Animal and Plant Health Inspection Service
Food Safety and Inspection Service
Forest Service
Rural Business-Cooperative Service
Rural Utilities Service
Foreign-Trade Zones Board
International Trade Administration
National Oceanic and Atmospheric Administration
Army Department
Federal Energy Regulatory Commission
Centers for Medicare & Medicaid Services
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Coast Guard
Fish and Wildlife Service
Geological Survey
Land Management Bureau
National Park Service
Employee Benefits Security Administration
Federal Motor Carrier Safety Administration
Comptroller of the Currency
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Nuclear Regulatory Commission.
Final rule; correction.
The U.S. Nuclear Regulatory Commission (NRC) is correcting a final rule that was published in the
The correction takes effect on August 15, 2024.
Please refer to Docket ID NRC-2024-0091 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
•
•
•
Tricia Lizama, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-4110; email:
The NRC may post materials related to this document, including public comments, on the Federal rulemaking website at
In FR Doc. 2024-15234, appearing on page 57717 in the
(f) Licensees shall not perform any decommissioning activities, that—
(1) Foreclose release of the site for possible unrestricted use;
(2) Result in significant environmental impacts not previously reviewed; or
(3) Result in there no longer being reasonable assurance that adequate funds will be available for decommissioning.
(h)(1) Decommissioning trust funds may be used by licensees if—
(i) The withdrawals are for expenses for legitimate decommissioning activities consistent with the definition of decommissioning in § 52.1;
(ii) The expenditure would not reduce the value of the decommissioning trust below an amount necessary to place and maintain the reactor in a safe storage condition if unforeseen conditions or expenses arise; and
(iii) The withdrawals would not inhibit the ability of the licensee to complete funding of any shortfalls in the decommissioning trust needed to ensure the availability of funds to ultimately release the site and terminate the license.
For the Nuclear Regulatory Commission.
Federal Deposit Insurance Corporation.
Final rule.
The Federal Deposit Insurance Corporation (FDIC) is revising
rule will be effective on October 1, 2024.
Timothy Schuett, Senior Review Examiner, 763-614-9473,
The policy objective of the rule is to revise the FDIC's regulations concerning section 19 of the Federal Deposit Insurance Act (section 19)
Section 19 prohibits, without the prior written consent of the FDIC (the FDIC refers to applications for such consent as “consent applications”,
From 1998 until 2020, the FDIC had a Statement of Policy that was issued related to section 19, occasionally revised, and published in the
On December 23, 2022, the President signed into law the FHBA, which significantly revised section 19 and was effective immediately. The FHBA created several categories of exceptions or exemptions to the prohibition on participating in banking, including the following:
•
•
•
•
•
The FHBA clarifies several terms in section 19, including “criminal offense involving dishonesty” and “pretrial diversion or similar program.” It also provides conditions regarding
The FHBA codifies procedures for consent applications filed with the FDIC. It requires the FDIC to make all forms and instructions related to consent applications available to the public, including on the FDIC's website. It requires the FDIC to primarily rely on the criminal history record of the Federal Bureau of Investigation when evaluating consent applications and to provide such records to the applicant to review for accuracy. Further, it requires the FDIC to assess evidence of an individual's rehabilitation including: the applicant's age at the time of the conviction or program entry; the time that has elapsed since conviction or program entry; and the relationship of an individual's offense to the responsibilities of the applicable position. Other information, including an individual's employment history, letters of recommendation, certificates documenting participation in substance abuse programs, successful participation in job preparation and educational programs, other relevant mitigating evidence, and any additional information the FDIC determines necessary for safety and soundness shall also be considered.
On November 14, 2023, the FDIC published a notice of proposed rulemaking (proposal) to conform the FDIC's section 19 regulations with the
• the date on which a criminal offense “occurred” or was “committed;”
• the date on which “sentencing occurred;”
• whether section 19 encompasses foreign convictions and pretrial diversions;
• the standard for expungements, sealings, and dismissals;
• “offenses involving controlled substances;” and
•
The comment period closed on January 16, 2024. The FDIC received five comments from six different commenters, consisting of two individuals and four advocacy groups (two advocacy groups provided a joint comment). All of the comments generally supported the proposal. The comment received from one advocacy group did not offer specific changes to the proposal but urged the FDIC and other financial regulators to strengthen their enforcement practices. The other commenters suggested a variety of changes. The comments and the FDIC's responses are discussed below in sections III and V of this document.
The primary purpose of the final rule is to align the FDIC's section 19 regulations with the FHBA. The amendments address, among other topics, the types of offenses covered by section 19, the effect of the completion of sentencing or pretrial-diversion program requirements in the context of section 19, and the FDIC's procedures for reviewing applications filed under section 19. Significant revisions to the FDIC's current regulations
Paragraph (b) clarifies that each IDI must make a “reasonable, documented inquiry” to verify an applicant's history to ensure that a person who has a covered offense on the person's record is not hired or permitted to participate in its affairs without the written consent of the FDIC. In the FDIC's 2020 Final Rule concerning revisions to its section 19 regulations, the FDIC stated, “The procedures that constitute a reasonable inquiry will vary from bank to bank, and the FDIC believes that this determination is best left to the business judgments of these institutions.”
One commenter recommended that the FDIC clarify that a “reasonable, documented inquiry” would include verifying that the date of any conviction or program entry occurred at least one year or seven years prior, as applicable. (This commenter did not take into consideration the offenses enumerated in 12 U.S.C. 1829(a)(2) that are not affected by the FHBA's time-based exclusions.) As discussed in greater detail later in this preamble, the FDIC interprets the terms “offense occurred” and “offense committed” in the FHBA to mean the last date of the underlying misconduct rather than the date of conviction or program entry. But since the date of conviction or program entry necessarily follows the last date on which the underlying misconduct occurred, there may be circumstances in which the date of conviction or program entry may provide sufficient information to an IDI that an offense is excluded from the scope of section 19. For example, if a State felony conviction occurred 10 years ago, it would be clear from the criminal record that the conviction is not subject to section 19's prohibitions, and the use of the conviction date could be used by the IDI to establish a reasonable, documented inquiry. On the other hand, if an IDI cannot ascertain whether an offense is subject to section 19 based on the date of conviction or program entry, it may be necessary for the IDI to perform additional research to determine the last date of the underlying misconduct. The FDIC is not, however, prescribing the exact procedures that IDIs should follow in conducting a reasonable, documented inquiry.
Paragraph (d) more closely aligns its restrictions with the analogous FRB regulations under 12 CFR 225.41 and 238.31 and the FDIC's regulations under 12 CFR part 303, subpart E, concerning Change in Bank Control applications. A person will be deemed to exercise “control” if that person: (1) has the ability to direct the management or policies of an IDI; (2) has the power to vote 25 percent or more of the voting shares of an IDI; or (3) has the power to vote 10 percent of the voting shares of an IDI if: (a) no other person owns, controls, or has the power to vote more shares; or (b) the institution has registered securities under section 12 of the Securities Exchange Act of 1934.
3. Section 303.222 Which offenses qualify as “Covered Offenses” under section 19?
Paragraph (a) reflects the statutory definition of “criminal offense involving dishonesty.”
One commenter specifically supported the FDIC's proposal concerning controlled substances. Another commenter said that the FDIC's proposed language was overly broad and contrary to congressional intent and that the proposed exclusion should be limited to the offense of simple possession of controlled substances. This commenter added that banks would face reputational risks if they hired individuals who had been convicted of the crime of possession with the intent to distribute controlled substances. This commenter also recommended that the FDIC retain its regulatory text concerning the illegal manufacture, sale, distribution of, or trafficking in controlled substances.
The FDIC believes that the proposed language is consistent with the text and purposes of the FHBA and would align the FDIC's interpretation of section 19 as to offenses involving controlled substances more closely with other Federal banking regulators. The FHBA explicitly excludes from the category of “criminal offense involving dishonesty” “an offense
The FHBA also states that the term “criminal offense involving dishonesty” does not include “a misdemeanor criminal offense committed more than one year before the date on which an individual files a consent application, excluding any period of incarceration.”
Revised paragraph (c) includes new language reflecting the statute's exception of certain older offenses from the scope of section 19.
Two commenters disagreed with the FDIC's proposal and stated that “offense occurred” or “offense committed” should mean the date of the plea, conviction, or program entry. In the FDIC's view, however, the plain meaning of the terms “committed” and “occurred” mean when the underlying misconduct happened. This interpretation is buttressed by Congress's use of the date of conviction or program entry elsewhere in the statute; that is, the statute distinguishes between when misconduct was “committed” or “occurred” and the date of a “conviction” or “program entry.”
Two commenters expressed concerns that IDIs would have difficulty with ascertaining the underlying date(s) of misconduct for job applicants, as part of background inquiries. The commenters noted that background-check reports that are commercially or otherwise available tend to list the date of arrest, conviction, or release from incarceration but not necessarily the date of the underlying misconduct. The FDIC believes that, for many applicants, an IDI will be able to determine whether an offense is covered by section 19 using the background-check reports noted by the commenters. And as stated earlier in this preamble, an IDI may conduct a reasonable, documented inquiry by using the date of conviction or program entry if it is clear from that information that an applicant's offense is not subject to section 19 due to the amount of time that has elapsed. On the other hand, if an IDI cannot ascertain whether an offense is subject to section 19 based on the date of conviction or program entry, it may be necessary for the IDI to perform additional research to determine the last date of the underlying misconduct.
Revised paragraph (c) contains another FHBA exception: section 19's restrictions would not apply to an offense if “the individual was incarcerated with respect to the offense and it has been 5 years or more since the individual was released from incarceration.”
One commenter agreed with the FDIC that the term “sentencing occurred”
Revised paragraph (d) adds language to codify the FDIC's long-held position that individuals who are convicted of or enter into a pretrial diversion program for a criminal offense involving dishonesty, breach of trust, or money laundering in foreign jurisdictions are subject to section 19, unless the offense is otherwise excluded by 12 CFR part 303, subpart L.
One commenter stated that foreign convictions and pretrial diversions should be excluded from the scope of section 19. This commenter cited the difficulty of investigating criminal matters in foreign jurisdictions in which an applicant may have worked or resided, noted that banks might not have operations in such jurisdictions, and expressed concern that banks could expose themselves to liability in foreign jurisdictions through conducting background checks. Moreover, this commenter said that certain applicants for bank employment may already have completed a background check for the visa process; therefore, there would be a risk of duplication with a bank's investigation.
The FDIC has retained its proposed language as to foreign offenses due to the importance of ensuring that individuals with covered offenses do not participate in the affairs of IDIs without the FDIC's consent. Employers may be unaware of an applicant's foreign offenses without conducting their own inquiry, and many countries have their own application processes to conduct criminal background checks. The FDIC reiterates several non-exhaustive ways in which banks could comply with this requirement. For IDI operations outside the United States, the IDI could conduct a reasonable, documented inquiry to verify an applicant's history, in accordance with 12 CFR 303.220, by inquiring about potential covered offenses that may have occurred in that foreign country (or countries) in which the IDI conducts operations, as well as in the United States. As another example of such an inquiry, if an IDI plans to hire someone in the United States who is from a foreign country, the IDI could inquire about potential covered offenses that may have occurred in the United States and in that foreign country. And if a foreign jurisdiction forbade background investigations by an IDI, the IDI could note this restriction as part of its reasonable, documented inquiry.
Paragraph (c) has been revised to reflect statutory language related to the treatment of orders of expungement, sealing, or dismissal of criminal records.
Revised paragraph (d) clarifies that it encompasses the terms “youthful offender” and “juvenile delinquent”
This section has been revised to reflect the statutory definition of “pretrial diversion or similar program.”
This section has been revised to reflect the updated statutory filing procedures. The statute removes the FDIC's former policy that an institution sponsor a consent application or that an individual seek a waiver of the institution filing requirement. Moreover, the statute enables a depository institution holding company to file an application on behalf of an individual (previously, only IDIs could file such sponsored applications).
Revised paragraph (b), consistent with the FHBA, states that an individual or an institution may file applications at separate times. Under either approach, the application(s) must be filed with the appropriate FDIC Regional Office.
This revised section notes that, before an application may be filed, “all of the sentencing requirements associated with a conviction, or conditions imposed by the program entry, including but not limited to, imprisonment, fines, condition of rehabilitation, and probation requirements, must be completed, and the case must be considered final by the procedures of the applicable jurisdiction.” The FDIC includes this revised language to accord with several of the FHBA's exclusions from section 19 that are not tied to the completion of sentencing requirements.
Furthermore, the FHBA requires the FDIC to “make all forms and instructions related to consent applications available to the public, including on the website of the Corporation.”
The FDIC has made a number of changes to this section based on the statutory revisions and helpful comments received. Two commenters asked for additional clarity on what constitutes a
The FHBA removed the use of fake identification from the scope of section 19, and revised paragraphs (a)(1) and (b)(4) reflect this exclusion.
Revised paragraph (b)(1) (Age of person at time of Covered Offense) clarifies that, for a reduced waiting period to apply before an individual may qualify for the
The FDIC has revised the
The FDIC has deleted former § 303.227(c) concerning fidelity bond coverage and disclosure of
This revised section eliminates the institution filing requirement and waiver process and indicates that an “institution”—an IDI or a depository institution holding company—may file an application on behalf of an individual, rather than just an IDI. The individual may also file an application. These revisions are due to the updated statutory language.
Revised paragraph (a) reflects new statutory requirements related to the FDIC's review process, including the requirement that the FDIC primarily rely on the criminal history record provided by the Federal Bureau of Investigation in the FDIC's review and provide such record to the applicant to review for accuracy.
One commenter requested that the FDIC establish a deadline to evaluate the application once received and a deadline of five days to return the copy of the criminal history record once received from the Federal Bureau of Investigation. The FDIC adopts this recommendation in part. Under revised paragraph (a)(2), the FDIC will make reasonable efforts to communicate with the subject of the application within 15 calendar days of receipt of this record from the Federal Bureau of Investigation to inform the individual that the FDIC will be providing them with a copy of the report and to verify the individual's contact information. The FDIC will also make reasonable efforts to send the report to the individual within 5 business days of successful verification of the individual's contact information. If the individual believes that there are any inaccuracies in the report, the FDIC will direct the individual to an appropriate contact at the Federal Bureau of Investigation where the individual can seek corrections to the report.
Revised paragraph (b) states that the FDIC will not require an individual to provide certified copies of criminal history records unless the FDIC determines that there is a clear and compelling justification to require additional information to verify the accuracy of the criminal history record provided by the Federal Bureau of Investigation (that is, the rap sheet).
Revised paragraph (d) clarifies how the FDIC will evaluate evidence of rehabilitation and other evidence, as required by the FHBA.
Revised paragraph (g) eliminates references to the former application-waiver requirement.
Finally, revised paragraph (h) incorporates statutory language explaining when a new institution-sponsored application would be necessary due to changes in the scope of an applicant's employment.
Revised paragraph (b) clarifies that, for institution-sponsored applications, either the institution or the subject individual (or both, as a consolidated request) may file a written request for a hearing (or a request for written submission in lieu of a hearing) under 12 CFR part 308, subpart M.
This revised section, among other provisions, requires a one-year waiting period to file a consent application, following the issuance of a decision denying such an application. This general requirement is substantially unchanged from existing regulations, but the FDIC has made several technical amendments to align this section with the FHBA. Revised paragraph (a) acknowledges that the passage of time may remove an offense from the scope of section 19. And the final rule creates a new paragraph (b)—which notes that an institution-sponsored application is not subject to the one-year waiting period if the application (1) follows the denial of an individual application, or (2) follows the denial of an institution-sponsored application and the subsequent application is sponsored by a different institution or is for a different position.
The rule makes several technical amendments to subpart M. The rule revises the subpart's title to reflect that, following a denial of an application under 12 CFR part 303, subpart L, an applicant may request either a hearing or written submissions in lieu of a hearing. The rule also amends §§ 308.156, 308.157, and 308.158 to do the following: (1) encompass applications that are sponsored by depository institution holding companies; (2) explain that, if an application has been denied under 12 CFR part 303, subpart L, an applicant may request either a hearing or written submissions in lieu of a hearing; (3) clarify several sentences concerning hearing procedures; and (4) use more consistent terminology.
As previously discussed, the rule aligns the FDIC's regulations with the FHBA's provisions, makes additional changes to further clarify the FDIC's regulations related to section 19, more closely aligns the FDIC's section 19 regulations with those of other Federal financial regulators, and makes a number of non-substantive, technical edits. As of the quarter ending March 31, 2024, there were 4,577 FDIC-insured depository institutions, all of which are covered by the rule and therefore could be affected.
To estimate the number of institutions and individuals affected by the rule, the FDIC counted the number of section 19 applications it has received between 2021 and 2023. Over this period, the FDIC received 16 bank-sponsored section 19 applications, an average of 5 per year. Additionally, the FDIC received 115 individual section 19 applications during the same period, an average of approximately 38 per year.
As previously described, the rule aligns the FDIC's regulations with the FHBA's provisions. In particular, the FHBA created several categories of exceptions or exemptions to the prohibition on participating in banking. The rule incorporates these categories of exemptions and exceptions. The FDIC believes that the additional categories for exceptions or exemptions to the prohibition on participating in banking established by the FHBA could benefit certain individuals and IDIs by reducing the number of applications they would otherwise be required to file under section 19. Additionally, the categories of exceptions or exemptions to the prohibition on participating in banking established by the FHBA could benefit IDIs by marginally expanding the supply of labor available. However, these changes were created by the FHBA and were effective immediately upon passage, and the rule aligns the FDIC's regulations with these elements of the FHBA; therefore, the associated changes in the rule will have no direct effect on individuals or IDIs.
The rule amends the FDIC's existing section 19 application-procedure regulations to incorporate the FHBA's provisions. The FDIC's current section 19 regulations contain references to existing application procedures that are similar in substance to those established by FHBA. However, the FHBA, among other requirements, compels the FDIC to primarily rely on the criminal history record of the Federal Bureau of Investigation when reviewing consent applications. It is the current practice of the FDIC to consider all relevant information when evaluating a section 19 application. However, the establishment of a common source of criminal history, together with only requiring certified copies of criminal history records if there exists clear and compelling justification for doing so, could benefit certain individuals and IDIs by marginally reducing the volume of information they need to supply to the FDIC. The FDIC believes that, while these changes to the application procedures will directly affect certain individuals and institutions that file section 19 applications, they may not have a substantial effect on potential applicants. These changes, moreover, were created by the FHBA and were effective immediately upon passage, and the rule aligns the FDIC's regulations with these elements of the FHBA; therefore, the associated changes in the rule will have no direct effect on individuals or IDIs.
Finally, in seeking to align its section 19 regulations with the provisions of the FHBA, the FDIC used its discretion to
As discussed above, almost all of the significant changes to the FDIC's section 19 regulations stem from the FHBA's revisions to section 19. The FDIC had limited discretion in adopting alternatives to those statutory revisions. The FDIC considered other proposals that were submitted by the commenters but believes that the final amendments represent the most appropriate option for covered entities and individuals. This section discusses those other proposals.
One commenter said that federal financial regulators should increase the number of enforcement actions against and the severity of the punishments for executives of large banks who harm consumers and threaten the country's financial stability. This comment, in the FDIC's view, is outside the scope of this rulemaking.
One commenter suggested that the FDIC should collect information on instances of criminal recidivism among bank employees, in light of the FHBA's exclusion of previously covered offenses from the scope of section 19. The FDIC declines to adopt this proposal because it would be administratively impracticable for the FDIC to obtain this information from the thousands of IDIs subject to section 19, and this proposal would impose significant compliance burdens on those institutions.
One commenter suggested that the FDIC consider how the rule might affect the federal criminal justice system and public safety. This commenter noted that some individuals may be released from prison early or receive shorter sentences due to the First Step Act of 2018.
On November 7, 2023, the NCUA issued a notice of proposed rulemaking to implement the FHBA as to the NCUA's regulations,
Several commenters suggested that the
One commenter recommended excluding pardoned offenses from the scope of section 19 and suggested that pardoned offenses should be treated the same as expunged offenses. The FDIC disagrees with this recommendation and notes its longstanding position that covered offenses that have been pardoned—and which are not otherwise excluded from the scope of section 19—will still require an application. A pardon typically cancels the punishment for a criminal offense, not the underlying finding of guilt. In contrast, an expungement or sealing is significantly more likely to result—by applicable statute of court order—in the removal of the finding of guilt or otherwise result in a legal determination that the offense should not be used against an individual for employment purposes. Accordingly, in the FDIC's view, a person with such an expunged or sealed offense tends to present less of a risk to the banking system than a person whose same offense has been pardoned.
One commenter suggested that the FDIC should increase the maximum potential penalty threshold from $2,500 to $5,000 under the general
In accordance with the requirements of the Paperwork Reduction Act (PRA),
The FDIC received one comment that appears to relate to the PRA. The commenter suggested that the FDIC should collect information on instances of criminal recidivism among bank employees, in light of the FHBA's exclusion of previously covered offenses from the scope of section 19. The FDIC declines to adopt this proposal because it would be administratively impracticable for the FDIC to obtain this information from the thousands of IDIs subject to section 19, and this proposal would impose significant compliance burdens on those institutions. In other words, the compliance burden associated with collecting this information would outweigh the benefits and practical utility of collecting this information.
The FDIC will revise its section 19 application form to conform with the changes to section 19 under the FHBA. These changes amend the FDIC's existing information collection associated with this rule, entitled “Application Pursuant to Section 19 of the Federal Deposit Insurance Act” (3064-0018). For this reason, the information collection requirements contained in this final rule will be submitted by the FDIC to OMB for review and approval under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and § 1320.11 of the OMB's
Based on available data, the number of respondents and the estimated annual burden associated with the information collection will decrease.
The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a final rule, to prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the final rule on small entities.
As discussed further below, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of FDIC-supervised small entities.
As of the quarter ending March 31, 2024, the FDIC insured 4,577 depository institutions, of which 3,259 are defined as small banking organizations for the purposes of the RFA.
As discussed in the
In light of the foregoing, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small entities.
Section 722 of the Gramm-Leach Bliley Act
Under section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),
For purposes of the Congressional Review Act (5 U.S.C. 801
Administrative practice and procedure, Bank deposit insurance, Banks, Banking, Reporting and recordkeeping requirements, Savings associations.
Administrative practice and procedure, Bank deposit insurance, Banks, Banking, Claims, Crime, Equal access to justice, Fraud, Investigations, Lawyers, Penalties, Savings associations.
For the reasons stated in the preamble and under the authority of 12 U.S.C. 1819 (Seventh and Tenth), the FDIC amends 12 CFR parts 303 and 308 as follows:
12 U.S.C. 378, 1464, 1813, 1815, 1817, 1818, 1819(a) (Seventh and Tenth), 1820, 1823, 1828, 1829, 1831a, 1831e, 1831
(a) This subpart covers applications under section 19 of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1829. The FDIC refers to such applications as “consent applications.” Under section 19, any person who has been convicted of any criminal offense involving dishonesty, breach of trust, or money laundering, or has agreed to enter into a pretrial diversion or similar program (program entry) in connection with a prosecution for such offense (collectively, Covered Offenses), may not become, or continue as, an institution-affiliated party (IAP) of an insured depository institution (IDI); own or control, directly or indirectly, any IDI; or otherwise participate, directly or indirectly, in the conduct of the affairs of any IDI without the prior written consent of the FDIC.
(b) In addition, the law prohibits an IDI from permitting such a person to engage in any conduct or to continue any relationship prohibited by section 19. IDIs must therefore make a reasonable, documented inquiry to verify an applicant's history to ensure that a person who has a Covered Offense under section 19 is not hired or permitted to participate in its affairs without the written consent of the FDIC issued under this subpart. FDIC-supervised IDIs may extend a conditional offer of employment contingent on the completion of a background check satisfactory to the institution to determine if the applicant is prohibited under section 19, but the applicant may not work for, be employed by, or otherwise participate in the affairs of the IDI until the IDI has determined that the applicant is not prohibited under section 19 (including persons who have had a consent application approved).
(c) If there is a conviction or program entry covered by the prohibitions of section 19, an application under this subpart must be filed seeking the FDIC's consent in order to become, or to continue as, an IAP; to own or control, directly or indirectly, an IDI; or to otherwise participate, directly or indirectly, in the affairs of the IDI. The application must be filed, and consented to, prior to serving in any of the foregoing capacities unless such application is not required under the subsequent provisions of this subpart. The purpose of an application is to provide the applicant an opportunity to demonstrate that, notwithstanding the prohibition, a person is fit to participate in the conduct of the affairs of an IDI without posing a risk to its safety and soundness or impairing public confidence in that institution. The burden is upon the applicant to establish that the application warrants approval.
(a) Persons covered by section 19 include IAPs, as defined by 12 U.S.C. 1813(u), and others who are participants in the conduct of the affairs of an IDI. Therefore, all directors, officers, and employees of an IDI who fall within the scope of section 19, including
(b) The term
(c) Individuals who file an application with the FDIC under the provisions of section 19 who also seek to participate in the affairs of a bank holding company or savings and loan holding company may have to comply with any filing requirements of the Board of the Governors of the Federal Reserve System under 12 U.S.C. 1829(d) and (e). Conversely, an individual who works at a bank holding company or savings and loan holding company who would like to participate in the affairs of an IDI or be in a position to influence or control the management or affairs of an IDI must file an application with the FDIC under this subpart.
(d) Section 19 specifically prohibits a person subject to its provisions from owning or controlling, directly or indirectly, an IDI. The terms
(1) A person will be deemed to exercise “control” if that person—
(i) Has the ability to direct the management or policies of an IDI;
(ii) Has the power to vote 25 percent or more of the voting shares of an IDI; or
(iii) Has the power to vote 10 percent of the voting shares of an IDI if—
(A) No other person owns, controls, or has the power to vote more shares; or
(B) The institution has registered securities under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l).
(2) Under this paragraph (d), a person will be deemed to “own” an IDI if that person owns—
(i) 25 percent or more of the institution's voting stock; or
(ii) 10 percent of the voting shares if—
(A) No other person owns more; or
(B) The institution has registered securities under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l).
(3) The standards in this paragraph (d) would also apply to an individual acting in concert with others so as to have such ownership or control. Absent the FDIC's consent, persons subject to the prohibitions of section 19 must divest their control or ownership of shares above the foregoing limits.
(a)
(1) The term
(i) Means an offense under which an individual, directly or indirectly—
(A) Cheats or defrauds; or
(B) Wrongfully takes property belonging to another in violation of a criminal statute;
(ii) Includes an offense that Federal, State, or local law defines as dishonest, or for which dishonesty is an element of the offense; and
(iii) Does not include—
(A) A misdemeanor criminal offense committed more than one year before the date on which an individual files a consent application, excluding any period of incarceration; or
(B) An offense involving the possession of controlled substances. At a minimum, this exclusion applies to criminal offenses involving the simple possession of a controlled substance and possession with intent to distribute a controlled substance. This exclusion may also apply to other drug-related offenses depending on the statutory elements of the offenses or from court determinations that the statutory provisions of the offenses do not involve dishonesty, breach of trust, or money laundering, as noted in paragraph (b) of this section. Potential applicants may contact their appropriate FDIC Regional Office if they have questions about whether their offenses are covered under section 19.
(iv) The term
(2) The term
(b)
(c)
(i) It has been 7 years or more since the offense occurred; or
(ii) The individual was incarcerated with respect to the offense and it has been 5 years or more since the individual was released from incarceration.
(iii) The term
(2)
(3)
(d)
(a)
(b)
(c)
(1) There is an order of expungement, sealing, or dismissal that has been issued in regard to the conviction in connection with such offense, or if a conviction has been otherwise expunged, sealed, or dismissed by operation of law; and
(2) It is intended by the language in the order itself, or in the legislative provisions under which the order was issued, or in other legislative provisions, that the conviction shall be destroyed or sealed from the individual's State, Tribal, or Federal record, even if exceptions allow the conviction to be considered for certain character and fitness evaluation purposes.
(d)
(a) The term
(b) When a Covered Offense either is reduced by a program entry to an offense that would otherwise not be covered by section 19 or is dismissed upon successful completion of a program entry, the offense remains a Covered Offense for purposes of section 19. The Covered Offense will require an application unless it is
(c) Expungements, dismissals, or sealings of program entries will be treated the same as those for convictions.
(a) The FDIC will accept applications from—
(1) An individual;
(2) An IDI applying on behalf of an individual;
(3) A depository institution holding company applying on behalf of an individual with respect to an IDI subsidiary of the holding company; and
(4) A depository institution holding company applying on behalf of an individual who will work at the holding company but also participate in the affairs of the IDI or who would be in a position to influence or control the management or affairs of the IDI, in accordance with § 303.221(a).
(b) An individual or an institution may file applications at separate times. Under either approach, the application(s) must be filed with the appropriate FDIC Regional Office, as required by this subpart.
Except for situations in which no application is required under section 19 and this subpart, an application must be filed when there is a conviction by a court of competent jurisdiction for a Covered Offense by any adult or minor treated as an adult or when such person has a program entry regarding that offense. Before an application may be filed, all of the sentencing requirements associated with a conviction, or conditions imposed by the program entry, including but not limited to, imprisonment, fines, conditions of rehabilitation, and probation requirements, must be completed, and the case must be considered final by the procedures of the applicable jurisdiction. The FDIC's application forms as well as additional information concerning section 19 can be accessed from the FDIC's Regional Offices or on the FDIC's website.
(a)
(1) The individual has been convicted of, or has program entries for, no more than two Covered Offenses, including those subject to paragraphs (b)(1) through (3) of this section; and for each Covered Offense, all of the sentencing requirements associated with the conviction, or conditions imposed by the program entry, have been completed (the sentence- or program-completion requirement does not apply under paragraph (b)(2) of this section).
(2) For each Covered Offense, the individual could have been sentenced to a term of confinement in a correctional facility of three years or less and/or a fine of $2,500 or less, and the individual actually served three days or less of jail time for each Covered Offense.
(3) Jail time under paragraph (a)(2) of this section is calculated based on the time an individual spent incarcerated as a punishment or a sanction—not as pretrial detention—and does not include probation or parole where an individual was restricted to a particular jurisdiction or was required to report occasionally to an individual or a specific location. Jail time includes confinement to a psychiatric treatment center in lieu of a jail, prison, or house of correction on mental-competency grounds. The definition is not intended to include either of the following: persons who are restricted to a substance-abuse treatment program facility for part or all of the day; or persons who are ordered to attend outpatient psychiatric treatment.
(4) If there are two convictions or program entries for a Covered Offense, each conviction or program entry was entered at least three years prior to the date an application would otherwise be required, except as provided in paragraph (b)(1) of this section.
(5) Each Covered Offense must not have been committed against an IDI or insured credit union.
(b)
(2)
(i) The aggregate total face value of all “bad” or insufficient funds check(s) cited across all the conviction(s) or program entry(ies) for “bad” or insufficient funds checks is $2,000 or less;
(ii) No IDI or insured credit union was a payee on any of the “bad” or insufficient funds checks that were the basis of the conviction(s) or program entry(ies); and
(iii) The individual has no more than one other
(3)
(i) The value of the currency, goods, or services taken was $1,000 or less;
(ii) The theft was not committed against an IDI or insured credit union;
(iii) The individual has no more than one other offense that is considered exempt under this section; and
(iv) If there are two offenses—each of which, by itself, is considered exempt under this section—each conviction or program entry was entered at least three years prior to the date an application would otherwise be required, or at least 18 months prior to the date an application would otherwise be required if the actions that resulted in the conviction or program entry all occurred when the individual was 21 years of age or younger.
(v) Simple theft excludes burglary, forgery, robbery, identity theft, and fraud.
(4)
(c)
Forms and instructions should be obtained from the FDIC's Regional Offices or on the FDIC's website (
(a)
(1) Primarily rely on the criminal history record provided by the Federal Bureau of Investigation (rap sheet); and
(2) Provide such record to the subject of the application to review for accuracy. The FDIC will make reasonable efforts to communicate with the subject of the application within 15 calendar days of receipt of this record from the Federal Bureau of Investigation to inform the individual that the FDIC will be providing them with a copy of the report and to verify the individual's contact information. The FDIC will make reasonable efforts to send the report to the individual within 5 business days of successful verification of the individual's contact information. If the individual believes that there are any inaccuracies in the report, the FDIC will direct the individual to an appropriate contact at the Federal Bureau of Investigation where the individual can seek corrections to the report.
(b)
(c)
(d)
(1) Whether the conviction or program entry is subject to section 19, and the specific nature and circumstances of the offense;
(2) Whether the participation directly or indirectly by the person in any manner in the conduct of the affairs of the IDI constitutes a threat to the safety and soundness of the institution or the interests of its depositors or threatens to impair public confidence in the institution;
(3) Evidence of rehabilitation, including the person's age at the time of the conviction or program entry, the time that has elapsed since the conviction or program entry, and the relationship of the individual's offense to the responsibilities of the applicable position;
(4) The individual's employment history, letters of recommendation, certificates documenting participation in substance-abuse programs, successful participation in job preparation and educational programs, and other relevant evidence;
(5) The ability of management of the IDI to supervise and control the person's activities;
(6) The level of ownership or control the person will have of an IDI;
(7) The applicability of the IDI's fidelity bond coverage to the person; and
(8) Any additional factors in the specific case that appear relevant to the application or the individual including, but not limited to, the opinion or position of the primary Federal or State regulator.
(e)
(f)
(g)
(h)
(i)
(a) The FDIC will inform the applicant in writing that the application has been denied and summarize or cite the relevant considerations specified in § 303.229.
(b) The denial will also notify the applicant that a written request for a hearing (or a request for written submissions in lieu of a hearing) under 12 CFR part 308, subpart M, may be filed with the FDIC Executive Secretary within 60 days after the denial. For institution-sponsored applications, either the institution or the subject individual (or both, as a consolidated request) may file such a written request. A request must include the relief desired, the grounds supporting the request for relief, and any supporting evidence.
(a) An application under section 19 must be made in writing and may not be made less than one year following the issuance of a decision denying an application under section 19. If the original denial is subject to a request for a hearing or written submissions in lieu of a hearing, then the subsequent application may be filed at any time more than one year after the decision of the FDIC Board of Directors, or its designee, denying the application. Unless with the passage of time the individual is no longer subject to section 19, the prohibition against participating in the affairs of an IDI under section 19 will continue until the individual has been granted consent in writing to participate in the affairs of an IDI by the Board of Directors or its designee.
(b) An institution-sponsored application is not subject to the one-year waiting period if the application—
(1) Follows the denial of an individual application; or
(2) Follows the denial of an institution-sponsored application and the subsequent application is sponsored by a different institution or is for a different position.
5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 1464, 1467(d), 1467a, 1468, 1815(e), 1817, 1818, 1819, 1820, 1828, 1829, 1829(b), 1831i, 1831m(g)(4), 1831o, 1831p-1, 1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 4717, 5412(b)(2)(C), 5414(b)(3); 15 U.S.C. 78(h) and (i), 78o(c)(4), 78o-4(c), 78o-5, 78q-1, 78s, 78u, 78u-2, 78u-3, 78w, 6801(b), 6805(b)(1); 28 U.S.C. 2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a; Pub. L. 104-134, sec. 31001(s), 110 Stat. 1321; Pub. L. 109-351, 120 Stat. 1966; Pub. L. 111-203, 124 Stat. 1376; Pub. L. 114-74, sec. 701, 129 Stat. 584.
The rules and procedures set forth in this subpart will apply to an application filed under section 19 of the FDI Act, 12 U.S.C. 1829 (section 19), and 12 CFR part 303, subpart L, by an insured depository institution (IDI), depository institution holding company, or an individual (any of which could be termed an applicant). Section 19 states that if an individual has been convicted of any criminal offense involving dishonesty, a breach of trust, or money laundering, or who has agreed to enter into a pretrial diversion or similar program in connection with the prosecution of such offense, the individual must seek the prior written consent of the FDIC to: become or continue as an institution-affiliated party (IAP) with respect to an IDI; own or control directly or indirectly an IDI; or participate directly or indirectly in any manner in the conduct of the affairs of an IDI. This subpart will apply only after such application has been denied under 12 CFR part 303, subpart L.
If an application is denied under 12 CFR part 303, subpart L, then the applicant may request a hearing (or request a written submission in lieu of a hearing) under this subpart M. The applicant will have 60 days after the date of the denial to file a written request with the Administrative Officer. In the request, the applicant must state the relief desired, the grounds supporting the request for relief, and provide any supporting evidence that the applicant believes is responsive to the grounds for the denial.
(b)
(d)
(e)
(f)
By order of the Board of Directors.
Coast Guard, DHS.
Temporary interim rule with request for comments.
The Coast Guard is temporarily modifying the operating schedule that governs the Florida East Coast (FEC) Railroad Bridge, across the Okeechobee Waterway (OWW), mile 7.41, at Stuart, FL. This action is necessary to allow for continuity of drawbridge operations while the Coast Guard reviews comments and documents associated with the temporary test deviation. Allowing the drawbridge to return to its regular operating schedule would not meet the reasonable needs of navigation given the increase in railway traffic.
This temporary interim rule is effective from August 9, 2024, through 11:59 p.m. on December 31, 2024.
Comments and related material must reach the Coast Guard on or before September 23, 2024.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this temporary interim rule, call, or email Ms. Jennifer Zercher, Bridge Management Specialist, Seventh Coast Guard District; telephone 571-607-5951, email
The Coast Guard is issuing this temporary interim rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. Allowing the drawbridge to return to its regular operating schedule would not meet the reasonable needs of navigation given the increase in railway traffic. The regular operating schedule does not provide predictable and reliable drawbridge openings.
On February 6, 2024, the Coast Guard published a notice of temporary deviation from regulations; request for comments, in the
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making it effective in less than 30 days after publication in the
We are soliciting comments on this rulemaking. If the Coast Guard determines that changes to the temporary interim rule are necessary, we will publish a temporary final rule or other appropriate document.
The Coast Guard is issuing this rule under authority in 33 U.S.C. 499. The FEC Railroad Bridge across the OWW, mile 7.41, at Stuart, FL, is a single-leaf bascule bridge with a six-foot vertical clearance at mean high water in the closed position. The normal operating schedule for the bridge is found in 33 CFR 117.317(c).
The regular drawbridge regulation, 33 CFR 117.313(c), states that the draw is normally in the fully open position . . . when a train approaches the bridge . . . the draw lowers and locks . . . and remains down for a period of eight minutes or while the approach track circuit is occupied. The Coast Guard has determined that allowing the drawbridge to return to its regular operating schedule would not meet the reasonable needs of navigation given the increase in railway traffic. The regular operating schedule does not provide predictable and reliable drawbridge openings. The Coast Guard needs sufficient time to review the marine traffic study and other documentation,
The Coast Guard is issuing this rule, which permits a temporary deviation from the operating schedule that governs FEC Railroad Bridge across the OWW, mile 7.41, at Stuart, FL. This rule allows the bridge to provide continuity with predictable and reliable drawbridge openings through 11:59 p.m. on December 31, 2024.
When determining if this temporary deviation will meet the reasonable needs of competing modes of transportation, sufficient time to review and mitigate public comments and the marine traffic study is necessary. The marine traffic study was delayed and the Coast Guard did not receive the draft document until July 11, 2024. A proper review the marine traffic study and mitigation of comments is anticipated to be completed by December 31, 2024.
We developed this temporary interim rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders.
Executive Orders 12866 and 13563 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. This rule has not been designated a “significant regulatory action,” under Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, it has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on the fact that little, or no commercial or recreational vessel traffic will be impacted by this rule. Furthermore, the drawbridge, as of date of the publication of this rule, cannot resume its regular operating schedule as it does not meet the reasonable needs of navigation given the increase in railway traffic. The regular operating schedule does not provide predictable and reliable drawbridge openings.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does 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.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01, Rev.1, associated implementing instructions, and Environmental Planning Policy COMDTINST 5090.1 (series) which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f). The Coast Guard has determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule promulgates the operating regulations or procedures for drawbridges and is categorically excluded from further review, under paragraph L49, of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1.
Neither a Record of Environmental Consideration nor a Memorandum for the Record are required for this rule.
We view public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal Decision-Making Portal at
To view documents mentioned in this rule as being available in the docket, find the docket as described in the previous paragraph, and then select “Supporting & Related Material” in the Document Type column. Public comments will also be placed in our online docket and can be viewed by following instructions on the
We accept anonymous comments. Comments we post to
Bridges.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:
33 U.S.C. 499; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 00170.1. Revision No. 01.3
(k) Florida East Coast Railroad (FEC) Bridge, mile 7.41, at Stuart. The draw shall operate as follows:
(1) The drawbridge will be maintained in the fully open-to-navigation position, except during periods when it is closed for the passage of train traffic, to conduct inspections, and to perform maintenance and repairs authorized by the Coast Guard.
(2) The drawbridge will not be closed for more than 50 consecutive minutes in any given hour during daytime operations (6 a.m. to 8 p.m.) and for more than 7 total hours during daytime operations (6 a.m. to 8 p.m.).
(3) Notwithstanding paragraph (k)(1), the drawbridge will open and remain open to navigation for a fixed 10-minute period at the top of each hour from 6 a.m. to 8 p.m.
(4) From 8:01 p.m. until 5:59 a.m. daily, the drawbridge will remain in the fully open-to-navigation position, except during periods when it is closed for the passage of train traffic, to conduct inspections, and to perform maintenance and repairs authorized by the Coast Guard. The drawbridge will not be closed more than 60 consecutive minutes.
(5) If a train is in the track circuit at the start of a fixed opening period, the opening may be delayed up to, but not more than, five minutes. Once the train has cleared the circuit, the bridge must open immediately for navigation to begin the fixed opening period.
(6) The drawbridge will be tended from 6 a.m. to 8 p.m., daily. The bridge tender will monitor VHF-FM channels 9 and 16 and will provide estimated times of drawbridge openings and closures, or any operational information requested. Operational information will be provided 24 hours a day by telephone at (772) 403-1005.
(7) The drawbridge owner will maintain a mobile application. The drawbridge owner will publish drawbridge opening times, and the drawbridge owner will provide timely updates to schedules, including but not limited to, impacts due to emergency circumstances, inspections, maintenance, and repairs authorized by the Coast Guard.
(8) Signs will be posted and visible to marine traffic, displaying VHF radio contact information, application information, and the telephone number for the bridge tender.
(9) A copy of the drawbridge logbook for the previous week will be provided to the Seventh Coast Guard District Bridge Manager by 4 p.m. each Monday.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for certain waters of Lake Michigan in Sheboygan, WI. This rule is necessary to protect personnel, vessels, and the marine environment from potential hazards associated during a high-speed boat race. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port, Sector Lake Michigan.
