclosure protections earlier and expanding them from initiation and sale to cover all foreclosure advancement may be minimal. The CFPB understands that many servicers already place a pause on foreclosure proceedings as soon as the loss mitigation process begins, and some investor guidelines may require foreclosure to be paused even before an application is complete (when the existing framework's prohibition on these practices begins).
The CFPB does not have data to predict the additional possible duration of the proposed foreclosure procedural safeguards or number of borrowers to whom they would apply. The CFPB previously estimated that, under the existing rule, the typical duration from initiating a loss mitigation application to completing it was roughly two months.
Any delay in completing foreclosure would create additional costs to service the loan before foreclosure. The Mortgage Bankers Association reported an annual cost of servicing non-performing loans of $1,857 and performing loans of $176.
Servicers also would incur costs to manage compliance risk and ensure that the provision is not violated. This would encompass the cost of developing systems to ensure compliance with the conditions under which a loss mitigation review cycle ends along with the prohibition on initiating or advancing foreclosures, to ensure that they do not inadvertently violate the protections. On net, these costs may be lower than compliance costs under the existing rule compared to baseline due to the simpler prohibition on initiating or advancing foreclosure.
The proposed changes also would bring the servicing rules into closer alignment with current servicing practices, which are largely set by investors. If the proposed rule increases the likelihood that non-performing loans are modified or speeds the process of achieving a permanent loss mitigation, then servicers and investors may benefit from either or both changes.
The proposal would make changes to the early intervention notice requirements in § 1024.39. Specifically, the proposal would amend the content of § 1024.39(b) written notices by adding to existing notice requirements a new requirement that the notices identify the name of the owner or assignee, currently holding the borrower's mortgage, a brief description of each type of loss mitigation option that is generally available from the investor, and a website address and phone number where the borrower can obtain a list of all of the loss mitigation options that may be available from that borrower's investor. Additionally, the proposal would create alternative early intervention notice requirements at § 1024.39(e) for borrowers performing under the terms of a forbearance. Under the proposed alternative notice requirements, servicers would receive a partial exemption from the live contact and early intervention written disclosure requirements of § 1024.39(a) and (b) while a borrower is performing pursuant to the terms of a forbearance. However, servicers would be required to provide new oral and written notices to delinquent borrowers near the scheduled end of their forbearance period.
Proposed § 1024.39(b) would benefit borrowers by better informing them about their possible loss mitigation options earlier in the loss mitigation process. Given that the proposed rule would allow servicers to consider borrowers for loss mitigation options one at a time (as discussed above in this part), it may be more critical for borrowers to receive information about all available options upfront than under the existing rule. That is, providing information on all options upfront may mitigate the chance that borrowers accept an inferior option for their needs due to ignorance of a superior alternative for which they have not yet been reviewed.
The existing written early intervention notices rules do not require the servicer to inform the borrower of the investor's identity and do not require a servicer to provide any resource from which the borrower can obtain information regarding each loss mitigation option that may be available from that investor. This can make it difficult or impossible for a borrower to discover the investor's identity and to determine which loss mitigation options are available for their loan. The main benefit of the proposed provision would be to remedy that problem for some borrowers, allowing them to learn more about their available loss mitigation options. This information may benefit borrowers by enabling them to request a loss mitigation option that may seem appropriate for their situation. In addition, making borrowers aware of options that may be appropriate to their situation earlier in the process may prompt some borrowers to contact their servicer and apply for help sooner. Borrowers who apply for consideration sooner also may successfully enter a loss mitigation option sooner and benefit from avoiding potential fees and other consequences that accompany a longer period of loan delinquency (as discussed above in this part).
Proposed § 1024.39(e) would benefit borrowers in two ways. First, it would eliminate borrower confusion that may currently occur when borrowers receive early intervention notices that do not reflect the fact that a forbearance is in place. Proposed § 1024.39(e) would eliminate this source of borrower confusion by exempting servicers from the early intervention notice requirements of § 1024.39(a) and (b) while borrowers perform under the terms of a forbearance agreement.
Second, proposed § 1024.39(e) would benefit borrowers who are delinquent and are nearing the end of a forbearance period by making it more likely that they are aware of their options at the end of the forbearance period with sufficient time to take the action most appropriate for their circumstances. Borrower responses to the ASMB 2020 Survey demonstrated that many borrowers in forbearance plans in 2020 were unsure of how their deferred payments would be repaid when their forbearance period was up (roughly 13 percent of respondents).
For both proposed provisions, the total benefits to borrowers would depend on the number of borrowers who might benefit as discussed above. The CFPB cannot currently quantify this number due to lack of information about how many people respond to early intervention notices today, how many recipients of early intervention notices would find the new information important, and how this might change the rate of responses to the notices. The CFPB requests data and other information that could help estimate these quantities.
For servicers, the main costs of these provisions would come from the costs of developing the new disclosures. Determining the appropriate information about the relevant investor for a borrower's loan and their loss mitigation options may be the costliest addition because it is tailored to each loan. This may require additional employee time to develop a process for linking loan investor and loss mitigation information to production of early intervention written notices. However, the added cost should not be overstated; under the existing rule, servicers must provide relevant loss mitigation information to borrowers when they contact the servicer to ask for help. Thus, the existing rule already requires servicers to have a way of knowing the investors' requirements for individual loans upon request. There may be additional costs to servicers from developing and maintaining the website and telephone resources that provide information on the relevant loss mitigation options for different investors to borrowers.
Additionally, with respect to § 1024.39(e), servicers may benefit from no longer providing early intervention notices while borrowers are in forbearance, although they would incur an additional cost for sending end-of-forbearance notices to these borrowers. Assuming typical forbearance periods of three to six months, the net effect of these two changes for the average borrower may be minimal. That is, the increased cost of providing the proposed end of forbearance notices and the reduced cost of no longer providing notices under § 1024.39(a) and (b) may offset each other.
The CFPB does not have data to estimate these increased costs to servicers. However, we note that any additional costs of gathering, maintaining, and providing this information may be smaller than the reductions in costs to servicers associated with simplifying the required application and evaluation process as discussed above in (1). The CFPB also requests data or other information to help estimate changes in costs associated with more expansive early intervention notices.
Proposed amendments to § 1024.41(f)(3) would prohibit fees beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract beginning when a borrower requests loss mitigation assistance and continuing throughout a loss mitigation review cycle. This prohibition would encompass both amounts typically imposed on a borrower's account directly by the servicer, such as late charges and stop payment fees, as well as payments to third party companies for delinquency-related services, such as property inspections.
The benefit of this provision to the borrower would be the value of delinquency-related fees prevented while a loss mitigation application is pending. The CFPB does not have data to estimate the average amount of fees that would otherwise be incurred by borrowers during the loss mitigation application process. However, GSE loan guidelines provide a ceiling with maximum allowable charges: monthly late charges cannot exceed 5 percent of the principal and interest payment, or roughly $88 for the average outstanding mortgage at the end of 2023
Given uncertainty about the impact of the proposed changes on loss mitigation review cycle durations, it is not possible to estimate the number of months borrowers would receive these protections on average. Under the existing rule (and prior to COVID-19 temporary exceptions), 2015 servicer operations data from the CFPB's 2019 Servicing Rule Assessment suggests the typical duration from initiating a loss mitigation application to receiving an evaluation from the servicer was roughly two months under the existing rule and slightly more than one month prior to the 2013 Mortgage Servicing Final Rule.
The cost to servicers of the proposed fee prohibition would be the value of the lost fees they would otherwise charge to borrowers with the same estimates discussed above regarding consumer benefit. The CFPB understands that investors typically require their servicers to engage and pay third party companies during delinquencies for a variety of activities, such as regular property inspections. In these cases, the prohibition would prevent servicers from recouping their expenses from payments they must make to third party companies for delinquency-related services, although they may still be able to recoup these expenses later at a foreclosure sale. Incurring these expenses may further incentivize servicers to process loss mitigation applications expediently, mitigating the overall expenses incurred by servicers as well as for borrowers. To the extent servicers either are able to retain any fee income or are required to advance the fees to investors (as may be the case for late fees), servicers will likewise have increased incentives to process loss mitigation applications expediently, mitigating the overall expenses incurred by servicers as well as for borrowers.
Proposed amendments to § 1024.41(c) would add new requirements for loss mitigation determination notices that would, in relevant part, (a) require offer and denial notices for all loss mitigation options, (b) require more detail in the notices specifying the key borrower-provided inputs that served as the basis for the determination, (c) provide contact information that the borrower can use to access a list of non-borrower provided inputs, if any, used by the servicer in making the loss mitigation determination, (d) require the servicer to provide a website through which a borrower could access a list of non-borrower provided inputs, if any, used by the servicer in making the loss mitigation determination; (e) require certain disclosures regarding loss mitigation options that may remain available to the borrower, and (f) require that the servicer inform the borrower as to whether an offer will still be available if the borrower requests to be reviewed for other loss mitigation options. If the loss mitigation offer is for a forbearance, the amendments also would require that the determination notice include information regarding the terms and duration of the forbearance. Disclosure of the terms and duration of the forbearance is not a new requirement but is being moved into the proposed determinations section to provide the borrower additional information and because of the proposed amendment of § 1024.41(c)(2)(iii), where the requirement currently resides.
The purpose of the existing loan modification denial notice provision in § 1024.41(d) is to provide borrowers with information that might help them correct an erroneous denial, and the proposed changes to determination notices would extend that benefit to any loss mitigation determination rather than to permanent loan modification denials only. Additionally, the proposed changes would require detail to be included in the notices on specific inputs used in the determination, better enabling borrowers to recognize potentially erroneous denials and fully understand the basis for the determination.
In the case of a denial, ensuring the consumer understands the reasons for the denial including any specific numerical input used in the determination is necessary to enable the consumer to recognize and respond to potential errors that may occur in determinations. Requiring this for all loss mitigation options rather than only permanent loan modifications as specified under the existing rule recognizes the increasing prevalence of alternative types of loss mitigation options, such as forbearances and deferrals. This additional information could reduce confusion for borrowers and help some borrowers understand their loss mitigation determinations better under the proposal compared to baseline.
In the case of an offer, the primary benefit to borrowers of requiring detailed determination notices is to assist the borrower with potential appeals in cases where the terms of the offer may depend on certain inputs. By providing details on the inputs used as basis for the determination, the proposed notices may enable borrowers to recognize errors in determinations that may have led to worse terms in the offer than if the correct information had been used. In such cases, if the borrower appeals an error that they would not otherwise have recognized or been able to substantiate, and accepts an offer on better terms, they will benefit by the difference in terms between the initial and appealed offer terms.
Due to uncertainty about trends in borrower distress, prevalence of loss mitigation options other than permanent loan modifications, and the rate of loss mitigation applications that servicers would deny, the CFPB does not have sufficient information to estimate the additional number of required notices. ICE Mortgage Technology reported that roughly 8.8 million borrowers had entered temporary forbearance between when the CARES Act was passed in Spring 2020 and the end of 2023.
The CFPB does not have data to estimate the share of those borrowers who would newly appeal a determination successfully. Based on data on loss mitigation applications and appeals from five large servicers in 2015 analyzed for the CFPB's 2019 Servicing Rule Assessment, the rate of successful appeals on loss mitigation applications was 0.1 percent.
In addition, the proposed rule requires that the servicer inform the borrower as to what loss mitigation
Requiring determination notices for all loss mitigation determinations—not only for denials of permanent loan modifications relating to complete applications—could increase costs to servicers associated with preparing and mailing a greater number of determination notices, as well as identifying and making available borrower-provided and non-borrower-provided inputs used in the determination. However, the CFPB anticipates that the costs of additional determination notices for non-loan modification options should be partially offset by the proposed removal of the required notice under existing § 1024.41(c)(2)(iii), which requires servicers to provide borrowers with a notice stating the terms of any forbearance or repayment plan they are offered.
The increased detail required in determination notices may not substantially affect costs per notice given that servicers already have the required information on inputs underlying their determinations, other loss mitigation options available, and forbearance terms and durations. However, including this information may increase questions and/or alleged errors from borrowers, particularly if numerical inputs are difficult to understand or do not align with other common usages of the same term (
An estimate of the increased costs to servicers would depend on the costs of identifying the relevant borrower-provided and non-borrower-provided inputs, which may vary depending on the complexity of the determination process, the costs of developing and maintaining a website through which consumers can access the required information, and the additional number of required notices and the average cost of providing and mailing each notice. However, the CFPB understands that most loss mitigation determinations are relatively standardized due to servicers' obligations to follow investor requirements. Due to uncertainty about trends in the incidence of borrower distress, prevalence of loss mitigation options other than permanent loan modifications, and the rate of loss mitigation applications that servicers would deny, the CFPB does not have sufficient information to estimate the additional number of required notices. However, as discussed above regarding consumers' benefits, recent circumstances relating to COVID-19 related forbearances provide an example of extenuating circumstances when loss mitigation options other than permanent loan modifications affect very large numbers of borrowers.
Amendments to § 1024.35(b) make explicit that loss mitigation determinations are subject to notice of error provisions. As discussed in the preamble to § 1024.35, the CFPB has consistently viewed servicer errors related to loss mitigation determinations as errors subject to the notice of error provisions. Amendments to § 1024.41(h) also provide that that section's right of appeal applies for all loss mitigation options, not just permanent loan modifications. For example, some forbearance options may not currently be subject to appeal rights, and appeal rights would be extended to them under the proposal.
The main aim of explicitly listing loss mitigation determinations as within the scope of the existing error resolution provision would be to provide clarity to both consumers and servicers that notice of error requirements apply to loss mitigation determinations. For consumers, the main value of this addition would be to increase servicer accountability by increasing the likelihood, timeliness, and quality of servicers' responses. For example, this clarity may help ensure that a servicer responds to a notice of error about a loss mitigation determination from a borrower by conducting a reasonable investigation and correcting any error if their investigation confirms one. This may benefit the borrower if the correction allows them to be offered an appropriate loss mitigation option. Borrowers also could save on legal costs if they can resolve the issues through error resolution instead of through outside legal action. While the CFPB does not have information to precisely estimate the expected number of borrowers this would affect, prior analysis by the CFPB indicates that loss mitigation is already a common reason for formal error assertions.
The main benefit to borrowers of expanding the right to appeal in § 1024.41(h) such that it applies to all loss mitigation options would be an increased likelihood of successful loss mitigation.
Newly allowing borrowers to appeal denials of loss mitigation options beyond permanent loan modifications
The proposed amendment to § 1024.35(b) also clarifies that the CFPB has always interpreted that loss mitigation determinations are and continue to be covered by the notice of error provision. Though § 1024.35(b) is a provision that applies to small servicers, the clarification the CFPB is proposing to add to this provision is not a change to the existing rule, so the CFPB does not expect any changes in the costs and benefits to covered persons, including small servicers, from this clarification.
As discussed in part IV.D, the CFPB is proposing requirements to provide borrowers with limited English proficiency greater language access to mortgage servicing communications. These include requirements to provide select written and oral mortgage servicing communications—including the early intervention notice and loss mitigation option determination notices—in a borrower's preferred language in certain cases. For the specified written communications, the proposal requires an accurate Spanish language translation of the communication to be provided to all borrowers with the English version. The proposal also requires servicers to provide, upon borrower request, accurate translations of the specified written communications to the borrower in certain servicer-selected languages (as detailed in part IV.D) and to include five brief in-language statements in the English version of the specified written communications stating the availability of translations and interpretation services for those languages and providing how the borrower can request those translations or interpretation services. For the specified oral communications, the CFPB proposes requiring servicers, upon borrower request, to make available and establish connection with interpretation services before or within a reasonable time of establishing connection with borrowers, to the extent the borrower's requested language is one of the servicer-selected languages. The proposal also would require a servicer, under certain circumstances, to provide translations of the specified written communications and interpretations of the specified oral communications in languages that were used in marketing the mortgage product to the borrower upon the borrower's request.
The main benefit to borrowers of these proposed changes would be to increase access to and understanding of servicer communications, as well as lowered costs to borrowers with limited English proficiency to obtain that access. For example, if borrowers with limited English proficiency previously used translation services through other sources, receiving critical written materials in their preferred language from their servicer may save them time and/or expense in obtaining translations or interpretations. This increased access and understanding may in turn increase the likelihood the servicer is able to complete early intervention with a delinquent borrower and, if applicable, the borrower is able to identify available loss mitigation options and make a request for loss mitigation assistance. If borrowers with limited English proficiency were previously unable to obtain a translation or interpretation of these materials, or were deterred from doing so by cost, the complexity of the task, or privacy concerns, the new requirements could significantly increase the likelihood that a borrower may now have access to this information, increasing the likelihood the borrower completes a loss mitigation application. For example, translated materials may increase borrowers' awareness of important deadlines or necessary steps to obtain their preferred loss mitigation options. Obtaining better outcomes in this way may enable some borrowers to avoid foreclosures they would otherwise have experienced, reducing costs associated with foreclosure as discussed above in this part. Further, access to reliable translations and interpretation services may enable some borrowers to avoid harm where they would otherwise obtain inaccurate or incomplete translations or interpretations, including harm caused by predatory practices.
As discussed in part IV.D, the proposed requirements for establishing specified oral communications may reduce additional hold times some borrowers with limited English proficiency currently incur to establish a connection to translation services provided by the servicer during oral communications or may result in previously unavailable real-time interpretations. In some cases, the removal of these delays may increase the likelihood that more borrowers with limited English proficiency use existing translation services and may impact the efficacy of servicers' early intervention and loss mitigation efforts through oral communication.
The proposed language access changes may benefit a large subset of borrowers. Roughly 30 million U.S. households speak a language other than English at home and nearly 5.5 million households within that population have limited English proficiency according to estimates from the 2022 American Community Survey. Borrowers from those households might substantively benefit from increased access to key written and oral communications in a language they understand very well, although the CFPB does not have data to precisely estimate the average benefit of improved understanding to each borrower. Spanish speakers represent the second largest language group in the United States after English speakers and, thus, a large share of borrowers with limited English proficiency would benefit from the requirement to send specified written servicing communications in Spanish as well as English.
Data from the ASMB 2020 Survey supports this preliminary conclusion. Responses to the ASMB 2020 Survey indicate a similar share of respondents experiencing financial distress who
Requiring certain written mortgage servicing communications in specified languages other than English may impose new or additional costs on servicers. A requirement to send both English- and Spanish-language communications to all borrowers may result in updates to software systems to create the Spanish version of the communications and may increase mailing costs for communications sent by mail if these require additional pages of text. Smaller costs for software system updates may apply for some servicers when adding the in-language translation availability statements to the English version of the written communications. Servicers may incur similar software system update and mailing costs to provide translations upon borrower request in certain servicer-selected languages, as detailed in part IV.D. A requirement to provide specified written communications in languages other than English and Spanish when the servicer has or should have knowledge of in-language marketing to the borrower before origination, and upon borrower request, could increase costs by requiring servicers to develop and maintain systems for tracking languages used in marketing and sending appropriate written communications based on that request. Servicers also may incur one-time costs to develop translations in languages they currently do not offer and may incur ongoing costs to maintain these translations or to tailor the translated templates they develop to borrower circumstances. A requirement that servicers comply with the translation and interpretation service requirements for languages used in marketing before origination for the borrower, if the servicer knows or should have known of that marketing, also could prompt servicers to develop and maintain systems for tracking this information when servicing rights are obtained, at least in cases where the servicer is not the originator of the loan. The CFPB has heard from stakeholders concern that requiring servicers that know or should have known of languages used in marketing to provide translation and interpretation services, as applicable, in those languages could create incentives for firms that originate loans to avoid marketing in languages other than English to reduce anticipated servicing costs.
The proposed requirement to ease access to interpretation services over the phone by connecting these services before or within a reasonable time of establishing connection with borrowers with limited English proficiency may require servicers to adapt processes and could require additional staff or additional staff time. Servicers who are not already following this practice may need to establish a process for connecting stored information on borrower language preference with their process for oral communications. In some cases, this may not impose meaningful ongoing costs beyond those described above for complying with the changes to written notice requirements. However, complying with this requirement may require some servicers to make interpretation services available for more time overall in order to establish connections with them before or within a reasonable time of establishing connection with borrowers with limited English proficiency. Servicers that currently do not offer or only offer a limited number of languages for interpretation may experience additional costs for increasing the languages available for interpreter services to borrowers. Estimates of total servicer costs to comply with these language access requirements would depend on the language access methods currently offered by the servicer, the volume of borrowers with limited English proficiency, and the rate the servicer pays staff or third-party services for translations or interpretations.
The CFPB requests data and other information that could help estimate the benefits and costs of providing language access services of the types we are considering.
The CFPB expects that, if finalized as proposed, the rule would impose ongoing compliance costs on servicers. The CFPB requests comments on potential compliance costs of the proposed rule.
The CFPB believes that a large majority of depository institutions and credit unions with $10 billion or less in total assets that are engaged in servicing mortgage loans qualify as “small servicers” for purposes of Regulation X because they service 5,000 or fewer loans, all of which they or an affiliate own or originated. In the past, the CFPB has estimated that more than 95 percent of insured depositories and credit unions with $10 billion or less in total assets service 5,000 mortgage loans or fewer.
The CFPB believes that the consideration of benefits and costs of covered persons presented above generally describes the impacts of the rule on the minority of depository institutions and credit unions with $10 billion or less in total assets that service more than 5,000 loans.
Restrictions on servicers' ability to foreclose on mortgage loans could, in theory, reduce mortgage lending profitability and cause lenders to increase interest rates or reduce access to mortgage credit, particularly for loans with a higher estimated risk of default. The CFPB cannot rule out the possibility that the rule will have the effect of increasing mortgage interest
Consumers in rural areas may experience benefits from the rule that are different in certain respects from the benefits experienced by consumers in general. Consumers in rural areas may be more likely to obtain mortgages from small local banks and credit unions that either service the loans in portfolio or sell the loans and retain the servicing rights.
The CFPB will further consider the impact of the proposed rule on consumers in rural areas. The CFPB therefore asks interested parties to provide data, research results, and other factual information on the impact of the proposed rule on consumers in rural areas.
The Regulatory Flexibility Act (RFA) generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.
The analysis below evaluates the potential economic impact of the proposed rule on small entities as defined by the RFA.
The CFPB estimates that there are approximately 7,990 depositories (commercial banks, savings institutions, and credit unions) that engage in mortgage servicing and are therefore subject to the Mortgage Servicing Rules. Of these, the CFPB estimates that approximately 6,370 depositories are “small entities” as defined in the RFA.
For commercial banks, savings institutions, and credit unions, the number of entities and asset sizes were obtained from December 2023 Call Report data. Banks and savings institutions are counted as engaging in mortgage loan servicing if they hold closed-end loans secured by one to four family residential property or they are servicing mortgage loans for others. Credit unions are counted as engaging in mortgage loan servicing if they have closed-end one to four family mortgages in portfolio, or hold real estate loans that have been sold but remain serviced by the institution.
For firms providing real estate credit and firms engaged in other activities related to credit intermediation, the total number of entities and small entities comes from the 2017 Economic Census. For firms engaged in other activities related to credit intermediation, the number of entities engaged in mortgage servicing also comes from the 2017 Economic Census. The CFPB has not been able to separately estimate the number of these entities and small entities that are engaged in mortgage servicing. However, with the 2013 Final Rule the CFPB published analysis showing that approximately 90 percent of the estimated total entities engaged in servicing were depository institutions (DIs), while the remainder were non-depository institutions (non-DIs). The market share of non-DIs has grown considerably, with a report by the Financial Stability Oversight Committee (FSOC) showing that the share of Agency loans serviced by non-DIs rose from roughly 35 percent in 2014 to over 60 percent in 2023. Taking the assumption that the relationship between entity size and loans serviced within servicer type has remained stable over that period, this implies that the non-DI share of servicer entities has grown from roughly 10 percent to 17 percent over that decade. Using this figure, the CFPB estimates that there are currently approximately 1,637 non-DI entities engaged in servicing and 1,320 non-DI small entities engaged in servicing. The CFPB considers these the best available approximations to the current number of non-DI servicers, but also recognizes that they are rough estimates.
Non-profits and small non-profits engaged in mortgage servicing would be included under real estate credit if their primary activity is originating loans and under other activities related to credit intermediation if their primary activity is servicing. The CFPB has not been able to separately estimate the number of non-profits and small non-profits engaged in mortgage loan servicing.
The large majority of small entities discussed above qualify as “small servicers” for the purposes of the Mortgage Servicing Rule, which exempts servicers that service 5,000 mortgage loans or less, all of which the servicer or an affiliate owns or originated, from all the provisions affected by the proposed rule.
It is not possible to observe in the data whether the loans that servicers are servicing for others were originated by those servicers or their affiliates. However, all insured depositories and credit unions that meet both the SBA asset threshold and the loan count threshold likely qualify for the exception. In principle, these entities may not qualify for the exception because they service loans that they did not originate and do not own and that their affiliates did not originate and do not own; however, this situation is extremely unlikely. First, most entities servicing loans they did not originate and do not own most likely view servicing as a stand-alone line of business. In this case they would most likely choose to service substantially more than 5,000 loans in order to obtain a profitable return on their investment in servicing.
The CFPB does not have the data necessary to precisely estimate the number of small entity non-DIs that would be covered by the exemption. To obtain a rough estimate, the CFPB draws on prior CFPB analysis in the preamble to the 2013 Mortgage Servicing Final Rule estimating that all but 4 percent of non-depository servicers would service, together with affiliates, 5,000 loans or less. This estimate implies that 1,253 (all but 4 percent of 1,305, or 52) non-DI servicers would service 5,000 loans or less. The CFPB determines this to be the best available approximation to the number of non-DI servicers that would not qualify for the exemption, but also recognizes that these figures are rough.
The CFPB estimates that out of 7,675 small entities engaged in servicing, approximately 1 percent (or 113 entities) are not small servicers and would therefore be affected by the rule. While these estimates are somewhat uncertain, the estimate that roughly 1 percent of small entities would be affected implies that it is unlikely that a substantial number of small entities would be affected.
Accordingly, the undersigned certifies that this proposal, if adopted, would not have a significant economic impact on a substantial number of small entities. The CFPB requests comment on the analysis above and requests any relevant data.
Under the Paperwork Reduction Act of 1995 (PRA),
This proposed rule would amend 12 CFR part 1024 (Regulation X). The Bureau's OMB control number for Regulation X is 3170-0016 which currently expires on December 31, 2026. As described below, the proposed rule would revise existing information collections and create the following new information collection requirements in Regulation X:
• The proposed rule would require that a servicer provide a delinquent borrower who is performing pursuant to the terms of a forbearance agreement with a written notice containing certain information relating to loss mitigation and the borrower's forbearance when the forbearance is nearing its scheduled end.
• The proposed rule would require that a servicer provide certain additional information to delinquent borrowers in early intervention notices, such as the name of the investor on the borrower's loan, a brief description of each type of loss mitigation option that is generally available from that owner or assignee, as well as a website and telephone number where the borrower can obtain information about all of the loss mitigation options that may be available from that investor.
• The proposed rule would require that a servicer send loss mitigation determination notices to borrowers when a servicer offers a borrower a loss mitigation option and when a servicer denies the borrower for any loss mitigation option. Currently, servicers are required to send detailed determination notices only for denials of loan modifications. The proposed rule would (a) require more detail in the notices specifying the borrower-provided inputs that served as the basis for the determination, (b) provide contact information that the borrower can use to access a list of non-borrower provided inputs, if any, used by the servicer in making the loss mitigation determination, (c) require certain disclosures regarding loss mitigation options that may remain available to the borrower, and (d) require that the servicer inform the borrower as to whether an offer will still be available if the borrower requests to be reviewed for other loss mitigation options.