This rule is effective from August 9 through August 11, 2024, but it will only be enforced from 8:00 a.m. to 6:00 p.m. each day.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions about this rule, call or email Chief Petty Officer Aaron Sunstrom, Sector Lake Michigan Waterways Management Division, U.S. Coast Guard; telephone 414-747-7148, email
The sponsors of the Sheboygan Midwest Challenge advised the Coast Guard on July 30, 2024, that they planned to hold their high-speed boat race beginning on August 9, 2024. There is insufficient time to propose a rule, consider comments, and publish a final rule in time to respond to the potential safety risk associated with the high-speed boat race before August 9; therefore, the Coast Guard is issuing this
Also, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Lake Michigan (COTP) has determined that potential hazards associated with the Sheboygan Midwest Challenge would be a safety concern for anyone within the safety zone that is not participating in the event. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the scheduled event.
This rule establishes a safety zone which will be enforced each day, from 8:00 a.m. to 6:00 p.m., starting on August 9, 2024, and continuing through August 11, 2024. The safety zone will cover certain waters of Lake Michigan with a rectangle shaped racecourse offshore of Sheboygan, WI. The area will be bounded by the points beginning at 43°44′54.32″ N, 87°42′5.77″ W; then east to 43°44′54.10″ N, 87°41′3.21″ W; then south to 43°42′26.73″ N, 87°40′54.66″ W; then west to 43°42′27.10″ N, 87°42′10.11″ W; then returning to the point of origin. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the high-speed boat race. No vessels or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 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. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on characteristics of the safety zone. The safety zone created by this rule will be relatively small, is designed to minimize its impact on navigable waters, and is not anticipated to exceed 10 hours in duration each day the rule is in place. Furthermore, under certain conditions vessels may still transit through the safety zone when permitted by the Captain of the Port of designated representative.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, does not apply to rules not subject to notice and comment. As the Coast Guard has, for good cause, waived notice and comment requirement that would otherwise apply to this rulemaking, the Regulatory Flexibility Act's provisions do not apply here.
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does 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.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting 10 hours in duration each day that will prohibit entry into certain waters of Lake Michigan with a rectangle shaped racecourse offshore of Sheboygan, WI. The area will be bounded by the points beginning at 43°44′54.32″ N, 87°42′5.77″ W; then east to 43°44′54.10″ N, 87°41′3.21″ W; then south to 43°42′26.73″ N, 87°40′54.66″ W; then west to 43°42′27.10″ N, 87°42′10.11″ W; then returning to the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a)
(b)
(c)
(2) This safety zone is closed to all vessel traffic, except as may be permitted by the COTP or a designated representative.
(3) The “designated representative” of the COTP is any Coast Guard commissioned, warrant, or petty officer who has been designated by the COTP to act on his or her behalf.
(4) Persons and vessel operators desiring to enter or operate within the safety zone must contact the COTP or an on-scene representative to obtain permission to do so. The COTP or an on-scene representative may be contacted via VHF Channel 16. Vessel operators given permission to enter or operate in the safety zone must comply with all directions given to them by the COTP or an on-scene representative.
Coast Guard, Department of Homeland Security (DHS).
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for navigable waters of the Green River from Mile Marker 61 to 62 in Calhoun, KY. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by a power line replacement due to unstable powerline poles. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port, Sector Ohio Valley.
This rule is effective without actual notice from 6 a.m. on August 7, 2024, through 8 p.m. on August 9, 2024. For the purposes of enforcement, actual notice will be used from 6 a.m. on August 5, 2024, through 8 p.m. on August 7, 2024. This safety zone will be enforced each day it is effective from 6 a.m. until 8 p.m.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions about this rule, call or email Marine Safety Technician Second Class Bryan Crane, Sector Ohio Valley, U.S. Coast Guard; telephone 502-779-5334, email
The Coast Guard is issuing this temporary rule under authority in 5 U.S.C. 553(b)(B). This statutory provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” The Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the power line poles failed the internal integrity test and prompt action is needed to respond to the potential safety hazards associated with the overhead power lines. It is impracticable to publish an NPRM because we must establish this safety zone by August 5, 2024, to preserve safety of vessels transiting this area during the repairs. We note that a similar regulation was published establishing a safety zone from July 16, 2024, through July 19, 2024 (89 FR 57359). However, inclement weather prevented the repairs from being completed. Therefore, we are establishing this safety zone so that repair work can be conducted from August 5, 2024, through August 9, 2024.
Also, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Ohio Valley (COTP) has determined that potential hazards associated with the power line replacement starting August 5, 2024,
This rule establishes a safety zone during daylight hours on August 5, 2024, through August 9, 2024. The safety zone will cover all navigable waters within one (1) Nautical Mile of vessels and machinery being used by personnel to repair the powerline poles between Mile Markers 61 and 62 on the Green River, in Calhoun, KY. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the powerline poles are being repaired. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 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. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone. Vessel traffic will be able to safely transit around this safety zone during the times that powerline work is not being conducted. Moreover, the Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rule would allow vessels to seek permission to enter the zone.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does 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.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting only four days that will prohibit entry within 1 nautical mile of the location of the power line crossing, Green River between Mile Markers 61 and 62, specifically 61.5. It is categorically excluded from further review under paragraph L60c of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a)
(b)
(2) To seek permission to enter, contact the COTP or the COTP's representative by VHF CH. 16. Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.
(c)
Environmental Protection Agency (EPA).
Final action.
The Environmental Protection Agency (EPA) is taking final action to disapprove a revision to Kansas's State Implementation Plan (SIP) submitted on July 28, 2021, intended to satisfy applicable requirements under the Clean Air Act (CAA) and EPA's Regional Haze Rule (RHR) for the program's second planning period. As required by the CAA, the RHR calls for State and Federal agencies to work together to improve visibility, including by reducing or eliminating regional haze, in 156 national parks and wilderness areas. The rule requires the States, in coordination with the EPA, the National Park Service (NPS), U.S. Fish and Wildlife Service (FWS), the U.S. Forest Service (FS), and other interested parties, to develop and implement air quality protection plans in which States revise their long-term strategies (LTS) for making reasonable progress towards the national goal of preventing any future, and remedying any existing, anthropogenic impairment of visibility in these mandatory Class I Federal Areas. Disapproval does not trigger imposition of mandatory sanctions. The effective date of this action does trigger an obligation for the EPA to issue a Federal Implementation Plan (FIP) within two years.
This final action is effective on September 6, 2024.
The EPA has established a docket for this action under Docket ID No. EPA-R07-OAR-2023-0582. All documents in the docket are listed on the
Jed D. Wolkins Environmental Protection Agency, Region 7 Office, Air Quality Planning Branch, 11201 Renner Boulevard, Lenexa, Kansas 66219; telephone number: (913) 551-7588; email address:
Throughout this document “we,” “us,” and “our” refer to the EPA.
The EPA is disapproving Kansas's regional haze plan for the second planning period. As required by section 169A of the CAA, the Federal RHR calls for State and Federal agencies to work together to improve visibility in 156 national parks and wilderness areas. The rule requires the States, in coordination with the EPA, the NPS, FWS, the FS, and other interested parties, to develop and implement air quality protection plans to reduce the pollution that causes visibility impairment in mandatory Class I Federal areas. Visibility impairing pollutants include fine and coarse particulate matter (PM) (
On July 28, 2021, Kansas submitted a revision to its SIP to address regional haze for the second implementation period. Kansas made this submission in order to satisfy the requirements of the CAA's regional haze program pursuant to CAA sections 169A and 169B and 40 Code of Federal Regulations (CFR) 51.308. The State's submission met the public notice requirements in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on its SIP revision from May 27, 2021, to June 28, 2021, and received comments from five parties, including the EPA. Kansas made some changes to its SIP revision based on some of the public comments. However, Kansas disagreed with most of the comments pointing out flaws in its SIP revision, and the State made no changes based on those comments.
On January 2, 2024 (89 FR 178), the EPA published the NPRM proposing a
The purpose of the proposed rulemaking was to take public comment on the EPA's intent to disapprove Kansas's July 28, 2021 SIP submission because it does not satisfy regional haze requirements for the second planning period. In the NPRM, the EPA proposed to disapprove the submission for,
In the rest of this section, the EPA has summarized and provided responses to the adverse comments received on the NPRM. No response is necessary for the comments received in support of the NPRM or the comments that were not directly related to the NPRM. After carefully considering the comments received, the EPA is finalizing its disapproval of the Kansas SIP submission for the RHR second planning period.
The Conservation Groups commented that the EPA ignores the environmental justice impacts of our action on Kansas's SIP revision. The commenters acknowledged that requiring Kansas to correct the deficiencies in the SIP revision may result in the State identifying new emission control measures to reduce pollution that negatively impacts low-income communities and communities of color. The commenters then provided information from the EPA's EJScreen tool to state that there are overburdened communities exposed to pollution near some large stationary sources, including Kansas City-BPU's Nearman Creek Power Station, the Jeffrey Energy Center, and the Lawrence Energy Center. The Conservation Groups stated that the EPA must analyze the potential disparate impacts or environmental justice benefits of its action on Kansas's SIP revision.
The Conservation Group commenters provided additional information from multiple EJ Screen analyses. Without agreeing with the particular relevance or accuracy of this information, the EPA acknowledges the EJ Screen information provided as part of the comment, which identifies certain demographic and environmental information regarding communities near the Kansas City-BPU's Nearman Creek Power Station, the Jeffrey Energy Center, and the Lawrence Energy Center. As discussed in the NPRM and in this document, the EPA has evaluated Kansas's SIP submission against the statutory and regulatory regional haze requirements and determined that it has not satisfied those minimum requirements.
KDHE stated that per 40 CFR 51.308(f)(2), the 2021 SIP's LTS evaluated whether any emission reductions measures were “necessary to make reasonable progress” and determined no additional measures were necessary. KDHE stated that the CenSARA Area of Influence (AOI) results show that for the 20% most impaired days in base year 2016, no Kansas facility had an individual impact greater than 0.84% (nitrate and sulfate impacts combined) at any of the Class I areas studied. KDHE maintained that 0.84% is not a significant level of visibility impact. KDHE asserted that neither the EPA nor federal land manager (FLM) staff criticized the use of combined nitrates and sulfates, and Kansas was only notified of the EPA's preference to separate nitrates and sulfates in comments during the public comment period.
As explained in the NPRM, the State must evaluate and determine the emission reduction measures that are necessary to make reasonable progress by considering the four statutory factors.
The 1999 RHR established an iterative planning process that requires States that impact visibility at Class I areas to periodically submit SIP revisions to address such impairment. 64 FR 35714 (1999); CAA section 169A(b)(2). While the 1999 RHR outlined the regional haze requirements for the first planning period, the EPA revised the RHR in 2017 to establish the regional haze requirements for the second planning period. 82 FR 3078 (2017). For example, the LTS requirements for the first planning period are laid out in 40 CFR 51.308(d)(3), and the LTS requirements for the second planning period are laid out in 40 CFR 51.308(f)(2). This therefore necessitates separate analyses in line with the regulatory language dictating the requirements for the development of each planning period's LTS.
Kansas also argues that the SO
KDHE's reliance on the CenSARA AOI results to determine reasonable progress is misplaced. CAA section 169A(g)(1) outlines that “in determining reasonable progress, there shall be taken into consideration the costs of compliance, the time necessary for compliance, and the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any existing source subject to such requirements.” Moreover, the RHR outlines that in order to evaluate and determine the emission reduction measures that are necessary to make reasonable progress, States must consider “the costs of compliance, the time necessary for compliance, the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any potentially affected anthropogenic source of visibility impairment.” 40 CFR 51.308(f)(2)(i). The individual impact of a State's sources on the Class I area and the significance of visibility impact should not undermine the role of the four-factor analysis when determining reasonable progress in accordance with the regulations.
While the EPA cannot speak for the FLMs as to why they did not address the use of combined nitrates and sulfates, the EPA choose to not address this issue in its initial comments to Kansas on the proposed SIP revision during early engagement (
Kansas did not meet the statutory and regulatory requirements for the second planning period SIP revision, and therefore, the EPA cannot approve Kansas's SIP submission.
KDHE stated the language of CAA section 169A(b) requires a SIP to “contain such emission limits, schedules of compliance and other measures as may be necessary to make reasonable progress toward meeting the national goal” and asserted that the trigger warranting evaluation of the four statutory factors is, by statute, whether it is first “necessary” to meet the national goal. KDHE asserted that Kansas sources' de minimis impact to visibility and trending reduction of visibility impairment makes conducting four-factor analyses unnecessary to ensure reasonable progress. KDHE stated that the EPA's insistence that every State carry out four-factor analysis despite having insignificant sources with respect to visibility impact is not justified. KDHE concluded that the threshold the EPA currently uses exceeds the statutory requirement, is inconsistent with legislative intent, and is arbitrary.
First, Kansas's chosen source selection methodology analyzed visibility impacts from Kansas and compared those to visibility impacts to other States that impact the same Class I areas. In so doing, Kansas concluded that its in-state contribution to visibility impairment at the affected Class I area is insignificant and therefore, it was unnecessary to undertake an evaluation of control measures by applying the four statutory factors. This was improper. Under the RHR, each State has an obligation to submit a LTS that addresses the regional haze visibility impairment resulting from emissions from within that State, and that obligation “is not discharged simply because another State's contributions to visibility impairment may be greater.”
KDHE provided information including graphs and tables showing the improving visibility impairment at Class I areas impacted by Kansas emissions, year over year of decreasing emissions, and Kansas's low impact compared to other nearby States. While we agree that these are true, as stated throughout this document, these facts do not relieve Kansas from the requirement to have a LTS by considering the four statutory factors.
Secondly, Kansas's chosen threshold of 1.0% is unreasonable because it excluded all of the State's largest visibility impairing sources from selection. Generally, a threshold that captures only a small portion of a State's contribution to visibility impairment in Class I areas is more likely to be unreasonable.
CAA section 169A(b)(2)(B), requires each State having emissions that may affect visibility in a Class I area to include in its SIP emission limits, schedules of compliance, and other measures as may be necessary to make reasonable progress toward meeting the national goal. CAA section 169A(b)(2)(B). The national goal, as laid out in section 169A(a)(1) of the CAA is to prevent future, and to remedy existing manmade impairment of visibility in Class I areas.
In the 1999 RHR, the EPA stated that the “prevention component of the national goal requires that States have the framework in place to address future growth in emissions. . . . For this reason, the EPA does not believe that it is appropriate to establish criteria for excluding States or geographic areas from consideration as potential contributors to regional haze.” 64 FR 35721 (1999). Then, in the 2017 RHR, the EPA “reiterat[ed] that the CAA requires States to consider the four statutory factors . . . in each implementation period to determine the rate of progress towards natural visibility conditions that is reasonable for each Class I area.” 82 FR 3080 (2017).
The 2017 RHR also recognized that, due to the nature of regional haze (visibility impairment that is caused by the emissions of air pollutants from numerous anthropogenic sources located over a wide geographic area), numerous and sometimes (relatively) smaller in-state sources may need to be selected and evaluated for control measures as part of the reasonable progress analysis. As stated in response to comments on the 2017 RHR, “[a] state should not fail to address its many relatively low-impact sources merely because it only has such sources and another state has even more low-impact sources and/or some high impact sources.”
Once a State has selected sources, or groups of sources, for evaluation, it then must consider the four statutory factors to evaluate the emission reduction measures that are necessary to make reasonable progress. CAA section 169A(g)(1); 40 CFR 51.308(f)(2). Control measures that are necessary to make reasonable progress toward the national goal of natural visibility conditions must be included in the State's LTS in the SIP. CAA section 169A(b)(2)(B); 40 CFR 51.308(f)(2). Kansas did not select any sources to evaluate and did not apply the four statutory factors in order to determine what is necessary for reasonable progress, thus resulting in an unjustified LTS for the second planning period. The EPA therefore finds
In addition, Kansas's interpretation of the phrase “as may be necessary to make reasonable progress toward meeting the national goal” is incorrect. Kansas's statutory construction comment is inconsistent with the EPA's interpretation and explanation laid out in the 2017 RHR preamble. To achieve the national goal, it is “necessary” for all States to reduce or eliminate visibility-impairing emissions, which includes contributions from sources in Kansas. While the EPA has created an iterative planning process to achieve Congress' ambitious goal, that process will take many years. Thus, in the second planning period, it nonetheless remains “necessary” for States to consider the four statutory factors and evaluate potential control measures to ensure that they are making reasonable progress toward that goal.
Kansas's conclusion that a four-factor analysis should only be conducted if visibility impacts are significant (
The EPA also disagrees with KDHE's contention that it is not necessary for every State to take into consideration the four statutory factors when determining the control measures that are a part of their LTS for the second planning period. CAA section 169A(b)(2) requires each State whose emissions may reasonably contribute to visibility impairment to include in its regional haze SIP the measures that are necessary to make reasonable progress toward meeting the national goal of preventing future, and eliminating existing, visibility impairment in Class I areas. Within these SIPs, CAA section 169A(b)(2)(B) also requires long-term (10-15 year) strategies for making reasonable progress. CAA 169A(g)(1) outlines that in determining reasonable progress, the four factors must be considered, which is also outlined in the RHR. As outlined in the 1999 RHR, the EPA concluded that “all States contain sources whose emissions are reasonably anticipated to contribute to regional haze in a Class I area and, therefore, must submit regional haze SIPs.” 64 FR 35721 (1999). This determination did not change with the 2017 RHR.
Therefore, in the second planning period, just as with the first planning period, all States are required to submit SIPs to address regional haze and those SIPs must include a LTS for making reasonable progress, which considers the four statutory factors.
In applying the requirements of the regional haze program, the EPA's disapproval is consistent with, and within, the bounds of the CAA and its legislative intent.
As discussed above in Responses to KDHE Comments 1 and 2, the support proffered for Kansas' decision to decline to select sources included Kansas's mistaken belief that the surrounding States should match the level of control at Kansas sources before Kansas evaluates sources for further controls and that, in Kansas's interpretation of CAA section 169A(b)(1), the impacts from individual Kansas sources are so insignificant so as to not require controls. As stated above, the EPA does not find these assertions to be aligned with the statute or RHR, and thus we find that Kansas has not reasonably explained its decision to not select sources for analysis.
If KDHE wanted to rely upon its first planning period analysis and approach, the 2019 Guidance and 2021 Clarifications Memo explain that the State must support its conclusion with a sound analysis that no new significant information is available that changes the first planning period approach. 2019 Guidance at 36; 2021 Clarifications Memo at 5. Kansas's submission did not include an analysis of its first planning period source selection and four factor considerations. Instead, Kansas points to the SO
KDHE cites to the 2019 Guidance and the 2021 Clarifications Memo for how a State can reasonably explain its decision to not select sources. However, without conducting the proper analyses required by the rule, KDHE cannot determine that additional controls or optimization of current controls to reduce emissions and improve visibility would not be cost-effective or necessary for reasonable progress.
On June 28, 2021, the EPA submitted comments on the Kansas regional haze plan revision during the public comment period. After the State's public comment period closed, in the SIP's Responsiveness Summary, Kansas addressed the EPA's comment by providing “narrative analyses for the two most impactful facilities based on nitrates-only and sulfates-only AOI results” in order to satisfy the requirement of 40 CFR 51.308(f)(2)(i). The narrative analyses discussed NO
The EPA notes that Kansas did generally undertake an evaluation of emission reduction measures necessary to make reasonable progress for Evergy—La Cygne and Sunflower Electric—Holcomb. However, the EPA disagrees with Kansas's assertion in the Responsive Summary and its comment on the NPRM that the narrative analyses satisfy the requirement to consider the four statutory factors for two reasons, one substantive and the other procedural.
Substantively, Kansas's four-factor analysis for Evergy—La Cygne and Sunflower Electric—Holcomb is not sufficient. The EPA notes that the 2019 Guidance provides the opportunity for a State to forgo a full four-factor analysis for a particular source if it is already “effectively controlled,” as long as the State explains why it is reasonable to assume that a four-factor analysis would likely result in the conclusion that no further controls are reasonable. 2019 Guidance at 22. Further, the EPA's 2021 Clarifications Memo guides that if a source can achieve, or is achieving, a lower emission rate using its existing measures than the rate assumed for the “effective control,” a State should further analyze the lower emission rate(s) as a potential control option. 2021 Clarifications Memo at 5. In its analysis, Kansas discusses the current control equipment, control efficiencies and current enforceable emission limitations for Evergy—La Cygne NO
Procedurally, the four-factor analysis of NO
A State that has emissions that may affect visibility in a Class I area must develop a LTS that includes the enforceable emission limitations, compliance schedules, and other measures that are necessary to make reasonable progress in such Class I areas. 40 CFR 51.308(f)(2). The State must evaluate and determine the emission reduction measures that are necessary to make reasonable progress by considering the four factors of CAA section 169A(g)(1). The outcome of that analysis is used to determine the emission reduction measures that a particular source or group of sources needs to implement in order to make reasonable progress towards the national visibility goal. The State must include in its implementation plan a description of the criteria it used to determine which sources or groups of sources it evaluated and how the four factors were taken into consideration in selecting the measures for inclusion in its LTS. In addition, emission reduction measures that are necessary to make reasonable progress may be either new, additional control measures for a source, or they may be the existing emission reduction measures that a source is already implementing, and those measures must be included in the SIP. 2019 Guidance at 45; 2021 Clarifications Memo at 8-10.
As stated in the NPRM, Kansas's submission identifies one hundred and twenty-eight (128) sources in Kansas that impact Class I areas. If Kansas had followed the RHR and properly analyzed a set of these sources, it could potentially have identified additional cost-effective control measures to achieve SO
The determination of adequacy for the existing implementation plan found under 40 CFR 51.308(h) is not applicable to the second planning period SIP revisions under 40 CFR 51.308(f)(2), as KDHE mistakenly asserts. Rather, the requirements for
The EPA reiterates that KDHE did not submit a progress report in accordance with 40 CFR 51.308(g) when it submitted its second planning period SIP revision due July 21, 2021. Rather, the progress report provided in the second planning period SIP revision was to fulfill its 40 CFR 51.308(f)(5) requirements. The regulatory language under 40 CFR 51.308(f)(5) directs States
Thus, for the reasons described in this response, KDHE is mistaken that it can use a declaration of adequacy under 40 CFR 51.308(h) in order to avoid considering the four statutory factors to fulfill its LTS requirements for the second planning period under 40 CFR 51.308(f)(2). KDHE has
The EPA disagrees that it is arbitrary for the Agency to require second planning period regional haze SIP submissions to develop a LTS that will make reasonable progress towards the national goal specified in CAA section 169A(a)(1), through consideration of the four factors specifically outlined in the CAA section 169A(g)(1). Kansas decided to not select any sources and, as stated in the NPRM, the EPA does not find its decision to be reasonable. Kansas's own submission lists one hundred twenty-eight (128) sources in Kansas with some, albeit low, visibility impacts on at least one Class I area. When SO
The 2017 RHR Revision directed all States that impact Class I areas to evaluate major and minor emission sources and consider the four factors in the second planning period SIP revision. It is already established that Kansas emissions impact Class I areas. As mentioned previously, the EPA acknowledges that there has been visibility improvement and source retirements since the first planning period. However, the fact remains that there is no exclusion in the CAA or RHR to support the contention that if a State can show emissions are “insignificant” or “de minimis”, then it does not have to comply with 40 CFR 51.308(f). The EPA has long established that achieving the Congressional goal of natural visibility will take reductions from multiple sources, across all States, over multiple planning periods.
The EPA also disagrees that source selection and a four-factor analysis is a costly and futile formality of the RHR. The 2019 Guidance and 2021 Clarifications Memo provide States with latitude by which to formulate the LTS, so long as the result is reasonably supported. 2019 Guidance at 9; 2021 Clarifications Memo at 3. As stated in the NPRM, Kansas has not conducted a reasonably supported analysis to in developing its LTS for the second planning period. Had Kansas selected sources to analyze for a four-factor analysis or properly explained its decision not to, it is possible that there would be no new cost-effective controls. If that were the case, then Kansas's existing controls would be necessary for reasonable progress and would need to be in the State's LTS. However, Kansas did not demonstrate that with a proper analysis. 2021 Clarifications Memo at 10.
Additionally, as discussed in Response to KDHE Comment 3, the EPA also does not find KDHE's narrative analyses for Evergy—La Cygne for NO
As previously stated, in order to demonstrate that no additional controls were necessary for reasonable progress at sources in Kansas, KDHE was required by the CAA and the RHR to evaluate sources or groups of sources and determine the emission reduction measures that are necessary to make reasonable progress by considering the four statutory factors. Specifically, the Kansas SIP revision for the second planning period did not provide a substantive analysis related to the effectiveness of controls, nor did Kansas clarify that it determined that the existing controls were necessary for reasonable progress and thus a part of its LTS for the second planning period.
Further, the comment presented summaries from Trinity's modeling analysis and provided a copy of BPU's comment letter submitted to KDHE during the State's public review and comment period. Neither Kansas nor BPU provided the modeling files or documentation of Trinity's modeling analysis during the EPA's comment period. The 2019 Guidance provides a mechanism for a State to decline to select a source “if the source owner has recently made a significant expenditure that resulted in significant reductions of visibility impairing pollutants at an emissions unit, it may be reasonable for the State to assume that additional controls on the unit are unlikely to be reasonable for the upcoming implementation period.” 2019 Guidance at 22-23. The Guidance directs the State to “explain why the decision is consistent with the requirement to make reasonable progress,
As to BPU's discussion of costs and remaining useful life of Nearman Creek Power Station and its controls regarding SO
The EPA understands that if KDHE was to select Nearman Creek Power Station and conduct a four-factor analysis, with full documentation and cost numbers, the result for SO
Furthermore, BPU's comment was not provided to the FLMs during the consultation process or included in the State's plan revision for public notice and comment. Therefore, the analysis does not satisfy the substantive or procedural requirements of the statute or regulations.
If KDHE wanted to rely upon the emission reductions achieved by Evergy and other Kansas sources during the first planning period, then Kansas must document the technical basis on which it is relying to determine that those emissions reductions measures are necessary to make reasonable progress for the second planning period. 40 CFR 51.308(f)(2)(iii). Kansas's submission did not provide the requisite documentation, including a reasoned analysis of why it declined to select any sources; did not make a connection between the source selection step for the second planning period and the emissions controls implemented; and did not provide an analysis of its first planning period source selection and four factor considerations. Instead, Kansas simply points to the SO
Additionally, the statute and rule require evaluation of emissions sources and consideration of the four statutory factors to be part of the State's SIP revision for the second planning period for regional haze regardless of the outcome of the required state-to-state consultation. During the consultation, a State may agree to certain measures necessary to make reasonable progress at a Class I area, and those measures must be included in the SIP revision. The state-to-state consultation also allows States to share the emission reduction measures that have been identified to reduce emissions from their own sources. Therefore, the state-to-state consultation is just one facet, among many, in determining which emission reduction measures for selected sources, or groups of sources, should be included in a State's LTS.
Kansas's SIP submission included documentation of its consultations with Colorado and New Mexico, and neither State appeared to disagree with or comment on Kansas's LTS approach. However, the EPA disagrees with the assertion that, based on consultation, it was reasonable for Kansas to determine it did not have to select sources, apply the four statutory factors, or describe how the statutory factors were evaluated when selecting measures for inclusion in the LTS.
As far as the EPA “burdening Kansas emissions sources with even more analyses and financial obligations”, the EPA is obligated to implement the mandate created by Congress to prevent future, and remedy existing visibility impairment by requiring States to submit SIP revisions that include a LTS to make reasonable progress. CAA section 169A(a)(1),(b)(2)(B). For the second planning period, the EPA conducted a rulemaking with public comment on how the States should be required to address the Congressional mandate. Notably, during that comment period, the EPA received no comments from Kansas or Kansas emission sources to this effect, nor any lawsuits from said parties. If Kansas or Kansas emissions sources have ideas on how to meet the Congressional mandate without further burden on States or sources, we encourage said parties to be involved in the public discourse with the EPA as it relates to the third planning period.
The commenters stated the EPA should review the 2021 SIP again and notice that each factor required to be discussed was identified and commented on in the 2021 SIP submission. Evergy and Sunflower argued the EPA's statement that the 2021 SIP lacks a LTS is patently false.
Additionally, the Responsiveness Summary fails to satisfy the procedural requirements for public notice and comment in 40 CFR part 51 because it was not part of Kansas's regional haze plan revision that went out for state-level public comment from May 27, 2021, to June 28, 2021. 40 CFR 51.102(a) requires States to provide the opportunity to submit written comments on SIP submittals. 40 CFR 51.102(a). 40 CFR 51.104(c) states “EPA will approve revisions only after applicable hearing requirements of § 51.102 have been satisfied.” 40 CFR 51.104(c). The public did not have an opportunity to submit written comments on the analyses provided by Kansas in the Responsive Summary.
Due to the substantive and procedural defects surrounding the Responsiveness Summary, the EPA has determined that the narrative analyses do not meet the RHR requirements, and therefore, the EPA proposes disapproval of Kansas's SIP revision.
If Kansas wanted to rely on an argument that their existing effective controls are necessary for reasonable progress in the second planning period, the EPA has provided guidance on how to analyze and provide the proper documentation to back up such a finding. However, Kansas did not properly analyze whether the Kansas sources' existing measures are necessary for reasonable progress and thus a part of their LTS for the second planning period. The 2021 Clarifications Memo states “the existence of an enforceable emission limit or other enforceable requirement reflecting a source's existing measures may also be evidence that the source will continue implementing those measures. . . . States should provide information on any enforceable emission limits associated with sources' existing measures.” 2021 Clarifications Memo at 9. The SIP should further identify the applicable permits and the relevant limits and provide a copy of the underlying permit with the SIP submission, if it is not publicly available.
The EPA is taking final action to disapprove Kansas's SIP revision related to the regional haze requirements for the second planning period. Disapproval does not trigger imposition of mandatory sanctions. The effective date of this action does trigger an obligation for the EPA to issue a FIP within two years.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve State choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of the National Technology Transfer and Advancement Act (NTTA) because this action does not involve technical standards; and
• This action does not have Tribal implications as specified in Executive Order 13175. This action does not apply on any Indian reservation land, any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, or non-reservation areas of Indian country. Thus, Executive Order 13175 does not apply to this action.
• Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) and Executive Order 14096 (Revitalizing Our Nation's Commitment to Environmental Justice for All, 88 FR 25251, April 21, 2023) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of t/heir actions on minority
KDHE did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. The EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples. While the Conservation Groups did adversely comment that the EPA should consider EJ, they did not provide any different steps or outcomes the EPA should take or arrive at. See our response to comments document in the docket for this action.
This action is subject to the Congressional Review Act, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 7, 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, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
Bureau of Land Management, Interior.
Final rule.
The Bureau of Land Management (BLM) is revising its regulations to modernize and streamline how the agency notifies the public of temporary closure and restriction orders; clarify that such orders may be issued to avoid conflicts among public land users and ensure the privacy of Tribal activities for traditional or cultural use; require that all orders specify the date and time that a temporary closure or restriction becomes effective and terminates; and harmonize the penalties for violating temporary closure and restriction orders consistent with current statutory authority.
This final rule is effective on September 6, 2024.
Kevin Oliver, Division Chief, BLM Headquarters Division of Recreation and Visitor Services at (801) 450-3134 or via email at
The Federal Land Policy and Management Act (FLPMA) (43 U.S.C. 1701-1787) establishes the BLM's multiple use and sustained yield mandate. In managing the public lands in accordance with FLPMA, the BLM occasionally issues temporary closure and restriction orders under 43 CFR 8364.1 to protect persons, property, public lands, and resources. The need to temporarily close or restrict the use of public land arises in various situations, including in response to an emergency or unplanned event such as a flood, fire, hazardous material incident, discovery of unexploded ordnance, public health emergency, or change in public land use that creates a public safety hazard. For example, the BLM has issued temporary closure or restriction orders to protect the public from unsafe conditions in a community rock pit in Doña Ana County, New Mexico (88 FR 42984 (July 5, 2023)); close 9 acres of public land near Rowley, Utah, that were inundated with a hydrochloric acid spill (79 FR 26265 (May 7, 2014)); close approximately 31,000 acres of public land in California to protect the public from exposure to airborne asbestos (73 FR 24087 (May 1, 2008)); and close a recreation site near Challis, Idaho, to protect the public from dangerous flooding and ice jams (87 FR 25523 (April 29, 2022)).
The BLM also occasionally issues temporary closures or restrictions to protect resources or avoid conflicts among visitor use activities. In such situations, the BLM may restrict an area to certain types of travel to facilitate resource restoration or close an area to public access to facilitate special recreation events, such as the Burning Man Project (88 FR 39863 (June 20, 2023)); the King of the Hammers off-road race (87 FR 69300 (November 11, 2022)); the Reno Air Races (84 FR 31337 (July 1, 2019)); the Mint 400 off-road race in Las Vegas (88 FR 7994 (February 7, 2023)); and the Desert Classic racecourse (87 FR 20457 (April 7, 2022)).
As resource uses and demands for access to public lands have increased,
Streamlining and modernizing how the BLM notifies the public about temporary closure and restriction orders, as well as providing managers with the ability to issue such orders with immediate effect, will enhance the BLM's ability to perform its mission to responsibly manage public lands and protect public safety. Revising § 8364.1 will also make the BLM's temporary closure and restriction authorities more consistent with those of the U. S. Forest Service (USFS), U.S. Fish and Wildlife Service (FWS), and the National Park Service (NPS) (agencies with which BLM-administered public lands often share a common boundary) and will allow the BLM to be a more effective cooperator with other Federal and local agencies when responding to multijurisdictional demands, including emergency incidents or unforeseen events.
Section 310 of FLPMA, which authorizes the Secretary to promulgate regulations to carry out the purposes of that Act and other laws with respect to public lands, authorizes this revision of the BLM's regulatory authority for temporarily closing and restricting the use of public lands. Other statutes, such as the Archaeological Resources Protection Act (16 U.S.C. 470aa-470mm), also authorize the Secretary to promulgate regulations relating to closures and use restrictions in certain contexts.
The BLM published a proposed rule on November 21, 2023 (88 FR 81022), soliciting public comments for 60 days. The BLM received 79 submissions from members of the public, including individuals, State and local governments, regional law enforcement groups, livestock grazing organizations, recreation groups, and wilderness organizations. The BLM considered each comment in developing the final rule. Some comments fully or partially supported the proposed rule. Other comments were critical of the proposed rule and expressed concern regarding, among other issues, its scope, how the BLM would notify the public about temporary closure and restriction orders, how such orders would comply with the National Environmental Policy Act (NEPA), the BLM's ability to exempt certain persons from temporary closure and restriction orders, the lack of a mandatory public participation requirement, and the length of time that temporary closure and restriction orders could remain in place. Additional comments expressed a desire for the BLM's temporary closure and restriction authority to align more closely with the temporary closure and restriction authorities of other Federal agencies.
Comments that are similar in nature have been categorized by subject and, in some instances, have been combined with related comments.
Second, the BLM is also revising 43 CFR 8364.1 to make it more consistent with closure authorities of the USFS, FWS, and NPS, none of which are generally required to seek public input before issuing closure or restriction orders. Third, even though public participation is not required prior to the BLM issuing a closure or restriction order, the BLM provides for public participation in the form of being able to appeal such orders to the Department of the Interior's Board of Land Appeals (IBLA) in accordance with the regulations contained in 43 CFR part 4. As a result, members of the public retain an ability to voice opposition to a closure or restriction order that they believe was issued improperly. Finally, the fact that this final rule does not require the BLM to seek public input does not mean that there will never be opportunities for public participation before the BLM issues temporary closure and restriction orders. Orders issued under this section must comply with NEPA, and that process will often provide opportunities for public participation. Moreover, depending on
The final rule also satisfies the second prong of § 46.210(i). The details of specific closures or restrictions that the BLM may impose in accordance with the final rule are uncertain. As a result, the environmental effects of such future closures or restrictions are currently too speculative and conjectural to lend themselves to meaningful analysis. The environmental effects of future closure or restriction orders issued under the final rule will later be subject to the NEPA process when the agency can account for the site specificity that will make such analysis meaningful. Finally, reliance on the categorical exclusion at 43 CFR 46.210(i) is appropriate because none of the extraordinary circumstances described in 43 CFR 26.215 apply to the final rule.
While the provisions of 43 CFR 8364.1 authorizing the BLM to issue temporary closure and restriction orders to protect persons and avoid user conflicts would seemingly also cover closure to ensure privacy for Tribal uses, the BLM thinks it is worth clarifying the agency's authority to temporarily close or restrict the use of public lands to ensure privacy for Tribal activities for traditional or cultural use consistent with the direction in the above-discussed authorities. Expressly providing that the BLM may temporarily close or restrict the use of public lands to ensure privacy for certain Tribal activities will also allow the BLM to implement aspects of the Best Practices Guide for Federal Agencies Regarding Tribal and Native Hawaiian Sacred Sites that was developed to operationalize the direction in E.O. 13007, as well as facilitate commitments the BLM may make to specific Tribes as part of co-stewardship agreements governing certain portions of the public lands. Moreover, because many Tribal traditional and cultural uses take place in the vicinity of cultural resources whose nature and location the BLM is required to keep confidential, this provision will help the BLM comply with related statutory obligations.
The commenters suggested that the BLM adopt a similar framework for this rulemaking.
The existing regulation at 43 CFR 8364.1 sets out the BLM's authority and procedures for issuing temporary closure and restriction orders. Among other things, the existing regulation requires the BLM to publish temporary closure and restriction orders in the
The final rule revises 43 CFR 8364.1 to improve the BLM's ability to respond quickly to changing conditions on public lands and facilitate more modern and direct methods of communicating its actions to the public by eliminating the requirement to publish temporary closure and restriction orders issued under this rule in the
The final rule authorizes the BLM to make temporary closure and restriction orders effective immediately, which will improve the BLM's capacity to respond quickly to emergencies and other unforeseen events affecting public lands. This change will help the BLM more effectively fulfill its multiple-use mission without preventing those who are adversely affected from appealing the issuance of an order to the IBLA.
The final rule clarifies the broad range of situations in which the BLM may issue temporary closure and restriction orders. Under both the prior regulation and this final rule, the BLM may issue temporary closure and restriction orders to protect persons, property, and public lands and resources. The final rule also reinforces that the BLM may issue temporary closure and restriction orders to avoid conflicts among public land users and to ensure the privacy of Tribal activities for traditional or cultural use.
The final rule requires all temporary closure and restriction orders issued under 43 CFR 8364.1 to state the date and time that a closure or restriction will become effective and the date and time it will terminate. The final rule also clarifies that the BLM may exempt groups, such as law enforcement, emergency response, and Tribes, from temporary closures and restrictions as appropriate. By comparison, the prior regulation only expressly required the BLM to identify persons who are exempt from temporary closure and restriction orders.
Finally, the final rule harmonizes the penalty provision in 43 CFR 8364.1 with current statutory authorities and makes several other changes that improve the final rule's organization and readability.
The final rule does not itself close or restrict the use of any specific public land, nor will it require the BLM to issue any new or additional temporary closures or restrictions of public lands. Instead, the final rule makes administrative changes intended to modernize and streamline the procedures governing how the BLM issues temporary closure and restriction orders and, thereby, provides the public with better clarity about the scope of these orders and when they are effective. Under the final rule, the BLM will continue to consider other management strategies alongside or instead of temporary closures and restrictions including, but not limited to, increased law enforcement, cooperative efforts with local governments, engineering, education, and outreach.
The final rule does not change any public participation requirements or opportunities. While the prior regulation required the BLM to publish temporary closure and restriction orders in the
Relatedly, the final rule does not diminish or eliminate the public's opportunity to challenge temporary closure or restriction orders, which will remain subject to appeal to the IBLA in accordance with 43 CFR part 4 or to judicial review in Federal court. The final rule, however, enhances the BLM's ability to protect persons, property, public lands, or resources in a timely fashion by making temporary closure and restriction orders effective immediately, pending a decision on appeal or judicial review or the issuance of an administrative or judicial stay.
Each section of the final rule is discussed in further detail below.
The final rule reorganizes paragraph (a) for readability, adds the word “temporarily” to clarify the nature of the closure and restriction orders that the BLM issues under 43 CFR 8364.1, and enumerates the situations in which the BLM may temporarily close or restrict the use of public lands; namely, to protect persons, property, public lands, or resources, to avoid conflict among public land users, and to ensure the privacy of Tribal activities for traditional or cultural use.
The addition of the word “temporarily” is intended to differentiate temporary closures and restrictions issued under 43 CFR 8364.1 from closures and restrictions that are established through the land use planning process. Closures and restrictions issued through the land use planning process are intended to be part of the BLM's long-term management strategy for an area and remain in place until the BLM either revises or amends the applicable land use plan in accordance with 43 CFR part 1600. Temporary closure and restriction orders issued under the final rule, which are generally intended to address emergencies or unforeseen events or facilitate time-limited uses that require specific restrictions, serve a different and generally more limited purpose. For example, the BLM typically issues temporary closure and restriction orders under 43 CFR 8364.1 to facilitate time-limited uses that require specific restrictions to avoid user conflicts or ensure public safety, privacy, or resource protection; to address emergencies that require timely responses; or to respond to events and circumstances that the BLM did not foresee when it was previously engaged in the land use planning process. Under the final rule, such orders are considered “temporary” in that they are implemented outside the land use planning process that typically guides how the BLM makes more long-term decisions. While the final rule requires the BLM to specify the time and date the closure or restriction imposed by such orders begins and ends, it does not impose any specific limitation on the duration that a temporary closure or restriction order may remain in place, nor does it prevent the BLM from issuing a new order that extends the time a temporary closure or restriction order is in effect, if necessary. Because not all situations requiring temporary closure or restriction orders will end within a preconceived timeframe, it may be necessary to issue a revised closure or restriction order to ensure the underlying situation has abated or the BLM has had an opportunity to address the situation in a longer-term fashion through the land use planning process.
The final rule adds the phrase “including roads, trails, and waterways” for internal consistency with paragraph (b) and to clarify that public roads, trails, and waterways under the BLM's jurisdiction are components of public lands. This change is intended to be clarifying only and is not intended to expand the scope of the BLM's authority or alter its obligations under this regulation.