• The proposed rule would expand the information that is currently required to be disclosed when a servicer denies a borrower for a loss mitigation option due to missing documents and information not in the borrower's control, to include, for example, a list of loss mitigation options that are still available to the borrower.
• The proposed rule would require that certain written early intervention and loss mitigation communications contain statements making a borrower aware of the availability of translation of the notices into non-English languages, that all such communications be made available to borrowers in both English and Spanish, and that servicers make available additional translations and oral interpretations under certain other circumstances.
The collections of information contained in this proposed rule, and
Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information will have practical utility; (b) The accuracy of the Bureau's estimate of the burden of the collection of information, including the validity of the methods and the assumptions used; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Comments submitted in response to this notification will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record.
If applicable, the final rule will inform the public of OMB's approval of the new information collection requirements proposed herein and adopted in the final rule. If OMB has not approved the new information collection requirements prior to publication of the final rule in the
The CFPB seeks comment on all aspects of this proposed rule. Additionally, the CFPB specifically requests comments or information on the following:
Are there ways in which the early intervention and loss mitigation provisions in Regulation X could be further simplified or streamlined?
Are there different or additional policy and procedure requirements that might be needed in § 1024.38 in light of the proposed changes?
What additional information or clarification, if any, should the CFPB consider for the continuity of contact provisions in § 1024.40?
The CFPB preliminarily intends that, if any provision of the final rule, or any application of a provision, is stayed or determined to be invalid, the remaining provisions or applications are severable and shall continue to be in effect.
Banks, banking, Condominiums, Consumer protection, Credit unions, Housing, Mortgage insurance, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations.
For reasons set forth in the preamble, the CFPB proposes to amend Regulation X, 12 CFR part 1024, as set forth below:
12 U.S.C. 2603-2605, 2607, 2609, 2617, 5512, 5532, 5581.
(1) A borrower expresses an interest in pursuing a loss mitigation option;
(2) A borrower indicates that they have experienced a hardship and asks the servicer for assistance with making payments, retaining their home, or avoiding foreclosure; or
(3) In response to a servicer's unsolicited offer of a loss mitigation option, a borrower expresses an interest in pursuing either the loss mitigation option offered or any other loss mitigation option.
(b) * * *
(9) Making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, or advancing the foreclosure process, in violation of § 1024.41(f) or (j).
(10) Moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of § 1024.41(f) or (j).
(11) Any other error relating to the servicing of a borrower's mortgage loan, including failure to make an accurate loss mitigation determination on a borrower's mortgage loan.
(b) * * *
(2)
(iv) Identify documents and information, if any, that a borrower is required to submit for the servicer to make a loss mitigation determination;
(v) Properly evaluate a borrower who makes a request for loss mitigation assistance for all loss mitigation options for which the borrower may be eligible pursuant to any requirements established by the owner or assignee of the borrower's mortgage loan and, where applicable, in accordance with the requirements of § 1024.41; and
(vi) Promptly identify and obtain documents or information not in the borrower's control that the servicer requires to determine which loss mitigation options, if any, to offer the borrower.
(3) * * *
(iii) Facilitate the sharing of accurate and current information regarding the status of any evaluation of a borrower's request for loss mitigation assistance and the status of any foreclosure proceeding among appropriate servicer personnel, including any personnel assigned to a borrower's mortgage loan account as described in § 1024.40, and appropriate service provider personnel, including service provider personnel responsible for handling foreclosure proceedings.
(c) * * *
(1)
(a)
(b) * * *
(2) * * *
(ii) The telephone number to access servicer personnel assigned pursuant to § 1024.40(a), the telephone number where the borrower can obtain a list of all loss mitigation options that may be available from the owner or assignees of the borrower's loan, the servicer's mailing address, and a website to access a list of all loss mitigation options that may be available from the owner or assignee of the borrower's mortgage loan;
(iii) The name of the owner or assignee of the borrower's mortgage loan, and a statement providing a brief description of each type of loss mitigation option that is generally available from the owner or assignee of the borrower's mortgage loan;
(iv) If applicable, a statement informing the borrower how to make a request for loss mitigation assistance; and
(v) * * *
(3) Model clauses. Model clause MS-4(C), in appendix MS-4 to this part may be used to comply with the requirements of this paragraph (b).
(e)
(2)
(i) Establish or make good faith efforts to establish live contact with the borrower. During such live contact, the servicer shall inform the borrower of the following information:
(A) The date the borrower's current forbearance is scheduled to end; and
(B) The availability of loss mitigation options, if appropriate, as set forth in paragraph (a) of this section.
(ii) Shall send the borrower a written notice with the following information:
(A) The date the borrower's current forbearance is scheduled to end; and
(B) The content of the written notice as set forth in paragraphs (b)(2)(i)-(v) of this section.
(3)
(b) * * *
(1) * * *
(ii) Any actions the borrower must take to be evaluated for such loss mitigation options, and whether the borrower has the right to appeal the loss mitigation determination as well as the amount of time the borrower has to file such an appeal and any requirements for making an appeal, as provided for in paragraph (h) of this section;
(iii) The status of the servicer's review of any request for loss mitigation assistance from the borrower to the servicer;
(iv) The circumstances under which the servicer may make a referral to foreclosure or advance the foreclosure process; and
(2) * * *
(ii) All written information the borrower has provided to the servicer, and if applicable, to prior servicers, in connection with a request for loss mitigation assistance;
(a)
(b) [RESERVED]
(c)
(i) The amount of time the borrower has to accept or reject an offer of a loss mitigation option as provided for in paragraph (e) of this section, if applicable;
(ii) A notification, if applicable, that the borrower has the right to appeal the loss mitigation determination as well as the amount of time the borrower has to file such an appeal and any requirements for making an appeal, as provided for in paragraph (h) of this section.
(iii) The specific reason or reasons for the servicer's determination to offer or deny each such loss mitigation option;
(iv) The key borrower-provided inputs, if any, that served as the basis for the determination;
(v) A telephone number, mailing address, and website, where the borrower can access a list of the non-borrower provided inputs, if any, used by the servicer in making the loss mitigation determination;
(vi) A list of all other loss mitigation options that may remain available to the borrower, if any, including a clear statement describing the next steps the borrower must take to be reviewed for those loss mitigation options or, if applicable, a statement that the servicer has reviewed the borrower for all available loss mitigation options and none remain;
(vii) A list of any loss mitigation options that the servicer previously offered to the borrower that remain available but that the borrower did not accept;
(viii) A telephone number where the borrower can obtain a list of all loss mitigation options that may be available from the owner or assignee of the borrower's loan, pursuant to § 1024.39(b)(2)(ii), and a website to access a list of all loss mitigation options that may be available from the owner or assignee of the borrower's mortgage loan, pursuant to § 1024.39(b)(2)(ii);
(ix) The name of the owner or assignee of the borrower's mortgage loan;
(x) If there is a loss mitigation offer, a statement informing the borrower whether the offered option will still be available if the borrower requests to be reviewed for other loss mitigation options prior to accepting or rejecting the offer; and
(xi) If there is a loss mitigation offer of a forbearance, a statement informing the borrower of the specific payment terms and duration of the forbearance.
(2)
(ii) If the servicer has regularly taken steps to obtain required documents or information from a party other than the borrower or the servicer, but the servicer has been unable to obtain such documents or information for at least 90 days and the servicer, in accordance with applicable requirements established by the owner or assignee of the borrower's mortgage loan, is unable to determine which loss mitigation options, if any, it will offer the borrower without such documents or information, the servicer may deny the request for loss mitigation assistance and provide the borrower with a written notice in accordance with § 1024.41(c)(2)(iii).
(iii) The servicer shall provide the borrower a written notice, informing the borrower:
(
(
(
(
(
(3)
(i) The amount of time the borrower has to accept or reject an offer of a loss mitigation program as provided for in paragraph (e) of this section; and
(ii) The information required by paragraphs (c)(1)(vi) and (ix).
(d) [RESERVED]
(e)
(2)
(ii)
(iii
(f)
(i) A borrower's mortgage loan obligation is more than 120 days delinquent;
(ii) The foreclosure is based on a borrower's violation of a due-on-sale clause; or
(iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder.
(2)
(i)
(ii)
(3)
(g) [RESERVED]
(h)
(2)
(3)
(4)
(i)
(j)
(k)
(ii)
(2) [RESERVED]
(3)
(4)
(i)
(ii)
(5)
The revisions read as follows:
1.
2.
3.
4.
1.
2.
1.
1. A qualified written request is a written notice a borrower provides to request a servicer either correct an error relating to the servicing of a mortgage loan or to request information relating to the servicing of the mortgage loan. A qualified written request is not required to include both types of requests. For example, a qualified written request may request information relating to the servicing of a mortgage loan but not assert that an error relating to the servicing of a loan has occurred.
2. A qualified written request is just one form that a written notice of error or information request may take. Thus, the error resolution and information request requirements in §§ 1024.35 and 1024.36 apply as set forth in those sections irrespective of whether the servicer receives a qualified written request.
1. Service providers may include attorneys retained to represent a servicer or an owner or assignee of a mortgage loan in a foreclosure proceeding, as well as other professionals retained to provide appraisals or inspections of properties.
1.
2.
Section 1024.38—General Servicing Policies, Procedures, and Requirements.
1.
1.
2.
3.
i.
ii.
iii.
iv.
4.
5.
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1.
1.
2.
3.
1.
1.
i. Assume a mortgage loan obligation with a monthly billing cycle and monthly payments of $2,000 representing principal, interest, and escrow due on the first of each month.
A. The borrower fails to make a payment of $2,000 on, and makes no payment during the 36-day period after, January 1. The servicer must establish or make good faith efforts to establish live contact not later than 36 days after January 1—
B. The borrower makes no payments during the period January 1 through April 1, although payments of $2,000 each on January 1, February 1, and March 1 are due. Assuming it is not a leap year; the borrower is 90 days delinquent as of April 1. The servicer may time its attempts to establish live contact such that a single attempt will meet the requirements of § 1024.39(a) for two missed payments. To illustrate, the servicer complies with § 1024.39(a) if the servicer makes a good faith effort to establish live contact with the borrower, for example, on February 5 and again on March 25. The February 5 attempt meets the requirements of § 1024.39(a) for both the January 1 and February 1 missed payments. The March 25 attempt meets the requirements of § 1024.39(a) for the March 1 missed payment.
ii. A borrower who is performing as agreed under a loss mitigation option designed to bring the borrower current on a previously missed payment is not delinquent for purposes of § 1024.39.
iii. During the 60-day period beginning on the effective date of transfer of the servicing of any mortgage loan, a borrower is not delinquent for purposes of § 1024.39 if the transferee servicer learns that the borrower has made a timely payment that has been misdirected to the transferor servicer and the transferee servicer documents its files accordingly.
iv. A servicer need not establish live contact with a borrower unless the borrower is delinquent during the 36 days after a payment due date. If the borrower satisfies a payment in full before the end of the 36-day period, the servicer need not establish live contact with the borrower. For example, if a borrower misses a January 1 due date but makes that payment on February 1, a servicer need not establish or make good faith efforts to establish live contact by February 6.
2.
3.
4.
i.
A. A servicer provides information about the availability of loss mitigation options to a borrower who notifies a servicer during live contact of a hardship for which a loss mitigation option may be available.
B. A servicer does not provide information about the availability of loss mitigation options to a borrower who has missed a January 1 payment and notified the servicer that full late payment will be transmitted to the servicer by February 15.
ii.
5.
6.
1.
1.
1.
2.
3.
i. A servicer services mortgage loans for two different owners or assignees of mortgage loans. Those entities each have different loss mitigation programs. loss mitigation options not offered by the owner or assignee of the borrower's mortgage loan are not available to the borrower; or
ii. The owner or assignee of a borrower's mortgage loan has established pilot programs, temporary programs, or programs that are limited by the number of participating borrowers. Such loss mitigation options are available to a borrower. However, a servicer evaluates whether a borrower is eligible for any such program consistent with criteria established by an owner or assignee of a mortgage loan. For example, if an owner or assignee has limited a pilot program to a certain geographic area or to a limited number of participants, and the servicer determines that a borrower is not eligible based on any such requirement, the servicer shall inform the borrower that the investor requirement for the program is the basis for the denial.
4.
5.
1.
i. Where foreclosure procedure requires a court action or proceeding, a document is considered the first notice or filing if it is the earliest document required to be filed with a court or other judicial body to commence the action or proceeding (
ii. Where foreclosure procedure does not require an action or court proceeding, such as under a power of sale, a document is considered the first notice or filing if it is the earliest document required to be recorded or published to initiate the foreclosure process.
iii. Where foreclosure procedure does not require any court filing or proceeding, and also does not require any document to be recorded or published, a document is considered the first notice or filing if it is the earliest document that establishes, sets, or schedules a date for the foreclosure sale.
iv. A document provided to the borrower but not initially required to be filed, recorded, or published is not considered the first notice or filing on the sole basis that the document must later be included as an attachment accompanying another document that is required to be filed, recorded, or published to carry out a foreclosure.
1.
2.
3.
4.
5.
6.
7.
ii. If a servicer receives a request for loss mitigation assistance from a potential successor in interest and elects not to comply with the foreclosure process procedural safeguards in § 1024.41(f)(2) with respect to that person before confirming that person's identity and ownership interest in the property, the servicer must comply with those foreclosure process procedural safeguards with respect to that person as soon as that person becomes a confirmed successor in interest and must treat the request for loss mitigation assistance as if it had been received on the date that the servicer confirmed the successor in interest's status.
1.
2.
3.
1.
1.
1.
ii. A transferee servicer must, in accordance with § 1024.41(f)(2)(ii), regularly take steps to identify and obtain any information and documents necessary from the borrower to determine which loss mitigation options, if any, it will offer to the borrower. In the transfer context, a transferee servicer must ensure that a borrower is informed of any changes to the loss mitigation determination process, such as a change in the address to which the borrower should submit documents and information, as well as ensuring that the borrower is informed about which documents and information are needed by the transferee servicer to determine which loss mitigation options, if any, it will offer to the borrower.
iii. A borrower may provide documents and information to a transferor servicer after the transfer date. Consistent with policies and procedures maintained pursuant to § 1024.38(b)(4), the transferor servicer must timely transfer, and the transferee servicer must obtain, such documents and information.
2.
3.
1.
1.
2.
1.
1. [RESERVED]
2. [RESERVED]
3.
Office of Postsecondary Education, Department of Education.
Notice of proposed rulemaking.
The Secretary is proposing to amend the Student Assistance General Provisions regulations governing participation in the student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended (HEA), to promote program integrity and institutional quality. These regulations would clarify, update, and consolidate certain provisions that apply to distance education; the return of title IV, HEA funds; and the Federal TRIO programs. A brief summary of the proposed rule is available at
We must receive your comments on or before August 23, 2024.
Comments must be submitted via the Federal eRulemaking Portal at
Gregory Martin, U.S. Department of Education, Office of Postsecondary Education, 400 Maryland Avenue SW, 5th floor, Washington, DC 20202. Telephone: (202) 205-4595. Email:
If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.
These proposed regulations address three substantive areas: distance education, return of title IV funds (R2T4), and the Federal TRIO programs (TRIO). The Department is addressing these areas in an effort to help ensure students are well served by the institutions of higher education they attend, increase access to postsecondary education for disadvantaged students, and ensure that Federal Student Aid programs work in the best interests of students. As the three distinct topics are structured and addressed independently in this proposed rule, the Department generally intends the rule's provisions to be severable from each other. The Department expects to provide additional detail on severability in the final rule once we consider public comments and finalize the regulatory language.
The proposed distance education regulations would help the Department better measure and account for student outcomes, improve oversight over distance education, and ensure students are receiving effective education by expanding the definition of an
As specifically set forth in each of the areas identified below, the proposed regulations would:
• Amend § 600.2 to: (1) include in the definition of
• Amend the academic year definition in § 668.3 to specify that, for purposes of the title IV, HEA definition of an academic year, asynchronous coursework offered through distance education could only be offered in credit-hour programs.
• Amend § 668.41 to require institutions to report student enrollment in distance education or correspondence courses, using a procedure that would be determined by the Department.
• Amend § 668.21 to allow a student who received a loan disbursement as part of a title IV credit balance, but never began attendance in a payment period or period of enrollment, to repay loan funds they received under the terms of their promissory note.
• Amend § 668.22 to exempt institutions from performing an R2T4 calculation in the event that (1) a student is treated as never having begun attendance; (2) the institution returns all title IV aid disbursed to the student for that payment period or period of enrollment; (3) the institution refunds all institutional charges to the student for that payment period or period of enrollment; and (4) the institution writes off or cancels any current year balance owed by the student to the institution due to the institution's return of title IV funds to the Department.
• Amend § 668.22 to codify that an institution that is required to take attendance must, within 14 days of a student's last date of attendance, document the student's withdrawal date.
• Amend § 668.22 to require an institution to take attendance for each course offered entirely through distance education, except for dissertation research courses that are part of a doctoral program.
• Amend § 668.22 to allow a confined or incarcerated individual, in a term-based setting, to not have to come back from a leave of absence to where the student left off, and instead, allow the individual to return at a different point in their prison education program (PEP).
• Amend § 668.22 to streamline and make consistent institutions' calculation of the percentage of the payment period completed for a clock-hour program.
• Amend § 668.22 to consider a module part of the payment period used in the denominator of the R2T4 calculation only when a student begins attendance in the module.
• Amend § 643.3 to expand who would be able to participate in a Talent Search project. Eligibility would be extended to an individual who is enrolled in or seeks to enroll in a high school in the United States, territories, or Freely Associated States.
• Amend § 644.3 to expand who would be able to participate in an Educational Opportunity Centers project. Eligibility would be extended to an individual who is enrolled in or seeks to enroll in a high school in the United States, territories, or Freely Associated States.
• Amend § 645.3 to expand who would be able to participate in a Regular or a Math and Science Upward Bound project. Eligibility (other than for direct cash stipends) would be extended to an individual who is enrolled in or seeks to enroll in a high school in the United States, territories, or Freely Associated States.
As further detailed in the
We invite you to submit comments regarding these proposed regulations. To ensure that your comments have maximum effect in developing the final regulations, we urge you to clearly identify the specific section or sections of the proposed regulations that each of your comments addresses and to arrange your comments in the same order as the proposed regulations. The Department will not accept comments submitted after the comment period closes. To ensure that we do not receive duplicate copies, please submit your comments only once.
The following tips are meant to help you prepare your comments and provide a basis for the Department to respond to issues raised in your comments in the notice of final regulations (NFR):
• Be concise but support your claims.
• Explain your views as clearly as possible and avoid using profanity.
• Refer to specific sections and paragraphs of the proposed regulations throughout your comments, particularly in any headings that are used to organize your submission.
• Explain why you agree or disagree with the proposed regulatory text and support these reasons with data-driven evidence, including the depth and breadth of your personal or professional experiences.
• Where you disagree with the proposed regulatory text, suggest alternatives, including regulatory language, and your rationale for the alternative suggestion.
• Do not include personally identifiable information (PII), such as Social Security numbers or loan account numbers, for yourself or for others in your submission. Should you include any PII in your comment, such information may be posted publicly.
In instances where individual submissions are bundled together (submitted as a single document or packaged together), the Department will post all of the substantive comments included in the submissions along with the total comment count for that document or package to
The Department may, at its discretion, decide not to post or to withdraw certain comments and other materials that are computer-generated. Comments containing the promotion of commercial
We may not address comments outside of the scope of these proposed regulations in the NFR. Generally, comments that are outside of the scope of these proposed regulations are comments that do not discuss the content or impact of the proposed regulations or the Department's evidence or reasons for the proposed regulations, which includes topics negotiated but not included in this NPRM.
Comments that are submitted after the comment period closes will not be posted to
Comments containing personal threats will not be posted to
We invite you to assist us in complying with the specific requirements of Executive Orders 12866, 13563, and 14094 and their overall requirement of reducing regulatory burden that might result from these proposed regulations. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the Department's programs and activities.
During and after the comment period, you may inspect public comments about these proposed regulations by accessing
Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand. The Secretary invites comments on how to make the regulation easier to understand, including answers to questions such as the following:
• Are the requirements in the proposed regulations clearly stated?
• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?
• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing) aid or reduce its clarity?
• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading; for example, § 668.2 General definitions.)
• Could the description of the proposed regulations in the
• What else could we do to make the proposed regulation easier to understand?
To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the
The legal basis for these proposed regulations is title IV of the Higher Education Act of 1965, as amended (HEA), which authorizes the Federal government's major student financial aid programs that are the primary source of direct Federal support to students pursuing postsecondary education. 20 U.S.C. 1070-1099d (sections 400-499 of the HEA). Institutions participating in title IV programs must satisfy certain threshold and ongoing requirements,
The definition of “distance education” in § 600.2 lists the technologies that allow for instruction to occur between instructors and students who are separated. It also requires that such education must include regular and substantive interaction between the two parties and explains what such interaction must entail. With the development of the technology that supports distance learning and particularly in the wake of the pandemic, the Department observed that the use of distance education at eligible institutions has increased and is likely to continue to do so. However, as the Department noted in the distance education issue paper and during the negotiated rulemaking on this issue, we have been hampered in the ability to fully understand students' participation in distance education, account for differences in outcomes and conduct oversight, accurately measure taxpayer expenditures on distance education programs, and gauge the success of such education.
The other distance education issue the Department seeks to address with this rulemaking involves clock-hour programs, which traditionally have required considerable hands-on
The R2T4 regulations govern the process institutions must conduct when a title IV recipient ceases attendance during a payment period (term) or a period of enrollment. Title IV funds are awarded to a student under the assumption that the student will attend school for the entire period for which the funds were awarded. When a student withdraws, they may no longer be eligible for the full amount of title IV funds that they were originally scheduled to receive and that the institution disbursed. After an institution completes an R2T4 calculation, funds that were awarded to the student may need to be returned to the Department.
R2T4 is consistently in the Department's top 10 compliance findings for schools and yields complex and challenging questions. The Department proposed the regulatory changes in this section to address some of the issues in the regulations that have been identified in these findings.
The TRIO programs are Federal outreach and student services programs designed to identify and provide services for individuals from disadvantaged backgrounds. Individuals from disadvantaged backgrounds include low-income individuals, first-generation college students, students with disabilities, students with limited English proficiency, students experiencing homelessness, and students in foster care. The TRIO programs are designed to help students from disadvantaged backgrounds progress through the academic pipeline from middle school to postbaccalaureate programs.
Current regulations limit TRIO programs to an individual that is a citizen or national of the United States, a permanent resident of the United States, a permanent resident of Guam, the Northern Mariana Islands, the Trust Territory of the Pacific Islands (Palau), or a resident of the Freely Associated States (the Federated States of Micronesia or the Republic of the Marshall Islands). See §§ 643.3(a)(1)(i) through (v), 644.3(a)(1)(i) through (v), and 645.3(a)(1) through (5). An individual is also currently eligible to participate in the TRIO programs if they are in the United States for other than a temporary purpose and provide evidence from the Immigration and Naturalization Service (currently Department of Homeland Security) of his or her intent to become a permanent resident (
The Department's proposed changes would impact the three TRIO programs that serve students in a pre-postsecondary education context: the Upward Bound program, the Talent Search program, and the Educational Opportunity Centers program. The Upward Bound program prepares high school students for college while the Talent Search program encourages participants to complete secondary and postsecondary education. The Educational Opportunity Centers program provides financial and academic counseling to qualified individuals, generally over the age of 19, though individuals under 19 are eligible to receive program services if they meet the requirements of current 34 CFR 644.3(a)(2)(ii), who want to enter or continue a postsecondary education program. The Department proposes to broaden participation in these three programs by expanding eligibility to all disadvantaged individuals who have enrolled in or who seek to enroll in a high school in the United States, territories, or Freely Associated States, which are the geographic areas served by the TRIO programs. This proposal would allow the three TRIO programs that serve students in the pre-postsecondary education context to serve students who are already receiving or seek to receive public educational services from middle and high schools.
The McNair Scholars program, the Student Support Services program and the Training Program for Federal TRIO Programs would not be impacted by these proposed changes. The Department proposes to limit this eligibility expansion to the three TRIO programs that serve students in the pre-postsecondary context, because the Department believes that all who attend high school in the United States should have the same access to TRIO services. The TRIO provisions would additionally eliminate the operational burden of separating out students who are enrolled in public schools but not eligible for TRIO services under the current rule, enabling a greater focus on delivering educational services to all students. The proposed rule change would assist students on their path to and attainment of postsecondary education.
The Department has significantly engaged the public in developing this NPRM, as described here and below in the
On March 24, 2023, The Department announced public hearings at which interested parties could comment on the topics suggested by the Department or suggest additional topics for consideration.
The Department also accepted written comments on possible regulatory provisions that were submitted to the Department by interested parties and organizations as part of the public hearing process. You may view the written comments submitted in response to the March 23, 2023,
On November 29, 2023, the Department published a notice in the
Section 492 of the HEA requires the Secretary to obtain public involvement in the development of proposed regulations affecting programs authorized by title IV of the HEA. After obtaining extensive input and recommendations from the public, including individuals and representatives of groups involved in the title IV, HEA programs, the Department, in most cases, must engage in the negotiated rulemaking process before publishing proposed regulations in the
On November 29, 2023, the Department published a notice in the
The Committee included the following members, representing their respective constituencies:
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The Department also invited nominations for a Federal TRIO Programs Subcommittee (Subcommittee). The Subcommittee members were not voting members of the Committee unless otherwise designated to represent a constituency; however, they provided a recommendation for TRIO and served as a resource to the Committee. The Subcommittee members were:
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The Committee met for three rounds of negotiations, each of which was held over four days between January and March 2024. The Subcommittee met on January 12 and February 9. At its first meeting, the Committee reached agreement on its protocols and proposed agenda. The protocols provided, among other things, that the Committee would operate by consensus. The protocols defined consensus as no dissent by any member of the Committee and noted that consensus checks would be taken issue by issue.
The Committee reviewed and discussed the Department's drafts of regulatory language, as well as alternative language and suggestions proposed by Committee members. During each negotiated rulemaking session, provided opportunities for public comment at the end of each day. Additionally, during and between each negotiated rulemaking session, non-Federal negotiators obtained feedback from their stakeholders that they shared with the negotiating committee.
At the meeting on March 4, 2024, the Committee reached consensus on the Department's proposed regulations on TRIO. The Department has published the proposed TRIO amendatory language in this NPRM without substantive alteration to the agreed-upon proposed regulations. The Committee did not reach consensus on the other issues considered.
For more information on the negotiated rulemaking sessions please visit
We discuss substantive issues under the sections of the proposed regulations to which they pertain. Generally, we do not address proposed regulatory provisions that are technical or otherwise minor in effect.
Establishing a virtual location as a type of
In addition, having distinct virtual locations would allow the Department to account for situations in which an institution ends its online offerings irrespective of what is occurring at a school's brick-and-mortar campus or if an institution ended its brick-and-mortar offerings but continued its online offerings. This would allow the Department to monitor an institution's compliance with close-out requirements, consistent with the monitoring done for closures of brick-and-mortar institutions and locations. Separately identifying virtual locations would also provide greater protection for students if an institution offering both distance education and in-person instruction suspends coursework in one modality but maintains the other. Students whose modality has been discontinued and who may not wish to, or may not be able to, continue in the alternative modality, would be eligible for closed school discharges. For example, students that enrolled in an on-campus program may have done so with the expectation that they would be instructed in person, and they may not have otherwise chosen an online program. Similarly, a student who enrolled in an online program may not be inclined or able to move into an on-campus program for a number of reasons, such as preference for a flexible schedule, not living near the physical campus, or a preference for online instruction. This regulatory change will provide a clear mechanism for providing relief.