The final rule revises paragraph (a) to provide that the BLM may issue temporary closure and restriction orders to avoid user conflicts on public lands. Although this authority was implicitly
The final rule revises paragraph (a) to provide that the BLM may issue temporary closure and restriction orders to ensure the privacy of Tribal activities for traditional or cultural use. Similar to the provision concerning the avoidance of user conflicts, the authority to temporarily close or restrict the use of public lands to ensure the privacy of Tribal activities for traditional or cultural use was implicitly contained in the existing provision authorizing the agency to issue temporary closure and restriction orders to protect persons. However, the BLM believes that authority should be made explicit given the Federal Government's unique trust responsibility to Tribal Nations in the stewardship of public lands and the direction in Secretarial Order 3403, which directs Department of the Interior bureaus and offices to “manage Federal lands and waters in a manner that seeks to protect the treaty, religious, subsistence, and cultural interests of federally recognized Indian Tribes.” Many Tribal Nations continue to use BLM-managed lands for traditional and cultural purposes, and in some cases those uses can be disrupted by simultaneous use by other members of the public. The final rule will help the BLM facilitate Tribal activities for traditional or cultural use on public lands without such disruptions.
The proposed rule would have authorized the BLM to issue temporary closures and restrictions to “provide for implementation of management responsibilities.” The intent behind that proposal was to more closely align the BLM's temporary closure and restriction authority with the NPS's analogous regulation, which permits temporary closures and public use limits “based upon a determination that such action is necessary for . . . implementation of management responsibilities.” 36 CFR 1.5(a). Moreover, the BLM intended inclusion of the phrase to more explicitly allow the BLM to temporarily close or restrict the use of public lands to facilitate construction, demolition, resource monitoring, invasive species control projects, and other typical management responsibilities in which the agency regularly engages. However, several commenters expressed concerns that the phrase “implementation of management responsibilities” was vague and essentially removed all limits on the BLM's ability to close or restrict the use of public lands. The BLM agrees that the phrase, while commensurate with the BLM's authority to manage public lands under FLPMA, is potentially open to misinterpretation. Accordingly, the BLM has not included “provide for implementation of management responsibilities” as a reason for issuing a temporary closure or restriction order in the final rule. The deletion of the phrase from the final rule does not affect the BLM's ability to perform typical management responsibilities. Activities such as construction, demolition, resource monitoring, and invasive species control projects are already typically accompanied by a temporary closure or restriction order where necessary to protect persons, property, public lands, or resources. As a result, the BLM would still be able to issue such closures and restrictions under the authority that is included in the final rule.
Paragraph (b) of the final rule outlines the contents of temporary closure and restriction orders.
The final rule revises paragraph (b)(1) to clarify that public roads, trails, or waterways are aspects of the public lands and, therefore, are subject to temporary closures or restrictions where appropriate. The prior text could arguably be interpreted to suggest that roads, trails, and waterways under the BLM's jurisdiction are not public lands, which is incorrect.
The final rule revises paragraph (b)(3) to improve readability and clarify that each temporary closure and restriction order must state the date and time when it will become effective and the date and time when it will terminate. Including both of those dates and times will help clearly communicate to the public how long the BLM expects a temporary closure or restriction order to last. As noted above, however, temporary closure and restriction orders are occasionally issued to address situations that do not end or abate on a certain date. As a result, the final rule should not be understood to limit the BLM's authority to renew, extend, or modify temporary closures or restrictions. Where necessary, the BLM may renew, extend, or modify a temporary closure or restriction order by issuing a new order that contains different parameters following the same procedures that the agency uses to issue an order in the first instance.
The final rule revises paragraph (b)(4) to clarify that the BLM can exempt groups or persons from a closure or restriction as circumstances warrant. For example, the BLM generally exempts Federal, State, and local officers and employees, as well as members of organized rescue or firefighting forces, from temporary closures and restrictions when necessary for them to perform their official duties. The BLM may also exempt Tribal members who may need to access an otherwise closed area for traditional or cultural uses. The final rule clarifies the BLM's authority to exempt such groups.
The final rule moves former paragraphs (b)(5) and (6) to paragraph (c) to consolidate the notification requirements in one paragraph. Further revisions to those paragraphs are discussed below.
The final rule renumbers and revises former paragraph (b)(7) to improve readability and for consistency with other provisions of the regulation. That revision is not intended to affect the BLM's duties under this regulation.
The final rule revises paragraph (c) by removing the requirement to publish temporary closure and restriction orders in the
Although the
Under the final rule, the BLM may post notices on multiple BLM web pages, including national, state, district, and field office web pages. In other situations, more limited online notification may be appropriate. The final rule permits the BLM to use the best methods available to reach the public depending on the circumstances of the closure or restriction, which can vary widely. Members of the public will still have reliable ways to learn about temporary closures and restrictions, including through posts at the relevant BLM offices and closed or restricted areas, the BLM's online communication systems, such as web pages, and local media.
The final rule's notification procedures will apply to all orders issued under 43 CFR 8364.1, including those unrelated to emergencies. Many commenters expressed that the agency should retain the
The final rule is designed to avoid such situations by not requiring
Paragraph (c) of the final rule also incorporates the posting requirements that were previously included in paragraph (b) of 43 CFR 8364.1. The internal reorganization is intended to consolidate the final rule's notification requirements in a single paragraph, which will make it easier for the public to understand how to learn about potential temporary closures and restrictions on public lands.
Elimination of the requirement to publish temporary closure and restriction orders in the
The final rule adds a new paragraph (d), which authorizes the BLM to make temporary closure or restriction orders effective immediately. Prior to the final rule becoming effective, temporary closure and restriction orders issued under 43 CFR 8364.1 would typically not take effect during the 30-day period in which the order is appealable to the IBLA. However, emergencies and changing circumstances on public lands often require a quicker response, and the delay in a closure or restriction order taking effect has, in some cases, compromised the BLM's ability to carry out its mission and protect the public. To adequately meet the public's expectation for the BLM to protect health, safety, property, and resources, the agency needs the ability to issue temporary closure or restriction orders that are effective immediately when necessary. Under paragraph (d), temporary closure and restriction orders issued under 43 CFR 8364.1 will be effective upon issuance or a date and time established in the order. This change will enhance the BLM's ability to respond to emergencies and other unforeseen conditions while preserving the public's ability to appeal an order to the IBLA in accordance with 43 CFR part 4.
Like the elimination of the
Former paragraph (d) addressed the penalties for violating temporary closure and restriction orders. The final rule renumbers that paragraph and updates it to be consistent with current legal authorities. The Sentencing Reform Act of 1984, 18 U.S.C. 3571, which passed the year after 43 CFR 8364.1 was promulgated, authorizes fines that supersede those set out in FLPMA at 43 U.S.C. 1743. Under the final rule, the penalty provision will refer directly to 18 U.S.C. 3571, which will make it less likely that the BLM will need to revise the rule if Congress updates 18 U.S.C. 3571 in the future. The final rule also revises the penalty provision to refer to 43 U.S.C. 1733, which sets out the BLM's enforcement authority under FLPMA. Notably, neither of these revisions effect a substantive change, as 43 CFR 8364.1 has always been subject to these overarching statutory authorities. The change in the final rule is only intended to make the regulation reflect these statutory realities.
E.O. 12866, as amended by E.O. 14094, provides that the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) will review all significant rules. OIRA has determined that the rule does not meet the criteria for significance under section 3(f) of E.O. 12866, as amended by E.O. 14094.
E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability, reduce uncertainty, and use the best, most innovative, and least burdensome tools for achieving regulatory ends. The E.O. directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. The BLM has developed this final rule in a manner consistent with these requirements.
The BLM reviewed the requirements of the final rule and determined that it will not 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, or Tribal governments or communities. For more detailed information, see the Economic and Threshold analysis prepared for the final rule. This analysis has been posted in the docket for the final rule on the Federal eRulemaking Portal:
E.O 12898 requires that, to the extent practicable and permitted by law, each Federal agency must make achieving environmental justice part of its mission. E.O. 12898 provides that each Federal agency conduct its programs, policies, and activities that substantially affect human health or the environment in a manner that ensures that such programs, policies, and activities do not have the effect of excluding persons (including populations) from participation in, denying persons (including populations) the benefits of, or subjecting persons (including populations) to discrimination under such programs, policies, and activities because of their race, color, or national origin.
This final rule revises the process the BLM uses to issue temporary closure and restriction orders. The final rule is not self-executing, in that it does not, in and of itself, temporarily close or restrict the use of any public lands, and it is not expected to affect any particular population. Therefore, this final rule is not expected to negatively impact any community or cause any disproportionately high or adverse impacts to minority or low-income communities.
The Regulatory Flexibility Act (RFA) generally requires that Federal agencies prepare a regulatory flexibility analysis for rules subject to the notice-and-comment rulemaking requirements under the Administrative Procedure Act (5 U.S.C. 500
Based upon the BLM's economic and threshold analysis, this final rule does not meet the criteria under 5 U.S.C. 804(2), the Congressional Review Act. This rule will not:
(a) Have an annual effect on the economy of $100 million or more;
(b) Cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and
(c) Have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S. based enterprises to compete with foreign-based enterprises.
Under the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531
This final rule is not subject to the requirements under the UMRA. The final rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and Tribal governments, in the aggregate, or to the private sector in any one year. The final rule will not significantly or uniquely affect small governments. A statement containing the information required by the UMRA is not required.
This final rule will not affect a taking of private property or otherwise have taking implications under E.O. 12630. The final rule will only affect the management of public lands. Accordingly, a takings implication assessment is not required.
Under the criteria in section 1 of E.O. 13132, this final rule does not have
This final rule complies with the requirements of E.O. 12988. Specifically, this final rule:
(a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and
(b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
The Department of the Interior strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their right to self-governance and Tribal sovereignty.
In accordance with E.O. 13175, the BLM has evaluated this final rule and determined that it will not have substantial direct effects on federally recognized Indian Tribes. Nevertheless, the BLM consulted on a government-to-government basis with Tribal governments that wished to discuss the rule.
On March 22, 2023, the BLM sent a letter to federally-recognized Indian Tribes and Alaska Native Corporations notifying them about the BLM's intent to pursue this proposed rulemaking. In that letter, the BLM invited the Tribes and Corporations to engage in government-to-government consultation. Two Tribes requested additional information and engaged in consultation about aspects of the proposed rulemaking: one Tribe was concerned about the proposed rule and how it might affect management of lands for which the Tribe manages all surface rights; another Tribe shared that the proposed rule could play an important role in protecting Tribal cultural resources and facilitating cultural practices. In both cases, the consultation concluded with no objections, no requests to modify the proposed rule, and no requests for follow-up consultation.
This final rule does not contain information collection requirements, and a submission to the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The BLM has determined that the final rule is not a major Federal action significantly affecting the quality of the human environment. A detailed statement under NEPA is not required because the final rule is categorically excluded from further analysis or documentation in accordance with 43 CFR 46.210(i). That categorical exclusion covers policies, directives, regulations, and guidelines that are of an administrative, financial, legal, technical, or procedural nature or whose environmental effects are too broad, speculative, or conjectural to lend themselves to meaningful analysis and will later be subject to the NEPA process, either collectively or case-by-case. The BLM has documented the applicability of the categorical exclusion concurrently with development of the final rule.
The final rule is procedural and administrative in nature and, therefore, satisfies the first prong of § 46.210(i). The final rule will not result in access being prohibited or use being restricted on any specific public lands. The final rule also will not limit or reduce any current public participation opportunities. The final rule clarifies the situations in which the agency may issue temporary closure and restriction orders, streamlines the administrative process through which the BLM issues and publicizes temporary closure and restriction orders, and updates the penalty provision in § 8364.1 to align with current statutory authority. When the BLM considers using the final rule to issue a temporary closure or restriction order, the agency will need to comply with NEPA and other applicable laws, including those requiring public participation.
The final rule also satisfies the second prong of 43 CFR 46.210(i). As noted above, the final rule does not prohibit access or restrict use of any specific public lands, and the potential environmental effects of future orders issued under the final rule that do prohibit access or restrict the use of public land are too speculative and conjectural to lend themselves to meaningful analysis at this time. However, the effects of such orders will be individually subject to NEPA prior to being authorized.
The BLM has determined that the final rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that require further analysis under NEPA.
Federal agencies must prepare and submit to OMB a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that: (1) Is a significant regulatory action under E.O. 12866, or any successor order; (2) Is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) Is designated by the Administrator of OIRA as a significant energy action. The final rule is not a significant action within the meaning of E.O. 12866 or any successor order. The final rule does not affect energy supply or distribution. Accordingly, a statement of energy effects is not required.
The principal authors of this final rule are: David Jeppesen, Cory Roegner, Kevin Oliver, and Greg Wolfgang, Recreation and Visitor Services; Nicole Hanna, Tribal Relations; Russell Scofield and Sandra McGinnis, National Experienced Workforce Solutions; Brittney Rodrigues, Regulatory Affairs; Rebecca Moore and Jeff Childers, Decision Support, Planning and NEPA; Heather Feeney, Public Affairs; Stephanie Rice and Pat Johnston, Wildlife, Aquatics and Environmental Protection; Stacy Silvester and Carmen Drieling, Forest, Rangeland and Vegetation Resources; Ernesto Felix, Law Enforcement and Security; assisted by the Office of the Solicitor.
This action by the Principal Deputy Assistant Secretary is taken pursuant to an existing delegation of authority.
Penalties, Public lands, Recreation and recreation areas.
For the reasons set out in the preamble, the Bureau of Land Management amends 43 CFR part 8360 as follows:
16 U.S.C. 470aaa,
(a) The authorized officer may issue an order to temporarily close or restrict the use of designated public lands, including roads, trails, and waterways, to protect persons, property, public lands, or resources; avoid conflict among public land users; or ensure the privacy of Tribal activities for traditional or cultural use.
(b) Each order shall:
(1) Identify the public lands, including roads, trails, or waterways, that are closed to entry or restricted as to use;
(2) Specify the uses that are restricted;
(3) Specify the date and period of time that the closure or restriction order will become effective and the date and time that the order will terminate;
(4) Identify any persons or groups who are exempt from the closure or restriction; and
(5) Identify the reasons for the closure or restriction.
(c) When issuing closure or restriction orders pursuant to this section, the authorized officer shall provide public notice by:
(1) Posting the order in a Bureau of Land Management (BLM) Office having jurisdiction over the public lands, including roads, trails, or waterways, to which the order applies;
(2) Posting the order at places near or within the area to which the closure or restriction applies, in such manner and location as is reasonable to bring prohibitions to the attention of users;
(3) Notifying local media outlets; and
(4) Posting information on at least one BLM-controlled, publicly available online communication system.
(d) Notwithstanding any contrary provisions in part 4 of this title, the authorized officer will provide that orders issued pursuant to this section will be effective upon issuance or at a date and time established in the order. If appealed, such orders shall remain in effect pending the decision on appeal unless a stay is granted.
(e) Any person who violates a temporary closure or restriction order may be tried before a United States magistrate and fined in accordance with 18 U.S.C. 3571, imprisoned no more than 12 months under 43 U.S.C. 1733(a) and § 8360.0-7, or both.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS implements an accountability measure for blueline tilefish in the exclusive economic zone (EEZ) of the South Atlantic. NMFS estimates that commercial landings of blueline tilefish will soon reach the commercial annual catch limit (ACL) for the 2024 fishing year. Accordingly, NMFS closes the commercial sector for the harvest of blueline tilefish in the South Atlantic EEZ to protect the blueline tilefish resource from overfishing.
This temporary rule is effective from August 8, 2024, through December 31, 2024.
Mary Vara, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The snapper-grouper fishery of the South Atlantic includes blueline tilefish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The South Atlantic Fishery Management Council and NMFS prepared the FMP, and the FMP is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622. All weights in this temporary rule are given in round weight.
Regulations at 50 CFR 622.193(z)(1)(i) specify the commercial ACL and accountability measure for blueline tilefish in the South Atlantic. The commercial ACL is 117,148 pounds (lb) or 53,137 kilograms (kg). NMFS is required to close the commercial harvest of blueline tilefish when NMFS projects its landings will reach or have reached the commercial ACL. NMFS estimates that for the 2024 fishing year, commercial landings of blueline tilefish will reach the commercial ACL by August 8, 2024. Accordingly, the commercial sector for South Atlantic blueline tilefish is closed from August 8, 2024, through December 31, 2024.
During the commercial closure, all sale or purchase of blueline tilefish is prohibited. Because the harvest of blueline tilefish by the recreational sector is also closed for the rest of 2024 (89 FR 19290, March 18, 2024), during this commercial closure all harvest and possession of blueline tilefish in or from the South Atlantic EEZ is also prohibited through the end of 2024. The bag and possession limits of zero blueline tilefish during the remainder of 2024 apply in state or Federal waters of the South Atlantic on a vessel for which NMFS has issued a valid commercial or charter vessel/headboat permit for South Atlantic snapper-grouper [50 CFR 622.193(z)(1)(i)].
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 622.193(z)(1)(i), which was issued pursuant to section 304(b) of the Magnuson-Stevens Act, and is exempt from review under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment are unnecessary and contrary to the public interest. Such procedures are unnecessary because the regulations associated with the closure of the blueline tilefish commercial sector at 50 CFR 622.193(z)(1)(i) have already been subject to notice and public comment, and all that remains is to notify the public of the closure. Prior notice and opportunity for public comment are contrary to the public interest because there is a need to immediately implement this action to protect blueline tilefish, because the capacity of the fishing fleet allows for rapid harvest of the commercial ACL. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial ACL.
For the reasons already stated, there is also good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).
16 U.S.C. 1801
Office of Postsecondary Education (OPE), Department of Education.
Proposed waiver and extension of the project period.
The Secretary proposes to waive the requirements in the Education Department General Administrative Regulations that generally prohibit project period extensions involving the obligation of additional Federal funds. The proposed waiver and extension would enable one project under ALN number 84.407C to receive funding for an additional period, not to exceed September 30, 2025.
We must receive your comments on or before September 6, 2024.
Submit your comments through the Federal eRulemaking Portal or via postal mail or commercial delivery. We will not accept comments submitted by fax or by email or those submitted after the comment period. To ensure that we do not receive duplicate copies, please submit your comments only once. In addition, please include the Docket ID at the top of your comments.
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Shedita Alston, U.S. Department of Education, 400 Maryland Avenue SW, Room 5C-131, Washington, DC 20202. Telephone: (202) 453-7090. Email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
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 this proposed waiver and extension. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program.
During and after the comment period, you may inspect all public comments about this proposed waiver and extension by accessing
On August 5, 2021, the Department of Education (Department) published in the
In August 2021, the Department made one 36-month award under the PPSID-NTAD program as follows:
The current project period for this grantee ends on September 30, 2024.
We are proposing to extend the project period for the PPSID-NTAD FY 2021 grantee in order to align and coordinate the funding cycle of the PPSID-NTAD program with TPSID and the TPSID-Coordinating Center (TPSID-CC) program grant authorized under title VII, part D, subpart 2 of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1140f
For this reason, the Secretary proposes to waive the requirements in 34 CFR 75.261(a) and (c)(2), which allow the extension of a project period only if the extension does not involve the obligation of additional Federal funds. The waiver would allow the Department to issue a one-time FY 2024 continuation award to the current PPSID-NTAD program grantee estimated as follows:
Any activities carried out during the year of this continuation award must be consistent with the scope, goals, and objectives of the grantee's application as approved in the FY 2021 competition. If we announce the proposed waiver and extension as final, we will base our decisions regarding a continuation award on the extent to which the grantee meets the requirements set forth in 34 CFR 75.253.
The Secretary certifies that the proposed waiver and extension of the project period would not have a significant economic impact on a substantial number of small entities. The only small entities that would be affected by the proposed waiver and extension of the project period is the current grantee and any other potential applicants.
The Secretary certifies that the proposed waiver and extension would not have a significant economic impact on these entities because the extension of an existing project period would impose minimal compliance costs to extend the existing project, and the activities required to support the additional year of funding would not impose additional regulatory burdens or require unnecessary Federal supervision.
The proposed waiver and extension do not contain any information collection requirements.
This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79.
You may also access Department documents published in the
20 U.S.C. 1140f-1140i.
Animal and Plant Health Inspection Service, USDA.
Notice of availability.
We are advising the public that we are proposing to recognize Costa Rica as being free of classical swine fever. This proposed recognition is based on a risk evaluation we have prepared in connection with this action, which we are making available for review and comment.
We will consider all comments that we receive on or before September 6, 2024.
You may submit comments by either of the following methods:
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Supporting documents and any comments we receive on this docket may be viewed at
Dr. Rebecca Gordon, Senior Staff Officer, Regionalization Evaluation Services, Veterinary Services, APHIS, USDA, 920 Main Campus Drive, Venture II, 3rd Floor, Raleigh, NC 27606; email:
The regulations in 9 CFR part 94 (referred to below as the regulations) govern the importation of certain animals and animal products into the United States in order to prevent the introduction of various animal diseases, including classical swine fever (CSF), a dangerous and communicable disease of swine. In part 94, § 94.9 contains requirements governing the importation of pork or pork products from regions where CSF exists. Section 94.10 contains importation requirements for swine from regions where CSF is considered to exist.
In accordance with §§ 94.9(a)(1) and 94.10(a)(1), the Animal and Plant Health Inspection Service (APHIS) maintains a web-based list of regions that the Agency considers free of CSF. Sections 94.9(a)(2) and 94.10(a)(2) state that APHIS will add a region to this list after it conducts an evaluation of the region and finds that CSF is not present.
Finally, under § 94.32, the importation into the United States of swine, pork, and pork products from certain regions that are considered free of CSF in accordance with §§ 94.9 and 94.10 is still subject to mitigations for CSF, because the exporting region either supplements their pork supplies with fresh (chilled or frozen) pork imported from regions considered to be affected by CSF, or supplements their pork supplies with pork from CSF-affected regions that is not processed in accordance with the regulations, or shares a common land border with CSF-affected regions, or imports live swine from CSF-affected regions under conditions less restrictive than would be acceptable for importation into the United States. The section specifies that there is a web-based list of such regions.
In the regulations in 9 CFR part 92, § 92.2 contains requirements for requesting the recognition of the animal health status of a region (as well as for the approval of the export of a particular type of animal or animal product to the United States from a foreign region). If, after review and evaluation of the information submitted in support of the request, APHIS believes the request can be safely granted, APHIS will make its evaluation available for public comment through a document published in the
In September 2020, the Government of the Republic of Costa Rica requested that APHIS evaluate the CSF disease status of the country. In response to Costa Rica's request, APHIS prepared an evaluation, titled “APHIS Evaluation of the Classical Swine Fever Status of the Republic of Costa Rica” (May 2023). Based on the evaluation, APHIS has determined that CSF is not known to exist in Costa Rica. APHIS has also determined that the surveillance, prevention, and control measures implemented by Costa Rica are sufficient to minimize the likelihood of introducing CSF into the United States via imports of species or products susceptible to this disease. However, because Costa Rica shares a common land border with regions in which CSF exists, we have also determined that requirements of § 94.32 should be operative, if Costa Rica is considered free of CSF. Our determination supports adding Costa Rica to the web-based list of regions that APHIS considers free of CSF.
Therefore, in accordance with the regulations in § 92.2, we are announcing the availability of our evaluation of the CSF status of Costa Rica for public review and comment. We are also announcing the availability of an environmental assessment (EA), which has been prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321
Information submitted in support of Costa Rica's request is available by contacting the person listed under
After reviewing any comments we receive, we will announce our decision regarding the disease status of Costa Rica with respect to CSF in a subsequent notice.
Animal and Plant Health Inspection Service, USDA.
Notice of availability.
We are advising the public that we have prepared a pest risk analysis that evaluates the risks associated with the importation of fresh cape gooseberry fruit from Peru into the United States. Based on the analysis, we have determined that the application of one or more designated phytosanitary measures will be sufficient to mitigate the risks of introducing or disseminating plant pests or noxious weeds via the importation of fresh cape gooseberry fruit from Peru. We are making the pest risk analysis available to the public for review and comment.
We will consider all comments that we receive on or before October 7, 2024.
You may submit comments by either of the following methods:
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Supporting documents and any comments we receive on this docket may be viewed at
Ms. Claudia Ferguson, Senior Regulatory Policy Specialist, Regulatory Coordination and Compliance, Imports, Regulations, and Manuals PPQ, APHIS, 4700 River Road, Unit 133, Riverdale, MD 20737-1231; (301) 851-2352; email
Under the regulations in “Subpart L—Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-12, referred to below as the regulations), the Animal and Plant Health Inspection Service (APHIS) prohibits or restricts the importation of fruits and vegetables into the United States from certain parts of the world to prevent plant pests from being introduced into or disseminated within the United States.
Section 319.56-4 contains a performance-based process for approving the importation of fruits and vegetables that, based on the findings of a pest risk analysis, can be safely imported subject to one or more of the five designated phytosanitary measures listed in paragraph (b) of that section.
APHIS received a request from the national plant protection organization (NPPO) of Peru to allow the importation of fresh cape gooseberry fruit (
Therefore, in accordance with § 319.56-4(c), we are announcing the availability of our pest risk assessment and RMD for public review and comment. Those documents, as well as a description of the economic considerations associated with the importation of fresh cape gooseberry fruit from Peru, may be viewed on the
After reviewing any comments we receive, we will announce our decision regarding the import status of fresh cape gooseberry fruit from Peru in a subsequent notice. If the overall conclusions of our analysis and the Administrator's determination of risk remain unchanged following our consideration of the comments, then we will authorize the importation of fresh cape gooseberry fruit from Peru into the United States subject to the requirements specified in the RMD.
Forest Service, USDA.
Notice.
The Huron-Manistee National Forests are proposing to establish several new recreation fee sites. Proposed recreation fees collected at the proposed recreation fee sites would be used for operation, maintenance, and improvement of the sites. An analysis of nearby recreation fee sites with similar amenities shows the proposed recreation fees that would be charged at the proposed recreation fee sites are reasonable and typical of similar recreation fee sites in the area.
If approved, the proposed recreation fees would be implemented no earlier than six months following the publication of this notice in the
Huron-Manistee National Forests, Attention: Recreation Fees, 1755 South Mitchell Street, Cadillac, MI 49601.
Nick Edington, Recreation Program Manager, (218) 308-0580 or
The Federal Lands Recreation Enhancement Act (16 U.S.C. 6803(b)) requires the Forest Service to publish a six-month advance notice in the
An expanded amenity recreation fee of $10 per night would be charged for Cathedral Pines Backcountry Campsite, Mckinley Horse Trail Campground, Buttercup Backcountry Campsites, Bear Island Backcountry Campsites, River Dune Backcountry Campsite, Meadow Springs Backcountry Campsites, and Luzerne Horse Trail Campgrounds. An expanded amenity recreation fee of $15 per night would be charged at Condon Lake Backcountry Campsites, Sulak Recreation Area, and Sawkaw Lake Campgrounds. An expanded amenity recreation fee of $40 per double site per night would be charged for Mack Lake Off-highway Vehicle, Kneff Lake, Gabions, and Jewell Lake Campgrounds. An expanded amenity recreation fee of $30 per double site per night would be charged for Horseshoe, Meadows Off-highway Vehicle, and Au Sable Look Campgrounds. An expanded amenity recreation fee of $60 per night for groups of up to 220 people would be charged for McKinley Horse Trail Group Campground, $60 per night for groups of up to 230 people would be charged for Luzerne Horse Trail Group Campground, and an expanded amenity recreation fee of $60 per night for groups of up to 200 people would be charged for the River Road Trail Group Campground. In addition, an expanded amenity recreation fee of $150 per night would be charged for rental of Sprinkler Lake Cabins.
A standard amenity recreation fee of $5 per day per vehicle would be charged at Lower Branch Bridge Carry-In Access. Additionally, a standard amenity recreation fee of $5 per day, $15 per week, and $30 per year per vehicle would be charged at East Bull Gap Off-Road Vehicle Trailhead, and Bull Gap Hill Climb Off-Road Vehicle Trailhead developed recreation sites. The Huron-Manistee National Forests Annual Day Use Pass and the America the Beautiful—the National Parks and Federal Recreational Lands Pass would be honored at these standard amenity recreation fee sites.
Expenditures from recreation fee revenues collected at the proposed recreation fee sites would enhance recreation opportunities, improve customer service, and address maintenance needs. Once public involvement is complete, the proposed recreation fee sites and proposed recreation fees will be reviewed by a Recreation Resource Advisory Committee prior to a final decision and implementation. Reservations for campgrounds and cabins could be made online at
Rural Business-Cooperative Service.
Notice; request for comments.
In accordance with the Paperwork Reduction Act of 1995, the Rural Business-Cooperative Service (RBCS) announces its intention to request a revision for a currently approved information collection package for the Annual Survey of Farmer Cooperatives, as authorized in the Cooperative Marketing Act of 1926.
Comments on this notice must be received by October 7, 2024 to be assured of consideration.
Comments may be submitted electronically by the Federal eRulemaking Portal,
Adyam Negasi, RD Innovation Center—Regulations Management Division, U.S. Department of Agriculture, 1400 Independence Ave. SW, Washington, DC 20250; Tel: 202-221-9298; Email:
The Office of Management and Budget's (OMB) regulation (5 CFR part 1320) implementing provisions of the Paperwork Reduction Act of 1995 (Pub. L. 104-13) requires that interested members of the public and affected agencies have an opportunity to comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d)). This notice identifies an information collection that the Agency is submitting to OMB for revision.
Comments are invited on (a) 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; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumption 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 those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques on other forms and information technology.
Comments may be sent through the Federal eRulemaking Portal,
All comments will be available for public inspection online at the Federal eRulemaking Portal (
Copies of this information collection can be obtained from Adyam Negasi, RD Innovation Center—Regulations Management Division, at 202-221-9298 or
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Rural Utilities Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Rural Utilities Service's (RUS or the Agency), an agency with the United States Department of Agriculture, Rural Development, intention to request a revision to a currently approved information collection package for the RUS Electric Loan Application and Related Reporting Burdens. The Agency invites comments on this information collection for which the Agency intends to request approval from the Office of Management and Budget (OMB).
Comments on this notice must be received by October 7, 2024 to be assured of consideration.
Pamela Bennett, Rural Development Innovation Center—Regulations Management Division, USDA, 1400 Independence Avenue SW, STOP 1522, South Building, Washington, DC 20250-1522. Telephone: (202) 720-9639. Email
The OMB regulation (5 CFR part 1320) implementing provisions of the Paperwork Reduction Act of 1995 (Pub. L. 104-13) requires that interested members of the public and affected agencies have an opportunity to comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d)). This notice identifies an information collection that the Agency is submitting to OMB for revision.
Comments are invited on: (a) 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; (b) 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; (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 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.
Comments may be sent by the Federal eRulemaking Portal: Go to
A Federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB Control Number. Data furnished by the applicants will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, failure to provide data could result in program benefits being withheld or denied.
The RE Act also authorizes and empowers the Administrator of RUS to make or cause to be made, studies, investigations, and reports concerning the condition and progress of the electrification of the several States and Territories; and to publish and disseminate information with respect thereto. Information supplied by borrowers forms the basis of many of these reports.
RUS uses an online application intake system called RDApply that allows applicants to create an online application for RUS loans and grants as well as upload attachments, sign certifications, and draw service areas, to name a few features. RDApply streamlines the application process, as well as provides identity security, reduces paper consumption and is expected to reduce the burden associated with this information collection package over time.
Copies of this information collection can be obtained from Pamela Bennett, Rural Development Innovation Center—Regulations Management Division, USDA, 1400 Independence Avenue SW, South Building, Washington, DC 20250-1522. Email:
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Office of the Secretary, Department of Commerce.
Notice and request for comments (RFC).
The U.S. Department of Commerce's Office of Privacy and Open Government requests public comment on improvements for the presentation of the Department's eighth Open Government Plan. We are committed to creating opportunities for meaningful civic engagement and public participation and welcome public input on how to improve upon the organization, scope, form, and format of the Department's seventh Open Government Plan document, how to enhance readability and reach a broader audience, and how best to convey in the document how the Department's eighth Open Government Plan incorporates themes from the fifth U.S. Open Government National Action Plan that was issued on December 28, 2022.
Comments on this notice must be submitted on or before September 6, 2024.
You may submit comments via the Federal eRulemaking Portal at
Requests for additional information should be directed to
In accordance with OMB Memorandum M-09-12, President's Memorandum on Transparency and Open Government—Interagency Collaboration, OMB Memorandum M-10-06, Open Government Directive, and OMB Memorandum M-16-16, 2016 Agency Open Government Plans, the Department continues to develop, publish, and update its Open Government Plan every two years. The Plan describes how the Department continuously strives to improve transparency and integrate public participation and collaboration into its activities. In September 2022, the Department published the seventh version of its Open Government Plan, building on the Department's long history of innovative approaches to data dissemination and highlighting the adoption of new tools and technology to facilitate the principles of open government.
Now, as the Department develops the eighth version of its Open Government Plan, we welcome public input on how to improve upon the approach we took for the presentation of the seventh version of the Open Government Plan, including how to improve the organization, scope, form and format of the plan; enhance readability; and reach a broader audience. We also welcome public input on how best to convey how the Department will incorporate the following themes from the fifth U.S. Open Government National Action Plan, issued on December 28, 2022:
• improving access to government data, research, and information;
• increasing civic space within which to engage with the public;
• transforming government service delivery;
• countering corruption and ensuring government integrity and accountability to the public; and
• ensuring equal justice under the law.
Please note: The focus of this request for information is the presentation of the Department's Open Government Plan document. Comments or suggestions for improvements to the Department's programs or activities in furtherance of open government will not be considered in connection with this request for information.
To learn more about the Department's commitment to open government and to access the seventh or previous versions of the Department's Open Government Plan, visit
On April 4, 2024, Twin Disc, Inc. submitted a notification of proposed production activity to the FTZ Board for its facility within Subzone 297A, in Lufkin, Texas.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Notice; correction.
The U.S. Department of Commerce (Commerce) published a notice in the
Adam Simons, 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) 482-6172.
On May 15, 2024, Commerce published in the
In the
This notice is issued and published in accordance with sections 735(d) and 777(i) of the Tariff Act of 1930, as amended, and 19 CFR 351.210(c).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that imports of aluminum wire and cable (AWC) completed in Cambodia, the Republic of Korea (Korea), and the Socialist Republic of Vietnam (Vietnam) (collectively, the third countries) using certain AWC inputs manufactured in the People's Republic of China (China) are not covered by scope of the antidumping duty (AD) and countervailing duty (CVD) orders on AWC from China. In addition, Commerce preliminarily determines that AWC completed in Korea and Vietnam using certain AWC inputs manufactured in China are circumventing the orders. Commerce also preliminarily determines that AWC completed in Cambodia using certain AWC inputs manufactured in China are not circumventing the orders. Commerce is also imposing a certification requirement with respect to applicable entries from Korea and Vietnam. Interested parties are invited to comment on these preliminary determinations.
Applicable August 7, 2024.
Gene H. Calvert, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3586.
On December 23, 2019, Commerce published the orders in the
In the
Between February 12 and 23, 2024, Commerce selected respondents from each of the third countries as mandatory respondents in these scope and circumvention inquiries.
The products subject to the
These inquiries cover AWC assembled or completed in either Cambodia, Korea, or Vietnam using Chinese-origin AWC inputs (
As detailed in the Preliminary Decision Memoranda, Commerce preliminarily determines that the AWC in question that is produced in the third countries using Chinese inputs does not meet the physical description of the scope of the
Commerce notes that these preliminary scope determinations are subject to verification of record information submitted by the company respondents in the third countries that are subject to these inquiries. At the completion of these inquiries, Commerce will serve a copy of these scope determinations to interested parties on the scope service list. In addition, Commerce will issue appropriate instructions to U.S. Customs and Border Protection (CBP).
Commerce made these preliminary circumvention determinations in accordance with section 781(b) of the Act and 19 CFR 351.226. With respect to Korea and Vietnam, we relied on the facts available under section 776(a) of the Act, including facts available with adverse inferences under section 776(b) of the Act, where appropriate.
As detailed in the Preliminary Decision Memoranda, Commerce preliminarily determines that U.S. imports of inquiry merchandise from Korea and from Vietnam are
Based on the preliminary affirmative country-wide determinations of circumvention with respect to Korea and Vietnam, in accordance with 19 CFR 351.225(l)(2), Commerce will direct CBP to suspend liquidation and to require a cash deposit of estimated duties on unliquidated entries of inquiry merchandise that were entered, or withdrawn from warehouse, for consumption, on or after October 19, 2023, the date of publication of the initiation of these circumvention inquiries in the
Where companies subject to these inquiries have their own company-specific rate under the
Also as detailed in the Cambodia Preliminary Decision Memorandum, Commerce preliminarily determines that U.S. imports of inquiry merchandise from Cambodia are not circumventing the
Entries for which the importer has met the certification requirements described below and in Appendix II to this notice will not be subject to suspension of liquidation, or the cash deposit requirements described above. Failure to comply with the applicable requisite certification requirements may result in the merchandise being subject to antidumping and countervailing duties.
To administer the preliminary country-wide affirmative circumvention determinations for Korea and for Vietnam, Commerce has established importer and exporter certifications as provided for in Appendix II to this notice. These certifications will permit importers and exporters to establish that specific entries of AWC from Korea and Vietnam are not subject to suspension of liquidation or the collection of cash deposits pursuant to these preliminary country-wide affirmative determinations of circumvention because the merchandise was processed in either Korea or in Vietnam and does not incorporate Chinese-sourced aluminum wire rod, aluminum wire strand, or aluminum wire. Importers and exporters that claim that an entry of AWC is not subject to suspension of liquidation or the collection of cash deposits because the merchandise was processed in either Korea or in Vietnam and does not incorporate Chinese-sourced aluminum wire rod, aluminum wire strand, or aluminum wire must certify that these products satisfy the requirements of these certification requirements as described in Appendix II of this notice.
Importers are required to complete and maintain the applicable importer certification, and maintain a copy of the applicable exporter certification, and retain all supporting documentation for both certifications. The importer certification must be completed, signed, and dated by the time the entry summary is filed for the relevant entry. The importer, or the importer's agent, must submit both the importer's certification and the exporter's certification to CBP as part of the entry process by uploading them into the document imaging system (DIS) in ACE. Where the importer uses a broker to facilitate the entry process, the importer should obtain the entry summary number from the broker. Agents of the importer, such as brokers, however, are not permitted to certify on behalf of the importer.
Exporters are required to complete and maintain the applicable exporter certification and provide the importer with a copy of that certification and all supporting documentation (
Additionally, the claims made in the certifications and any supporting documentation are subject to verification by Commerce and/or CBP. Importers and exporters are required to maintain the certifications and supporting documentation until the later of: (1) the date that is five years after the latest entry date of the entries covered by the certification; or (2) the date that is three years after the conclusion of any litigation in United States courts regarding such entries.
For all AWC from Korea or Vietnam that were entered, or withdrawn from warehouse, for consumption during the period October 19, 2023 (the date of initiation of these circumvention inquiries) through the date of publication of these preliminary affirmative determinations in the
For unliquidated entries (and entries for which liquidation has not become final) of AWC that were declared as non-AD/CVD type entries (
If it is determined that an importer and/or exporter has not met the certification and/or related documentation requirements for certain entries, Commerce intends to instruct CBP to suspend, pursuant to these preliminary country-wide affirmative determinations of circumvention and the
Interested parties may comment on these certification requirements, and on the certification language contained in the appendices to this notice in their case briefs.
As provided in 19 CFR 351.226(f)(3), Commerce intends to verify the information relied upon in making its final determinations.
Case briefs or other written comments should be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which any verification report is issued. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline for case briefs.
As provided in 19 CFR 351.309(c)(2) and (d)(2), in prior proceedings we have encouraged interested parties to provide an executive summary of their brief that should be limited to five pages total, including footnotes. In these scope and circumvention inquiries, we instead request that interested parties provide at the beginning of their briefs, a public executive summary for each issue raised in their briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce, within 30 days after the date of publication of this notice in the
Commerce, consistent with section 781(e) of the Act, will notify the U.S. International Trade Commission (ITC) of these preliminary determinations to include the merchandise subject to these circumvention inquiries within the
Commerce is issuing and publishing these determinations in accordance with section 781(b) of the Act, 19 CFR 351.225(g), and 19 CFR 351.226(g)(1).
I hereby certify that:
(A) My name is {IMPORTING COMPANY OFFICIAL'S NAME} and I am an official of {NAME OF IMPORTING COMPANY}, located at {ADDRESS OF IMPORTING COMPANY}.
(B) I have direct personal knowledge of the facts regarding the importation into the Customs territory of the United States of the aluminum wire and cable (AWC) assembled or completed in {select Korea or Vietnam} that under entry summary number(s), identified below, and are covered by this certification. “Direct personal knowledge” refers to facts the certifying party is expected to have in its own records. For example, the importer should have direct personal knowledge of the importation of AWC, including the exporter's and/or foreign seller's identity and location.
(C) If the importer is acting on behalf of the first U.S. customer, include the following sentence as paragraph C of this certification:
The AWC covered by this certification was imported by {IMPORTING COMPANY} on behalf of {U.S. CUSTOMER}, located at {ADDRESS OF U.S. CUSTOMER}.
If the importer is not acting on behalf of the first U.S. customer, include the following sentence as paragraph C of this certification:
{NAME OF IMPORTING COMPANY} is not acting on behalf of the first U.S. customer.
(D) The AWC covered by this certification was shipped to {NAME OF PARTY IN THE UNITED STATES TO WHOM THE MERCHANDISE WAS FIRST SHIPPED}, located at {U.S. ADDRESS TO WHICH MERCHANDISE WAS SHIPPED}.
(E) I have personal knowledge of the facts regarding the production of the imported products covered by this certification. “Personal knowledge” includes facts obtained from another party, (
(F) This certification applies to the following entries (repeat this block as many times as necessary):
(G) The AWC covered by this certification does not contain aluminum wire rod, aluminum wire strand, or aluminum wire produced in the People's Republic of China.
(H) I understand that {IMPORTING COMPANY} is required to maintain a copy of this certification and sufficient documentation supporting this certification (
(I) I understand that {IMPORTING COMPANY} is required to maintain a copy of the exporter's certification (attesting to the production and/or exportation of the imported merchandise identified above), and any supporting documentation provided to the importer by the exporter, until the later of: (1) the date that is five years after the date of the latest entry covered by the certification; or (2) the date that is three years after the conclusion of any litigation in United States courts regarding such entries.
(J) I understand that {IMPORTING COMPANY} is required to provide U.S. Customs and Border Protection (CBP) and/or the U.S. Department of Commerce (Commerce) with the importer certification, and any supporting documentation, and a copy of the exporter's certification, and any supporting documentation provided to the importer by the exporter, upon request of either agency.
(K) I understand that the claims made herein, and the substantiating documentation, are subject to verification by CBP and/or Commerce.