Although the definition of a virtual location refers primarily to programs offered entirely through distance education, the Department proposes to include in the definition an exception for programs that have limited requirements for students to attend on campus activities, including preparation activities and residential periods of instruction of 90 days or less. These exceptions are intended to prevent institutions from circumventing the requirement to report an additional location by requiring a minimal amount of on-campus or residential activities.
The Department notes that the proposed concept of a virtual
The Department has long had concerns about allowing clock hours offered through distance education to count toward a student's eligibility for title IV, HEA funds, particularly regarding an institution's ability to adequately identify true engagement with academic coursework and monitor how long that engagement took place. However, in the September 2, 2020, final rule on distance education, the Department was persuaded that clock hours completed through asynchronous instruction could be permitted to count toward a student's title IV eligibility as long as each clock hour offered asynchronously was adequately tracked through appropriate technology (85 FR 54742).
Asynchronous learning activities often require a level of technology that schools lack or fail to meet, resulting in substandard education consisting of students having to learn material on their own. For example, the Department has found during program reviews and from speaking to students that asynchronous learning in clock-hour programs has often consisted of playing videos, reading assignments or scrolling through pages, without the meaningful interaction with the coursework or instructors that is necessary for mastery in hands-on job training programs and the development of important skills such as critical thinking and effective communication. The National Accrediting Commission of Career Arts and Sciences (NACCAS), a Department-recognized accreditor of cosmetology schools, shows another example in its definition of asynchronous learning, which includes “scrolls through reading material” and “works on assignments” as a learning activity.
Asynchronous instruction in clock-hour programs also does not foster direct interaction between students and instructors, which can make it difficult for students to receive the training necessary for the types of occupations for which clock-hour programs train students. Students have repeatedly informed the Department during program reviews and oversight activities that the lack of direct engagement with instructors hampered their ability to obtain the skills necessary to pass certification exams or obtain a job in their field. The Department's observations during its compliance work are consistent with studies performed on the issue. As explained in the Regulatory Impact Analysis, surveys and evaluations of job training programs that are typically offered in clock hours have shown general concerns that distance education is not sufficient to provide learners with the type of “hands-on” experience that they need and expect in those kinds of programs.
The Department proposes to define a “distance education course” as comprising only distance education as
During negotiations, non-Federal negotiators proposed collecting student-level distance education information. While the Department did not take the proposal as written, this change would effectuate the intent of the proposal, and we would explain the details of this reporting in guidance pertaining to the operation of the Department's systems.
The Department proposes to implement this provision no earlier than July 1, 2026, given the significant amount of change that would be required in Federal Student Aid (FSA)'s systems. This will also provide institutions with sufficient time to make any necessary changes to their own systems and prepare to report the additional information to the Department. Institutions already report information regarding distance education enrollment at the aggregate level for IPEDS, however the Department understands that this requirement may require institutions to update their systems for reporting distance education enrollment on a student-by-student basis.
The Department proposes to change these requirements to allow a school to treat a student as having never attended during a payment period or period of enrollment if the institution: (1) Treats the student as never having begun attendance; (2) Returns all of a student's title IV, HEA funds for that period; (3) Refunds all the student's institutional charges for that period; and (4) Writes off or cancels any current year balance owed to the institution that results from the return of title IV funds. This would permit institutions that wish to maintain generous tuition refund policies to be exempt from performing an R2T4 calculation in cases where students are made financially whole after withdrawing. This would also result in these withdrawn students having greater Pell Grant lifetime eligibility and reduce the likelihood of these students owing a debt to the Department or the institution because the institution would be required to write off or cancel any current year balance owed to the institution that resulted from the return of title IV funds.
The proposed changes would address unique circumstances that currently constitute a withdrawal and may trigger return of funds by the school or student. While the Department does not have the authority to prohibit an institution from collecting a debt owed by a student, the Department seeks to incentivize institutions to not collect debts resulting from a student withdrawal by providing flexibility in conducting R2T4 calculations when certain conditions are met. The Department is aware that some institutions maintain policies that allow students to receive full tuition and fee refunds in certain circumstances, for example, if the student attended only a few days during a payment period or withdrew for medical reasons. These policies allow students who withdraw to avoid institutional debts and make it easier for those students to eventually re-enroll and complete their programs, whether at the same institution or elsewhere.
Use of these generous tuition refund policies would be at the discretion of the institution. The Department, however, intends for the reduced burden resulting from this exemption from the R2T4 process to serve as encouragement for institutions to develop and maintain these generous refund policies for their students.
Current paragraph (l)(3) defines the “date of the institution's determination that the student withdrew” for an institution that is not required to take attendance. Because the proposed provision in § 668.22 applies only to institutions that are required to take attendance, the Department proposes to remove the inapplicable cross-reference.
The Department believes it is illogical to not require an institution to use a student's actual last date of attendance as a withdrawal date when the institution already has the mechanism in place for making that determination. Consequently, to increase the accuracy of return calculations in distance education courses, the Department proposes to require institutions to take attendance in such courses for R2T4 purposes. Schools would be required to use actual attendance data to determine a withdrawal date for students enrolled entirely in online courses for a particular payment period or period of enrollment. Institutions will be able to document the withdrawal date by documenting “academic attendance” as required under § 668.22(b)(1). Under § 668.22(l)(7)(i), academic attendance must include academic engagement as defined in § 600.2. This would increase the accuracy of R2T4 calculations for such students, limit instances of inaccurate calculations and the potential for gaming R2T4 provisions by schools, and better protect student and taxpayer funds.
During negotiations the Department heard that dissertation research courses for doctoral candidates have a unique format and are structured in such a way that it would be difficult for an institution to meet an attendance-taking
The Department has observed that, when an institution uses the cumulative method, many times the percentage of funds earned by the institution is much larger than the time actually attended, because the institution is permitted to carry the student into the next payment period and use those additional scheduled hours. This results in a much smaller return of title IV funds, which ultimately hurts a student who had to withdraw from a program. The Department does not believe this is a desirable result. In addition, in its compliance efforts, the Department has seen this as an area of abuse in which some institutions carry students who are not attending into a subsequent payment period to lower the amount of title IV aid they have to return.
To promote consistency across all calculations, the Department proposes to change how institutions determine the percentage of the payment period completed for a clock-hour program by using only the payment period method. Providing one consistent way to calculate the percentage of the payment period completed would simplify R2T4 policy, reduce complexity and confusion, ensure that students are treated consistently, and eliminate an area of potential abuse.
The “freeze date” concept is important under current requirements because without this date, schools would find it very difficult to determine the denominator of the R2T4 calculation using the exact coursework a student was scheduled to attend at the time of their withdrawal. Currently, regulations
The Department proposes in § 668.22(l)(9) to simplify the determination by only including the days in a module in the denominator of the calculation if the student actually attends the module. The Department believes this will reduce complexity and errors. Institutions would no longer need to use a freeze date or differentiate between Pell and Direct loan recipients.
The change would provide consistency across title IV programs, simplify when and how to count scheduled days in a modular setting, and reduce burden for institutions and the Department by eliminating the need for a “freeze date” concept.
The Talent Search program focuses on completing high school and increasing postsecondary education attainment. The Department's proposal to expand eligibility to all individuals who are enrolled in or seek to enroll in high school would align with the statutory goal of TRIO serving individuals from disadvantaged backgrounds in order to “prepare them for a program of postsecondary education.” This expansion of eligibility would also better enable grantees to serve students from groups that are traditionally underrepresented in postsecondary education, such as students from low-income backgrounds who would be first-generation college students, which is among the statutory goals of the Talent Search program (section 402B of the HEA). In addition, the Committee reached consensus on this provision.
Although the Educational Opportunity Centers program is primarily focused on increasing the number of adult participants who enroll in postsecondary education institutions, the program also supports high school seniors who are transitioning into college. The Department's proposal to expand eligibility to individuals who are enrolled in or seek to enroll in high school would align with the statutory goal of TRIO serving individuals from disadvantaged backgrounds on the path toward postsecondary education. This expansion of eligibility would also better enable grantees to serve students from groups that are traditionally
Although the Upward Bound program is primarily focused on preparing participants for college, a precursor to enter college is obtaining a high school diploma. The Department proposes to expand eligibility to individuals who are enrolled in or seek to enroll in high school, without regard to their citizenship status, to align the eligibility requirements with the statutory goal of TRIO serving individuals from disadvantaged backgrounds on the path toward postsecondary education. This expansion of eligibility would also better enable grantees to serve students from groups that are traditionally underrepresented in postsecondary education such as students from low-income backgrounds and who would be first-generation college students, which is among the statutory goals of the Upward Bound program (section 402C of the HEA). In addition, the Committee reached consensus on this provision.
The Department's proposed expansion of student services for the Upward Bound program would not include providing direct cash stipends to individuals who do not meet the requirements of § 645.3(a)(1) through (5) because that would be contrary to Federal statute. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) prohibits “Federal public benefits” from being awarded to persons who are not able to demonstrate certain types of eligible noncitizen statuses as a “qualified alien” under 8 U.S.C. 1641(b). PRWORA defines a “Federal public benefit” to include “any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States.” 8 U.S.C. 1611(c)(1)(B). As stated within the Department of Health and Human Services (HHS) Interpretation of “Federal Public Benefit,” 63 FR 41658 (Aug. 4, 1998), these enumerated benefits exclude “non-postsecondary education programs, such as Head Start and elementary and secondary education.” The 1998 HHS interpretation also contemplates that not all benefits or services provided under certain programs would be considered “Federal public benefits.”
However, in the context of Upward Bound, the Department has determined that direct cash stipends provided to program participants under § 645.42 represent a “similar benefit” to those enumerated benefits under 8 U.S.C. 1611(c)(1)(B) for which, where payment is provided to an “individual, household, or family eligibility unit[,]” falls under the restrictions of PRWORA. Because an individual who fails to meet the requirements of current § 645.3(a)(1) through (5) would generally not be a “qualified alien,” the Department proposes to clarify in § 645.3(a)(6) that individuals who qualify for program participation solely as a result of high school enrollment are not eligible for a direct cash stipend under this program.
Under Executive Order 12866, the Office of Management and Budget (OMB) must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive Order and subject to review by OMB. Section 3(f) of Executive Order 12866, as amended by Executive Order 14094, defines a “significant regulatory action” as an action likely to result in a rule that may—
(1) Have an annual effect on the economy of $200 million or more (adjusted every three years by the Administrator of the Office of Information and Regulatory Affairs (OIRA) for changes in gross domestic product); or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or Tribal governments or communities;
(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues for which centralized review would meaningfully further the President's priorities, or the principles set forth in the Executive Order, as specifically authorized in a timely manner by the Administrator of OIRA in each case.
This proposed regulatory action is a significant regulatory action subject to review by OMB under section 3(f)(4) of Executive Order 12866, as amended by
The Department has also reviewed the regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—
(1) Propose or adopt regulations only on a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and
(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.
Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”
The Department issues these proposed regulations only on a reasoned determination that their benefits would justify their costs. In choosing among alternative regulatory approaches, the Department selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that these regulations are consistent with the principles in Executive Order 13563.
The Department has also determined that this regulatory action does not unduly interfere with State, local, territorial, or Tribal governments in the exercise of their governmental functions.
As required by OMB Circular A-4, the Department compared the proposed regulations to the current regulations. In this regulatory impact analysis, the Department discusses the need for regulatory action, potential costs and benefits, and the regulatory alternatives we considered.
Elsewhere in this section under
The Department has identified a significant need for regulatory action to address inequities and inadequate protections for students and taxpayers in the current regulations.
The HEA and the Department's regulations provide that institutions of higher education may offer programs through distance education. Currently, however, the Department has only very limited data about students enrolled in distance education, which limits the Department's ability to answer important questions about student pathways and outcomes through in-person, distance, and hybrid education. For example, an institution may offer a program that is provided on campus and a related program of the same CIP code that is provided online. The Department is currently unable to distinguish between those two programs in the data it currently receives, which limits its capacity to provide helpful and reliable information—such as College Scorecard program-level data, including debt, earnings, and completion—to students, families, institutions, and the public. This reporting requirement would also improve the Department's ability to determine whether institutions have reached the 50 percent threshold for distance education enrollment announced in Dear Colleague Letter GEN-23-09.
Additionally, because of these limitations, students may be denied relief in the form of closed school discharges that they should be entitled to under the HEA in instances in which an institution ends either on-campus or online learning generally. In such cases, when an institution closes a program, it closes the entire modality through which it has provided students instruction. While some students may be satisfied learning under a different modality, others may have enrolled, at least in part, specifically to access learning through that particular modality. If an institution abruptly closes, under certain conditions, borrowers become eligible for discharges under the HEA. However, the Department is currently unable to provide relief to students whose institution remains open even though the modality of instruction they agreed to when they enrolled has ended.
The proposed regulations would create a “virtual location” for institutions that includes all students who are being instructed primarily through distance education. The proposed regulations also would change institutional reporting requirements to specify a student's distance education status. These changes would enable the Department to obtain better data and more meaningfully compare the outcomes of students, particularly for those who are enrolled in similar programs that are delivered using different modalities. These provisions would also allow borrowers to receive closed school discharge if schools end either their online or on-campus operations. Finally, the additional reporting would allow the Department to better monitor and oversee the aid programs and institutional accrediting agencies by ensuring institutions are receiving appropriate review and approval of distance education offerings.
We further propose, with respect to distance education, revisions to the definition of a clock hour that would improve the integrity of the title IV, HEA programs and better align how programs award clock hours with the requirement in the HEA that distance
Further, as a result of its enforcement efforts, the Department is concerned that asynchronous learning does not sufficiently meet the requirements of a clock-hour program. Through its program reviews, the Department has come to better understand that asynchronous instruction time that has been occurring in clock-hour programs is more similar to preparation in a correspondence course, where students essentially have to learn on their own, than time spent with an instructor in a class, lecture, recitation or in faculty-supervised laboratory, shop training, or internship. The Department is also concerned that asynchronous instruction may not provide the appropriate training for the types of occupations and fields for which clock-hour programs are designed to train students. Surveys and evaluations of job training programs that are typically offered in clock hours show that there are concerns generally that distance education is not sufficient for these types of programs to provide learners with the type of “hands-on” experience that they need and expect.
Finally, the use of asynchronous clock hours allows a student to receive credit for clock hours that do not involve regular and substantive interaction between the student and an instructor, which is a fundamental requirement in the HEA for all distance education programs. The Department remains concerned that as clock-hour programs increasingly shift toward the use of asynchronous clock hours, the likelihood that distance education programs offered using clock hours will not meet the statutory requirements for regular and substantive interaction. Eliminating the use of asynchronous clock hours for title IV, HEA purposes, while continuing to allow synchronous clock hours involving direct instruction provides greater assurance that the statutory requirements for distance education in clock hour programs are met.
The R2T4 regulations govern the process institutions must conduct when a title IV, HEA recipient ceases attendance during a payment period or a period of enrollment. An R2T4 calculation determines, based on the proportion of a payment period or period of enrollment a student completed, whether funds must be returned by the school and/or student, or whether the student is eligible for a post-withdrawal disbursement. R2T4 calculations differ based on academic calendars and program format, including the use of clock hours or credit hours and the use of module courses within terms. R2T4 consistently ranks among the top ten compliance findings for institutions, is the subject of an entire volume of sub-regulatory guidance in the FSA Handbook and yields complex and challenging questions; therefore, the Department believes that there is a need to take regulatory action immediately to update and clarify the regulations.
Currently, when a disbursement of Direct Loan funds is made to a student, but the student does not begin attendance in the payment period or period of enrollment, the loan servicer issues a final demand letter requiring the student to immediately return all Direct Loan funds directly received associated with the payment period or period of enrollment. Some students may not be able to return all Direct Loan funds because they have already used those funds to pay for various noninstitutional educationally related expenses, such as housing. The Department believes there is a need to provide an alternative solution to the final demand letter. Therefore, the Department proposes that a student be able to repay their loans under the terms of their promissory note (
For some institutions, the R2T4 process is filled with errors, including issues such as incorrectly determining the withdrawal date or the number of days in a payment period. To simplify the process for institutions, the Department is proposing a withdrawal exemption in which an institution would not need to conduct an R2T4 calculation if the following conditions are met: (1) the student is treated as never having begun attendance; (2) the institution returns all title IV, HEA aid disbursed to the student for that payment period or period of enrollment; (3) the institution refunds all institutional charges to the student for that payment period or period of enrollment; and (4) the institution writes off or cancels any current year balance owed by the student to the institution due to the institution's return of title IV funds to the Department.
The proposed withdrawal exemption would reduce the likelihood that a student owes money back to the school, allow the student to not exhaust annual and aggregate subsidized aid, including Pell Grants, and reduce the likelihood the student will have a loan balance
The Department's longstanding guidance has been that institutions required to take attendance must, within 14 days of a student's last date of attendance, document the student's withdrawal date. The Department believes that fourteen days is an ample amount of time to document a student's withdrawal date when taking attendance. Enforcement by the Department is hampered because it is not currently codified in regulation. Therefore, to support the Department's enforcement efforts, it is necessary to codify the time frame in regulation.
Accurate withdrawal dates are key to understanding if and how much aid needs to be repaid in the event of a student withdrawal. But students in distance education programs might not formally withdraw since they are not on campus. Currently, courses offered entirely through distance education are not required to take attendance unless the institution is required to do so under § 668.22(b)(2). However, the very nature of distance education requires regular and substantive interaction between the student and instructor, and for title IV, HEA purposes, institutions are required to monitor a student's academic engagement when a student is learning through distance education. To determine actual withdrawal dates and produce the most accurate R2T4 calculations, the Department believes it is necessary to require courses offered entirely through distance education to take attendance.
On July 1, 2023, the Department published final regulations that detailed Pell Grant eligibility for confined or incarcerated individuals in PEPs.
The Department proposes to make changes to the regulations governing leave of absence to allow a student who is incarcerated to not have to return from the leave of absence where the student left off, and instead, the individual could return to a different point in their PEP. This would apply to programs of any structure, including term-based programs. This change would increase flexibility for institutions, and would help boost student retention in PEPs.
As a part of the R2T4 calculation, institutions must determine the percentage of the payment period or period of enrollment the student completed based on scheduled clock hours if enrolled in a clock-hour program. There are currently two ways that institutions can make this determination: the payment period method and the cumulative method. The cumulative method (as described in the Significant Proposed Regulations section) usually results in a significant amount of aid earned by the student compared to the actual time the student attended during the payment period. The Department believes it is necessary to streamline this calculation so that the payment period method is standardized across all clock-hour programs.
In 2021, the Department published final regulations outlining several changes to R2T4 and modules.
The Department believes it is necessary to simplify the determination by only including days in the module if the student actually attends the module. This change would reduce complexity and errors and institutions would no longer need to use a freeze date or differentiate between Pell Grant and Direct loan recipients.
The TRIO programs are Federal outreach and student services programs designed to identify and provide services for individuals from disadvantaged backgrounds. TRIO programs serve and assist low-income individuals, first-generation college students, students with disabilities, students with limited English proficiency, students experiencing homelessness, and students in foster care to progress through the academic pipeline from middle school to postbaccalaureate programs. Limitations in the current regulations do not allow TRIO programs to reach all students in the geographic areas that the programs were meant to serve.
The Department proposes to expand participation in three TRIO programs that serve students in pre-postsecondary education to all disadvantaged individuals who are enrolled in or seek to enroll in a high school in the United States, territories, or Freely Associated States. K-12 public schools must be open to all students regardless of their immigration status. As such, the Department believes that all disadvantaged children who attend high school in the United States should have the same access to TRIO services to assist in their achievement toward the path of postsecondary education. This proposal would also align TRIO programs that serve students in the elementary or secondary context with other Federal K-12 spending programs that allow recipients (such as SEAs and LEAs) to spend funds on K-12 students without regard to immigration status. The provisions in §§ 643.3, 644.3, and 645.3 would eliminate the administrative burden of separating out students who are enrolled in public schools but not eligible for TRIO services under the current rule.
The Department has analyzed the costs and benefits of complying with the proposed regulations. Although many of the associated costs and benefits are not easily quantifiable, the Department currently believes that the benefits derived from the proposed regulations outweigh the associated costs, as discussed in sections 3.B. and 3.C. below.
The proposed regulations, which would apply to over 6,000 postsecondary institutions, would help ensure students are well served by the institutions of higher education they attend, increase access to postsecondary education for disadvantaged students, and ensure that the Federal Student Aid programs work in the best interests of students.
Due to the large number of affected recipients (6,003, as discussed more fully in the discussion of Establishing the Baseline (Section 3.A)), the variation in likely responses to any regulatory change, and the limited information available about current practices, the Department is not able to precisely estimate the likely costs, benefits, and other effects of the proposed regulations. Despite these limitations and based on the best available evidence as explained in the discussion of Establishing a Baseline (Section 3.A), the Department estimates present value net benefits of $148,421,308 over ten years at a 2 percent discount rate. This is equivalent to an annualized net benefit of $16,523,227 over ten years. The proposed regulations are expected to result in estimated costs of $128,216,509 in the first year following publication of the proposed regulations and yield significant benefits beginning in year five as set forth in the below table.
As discussed in the Cost Estimates section (Section 3.B), the Year 1 costs include one-time costs associated with reviewing and making necessary changes to policies, procedures, and training to implement the proposed regulations. In addition to these estimated costs, the Department estimates benefits, which arise from the expanded eligibility for TRIO programs and ensuing long-term benefits to TRIO participants that would result from the proposed rule.
The assumptions, data, methodology, and other relevant materials, as applicable, on which the Department relied in developing its estimates are described throughout this Regulatory Impact Analysis (RIA).
Institutions of higher education would be subject to the proposed regulations. For purposes of establishing a baseline, this includes the number of institutions of higher education participating in programs under title IV of the HEA (such as Direct Loans, Federal Work Study, and Pell grants).
For purposes of this analysis, the Department bases its analysis of “postsecondary entities” on “institutions of higher education” as defined in section 102 of the HEA. It is assumed that 6,003 postsecondary institutions would be impacted by the proposed regulations. Among postsecondary institutions, institutions range from small, private, professional schools with fewer than 5 students enrolled in the fall of 2022 to large, public research universities with enrollments of more than 71,000 students and institutions operating mostly virtually with enrollments in excess of 156,000 students.
It is important to note that, across postsecondary institutions, there is wide variation in the number of students served, the number of employees, administrative structure, and annual revenue. This wide variation makes estimating the effects of the proposed regulations challenging, and the Department notes that the estimates provided are intended to reflect the average burden across the full spectrum of affected entities. As a result, estimates may be lower than the actual burden realized by, for example, larger institutions or institutions with more complex administrative structures, and larger than those actually realized by smaller institutions with less complex administrative structures.
Unless otherwise specified, the Department's model uses mean hourly wages for personnel employed in the education sector as reported by the Bureau of Labor Statistics (BLS)
In addition, throughout this RIA, some described calculations have results that are fractions. To improve readability, the Department presents these results as rounded totals in the text (
The Department invites comment on all estimates provided herein to ensure that they accurately reflect realistic assumptions about average burdens the proposed regulations would impose on the full range of affected entities.
In this section, the Department estimates monetized cost burdens associated with the proposed regulations. To assist the public in reviewing these estimates, the Department has subdivided this analysis, when appropriate, into the relevant subparts. As described below, the Department estimates a first-year cost of $19,046,893, with no estimated costs in subsequent years. The Department estimates proposed changes would result in a total annualized cost of $2,078,849.
The Department estimates that, upon promulgation of the proposed regulations, all affected entities would need time to read and understand the rule. Based on the Department's administrative experience, we assume this would require, on average, six hours from an education administrator (educational administrator (postsecondary), loaded wage rate of $117.32/hour) and six hours from a lawyer (postsecondary, loaded wage rate of $172.76/hour) for each of the 6,003 IHEs. For loan servicers, we assume this would require, on average, six hours from an education administrator (business administrator (Business Operations Specialists loaded wage rate of $85.70/hour)) and six hours from a lawyer (finance sector, loaded wage rate of $197.84/hour) for each of the seven loan servicers. In total, the Department estimates that reading and understanding the proposed rule will have a one-time cumulative cost of approximately $10,458,957 across all institutions of higher education.
As a result of proposed changes to § 668.41 to require institutions to report the enrollment status of students in distance education or correspondence courses, the Department estimates that each IHE will need to review and revise reporting policies and procedures. At the IHE level, we assume this would require half an hour from the education administrator and 1 hour from an administrative assistant (loaded wage rate of $43.58/hour) for each of the 3,732 IHEs that reported offering at least one distance education course. In total, the Department estimates reviewing and revising these procedures will cost approximately $381,560 in the first year across all impacted IHEs.
The proposed changes to the definitions in § 600.2 would remove asynchronous learning from clock-hour programs offered through distance education. The Department believes that there are very few institutions with clock-hour programs that use distance learning to provide portions of the program, because there are few State or professional licensing boards that permit distance learning for clock-hour programs. Based on data available to the Department, there are approximately 8,000 clock-hour programs operating at approximately 1,700 institutions. The Department does not have data available on how many of these institutions or programs are offered through asynchronous learning to estimate costs, and requests comment on these effects.
Proposed changes to § 668.21 would allow students that do not begin attendance at an institution to repay any disbursed loan funds directly received according to the terms of their master promissory note. Under current regulations, borrowers in this situation would receive a demand letter from the
The proposed addition of § 668.22(a)(2)(ii)(A)(
Any institution that used the cumulative method to determine the percentage of the payment period completed for a clock-hour program would be required to update their procedures and policies to only use the payment period method. The Department does not believe that many institutions use the cumulative method, however, for those that do, the Department believes costs would be negligible because institutions would have until July 1, 2025, to update policies. For more information on both methods, please see the applicable “reasons” discussion in the Significant Proposed Regulations section.
Institutions that offer programs with modules would need to update their policies and procedures to account for adjustments in how to determine the denominator in R2T4 calculations. The Department believes this would result in overall cost savings because institutions would no longer need to navigate a complex set of Department rules to determine whether or not the days in a module should be included in an R2T4 calculation. However, the Department does not maintain comprehensive information on the use of modules at eligible postsecondary institutions and therefore cannot estimate the scope of these effects.
Institutions that currently participate in the Second Chance Pell experimental site and that offer eligible PEPs in a term-based setting would need to update policies and procedures to allow more flexibility when students return from a leave of absence. The Department believes the cost would be negligible.
Proposed changes to §§ 643.3, 643.4, and 643.5 would expand eligibility for TS, EOC, and UB to any individual who is enrolled in or seeks to enroll in a high school located in the United States, territories, or Freely Associated States. The Department believes that these proposed changes would require current TS, EOC, and UB grantees to review and revise their participant recruitment and enrollment policies and procedures. At the grantee level, the Department assumes this would require two hours from an education administrator for each of the 2,111 grantees administering TS, EOC, or UB TRIO projects. In total, the Department estimates that revising project procedures would cost approximately $495,325.
The proposed regulations would impose minimal additional costs to TRIO grant recipients under TS, EOC, and UB. While it would increase the number of students who are eligible to participate, the effect is only distributional as the funds provided from Congress and to grantees would be distributed across grantees. This could mean different or additional participants receive the benefits of TRIO services, but it would not affect the overall appropriations.
Eligible grantees that offer the Talent Search program, the Educational Opportunity Centers program, and the Upward Bound program would be required to update their applications to account for students who have enrolled in or who seek to enroll in a high school in the United States, territories, or Freely Associated States. The Department believe costs would be negligible because grantees already have an application process for students to participate in these programs, and we request comment on any costs in this area.