(L) I understand that failure to maintain the required certification and supporting documentation, or failure to substantiate the claims made herein, or not allowing CBP and/or Commerce to verify the claims made herein, may result in a
(i) suspension of liquidation of all unliquidated entries (and entries for which liquidation has not become final) for which these requirements were not met;
(ii) the importer being required to post the cash deposits determined by Commerce; and
(iii) the importer no longer being allowed to participate in the certification process.
(M) I understand that agents of the importer, such as brokers, are not permitted to make this Certification.
This certification was completed and signed on, or prior to, the date of the entry summary if the entry date is more than 14 days after the date of publication of the notice of Commerce's preliminary determination of circumvention in the
(N) I am aware that U.S. law (including, but not limited to, 18 U.S.C. 1001) imposes criminal sanctions on individuals who knowingly and willfully make material false statements to the U.S. government.
The party that made the sale to the United States should fill out the exporter certification.
I hereby certify that:
(A) My name is {COMPANY OFFICIAL'S NAME} and I am an official of {NAME OF FOREIGN COMPANY THAT MADE THE SALE TO THE UNITED STATES); located at {ADDRESS OF FOREIGN COMPANY THAT MADE THE SALE TO THE UNITED STATES).
(B) I have direct personal knowledge of the facts regarding the production and exportation of the aluminum wire and cable (AWC) for which sales are identified below. “Direct personal knowledge” refers to facts the certifying party is expected to have in its own records. For example, an exporter should have direct personal knowledge of the producer's identity and location.
(C) The AWC covered by this certification was shipped to {NAME OF PARTY IN THE UNITED STATES TO WHOM THE MERCHANDISE WAS FIRST SHIPPED}, located at {U.S. ADDRESS TO WHICH THE MERCHANDISE WAS SHIPPED}.
(D) The AWC covered by this certification does not contain aluminum wire rod, aluminum wire strand, or aluminum wire produced in the People's Republic of China.
(E) This certification applies to the following sales to {NAME OF U.S. CUSTOMER}, located at {ADDRESS OF U.S. CUSTOMER} (repeat this block as many times as necessary):
(F) The AWC covered by this certification was shipped to {NAME OF U.S. PARTY TO WHOM MERCHANDISE WAS SHIPPED}, located at {U.S. ADDRESS TO WHICH MERCHANDISE WAS SHIPPED}.
(G) I understand that {NAME OF FOREIGN COMPANY THAT MADE THE SALE TO THE UNITED STATES} is required to maintain a copy of this certification and sufficient documentation supporting this certification (
(H) I understand that {NAME OF FOREIGN COMPANY THAT MADE THE SALE TO THE UNITED STATES} is required to provide the U.S. importer with a copy of this certification and is required to provide U.S.
(I) I understand that the claims made herein, and the substantiating documentation, are subject to verification by CBP and/or Commerce.
(J) I understand that failure to maintain the required certification and supporting documentation, or failure to substantiate the claims made herein, or not allowing CBP and/or Commerce to verify the claims made herein, may result in a
(i) suspension of all unliquidated entries (and entries for which liquidation has not become final) for which these requirements were not met;
(ii) the importer being required to post the cash deposits determined by Commerce; and
(iii) the seller/exporter no longer being allowed to participate in the certification process.
(K) I understand that agents of the seller/exporter, such as freight forwarding companies or brokers, are not permitted to make this certification.
(L) This certification was completed and signed, and a copy of the certification was provided to the importer, on, or prior to, the date of shipment if the shipment date is more than 14 days after the date of publication of the notice of Commerce's preliminary determination of circumvention in the
(M) I am aware that U.S. law (including, but not limited to, 18 U.S.C. 1001) imposes criminal sanctions on individuals who knowingly and willfully make material false statements to the U.S. government.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) finds the Socialist Republic of Vietnam (Vietnam) remains a non-market economy (NME) country for purposes of U.S. antidumping duty (AD) law due to the sustained and pervasive government influence over its country's economic activities.
Applicable August 7, 2024.
Chien-Min Yang, Office of Policy, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5484.
Commerce determined that Vietnam was an NME country under the U.S. AD law in 2002. Since then, Commerce has consistently treated Vietnam as an NME in all AD investigations and administrative reviews involving imported products from Vietnam.
On September 8, 2023, the Government of Vietnam (GOVN) submitted a letter to Commerce requesting a review of Vietnam's status as an NME country within the context of a changed circumstances review (CCR) of the AD order on raw honey from Vietnam.
To ensure full public and interested party participation in this inquiry, Commerce invited public comment on Vietnam's economic status as an NME country. All comments and rebuttal comments were received by December 21, 2023, and February 1, 2024, respectively. Invitations for comments, along with the comments and rebuttal comments themselves, have remained accessible using the Federal eRulemaking portal at
On March 8, 2024, Commerce received new factual information from several domestic industries claiming that the GOVN submitted false statements and omitted material facts regarding Vietnam's alleged reforms in the context of the ongoing review of Vietnam's status as an NME country.
On May 8, 2024, Commerce also held a public hearing regarding the CCR of Vietnam's status as an NME country.
Commerce's analysis of the issues raised by parties to this CCR regarding Vietnam's status as a non-market economy country is included in the NME Analysis Memorandum.
This CCR was conducted pursuant to section 771(18)(A) of the Act, which defines the term “non-market economy country” as a foreign country determined by Commerce not to “operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise.” Section 771(18)(B) of the Act lists six factors Commerce must consider in any inquiry made under section 771(18)(A) of the Act, and under section 771(18)(C)(i) of the Act, a country's NME status remains in effect until revoked.
Section 771(18)(B) of the Act requires that Commerce take into account: (1) the extent to which the currency of the foreign country is convertible into the currency of other countries; (2) the extent to which wage rates in the foreign country are determined by foreign bargaining between labor and management; (3) the extent to which joint ventures or other investments by firms of other foreign countries are permitted in the foreign country; (4) the extent of government ownership or control of the means of production; (5) the extent of government control over the allocation of resources and over the price and output decisions of enterprises; and (6) such other factors as the administering authority (
Since Commerce's Vietnam NME Determination (2002),
Despite these market-oriented reforms, the GOVN remains entrenched in many aspects of the Vietnamese economy. The State Bank of Vietnam is still not independent and continues to intervene in the foreign exchange market to influence the value of the dong. Labor unions remain dominated by the state-controlled Vietnam General Confederation of Labor, hindering genuine collective bargaining and ultimately creating conditions for suppressed wages and labor costs. Although Vietnam has taken steps to make its overall foreign direct investment environment more attractive, market access barriers, regulatory transparency, and restrictions on corporate control and foreign ownership persist.
In addition to the above referenced points, Vietnam's economy is still characterized by significant state ownership and control over the means of production, most notably over companies and land. The GOVN continues to play a significant role over the pricing and allocation of credit in Vietnam. State-owned enterprises (SOE) command a disproportionate amount of lending credit, among other structural advantages, despite the SOE's relatively low efficiency levels compared to their private-sector counterparts. The GOVN also uses state-directed planning to communicate its objectives for the economy in terms of business outcomes and resource allocations, and pervasive government price controls continue to influence final prices of goods in Vietnam. Finally, the Communist Party of Vietnam's influence over the judicial system and persistent challenges with corruption continue to undermine some of Vietnam's reform initiatives.
In sum, while Vietnam has implemented notable market-oriented reforms, the extent of government involvement in the economy continues to distort market conditions, rendering Vietnamese prices and costs unusable for U.S. antidumping duty calculations. Therefore, based on the totality of the six factors analyzed, Commerce determines that Vietnam remains a non-market economy for purposes of U.S. AD law.
This notice is issued and published in accordance with sections 751(b) and 771(18)(C)(ii) of the Act.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
This notice announces the date, time, and access information of the public meeting being held, in a virtual format, prior to the 69th meeting of the International Whaling Commission (IWC). The meeting is open to U.S. citizens only.
The public meeting will be held August 26, 2024, at 3 p.m. EDT.
The meeting will be held in a virtual/online format. Attendees must register in advance to attend the public meeting at the following link:
Madison Harris,
The Secretary of Commerce is responsible for implementing the domestic obligations of the United States under the International Convention for the Regulation of Whaling, 1946. The U.S. IWC Commissioner has responsibility for the preparation and negotiation of U.S. positions on international issues concerning whaling and for all matters involving the IWC. The U.S. IWC Commissioner is staffed by the Department of Commerce and assisted by the Department of State, the Marine Mammal Commission, and other U.S. Government agencies.
The IWC will hold its 69th meeting in Lima, Peru on September 23-27, 2024. Additional information about the IWC meeting, including a draft agenda for the meeting, is posted on the IWC Secretariat's website at
NOAA will hold a public meeting on August 26, 2024, to discuss the tentative U.S. positions for the September 2024 IWC meeting. Any U.S. citizen with an identifiable interest in U.S. whale conservation and management policy may participate, but NOAA reserves the authority to inquire about the interests of any person who appears at the meeting and determine the
The August 26 meeting will be held at 3 p.m. EDT in a virtual format. Meeting access and conferencing platform information will be sent to those who register. To participate, interested persons must register in advance via the following link:
Requests for sign language interpretation or other auxiliary aids should be directed to Madison Harris,
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of initiation; request for information.
The National Marine Fisheries Service (NMFS) announces the initiation of a 5-year review for the Mediterranean monk seal (
To allow us adequate time to conduct this review, we must receive your information no later than October 7, 2024.
You may submit information on this document, identified by NOAA-NMFS-2024-0092, by the following method:
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Kristen Koyama (301) 427-8456 or
This notice announces our review of the Mediterranean monk seal (
Background information on the Mediterranean monk seal is available on the NMFS website at:
To ensure that the review is complete and based on the best available scientific and commercial information, we are soliciting new information from the public, governmental agencies, Tribes, the scientific community, industry, environmental entities, and any other interested parties concerning the status of
If you wish to provide information for the review, you may submit your information and materials electronically (see
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; request for comments on proposed renewal incidental harassment authorization.
NMFS received a request from Attentive Energy, LLC (Attentive Energy), a company registered in Delaware, for the renewal of their previously issued incidental harassment authorization (IHA) (hereafter, the “initial IHA”) to take marine mammals incidental to marine site characterization surveys in coastal waters off of New York and New Jersey in the New York Bight, specifically within the Bureau of Ocean Energy Management (BOEM) Commercial Lease of Submerged Lands for Renewable Energy Development on the Outer Continental Shelf (Lease) Area OCS-A 0538 and associated export cable route (ECR) area. Pursuant to the Marine Mammal Protection Act (MMPA), prior to issuing the initial IHA, NMFS requested comments on both the proposed IHA and the potential for renewing the initial authorization if certain requirements were satisfied. The renewal requirements have been satisfied, and NMFS is now providing an additional 15-day comment period to allow for any additional comments on the proposed renewal not previously provided during the initial 30-day comment period.
Comments and information must be received no later than August 22, 2024.
Comments should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, NMFS, and should be submitted via email to
Electronic copies of the original application, renewal request, and supporting documents (including NMFS
Kelsey Potlock, 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 such species or stocks for taking for certain subsistence uses (referred to here as “mitigation measures”). NMFS must also prescribe requirements pertaining to monitoring and reporting of such takings. The definition of key terms such as “take,” “harassment,” and “negligible impact” can be found in the MMPA and the NMFS's implementing regulations (see 16 U.S.C. 1362; 50 CFR 216.103).
NMFS' regulations implementing the MMPA at 50 CFR 216.107(e) indicate that IHAs may be renewed for additional periods of time not to exceed 1 year for each reauthorization. In the notice of proposed IHA for the initial IHA, NMFS described the circumstances under which we would consider issuing a renewal for this activity, and requested public comment on a potential renewal under those circumstances.
Specifically, on a case-by-case basis, NMFS may issue a one-time 1-year renewal of an 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 Detailed Description of Specified Activities section of the initial IHA issuance notice is planned; or (2) the activities as described in the Description of the Specified Activities and Anticipated Impacts section of the initial IHA issuance notice would not be completed by the time the initial IHA expires and a renewal would allow for completion of the activities beyond that described in the
1. 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).
2. The request for renewal must include the following:
• 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 (
• 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.
3. Upon review of the request for renewal, the status of the affected
An additional public comment period of 15 days (for a total of 45 days), with direct notice by email, phone, or postal service to commenters on the initial IHA, is provided to allow for any additional comments on the proposed renewal. A description of the renewal process may be found on our website at:
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
On June 20, 2023, NMFS issued an IHA to Attentive Energy to take marine mammals incidental to conducting marine site characterization surveys in coastal waters off of New York and New Jersey in the New York Bight region, specifically within the BOEM Lease Area OCS-A-0538 and associated ECR area (88 FR 41888, June 28, 2023), effective from June 20, 2023, through June 19, 2024. On May 24, 2024, NMFS received an application for the renewal of that initial IHA. As described in the application for renewal IHA, the activities for which incidental take is requested consist of activities that were analyzed for the initial 2023 authorization, but would not be completed prior to its expiration. As required, the applicant also provided a preliminary monitoring report which confirms that the applicant has implemented the required mitigation and monitoring, and which also shows that no impacts of a scale or nature not previously analyzed or authorized have occurred as a result of the activities conducted.
Under the initial IHA, Attentive Energy planned to conduct marine site characterization surveys, including high-resolution geophysical (HRG) surveys, in coastal waters off of New Jersey and New York in the New York Bight, specifically within the BOEM Lease Area OCS-A 0538 and associated ECR areas. Challenges and delays with procurement, mobilization, and downtime contributed to less survey being completed during the initial IHA period than anticipated.
The surveys were designed to obtain data sufficient to meet BOEM guidelines for providing geophysical, geotechnical, and geo-hazard information for site assessment plan surveys and/or construction and operations plan development. The objective of the surveys was to support the site characterization, siting, and engineering design of offshore wind project facilities including wind turbine generators, offshore substations, and submarine cables within the Lease Area. At least two survey vessels would operate as part of the planned surveys with a maximum of two nearshore (<20 meters (m); <65.6 feet (ft)) vessels and a maximum of two offshore (≥20 m (≥65.6 ft)) vessels operating concurrently.
Attentive Energy is proposing to continue to conduct these survey activities, as per the initial IHA application, up to approximately 6,936 kilometers (km; 4,309.8 miles (mi)) of trackline. This is a subset of the survey trackline included in the initial IHA; the initial survey plan included 21,745 km (13,511.72 mi) across the entire project area (maximum-case scenario), which was split up by approximately 14,025 km (8,714.7 mi) in the Lease Area and 7,720 km (4,797 mi) in the ECR area. We note here that the Project Area is minimally expanded (primarily to the south) in the current survey plan as compared with the survey plan associated with the initial IHA (see figure 1); however, per discussions with Attentive Energy, this expanded area will not result in the need to survey additional tracklines. NMFS has determined that this slight change to the survey area constitutes a minor change that does not affect the previous analyses, mitigation and monitoring requirements, or take estimates.
The survey effort in the proposed project would be conducted over up to approximately 80 days across two vessels (in the same manner as the initial IHA). The survey effort proposed for this renewal IHA conservatively assumes that sparker acoustic sources, which have the largest estimated Level B harassment area, would be used exclusively. In reality, other sources with smaller estimated harassment areas would be used during some proportion of survey effort.
The potential impacts of Attentive Energy's proposed activity on marine mammals would involve acoustic stressors and are unchanged from the impacts described in the
This proposed renewal IHA is for the remainder of work that was not completed by the expiration of the initial IHA. This proposed renewal IHA would authorize incidental take, by Level B harassment only, of 15 species (16 stocks) of marine mammals for a subset of the initially planned marine site characterization survey activities to be completed in approximately 1 year, in a substantially similar area, and using the same survey methods and acoustic sources to those described in the initial IHA application. Therefore, the anticipated effects on marine mammals and the affected stocks also remain the same. All mitigation, monitoring, and reporting measures would remain exactly as described in the
A detailed description of the marine site characterization survey activities for which incidental take is proposed here may be found in the
The only change to this project would be the aforementioned slight expansion of the survey area to the south of the initial project area, which consists of additional potential ECRs (refer back to figure 1). However, as described above, Attentive Energy intends to maintain the same amount of remaining trackline, using the same number of vessels, and using the same acoustic sources as previously analyzed (
A description of the marine mammals in the area of the activities for which authorization of take is proposed here, including information on abundance, status, distribution, and hearing, may be found in the
The draft 2023 SARs include updates for additional marine mammal species and stocks (
On August 1, 2022, NMFS announced proposed changes to the existing North Atlantic right whale vessel speed regulations to further reduce the likelihood of mortalities and serious injuries to endangered North Atlantic right whales from vessel collisions, which are a leading cause of the species' decline and a primary factor in an ongoing Unusual Mortality Event (87 FR 46921, August 1, 2022). Should a final vessel speed rule be issued and become effective during the effective period of this proposed renewal IHA (or any other MMPA incidental take authorization), the authorization holder would be required to comply with any and all applicable requirements contained within the final rule. Specifically, where measures in any final vessel speed rule are more protective or restrictive than those in this or any other MMPA authorization, authorization holders would be required to comply with the requirements of the rule. Alternatively, where measures in this or any other MMPA authorization are more restrictive or protective than those in any final vessel speed rule, the measures in the MMPA authorization would remain in place. These changes would become effective immediately upon the effective date of any final vessel speed rule and would not require any further action on NMFS's part.
Based on the information presented above, NMFS has determined that neither this nor any other new information affects which species or stocks have the potential to be affected or any other pertinent information in the Description of the Marine Mammals in the Area of Specified Activities contained in the supporting documents for the initial proposed (88 FR 24553, April 21, 2023) and final (88 FR 41888, June 28, 2023)
A description of the potential effects of the specified activity on marine mammals and their habitat for the activities for which an authorization of incidental take is proposed here may be found in the
A detailed description of the methods and inputs used to estimate take for the specified activity are found in the
Here, NMFS have utilized the draft 2023 SARs, rather than the final 2022 SARs, as the draft 2023 SARs represent the best available science and the most recently available data.
The proposed mitigation, monitoring, and reporting measures included as requirements in this authorization are identical to those included in the
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NMFS published a notice of a proposed IHA (88 FR 24553, April 21, 2023) and solicited public comments on both our proposal to issue the initial IHA for marine site characterization surveys and on the potential for a renewal IHA, should certain requirements be met. All public comments were addressed in the notice announcing the issuance of the initial IHA (88 FR 41888, June 28, 2023) and none of the comments specifically pertained to the potential renewal of the 2023 IHA.
Attentive Energy's proposed activities consist of a subset of activities analyzed in the initial IHA. In analyzing the effects of the activities for the initial IHA, NMFS determined that Attentive Energy's activities would have a negligible impact on the affected species or stocks and that authorized take numbers of each species or stock were small relative to the relevant stocks (
NMFS has preliminarily concluded that there is no new information suggesting that our analysis or findings should change from those reached for the initial IHA. This includes consideration of the draft 2023 SAR estimated abundance of the North Atlantic right whale stock and other stocks, as shown above in table 1. Specifically, NMFS is proposing to authorize 4 takes of North Atlantic right whales by Level B harassment only, and the impacts resulting from the project's activities are neither reasonably expected nor reasonably likely to
Based on the information and analysis contained here and in the referenced documents, NMFS has determined the following: (1) the required mitigation measures will affect the least practicable adverse impact on marine mammal species or stocks and their habitat; (2) the proposed takes for authorization would have a negligible impact on the affected marine mammal species or stocks; (3) the takes proposed for authorization represent small numbers of marine mammals relative to the affected stock abundances; (4) Attentive Energy's activities will not have an unmitigable adverse impact on taking for subsistence purposes as no relevant subsistence uses of marine mammals are implicated by this action; and (5) appropriate monitoring and reporting requirements are included. This includes consideration of the estimated abundance of 13 stock(s) decreasing or increasing slightly, specific to each stock.
Section 7(a)(2) of the Endangered Species Act of 1973 (ESA; 16 U.S.C. 1531
NMFS Office of Protected Resources has proposed to authorize the incidental take of four species of marine mammals which are listed under the ESA (the North Atlantic right, fin, sei, and sperm whale) and has determined that these activities fall within the scope of activities analyzed in GARFO's programmatic consultation regarding geophysical surveys along the U.S. Atlantic coast in the three Atlantic Renewable Energy Regions (completed June 29, 2021; revised September 2021). The proposed renewal IHA provides no new information about the effects of the action, nor does it change the extent of effects of the action, or present any other basis to require re-initiation of consultation with NMFS GARFO; therefore, the ESA consultation has been satisfied for the initial IHA and remains valid for the Renewal IHA.
As a result of these preliminary determinations, NMFS proposes to issue a renewal IHA to Attentive Energy for conducting marine site characterization surveys in coastal waters off of New York and New Jersey in the New York Bight, from the date of issuance through June 19, 2025, provided the previously described mitigation, monitoring, and reporting requirements are incorporated. A draft of the proposed and final initial IHA can be found at
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of an incidental harassment authorization.
In accordance with the regulations implementing the Marine Mammal Protection Act (MMPA) as amended, notification is hereby given that NMFS has issued an incidental harassment authorization (IHA) to Weyerhaeuser Company (Weyerhaeuser) to incidentally harass marine mammals during construction activities associated with the Log Export Dock Project on the Columbia River near Longview, Washington.
This authorization is effective from September 1, 2025 through August 31, 2026.
Electronic copies of the application and supporting documents, as well as a list of the references cited in this document, may be obtained online at
Rachel Wachtendonk, Office of Protected Resources (OPR), 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.
On October 29, 2023, NMFS received a request from Weyerhaeuser for an IHA to take marine mammals incidental to pile driving and removal activities associated with the Log Export Dock
Weyerhaeuser is planning the partial demolition and replacement of the existing Log Export dock on the Columbia River, near Longview, Washington. The project includes impact and vibratory pile installation and vibratory pile removal. Vibratory and impact pile driving are expected to start in September 2025 and take about 120 days of in-water work within the U.S. Army Corps of Engineers (USACE) and the U.S. Fish and Wildlife Service (USFWS)-designated in-water work window (September 1, 2025-January 3, 2026). All pile installation will occur during the work window, which would minimize potential exposure of Endangered Species Act (ESA) listed fish species from impact pile driving. An additional 30 days of vibratory pile removal may occur outside the window.
The demolition and replacement of the 612-foot (ft), or 186.5-meter (m) berth A of the Log Export Dock would include the removal of 983 16-inch (in), or 0.41-m, timber piles, 36 16-in (0.41-m) steel pipe piles, 10 12-in (0.30-m) steel H-piles, 7 12-in (0.30-m) steel pipe piles, and 20 14- or 16-in (0.36- or 0.41-m) steel fender piles. Existing piles would be primarily removed by the deadpull method, with piles being removed with the vibratory hammer if the deadpull is unsuccessful. Broken or damaged piles would be cut at the mudline. It is anticipated that 75 percent of the existing 983 timber piles will be removed by the deadpull method, with the remaining 246 being removed with the vibratory hammer. The new structure will be supported by the installation of 325 30-in (0.76-m) steel pipe piles. In addition, up to 26 24-in (0.61 m) temporary steel pipe piles may be installed and removed to support permanent pile installation. Temporary and permanent piles would be initially installed with a vibratory hammer, with permanent piles being followed by an impact hammer to embed them to their final depth. To reduce underwater noise produced by impact pile driving, an unconfined bubble curtain will be used during impact pile installation.
In order to maintain project schedules, it is possible that multiple pieces of equipment would operate at the same time within the project area. Piles may be driven on the same day or, less commonly, at the same time, by two impact hammers, one impact hammer and one vibratory hammer, or two vibratory hammers. The method of installation, and whether concurrent pile driving scenarios will be implemented, will be determined by the construction crew once the project has begun. Therefore, the total take estimate reflects the worst-case scenario (both hammers installing 30-in steel pipe piles) for the proposed project. However, the most likely scenario is the vibratory removal of a 16-in timber pile at the same time as installing a 30-in steel pipe piles by vibratory or impact methods.
A detailed description of the planned construction project is provided in the
A notice of NMFS' proposal to issue an IHA to Weyerhaeuser was published in the
In table 5 of the proposed IHA
Sections 3 and 4 of Weyerhaeuser's 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 1 lists all species or stocks for which take is expected and authorized for this activity and summarizes information related to the population or stock, including regulatory status under the MMPA and 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 authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of
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 1 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 three species (with three managed stocks) in table 2 temporally and spatially co-occur with the activity to the degree that take is reasonably likely to occur.
A detailed description of the species likely to be affected by Weyerhaeuser's project, including brief introductions to the species and relevant stocks as well as available information regarding population trends and threats, and information regarding local occurrence, were provided in the
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, see NMFS (2018) for a review of available information.
The effects of underwater noise from Weyerhaeuser's pile driving activities have the potential to result in behavioral harassment of marine mammals in the vicinity of the project area. The notice of the proposed IHA (FR 48579, June 7, 2024) included a discussion of the effects of anthropogenic noise on marine mammals and the potential effects of underwater noise from Weyerhaeuser's pile driving activities on marine mammals and their habitat. That information and analysis is incorporated by reference into this final IHA determination and is not repeated here; please refer to the notice of the proposed IHA (FR 48579, June 7, 2024).
This section provides an estimate of the number of incidental takes authorized 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 will primarily be by Level B harassment, as use of the acoustic source (
As described previously, no serious injury or mortality is anticipated or authorized for this activity. 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 is authorized.
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 permeant threshold shift (PTS) of some degree (equated to Level A harassment).
Weyerhaeuser's activity includes the use of continuous (vibratory pile driving) and impulsive (impact pile driving) sources, and therefore the RMS SPL thresholds of 120 and 160 dB re 1μPa are applicable.
These thresholds are provided in the table 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 construction noise from the proposed project. Pile driving generates underwater noise that can potentially result in disturbance to marine mammals in the project area. The maximum (underwater) area ensonified is determined by the topography of the Columbia River, including intersecting land masses that will reduce the overall area of potential impact. Additionally, vessel traffic, including the other half of the dock (berth B) remaining operational during construction, in the project area may contribute to elevated background noise levels, which may mask sounds produced by the project.
Transmission loss (
This formula neglects loss due to scattering and absorption, which is assumed to be zero here. The degree to which underwater sound propagates away from a sound source is dependent on a variety of factors, most notably the water bathymetry and presence or absence of reflective or absorptive conditions including in-water structures and sediments. Spherical spreading occurs in a perfectly unobstructed (free-field) environment not limited by depth or water surface, resulting in a 6-dB reduction in sound level for each doubling of distance from the source (20 × log
The intensity of pile driving sounds is greatly influenced by factors such as the type of piles, hammers, and the physical environment in which the activity takes place. In order to calculate the distances to the Level A harassment and the Level B harassment sound thresholds for the methods and piles being used in this project, NMFS used acoustic monitoring data from other locations to develop proxy source levels for the various pile types, sizes and methods (table 4). Generally, we choose source levels from similar pile types from locations (
For this project, two hammers, including any combination of vibratory and impact hammers, may operate simultaneously. As noted earlier, the estimated ensonified area reflects the worst-case scenario (both hammers installing 30-in steel pipe piles) for the project. However, the most likely scenario is the removal of a 16-in timber pile at the same time as installing a 30-in steel pipe pile. The calculated proxy source levels for the different potential concurrent pile driving scenarios are shown in table 5.
For simultaneous impact driving of two 30-in steel pipe piles (the most conservative scenario), the number of strikes per pile was doubled to estimate total sound exposure during simultaneous installation. While the likelihood of impact pile driving strikes completely overlapping in time is rare due to the intermittent nature and short duration of strikes, NMFS conservatively estimates that up to 20 percent of strikes may overlap completely in time. Therefore, to calculate Level B isopleths for simultaneous impact pile driving, dB addition (if the difference between the two sound source levels is between 0 and 1 dB, 3 dB are added to the higher sound source level) was used to calculate the combined sound source level of 188 dB RMS that was used in this analysis.
To calculate Level B isopleths for one impact and one vibratory hammer operating simultaneously, sources were treated as though they were non-overlapping and the isopleth associated with the individual source which results in the largest Level B harassment isopleth was conservatively used for both sources to account for periods of overlapping activities.
To calculate Level B isopleths for two simultaneous vibratory hammers, the NMFS acoustic threshold calculator was used with modified inputs to account for accumulation, weighting, and source overlap in space and time. Using the rules of dB addition if the difference between the two sound source levels is between 0 and 1 dB, 3 dB are added to the higher sound source level), the combined sound source level for the simultaneous vibratory installation of two 30-in steel piles is 166 dB RMS.
The ensonified area associated with Level A harassment is more technically challenging to predict due to the need to account for a duration component. Therefore, NMFS developed an optional User Spreadsheet tool to accompany the Technical Guidance that can be used to relatively simply predict an isopleth distance for use in conjunction with marine mammal density or occurrence to help predict potential takes. We note that because of some of the assumptions included in the methods underlying this optional tool, we anticipate that the resulting isopleth estimates are typically going to be overestimates of some degree, which may result in an overestimate of potential take by Level A harassment. However, this optional tool offers the best way to estimate isopleth distances when more sophisticated modeling methods are not available or practical. For stationary sources, like pile driving, the optional User Spreadsheet tool predicts the distance at which, if a marine mammal remained at that distance for the duration of the activity, it would be expected to incur PTS. Inputs used in the optional User Spreadsheet tool, and the resulting estimated isopleths, are reported in table 6, below.
To calculate Level A isopleths for two impact hammers operating simultaneously, the NMFS User Spreadsheet calculator was used with modified inputs to account for the total estimated number of strikes for all piles. For simultaneous impact driving of two 30-in steel pipe piles (the most conservative scenario), the number of strikes per pile was doubled to estimate total sound exposure during simultaneous installation, and the number of piles per day was reduced to one. The source level for two simultaneous impact hammers was not adjusted because for identical sources the accumulation of energy depends only on the total number of strikes, whether or not they overlap fully in time. Therefore, the source level used for two simultaneous impact hammers was 172 dB single-strike sound exposure level (SEL
To calculate Level A isopleths of one impact hammer and one vibratory hammer operating simultaneously, sources were treated as though they were non-overlapping and the isopleth associated with the individual source which resulted in the largest Level A isopleth was conservatively used for both sources to account for periods of overlapping activities.
To calculate Level A isopleths of two vibratory hammers operating simultaneously, the NMFS acoustic threshold calculator was used with modified inputs to account for accumulation, weighting, and source overlap in space and time. Using the rules of dB addition (NMFS, 2024; if the difference between the two sound source levels is between 0 and 1 dB, 3 dB are added to the higher sound source
In this section, we provide information about the occurrence of marine mammals that will inform the take calculations, and describe how the information provided is synthesized to produce a quantitative estimate of the take that is reasonably likely to occur and authorized. Daily occurrence data cones from USACE compiled weekly monitoring reports collected at the Bonneville Dam (river mile (RM) 146) from 2020 through 2021 (van der Leeuw and Tidwell, 2022). As pinnipeds would need to swim past the proposed project site to reach the dam, the number of animals observed at Bonneville Dam may be slightly lower than what would be observed at the project site. The take calculations for this project are:
Incidental take estimate = (number of days during work window × estimated number of animals per day) + (number of days outside work window × estimated number of animals per day).
The numbers of California sea lions observed at Bonneville Dam have been in decline in recent years and ranged from 149 in 2016 to a total of 24 in 2021 (van der Leeuw and Tidwell, 2022). During the spring period from January 1 to May 6, 2020, daily counts averaged 0.9 animals ± 3.3 standard deviation, with a high of seven individuals (Tidwell
The largest Level A harassment zone for California sea lions extends 29 m from the sound source (table 7) during impact pile driving. All construction work would be shut down prior to a California sea lion entering the Level A harassment zone specific to the in-water activity underway at the time. In consideration of the small Level A harassment isopleth and proposed shutdown requirements, no take by Level A harassment is anticipated or authorized for California sea lions.
Steller sea lions have been observed in varying numbers at Bonneville Dam throughout much of the year, with a peak in April and May (Tidwell
The largest Level A harassment zone for Steller sea lions extends 29 m from the sound source (table 7) during impact pile driving. All construction work would be shut down prior to a Steller sea lion entering the Level A harassment zone specific to the in-water activity underway at the time. In consideration of the small Level A harassment isopleth and proposed shutdown requirements, no take by Level A harassment is anticipated or authorized for Steller sea lions.
Harbor seals are rarely observed at Bonneville Dam, but have been recorded in low numbers over the past 10 years. A recent IHA issued for the Port of Kalama Manufacturing and Marine Export Facility (85 FR 76527), which is located near the proposed project site, used a conservative estimate based on anecdotal information of harbor seals residing near the mouths of the Cowlitz and Kalama Rivers and estimated that there could be up to 10 present on any given day of pile driving (NMFS, 2017; 81 FR 15064, March 21, 2016). Therefore, using the equation given above, the calculated estimate of take by Level B harassment for harbor seals would be 1,500.
The largest Level A harassment zone for harbor seals extends 395 m from the sound source (table 7) during impact pile driving. The Port of Kalama project estimated that one harbor seal per day could be present in the Level A harassment zone for each day of impact pile driving. Given that the largest Level A isopleth extends approximately half the width of the river (810 m), the calculated estimated take by Level A harassment for harbor seals would be 58 (1 seal on 48.5% of the 120 impact pile driving days).
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 (latter not applicable for this action). 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. 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.
The mitigation measures described in the following paragraphs will apply to the Weyerhaeuser in-water construction activities.
Weyerhaeuser must establish shutdown zones and Level B harassment monitoring zones for all pile driving activities. The purpose of a shutdown zone is generally to define an area within which shutdown of the activity would occur upon sighting of a marine animal (or in anticipation of an animal entering the defined area). Shutdown zones are based on the largest Level A harassment zone for each pile size/type and driving method, and behavioral monitoring zones are meant to encompass Level B harassment zones for each pile size/type and driving method, as shown in table 9. A minimum shutdown zone of 10 m will be required for all in-water construction activities to avoid physical interaction with marine mammals. Shutdown zones for each activity type are shown in table 9.
Prior to pile driving, Protected Species Observers (PSOs) will survey the shutdown zones and surrounding areas for at least 30 minutes before pile driving activities start. If marine mammals are found within the shutdown zone, pile driving will be delayed until the animal has moved out of the shutdown zone, either verified by an observer or by waiting until 15 minutes has elapsed without a sighting. If a marine mammal approaches or enters the shutdown zone during pile driving, the activity will be halted. Pile driving may resume after the animal has moved out of and is moving away from the shutdown zone or after at least 15 minutes has passed since the last observation of the animal.
All marine mammals will be monitored in the Level B harassment to the extent of visibility for the on-duty PSOs. If a marine mammal for which take is authorized enters the Level B harassment zone, in-water activities will continue and PSOs will document the animal's presence within the estimated harassment zone.
If a species for which authorization has not been granted, or for which the authorized takes are met, is observed approaching or within the Level B harassment zone, pile driving activities will be shut down immediately. Activities will not resume until the animal has been confirmed to have left the area or 15 minutes has elapsed with no sighting of the animal.
The placement of PSOs during all pile driving and removal activities (described in detail in the Monitoring and Reporting section) will ensure that the ensonified area of the Columbia River is visible during pile installation.
Monitoring must take place from 30 minutes prior to initiation of pile driving activities (
A bubble curtain must be employed during all impact pile driving activities to interrupt the acoustic pressure and reduce impact on marine mammals. The bubble curtain must distribute air bubbles around 100 percent of the piling circumference for the full depth of the water column. The lowest bubble ring must be in contact with the mudline for the full circumference of the ring. The weights attached to the bottom ring must ensure 100 percent substrate contact. No parts of the ring or other objects may prevent full substrate contact. Air flow to the bubblers must be balanced around the circumference of the pile. If simultaneous use of two impact hammers occurs, both piles must be mitigated with bubble curtains as described above.
Soft-start procedures are believed to provide additional protection to marine mammals by providing warning and/or giving marine mammals a chance to leave the area prior to the impact hammer operating at full capacity. For impact driving, an initial set of three strikes will be made by the hammer at reduced energy, followed by a 30-second waiting period, then two subsequent three-strike sets before initiating continuous driving. Soft start will be implemented at the start of each day's impact pile driving and at any time following cessation of impact pile driving for a period of 30 minutes or longer.
Based on our evaluation of the applicant's proposed measures, NMFS has 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.
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 understanding of one or more of the following:
• 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.
Marine mammal monitoring must be conducted in accordance with section 5 of the IHA. Marine mammal monitoring during pile driving and removal must be conducted by NMFS-approved PSOs in a manner consistent with the following:
• PSOs must 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 must have prior experience performing the duties of a PSO during construction activity pursuant to a NMFS-issued incidental take authorization;
• Other PSOs may substitute education (degree in biological science or related field) or training for experience; and,
• Weyerhaeuser must submit PSO Curriculum Vitae for approval by NMFS prior to the onset of pile driving.
PSOs must have the following additional qualifications:
• Ability to conduct field observations and collect data according to assigned protocols;
• Experience or training in the field identification of marine mammals, including the identification of behaviors;
• Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations including but not limited to the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates, times, and reason for implementation of mitigation (or why mitigation was not implemented when required); and marine mammal behavior; and,
• 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. Weyerhaeuser will employ up to four PSOs. PSO locations will provide an unobstructed view of all water within the shutdown zone(s), and as much of the Level A harassment and Level B harassment zones as possible. PSOs will be stationed along the shore of the Columbia River.
Weyerhaeuser will ensure that construction supervisors and crews, the monitoring team, and relevant Weyerhaeuser staff are trained prior to the start of activities subject to the proposed IHA, so that responsibilities, communication procedures, monitoring protocols, and operational procedures are clearly understood. New personnel joining during the project will be trained prior to commencing work. Monitoring will occur for all pile driving activities during the pile installation work window (September 1, 2025 through January 31, 2026). For pile removal activities outside the work window, one PSO will be on site to monitor the ensonified area once every 7 calendar days, whether or not vibratory pile extraction occurs on that day. Monitoring will be conducted 30 minutes before, during, and 30 minutes after pile driving/removal activities. In addition, observers shall record all incidents of marine mammal occurrence, regardless of distance from activity, and shall document any behavioral reactions in concert with distance from piles being driven or removed. Pile driving/removal activities include the time to install or remove a single pile or series of piles, as long as the time elapsed between uses of the pile driving equipment is no more than 30 minutes.
PSOs will use approved data forms to record the following information:
• Dates and times (beginning and end) of all marine mammal monitoring.
• PSO locations during marine mammal monitoring.
• Construction activities occurring during each daily observation period, including how many and what type of piles were driven or removed and by what method (
• Weather parameters and water conditions.
• The number of marine mammals observed, by species, relative to the pile location and if pile driving or removal was occurring at time of sighting.
• Distance and bearings of each marine mammal observed to the pile being driven or removed.
• Description of marine mammal behavior patterns, including direction of travel.
• Age and sex class, if possible, of all marine mammals observed.
• Detailed information about implementation of any mitigation triggered (such as shutdowns and delays), a description of specific actions that ensued, and resulting behavior of the animal if any.
A draft marine mammal monitoring report will be submitted to NMFS within 90 days after the completion of pile driving and removal activities. It would include an overall description of work completed, a narrative regarding marine mammal sightings, and associated PSO data sheets. Specifically, the report must include:
• Dates and times (begin and end) of all marine mammal monitoring.
• Construction activities occurring during each daily observation period, including the number and type of piles driven or removed and by what method (
• PSO locations during marine mammal monitoring.
• Environmental conditions during monitoring periods (at beginning and end of PSO shift and whenever conditions change significantly), including Beaufort sea state and any other relevant weather conditions including cloud cover, fog, sun glare, and overall visibility to the horizon, and estimated observable distance.
• Upon observation of a marine mammal, the following information: (1) name of PSO who sighted the animal(s) and PSO location and activity at time of sighting; (2) time of sighting; (3) identification of the animal(s) (
• Number of marine mammals detected within the harassment zones, by species.
• Detailed information about any implementation of any mitigation triggered (
If no comments are received from NMFS within 30 days, the draft final 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 the construction activities discover an injured or dead marine mammal, Weyerhaeuser shall report the incident to the OPR, NMFS and to the west coast regional stranding network as soon as feasible. If the death or injury was clearly caused by the specified activity, Weyerhaeuser must immediately cease the specified activities until NMFS is able to review the circumstances of the incident and determine what, if any, additional measures are appropriate to ensure compliance with the terms of the IHA. The IHA-holder must not resume their activities until notified by NMFS. The report must include the following information:
• Time, date, and location (latitude/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 California sea lions, Steller sea lions, and harbor seals, given that the anticipated effects of this activity on these different marine mammal stocks are expected to be similar. There is little information about the nature or severity of the impacts, or the size, status, or structure of any of these species or stocks that would lead to a different analysis for this activity.
Pile driving activities have the potential to disturb or displace marine mammals. Specifically, the project activities may result in take, in the form of Level A harassment and Level B harassment from underwater sounds generated from pile driving and removal. Potential takes could occur if individuals are present in the ensonified zone when these activities are underway.
The takes from Level B harassment would be due to potential behavioral disturbance, and TTS. Level A harassment takes would be due to PTS. No mortality or serious injury is anticipated given the nature of the activity, even in the absence of the required mitigation. The potential for harassment is minimized through the construction method and the implementation of the mitigation measures (see Mitigation section).
Take would occur within a limited, confined area (the Columbia River) of the stocks' ranges. Level A harassment and Level B harassment would be reduced to the level of least practicable adverse impact through use of mitigation measures described herein. Further, the amount of take authorized is extremely small when compared to stock abundance, and the project is not anticipated to impact any known important habitat areas for any marine mammal species.
Take by Level A harassment is authorized to account for the potential that an animal could enter and remain within the area between a Level A harassment zone and the shutdown zone for a duration long enough to be taken by Level A harassment. Any take by Level A harassment is expected to arise from, at most, a small degree of PTS because animals would need to be exposed to higher levels and/or longer duration than are expected to occur here in order to incur any more than a small degree of PTS. Additionally, and as noted previously, some subset of the individuals that are behaviorally harassed could also simultaneously incur some small degree of TTS for a short duration of time. Because of the small degree anticipated, though, any PTS or TTS potentially incurred here would not be expected to adversely impact individual fitness, let alone annual rates of recruitment or survival.
Behavioral responses of marine mammals to pile driving at the project site, if any, are expected to be mild and temporary. Marine mammals within the Level B harassment zone may not show any visual cues they are disturbed by activities or could become alert, avoid the area, leave the area, or display other mild responses that are not observable such as changes in vocalization patterns. Given the limited number of piles to be installed or extracted per day and that pile driving and removal would occur across a maximum of 150 days within the 12-month authorization period, any harassment would be temporary.
Any impacts on marine mammal prey that would occur during Weyerhaeuser's activity would 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. Indirect effects on marine mammal prey during the construction are expected to be minor, and these effects are unlikely to cause substantial effects on marine mammals at the individual level, with no expected effect on annual rates of recruitment or survival.
In addition, it is unlikely that minor noise effects in a small, localized area of habitat would have any effect on the stocks' annual rates of recruitment or survival. In combination, we believe that these factors, as well as the available body of evidence from other similar activities, demonstrate that the potential effects of the specified activities will have only minor, short-term effects on individuals. The specified activities are not expected to impact rates of recruitment or survival and will therefore not result in population-level impacts.
In summary and as described above, the following factors primarily support our determination that the impacts resulting from this activity are not expected to adversely affect any of the species or stocks through effects on annual rates of recruitment or survival:
• No serious injury or mortality is anticipated or authorized;
• The intensity of anticipated takes by Level B harassment is relatively low for all stocks and would not be of a duration or intensity expected to result in impacts on reproduction or survival;
• No important habitat areas have been identified within the project area;
• For all species, the Columbia River is a very small and peripheral part of their range and anticipated habitat impacts are minor; and,
• Weyerhaeuser will implement mitigation measures, such as soft-starts for impact pile driving and shut downs to minimize the numbers of marine mammals exposed to injurious levels of sound, and to ensure that take by Level A harassment, is at most, a small degree of PTS.
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 monitoring and mitigation measures, NMFS 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. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
Table 8 demonstrates the number of animals that could be exposed to received noise levels that could cause Level B harassment for the work. Our analysis shows that less than 10 percent of each affected stock could be taken by harassment. The numbers of animals authorized to be taken for these stocks
Based on the analysis contained herein of the activity (including the mitigation and monitoring measures) and the authorized take of marine mammals, NMFS finds that small numbers of marine mammals would be taken relative to the population size of the affected species or stocks.
There are no relevant subsistence uses of the affected marine mammal stocks or species implicated by this action. Therefore, NMFS has determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
Section 7(a)(2) of the Endangered Species Act of 1973 (ESA; 16 U.S.C. 1531
No incidental take of ESA-listed species is authorized or expected to result from this activity. Therefore, NMFS has determined that formal consultation under section 7 of the ESA is not required for this action.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
This action is consistent with categories of activities identified in Categorical Exclusion B4 (IHAs with no anticipated serious injury or mortality) of the Companion Manual for NAO 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has determined that the issuance of this IHA qualifies to be categorically excluded from further NEPA review.
NMFS has issued an IHA to Weyerhaeuser for the potential harassment of small numbers of three marine mammal species incidental to the Log Export Dock Project on the Columbia River near Longview, Washington that includes the previously explained mitigation, monitoring and reporting requirements.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of request for nominations.
NMFS is soliciting nominations (which may include self-nominations) to the Advisory Committee to the U.S. Section to the International Commission for the Conservation of Atlantic Tunas (ICCAT) as established by the Atlantic Tunas Convention Act (ATCA). NMFS is also soliciting nominations for Technical Advisors to the Advisory Committee's species working groups.
Nominations must be received by September 13, 2024.
Nominations, including a letter of interest and a resume or curriculum vitae, should be sent via email to Bryan Keller at
Bryan Keller, Office of International Affairs, Trade, and Commerce; email:
ICCAT was established to provide an effective program of international cooperation in research and conservation in recognition of the unique problems related to the highly migratory nature of tunas and tuna-like species. The International Convention for the Conservation of Atlantic Tunas (Convention), which established ICCAT, entered into force in 1969. ICCAT usually holds an Annual Meeting in November of each year, and convenes meetings of its working groups and other subsidiary bodies between annual meetings as needed. Under ATCA (see 16 U.S.C. 971a), the United States is represented at ICCAT by not more than three U.S. Commissioners. Additional information about ICCAT is available at
ATCA (see 16 U.S.C. 971
Members of the Advisory Committee receive no compensation for their services. The Secretary of Commerce
ATCA specifies that the U.S. Commissioners may establish species working groups for the purpose of providing advice and recommendations to the U.S. Commissioners and to the Advisory Committee on matters relating to the conservation and management of any highly migratory species covered by the ICCAT Convention (see 16 U.S.C. 971b-1). Any species working group shall consist of no more than seven members of the Advisory Committee and no more than four scientific or technical personnel, as considered necessary by the Commissioners. Currently, there are four species working groups advising the Committee and the U.S. Commissioners: a Bluefin Tuna and Albacore Working Group, a Swordfish/Sharks Working Group, a Billfish Working Group, and a Bigeye, Yellowfin, and Skipjack Tunas Working Group. Scientific or technical personnel (known as Technical Advisors) appointed to species working groups serve at the pleasure of the Commissioners; therefore, the Commissioners can choose to alter these appointments at any time. As with Committee Members, Technical Advisors may not be represented by a proxy during meetings of the Advisory Committee. Nominees should be able to fulfill the time and travel commitments required to participate in the annual spring meeting of the Advisory Committee, when the species working groups are convened, in addition to ad hoc meetings throughout the year, as appropriate.
Nominations to either the Advisory Committee or a species working group should include a letter of interest and a resume or curriculum vitae that describes the individual's knowledge and experience in a field related to the highly migratory species covered by the ICCAT Convention. Self-nominations are acceptable. Letters of recommendation are useful but not required. When making a nomination, please specify which appointment (Advisory Committee member or Technical Advisor to a species working group) is being sought. Nominees are also encouraged to indicate which of the four species working groups is preferred, although placement on the requested group is not guaranteed.
NMFS encourages nominations for women and for individuals from underserved communities that meet the knowledge, experience, and other requirements of the positions described in this notice. See Executive Order (E.O.) 13985 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government) section 2 (defining “underserved communities” as populations sharing a particular characteristic, as well as geographic communities, that have been systematically denied a full opportunity to participate in aspects of economic, social, and civic life, such as Black, Latino, and Indigenous and Native American persons, Asian Americans and Pacific Islanders and other persons of color; members of religious minorities; lesbian, gay, bisexual, transgender, and queer (LGBTQ+) persons; persons with disabilities; persons who live in rural areas; and persons otherwise adversely affected by persistent poverty or inequality.). E.O. 13985 is available at
National Oceanic & Atmospheric Administration (NOAA), Commerce.
Notice of information collection, request for comment.
The Department of Commerce, in accordance with the Paperwork Reduction Act of 1995 (PRA), invites 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. The purpose of this notice is to allow for 60 days of public comment preceding submission of the collection to OMB.
To ensure consideration, comments regarding this proposed information collection must be received on or before October 7, 2024.
Interested persons are invited to submit written comments to Adrienne Thomas, NOAA PRA Officer, at
Requests for additional information or specific questions related to collection activities should be directed to Carrie Upite, Sea Turtle Recovery Coordinator, Greater Atlantic Regional Fisheries Office, National Marine Fisheries Service, 55 Great Republic Drive, Gloucester, MA 01930; (978) 282-8475; or
This is a request for renewal of an approved information collection.
Since 2002, the National Oceanic and Atmospheric Administration's (NOAA) National Marine Fisheries Service (NMFS) has promulgated several rules restricting the use of large mesh and stringer pound net leaders in certain Virginia Chesapeake Bay waters during the late spring/early summer each year. On June 17, 2002, an interim final rule was published (67 FR 41196) restricting leader use, which also required year-round reporting of sea turtle takes. In 2004, NMFS issued a final rule further restricting pound net leader use in Virginia (69 FR 24997). The 2004 rule retained the reporting requirement from the 2002 rule. These regulations (modifications to 50 CFR parts 222 and 223) were implemented as a result of high sea turtle strandings each spring in Virginia and the documented take of sea turtles in pound net leaders. On March 31, 2018, a revised Biological Opinion on NMFS gear regulations in the Virginia pound net fishery was completed pursuant to section 7 of the Endangered Species Act of 1973, as amended (ESA). An Incidental Take Statement was included in this
A non-discretionary term and condition of the Incidental Take Statement involved the reporting to NMFS of live or dead sea turtles taken in pound net operations (reflected in 50 CFR 223.206). The collection of this information on the incidental take of sea turtles in the Virginia pound net fishery is necessary to ensure sea turtles are being conserved and protected, as mandated by the ESA. Documenting the accurate occurrence of sea turtle incidental take in pound net operations will help to determine if additional regulatory actions or management measures are necessary to protect sea turtles caught in pound net operations. This information will help NMFS better assess the Virginia pound net fishery and its impacts (or lack thereof) on sea turtle populations in the Virginia Chesapeake Bay. The collection of this information is also imperative to ensure that the Incidental Take Statement is not being exceeded, the anticipated take levels are appropriate, and the effects analysis in the Biological Opinion is accurate. Further, reporting the take of live, injured sea turtles caught in pound net gear will ensure these turtles are transferred immediately to a stranding and rehabilitation center for appropriate medical treatment.
Reports may be made either by telephone or email.
We are soliciting public comments to permit the Department/Bureau to: (a) Evaluate whether the proposed information collection is necessary for the proper functions of the Department, including whether the information will have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. 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 may 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.
Department of the Army, DoD.
Notice of open committee meeting.
The Department of the Army is publishing this notice to announce the following Federal advisory committee meeting of the Army Education Advisory Committee (AEAC). This meeting is open to the public.
The Army Education Advisory Committee will meet from 8 a.m. to 5 p.m. on both August 21-22, 2024.
Army Education Advisory Committee, 950 Jefferson Avenue, Building 950, U.S. Training and Doctrine Command (TRADOC) Headquarters, Conference Room 2047, Ft. Eustis, VA 23604.
Dr. Justin M. Green, the Designated Federal Officer for the committee, in writing at ATTN: ATTG-TRI-G, TRADOC, 950 Jefferson Ave, Fort Eustis, VA 23604, by email at
The committee meeting is being held under the provisions of the Federal Advisory Committee Act (FACA; 5 U.S.C. 10), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.150.
Because the meeting of the committee will be held in a Federal Government facility on a military base, security screening is required. A photo ID is required to enter base. Please note that security and gate guards have the right to inspect vehicles and persons seeking to enter and exit the installation. TRADOC Headquarters is fully handicap accessible. Wheelchair access is available in front at the main entrance of the building. For additional information about public access procedures, contact Dr. Green, the committee's Designated Federal Officer, at the email address or telephone number listed in the
Pursuant to 41 CFR 102-3.140d, the Committee is not obligated to allow a member of the public to speak or otherwise address the Committee during the meeting. Members of the public will be permitted to make verbal comments during the Committee meeting only at the time and in the manner described below. If a member of the public is interested in making a verbal comment at the open meeting, that individual must submit a request, with a brief statement of the subject matter to be addressed by the comment, at least seven business days in advance to the committee's Designated Federal Official, via electronic mail, the preferred mode of submission, at the address listed in the
Deputy Assistant Secretary of Defense for Military Community and Family Policy, Department of Defense (DoD).
Request for information; response to public comments.
On Tuesday, March 26, 2024, DoD published a request for information in the
Ms. Geraldine Valentin-Smith, (703) 618-6907 (voice),
On Tuesday, March 26, 2024 (89 FR 20954), the DoD published a notice titled “Request for Information for 2026 DoD State Policy Priorities Impacting Service Members and Their Families.” Public comments were accepted for 30 days until April 25, 2024. Twenty public comments were received. The DoD responds to the comments as follows:
Seven comments were received which identified issues for potential inclusion as a State Policy Priority. We appreciate your thoughtful engagement and recommendations. We respond to the comments as follows:
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The Department will evaluate the seven issues independently for suitability, feasibility, desirability, acceptability, and sustainability.
One comment was received which related to an existing State Policy Priority:
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Additionally, four comments were received which related to issues outside the criteria listed for consideration. The criteria include: States are primary responsible for resolving the problem; the solution should positively impact the quality of life of Service members and their families; should or positively contribute to readiness; should impact members of the military, recent veterans, and their family members; and for quality-of-life issues, the resolution should help eliminate a barrier caused by the dynamics of military life. We respond to the comments as follows:
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Eight comments were received which were not germane to the request for input and did not identify an issue for potential inclusion as a State Policy Priority. We respond to the comments as follows:
• Thank you for your advocacy for our military families. It is both valued and recognized. Thank you very much for your contributions.
Each fiscal year, the DoD considers numerous vital state policy issues, with the aim of selecting those that hold the most promise for positively impacting the lives of Service members and their families. It is within this competitive and discerning framework that we evaluate, research, and assess all proposed state policy solutions to resolve challenges for military families.
We are committed to a rigorous examination of these issues, among others. Our process is designed to ensure that we advance the most impactful and viable initiatives to support our military families effectively.
As always, our team at the Defense-State Liaison Office, who manage state government relations for the Office of the Secretary of Defense on personnel and readiness issues, stand ready to fully support state policymakers and the military community. Thank you once again for bringing these important issues to our attention.
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
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The Commission strongly encourages electronic filing. Please file comments, motions to intervene, and protests using the Commission's eFiling system at
The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
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n. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
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q. 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. 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 on July 19, 2024, Florida Gas Transmission Company, LLC (FGT), 1300 Main St., Houston, Texas 77002, filed in the above referenced docket, a prior notice request pursuant to sections 157.205, 157.208, 157.210, and 157.211 of the Commission's regulations under the Natural Gas Act (NGA), and FTG's blanket certificate issued in Docket No. CP82-553-000, for authorization to increase certificated mainline capacity, and to construct, modify, own, maintain and operate interstate natural gas delivery point and appurtenant facilities, consisting of an additional alternate feed connection and a meter station upgrade; appurtenant facility maintenance replacement on a compressor unit at FGT's existing Compressor Station 10 (CS 10) and other appurtenant facilities as needed. All of the above facilities are located in St. Helena Parish, Louisiana and Perry County, Mississippi (Livingston Parish Project). The project will allow FGT to transport incremental certificated firm transportation capacity up to 4.0 million cubic feet per day (MMcf/d) to the existing City of Walker Meter Station delivery point to be upgraded by FGT, and to be utilized by the City of Walker, La (City of Walker, Customer, or Shipper) primarily for residential use through the City of Walker gas system. The estimated cost for the project is $985,000, all as more fully set forth in the request which is on file with the Commission and open to public inspection.
In addition to publishing the full text of this document in the
User assistance is available for eLibrary and the Commission's website during normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at
Any questions concerning this request should be directed to Blair Lichtenwalter, Senior Director of Certificates, Florida Gas Transmission Company, LLC, 1300 Main St., Houston, Texas, 77002, at (713) 989-2605, or
There are three ways to become involved in the Commission's review of this project: you can file a protest to the project, you can file a motion to intervene in the proceeding, and you can file comments on the project. There is no fee or cost for filing protests, motions to intervene, or comments. The deadline for filing protests, motions to intervene, and comments is 5:00 p.m. Eastern Time on September 30, 2024. How to file protests, motions to intervene, and comments is explained below.
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
Pursuant to section 157.205 of the Commission's regulations under the NGA,
Protests must comply with the requirements specified in section 157.205(e) of the Commission's regulations,
Any person has the option to file a motion to intervene in this proceeding. Only intervenors have the right to request rehearing of Commission orders issued in this proceeding and to subsequently challenge the Commission's orders in the U.S. Circuit Courts of Appeal.
To intervene, you must submit a motion to intervene to the Commission in accordance with Rule 214 of the Commission's Rules of Practice and Procedure
All timely, unopposed motions to intervene are automatically granted by operation of Rule 214(c)(1). Motions to intervene that are filed after the intervention deadline are untimely and may be denied. Any late-filed motion to intervene must show good cause for being late and must explain why the time limitation should be waived and provide justification by reference to factors set forth in Rule 214(d) of the Commission's Rules and Regulations. A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies (paper or electronic) of all documents filed by the applicant and by all other parties.
Any person wishing to comment on the project may do so. The Commission considers all comments received about the project in determining the appropriate action to be taken. To ensure that your comments are timely and properly recorded, please submit your comments on or before September 30, 2024. The filing of a comment alone will not serve to make the filer a party to the proceeding. To become a party, you must intervene in the proceeding.
There are two ways to submit protests, motions to intervene, and comments. In both instances, please reference the Project docket number CP24-000-000 in your submission.
(1) You may file your protest, motion to intervene, and comments by using the Commission's eFiling feature, which is located on the Commission's website (
(2) You can file a paper copy of your submission by mailing it to the address below. Your submission must reference the Project docket number CP24-500-000.
The Commission encourages electronic filing of submissions (option 1 above) and has eFiling staff available to assist you at (202) 502-8258 or
Protests and motions to intervene must be served on the applicant either by mail or email (with a link to the document) at: Blair Lichtenwalter, Senior Director of Certificates, Florida Gas Transmission Company, LLC, 1300 Main St., Houston, Texas, 77002, or by
Throughout the proceeding, additional information about the project will be available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website at
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. For more information and to register, go to
This is a supplemental notice in the above-referenced proceeding of Mordor ES2 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 20, 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.
In addition to publishing the full text of this document in the
User assistance is available for eLibrary and the Commission's website during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email 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
This is a supplemental notice in the above-referenced proceeding of Mordor ES1 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 20, 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.
In addition to publishing the full text of this document in the
User assistance is available for eLibrary and the Commission's website during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email 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 EA contains Commission staff's analysis of the potential environmental effects of the proposed amendment, alternatives to the proposed action, and concludes that the proposed amendment with appropriate environmental protective measures, would not constitute a major federal action that would significantly affect the quality of the human environment.
The EA may be viewed on the Commission's website at
You may also register online at
All comments must be filed by August 31, 2024.
The Commission strongly encourages electronic filing. Please file comments using the Commission's eFiling system 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
For further information, contact Shawn Halerz at 202-502-6360 or
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following electric securities 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
Take notice that on July 17, 2024, Black Bayou Gas Storage, LLC (Black Bayou), 229 Heymann Blvd., Lafayette, Louisiana 70503, filed an application under section 7c of the Natural Gas Act (NGA), and Part 157 of the Commission's regulations requesting authorization for its Black Bayou Storage Project (Project). Black Bayou proposes to construct a salt dome natural gas storage facility in Cameron and Calcasieu Parishes, Louisiana consisting of: (1) 4 salt storage caverns, with a total working gas capacity of 34.7 Bcf; (2) a 44,000 gas-driven reciprocating engine compressor station; (3) two 27.1-mile-long, 24-inch-diameter bidirectional header pipelines connecting the caverns to multiple interstate pipelines; (4) 10 meter stations; and (5) appurtenances.
Black Bayou further requests: (1) Part 157, Subpart F and Part 284, Subpart G blanket certificates; (2) authorization to charge market-based rates for its proposed interstate storage services and hub services; (3) approval of its pro forma tariff; and (4) waiver of certain Commission regulations, all as more fully set forth in the application which is on file with the Commission and open for public inspection.
In addition to publishing the full text of this document in the
User assistance is available for eLibrary and the Commission's website
Any questions regarding the proposed project should be directed to Tad Lalande, Chief Executive Officer, Black Bayou Gas Storage, LLC, 229 Heymann Blvd., Lafayette, Louisiana 70503, by phone at (337) 541-1200, or by email at
Pursuant to section 157.9 of the Commission's Rules of Practice and Procedure,
Black Bayou stated that a water quality certificate under section 401 of the Clean Water Act is required for the project from the Louisiana Department of Environmental Quality. When available, Black Bayou should submit to the Commission a copy of the request for certification for the Commission authorization, including the date the request was submitted to the certifying agency, and either (1) a copy of the certifying agency's decision or (2) evidence of waiver of water quality certification.
There are three ways to become involved in the Commission's review of this project: you can file comments on the project, you can protest the filing, and you can file a motion to intervene in the proceeding. There is no fee or cost for filing comments or intervening. The deadline for filing a motion to intervene is 5:00 p.m. Eastern Time on August 21, 2024. How to file protests, motions to intervene, and comments is explained below.
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
Any person wishing to comment on the project may do so. Comments may include statements of support or objections, to the project as a whole or specific aspects of the project. The more specific your comments, the more useful they will be.
Pursuant to sections 157.10(a)(4)
To ensure that your comments or protests are timely and properly recorded, please submit your comments on or before August 21, 2024.
There are three methods you can use to submit your comments or protests to the Commission. In all instances, please reference the Project docket number CP24-494-000 in your submission.
(1) You may file your comments electronically by using the eComment feature, which is located on the Commission's website at
(2) You may file your comments or protests electronically by using the eFiling feature, which is located on the Commission's website (
(3) You can file a paper copy of your comments or protests by mailing them to the following address below. Your written comments must reference the Project docket number (CP24-494-000).
The Commission encourages electronic filing of comments (options 1 and 2 above) and has eFiling staff available to assist you at (202) 502-8258 or
Persons who comment on the environmental review of this project will be placed on the Commission's environmental mailing list, and will receive notification when the environmental documents (EA or EIS) are issued for this project and will be notified of meetings associated with the Commission's environmental review process.
The Commission considers all comments received about the project in determining the appropriate action to be taken. However, the filing of a comment alone will not serve to make the filer a party to the proceeding. To become a party, you must intervene in the proceeding. For instructions on how to intervene, see below.
Any person, which includes individuals, organizations, businesses, municipalities, and other entities,
To intervene, you must submit a motion to intervene to the Commission in accordance with Rule 214 of the Commission's Rules of Practice and Procedure
There are two ways to submit your motion to intervene. In both instances, please reference the Project docket number CP24-494-000 in your submission.
(1) You may file your motion to intervene by using the Commission's eFiling feature, which is located on the Commission's website (
(2) You can file a paper copy of your motion to intervene, along with three copies, by mailing the documents to the address below. Your motion to intervene must reference the Project docket number CP24-494-000.
The Commission encourages electronic filing of motions to intervene (option 1 above) and has eFiling staff available to assist you at (202) 502-8258 or
Protests and motions to intervene must be served on the applicant either by mail or email at: Tad Lalande, Chief Executive Officer, Black Bayou Gas Storage, LLC, 229 Heymann Blvd., Lafayette, Louisiana 70503 or at
All timely, unopposed
Throughout the proceeding, additional information about the project will be available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website at
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. For more information and to register, go to
Environmental Protection Agency (EPA).
Order.
The Environmental Protection Agency (EPA or Agency) is issuing an Emergency Order directing the suspension of all registrations issued under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) for pesticide products containing the active ingredient dimethyl tetrachloroterephthalate (DCPA), also marketed under the trade name Dacthal. EPA has determined that continued sale, distribution, or use of DCPA products during the time required to cancel such products would pose an imminent hazard and that an emergency exists that does not permit EPA to hold a hearing before suspending such products. These determinations are based primarily on a risk of thyroid hormone perturbations in the fetuses of female bystanders and workers who apply DCPA or who enter treated fields after application. EPA has concerns that pregnant individuals may be currently exposed to DCPA at levels higher than those that cause fetal thyroid hormone disruption, but at which no thyroid effects would occur in the pregnant individual. The downstream effects of such hormone perturbations in the fetus may include low birth weight and irreversible and life-long impacts to children exposed in-utero, such as impaired brain development and motor skills. While the sole registrant of DCPA products, AMVAC Chemical Corporation (AMVAC), has attempted to address these concerns, EPA has determined that there is no combination of practicable mitigations under which DCPA use can continue without presenting an imminent hazard. Set forth below are the substantive bases for these determinations and the procedures that affected registrants must follow to obtain a hearing on or otherwise challenge these determinations.
This Emergency Order is issued and effective immediately upon signature. The sole affected registrant has also been notified by certified mail. Any request by the registrant for a
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2011-0374, is available online at
Jean Overstreet, Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: 202-566-2425; email address:
This action is directed to the public in general and may be of interest to a wide range of stakeholders including environmental, human health, farm worker and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
EPA is issuing an Emergency Order directing the suspension of all registrations for pesticide products containing the active ingredient dimethyl tetrachloroterephthalate (DCPA), also marketed under the trade name Dacthal. See Unit II.
The Emergency Order is issued under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136
DCPA is a benzoic acid herbicide (Herbicide Resistance Action Committee/Weed Science Society of America Group 3) which inhibits cell division of root tips in target plants. It controls annual grasses and broadleaf weeds before they emerge in a variety of agricultural crops. DCPA is registered for agricultural uses, including on
EPA has determined that the further sale, distribution, and use of DCPA as an herbicide would pose an imminent hazard during the period required to conduct administrative hearings concerning cancellation. EPA has further determined that an emergency exists with respect to all DCPA products which does not permit it to hold a hearing concerning its determination of imminent hazard before acting to prohibit further sale, distribution, and use of such products.
EPA has evaluated the available information concerning the risks and benefits associated with continued use of DCPA during the time required for a cancellation hearing. Based on this information, EPA has determined that the risks of continued use during this period outweigh the benefits and that registered DCPA products therefore pose an imminent hazard. The Agency has determined that this imminent hazard constitutes an emergency, such that sale, distribution, and use of all DCPA products must be suspended during the pendency of any expedited hearing held under FIFRA section 6(c)(2).
EPA's findings concerning the existence of an imminent hazard and an emergency are summarized in Unit V., and Unit VI. then provides in greater detail the evidence and analyses upon which these findings are based.
This Emergency Order suspends the registration of all pesticide products which contain DCPA (see Table 1). EPA has determined that continued registration of DCPA products during the time required to conduct a cancellation proceeding would likely result in unreasonable adverse effects on the environment (which, according to FIFRA section 2(j), includes “man and other animals living therein”) and therefore poses an imminent hazard. EPA has also determined that there is a substantial likelihood that the continued sale, distribution, or use of DCPA products during the pendency of a suspension hearing would result in serious harm and therefore that an emergency exists that does not permit EPA to hold a hearing before suspending such products. Accordingly, EPA is issuing this Emergency Order immediately suspending all registrations of DCPA products. The substantive rationale for these determinations is explained below.
Pursuant to FIFRA section 6(c)(3), EPA hereby suspends the registration of each pesticide product containing DCPA as identified in Table 1. Effective immediately, no person in any state may distribute, sell, offer for sale, hold for sale, ship, deliver for shipment, or receive and (having so received) deliver or offer to deliver to any person any pesticide product containing DCPA. Additionally, in accordance with FIFRA section 6(a)(1), EPA has elected not to permit the continued use of existing stocks, consistent with its policies applicable to cancellations where the Agency has identified significant risk concerns. See 56 FR 29362, 29367, June 26, 1991 (FRL-3845-4). Generally, the Agency will not permit continued distribution, sale, or use of a cancelled pesticide that raises risk concerns, absent a showing that the benefits of such use exceed the risks. The same facts supporting the imminent hazard
Based on indications that DCPA likely has effects on thyroid function in rats, (
AMVAC subsequently submitted a definitive CTA in August 2022. The results of the CTA indicated that very low levels of DCPA cause thyroid hormone perturbations in fetal rats.
In the fetus of exposed pregnant humans, thyroid hormone perturbations, such as those observed in the CTA, can lead to downstream health problems such as low birth weight, impaired brain development, decreased Intelligence Quotient (IQ), impaired motor skills, and decreased bone deposition (Chan, S; Kilby, MD. Thyroid hormone and central nervous system development.
In May 2023, an occupational and residential exposure (ORE) assessment was conducted based on the two DCPA end-use products registered at that time [EPA Reg. Nos. 5481-487 (a liquid formulation) and 5481-490 (a wettable powder formulation)]. See 88 FR 89447, December 27, 2023 (FRL-11590-01-OCSPP) (final cancellation order for EPA Reg. No. 5481-490). Risks of concern were identified for multiple scenarios, including occupational scenarios (handler and post-application), residential post-application scenarios, and non-occupational post-application bystander spray drift scenarios. Occupational handler scenarios were of concern assuming label-prescribed personal protective equipment (PPE), and even assuming maximum PPE and/or engineering controls. Occupational post-application scenarios were of concern on the day of application (the current label required restricted entry interval of 12 hours) and even past 30 day after application. It should be noted that available data for DCPA indicates that while DCPA residues decline on treated foliage after application, residues that are present even out 40 days post-application can result in risks of concern. For bystander spray drift scenarios, risks were of concern up to and greater than 300 feet from the field edge.
These risks of concern indicate that individuals, either using DCPA products as currently registered, working in areas/fields treated with DCPA, or present near areas where DCPA is being used can be exposed to DCPA at levels greater than the level at which no adverse effects were observed in rat fetuses in the CTA. In some situations, pregnant individuals are likely being exposed to DCPA at levels greater than the level at which adverse effects were observed in the study. EPA is concerned that exposure at these levels could result in adverse effects to the fetuses of the pregnant individuals being exposed. Although the registrant has presently unilaterally promised to halt the sale and distribution of DCPA (until EPA approves new labels incorporating the registrant's proposed mitigations), DCPA products that were sold or distributed prior to this voluntary cessation remain in the hands of growers, and the Agency has no mechanism to enforce the voluntary cessation. DCPA is used year-round on certain crops, so EPA believes that these exposures of concern are likely to be occurring at present. Succinctly, EPA believes that the continued use of DCPA products will allow for people, particularly pregnant individuals, to be unknowingly exposed to DCPA at levels that result in a risk of concern and in some cases, are equal to or greater than those that result in fetal thyroid hormone perturbations in the CTA and the life-long health effects that may result from those perturbations.
In addition to assessing the risks posed by continued registration or use of DCPA, the Agency also assessed all currently registered uses of the pesticide to conduct a “rough and ready balancing” of health risks against economic benefits.
DCPA has high benefits for growers of specialty
Between EPA's issuance of the May 2023 ORE Assessment and April 2024, the Agency and AMVAC discussed how to limit exposures to DCPA. AMVAC voluntarily cancelled all but two of its DCPA products [(EPA Reg. Nos. 5481-495 (technical product) and 5481-487 (liquid end-use product)] pursuant to FIFRA Section 6(f). 88 FR 89447, December 27, 2023 (FRL-11590-01-OCSPP) (final cancellation order). These product cancellations limited registered end-use products to only one liquid formulation (a Special Local Need (SLN) registration in Wisconsin remains active (WI050002), but will imminently be cancelled pursuant to FIFRA Section 4 due to AMVAC's failure to pay the required maintenance fees). Further, in July 2023, the registrant requested to voluntarily cancel uses on turf from its remaining product. While these voluntary cancellations would eliminate residential post-application exposures to DCPA from activities on and around turf (including golf courses and athletic fields), the currently available product labels have not been revised—due to the remaining issues not addressed by the proposed mitigations—and still allow for these uses.
AMVAC submitted additional proposals in April 2024 and May 2024 to address the identified risk to handlers, post-application workers and residential bystanders that still remained even after cancelling the products identified above and proposing cancellation of the turf uses. These additional proposals include limiting the amount of product individual handlers are allowed to use, only permitting banded applications, limiting applications over the top of crops to reduce the post-application exposure potential, and requiring buffers around agricultural applications to address risks in residential areas from spray drift. In April 2024, AMVAC informed EPA that the company had voluntarily ceased sale and distribution of all Dacthal Flowable Herbicide (the only remaining end-use product) in the company's possession until the Agency approved product labels addressing the risks described in the May 2023 ORE Assessment. Although the registrant has presently unilaterally promised to halt the sale and distribution of DCPA, DCPA products that were sold or distributed prior to this voluntary cessation remain in the hands of growers. DCPA is used year-round on certain crops, so EPA believes that exposures of concern likely continue to occur.
While the voluntary steps identified above may reduce the risks of concern identified for DCPA, according to the Agency's analysis, these steps would not adequately address all of the identified risks of concern, leaving the current approved product label in use. As noted in the May 2023 ORE Assessment, use under the current approved product label can result in pregnant individuals being unknowingly exposed to DCPA at levels greater than the level at which adverse effects were observed in the CTA. EPA is concerned that exposure at these levels could result in adverse effects to the fetuses of the pregnant individuals being exposed. There are unknown amounts of existing DCPA product in the hands of users which may lead to the serious and significant health outcomes described in this Emergency Order. Additional explanation as to why the proposed mitigations do not address the risks of concern or alleviate the imminent hazard from continued DCPA use is provided in Unit VII., below. Due to the concerns summarized, EPA does not believe that the risks identified in this Emergency Order can be sufficiently mitigated through any means except cancellation and immediate suspension of all products containing DCPA. Accordingly, issuance of this Emergency Order is necessary.
FIFRA provides for federal regulation of pesticide distribution, sale, and use. 7 U.S.C. 136
Whenever the Agency determines that the product no longer satisfies the statutory criteria for registration, it may issue a notice of intent to cancel the registration of a pesticide product under FIFRA section 6(b). In such notice, the Agency may specify particular modifications in the terms and conditions of registration, such as deletion of particular uses or revisions of labeling, as an alternative to cancellation. If a hearing is requested by an adversely affected person, the final
The suspension provisions in FIFRA section 6(c) give EPA the authority to take interim action until completion of the time-consuming procedures which may be required to reach a final cancellation decision. Under this authority, EPA may suspend the registration of a product and prohibit its distribution, sale, or use during cancellation proceedings upon a finding that the pesticide poses an “imminent hazard” to humans or the environment. FIFRA section 6(c)(1). Suspension is an interim remedy which enables the Agency to abate potential unreasonable adverse effects in advance of the full analysis of risks and benefits in a cancellation hearing. The function of suspension “is to make a preliminary assessment of evidence, and probabilities, not an ultimate resolution of difficult issues.”
As noted previously, “unreasonable adverse effects on the environment” means that the risks associated with use of a pesticide outweigh the benefits of its use. Thus, in order to find an “imminent hazard,” the Agency must determine that the risks appear to outweigh the benefits associated with continued registration during the period likely to be necessary to complete a cancellation proceeding. Courts addressing the suspension provisions of FIFRA section 6 have held that an imminent hazard exists if there is “a substantial likelihood that serious harm will be experienced during the year or two required in any realistic projection of the administrative [cancellation] process.”
(1) The seriousness of the threatened harm;
(2) The immediacy of the threatened harm;
(3) The probability that the threatened harm will occur;
(4) The benefits to the public of the continued use of the pesticide; and
(5) The nature and extent of the information before the Agency at the time it makes a decision.
If the Administrator determines that: (1) A pesticide poses an imminent hazard, and (2) An emergency exists that does not permit the Administrator to hold a hearing before suspending the pesticide, FIFRA section 6(c)(3) provides that the Administrator may issue an Emergency Order immediately suspending registration of the pesticide.
The term “emergency” is not defined by FIFRA. In the case of emergency suspension, one court has found by analogy that suspension is appropriate if there is “a substantial likelihood that serious harm will be experienced during the three or four months required in any realistic projection of the administrative suspension process.”
An Emergency Order to suspend a registration may be issued without prior notice to affected registrants and is effective immediately upon issuance. In contrast to a notice of intent to suspend issued pursuant to FIFRA section 6(c)(1), there is no requirement that EPA issue a notice of intent to cancel the registration or change the classification of that pesticide prior to or simultaneous with issuing an Emergency Order of suspension. The Agency may issue an Emergency Order of suspension, effective immediately, prior to issuing a notice of intent to cancel. However, if EPA does not issue a notice of intent to cancel within 90 days of issuing an Emergency Order of suspension, the Emergency Order of suspension will expire.
The Agency must notify the affected registrant that an Emergency Order of suspension has been issued and the registrant may request an expedited hearing by submitting a valid hearing request to the OALJ Clerk. If an expedited hearing is held concerning any product, the hearing is confined solely to the question of imminent hazard, and the Emergency Order of suspension remains in effect during the pendency of the expedited hearing. Following the expedited hearing, the Administrator issues a final order which may either retain, modify, or rescind the suspension. FIFRA section 6(c)(2).
The Administrator's determination to issue an Emergency Order of suspension is also subject to immediate review in an appropriate United States district court. The only issues in any such review are whether the Emergency Order was arbitrary, capricious, or an abuse of discretion, and was issued in accordance with procedures established by law. FIFRA section 6(c)(4).
If a registrant does not request an expedited hearing concerning a particular product but does request a hearing concerning cancellation of that product, the Emergency Order of suspension remains in effect until the completion of the cancellation proceeding, unless the suspension is lifted, stayed, or otherwise modified by the Administrator or an appropriate federal court.
This unit summarizes EPA's findings concerning the existence of an imminent hazard and an emergency.
In evaluating the risks which DCPA would pose during the time needed to conduct a cancellation hearing, EPA has placed the greatest emphasis on the results of the CTA submitted to the Agency, which indicates that very low levels of DCPA (at least 10-fold lower
EPA also took time to gather and evaluate essential and available data on the benefits associated with DCPA use. While this benefits assessment focused primarily on the heaviest current use patterns and locations, EPA also assessed DCPA use on a national level for all registered uses, to the extent that information was available to the Agency. Accordingly, as discussed in Unit VI. of this Emergency Order, EPA assessed DCPA's benefits as a preemergence treatment in crops with registered uses, primarily
In the CTA, decreased levels of the thyroid hormones T3 (triiodothyronine) and T4 (thyroxine) were observed in rats exposed to very low levels of DCPA (1 mg/kg/day). The level of exposure at which fetal hormone perturbations were observed is much lower than the level at which effects were observed in adult rats, and lower than levels at which EPA estimates human users of DCPA are currently being exposed.
In the fetus of exposed pregnant humans, thyroid hormone perturbations, such as those observed in the CTA, can lead to downstream health problems such as low birth weight, impaired brain development, decreased IQ, impaired motor skills, and decreased bone deposition (Chan and Kilby, 2000; Fisher, 2000; Morreale, et al., 2000; Zoeller and Rovet, 2004). Based on the CTA data for DCPA, these effects are not expected in exposed adults, but rather in children born to individuals exposed to DCPA during pregnancy and might not always be obvious in affected children at the time of birth. Brief thyroid hormone perturbations in fetuses during critical stages of development may result in life-long consequences for children exposed before birth (
EPA has determined that there are likely immediate, ongoing risks of concern presented by continued use of DCPA. Of primary concern, based on usage data, are the risks identified in the May 2023 ORE Assessment for occupational scenarios (handler and post-application) and non-occupational post-application bystander spray drift scenarios. Occupational handler scenarios were of concern assuming label-prescribed PPE, and even assuming maximum PPE and/or engineering controls. Occupational post-application scenarios were of concern on the day of application (the current label required restricted entry interval of 12 hours) and even past 30 days after application. It should be noted that available data for DCPA indicates that while DCPA residues decline on treated foliage after application, residues that are present more than 40 days post-application for some uses can result in risks of concern. For bystander spray drift scenarios, risks were of concern up to and greater than 300 feet from the field edge.
These risks of concern indicate that individuals, either using DCPA products as currently registered, working in areas/fields treated with DCPA, or present near areas where DCPA is being used, can be unknowingly exposed to DCPA at levels greater than the level at which no adverse effects were observed in rat fetuses in the CTA, and in some situations, can be exposed to DCPA at levels greater than the level at which adverse effects were observed in the study. EPA is concerned that exposure at these levels could result in adverse effects to the fetuses of pregnant individuals being exposed. Although the registrant has presently unilaterally promised to halt the sale and distribution of DCPA (until EPA approves new labels incorporating the registrant's proposed mitigations), DCPA products that were sold or distributed prior to this voluntary cessation remain in the hands of growers and EPA has no mechanism to enforce this voluntary cessation. DCPA is used year-round on certain crops; EPA thus believes that these exposures of concern are likely occurring at present. To summarize, EPA believes that the continued use of DCPA products will allow for people, particularly pregnant individuals, to be unknowingly exposed to DCPA at levels that result in a risk of concern and in some cases, are equal to or greater than those that result in fetal thyroid hormone perturbations in the CTA and the life-long health effects that may result from those perturbations.
Based on EPA's analysis of the available evidence, the fetuses of pregnant individuals exposed to DCPA are at significant risk for adverse thyroid hormone changes. Without this Emergency Order, such exposures would continue during the time required to conduct a cancellation hearing. If the products were not suspended, use of DCPA could lawfully continue during the pendency of a cancellation hearing.
Although EPA considered AMVAC's statement that the company has voluntarily temporarily ceased sale and distribution of Dacthal Flowable Herbicide in the context of this determination, EPA still considers the probability of the harm in this situation sufficiently likely to justify this Emergency Order. While such voluntary steps would likely reduce the risks of concern identified for DCPA, the Agency has no means of assessing whether AMVAC is adhering to this temporary cessation of sale, neither EPA nor AMVAC has information concerning subsequent downstream distribution and use, and—in any event—there is no
EPA also considered, in the context of this determination, AMVAC's voluntary cancellation of all but two of its DCPA products (EPA Reg. Nos. 5481-495 and 5481-487; a SLN registration in Wisconsin remains active (WI050002), but will imminently be cancelled pursuant to FIFRA section 4 due to AMVAC's failure to pay the required maintenance fees) pursuant to FIFRA section 6(f). 88 FR 89447, December 27, 2023 (FRL-11590-01-OCSPP) (final cancellation order). Additionally, AMVAC submitted several revised proposed product labels from approximately July 2023 through May 2024, including its requests to cancel certain uses of DCPA. Of particular note, in July 2023 the registrant requested to voluntarily cancel remaining (non-residential) uses on turf from its remaining products. Accordingly, while risks of concern arising from turf uses are addressed in the May 2023 ORE Assessment, those risks are not part of the basis for this Emergency Order. However, the proposed product labels do not adequately address the risks of concern for continued DCPA use. Following the registrant's April and May proposals, EPA has determined that there is no combination of practicable mitigations under which DCPA use can continue without presenting an imminent hazard. Additional explanation as to why the proposed mitigations do not address the risks of concern or alleviate the imminent hazard from continued DCPA use is provided in Unit VII. of this Emergency Order. Due to the concerns described in this unit, EPA does not believe that the risks identified in this Emergency Order can be mitigated through any means except cancellation and immediate suspension of all products containing DCPA. Accordingly, issuance of this Emergency Order is necessary.
While DCPA has high benefits for the growers of certain crops, EPA estimates that the suspension and cancellation of DCPA is likely to have negligible impacts to consumers of those crops. DCPA is registered for use in the production of
DCPA has high benefits for growers of specialty
DCPA has medium benefits for growers of direct-seeded major
In
DCPA has low benefits in strawberry and the remaining cucurbit, fruiting, and root vegetables for which it is registered for use because extension publications do not recommend DCPA and/or recommend alternative preemergence herbicides; where surveyed, growers do not report using DCPA extensively on these crops. DCPA also has low benefits in sod and ornamental production as registered and recommended alternative herbicides are available on these use sites and growers do not report using DCPA.