The Department believes that these proposed regulations would likely have a wide range of benefits both for students, parents and caregivers, and the public at large. The discussion that follows discusses the benefits the Department has attempted to quantify and monetize.
In this section, the Department discusses monetizable benefits likely to result from the proposed regulations. In total, the Department estimates, after accounting for anticipated costs resulting from enrolling in postsecondary education, annualized benefits from the proposed regulations of $17,664,756 over the next ten years.
Benefits arise from increased earnings from improved educational attainment of students without status previously ineligible to receive TRIO program services higher levels of educational attainment and associated higher wages. The Department believes expanding TS, EOC, and UB eligibility to students previously ineligible to receive TRIO program services would result in a net benefit to the public due to the capacity within TS, EOC, and UB projects to enroll additional participants.
The Department assumes that the approximately 500,000 elementary and secondary students without status previously ineligible to receive TRIO program services are evenly distributed across each high school grade level (
For the 2021-2022 reporting period, TS, UB, and EOC projects that did not meet their enrollment targets had the capacity to serve an additional 104,111 participants. According to data from the Migration Policy Institute, fifteen States (See Table 1 footnote) account for 81 percent of all high school graduates without status.
For the purposes of this analysis, the Department assumes that TS, UB, and
The Department conducted a sensitivity analysis of the possible impact of the proposed rule on TS, UB, or EOC enrollment. We assume that 55,753 is the maximum number of students without status that could potentially enroll in TS, UB, or EOC as a result of the proposed rule. The Department assumes that there are a variety of reasons that a student that would be otherwise eligible as a result of the proposed rule would ultimately not enroll in TS, UB, or EOC. Therefore, the Department conducted a sensitivity analysis that analyzed program enrollment rates of 1, 5, or 10 percent of the universe of eligible participants. As described below, the benefits of the rule grow as the size of the TRIO enrollment effect increases. For the purposes of this RIA we estimate that 5 percent, or 2,788 students without status, would enroll in TS, UB, or EOC as a result of this rule.
The Department therefore estimates that of the 55,753 estimated capacity of TS, UB, and EOC projects in States likely to serve students without status, 1,831 would enroll in TS, 133 would enroll in UB (including UBMS), and 824 would enroll in EOC. In total, the Department estimates that this proposed rule would result in 2,788 additional high school students without status previously ineligible to receive TRIO services enrolling in TS, UB, or EOC. For the purposes of this analysis the Department assumes that the 2,788 included as part of this analysis are students that would not have otherwise graduated from postsecondary education. The Department invites comments on this assumption.
According to data from NCES,
For those 1,813 additional students that would enroll in postsecondary education, the Department assumes that these students would earn at least some college credit from a 2- or 4-year institution. Among the 2012 UB cohort, 35 percent of UB participants that enrolled in postsecondary education earned a degree at a 4-year IHE while 7 percent of UB participants earned a degree at a 2-year IHE. For the purposes of this analysis, and due to lack of data, the Department assumes that postsecondary graduation rates are comparable between TS, UB, and EOC. We request comment on this assumption. Therefore, we assume that 58 percent of UB participants did not complete a bachelor's degree, associate's degree, or certificate within six years of initial enrollment. For our analysis we identify those that did not complete a degree or certificate as earning some college credit.
For several analyses, the Department relies on estimated wages by educational attainment. For these analyses, the Department relies on data from BLS
The Department estimates that these proposed regulations would directly result in an additional 1,813 students enrolling in and completing as least some postsecondary education. In addition, the Department assumes that affected individuals would have average earnings and employment rates equal to those at high school diploma level in the baseline, and average earnings and employment rates equal to their new educational attainment level following implementation of the rule. The Department estimates that the total weekly earnings of these students if they had only earned a high school diploma would be $1,566,058. These students' enrollment in postsecondary education would result in total weekly earnings of $2,066,151, an increase of $500,093 per week
Based on the earnings and unemployment information described in Earnings and unemployment rates by educational attainment from the U.S. Bureau of Labor Statistics,
The Department estimates that the benefits of the proposed rule described above would outweigh costs resulting from lost wages from delaying entry into the workforce and tuition costs.
Under the proposed changes to §§ 643.3, 643.4, and 643.5, the Department estimates that newly eligible recipients that enroll postsecondary education would realize an opportunity cost from the loss of wages they would otherwise receive as a high school graduate immediately entering into the workforce. The Department estimates that an additional 1,813 students without status would enroll in postsecondary education each year as a result of the proposed rule. The Department assumes that of these students, 1,742 would find employment and earn a median wage of $899 per week as a high school graduate for total weekly earnings of $1,566,058. The Department estimates that annual costs of $81,435,016 during the first two years after the implementation of the proposed rule to account for students enrolled in both four-year and two-year postsecondary education. The Department assumes for the purposes of this analysis that 50 percent of these students are enrolled at a four-year IHE and therefore will realize an opportunity cost of $40,717,508 in years three and four. The Department requests comment on these assumptions.
In addition, under the proposed changes to §§ 643.3, 643.4, and 643.5, the Department estimates that newly eligible recipients that enroll postsecondary education would realize postsecondary tuition costs. Due to a lack of available data, the Department assumes that the 1,813 students without status estimated to enroll in postsecondary education each year as a result of the proposed rule will be equally divided across four-year public IHEs, four-year private nonprofit IHEs, two-year public IHEs, and two-year private nonprofit IHEs. The Department requests comment on these assumptions. Based on NCES data,
The Department estimates that annual costs of $27,734,600 during the first two years after the implementation of the proposed rule to account for students enrolled in both four-year and two-year postsecondary education. The Department assumes for the purposes of this analysis that 50 percent of these students are enrolled at a four-year IHE and therefore will realize tuition costs of $14,416,400 in years three and four. The Department requests comment on these assumptions.
Changes proposed to provide better data on student outcomes for students enrolled in distance education would provide benefits for students in allowing reporting and evaluations of outcomes for students depending on their enrollment in distance education, traditional on-site instruction, or a combination of the two. Such analysis is increasingly advantageous to determine the educational and cost effectiveness of postsecondary instruction as it becomes more available at a distance.
Students can also benefit from the change to only allow synchronous instruction in clock-hour programs offered through distance education. Because studies have shown better student outcomes when comparing synchronous and asynchronous instruction, students would likely have greater persistence and completion, and would also likely benefit from improved labor market outcomes.
Students would benefit from these regulations under several of the proposed regulations. If institutions choose to implement the optional withdrawal exemption, students who withdraw would not owe any balance related to any returned title IV, HEA aid to the Department or the institution. This would alleviate students from the burden of having to repay title IV, HEA dollars or owing an institutional debt related to a payment period or period of enrollment that they did not complete.
If a school chooses not to implement the optional withdrawal exemption, students that received a Direct Loan but did not begin attendance in their program would be able to repay their loans under the terms of a promissory note as opposed to the current practice of receiving a demand letter for the full payment. Students would be able to benefit from an income-driven repayment plan, or standard payment plans with payments that could potentially be paid over 30 years.
Students who are incarcerated at times may need to (or be forced to) take a break in their PEP, including activities out of their control such as prison-wide lockdowns or involuntary transfers to other facilities. The proposed regulations would benefit incarcerated students allowing them to not have to come back from the leave of absence where they left off (as current regulations require), and instead, the student could come back at a different point in their eligible prison education program, affording greater flexibility in their academic progression.
Institutions would benefit under several of these proposed regulations. Currently, an institution offering clock-
Currently institutions implement complex sub-regulatory guidance to determine the number of days in the payment period for a program offered in modules, even if the student did not attend the module. The proposed regulations would benefit institutions through the requirement that the student actually attend the module for the days in the module to be included in the payment period. It would also eliminate the need for a “freeze date” (explained in the discussion section), further reducing complexity.
Overall, we believe that the more accurate calculations and reductions in complexity would benefit the taxpayer by reducing errors in R2T4 calculations, resulting in more accurate amounts being returned to the Department and further supporting the integrity of the title IV, HEA programs. R2T4 consistently ranks in the Top 10 compliance findings,
For example, we have proposed a requirement that schools that offer distance education courses entirely online begin taking attendance for those courses. As a result, we anticipate more accurate calculations through the use of actual withdrawal dates from attendance records, thus providing taxpayers a more accurate accounting of title IV, HEA funds returned.
As discussed above, the proposed changes to TRIO would align TRIO programs that serve students in the elementary or secondary context with other Federal K-12 spending programs that allow recipients (such as SEAs and LEAs) to spend funds on K-12 students without regard to immigration status. This would eliminate the administrative burden of separating out students who are enrolled in public schools but not eligible for TRIO services under the current rule.
As required by OMB Circular A-4, the Department has prepared an accounting statement showing the classification of the expenditures associated with the provisions of these regulations. This table provides the best estimate of the changes in annual monetized benefits and costs of these proposed regulations.
As part of the development of these proposed regulations, the Department engaged in a negotiated rulemaking process in which we received comments and proposals from non-Federal negotiators representing numerous impacted constituencies. These included higher education institutions, consumer advocates, students, financial aid administrators, accrediting agencies, and State attorneys general. Non-Federal negotiators submitted a variety of proposals relating to the issues under discussion. Information about these proposals is available on our negotiated rulemaking website at
During negotiations there was no disagreement with the Department's proposal to amend the definition of “additional location” to separately identify virtual locations and to define “distance education course” (which was based on a negotiator suggestion), so there was little discussion on these topics.
The negotiators also did not disagree with the general idea of requiring institutions to report students' enrollment in distance education. There were suggestions about what that reporting should entail, including more detailed data about the extent of students' enrollment in distance education and not just whether they are in-person or distance education students. The discussion settled on reporting students as having one of three statuses: fully in-person, fully at a distance, or a hybrid of the two. This would be a simple determination for schools that would also provide sufficient information for the Department. Because specific details about this reporting are yet to be determined, the proposed regulation establishes the general requirement and notes that reporting will be in accordance with procedures to be established by the Secretary.
Some negotiators disagreed with the proposed elimination of asynchronous distance education in the definition of clock-hour programs in § 600.2. Negotiators representing various institutional sectors contended that instruction in clock-hour programs need not be entirely hands-on, that there is a didactic component that lends itself to asynchronous instruction, and that schools have been able to master the technology necessary for close accounting of student academic engagement. These negotiators suggested limiting the amount of a clock-hour program that can occur asynchronously to 50 percent. Based on our review of clock-hour programs that delivered substandard education with little direct instructor interaction, we disagree that schools have the technology and resources to adequately monitor student academic engagement, as discussed in the section above on the proposed revisions to distance education. Allowing 50 percent of instruction to be asynchronous would still permit substandard education to occur. We thus reaffirmed that elimination of asynchronous distance education in clock-hour programs would be appropriate.
The Department initially proposed to exempt confined or incarcerated individuals from R2T4 if the students withdrew from a program due to circumstances outside of their control, such as a correctional facility-wide lockdown or an involuntary transfer to a different facility. Upon further review, we determined that we do not have the legal authority to waive R2T4
To address the negotiators' concerns, the Department instead proposed a new condition under the leave of absence provisions (§ 668.22(d)), targeted at confined or incarcerated individuals that take a break from their PEP due to events at their correctional facility, which would give students and institutions, especially in term-based settings, more flexibility when students return from a leave of absence. In term-based settings, the proposal would allow a confined or incarcerated individual to not have to come back from the leave of absence resuming where the student left off, and instead, the individual could resume at a different point in their PEP. The postsecondary institution would still have to adhere to all other requirements of a leave of absence as we propose they remain unchanged.
The Department considered exempting direct assessment programs offered through distance education from the proposed requirement under § 668.22(b)(3)(i)(D) that would require an institution to take attendance for each course offered entirely through distance education. A negotiator stated three concerns: (1) requiring an R2T4 calculation that is artificially based on dates of attendance, in a program structure that is not designed around seat time, would disincentivize progression and punish students who complete program requirements more quickly than anticipated; (2) requiring attendance in direct assessment programs would not increase the accuracy of R2T4 calculations, because the amount of funds earned by these students is not correlated to time and an attendance-based calculation does not accurately reflect the actual amount of coursework completion for students who take advantage of self-paced instruction; and (3) to offset these negative effects, institutions may feel compelled to add pedagogically unnecessary content or participation requirements to courses in order to increase the frequency of attendance-taking opportunities. The negotiator argued that doing so would undermine the advantages of self-paced direct assessment programs and could unnecessarily increase program length and cost.
The Department is not persuaded by these arguments, because all distance education courses are still required to provide regular and substantive interaction. Direct assessment programs offered through distance education do not pose unique attendance-based challenges that justify exemption from the requirement. Direct assessment programs, like all other programs, are required to determine a withdrawal date, which is the last date of academic attendance as determined by the institution's academic records. The Department believes that institutions that offer direct assessment programs through distance education already have systems in place that sufficiently monitor academic engagement and thus can easily determine attendance and, by extension, a student's withdrawal date.
As part of our 2019 negotiated rulemaking, the Department adopted a withdrawal exemption for programs offered in modules that treat a student as not withdrawn if the student successfully completes one or more modules that make up 49 percent or more of the number of days in the payment period. The Department's initial proposal with negotiators suggested removing the 49 percent withdrawal exemption, which, for students that do not qualify for another withdrawal exemption, would mean that more money would be returned to the Department and students would not exhaust their aid eligibility as quickly. The Department also believed that removing the 49 percent withdrawal exemption would eliminate observed confusion between this figure and the 60 percent completion requirement under the R2T4 calculation, and eliminate the continued need for significant guidance and training on how to determine whether a student qualifies for the exemption.
Many negotiators disagreed with the elimination of the 49 percent withdrawal exemption. Negotiators stated that their institutions had already updated systems and policies to account for the exemption and that it was serving students well. Negotiators also pointed out that the exemption has only been in regulation since 2021 and, instead of eliminating the exemption, the Department should provide more guidance and training to assist those institutions that may be having some difficulty implementing this regulatory requirement. In light of these negotiator concerns and suggestions, the Department decided to retain this exemption.