In the use sites where there are high benefits from the use of DCPA, its absence could result in growers who rely on DCPA shifting to production of other crops. For registered
For additional details on the benefits of DCPA in registered use sites, see
The Agency has determined that an emergency exists such that sale, distribution, and use of all DCPA products must be suspended during the pendency of any expedited hearing. In order to find that an emergency exists, EPA must determine whether the threat of harm associated with continued sale, distribution, or use of DCPA products is sufficiently serious and immediate that
Although EPA considered AMVAC's statement that the company has voluntarily ceased sale and distribution of Dacthal Flowable Herbicide in the context of this determination, EPA still considers the probability of the harm in this situation sufficiently likely to justify this Emergency Order. While such voluntary steps would likely reduce the risks of concern identified for DCPA, the Agency has no means of assessing whether AMVAC is adhering to this temporary cessation of sale, neither EPA nor AMVAC has information concerning subsequent downstream distribution and use, and—in any event—there is no mechanism under FIFRA through which EPA can enforce compliance with such voluntary measures. AMVAC could resume sale and distribution at any time, and application of DCPA products by end users is still allowed under current approved product labels.
In the absence of an emergency order, it appears that exposures to pregnant individuals resulting in adverse fetal thyroid effects could unknowingly occur as a result of lawful use during the time required for a suspension hearing. DCPA is registered and is typically used for weed control throughout the calendar year on a variety of crops, including
An immediate prohibition on use of DCPA products may cause some disruption, as users need to identify and obtain or implement alternatives. However, the Agency has concluded that alternative pesticides are available for most DCPA target pests and use sites, though there will be impacts on growers as they transition to combinations of alternative herbicides and hand weeding at an additional cost, and some
Although FIFRA section 6(b) generally requires prior review of and comment upon proposed notices of intent to cancel by the Secretary of Agriculture and the FIFRA Scientific Advisory Panel (SAP), FIFRA specifically provides the Administrator with the authority to waive such requirements and proceed in accordance with FIFRA section 6(c) whenever it finds that suspension of a pesticide registration is necessary to prevent an imminent hazard to human health. As described in this unit, EPA has found that immediate suspension of the registrations of pesticide products containing DCPA is necessary to prevent an imminent hazard to human health, and the Administrator hereby invokes the authority to waive the requirements for the Secretary of Agriculture and FIFRA SAP reviews.
As noted previously, in May 2023, an ORE assessment was conducted based on the two DCPA products registered at the time: EPA Reg. Nos. 5481-487 (a liquid formulation) and 5481-490 (a wettable powder formulation). The wettable powder product has since been voluntarily cancelled by AMVAC. Full details of inputs, assumptions and calculations are provided in the ORE Assessment. A summary of the exposure and risks identified in the May 2023 ORE Assessment are presented below. This summary takes into account the product cancellations that occurred in December 2023 (
Any risk assessment begins with an evaluation of a chemical's properties that have the potential to cause adverse effects to humans. In evaluating toxicity or hazard, EPA reviews toxicity data, typically from studies with laboratory animals, to identify any adverse effects on the test subjects leading to the establishment of a Lowest Observed Adverse Effect Level (LOAEL) and a No Observed Adverse Effect Level (NOAEL). A Point of Departure (POD) is the dose that serves as the ‘starting point' in extrapolating a risk to the human population. PODs are selected to be protective of the most sensitive adverse toxic effect for each exposure scenario and are chosen from toxicity studies that show clearly defined NOAELs or LOAELs, dose-response relationships, and relationships between the chemical exposure and effect. EPA will select separate PODs, as needed, for each expected exposure duration and route of exposure.
DCPA has low acute toxicity via the oral, dermal, and inhalation routes (Toxicity Category III-IV). DCPA is not a dermal sensitizer and is classified as Toxicity Categories III and IV for eye and skin irritation, respectively. Thyroid effects are the most sensitive endpoints in the DCPA toxicity database. Thyroid histological alterations and thyroid hormone perturbations were seen at all exposure durations and across lifestages. The decreased fetal thyroid hormone levels identified in the CTA are the basis for occupational and adult bystander assessments. Toxicological PODs for adults (including pregnant individuals) were selected for the following routes of exposure:
• Short- and intermediate-term dermal; and
• Short- and intermediate-term inhalation.
Although no adverse effects were observed up to the highest doses tested in the route-specific dermal and inhalation studies (1,000 mg/kg/day and 3.11 mg/L, respectively), increased quantitative susceptibility in the fetal life stage was observed in the definitive CTA in rats. Thus, an oral POD was selected for dermal and inhalation risk assessment because the dermal and inhalation toxicity studies did not evaluate the critical endpoint (thyroid hormone levels, thyroid weights or thyroid histopathology) or the fetal lifestage that were identified as the most sensitive endpoint and lifestage, respectively, in the DCPA database for
Since decreased fetal thyroid hormone levels (a female specific effect) is the endpoint for both the dermal and inhalation exposure scenarios, a body weight of 69 kg (representing females) was used in the dose calculations rather than 80 kg (representing males and females). This body weight was used for the ORE assessment because it accounts for the adverse effects to the fetal lifestage and is protective of pregnant individuals.
Although a cancer assessment was also presented for DCPA in the May 2023 ORE Assessment, the concern for the Emergency Order are the non-cancer risks, specifically for the fetuses of exposed pregnant individuals. As such, only information related to the non-cancer risks for adults are further summarized here.
EPA uses the term post-application to describe exposures that occur when individuals are present in an environment that has been previously treated with a pesticide (also referred to as re-entry exposure). Such exposures may occur when workers enter previously treated areas to perform job functions, including activities related to crop production, such as scouting for pests or harvesting. Post-application exposure levels vary over time and depend on such things as the type of activity, the nature of the crop or target that was treated, the type of pesticide application, and the chemical's degradation properties. In addition, the timing of pesticide applications, relative to harvest activities for example, can greatly reduce the potential for post-application exposure.
A series of assumptions and exposure factors served as the basis for completing the occupational post-application risk assessments. Each assumption and factor are detailed in the May 2023 ORE Assessment. The algorithms used to estimate non-cancer exposure and dose for occupational post-application scenarios can be found in Appendix A of the May 2023 ORE Assessment. Occupational post-application non-cancer dermal risk estimates are of concern on the day of application (
A restricted entry interval (REI) can be established based on different sources of information considering both acute effects and also systemic effects. EPA considers both the acute toxicity categories for the active ingredient in a product and also the post-application risk assessment which may incorporate systemic effects from exposure to a pesticide product and establishes the REI based on the more protective duration.
Although active ingredients like DCPA that are classified as Category III or IV for acute dermal, eye irritation and primary skin irritation are assigned under 40 CFR 156.208(c)(2) a 12-hour REI (currently listed on registered product labels), short- and intermediate-term post-application risk estimates were of concern on 0-DAT (12 hours following application) for all activities with implications for re-entry risks of concern extending past 30 days.
EPA uses the term handlers to describe those individuals who are involved in the pesticide application process. EPA believes that there are distinct job functions or tasks related to applications and exposures can vary depending on the specifics of each task. The amount of chemical used in each application (
Based on the anticipated use patterns and current labeling, types of equipment and techniques that can potentially be used, occupational handler exposure is expected from the registered uses. A series of assumptions and exposure factors served as the basis for completing the occupational handler risk assessments. Each assumption and factor are detailed in the May 2023 ORE Assessment. The algorithms used to estimate non-cancer exposure and dose for occupational handlers can be found in Appendix A of the May 2023 ORE Assessment.
Estimates of dermal and inhalation exposure were calculated for various levels of personal protective equipment (PPE). Results are presented for the highest level of protection available for the particular scenario, which ranged from double layer of clothing (
Dermal and inhalation risk estimates were combined in this assessment, since the toxicological effects for these exposure routes were similar. Occupational handler non-cancer combined (dermal and inhalation) risk estimates are of concern (
The spray drift risk estimates are based on an estimated deposited residue concentration as a result of screening level agricultural application scenarios. DCPA is used on field crops, sod farms, and nurseries, and can be applied via groundboom and aerial equipment. The recommended drift scenario screening level options are las follows:
• Groundboom applications are based on the AgDrift model option for high boom height and using very fine to fine spray type using the 90th percentile results.
• Aerial applications are based on the use of AgDrift Tier 1 aerial model option for a fine to medium spray type and a series of other parameters which will be described in more detail below (
Adult dermal exposures resulting from spray drift residues were estimated. Exposures were considered for 50 feet wide lawns where the nearest side of the property was directly adjoining the treated field (at field edge) and at varied distances up to 300 feet downwind of a treated field. The algorithms used to estimate exposure and dose for non-occupational spray drift can be found in Appendix C of the May 2023 ORE Assessment.
Results for the screening level scenarios are presented in Table 6.1.1 (adult risk estimates) of the May 2023 ORE Assessment and indicate that there are risks of concern at the field edge and at distances greater than 300 feet for some adult exposure scenarios (which includes exposures to pregnant individuals). For adults, dermal screening-level risk estimates were of concern at the field edge with MOEs ranging from 0.4-1 for all scenarios (dermal LOC = 100). The distance required for exposures to reach the LOC of 100 is >300 feet from the field edge.
The Agency assessed DCPA's benefits as a preemergence treatment in the
EPA determined that DCPA is rarely used in registered use sites other than
For more information on the benefits of DCPA usage (and to see supporting references), see
Growers use DCPA, as directed by the product label, when planting seed (also referred to as direct seeding) and at transplant to provide residual control of weeds during the period between
The cost of herbicides used in
In production of direct-seeded broccoli, Brussels sprouts, cabbage, and cauliflower, the most likely pre-emergent alternative to DCPA is bensulide. Bensulide can be applied without injuring the crop (crop-safe), and it allows for a number of rotational crops to be grown following
In the absence of DCPA, growers who transplant broccoli, cabbage, and cauliflower could switch to oxyfluorfen
Growers of both direct-seeded and transplanted specialty
DCPA is recommended for weed management throughout the season; however, DCPA is the only herbicide that UC IPM recommends for application at seeding or transplant in onion, indicating its specific importance in early-season weed control in onion in California. Herbicide extension recommendations for states other than California generally do not recommend DCPA therefore the analysis for
Herbicides that can be applied before crop emergence in onions and associated crops (shallot, leek) are bensulide, ethofumesate, flumioxazin, and pendimethalin; however, these herbicides are registered for different
DCPA provides control or partial control for a wide spectrum of annual weeds in
In the absence of DCPA, growers could transplant green onions to avoid the critical weed management period between onion seeding and emergence; however, transplanting is not currently a common practice in California onion production and may not be feasible for growers currently using DCPA. Green onions are densely planted, so transplanting can be infeasible for large-scale operations, and dense plantings can also make hand-weeding and mechanical cultivation difficult or impractical. If no preemergence herbicide options exist and transplanting is typically infeasible for most onion growers who use DCPA, then growers would need to rely on other cultural weed management practices. Cultural weed management practices include using fields with low levels of weed pressure or using pre-irrigation before planting followed by shallow cultivation to reduce the emergence of weeds during crop emergence. Growers can also rotate onions with crops that have more effective registered herbicide options to reduce weed pressure before onions are planted. In all cases, the labor needs for green onion production would likely increase due to the lack of a preemergence herbicide.
In the absence of DCPA, dry bulb onion growers can use pendimethalin for early season weed control. Since pendimethalin provides the same level of preemergence weed control as DCPA, dry bulb onion growers will not face revenue loss from switching from DCPA to pendimethalin for early season weed control. Like dry bulb onion growers, shallot growers can also replace DCPA with pendimethalin for similar weed control without revenue loss. EPA expects that green onion and leek growers in California will face substantial impacts from the loss of DCPA due to a lack of registered preemergence herbicides; impacts include yield losses and increased labor for hand-weeding or other cultural weed management practices.
EPA has explored various mitigation measures to feasibly address the identified risks of concern to bystanders, occupational handlers, and occupational post-application workers. EPA requested public comment on the ORE Assessment on June 1, 2023, and received comments from various stakeholders including AMVAC. EPA has received various mitigation proposals from AMVAC beginning in July 2023, with each proposal further restricting DCPA registered uses, and a proposed draft product label submitted in April 2024. After EPA's extensive review and analysis of AMVAC's April 2024 mitigation proposal and considering all feasible mitigation measures, risks of concern remain for handlers and post-application workers exposed to DCPA and are documented in a revised ORE Assessment (
Prior to AMVAC's April 2024 proposed product label, AMVAC proposed a number of mitigation options, including restricting use patterns and reduced application rates, for DCPA to radish, Brassica (cole) leafy vegetables, and onions and restricting the formulation type (liquid formulation only). Mitigation was also proposed by AMVAC that would restrict application to groundboom and chemigation only and would require handlers to use engineering controls with gloves for all activities. In addition, REIs of 10 days and 21 days were proposed by AMVAC for post-application activities such as scouting and hand-set irrigation, respectively. For spray drift, AMVAC's proposed mitigations initially included a label requirement for medium/coarse droplets, use of a low boom, and a 150 ft buffer. However, risks of concern still remained for occupational handlers, occupational post-application workers and bystanders even after consideration of these mitigations.
In April 2024, AMVAC submitted an amended product label significantly reducing the use pattern and incorporating additional restrictions to address remaining risk concerns. On AMVAC's amended product label, many of the same restrictions noted above were incorporated, including the reduced application rate and requirement of engineering controls plus additional PPE. The following additional restrictions were proposed by AMVAC: applications only to radish and Brassica (cole) leafy vegetables, limitation of usage to CA and AZ, designation of the product as a restricted use pesticide (RUP), inclusion of a 200-foot buffer and low boom release height, restriction of handheld equipment applications, REIs for various activities ranging from 10 days to 21 days, restriction to banded ground applications, and restrictions on the amount of product handlers could use per day. These mitigations impact the occupational handler, occupational post-application worker, and bystander scenarios.
The restrictions of handheld equipment and the restriction to banded ground applications would result in only groundboom applications being allowed on the product label. Banded applications consist of a 12-inch band along a 24-inch row and would essentially reduce the application area by 50% because only half of the row is sprayed. Therefore, the banded groundboom scenarios assessed include a reduction in the area treated input from the default of 80 acres to 40 acres. This results in an increase in the combined (dermal + inhalation) MOEs, but not enough to reach the LOC of 100. MOEs range from 32 for applicators to 41 for mixers/loaders when considering banded applications.
Incorporating the additional restrictions on the amount of product that can be handled per day further reduces exposures and results in a combined MOE (dermal plus inhalation) of 98 for both mixers/loaders and applicators (LOC = 100). However, EPA does not typically approve labeling that restricts the amount of product that individual handlers are allowed to use for several reasons. First, there are various kinds of tasks individual handlers may need to do as part of an application, such as mixing the product, loading application equipment, using specific equipment, cleaning, repairing, or maintaining application equipment, and disposing of pesticides or materials with pesticide residue. These multiple activities can all lead to exposure, and make it difficult to adequately reduce exposure through a simple label restriction on the amount of a pesticide handled each day.
At present, there is also no mechanism in place through which users can track compliance with the proposed daily amount handled limitations. While AMVAC proposed to classify end use products containing DCPA as a RUP, which requires certain information to be retained concerning the application of a RUP (
Without a mechanism for reliably tracking the amounts of product handled per day, across different handling tasks such as mixing, loading and applying the pesticide, it would be very difficult to enforce this label requirement. Without a way to provide clear limits for all handler tasks, and ensure compliance with a limit to the amount of product handled each day for each handler, EPA determined this mitigation measure would not adequately address these handler risks.
AMVAC's April 2024 proposed product label limits use to cole crops and radish and only allows for applications over transplants for certain cole crops. Under AMVAC's April 2024 proposed product label, MOEs on the day of application (12 hours after application) are still of concern and MOEs continue to be of concern up until 28 or more days later.
AMVAC proposed requiring a 200-foot buffer for a low boom height groundboom spray, which would result in no spray drift risks of concern for adults (including pregnant individuals) (all MOEs ≥ LOC of 30). Implementing this change proposed by AMVAC would address EPA's risk concerns for bystanders.
AMVAC's May 2024 proposed product label did not include additional mitigations to address the occupational handler nor the bystander scenarios. The same mitigations which addressed the bystander risks that were included on AMVAC's proposed April 2024 label were present on AMVAC's proposed May 2024 label. The same mitigations AMVAC proposed on the April 2024 label (
AMVAC proposed additional mitigations to address the occupational post-application worker risks of concern. AMVAC's May 2024 proposed product label prohibits applications over transplanted crops, which would address the identified post-application risk concerns. Implementing AMVAC's proposed change would address EPA's risk concerns for occupational post-application workers.
While the proposed mitigations on AMVAC's May 2024 product label would address the risk concerns related to occupational post-application workers and bystanders, EPA still has concerns related to occupational handlers and does not feel that AMVAC's proposed mitigations will adequately address all of the identified risks of concern, leaving the current approved product label in use. As noted in the May 2023 ORE Assessment, use under the current approved product label can result in pregnant individuals being exposed to DCPA at levels greater than the level at which adverse effects were observed in the CTA. EPA has concerns that pregnant individuals may be exposed to DCPA at levels higher than those that cause fetal thyroid hormone disruption, but at which no thyroid effects would occur in the pregnant individual. There are unknown amounts of existing DCPA product in the hands of users which may lead to the serious and significant health outcomes described in this Emergency Order.
With this Emergency Order the Agency has suspended the registrations of all pesticide products containing DCPA. The Emergency Order expressly prohibits any further sale, distribution, or use of any pesticide product containing DCPA, including federally registered products and products registered pursuant to FIFRA section 24(c) and 40 CFR 162.152. The registrant of products affected by the Emergency Order may request an expedited Agency hearing on the question of whether an imminent hazard exists. This unit explains how to request an expedited hearing, the consequences of requesting or not requesting an expedited hearing, and the procedures which will govern any expedited hearing in the event one is requested.
Alternatively, FIFRA section 6(c)(4) provides that a registrant—or other interested person, with the concurrence of the registrant—may seek immediate review of this Emergency Order in an appropriate district court. Such review shall be solely to determine whether the Emergency Order of suspension was arbitrary, capricious or an abuse of discretion, or whether the Emergency Order was issued in accordance with the procedures established by law. The registrant or other interested person need not request an expedited hearing pursuant to FIFRA section 6(c)(2) before seeking review in district court.
The registrant of a pesticide product containing DCPA may request an expedited hearing concerning the Agency's determination that an imminent hazard exists. Hearings must comply with the Agency's Rules of Practice Governing Hearings, 40 CFR part 164. These procedures establish the following requirements:
(1) Each hearing request must specifically identify by registration or accession number each individual pesticide product concerning which a hearing is requested, 40 CFR 164.121(a)(3) and 164.22(a);
(2) Each hearing request must be accompanied by a document setting forth specific objections to the Agency's findings pertaining to the question of imminent hazard and state the factual basis for each such objection, 40 CFR 164.121(a)(3) and 164.22(a); and
(3) Each hearing request must be received by the Office of the Hearing Clerk, FIFRA section 6(c)(2); 40 CFR 164.121(a)(2) and 164.5(a).
Failure to comply with any one of these requirements will invalidate the request for a hearing.
Any person requesting a hearing is strongly encouraged to file such requests electronically via the EPA OALJ's E-filing system at:
This Emergency Order is effective immediately upon signature, regardless of whether a registrant requests an expedited hearing concerning the question of imminent hazard. If an expedited hearing is requested, this Emergency Order will remain in effect during any expedited hearing and consistent with the Administrator's final order on the issue of suspension. The final order to be issued by the Administrator or his delegate after any expedited hearing may retain the Emergency Order of suspension, modify it, or rescind it. Regardless of whether a registrant requests a hearing on this Emergency Order, the suspension shall be lifted automatically if EPA fails to issue a Notice of Intent to Cancel for the DCPA products at issue within 90 days from issuance of this Emergency Order.
If a registrant of a DCPA product submits a valid request for an expedited hearing, that hearing must commence within 5 days of receipt of the hearing request unless the registrant and the Agency agree that it will commence at a later time (FIFRA section 6(c)(2)). Valid requests received subsequently may be consolidated with requests received prior to commencement of the suspension hearing. Any suspension hearing will be limited to the question of whether an imminent hazard exists (FIFRA section 6(c)(1)) and no parties other than affected registrants and the Agency will be permitted to participate actively in the hearing (FIFRA section 6(c)(3)). However, other persons adversely affected may file proposed findings and conclusions and briefs in support thereof. 40 CFR 164.121(e)(3) and (j).
Once the presentation of evidence has been concluded, FIFRA section 6(c)(2) provides that the Administrative Law Judge will have 10 days to submit recommended findings and conclusions to the Administrator and the Administrator will have 7 days to issue a final order on the issue of suspension. Additional time requirements are set forth at 40 CFR 164.121(j).
EPA's Rules of Practice forbid anyone who may take part in deciding this case, at any stage of the proceeding, from discussing the merits of the proceeding
Accordingly, the following EPA offices, and the staffs thereof, are designated as the judicial staff to perform the judicial function of EPA in any administrative hearing on the issue of imminent hazard: The Presiding Officer, the Environmental Appeals Board, the Administrator, the Deputy Administrator, and the members of the staff in the immediate office of the Administrator and Deputy Administrator. None of the persons designated as the judicial staff may have any
Environmental Protection Agency (EPA).
Notice; request for public comment.
Notice is hereby given by the U.S. Environmental Protection Agency (EPA), Region 7, of a proposed prospective purchaser agreement, embodied in an Administrative Settlement Agreement and Covenant Not to Sue, with the city of St. Joseph, Missouri. This agreement pertains to a portion of the HPI Products, Inc. facility located at 424 S 8th Street (sometimes referred to as 408 S 8th Street), St. Joseph, Missouri.
Comments must be received on or before September 6, 2024.
The proposed settlement agreement is available for public inspection at EPA Region 7's office. A copy of the proposed agreement may also be obtained from Catherine Chiccine, EPA Region 7, 11201 Renner Boulevard, Lenexa, Kansas 66219, telephone number (913) 551-7917. You may send comments, identified by Docket ID No. EPA-R07-SFUND-2024-0253 to
Catherine Chiccine, Assistant Regional Counsel, Office of Regional Counsel, U.S. Environmental Protection Agency Region 7, 11201 Renner Boulevard, Lenexa, Kansas 66219; telephone number (913) 551-7917; email address
Submit your comments, identified by Docket ID No. EPA-R07-SFUND-2024-0253 at
Notice is hereby given by the U.S. Environmental Protection Agency, Region 7, of a proposed prospective purchaser agreement, embodied in an Administrative Settlement Agreement and Covenant Not to Sue, with the city of St. Joseph, Missouri. This agreement pertains to a portion of the former HPI Products, Inc. facility located at 424 S. 8th Street (sometimes referred to as 408 S. 8th Street), St. Joseph, Missouri. The city of St. Joseph, Missouri agrees to purchase the property for reuse and redevelopment and perform a response action. This project will result in a formerly contaminated property being restored to beneficial use by a community stakeholder.
The settlement includes a covenant by the EPA not to sue or take administrative action against the city of St. Joseph, Missouri, pursuant to sections 106 and 107(a) of CERCLA and section 7003 of RCRA. For thirty (30) days following the date of publication of this notice, the EPA will receive written comments relating to the settlement. The EPA will consider all comments received and may modify or withdraw its consent to the settlement agreement if comments received disclose facts or considerations that indicate that the proposed settlement is inappropriate, improper, or inadequate. EPA's response to any comments received will be available for public inspection at EPA Region 7, 11201 Renner Boulevard, Lenexa, Kansas 66219.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA or Agency) hereby announces its final cancellation order for the cancellations and amendments to terminate uses voluntarily requested by the registrants and accepted by the Agency, of the products listed in Table 1 and Table 2 of Unit II., pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). This final cancellation order follows a notice in the
The cancellations and amendments are effective August 7, 2024.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2022-0223, is available at
Patricia Biggio, Pesticide Re-Evaluation Division (7508M), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 566-0700; email address:
This action is directed to the public in general and may be of interest to a wide range of stakeholders including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
This document announces the cancellations and amendments through termination of certain uses, as requested by registrants, of products registered under FIFRA section 3 (7 U.S.C. 136a). These registrations are listed in sequence by registration number in Table 1 and Table 2 of this unit.
In 2021, EPA issued a rule revoking chlorpyrifos tolerances on the grounds that they were not safe (86 FR 48315, August 30, 2021 (FRL-5993-04-OCSPP)). Once those tolerances expired on February 28, 2022, use of pesticide products containing chlorpyrifos on food or feed crops would result in adulterated food, which cannot be sold in interstate commerce. After EPA alerted registrants of chlorpyrifos products of the lack of tolerances and the options for their products, several registrants submitted requests to voluntarily cancel their registered chlorpyrifos products or amend their chlorpyrifos pesticide products to remove food uses.
In 2024, EPA announced the receipt of and sought comment on such requests from the registrants identified
EPA received two comments in response to the notice that published in the
Neither of the comments specified the products listed in Table 1 or Table 2 of Unit II., but both comments were supportive of the cancellation of the pesticide. One commenter summarized studies found on the Breast Cancer Prevention Partners website. The other comment stated that the proposed provisions for using existing stocks for food uses until June 30, 2025 would subject workers, bystanders, and consumers to health risks, and were not consistent with FIFRA.
This cancellation action is responsive to registrants' requests to cancel specific products and specific uses. In response to both commenters, under FIFRA section 6(f), registrants may, at any time, seek to cancel their products or seek to amend their registrations to terminate specific uses. Under that provision of the statute, EPA provides an opportunity for public comment and then acts on the request. Cancellation of other products or uses that are not requested by the registrants occurs under other provisions of FIFRA, which is beyond the scope of this action and EPA's authority in FIFRA section 6(f).
In addition, in response to the comment submitted by Earthjustice, EPA has determined that the existing stocks provisions are not inconsistent with the purposes of FIFRA, given the limited amount of existing stocks and the limited time allowed for use of the existing stocks outlined in Unit VI.
Regarding the studies on the Breast Cancer Prevention Partners website referenced in the other submitted comment, the commenter may wish to submit this information for consideration during the next public comment period on the registration review of chlorpyrifos, when all currently registered uses of chlorpyrifos will be evaluated.
EPA determined that neither comment merited denial of the registrants' requests for cancellation and amendment.
Pursuant to FIFRA section 6(f) (7 U.S.C. 136d(f)(1)), EPA hereby approves the requested amendments to terminate uses and cancel the registrations identified in Table 1 and Table 2 of Unit II., respectively. Accordingly, the Agency hereby orders that the uses identified for the products listed in Table 1 of Unit II. are terminated, and the product registrations identified in Table 2 of Unit II. are cancelled.
The cancellations and amendments addressed in this Order are effective August 7, 2024. Any distribution, sale, or use of existing stocks of the products identified in Tables 1 and 2 of Unit II. in a manner inconsistent with any of the provisions for disposition of existing stocks set forth in Unit VI. will be a violation of FIFRA.
Section 6(f)(1) of FIFRA (7 U.S.C. 136d(f)(1)) provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be cancelled or amended to terminate one or more registered uses. FIFRA further provides that, before acting on the request, EPA must publish a notice of receipt of any such request in the
Existing stocks for the products identified in this document are those stocks of registered pesticide products that are currently in the United States and that were packaged, labeled, and released for shipment prior to the effective date of the cancellation action. EPA has determined that the following existing stocks provisions are not inconsistent with the purposes of FIFRA given the limited amount of existing stocks and the limited time allowed for use of the existing stocks outlined in this unit.
• Sale and distribution of existing stocks of Chlorpyrifos 61.5% MUP (81964-21) will not be permitted after the final cancellation order is issued. Although the April 3, 2024 notice indicated that EPA intended to allow sale and distribution of this product until April 30, 2025, that date was intended to apply to end use products only and thus does not apply because this is a MUP. This will also help limit the amount of additional chlorpyrifos end use products that can be produced from this MUP.
• Sale and distribution of existing stocks of Chlorpyrifos 4 EC (84229-20) will be permitted until April 30, 2025.
• Use of existing stocks of Chlorpyrifos 4 EC (84229-20) on food, food processing sites, and food manufacturing sites must be consistent with the product labeling and will be permitted until June 30, 2025.
• Use of existing stocks of Chlorpyrifos 61.5% MUP (81964-21) and Chlorpyrifos 4 EC (84229-20) for non-food purposes is permitted until existing stocks are exhausted, as long as such use is in accordance with the labeling.
After these dates, sale and distribution of existing stocks will be prohibited, except for export consistent with FIFRA section 17 (7 U.S.C. 136o), or for proper disposal in accordance with state regulations.
The products listed in Table 2 of Unit II. bear labeling only for non-food use. Therefore, EPA is allowing sale and distribution of existing stocks of those products for one year after publication of the cancellation order. Thereafter, sale and distribution of existing stocks of the product will be prohibited, except for export consistent with FIFRA section 17 (7 U.S.C. 136o), or for proper disposal in accordance with state regulations.
Use of existing stocks is permitted until such stocks are exhausted, provided that use is consistent with the terms of the previously approved labeling on, or that accompanied, the cancelled products.
The following item has been deleted from the list of items scheduled for consideration at the Wednesday, August 7, 2024, Open Meeting. Item No. 5 was released by the Commission on August 1, 2024. The item was previously listed
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
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 September 6, 2024.
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Board of Governors of the Federal Reserve System.
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 22, 2024.
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Board of Governors of the Federal Reserve System.
The U.S. General Services Administration (GSA), Office of Civil Rights (OCR).
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, and the Office of Management and Budget (OMB) regulations, GSA invites the public to comment on a revision to existing information collection 3090-0310, to add a Nondiscrimination in Federal Financial Assistance for Real Property Recipients form. This information is needed to facilitate nondiscrimination in GSA's Federal Financial Assistance Programs, consistent with Federal civil rights laws and regulations that apply to recipients of Federal financial assistance.
Lisa Lee Anderson, External Programs Branch Chief, OCR, at (202) 501-0767 or via email at
Submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, via
GSA has mission responsibilities related to monitoring and enforcing compliance with Federal civil rights laws and regulations that apply to Federal financial assistance programs administered by GSA. Specifically, those laws provide that no person on the ground of race, color, national origin, disability, sex, or age shall be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program in connection with which Federal financial assistance is extended under laws administered in whole, or in part, by GSA.
These mission responsibilities generate the requirement to request and obtain certain data from recipients of Federal surplus real property conveyances under the Federal Public Benefit Conveyance Program for the purpose of determining compliance, such as the number of individuals that speak non-English languages encountered by the recipient's program(s) and how the recipient is addressing meaningful access for individuals that are Limited English Proficient; whether the recipients provide disability access in compliance with applicable laws and standards; whether there has been complaints or lawsuits filed against the recipient based on prohibited discrimination; whether there has been any findings of discrimination; and whether the recipient's facilities are accessible to qualified individuals with disabilities.
Public comments are particularly invited on: Whether this collection of information will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
Obtaining Copies of Proposals: Requesters may obtain a copy of the information collection documents from the GSA Regulatory Secretariat Division by calling 202-501-4755 or emailing
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), Federal agencies are required to publish notice in the
Comments must be received by October 7, 2024.
When commenting, please reference the document identifier or OMB control number. 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.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the 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. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires Federal agencies to publish a 60-day notice in the
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This information collection includes the process for organizations wishing to provide healthcare services under MA plans. These organizations must complete an application annually (if required), file a bid, and receive final approval from CMS. The MA application process has two options for applicants that include (1) request for new MA product or (2) request for expanding the service area of an existing product. CMS utilizes the application process as the means to review, assess and determine if applicants are compliant with the current requirements for participation in the MA program and to make a decision related to contract award. This collection process is the only mechanism for organizations to complete the required MA application process.
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Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995
Comments must be received by October 7, 2024.
When commenting, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
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2.
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.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the 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. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires federal agencies to publish a 60-day notice in the
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The information collection requirements described herein are needed to implement the Medicare and Medicaid Conditions of Participation (CoPs) for a total of 5,132 facilities that includes: 4,994 accredited and non-accredited hospitals and 138 Critical Access Hospitals (CAHs) with Distinct Part Units (DPUs); specifically, 119 CAHs with psychiatric DPUs and 19 CAHs with rehabilitation DPUs. The information collection requirements for the 1,245 CAHs without DPUs (1,383 total CAHs less 138 CAHs with DPUs) are covered under OMB control number: 0938-1043 (CMS-10239).
As previous stated, this notice is related to a reinstatement of the information collection request that expired on 11/30/2017. The previous iteration of this OMB control number 0938-0328 (approved November 14, 2014) had a burden of 14,424,655 annual hours. For this requested reinstatement, with changes, the adjusted annual hourly burden for industry is 3,566,521 hours at an annual cost of $310,989,894. The decrease in burden hours is primarily due to the fact that many of the information collections that were previously required as CoPs by CMS are now customary and usual industry practice and would take place in the absence of the Medicare and Medicaid programs. In addition, where possible, CMS reduced the burden of CoPs with prior information collections. For example, the burden for individual hospitals that are part of a multi-hospital system was reduced by allowing a multi-hospital system, which represent approximately 70% of hospitals today, to develop a unified Quality Assessment and Performance Improvement (QAPI) program rather than requiring each hospital in the system to maintain separate programs and reporting requirements.
This reinstatement also reflects a change in how the annual burden costs for information collection requirements for Hospital CoPs are calculated. In prior submissions, the fully loaded wage estimates applied only an additional 33% to the hourly wage to account for fringe benefits. This reinstatement applies an additional 100% to the median hourly wage to reflect the costs more accurately to hospitals for compliance with the current CoPs.
Additional changes reflected in this reinstatement are some of the information collections were placed on participating hospitals as CoPs during the recent COVID-19 Public Health Emergency (PHE), specifically regarding collecting and reporting data on incidents and hospital management of infection diseases. The burden of many of these information collections were accounted for in other OMB submissions, such as the “
Finally, this reinstatement incorporates additional information collection requirements associated with a number of new CoPs for hospitals and CAHs regarding obstetrical services which are outlined in detail in the July 2024 proposed rule titled “Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs, Including the Hospital Inpatient Quality Reporting Program; Health and Safety Standards for Obstetrical Services in Hospitals and Critical Access Hospitals; Prior Authorization; Requests for Information; Medicaid and CHIP Continuous Eligibility; Medicaid Clinic Services Four Walls Exceptions; Individuals Currently or Formerly in Custody of Penal Authorities; Revision to Medicare Special Enrollment Period for Formerly Incarcerated Individuals; and All-Inclusive Rate Add-On Payment for High-Cost Drugs Provided by Indian Health Service and Tribal Facilities” (89 FR 59186).
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), Federal agencies are required to publish notice in the
Comments on the collection(s) of information must be received by the OMB desk officer by September 6, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
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 Parham at (410) 786-4669.
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. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to publish a 30-day notice in the
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Form CMS-R-285 provides the necessary information regarding the prior state or local government employment to process the individual's request for premium Part A reduction based on their employment by a state or local government. The form is completed by the state or local government employer on behalf of the individual seeking the Medicare premium reduction. The SSA, CMS' agent for processing Medicare enrollments and premium amount determinations, will use this information to help determine whether a beneficiary meets the requirements for reduction of the Part A premium. The form is owned by CMS but not completed by CMS staff.
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), Federal agencies are required to publish notice in the
Comments on the collection(s) of information must be received by the OMB desk officer by September 6, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
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 Parham at (410) 786-4669.
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. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to publish a 30-day notice in the
1.
This generic clearance will cover a program of surveys and feedback collections designed to strategically obtain data and feedback from MIPS
Food and Drug Administration, HHS.
Notice of public workshop.
The Food and Drug Administration (FDA, the Agency, or we) is announcing the following public workshop entitled “Enhancing Diversity in Therapeutics Development for Pediatric Patients.” The aim of the public workshop is to explore strategies to increase the enrollment of historically underrepresented populations in pediatric clinical trials and to help improve the strength and generalizability of the evidence for the intended use population.
The public workshop will be held on September 6, 2024, from 9 a.m. to 5 p.m. Eastern Time. See the
The public workshop will be held at FDA's White Oak Campus, 10903 New Hampshire Ave., Bldg. 31 Conference Center, the Great Room (Rm. 1503), Silver Spring, MD 20993-0002. Entrance for the registered public workshop participants (non-FDA employees) is through Building 1 where routine security check procedures will be performed. For parking and security information, please refer to
Julie Levin, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 6481, Silver Spring, MD 20993, 202-567-7565, or
Clinical trials in children are essential for obtaining data on the safety and effectiveness of medical products in children and to protect children from the risks associated with exposure to medical products that may be unsafe or ineffective for their intended uses in children. In some therapeutic areas, participation in clinical trials may be an important component of a participant's clinical care. Pediatric drug development programs should consider the clinical and demographic factors that impact the generalizability of study results with respect to the patient population that will use the product once it is approved.
FDA, in collaboration with the University of Maryland Center of Excellence in Regulatory Science and Innovation, is convening a 1-day workshop to explore strategies for enrolling historically underrepresented populations in pediatric clinical trials. The specific topics to be covered include, but are not limited to, the following:
• Understanding the current state and challenges of pediatric clinical trial participation;
• Understanding metrics for assessing representative clinical study enrollment, including considerations of disease prevalence and incidence across subgroups of the pediatric population; and
• Discussing key elements of a strategy to include a more representative population, including trial design and methodological considerations, community engagement, recruitment and retention practices, and other related topics.
Registration is free and based on space availability, with priority given to early registrants. Persons interested in attending this public workshop in person must register by August 23, 2024, at 5 p.m. Eastern Time; virtual attendees may register by September 6, 2024, at 9 a.m. Eastern Time. Early registration is recommended because seating is limited; therefore, FDA may limit the number of participants from each organization. Registrants will receive confirmation when they have been accepted. If time and space permit, onsite registration on the day of the public workshop will be provided beginning at 8:15 a.m. We will let registrants know if registration closes before the day of the public workshop.
If you need special accommodations due to a disability, please contact Julie Levin at 202-567-7565 or
(Notice of this meeting is given pursuant to 21 CFR 10.65.)
Health Resources and Services Administration (HRSA), Department of Health and Human Services (HHS).
Notice.
In compliance with the requirement for opportunity for public comment on proposed data collection projects of the Paperwork Reduction Act of 1995, HRSA announces plans to submit an Information Collection Request (ICR) to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this ICR should be received no later than October 7, 2024.
Submit your comments to
To request more information on the proposed project, email
When submitting comments or requesting information, please include the ICR title for reference.
Section 340B(d)(3) to the PHS Act requires HHS to promulgate regulations establishing and implementing a binding 340B Administrative Dispute Resolution (ADR) process for certain disputes arising under the 340B Drug Pricing Program. Pursuant to the statute, the 340B ADR process is intended to resolve (1) claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers and (2) claims by manufacturers, after a manufacturer has conducted an audit as authorized by section 340B(a)(5)(C) of the PHS Act, that a covered entity has violated the prohibition on diversion or duplicate discounts.
On April 19, 2024, HRSA published the 340B Drug Pricing Program; Administrative Dispute Resolution Regulation Final Rule (340B ADR Final Rule) (89 FR 28643 (Apr. 19, 2024) (to be codified at 42 CFR part 10)). The 340B ADR Final Rule provides the requirements for filing a 340B ADR claim. The 340B ADR Final Rule requires the submission of a 340B ADR claim within 3 years of the date of the alleged violation and specifies that it is a remedy open to all manufacturers and covered entities that participate in the 340B Drug Pricing Program. To initiate the 340B ADR process, a petitioner will email OPA's designated mailbox with its 340B ID or Labeler code and contact information, the 340B ID or Labeler code and contact information of the opposing party, and a brief description of the claim. Once a petition is filed, OPA reviews the petition to make sure the claim meets the requirements for the 340B ADR process, including whether: (1) the claim alleges a violation of an overcharge, duplicate discount, or diversion; (2) the claim has been filed within 3 years of the alleged violation; and (3) the petitioner has engaged in good faith efforts to resolve the claim. Both the petitioner and opposing party will be required to upload certain documentation to a secure 340B ADR workspace in the 340B OPA Information System to substantiate the claim. After an initial review of the claim and any supporting documentation, OPA staff will determine whether the requirements for filing a claim have been met, and if the claim is deemed complete, OPA will notify the parties. If the claim is deemed complete and all filing requirements are met, the claim will be assigned to a 340B ADR Panel. If the claim does not meet the filing requirements, OPA will dismiss the claim. Specific details concerning the 340B ADR Panel and requirements for filing a claim are outlined in the 340B ADR Final Rule and can be reviewed at
This information collection request is limited to the initiation of the 340B ADR process and the uploading of the related documents. Filing a claim though the 340B ADR process is a remedy open to all manufacturers and covered entities that participate in the 340B Drug Pricing Program, which can constitute a standardized federal information collection. Once the claim is assigned to a 340B ADR Panel for review, these subsequent steps, which encompass the 340B ADR process itself and ensuing correspondence with the parties involved in the process, are exempt from Paperwork Reduction Act requirements, pursuant to the Paperwork Reduction Act exception listed at 44 U.S.C. 3518(c), which exempts administrative actions or investigations involving an agency against specific individuals or entities.
HRSA specifically requests comments on: (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 of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Council of Councils.
This will be a hybrid meeting held in-person and virtually and will be partially open to the public as indicated below. Individuals who plan to attend in-person or view the virtual meeting and need special assistance or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.Registration is not required to attend the open portions of this meeting and can be accessed from the NIH Videocast at the following link:
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has procedures at
Information is also available on the Council of Council's home page at
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625-0017, Various International Agreement Safety Certificates and Documents; without change. Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before September 6, 2024.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology. These comments will help OIRA determine whether to approve the ICR referred to in this Notice.
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, USCG-2024-0336, and must be received by September 6, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments to the Coast Guard will be posted without change to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (89 FR 43863, May 20, 2024) required by 44 U.S.C. 3506(c)(2). That notice elicited no comments. Accordingly, no changes have been made to the Collection.
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625-0103, Mandatory Ship Reporting System for the Northeast and Southeast Coasts of the United States; without change. Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before September 6, 2024.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology. These comments will help OIRA determine whether to approve the ICR referred to in this Notice.
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, USCG-2024-0334, and must be received by September 6, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments to the Coast Guard will be posted without change to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (89 FR 43864, May 20, 2024) required by 44 U.S.C. 3506(c)(2). That notice elicited no comments. Accordingly, no changes have been made to the Collection.
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625-0043, Ports and Waterways Safety; without change.
Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before September 6, 2024.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, USCG-2024-0337, and must be received by September 6, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments to the Coast Guard will be posted without change to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (89 FR 43866, May 20, 2024) required by 44 U.S.C. 3506(c)(2). That notice elicited no comments. Accordingly, no changes have been made to the Collection.
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625—NEW, Coast Guard Junior Reserve Officers' Training Corps (JROTC) Host School Application; without change.
Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before September 6, 2024.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, USCG-2024-0335, and must be received by September 6, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments to the Coast Guard will be posted without change to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (89 FR 43865 May 20, 2024) required by 44 U.S.C. 3506(c)(2). That notice received five comments unrelated to the Collection. Accordingly, no changes have been made to the Collection.
Fish and Wildlife Service, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Fish and Wildlife Service (Service), are proposing to renew an information collection without change.
Interested persons are invited to submit comments on or before October 7, 2024.
Send your comments on the information collection request (ICR) by one of the following methods (please reference “1018-0067” in the subject line of your comments):
•
•
Madonna L. Baucum, Service Information Collection Clearance Officer, by email at
In accordance with the Paperwork Reduction Act (PRA; 44 U.S.C. 3501
As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other
We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency 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,
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. 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.
This is a non-form collection. Regulations at 50 CFR 20.134 outline the application and approval process for new types of nontoxic shot. When considering approval of a candidate material as nontoxic, we must ensure that it is not hazardous in the environment and that secondary exposure (ingestion of spent shot or its components) is not a hazard to migratory birds. To make that decision, we require each applicant to provide information about the solubility and toxicity of the candidate material. Additionally, for law enforcement purposes, a noninvasive field detection device must be available to distinguish candidate shot from lead shot. This information constitutes the bulk of an application for approval of nontoxic shot. The Director uses the data in the application to decide whether to approve a material as nontoxic.
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 authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
U.S. Geological Survey, Department of the Interior.
Notice of public meeting.
In accordance with the Federal Advisory Committee Act (FACA) of 1972, the U.S. Geological Survey (USGS) is publishing this notice to announce that a Federal advisory committee meeting of the National Geospatial Advisory Committee (NGAC) will take place and is open to members of the public.
The meeting will be held on Wednesday, October 16, 2024, from 9 a.m. to 5 p.m.; and on Thursday, October 17, 2024, from 9 a.m. to 4 p.m. eastern standard time.
The meeting will be held in the South Penthouse Conference Room of the Department of the Interior Building, 1849 C Street NW, Washington, DC. Members of the public may attend the meeting in person or can attend via webinar. Instructions for registration to attend the meeting will be posted at
Mr. Josh Delmonico, Federal Geographic Data Committee (FGDC), USGS, by mail at 12201 Sunrise Valley Drive, MS 590, Reston, VA 20192; by email at
Individuals in the United States who are deaf, blind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.
This meeting is being held under the provisions of the FACA of 1972 (5 U.S.C. ch. 10), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR part 102-3.
Before including your address, phone number, email address, or other personally identifiable information (PII) in your comment, you should be aware that your entire comment—including your PII—may be made publicly available at any time. While you may ask us in your comment to withhold your PII from public review, we cannot guarantee that we will be able to do so.
Bureau of Land Management, Interior.
Public Land Order.
This Order extends the duration of the withdrawal created by Public Land Order (PLO) No. 7608 for an additional 20-year period. Subject to valid existing rights, PLO No. 7608 withdrew 400.27 acres of public lands from settlement, sale, location, or entry under the general land laws, including the United States mining laws, and transferred jurisdiction over those lands to the United States Department of the Army, Corps of Engineers, for the Chief Joseph Dam Additional Units Project for a period of 20 years.
This Order takes effect on August 7, 2024.
Luke Poff, Realty Specialist, BLM Oregon/Washington State Office, (503) 808-6249, by email at
The purpose of this extension is to continue to reserve the use of the land for the USACE's water management responsibilities at Chief Joseph Dam, which includes water impoundment and storage, management of grazing, wildlife habitat and mitigation areas, recreation, fire protection, public access, cultural resources, and realty actions. The extension will be under the terms and conditions agreed upon between the USACE and the Bureau of Land Management and may be revised by consent of both parties.
By virtue of the authority vested in the Secretary of the Interior by Section 204(d) of the Federal Land Policy and Management Act of 1976, 43 U.S.C. 1714(d), it is ordered as follows:
1. PLO No. 7608 (69 FR 48253), which withdrew 400.27 acres of public lands from settlement, sale, location, or entry under the general land laws, including the United States mining laws, and transferred jurisdiction over those lands to the United States Department of the Army, Corps of Engineers, is hereby extended for an additional 20-year period. The following lands are affected by this Order:
2. This withdrawal will expire 20 years from the effective date of this order unless, as a result of a review conducted prior to the expiration date pursuant to Section 204(f) of the Federal Land Policy and Management Act, the Secretary determines that the withdrawal shall be further extended.
Bureau of Land Management, Interior.
Notice of public meetings.
In accordance with the Federal Land Policy and Management Act of 1976, as amended, and the Federal Advisory Committee Act of 1972, the U.S. Department of the Interior, Bureau of Land Management's (BLM) Southern New Mexico Resource Advisory Council (RAC) will meet as indicated below.
The Southern New Mexico RAC will participate in a field tour on
The RAC will participate in a field tour on Thursday, January 23, 2025, from 8 a.m. to approximately 4 p.m. MT. The RAC will then hold an in-person meeting, with a virtual participation option, on Friday, January 24, 2025, from 8 a.m. to 4 p.m. MT, with public comments accepted at 3:30 p.m.
The September 16, 2024, field tour will commence and conclude at the BLM Roswell Field Office, 2909 West Second St., Roswell, New Mexico 88201-1287. The September 17, 2024, meeting will take place at the Roswell Field Office.
The January 23, 2025, field tour will commence and conclude at the BLM Socorro Field Office, 901 South Highway 85, Socorro, NM 87801-4168. The January 24, 2025, meeting will take place at the Socorro Field Office.
A virtual participation option is available on the Zoom Webinar platform. To register for the September 17 meeting, go to
Wendy Brown, BLM Pecos District Office, 2909 West Second Street, Roswell, New Mexico 880201-1287; telephone: 575-627-0259; email:
For sign language interpretation services, language translation services, assistive listening devices, or other reasonable accommodations, please contact the individual listed above at least 7 business days before the meeting to ensure there is sufficient time to process the request. The Department of the Interior manages accommodation requests on a case-by-case basis.
The 12-member Southern New Mexico RAC advises the Secretary of the Interior, through the BLM New Mexico State Director, on planning and management of public land resources located within the jurisdictional boundaries of the RAC.
The September 16, 2024, field tour will include restoration/reclamation project sites in the Roswell Field Office, the Lesser Prairie Chicken Dunes Sagebrush Lizard Area of Critical Environmental Concern and adjoining areas, and recreational areas within the Field Office.
Planned meeting agenda items for the September 17, 2024, meeting include Albuquerque District updates with programs and major actions overviews; Las Cruces District updates with programs and major actions overviews (including an update on the Gila Box Riparian National Conservation Area); Pecos District updates with programs and major actions overviews; a presentation on dark skies designations; a presentation on the BLM Conservation and Landscape Health Rule (also known as the Public Lands Rule); and a discussion of land access issues in southern New Mexico.
The January 23, 2025, field tour will give the RAC the opportunity to see the Box Recreation Area and the Datil Well Recreation Campground.
Planned meeting agenda items for the January 24, 2025, meeting include Albuquerque District updates with programs and major actions overviews (including a presentation on the proposed Datil Well Recreation Area Campground fee increases); Las Cruces District updates with programs and major actions overviews; Pecos District updates with programs and major actions overviews (including a presentation on proposed fee increases for the Rob Jaggers Campground, Valley of Fires Recreation Area, Haystack Mountain Off-Highway Vehicle Area, and Mescalero Sands Off-Highway Vehicle Area); an oil and gas industry presentation by a ConocoPhillips representative; a discussion of land access issues in southern New Mexico; and votes on proposed recreation and campground fee increases.
Final agendas will be posted 2 weeks in advance of the meetings on the RAC web page at:
All meetings and field tours are open to the public, but members of the public who wish to participate in the field tours must provide their own transportation and meals.
Detailed meeting minutes for the Southern New Mexico RAC are maintained in the BLM Roswell Field Office and in the BLM Socorro Field Office (see
Bureau of Land Management, Interior.
Notice of decision approving lands for conveyance.
The Bureau of Land Management (BLM) hereby provides constructive notice that it will issue an appealable decision approving conveyance of the surface and subsurface estates in certain lands to Doyon, Limited, an Alaska Native regional corporation, pursuant to the Alaska Native Claims Settlement Act of 1971 (ANCSA), as amended.
Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the time limits set out in the
You may obtain a copy of the decision from the Bureau of Land Management, Alaska State Office, 222 West Seventh Avenue, #13, Anchorage, Alaska 99513-7504.
Rolando R. Masvidal, Land Law Examiner, BLM Alaska State Office, 907-271-4687, or
As required by 43 CFR 2650.7(d), notice is hereby given that the BLM will issue an appealable decision to Doyon, Limited. The decision approves conveyance of the surface and subsurface estates in certain lands pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601,
The decision addresses public access easements, if any, to be reserved to the United States pursuant to Sec. 17(b) of ANCSA (43 U.S.C. 1616(b)), in the lands approved for conveyance. The BLM will also publish notice of the decision once a week for four consecutive weeks in the “Fairbanks Daily News-Miner” newspaper. Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the following time limits:
1. Unknown parties, parties unable to be located after reasonable efforts have been expended to locate, parties who fail or refuse to sign their return receipt, and parties who receive a copy of the decision by regular mail, which is not certified, return receipt requested, shall have until September 6, 2024 to file an appeal.
2. Parties receiving service of the decision by certified mail shall have 30 days from the date of receipt to file an appeal.
Parties who do not file an appeal in accordance with the requirements of 43 CFR part 4 shall be deemed to have waived their rights. Notices of appeal transmitted by facsimile will not be accepted as timely filed.
Bureau of Land Management, Interior.
Notice of public meeting.
In accordance with the Federal Land Policy and Management Act of 1976 and the Federal Advisory Committee Act of 1972, the U.S. Department of the Interior, Bureau of Land Management's (BLM) Wyoming Resource Advisory Council (Council) will meet as follows.
The Council will hold a meeting on September 18, 2024, from 8:30 a.m. to 4:30 p.m. Mountain Time (MT) and a field tour on September 19, 2024, from 9:00 a.m. to approximately 4:00 p.m. MT. A virtual participation option will be available. The meeting and field tour are open to the public.
The September 18 meeting will be held, and the September 19 field tour will commence and conclude, at the Sublette County Library, 155 S Tyler Ave, Pinedale, WY 82941. Individuals that prefer to participate virtually must register in advance. Registration information and the final agenda will be posted two weeks in advance of the meeting on the Council's web page at
Allegra Keenoo, BLM Wyoming State Office, telephone: (307) 775-6318, email:
The Council provides recommendations to the Secretary of the Interior concerning the planning and management of the public land resources located within the State of Wyoming. Agenda topics for the September 18, 2024, meeting may include district and field manager updates and presentations on the final Rock Springs Resource Management Plan (RMP), if available, the Greater Sage Grouse RMP Amendments, the Foundation for America's Public Lands, wild horse gathers, rule implementation, the Blueprint for 21st Century Outdoor Recreation Plan, and other resource management issues the Council may raise. The Council will participate in a field tour on September 19, 2024, to view projects within the Pinedale Field Office. Members of the public are welcome on field tours but must provide their own transportation and meals.
A public comment period will be offered September 18, 2024, at 2:45 p.m. Depending on the number of persons wishing to speak and the time available, the amount of time for oral comments may be limited. Written comments for the Council may be sent electronically in advance of the scheduled meeting to the individual listed in the
Detailed minutes for Council meetings will be maintained in the BLM Wyoming State Office. Minutes will also be posted to the Council's web page at
Bureau of Land Management, Interior.
Notice.
In accordance with the Mineral Leasing Act of 1920, Mewbourne Oil Company timely filed a petition for reinstatement of competitive oil and gas lease NMNM105679576 (legacy serial number NMNM 115404) in Eddy County, New Mexico. The lessee paid the required rentals accruing from the date of termination. No lease was issued that affect these lands. The Bureau of Land Management (BLM) proposes to reinstate the lease.
Julieann Serrano, Supervisory Land Law Examiner, Branch of Adjudication, Bureau of Land Management New Mexico State Office, 301 Dinosaur Trail, Santa Fe, New Mexico 87508, (505) 954-2149,
The lessees agree to new lease terms for rentals and royalties of $20 per acre, or fraction thereof, per year, and 20 percent, respectively. The lessee agrees to additional or amended stipulations. The lessee paid the $500 administration fee for the reinstatement of the lease and $151 cost for publishing this Notice.
The lessee met the requirements for reinstatement of the lease per sections 31 (d) and (e) of the Mineral Leasing Act of 1920 (30 U.S.C. 188). The BLM is proposing to reinstate the lease effective March 1, 2006, and an extension for one year from the date the lease is reinstated in accordance with 43 CFR 3108.23(d) subject to: the original terms and conditions of the lease; additional and amended stipulations; increased rental of $20 per acre; increased royalty of 20 percent; and a one-year lease extension.
National Park Service, Interior.
Notice.
The National Park Service is soliciting electronic comments on the significance of properties nominated before July 27, 2024, for listing or related actions in the National Register of Historic Places.
Comments should be submitted electronically by August 22, 2024.
Comments are encouraged to be submitted electronically to
Sherry A. Frear, Chief, National Register of Historic Places/National Historic Landmarks Program, 1849 C Street NW, MS 7228, Washington, DC 20240,
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before July 27, 2024. Pursuant to Section 60.13 of 36 CFR part 60, comments are being accepted concerning the significance of the nominated properties under the National Register criteria for evaluation.
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.
Nominations submitted by State or Tribal Historic Preservation Officers
An owner objection received for the following resource(s):
Additional documentation has been received for the following resource(s):
On July 29, 2024, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the Middle District of North Carolina in the lawsuit entitled
The proposed Consent Decree settles the claims in the Complaint filed on June 29, 2022, which alleges that Defendants violated section 203(a) of the CAA (42 U.S.C. 7522(a) by manufacturing, selling, offering to sell, and installing aftermarket automotive products that bypass, defeat, or render inoperative motor vehicle emission controls and by failing to provide information requested by EPA. The Consent Decree settles the action by requiring Defendants to pay a $7 million penalty and comply with various measures detailed in the Consent Decree that are designed to present CAA violations from re-occurring.
The publication of this notice opens a period for public comment on the Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the Consent Decree may be examined and downloaded at this Justice Department website:
Pursuant to the authority contained in section 512 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1142, the 223rd open meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also
The three-day meeting will take place at the U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210 in Room 6, C5320. The meeting will also be accessible via teleconference and some participants, as well as members of the public, may elect to attend virtually. Instructions for public teleconference access will be available on the ERISA Advisory Council's web page at
The purpose of the open meeting is for Advisory Council members to hear testimony from invited witnesses and to receive an update from the Employee Benefits Security Administration (EBSA).
The Advisory Council is studying the following topics: (1) Making Welfare Plan Claims and Appeals Procedures More Accessible to Participants, and (2) Lifetime Income and Qualified Defined Investment Alternatives (QDIAs). Descriptions of these topics are available on the ERISA Advisory Council's web page at
Organizations or members of the public wishing to submit a written statement on any of the matters before the Advisory Council may do so on or before Tuesday, September 3, 2024, to George Pantazopoulos, Executive Secretary, ERISA Advisory Council. Statements should be transmitted electronically as an email attachment in text or pdf format to
Individuals or representatives of organizations interested in addressing the ERISA Advisory Council at the public meeting must submit a written request to the Executive Secretary on or before Tuesday, September 3, 2024, via email to
Individuals who need special accommodations should contact the Executive Secretary on or before Tuesday, September 3, 2024, via email to
For more information about the meeting, contact the Executive Secretary at the address or telephone number above.
National Archives and Records Administration (NARA).
Notice of availability of proposed records schedules; request for comments.
The National Archives and Records Administration (NARA) publishes notice of certain Federal agency requests for records disposition authority (records schedules). We publish notice in the
We must receive responses on the schedules listed in this notice by September 23, 2024.
To view a records schedule in this notice, or submit a comment on one, use the following address:
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If you are unable to comment via
Kimberly Richardson, Strategy and Performance Division, by email at
We are publishing notice of records schedules in which agencies propose to dispose of records they no longer need to conduct agency business. We invite
In addition, this notice lists the organizational unit(s) accumulating the records or states that the schedule has agency-wide applicability. It also provides the control number assigned to each schedule, which you will need if you submit comments on that schedule. We have uploaded the records schedules and accompanying appraisal memoranda to the
We will post comments, including any personal information and attachments, to the public docket unchanged. Because comments are public, you are responsible for ensuring that you do not include any confidential or other information that you or a third party may not wish to be publicly posted. If you want to submit a comment with confidential information or cannot otherwise use the
We will consider all comments submitted by the posted deadline and consult as needed with the Federal agency seeking the disposition authority. After considering comments, we may or may not make changes to the proposed records schedule. The schedule is then sent for final approval by the Archivist of the United States. After the schedule is approved, we will post on
We will post schedules on our website in the Records Control Schedule (RCS) Repository, at
Each year, Federal agencies create billions of records. To control this accumulation, agency records managers prepare schedules proposing retention periods for records and submit these schedules for NARA's approval. Once approved by NARA, records schedules provide mandatory instructions on what happens to records when no longer needed for current Government business. The records schedules authorize agencies to preserve records of continuing value in the National Archives or to destroy, after a specified period, records lacking continuing administrative, legal, research, or other value. Some schedules are comprehensive and cover all the records of an agency or one of its major subdivisions. Most schedules, however, cover records of only one office or program or a few series of records. Many of these update previously approved schedules, and some include records proposed as permanent.
Agencies may not destroy Federal records without the approval of the Archivist of the United States. The Archivist grants this approval only after thorough consideration of the records' administrative use by the agency of origin, the rights of the Government and of private people directly affected by the Government's activities, and whether or not the records have historical or other value. Public review and comment on these records schedules is part of the Archivist's consideration process.
1. Department of Defense, Department of the Army, Career Acquisition Management Portal (CAMP) Master File (DAA-AU-2024-0004).
2. HHS, Food and Drug Administration, Criminal Investigation Records of the Office of Criminal Investigations and the Office of Internal Affairs (DAA-0088-2024-0005).
3. HHS, Office of the Secretary, Records of the Office of Evaluation and Inspections (OEI) of the Inspector General (IG) of Health and Human Services (DAA-0468-2024-0003).
4. Department of Justice, Executive Office of US Trustees, Recordings of 341 Meetings (DAA-0060-2022-0018).
5. Central Intelligence Agency, Agency-wide, Due Diligence Records (DAA-0263-2023-0003).
6. National Credit Union Administration, Office of External Affairs and Communications, Web Content Records (DAA-0413-2023-0006).
7. Southeastern Power Administration, Agency-wide, Legal and Legislative Program (DAA-0388-2024-0008).
National Science Foundation.
Notice of permit modification request received and permit issued.
The National Science Foundation (NSF) is required to publish a notice of requests to modify permits issued to conduct activities regulated under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act in the Code of Federal Regulations. This is the required notice of a requested permit modification issued.
Andrew Titmus, ACA Permit Officer, Office of Polar Programs, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314; 703-292-4479; email:
The National Science Foundation (NSF), as directed by the Antarctic Conservation Act of 1978 (Pub. L. 95-541, 45 CFR part 670), as amended by the Antarctic Science, Tourism and Conservation Act of 1996, has developed regulations for the establishment of a permit system for various activities in Antarctica and designation of certain animals and certain geographic areas as requiring special protection.
Now the applicant proposes a modification to the permit to add access to ASPA 178—Inexpressible Island and Seaview Bay, Ross Sea to continue diet and foraging behavior research. The activities are consistent with the management plan for the ASPA.
The ACA Permit Officer has reviewed the modification request and has determined that the amendment is not a material change to the permit, and it will have a less than a minor or transitory impact.
National Science Foundation.
Notice of permits issued.
The National Science Foundation (NSF) is required to publish notice of permits issued under the Antarctic Conservation Act of 1978. This is the required notice.
Andrew Titmus, ACA Permit Officer, Office of Polar Programs, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314; 603-292-4479; email:
On June 18, 2024, the National Science Foundation published a notice in the
On June 26, 2024, the National Science Foundation published a notice in the
National Science Foundation.
Notice of permit modification request received and permit issued.
The National Science Foundation (NSF) is required to publish a notice of requests to modify permits issued to conduct activities regulated under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act in the Code of Federal Regulations. This is the required notice of a requested permit modification issued.
Andrew Titmus, ACA Permit Officer, Office of Polar Programs, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314; 703-292-4479; email:
The National Science Foundation (NSF), as directed by the Antarctic Conservation Act of 1978 (Pub. L. 95-541, 45 CFR part 670), as amended by the Antarctic Science, Tourism and Conservation Act of 1996, has developed regulations for the establishment of a permit system for various activities in Antarctica and designation of certain animals and certain geographic areas as requiring special protection.
Now the applicant proposes a modification to the permit to add access to ASPA 116—New College Valley, Caughley Beach, Cape Bird, Ross Island to support activities related to a review of the management plan for the ASPA. The activities are consistent with the existing activities authorized under the permit.
The ACA Permit Officer has reviewed the modification request and has determined that the amendment is not a material change to the permit, and it will have a less than a minor or transitory impact.
The permit modification was issued on July 30, 2024.
Nuclear Regulatory Commission.
Renewal of existing information collection; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) invites public comment on the renewal of Office of Management and Budget (OMB) approval for an existing collection of information. The information collection is entitled, “Facility Security Clearance and Safeguarding of National Security Information and Restricted Data.”
Submit comments by October 7, 2024. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods however, the NRC encourages electronic comment submission through the Federal rulemaking website:
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For additional direction on obtaining information and submitting comments,
David Cullison, Office of the Chief Information Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-2084; email:
Please refer to Docket ID NRC-2024-0040 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
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The NRC encourages electronic comment submission through the Federal rulemaking website (
The NRC cautions you not to include identifying or contact information in comment submissions that you do not want to be publicly disclosed in your comment submission. All comment submissions are posted at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that comment submissions are not routinely edited to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the NRC is requesting public comment on its intention to request the OMB's approval for the information collection summarized below.
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The NRC is seeking comments that address the following questions:
1. Is the proposed collection of information necessary for the NRC to properly perform its functions? Does the information have practical utility? Please explain your answer.
2. Is the estimate of the burden of the information collection accurate? Please explain your answer.
3. Is there a way to enhance the quality, utility, and clarity of the information to be collected?
4. How can the burden of the information collection on respondents be minimized, including the use of automated collection techniques or other forms of information technology?
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License amendment requests; opportunity to comment, request a hearing, and petition for leave to intervene; order.
The U.S. Nuclear Regulatory Commission (NRC or the Commission) received and is considering issuance of four amendments to Renewed Facility Operating License (RFOL) No. DPR-20, that were requested by Holtec Decommissioning International, LLC (HDI), on behalf of Holtec Palisades, LLC, to support the potential reauthorization of power operations at the Palisades Nuclear Plant (PNP). For each amendment request, the NRC proposes to determine that they involve
Comments must be filed by September 6, 2024. A request for a hearing or petition for leave to intervene must be filed by October 7, 2024. Any potential party as defined in section 2.4 of title 10 of the
You may submit comments by any of the following methods; however, the NRC encourages electronic comment submission through the Federal rulemaking website.
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Marlayna Doell, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone: 301-415-3178; email:
Please refer to Docket ID NRC-2024-0130 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
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The NRC encourages electronic comment submission through the Federal rulemaking website (
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
PNP consists of a single pressurized-water reactor located in Covert Township, Michigan, along the shoreline of Lake Michigan. Originally licensed for operation on March 24, 1971, the NRC issued a renewed operating license for PNP on January 17, 2007, with the renewed operating license term expiring on March 24, 2031.
On June 13, 2022, Entergy Operations, Inc., the licensee who operated the facility prior to transfer of control of the PNP license to HDI and Holtec Palisades, LLC, submitted certifications that it had permanently ceased operations of PNP and permanently removed fuel from the reactor vessel in accordance with paragraph 10 CFR 50.82(a)(1). When the NRC docketed the certifications, the PNP RFOL No. DPR-20 no longer authorized operation of the reactor, or emplacement or retention of fuel into the reactor vessel, as provided by 10 CFR 50.82(a)(2).
HDI is seeking to return PNP to power operations and has submitted several requests for NRC approval to support allowing the resumption of power operations through March 24, 2031, the end of the renewed facility operating license term under PNP RFOL No. DPR-20. These requests include four license amendment requests, which are the subject of this notice, a license transfer request, and an exemption request. The hearing opportunity for the license transfer request is being addressed by a separate notice published in today's issue of the
The NRC is considering issuance of amendments to RFOL No. DPR-20 that were requested by HDI, on behalf of Holtec Palisades, LLC, to support reauthorization of commercial power operations at PNP. These license amendment requests are the subject of this notice and are listed in tabular form in Section III of this document.
Before any issuance of the proposed license amendments, the NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended (the Act), and the NRC's regulations. Pursuant to Section 189a.(2) of the Act, the NRC is publishing this notice. The Act requires the Commission to publish notice of any amendments issued or proposed to be issued, and grants the Commission the authority to issue and make immediately effective any amendment to an operating license or combined license, as applicable, upon a determination by the Commission that such amendment involves no significant hazards consideration, notwithstanding
The scope of this notice is limited to comments, requests for a hearing, and petitions for leave to intervene related to the four proposed license amendment requests listed in tabular form in Section III of this document. The proposed direct transfer of the PNP license from HDI to Palisades Energy, LLC, is available for comment, as well as the opportunity to request a hearing and petition for leave to intervene, in a separate notice published in today's issue of the
The NRC staff also notes that, although the four amendment requests state that a categorical exclusion applies to the requested amendments, the NRC staff is not relying on a categorical exclusion for these actions but is instead preparing an environmental assessment (EA) to evaluate the environmental impacts from the proposed Federal actions related to reauthorizing power operations at PNP, which include the license amendment requests. The NRC's decision to prepare an EA and additional detail about the environmental review are discussed in the NRC's notice of intent to prepare an EA and conduct scoping, published on June 27, 2024 (89 FR 53659).
The Commission has made a proposed determination that the four amendment requests listed in this notice involve no significant hazards consideration. Under the Commission's regulations in 10 CFR 50.92, this means that operation of the facility in accordance with the proposed amendments would not (1) involve a significant increase in the probability or consequences of an accident previously evaluated, or (2) create the possibility of a new or different kind of accident from any accident previously evaluated, or (3) involve a significant reduction in a margin of safety. The basis for this proposed determination for each amendment request is included in the license amendment requests as referenced in tabular form in Section III of this document.
The Commission is seeking public comments on these proposed determinations. Any comments received within 30 days after the date of publication of this notice will be considered in making any final determinations.
Normally, the Commission will not issue the amendments until the expiration of 60 days after the date of publication of this notice. The Commission may issue any of these license amendments before expiration of the 60-day period provided that its final determination is that the amendment involves no significant hazards consideration. In addition, the Commission may issue any of these amendments prior to the expiration of the 30-day comment period if circumstances change during the 30-day comment period such that failure to act in a timely way would result, for example, in prevention of resumption of operation of the facility. If the Commission takes action on any of these amendments prior to the expiration of either the comment period or the notice period, it will publish a notice of issuance in the
Within 60 days after the date of publication of this notice, any person (petitioner) whose interest may be affected by any of these actions may file a request for a hearing and petition for leave to intervene (petition) with respect to that action. Petitions shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested persons should consult 10 CFR 2.309. If a petition is filed, the presiding officer will rule on the petition and, if appropriate, a notice of a hearing will be issued.
Petitions must be filed no later than 60 days from the date of publication of this notice in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document. Petitions and motions for leave to file new or amended contentions that are filed after the deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i) through (iii).
If a hearing is requested and the Commission has not made a final determination on the issue of no significant hazards consideration, the Commission will make a final determination on the issue of no significant hazards consideration, which will serve to establish when the hearing is held. If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendment and make it immediately effective, notwithstanding the request for a hearing. Any hearing would take place after issuance of the amendment. If the final determination is that the amendment request involves a significant hazards consideration, then any hearing held would take place before the issuance of the amendment unless the Commission finds an imminent danger to the health or safety of the public, in which case it will issue an appropriate order or rule under 10 CFR part 2.
A State, local governmental body, federally recognized Indian Tribe, or designated agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h) no later than 60 days from the date of publication of this notice. Alternatively, a State, local governmental body, federally recognized Indian Tribe, or agency thereof may participate as a non-party under 10 CFR 2.315(c).
For information about filing a petition and about participation by a person not a party under 10 CFR 2.315, see ADAMS Accession No. ML20340A053 (
All documents filed in NRC adjudicatory proceedings, including documents filed by an interested State, local governmental body, federally recognized Indian Tribe, or designated agency thereof that requests to participate under 10 CFR 2.315(c), must be filed in accordance with 10 CFR 2.302. The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases, to mail copies on electronic storage media, unless an exemption permitting an alternative filing method, as further discussed, is granted. Detailed guidance on electronic submissions in adjudicatory proceedings is located in the “Electronic Information Exchange System Adjudicatory User's Guide” (ADAMS Accession No. ML23150A083) and on the NRC's public website at
To comply with the procedural requirements of E-Filing, at least 10
Information about applying for a digital ID certificate is available on the NRC's public website at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public website at
Participants who believe that they have good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted in accordance with 10 CFR 2.302(b)-(d). Participants filing adjudicatory documents in this manner are responsible for serving their documents on all other participants. Participants granted an exemption under 10 CFR 2.302(g)(2) must still meet the electronic formatting requirement in 10 CFR 2.302(g)(1), unless the participant also seeks and is granted an exemption from 10 CFR 2.302(g)(1).
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket, which is publicly available at
The following table provides the topic and dates of each application, ADAMS accession number(s), and location in the application of HDI's proposed NSHC determination for each of the license amendment requests that support resumption of commercial power operation at PNP. For further details with respect to these license amendment applications, see the applications for amendment, publicly available portions of which are available for public inspection in ADAMS. For additional direction on accessing information related to these documents, see the “Obtaining Information and Submitting Comments” section of this document.
A. This Order contains instructions regarding how potential parties to this proceeding may request access to documents containing SUNSI and SGI. Requirements for access to SGI are primarily set forth in 10 CFR parts 2 and 73. Nothing in this Order is intended to conflict with the SGI regulations.
B. Within 10 days after publication of this notice of opportunity for hearing, any potential party who believes access to SUNSI and/or SGI is necessary to respond to this notice may request such access. A “potential party” is any person who intends to participate as a party by demonstrating standing and filing an admissible contention under 10 CFR 2.309. Requests for access to SUNSI and/or SGI submitted later than 10 days after publication will not be considered absent a showing of good cause for the late filing, addressing why the request could not have been filed earlier.
C. The requestor shall submit a letter requesting permission to access SUNSI, SGI, or both to the Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemakings and Adjudications Staff, and provide a copy to the Deputy General Counsel for Licensing, Hearings, and Enforcement, Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. The expedited delivery or courier mail address for both offices is: U.S. Nuclear Regulatory Commission, 11555 Rockville Pike, Rockville, Maryland 20852. The email addresses for the Office of the Secretary and the Office of the General Counsel are
(1) A description of the licensing action with a citation to this
(2) The name and address of the potential party and a description of the potential party's particularized interest that could be harmed by the action identified in C.(1).
(3) If the request is for SUNSI, the identity of the individual or entity requesting access to SUNSI and the requestor's basis for the need for the information in order to meaningfully participate in this adjudicatory proceeding. In particular, the request must explain why publicly available versions of the information requested would not be sufficient to provide the basis and specificity for a proffered contention.
(4) If the request is for SGI, the identity of each individual who would have access to SGI if the request is granted, including the identity of any expert, consultant, or assistant who will aid the requestor in evaluating the SGI. In addition, the request must contain the following information:
(a) A statement that explains each individual's “need to know” the SGI, as required by 10 CFR 73.2 and 10 CFR 73.22(b)(1). Consistent with the definition of “need to know” as stated in 10 CFR 73.2, the statement must explain:
(i) Specifically, why the requestor believes that the information is necessary to enable the requestor to proffer and/or adjudicate a specific contention in this proceeding;
(ii) The technical competence (demonstrable knowledge, skill, training or education) of the requestor to effectively utilize the requested SGI to provide the basis and specificity for a proffered contention. The technical competence of a potential party or its counsel may be shown by reliance on a
(b) A completed Form SF-85, “Questionnaire for Non-Sensitive Positions,” for each individual who would have access to SGI. The completed Form SF-85 will be used by the Office of Administration to conduct the background check required for access to SGI, as required by 10 CFR part 2, subpart C, and 10 CFR 73.22(b)(2), to determine the requestor's trustworthiness and reliability. For security reasons, Form SF-85 can only be submitted electronically through the National Background Investigation Services e-App system, a secure website that is owned and operated by the Defense Counterintelligence and Security Agency (DCSA). To obtain online access to the form, the requestor should contact the NRC's Office of Administration at 301-415-3710.
(c) A completed Form FD-258 (fingerprint card), signed in original ink, and submitted in accordance with 10 CFR 73.57(d). Copies of Form FD-258 will be provided in the background check request package supplied by the Office of Administration for each individual for whom a background check is being requested. The fingerprint card will be used to satisfy the requirements of 10 CFR part 2, subpart C, 10 CFR 73.22(b)(1), and Section 149 of the Atomic Energy Act of 1954, as amended, which mandates that all persons with access to SGI must be fingerprinted for a Federal Bureau of Investigation identification and criminal history records check.
(d) A check or money order payable in the amount of $310.00
(e) If the requestor or any individual(s) who will have access to SGI believes they belong to one or more of the categories of individuals in 10 CFR 73.59 that are exempt from the criminal history records check and background check requirements, the requestor should also provide a statement identifying which exemption the requestor is invoking and explaining the requestor's basis for believing that the exemption applies. While processing the request, the Office of Administration, Personnel Security Branch, will make a final determination whether the claimed exemption applies. Alternatively, the requestor may contact the Office of Administration for an evaluation of their exemption status prior to submitting their request. Persons who are exempt from the background check are not required to complete the SF-85 or Form FD-258; however, all other requirements for access to SGI, including the need to know, are still applicable.
Copies of documents and materials required by paragraphs C.(4)(b), (c), and (d) of this Order must be sent to the following address: U.S. Nuclear Regulatory Commission, Office of Administration, ATTN: Personnel Security Branch, Mail Stop: TWFN-07D04M, 11555 Rockville Pike, Rockville, MD 20852.
These documents and materials should
D. To avoid delays in processing requests for access to SGI, the requestor should review all submitted materials for completeness and accuracy (including legibility) before submitting them to the NRC. The NRC will return incomplete packages to the sender without processing.
E. Based on an evaluation of the information submitted under paragraphs C.(3) or C.(4), as applicable, the NRC staff will determine within 10 days of receipt of the request whether:
(1) There is a reasonable basis to believe the petitioner is likely to establish standing to participate in this NRC proceeding; and
(2) The requestor has established a legitimate need for access to SUNSI and/or a need to know the SGI requested.
F. For requests for access to SUNSI, if the NRC staff determines that the requestor has satisfied both E.(1) and E.(2), the NRC staff will notify the requestor in writing that access to SUNSI has been granted. The written notification will contain instructions on how the requestor may obtain copies of the requested documents, and any other conditions that may apply to access to those documents. These conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement or Affidavit, or Protective Order
G. For requests for access to SGI, if the NRC staff determines that the requestor has satisfied both E.(1) and E.(2), the Office of Administration will then determine, based upon completion of the background check, whether the proposed recipient is trustworthy and reliable, as required for access to SGI by 10 CFR 73.22(b). If the Office of Administration determines that the individual or individuals are trustworthy and reliable, the NRC will promptly notify the requestor in writing. The notification will provide the names of approved individuals as well as the conditions under which the SGI will be provided. These conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement or Affidavit, or Protective Order
H. Release and Storage of SGI. Prior to providing SGI to the requestor, the NRC staff will conduct (as necessary) an inspection to confirm that the recipient's information protection system is sufficient to satisfy the requirements of 10 CFR 73.22. Alternatively, recipients may opt to view SGI at an approved SGI storage location rather than establish their own SGI protection program to meet SGI protection requirements.
I. Filing of Contentions. Any contentions in these proceedings that are based upon the information received as a result of the request made for SUNSI and/or SGI must be filed by the requestor no later than 25 days after receipt of (or access to) that information. However, if more than 25 days remain between the petitioner's receipt of (or access to) the information and the deadline for filing all other contentions (as established in the notice of opportunity for hearing), the petitioner may file its SUNSI and/or SGI contentions by that later deadline.
J. Review of Denials of Access.
(1) If the request for access to SUNSI and/or SGI is denied by the NRC staff either after a determination on standing and requisite need, or after a determination on trustworthiness and reliability, the NRC staff shall immediately notify the requestor in writing, briefly stating the reason or reasons for the denial.
(2) Before the Office of Administration makes a final adverse determination regarding the trustworthiness and reliability of the proposed recipient(s) for access to SGI, the Office of Administration, in accordance with 10 CFR 2.336(f)(1)(iii), must provide the proposed recipient(s) any records that were considered in the trustworthiness and reliability determination, including those required to be provided under 10 CFR 73.57(e)(1), so that the proposed recipient(s) have an opportunity to correct or explain the record.
(3) The requestor may challenge the NRC staff's adverse determination regarding access to SUNSI or with respect to standing or need to know for SGI by filing a challenge within 5 days of receipt of that determination with: (a) the presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if this individual is unavailable, another administrative judge or an Administrative Law Judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) if another officer has been designated to rule on information access issues, with that officer.
(4) The requestor may challenge the Office of Administration's final adverse determination with respect to trustworthiness and reliability for access to SGI by filing a request for review in accordance with 10 CFR 2.336(f)(1)(iv).
(5) Further appeals of decisions under this paragraph must be made pursuant to 10 CFR 2.311.
K. Review of Grants of Access. A party other than the requestor may challenge an NRC staff determination granting access to SUNSI whose release would harm that party's interest independent of the proceeding. Such a challenge must be filed within 5 days of the notification by the NRC staff of its grant of access and must be filed with: (a) the presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if this individual is unavailable, another administrative judge or an Administrative Law Judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) if another officer has been designated to rule on information access issues, with that officer.
If challenges to the NRC staff determinations are filed, these procedures give way to the normal process for litigating disputes concerning access to information. The availability of interlocutory review by the Commission of orders ruling on such NRC staff determinations (whether granting or denying access) is governed by 10 CFR 2.311.
L. The Commission expects that the NRC staff and presiding officers (and any other reviewing officers) will consider and resolve requests for access to SUNSI and/or SGI, and motions for protective orders, in a timely fashion in order to minimize any unnecessary delays in identifying those petitioners who have standing and who have propounded contentions meeting the specificity and basis requirements in 10 CFR part 2. The attachment to this Order summarizes the general target schedule for processing and resolving requests under these procedures.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Application for direct transfer of license; opportunity to comment, request a hearing, and petition for leave to intervene.
The U.S. Nuclear Regulatory Commission (NRC) received and is considering approval of an application filed on December 6, 2023, by Holtec Decommissioning International, LLC (HDI), on behalf of itself, Holtec Palisades, LLC, and Palisades Energy, LLC (collectively, the Applicants), regarding the proposed transfer of control of Renewed Facility Operating License (RFOL) No. DPR-20 for the Palisades Nuclear Plant (PNP) and the general license for the Palisades Independent Spent Fuel Storage Installation (ISFSI). HDI and Holtec Palisades, LLC, are the current license holders. The application seeks NRC approval of the direct transfer of control of PNP RFOL No. DPR-20 and the Palisades ISFSI general license from HDI to Palisades Energy, LLC (the proposed new licensed operator). The NRC is also considering amending the RFOL for administrative purposes to reflect the proposed transfer. The application contains sensitive unclassified non-safeguards information (SUNSI).
Submit comments by September 6, 2024. A request for a hearing must be filed by August 27, 2024. Any person who has requested, or who may intend to request, a hearing or petition to intervene in this proceeding, who believes access to SUNSI is necessary to respond to this notice must follow the instructions in Section VI of the
You may submit comments by any of the following methods; however, the NRC encourages electronic comment submission through the Federal rulemaking website:
• Federal rulemaking website: Go to
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Marlayna Doell, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-3178; email:
Please refer to Docket ID NRC-2024-0128 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
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The NRC encourages electronic comment submission through the Federal rulemaking website (
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
PNP consists of a single pressurized-water reactor located in Covert Township, Michigan, along the shoreline of Lake Michigan. Originally licensed for operation on March 24, 1971, the NRC issued a renewed operating license for PNP on January 17, 2007, with the renewed operating license term expiring on March 24, 2031.
On June 13, 2022, Entergy Operations, Inc., the licensee who operated the facility prior to transfer of control of the PNP license to HDI and Holtec Palisades, LLC, submitted certifications that it had permanently ceased operations of PNP and permanently removed fuel from the reactor vessel in accordance with paragraph 50.82(a)(1) of title 10 of the
HDI is seeking to return PNP to power operations and has submitted several requests for NRC approval to support allowing the resumption of power operations through March 24, 2031, the end of the renewed facility operating license term under PNP RFOL No. DPR-20. These requests include the license transfer application, which is the subject of this notice, and four license amendment requests. The hearing opportunity for the four license amendment requests is being addressed by a separate notice published in today's issue of the
The NRC is considering the issuance of an order under 10 CFR 50.80 approving the direct transfer of control of RFOL No. DPR-20 for PNP and the general license for the Palisades ISFSI, from HDI to Palisades Energy, LLC, which would be the new licensed operator. The application states that this proposed transfer of operating authority would be conditioned on HDI's receipt of the NRC approvals necessary to resume full-power operation of PNP. Thus, implementation of the proposed direct transfer of control of the license, would make Palisades Energy, LLC, responsible for the operation and maintenance of PNP as licensed for full-power reactor operation. The proposed transfer would also involve the issuance of a conforming license amendment.
According to the application, HDI is requesting NRC approval to transfer operational authority to Palisades Energy, LLC, and to vest in Palisades Energy, LLC, exclusive control of operation and maintenance of PNP. Palisades Energy, LLC, is an indirect, wholly owned subsidiary of Holtec International, formed, staffed, and resourced by Holtec International specifically for power operations of PNP. As described in the application, Palisades Energy, LLC, will be resourced with the appropriate operational experience and the programmatic expertise to conduct licensed power operations activities at PNP. Holtec Palisades, LLC, will remain the licensed owner, the beneficiary of the PNP decommissioning trust fund, and the party to the Standard Contract for Disposal of Spent Nuclear Fuel. No changes are being made to the Big Rock Point license, which will remain owned by Holtec Palisades, LLC, and operated by HDI. No physical changes to the Palisades Nuclear Plant or Palisades ISFSI are being proposed in the transfer application.