The current proposal for the Upward Bound Program, the Educational Opportunity Centers, and the Talent Search program would allow an individual to participle in these programs if they are enrolled in, or seek to enroll in, high school in the United States. All of these three TRIO programs serve students at the secondary school level. The Department also considered, at the suggestion of a negotiator, expanding the eligibility proposal to Student Support Services and the McNair Scholars Program, which are postsecondary level TRIO programs.
The Department determined to limit eligibility expansion to the three identified secondary school programs based on our belief that all children who attend high school in the United States should have the same access to public TRIO services to assist in their path toward postsecondary education. This proposal also aligns TRIO with the treatment of students in other Federal K-12 spending programs, which allow recipients (such as State education agencies and local education agencies) to spend funds on K-12 students without regard to immigration status.
The TRIO programs have limited resources, with the TRIO programs currently serving less than 10 percent of the eligible population. The Department is proposing to expand eligible participants to focus on the most vulnerable population: children who do not yet have the basic education that comes from high school completion, which is a necessary step toward postsecondary education.
The Department considered not regulating, but as noted in the previous section, K-12 public schools are open to students regardless of their immigration status. As such, the Department believes that all children who attend high school in the United States should have the same access to TRIO services to assist their pathway into postsecondary education.
This section considers the effects that the proposed regulations may have on small entities in the educational sector as required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 601
The Secretary is proposing new regulations to ensure students are well served by the institutions of higher education they attend, increase access to postsecondary education for disadvantaged students, and ensure that Federal Student Aid programs work in the best interests of students. Proposed regulations for distance education would help the Department better measure and account for student outcomes, improve oversight over distance education, and ensure students are receiving effective education by requiring additional reporting of programs offered entirely through online education, requiring students' distance education enrollment status, and disallowing asynchronous distance education in clock-hour programs for title IV, HEA purposes. The proposed R2T4 regulations would help withdrawn students repay outstanding Direct Loan credit balances, increase the accuracy and simplicity of performing R2TV calculations, add additional clarity to institutions on reporting, and codify longstanding policies. The proposed TRIO regulations would expand student eligibility and provide greater access to postsecondary education for disadvantaged students who have enrolled or seek to enroll in a high school in the United States, territories, or Freely Associated States.
Through the proposed regulations, the Department aims to address inequities and inadequate protections for students to ensure the Federal Student Aid programs work to accomplish postsecondary access and completion. This includes ensure the Department, students, and families have the information needed to answer important questions about enrollment in and success with distance education, the ability provide closed school discharges where a program closes, that students that withdraw are able to repay their debt, and that disadvantaged students have the opportunity to access and succeed in postsecondary education.
The Department's authority to the proposed regulations stems primarily from multiple statutory enactments: first, 20 U.S.C. 1070-1099d (sections 400-499 of the HEA) which authorizes the Federal government's major student financial aid programs; second, 20 U.S.C. 1070(b) (section 400(b) of the HEA) which outline the Secretary's broad authority to carry out program requirements; and third, the sections that govern the Department's oversight responsibility under title IV 20 U.S.C. 1099c, 1099c-1, 1099c-2 (sections 498, 498A, and 498B of the HEA). The specific statutory sources of this authority are detailed in the Authority for This Regulatory Action section above.
As explained above, the enrollment-based size standard remains the most relevant standard for identifying all IHEs subject to the proposed regulations. Therefore, instead of the SBA's revenue-based size standard, which applies only to proprietary IHEs, the Department has defined “small IHE” as (1) a less-than-two-year institution with an enrollment of fewer than 750 students, or (2) an at-least two-year but less-than-four-year institution, or a four-year institution, with enrollment of fewer than 1,000 students.
We note that the Department's revised alternative size standard and the SBA's revenue standard identify a similar number of total proprietary IHEs, with greater than 93 percent agreement between the two standards. Using the Department's revised alternative size standard, approximately 61 percent of all IHEs would be classified as small for these purposes. Based on data from NCES, in 2022, small IHEs had an average enrollment of approximately 289 students. In contrast, all other IHEs had an average enrollment of approximately 5,509 students.
In addition, the following tables show the breakdown of this 93 percent agreement, using institutional-level data relating to the 2,334 private for-profit IHEs that were identified using 2022 IPEDS data.
Table 2 shows the distribution of revenues and the average enrollments of the 156 for-profit IHEs identified as small under only the enrollment size standard. A large majority of these for-profit IHEs do not have revenue data available in IPEDS. The average enrollment for this group with no revenue data available is 210 students.
Table 3 shows the distribution of enrollments and the average revenues of the 127 for-profit IHEs identified as small under only the revenue size standard. Six of these 127 IHEs do not have enrollment data available through IPEDS. There are 57 IHEs in the bin of “1,000-1,249 students”, which is closest to the enrollment threshold for for-profits, and average revenue for these IHEs is $13.3 million. To the extent that the proposed alternative size standard covers for-profit IHEs that would not otherwise be covered (and the revenue standard covers for-profit
Tables 4 and 5 show the distribution of institution levels for for-profit IHEs identified as small by the enrollment size standard only and by the revenue size standard only, respectively.
Notably, the five states with the most IHEs that are identified as small under only the enrollment standard are California (34), Texas (15), Florida (13), New Jersey (7), and Puerto Rico (7). The five states with the most IHEs that are identified as small under only the revenue standard are California (28), Florida (18), Texas (11), Arizona (8), and Illinois (6).
Based on the model described in the discussion of RIA, an IHE would see a minimum net increase in costs of approximately $3,361 in year 1 for all IHEs, as explained in more detail in the 3.B. COSTS OF THE PROPOSED REGULATIONS section of this Regulatory Impact Analysis and included in the table below:
For purposes of assessing the impacts on small entities, the Department defines a “small IHE” as a less than two-year IHE with an enrollment of less than 750 FTE and two-year or four-year IHEs with an enrollment of less than 1,000 FTE, based on official 2022 FTE enrollment. According to data from the IPEDS, in FY 2022, small IHEs had, on average, total revenues of approximately $8,691,634.
According to data from IPEDS, approximately 458 small IHEs had total reported annual revenues of less than $597,100 for which the costs estimated above will potentially exceed 1 percent of total revenues. The average enrollment across these 458 small IHEs was 48 students.
The regulations will not conflict with or duplicate existing Federal regulations.
As described in section 5 in the Regulatory Impact Analysis above, “Alternatives Considered”, the Department considered several alternative provisions and approaches but rejected those alternatives for the reasons considered above. Most relevant to small entities were the alternatives to limit proposed changes. For example, under distance education, the Department considered exempting direct assessment programs offered through distance education from the proposed requirement under § 668.22(b)(3)(i)(D) that would require an institution to take attendance for each course offered entirely through distance education. However, the Department rejected this consideration in part because it ultimately would not reduce burden including to small entities since all distance education courses are still required to provide regular and substantive interaction and believes that institutions that offer direct assessment programs through distance education already have systems in place to monitor academic engagement.
Similarly, under R2T4, the Department proposed removing the 49 percent withdrawal exemption, which would in part eliminate observed confusion between this figure and the 60 percent completion requirement under the R2T4 calculation and eliminate the continued need for significant guidance and training on how to determine whether a student qualifies for the exemption, thereby reducing institutional burden. Negotiators, however, disagreed stating that institutions had already updated systems and policies to account for the exemption and that it was serving students well. As a result, the Department eliminated the proposal.
As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that the public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.
Proposed §§ 668.22 and 668.41 contain information collection requirements. Under the PRA, the Department has or will at the required time submit a copy of these sections and Information Collection requests to OMB for its review. A Federal agency may not conduct or sponsor a collection of information unless OMB approves the collection under the PRA and the corresponding information collection instrument displays a currently valid OMB control number. Notwithstanding any other provision of law, no person is required to comply with, or is subject to penalty for failure to comply with, a collection of information if the collection instrument does not display a currently valid OMB control number. In the final regulations, we would display the control numbers assigned by OMB to any information collection requirements proposed in this NPRM and adopted in the final regulations.
Section 668.22 Treatment of title IV funds when a student withdraws.
Due to the highly automated delivery of these types of courses, and the availability of such coursework on a daily basis, the Department estimates half of the institutions offering distance education courses would already be performing this task. Therefore, the Department estimates it would take the remaining fifty percent of institutions offering distance education about 10 minutes on a daily basis to capture attendance information for their records. The Department estimates it would take 342 Proprietary institutions 21,221 hours annually to perform this recordkeeping function (684/2 institutions × 365 days × .17 (10 minutes) = 21,221 hours). The Department estimates it would take 707 Private institutions 43,869 hours annually to perform this recordkeeping function (1,414/2 × 365 × .17 (10 minutes) = 43,869). The Department estimates it would take 817 Public institutions 50,695 hours annually to perform this recordkeeping function (1,634/2 × 365 × .17 (10 minutes) = 50,695). The total estimated burden to be added to OMB Control Number 1845-0022 is 153,105 hours.
Section 668.41 Reporting and disclosure of information.
Consistent with the discussions above, the following chart describes the sections of the proposed regulations involving information collections, the information being collected and the collections that the Department would submit to OMB for approval and public comment under the PRA, and the estimated costs associated with the information collections. The monetized net cost of the increased burden for institutions, lenders, guaranty agencies and students, using wage data developed using Bureau of Labor Statistics (BLS) data. For institutions the Department is using the median hourly wage for Education Administrators, Postsecondary, $49.33 per hour according to BLS.
The Department has prepared the Information Collection Request for the information collection requirement. If you wish to review and comment on the Information Collection Requests, please follow the instructions in the
In preparing your comments, you may want to review the Information Collection Request, including the supporting materials, in
This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive Order is to foster an intergovernmental partnership and a strengthened Federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.
This document provides early notification of our specific plans and actions for this program.
In accordance with section 411 of the General Education Provisions Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on whether these proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.
Executive Order 13132 requires us to provide meaningful and timely input by State and local elected officials in the development of regulatory policies that have Federalism implications. “Federalism implications” means substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. The proposed regulations do not have Federalism implications.
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Colleges and universities, Foreign relations, Grant programs—education, Loan programs—education, Reporting and recordkeeping requirements, Selective Service System, Student aid, Vocational education.
Colleges and universities, Education of disadvantaged, Elementary and secondary education, Grant programs—education, Reporting and recordkeeping requirements, Student aid.
Colleges and universities, Education of disadvantaged, Elementary and secondary education, Grant programs—education, Reporting and recordkeeping requirements, Veterans.
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For the reasons discussed in the preamble, the Secretary of Education proposes to amend parts 600, 643, 644, 645, and 668 of title 34 of the Code of Federal Regulations as follows:
20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, and 1099c, unless otherwise noted.
The revision and additions read as follows:
Additional location:
(3) A virtual location through which the institution offers 100 percent of an educational program through distance education or correspondence courses, notwithstanding requirements for students to complete on-campus or residential periods of 90 days or less.
Clock hour:
(1) * * *
(iv) In distance education, 50 to 60 minutes in a 60-minute period of attendance in a synchronous class, lecture, or recitation where there is opportunity for direct interaction between the instructor and students.
20 U.S.C. 1070a-11 and 1070a-12, unless otherwise noted.
The addition reads as follows:
(a) * * *
(1) * * *
(vi) If an individual does not meet the requirements of paragraph (a)(1)(i) through (v) of this section, then the individual is enrolled in or seeks to enroll in a high school in the United States, territories, or Freely Associated States.
20 U.S.C. 1070a-11 and 1070a-16, unless otherwise noted.
The addition reads as follows:
(a) * * *
(1) * * *
(vi) If an individual does not meet the requirements of paragraph (a)(1)(i) through (v) of this section, then the individual is enrolled in or seeks to enroll in a high school in the United States, territories, or Freely Associated States.
20 U.S.C. 1070a-11 and 1070a-13, unless otherwise noted.
The addition reads as follows:
(a) * * *
(6) If an individual does not meet the requirements of paragraph (a)(1) through (5) of this section, then the individual is enrolled in or seeks to enroll in a high school in the United States, territories, or Freely Associated States, and provided that such individual is not eligible for a direct cash stipend.
20 U.S.C. 1001-1003, 1070g, 1085, 1088, 1091, 1092, 1094, 1099c, 1099c-1, 1221e-3, and 1231a, unless otherwise noted.
(a) * * *
(2) * * *
(ii) For remaining amounts of FFEL or Direct Loan funds disbursed directly to the student for that payment period or period of enrollment, including funds that are disbursed directly to the student by the lender for a study-abroad program in accordance with § 682.207(b)(1)(v)(C)(1) or for a student enrolled in a foreign school in accordance with § 682.207(b)(1)(v)(D), the institution is not responsible for returning the funds, but must immediately notify the lender or the Secretary, as appropriate, when it becomes aware that the student will not or has not begun attendance so that the lender or Secretary will initiate borrower repayment under the terms of their promissory note; and
The revisions and addition read as follows:
(a) * * *
(2) * * *
(ii) * * *
(A) * * *
(b) * * *
(2) An institution must, within 14 days of a student's last date of attendance, document a student's withdrawal date determined in accordance with paragraph (b)(1) of this section and maintain the documentation as of the date of the institution's determination that the student withdrew.
(3) * * *
(ii) An institution must take attendance for each course offered entirely through distance education as defined in 34 CFR 600.2, except for dissertation research courses that are part of a doctoral program.
(d) * * *
(1) * * *
(vii) Except for a clock-hour or non-term credit hour program, a subscription-based program, or an eligible prison education program, upon the student's return from the leave of absence, the student is permitted to complete the coursework he or she began prior to the leave of absence; and
(f) * * *
(1) * * *
(ii) (A) In the case of a program that is measured in clock hours, by dividing the total number of clock hours in the payment period or period of enrollment into the number of clock hours scheduled to be completed since the student began attendance in the payment period or period of enrollment as of the student's withdrawal date.
(l) * * *
(9) A student in a program offered in modules is scheduled to complete the days in a module only when a student begins attendance in the module.
(h)