The scope of this notice is limited to comments, requests for a hearing, and petitions for leave to intervene related to the proposed direct transfer of control of the PNP RFOL No. DPR-20 and the Palisades ISFSI general license from HDI to Palisades Energy, LLC. The four license amendment requests associated with potential reauthorization of power operations at PNP are available for comment, as well as the opportunity to request a hearing and petition for leave to intervene, in a separate notice published in today's issue of the
The NRC staff also notes that, although the transfer application states that a categorical exclusion applies to the proposed transfer, the NRC staff is not relying on a categorical exclusion for this action but is instead preparing an environmental assessment (EA) to evaluate the environmental impacts from the proposed Federal actions related to reauthorizing power operations at PNP, which include the proposed license transfer. The NRC's decision to prepare an EA and additional detail about the environmental review are discussed in the NRC's notice of intent to prepare an EA and conduct scoping, published on June 27, 2024 (89 FR 53659).
The NRC's regulations at 10 CFR 50.80 state that no license for a production or utilization facility, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission gives its consent in writing. The Commission will approve an application for the transfer of a license if the Commission determines that the proposed transferee is qualified to hold the license, and that the transfer is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission.
Before issuance of the proposed conforming license amendment, the Commission will have made findings required by the Atomic Energy Act of 1954, as amended, and the Commission's regulations.
As provided in 10 CFR 2.1315, unless otherwise determined by the Commission with regard to a specific application, the Commission has determined that any amendment to the license of a utilization facility, or to the
Within 30 days from the date of publication of this notice, persons may submit written comments regarding the license transfer application, as provided for in 10 CFR 2.1305. The Commission will consider and, if appropriate, respond to these comments, but such comments will not otherwise constitute part of the decisional record. Comments should be submitted as described in the
Within 20 days after the date of publication of this notice, any person (petitioner) whose interest may be affected by this action may file a request for a hearing and petition for leave to intervene (petition) with respect to the action. Petitions shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested persons should consult 10 CFR 2.309. If a petition is filed, the presiding officer will rule on the petition and, if appropriate, a notice of a hearing will be issued.
Petitions must be filed no later than 20 days from the date of publication of this notice in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document. Petitions and motions for leave to file new or amended contentions that are filed after the deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i) through (iii).
A State, local governmental body, Federally recognized Indian Tribe, or designated agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h) no later than 20 days from the date of publication of this notice. Alternatively, a State, local governmental body, Federally recognized Indian Tribe, or agency thereof may participate as a non-party under 10 CFR 2.315(c).
For information about filing a petition and about participation by a person not a party under 10 CFR 2.315, see ADAMS Accession No. ML20340A053 (
All documents filed in NRC adjudicatory proceedings, including documents filed by an interested State, local governmental body, Federally recognized Indian Tribe, or designated agency thereof that requests to participate under 10 CFR 2.315(c), must be filed in accordance with 10 CFR 2.302. The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases, to mail copies on electronic storage media, unless an exemption permitting an alternative filing method, as further discussed, is granted. Detailed guidance on electronic submissions in adjudicatory proceedings is located in the “Electronic Information Exchange System Adjudicatory User's Guide” (ADAMS Accession No. ML23150A083) and on the NRC's public website at
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public website at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public website at
Participants who believe that they have good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted in accordance with 10 CFR 2.302(b)-(d). Participants filing adjudicatory documents in this manner are responsible for serving their documents on all other participants. Participants granted an exemption under 10 CFR 2.302(g)(2) must still meet the electronic formatting requirement in 10 CFR 2.302(g)(1), unless the participant also seeks and is granted an exemption from 10 CFR 2.302(g)(1).
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket, which is publicly available at
The Commission will issue a notice or order granting or denying a hearing request or intervention petition, designating the issues for any hearing that will be held and designating the Presiding Officer. A notice granting a hearing will be published in the
For further details with respect to this application, see the application dated December 6, 2023 (ADAMS Accession No. ML23340A161), as supplemented on May 23, 2024 (ADAMS Accession No. ML24144A106).
Any person who desires access to proprietary, confidential commercial information that has been redacted from the application should contact the applicant by telephoning Jason Day, HDI General Counsel, at 856-797-0900, extension 3688, or
For the Nuclear Regulatory Commission.
The U.S. Nuclear Waste Technical Review Board will hold a hybrid (in-person/virtual) public meeting on August 29, 2024.
Pursuant to its authority under section 5051 of Public Law 100-203, Nuclear Waste Policy Amendments Act (NWPAA) of 1987, the U.S. Nuclear Waste Technical Review Board will hold a hybrid (in-person/virtual) meeting in North Augusta, South Carolina, on Thursday, August 29, 2024, to review information on the U.S. Department of Energy's (DOE) management and plans for disposal of DOE spent nuclear fuel (SNF). The meeting will begin with a program update from DOE's Office of Nuclear Energy (DOE-NE) on its reprioritization of storage, transportation, and disposal research and development (R&D) activities. One speaker will also provide an update on DOE-NE's federal consolidated interim storage facility for commercial SNF and consent-based siting efforts.
The hybrid (in-person/virtual) meeting will be held at the Crowne Plaza North Augusta at 1060 Center Street in North Augusta, South Carolina. The hotel telephone number is 803-349-8400. The hotel website is
The meeting will be open to the public, and there will be an opportunity for public comment at the end of the meeting. Those attending the meeting in person and wishing to provide oral comments are encouraged to sign-in using the Public Comment Register at the check-in table near the entrance to the meeting room. Oral commenters will be taken in the order in which they signed in. Public comments may also be submitted during the meeting via the online meeting viewing platform, using the “Comment for the Record” form. Comments submitted online during the day of the meeting may be read into the record by Board staff during the public comment period if time allows. Depending on the number of speakers and online comments, a time limit on individual remarks may be set. Written comments of any length may be submitted to the Board staff by mail or electronic mail. Comments received in writing will be included in the meeting record, which will be posted on the Board's website. An archived recording of the meeting will be available on the Board's website following the meeting, and a transcript of the meeting will be available on the website by November 1, 2024.
The Board is an independent federal agency in the Executive Branch. It was established in the Nuclear Waste Policy Amendments Act of 1987 (Pub. L. 100-203) to perform ongoing evaluation of the technical and scientific validity of U.S. Department of Energy activities related to developing and implementing a program for the management and disposal of spent nuclear fuel and high-level radioactive waste, in accordance with the terms of the Nuclear Waste Policy Act of 1982. Board members serve part-time and are appointed by the President from a list of nominees submitted by the National Academy of Sciences. The Board reports its findings, conclusions, and recommendations to Congress and the Secretary of Energy. Board reports, correspondence, congressional testimony, meeting transcripts, and related materials are posted on the Board's website.
For information regarding the meeting, contact Mr. Christopher Burk at
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the Market Dominant or the Competitive product list, or the modification of an existing product currently appearing on the Market Dominant or the Competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's website (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern Market Dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern Competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II.
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This Notice will be published in the
Notice is hereby given that the Securities and Exchange Commission (“Commission”) has issued an Order,
Section 19(g)(1) of the Act,
Section 17(d)(1) of the Act
To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d-1 and Rule 17d-2 under the Act.
To address regulatory duplication in these and other areas, the Commission adopted Rule 17d-2 under the Act.
On December 11, 2007, the Commission declared effective the Participating Organizations' Plan for allocating regulatory responsibilities pursuant to Rule 17d-2.
The Plan is designed to reduce regulatory duplication for common members by allocating regulatory responsibility for certain options-related market surveillance matters among the Participating Organizations. Generally, under the Plan, a Participating Organization will serve as the Designated Options Surveillance Regulator (“DOSR”) for each common member assigned to it and will assume regulatory responsibility with respect to that common member's compliance with applicable common rules for certain accounts. When an SRO has been named as a common member's DOSR, all other SROs to which the common member belongs will be relieved of regulatory responsibility for that common member, pursuant to the terms of the Plan, with respect to the applicable common rules specified in Exhibit A to the Plan.
On July 31, 2024, the parties submitted a proposed amendment to the Plan. The primary purpose of the amendment is to add MIAX Sapphire as a Participant to the Plan. The text of the proposed amended 17d-2 plan is as follows (additions are
This agreement (this “Agreement”), by and among NYSE American LLC (“NYSE American”), Cboe BZX Exchange, Inc., (“BZX”), the Cboe EDGX Exchange, Inc. (“EDGX”), Cboe C2 Exchange, Inc. (“C2”), Cboe Exchange, Inc. (“Cboe”), Nasdaq ISE, LLC (“ISE”), Financial Industry Regulatory Authority, Inc. (“FINRA”), NYSE Arca, Inc. (“Arca”), The Nasdaq Stock Market LLC (“Nasdaq”), BOX Exchange LLC (“BOX”), Nasdaq BX, Inc. (“BX”), Nasdaq PHLX LLC (“PHLX”), Miami International Securities Exchange, LLC (“MIAX”), Nasdaq GEMX, LLC (“GEMX”), Nasdaq MRX, LLC (“MRX”), MIAX PEARL, LLC (“MIAX PEARL”), MIAX Emerald, LLC (“MIAX Emerald”),
I. Except as otherwise provided in this Agreement, each Participant shall assume Regulatory Responsibility (as defined below) for the Common Members that are allocated or assigned to such Participant in accordance with the terms of this Agreement and shall be relieved of its Regulatory Responsibility as to the remaining Common Members. For purposes of this Agreement, a Participant shall be considered to be the Designated Options Surveillance Regulator (“DOSR”) for each Common Member that is allocated to it in accordance with Section VII.
II. As used in this Agreement, the term “Regulatory Responsibility” shall mean surveillance, investigation and enforcement responsibilities relating to compliance by the Common Members with such Options rules of the Participants as the Participants shall determine are substantially similar and shall approve from time to time, insofar as such rules relate to market surveillance (collectively, the “Common Rules”). For the purposes of this Agreement the list of Common Rules is attached as Exhibit A hereto, which may only be amended upon unanimous written agreement by the Participants. The DOSR assigned to each Common Member shall assume Regulatory Responsibility with regard to that Common Member's compliance with the applicable Common Rules for certain accounts.
The term “Regulatory Responsibility” does not include, and each Participant shall retain full responsibility with respect to:
(a) surveillance, investigative and enforcement responsibilities other than those included in the definition of Regulatory Responsibility;
(b) any aspects of the rules of a Participant that are not substantially similar to the Common Rules or that are allocated for a separate surveillance purpose under any other agreement made pursuant to Rule 17d-2. Any such aspects of a Common Rule will be noted as excluded on Exhibit A.
With respect to options position limits, the term Regulatory Responsibility shall include examination responsibilities for the delta hedging exemption. Specifically, the Participants intend that FINRA will conduct examinations for delta hedging for all Common Members that are members of FINRA notwithstanding the fact that FINRA's position limit rule is, in some cases, limited to only firms that are not members of an options exchange (
III. Each year within 30 days of the anniversary date of the commencement of operation of this Agreement, or more frequently if required by changes in the rules of a Participant, each Participant shall submit to the other Participants, through the Chair of the OSG, an updated list of Common Rules for review. This updated list may add Common Rules to Exhibit A, shall delete from Exhibit A rules of that Participant that are no longer identical or substantially similar to the Common Rules, and shall confirm that the remaining rules of the Participant included on Exhibit A continue to be identically or substantially similar to the Common Rules. Within 30 days from the date that each Participant has received revisions to Exhibit A from the Chair of the OSG, each Participant shall confirm in writing to the Chair of the OSG whether that Participant's rules listed in Exhibit A are Common Rules.
IV. Apparent violation of another Participant's rules discovered by a DOSR, but which rules are not within the scope of the discovering DOSR's Regulatory Responsibility, shall be referred to the relevant Participant for such action as is deemed appropriate by that Participant.
Notwithstanding the foregoing, nothing contained herein shall preclude a DOSR in its discretion from requesting that another Participant conduct an investigative or enforcement proceeding (“Proceeding”) on a matter for which the requesting DOSR has Regulatory Responsibility. If such other Participant agrees, the Regulatory Responsibility in such case shall be deemed transferred to the accepting Participant and confirmed in writing by the Participants involved. Additionally, nothing in this Agreement shall prevent another Participant on whose market potential violative activity took place from conducting its own Proceeding on a matter. The Participant conducting the Proceeding shall advise the assigned DOSR. Each Participant agrees, upon request, to make available promptly all relevant files, records and/or witnesses necessary to assist another Participant in a Proceeding.
V. The OSG shall be composed of one representative designated by each of the Participants (a “Representative”). Each Participant shall also designate one or more persons as its alternate representative(s) (an “Alternate Representative”). In the absence of the Representative, the Alternate Representative shall assume the powers, duties and responsibilities of the Representative. Each Participant may at any time replace its Representative and/or its Alternate Representative to the Group.
The Group will have a Chair, Vice Chair and Secretary. A different Participant will assume each position on a rotating basis for a one-year term. In the event that a Participant replaces a Representative who is acting as Chair, Vice Chair or Secretary, the newly appointed Representative shall assume the position of Chair, Vice Chair, or Secretary (as applicable) vacated by the Participant's former Representative. In the event a Participant cannot fulfill its duties as Chair, the Participant serving as Vice Chair shall substitute for the Chair and complete the subject unfulfilled term. All notices and other communications for the OSG are to be sent in care of the Chair and, as appropriate, to each Representative.
VI. The OSG shall determine the times and locations of Group meetings, provided that the Chair, acting alone, may also call a meeting of the Group in the event the Chair determines that there is good cause to do so. To the extent reasonably possible, notice of any meeting shall be given at least ten business days prior to the meeting date. Representatives shall always be given the option of participating in any meeting telephonically at their own expense rather than in person.
VII. No less frequently than every two years, in such manner as the Group deems appropriate, the OSG shall allocate Common Members that conduct an Options business among the Participants (“Allocation”), and the Participant to which a Common Member is allocated will serve as the DOSR for that Common Member. Any Allocation shall be based on the following principles, except to the extent all affected Participants consent to one or more different principles:
(a) The OSG may not allocate a Common Member to a Participant unless the Common Member is a member of that Participant.
(b) To the extent practicable, Common Members that conduct an Options business shall be allocated among the Participants of which they are members in such manner as to equalize as nearly as possible the allocation among such Participants, provided that no Common Members shall be allocated to FINRA. For example, if sixteen Common Members that conduct an Options business are members only of three Participants, none of which is FINRA, those Common Members shall be allocated among the three Participants such that no Participant is allocated more than six such members and no Participant is allocated less than five such members. If, in the previous example, one of the three Participants is FINRA, the sixteen Common Members would be allocated evenly between the remaining Participants, so that the two non-FINRA Participants would be allocated eight Common Members each.
(c) To the extent practicable, Allocation shall take into account the amount of Options activity conducted by each Common Member in order to most evenly divide the Common Members with the largest amount of activity among the Participants of which they are members. Allocation will also take into account similar allocations pursuant to other plans or agreements to which the Common Members are party
(d) To the extent practicable, Allocation of Common Members to Participants will be rotated among the applicable Participants such that a Common Member shall not be allocated to a Participant to which that Common Member was allocated within the previous two years. The assignment of DOSRs pursuant to the Allocation is attached as Exhibit B hereto, and will be updated from time to time to reflect Common Member Allocation changes.
(e) The Group may reallocate Common Members from time-to-time, as it deems appropriate.
(f) Whenever a Common Member ceases to be a member of its DOSR, the DOSR shall promptly inform the Group, which shall review the matter and allocate the Common Member to another Participant.
(g) A DOSR may request that a Common Member to which it is assigned be reallocated to another Participant by giving 30 days written notice to the Chair of the OSG. The Group, in its discretion, may approve such request and reallocate the Common Member to another Participant.
(h) All determinations by the Group with respect to Allocation shall be made by the affirmative vote of a majority of the Participants that, at the time of such determination, share the applicable Common Member being allocated; a Participant shall not be entitled to vote on any Allocation relating to a Common Member unless the Common Member is a member of such Participant.
VIII. Each DOSR shall conduct routine surveillance reviews to detect violations of the applicable Common Rules by each Common Member allocated to it with a frequency (daily, weekly, monthly, quarterly, semi-annually or annually as noted on Exhibit A) not less than that determined by the Group. The other Participants agree that, upon request, relevant information in their respective files relative to a Common Member will be made available to the applicable DOSR. In addition, each Participant shall provide, to the extent not otherwise already provided, information pertaining to its surveillance program that would be relevant to FINRA or the Participant(s) conducting routine examinations for the delta hedging exemption.
At each meeting of the OSG, each Participant shall be prepared to report on the status of its surveillance program for the previous quarter and any period prior thereto that has not previously been reported to the Group. In the event a DOSR believes it will not be able to complete its Regulatory Responsibility for its allocated Common Members, it will so advise the Group in writing promptly. The Group will undertake to remedy this situation by reallocating the subject Common Members among the remaining Participants. In such instance, the Group may determine to impose a regulatory fee for services provided to the DOSR that was unable to fulfill its Regulatory Responsibility.
IX. Each Participant will, upon request, promptly furnish a copy of the report or applicable portions thereof relating to any investigation made pursuant to the provisions of this Agreement to each other Participant of which the Common Member under investigation is a member.
X. Each Participant will routinely populate a common database, to be accessed by the Group relating to any formal regulatory action taken during the course of a Proceeding with respect to the Common Rules concerning a Common Member.
XI. Any written notice required or permitted to be given under this Agreement shall be deemed given if sent by certified mail, return receipt requested, to any Participant to the attention of that Participant's Representative, to the Participant's principal place of business or by email at such address as the Representative shall have filed in writing with the Chair.
XII. The costs incurred by each Participant in discharging its Regulatory Responsibility under this Agreement are not reimbursable. However, any of the Participants may agree that one or more will compensate the other(s) for costs incurred.
XIII. The Participants shall notify the Common Members of this Agreement by means of a uniform joint notice approved by the Group. Each Participant will notify the Common Members that have been allocated to it that such Participant will serve as DOSR for that Common Member.
XIV. This Agreement shall be effective upon approval of the Commission. This Agreement may only be amended in writing duly approved by each Participant. All amendments to this Agreement, excluding changes to Exhibits A, B and C, must be filed with and approved by the Commission.
XV. Any Participant may manifest its intention to cancel its participation in this Agreement at any time upon providing written notice to (i) the Group six months prior to the date of such cancellation, or such other period as all the Participants may agree, and (ii) the Commission. Upon receipt of the notice the Group shall allocate, in accordance with the provisions of this Agreement, those Common Members for which the canceling Participant was the DOSR. The canceling Participant shall retain its Regulatory Responsibility and other rights, privileges and duties pursuant to this Agreement until the Group has completed the reallocation as described above, and the Commission has approved the cancellation.
XVI. The cancellation of its participation in this Agreement by any Participant shall not terminate this Agreement as to the remaining Participants. This Agreement will only terminate following notice to the Commission, in writing, by the then Participants that they intend to terminate the Agreement and the expiration of the applicable notice period. Such notice shall be given at least six months prior to the intended date of termination, or such other period as all the Participants may agree. Such termination will become effective upon Commission approval.
XVII. Participation in the Group shall be strictly limited to the Participants and no other party shall have any right to attend or otherwise participate in the Group except with the unanimous approval of all Participants. Notwithstanding the foregoing, any national securities exchange registered with the SEC under Section 6(a) of the Act or any national securities association registered with the SEC under section 15A of the Act may become a Participant to this Agreement provided that: (i) such applicant has adopted rules substantially similar to the Common Rules, and received approval thereof from the SEC; (ii) such applicant has provided each Participant with a signed statement whereby the applicant agrees to be bound by the terms of this Agreement to the same effect as though it had originally signed this Agreement and (iii) an amended agreement reflecting the addition of such applicant as a Participant has been filed with and approved by the Commission.
XVIII. This Agreement is wholly separate from the multiparty Agreement made pursuant to Rule 17d-2 by and among [the NYSE American LLC,] the Cboe BZX Exchange, Inc., BOX Exchange LLC, [the C2 Exchange, Inc., the] Cboe Exchange, Inc.,
No Participant nor the Group nor any of their respective directors, governors, officers, employees or representatives shall be liable to any other Participant in this Agreement for any liability, loss or damage resulting from or claimed to have resulted from any delays, inaccuracies, errors or omissions with respect to the provision of Regulatory Responsibility as provided hereby or for the failure to provide any such Regulatory Responsibility, except with respect to such liability, loss or damages as shall have been suffered by one or more of the Participants and caused by the willful misconduct of one or more of the other Participants or its respective directors, governors, officers, employees or representatives. No warranties, express or implied, are made by the Participants, individually or as a group, or by the OSG with respect to any Regulatory Responsibility to be performed hereunder.
Pursuant to Section 17(d)(1)(A) of the Exchange Act and Rule 17d-2, the Participants join in requesting the Commission, upon its approval of this Agreement or any part thereof, to relieve the Participants that are party to this Agreement and are not the DOSR as to a Common Member of any and all Regulatory Responsibility with respect to the matters allocated to the DOSR.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.
In Witness Whereof, the Participants hereto have executed this Agreement as of the date and year first above written.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing. 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.
The Commission finds that the proposed Amended Plan is consistent with the factors set forth in Section 17(d) of the Act
This order gives effect to the amended Plan submitted to the Commission that is contained in File No. 4-551.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission” or “SEC”).
Notice.
Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
The Commission:
Laura L. Solomon, Senior Counsel, or Kyle R. Ahlgren, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
For Applicants' representations, legal analysis, and conditions, please refer to Applicants' third amended and restated application, dated July 23, 2024, which may be obtained via the Commission's website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC's EDGAR system.
The SEC's EDGAR system may be searched at
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The MSRB filed with the Commission a proposed rule change to amend the MSRB's Real-Time Transaction Reporting System and Price Dissemination Information Facility (“IF-1”) to consolidate access by subscribers to the real-time transaction data residing within the Real-Time Transaction Reporting System (“RTRS”) through a web service and to fully retire the Transmission Control Protocol secure socket connection (“TCP secure socket connection”) (the “proposed rule change”).
The MSRB has filed the proposed rule change under Section 19(b)(3)(A)(iii) of the Exchange Act
The text of the proposed rule change is available on the MSRB's website at
In its filing with the Commission, the MSRB 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 MSRB has prepared summaries, set forth in
MSRB Rule G-14, on transaction reporting, requires brokers, dealers and municipal securities dealers (“dealers”), and associated persons to report executed transactions in municipal securities to RTRS, with limited exceptions. The MSRB disseminates trade reporting information from RTRS to subscribers through certain data subscription feeds.
The MSRB has utilized a socket service-based technology since the introduction of RTRS in 2005, with the current version consisting of the TCP secure socket connection. The MSRB later added the web service in 2018 as an additional connectivity option to obtain real time transaction data through the Real-Time Subscription.
The MSRB has determined to consolidate access by subscribers to the Real-Time Subscription through the web service and to retire the older TCP secure socket connection. The purpose of the proposed rule change is to amend IF-1 to remove the reference to the TCP secure socket connection therein to reflect its retirement. Current subscribers using the TCP secure socket connection that wish to continue receiving the real-time transaction data subscription would need to migrate to the web service. The MSRB expects that, upon migration, these subscribers would experience improvements in the consistency and reliability of receiving trade data information in real-time.
The MSRB would announce the operative date of the proposed rule change, which would be no earlier than 30 days following the filing of the proposed rule change with the Commission, in a regulatory notice to be published on the MSRB website. The operative date will be the earlier of nine months following the filing date or the day by which all subscribers are deemed to have discontinued the use of the TCP secure socket connection. The MSRB intends to engage in outreach efforts to impacted subscribers to support the transition from the TCP secure socket connection to the web service.
Lastly, the proposed rule change also includes minor language changes to improve the readability and technical accuracy of the rule. These changes include adding the word “disseminated” to better describe the mechanics of the Real-Time Subscription, adding the article “a” to clarify the use of a single connection, and changing “connecting with RTRS” to “connected to RTRS” to more accurately describe the connection between the web service and RTRS.
The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2) of the Exchange Act,
The proposed rule change would improve subscribers' experience using the Real-Time Subscription to receive trade data. As noted above, the TCP secure socket connection has become less reliable than the web service, with greater susceptibility for individual subscribers to experience sporadic temporary connection problems and requiring the intervention and resources of information technology support resources from both the MSRB and individual subscribers for resolving such issues. By consolidating subscriber connection to only the web service, the MSRB can also streamline technical support for the web service and provide an improved user experience for subscribers.
These improvements in the resiliency and efficiency of the Real-Time Subscription will further remove impediments to and perfect the mechanism of a free and open market in municipal securities by making it more likely that subscribers to the Real-Time Subscription receive continuous transaction information. Therefore, the MSRB believes that the proposed rule change satisfies the applicable requirements of Section 15B(b)(2)(C) of the Exchange Act.
Section 15B(b)(2)(C) of the Exchange Act
The proposed rule change is of a technical nature. This proposed rule change to IF-1 would remove references to the “TCP secure socket connection” for access to RTRS data to correspond to the MSRB's planned retirement of that connection for a subset of subscribers. Subscribers presently using the TCP secure socket connection would need to convert to web service for messaging with RTRS. However, with the introduction of a more modern technology infrastructure, issues for individual subscribers using the TCP secure socket connection have increased, and MSRB staff has spent time and resources troubleshooting problems and restoring connectivity to individual subscribers. The MSRB expects that such efforts would need to be continued on a longer-term basis so long as the TCP secure socket connection is available. Subscribers using the TCP secure socket connection are burdened with the higher level of service disruptions and inquiries to MSRB support staff as compared to subscribers through the web service.
By retiring the TCP secure socket connection, the MSRB is expected to focus its resources on one method of connection, therefore improving the reliability, availability, and supportability of the Real-Time Subscription. This in turn will benefit the current TCP secure socket connection users with a more reliable connection if they choose to continue their Real-Time Subscription and migrate to the web service. The MSRB believes the proposed rule change, while requiring some initial adjustments by subscribers who currently use the TCP secure socket connection to rewrite, or retrofit, their code for the use of the web service, would reduce connection problems for subscribers and therefore improve market efficiency in the longer term. The proposed rule change would not modify the MSRB's administration of RTRS in collecting and disseminating information to the EMMA® website publicly for transactions in the municipal securities market. Accordingly, the MSRB does not believe that the proposed rule change would result in any burden on competition that is not necessary or appropriate in furtherance of the Exchange Act.
Written comments were neither solicited nor received on the proposed rule change.
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) of the Exchange 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 Exchange 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.
For the Commission, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to modify Rule 7.31-E regarding MPL-ALO Orders. The proposed rule change is available on the Exchange's 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 those 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 parts of such statements.
The Exchange proposes to amend Rule 7.31-E regarding MPL-ALO Orders.
Rule 7.31-E(d)(3) defines a Mid-Point Liquidity Order (“MPL Order”) as a Limit Order to buy (sell) that is not displayed and does not route, with a working price at the lower (higher) of the midpoint of the PBBO or its limit price. An MPL Order is ranked Priority 3—Non-Display Orders, is valid for any session, and does not participate in auctions.
Rule 7.31-E(d)(3)(A) provides that an MPL Order to buy (sell) must be designated with a limit price in the MPV for the security and will be eligible to trade at the working price of the order.
Rule 7.31-E(d)(3)(B) provides that if there is no PBB, PBO, or the PBBO is locked or crossed, both an arriving and resting MPL Order will wait for a PBBO that is not locked or crossed before being eligible to trade. If a resting MPL Order to buy (sell) trades with an MPL Order to sell (buy) after there is an unlocked or uncrossed PBBO, the MPL Order with the later working time will be the liquidity-removing order.
Rule 7.31-E(d)(3)(C) provides that an Aggressing MPL Order to buy (sell) will trade at the working price of resting orders to sell (buy) when such resting orders have a working price at or below (above) the working price of the MPL Order. Resting MPL Orders to buy (sell) will trade against all Aggressing Orders to sell (buy) priced at or below (above) the working price of the MPL Order.
Rule 7.31-E(d)(3)(D) provides that an MPL Order may be designated IOC (“MPL-IOC Order”). Subject to such IOC instructions, an MPL-IOC Order will follow the same trading and priority rules as an MPL Order, expect that an MPL-IOC Order will be rejected if there is no PBBO or the PBBO is locked or crossed. An MPL-IOC Order cannot be designated ALO or with a Non-Display Remove Modifier.
Rule 7.31-E(d)(3)(E) and the subparagraphs thereunder define the MPL-ALO Order, which is an MPL Order designated with an ALO Modifier.
Currently, Aggressing MPL-ALO Orders to buy (sell) may trade with resting orders priced below (above) the less aggressive of the midpoint of the PBBO or the limit price of the MPL-ALO Order (
The Exchange next proposes to amend Rule 7.31-E(d)(3)(E)(ii) to provide that an MPL-ALO Order not eligible to trade as described in proposed Rule 7.31-E(d)(3)(E)(i) would be ranked in the NYSE Arca Book at its working price and would not trade at that price if it would lock or cross displayed interest or cross non-displayed interest on the NYSE Arca Book. Specifically, the Exchange proposes to add new Rules 7.31-E(d)(3)(E)(ii)(a) and (b) to provide that resting MPL-ALO Orders would not be eligible to trade (a) at a price equal to or above (below) any sell (buy) orders that are displayed and that have a working price equal to or below (above) the working price of the MPL-ALO Order, or (b) at a price above (below) any sell (buy) orders that are not displayed and that have a working price below (above) the working price of the MPL-ALO Order. The Exchange notes
The Exchange further proposes to renumber current Rule 7.31-E(d)(3)(E)(ii) as Rule 7.31-E(d)(3)(E)(iii) and to amend the text of the rule to provide that if an MPL-ALO Order to buy (sell) cannot trade with a same-priced resting order to sell (buy) that is not displayed, a subsequently arriving order to sell (buy) eligible to trade at the working price of the MPL-ALO Order will trade ahead of such resting order to sell (buy). This proposed change is not intended to change the meaning of the rule, but rather to clarify that, if an MPL-ALO Order is resting at the same price as resting non-displayed interest, a subsequently arriving order that is eligible to trade with that MPL-ALO Order would, as currently, be permitted to trade ahead of such interest. The Exchange further proposes to delete the last sentence of current Rule 7.31-E(d)(3)(E)(ii), which provides that an MPL-ALO Order would not be eligible to trade at the price of a displayed resting order to buy (sell), as duplicative of proposed Rule 7.31-E(d)(3)(E)(ii)(a) described above.
The following example demonstrates how an arriving Aggressing MPL-ALO Order would trade or be ranked on the NYSE Arca Book, as proposed:
• Assume the PBBO
• Order 3 is an incoming MPL-ALO Order to buy 100 shares at $10.05. Order 3, as an Aggressing MPL-ALO Order, would not trade with either Order 1 or Order 2 because it would receive less than $0.01 price improvement over the midpoint. Pursuant to proposed Rule 7.31-E(d)(3)(E)(ii), Order 3 would be ranked on the NYSE Arca Book at its working price, $10.025 (which is the midpoint, as the working price of an MPL-ALO Order to buy is the lower of the midpoint or the order's limit price).
• Order 4 is an incoming MPL-IOC Order to sell 100 shares at $10.00. Order 4 would not trade with Order 3 (which is now ranked on the NYSE Arca Book at its working price) at $10.025 per proposed Rule 7.31-E(d)(3)(E)(ii)(a) because an execution at that price would be at a price above displayed interest on the NYSE Arca Book (Order 1 at $10.02). Order 4, as an IOC Order, would be cancelled because it does not execute.
• Assume Order 1 is cancelled, and Order 5 is an incoming MPL-IOC Order to sell 100 shares at $10.00. Order 5 would trade with Order 3 (where Order 3 is the liquidity provider) at $10.025, consistent with proposed Rule 7.31-E(d)(3)(E)(iii), because the trade would execute at a price that is not above the price of any displayed or non-displayed interest on the NYSE Arca Book, although it would be at the same price as Order 2 (non-displayed interest on the NYSE Arca Book).
The following example demonstrates how an MPL-ALO Order that is resting on the NYSE Arca Book and subsequently becomes an Aggressing MPL-ALO Order (in this example, when the PBBO is updated) would trade, as proposed:
• Assume the PBBO is $10.00 × $10.05 (midpoint is $10.025). Order 1 is a non-displayed Limit Order to sell 100 shares at $10.03, resting on the NYSE Arca Book at its working price of $10.03. Order 2 is an MPL-ALO Order to buy 100 shares at $10.05. Order 2 is resting non-displayed on the NYSE Arca Book at its working price of $10.025 (which is the midpoint, as the working price of an MPL-ALO Order to buy is the lower of the midpoint or the order's limit price).
• Assume the PBBO updates to $10.03 × $10.05 (midpoint is $10.04). Order 2 reprices to the new midpoint, $10.04, and becomes an Aggressing Order because its working price has changed and the PBBO has updated. Order 2 will trade as an Aggressing Order (as the liquidity taker) with Order 1 at $10.03 because it would receive $0.01 price improvement over its working price.
Finally, the Exchange proposes to renumber current Rule 7.31-E(d)(3)(E)(iii) as Rule 7.31-E(d)(3)(E)(iv) to reflect the addition of the new rule text described above, without any changes to the text of the rule.
The Exchange believes that the proposed change, which would allow an Aggressing MPL-ALO Order to trade only when it would receive price improvement over its working price of at least one MPV, would promote higher-quality executions for ETP Holders and provide ETP Holders with greater certainty regarding the amount of price improvement such executions would receive, thereby encouraging increased order flow to the Exchange and enhanced opportunities for order execution for all market participants. The Exchange notes that evaluating the economic benefit of an execution is not a novel concept on equity exchanges.
Because of the technology changes associated with this proposed rule change, the Exchange will announce the implementation date by Trader Update, which, subject to effectiveness of this proposed rule change, will be no later than in the fourth quarter of 2024.
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed change would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and protect investors and the public interest because allowing an Aggressing MPL-ALO Order to trade only when it would receive price improvement over its working price of at least one MPV
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. The proposed rule change would amend Exchange rules to permit Aggressing MPL-ALO Orders to trade only when they would receive price improvement of at least one MPV over their working price, thereby providing a minimum amount of price improvement for ETP Holders entering such orders. To the extent the proposed rule change promotes higher-quality executions on the Exchange, the proposed change could encourage increased order flow to the Exchange and facilitate additional trading opportunities for all market participants. In addition, at least one other equity exchange considers the economic benefit to the entering party when evaluating whether a similar order type may trade, and the Exchange's proposal would thus promote competition among exchanges by providing a minimum amount of price improvement to Aggressing MPL-ALO Orders.
No written comments were solicited or received with respect to the proposed rule change.
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 after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) 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.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change consists of amendments to DTC Operational Arrangements (Necessary for Securities to Become and Remain Eligible for DTC Services) (the “OA”)
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend the DTC Operational Arrangements (Necessary for Securities to Become and Remain Eligible for DTC Services) (the “OA”) to (i) insert, consolidate and update the procedures for an Agent processing a reorganizations event, offer, or solicitation (each, an “Offer”) through the DTC Automated Tender Offer Program (“ATOP”) system or Automated Subscription Offer Program (“ASOP”) system in order to better align with current processing, and (ii) make related technical and clarifying changes relating to Offers processed through ATOP (an “ATOP-eligible Offer”) or ASOP (an “ASOP-eligible Offer”), as described below.
ATOP is an instruction processor initially developed by DTC in 1988 to automate the manner in which tender and exchange offers are processed through DTC. When an Agent processes an Offer through ATOP, Participants are able to (i) submit instructions or elections for the Offer without needing to provide a letter of transmittal
ASOP is an instruction processing system similar to ATOP that was developed by DTC around 1994 to automate the manner in which rights subscription offers are processed
Currently, in order to make an Offer eligible for ATOP or ASOP, the agent for the Offer must have entered into a corresponding agreement (“Master Agreement”) with DTC and been approved by DTC to process Offers as an ATOP Agent or an ASOP Agent, as applicable. The ATOP Agent Master Agreement and ASOP Agent Master Agreement provide, in relevant part, that the Agent agrees that (i) the delivery by DTC of an electronic message transmitted through the ATOP or ASOP system, with respect to each instruction and election (an “Agent Message”), will satisfy the terms of each Offer made eligible for ATOP or ASOP (as applicable) as to the execution and delivery of a subscription form, letter of transmittal or a notice of guaranteed delivery, as the case may be, in the form of the subscription form, letter of transmittal or notice of guaranteed delivery required by the Offer by the Participant identified in such Agent's Message, and (ii) the agreement set forth above will be enforceable against the offeror in each Offer made eligible for ATOP or ASOP (as applicable) by the Participant identified in such Agent's Message. For each ATOP-eligible Offer or ASOP-eligible Offer, the Agent is required to electronically agree to a Letter of Agreement (“LOA”) that relates specifically to that Offer and contains additional terms, conditions, and requirements with respect to the Offer. ATOP Agents and ASOP Agents are also provided with a copy of the ATOP Agent procedures and ASOP Agent procedures, respectively. The procedures, which were originally drafted around 1989 and revised from time to time, outline the procedures and the technical operations of ATOP and ASOP.
DTC currently provides the ATOP Agent procedures and the ASOP Agent procedures to the ATOP Agent and ASOP Agent, as applicable, upon onboarding. However, DTC has come to understand that when the Agent later makes additional Offers ATOP-eligible or ASOP-eligible, as the case may be, the Agent might not have the applicable procedures readily accessible or might not be familiar with current processes. In addition, on the basis of its interactions with ATOP Agents and ASOP Agents, DTC has determined that the clarification and update of certain elements of the procedures would enhance Agents' understanding and facility with the process. Further, since there is considerable overlap between ATOP Agents and ASOP Agents, DTC determined that it is duplicative to continue to have two separate agreements and procedures for ATOP and ASOP processing.
Therefore, in order to make the Agent's procedures for ATOP and ASOP more streamlined, transparent, and reflective of current processes, DTC would discontinue use of standalone procedures and proposes to amend the OA to (i) insert consolidated and updated procedures for Agents that are processing ATOP-eligible Offers or ASOP-eligible Offers, and (ii) make related technical and clarifying changes relating to ATOP-eligible Offers or ASOP-eligible Offers.
Pursuant to the proposed rule change, DTC would delete the following:
1. Delete the second paragraph in Section VI.D because cut-off times would be addressed in the text of the proposed rule change.
2. Delete Section VI.D.2 because rights offers would be addressed in the text of the proposed rule change.
3. Delete Section VI.D.4.a and the text beginning “With regard to tender/exchange offers” through “Agent is required to approve and adhere to all requirements represented in the LOA which includes, but is not limited to, the following:” because processing of tender/exchange offers would be more fully described in the text of the proposed rule change.
Above the paragraph beginning with “At least one business day prior to payment and allocation of entitlements by DTC,” DTC is proposing to insert a new Section VI.D.3 with the title “DTC's Automated Tender Offer Program (“ATOP”) and DTC's Automated Subscription Offer Program (“ASOP”).”
DTC is proposing to add a new subsection VI.D.3.a with the heading “Becoming an ATOP/ASOP Agent.” Currently, the requirements for an Agent to become an ATOP or ASOP Agent are reflected in the ATOP Agent procedures and the ASOP Agent procedures, respectively. The new subsection would reflect the new consolidated designation of an Agent as an ATOP/ASOP Agent, which would be permitted to make an Offer ATOP or ASOP eligible. Specifically, in order to make an Offer eligible to be processed through ATOP or ASOP, an Agent must be an agent approved as an ATOP/ASOP Agent.
To become an ATOP/ASOP Agent, the Agent must (i) obtain the proper connectivity to access the ATOP and ASOP functions as may be required by DTC, and (ii) execute a DTC OA Agent Letter, if the Agent does not already have one on file with DTC; and (iii) execute an Automated Tender Offer (ATOP) and Automated Subscription Offer Program (ASOP) Agent Master Agreement (“ATOP/ASOP Master Agreement”), if the Agent does not already have one on file at DTC.
Two footnotes will be inserted to clarify when an Agent will be required to sign a new OA Letter and/or a new ATOP/ASOP Master Agreement. The footnotes would state as follows: “All Agents must have a signed OA Agent Letter on file at DTC prior to making any Offer eligible for either ATOP or ASOP. All Agents must have a signed ATOP/ASOP Master Agreement on file at DTC prior to making any Offer eligible for either ATOP or ASOP. Any Agent that had previously signed an ATOP Master Agreement and/or ASOP Master Agreement prior to August 1, 2024, will be required to execute a new ATOP/ASOP Master Agreement. DTC may, in its sole discretion, decline to make an Offer eligible for ATOP or ASOP if the Agent does not have an ATOP/ASOP Master Agreement on file with DTC.
Pursuant to the proposed rule change, OA would provide that the DTC Rules, including, without limitation, the OA, as may be amended from time to time, and the LOA for the particular Offer will govern the rights and obligations of the Agent in respect of each ATOP-eligible Offer or ASOP-eligible Offer, as the case may be. In addition, the OA would
1. The transmission by DTC of an Agent's Message shall satisfy the terms of:
a. each ATOP-eligible Offer as to the execution and delivery of a letter of transmittal, a notice of guaranteed delivery, or other form of instruction, election, or acceptance, as the case may be, in the form of the letter of transmittal, notice of guaranteed delivery, or other form of instruction, election, or acceptance required by the Offer by the Participant identified in such Agent's Message;
b. each ASOP-eligible Offer as to the execution and delivery of a subscription form, a notice of guaranteed delivery, other form of instruction, election, or acceptance, as the case may be, in the form of the subscription form, notice of guaranteed delivery, or other form of instruction, election or acceptance required by the Offer by the Participant identified in such Agent's Message.
2. The delivery of securities from the account of the Participant identified in the Agent's Message to the Agent's account maintained by DTC for purposes of the Offer (“Agent ATOP/ASOP Account”) shall satisfy the terms of each Offer as to the surrender of securities required by the Offer by the Participant identified in the Agent's Message.
3. Notwithstanding anything to the contrary, for purposes of making a determination of the timeliness of an instruction, election, or acceptance and, if applicable, the tender of securities, the date and time of a Participant's submission of any instruction, election, or acceptance to DTC through ATOP or ASOP (as reflected in the Transaction ID or Subscription ID), and not the date and time of the transmission of the Agent's Message by DTC to the Agent, shall govern. A footnote would be inserted to state that “By way of example, but without limitation, for purposes of determining the timeliness of a Participant's instruction and/or tender in connection with an Offer, the Participant's instruction is deemed to have been timely received by, and, if applicable, the securities timely tendered to, the Agent when the date and time of the submission of a Participant's instruction to DTC (as reflected in the Transaction ID or Subscription ID of the completed transaction) is prior to the applicable cutoff/expiration date and time, even if the transaction does not complete and/or an Agent's Message is not transmitted until after the applicable cutoff/expiration date and time for the Offer.”
4. The agreements set forth in the preceding paragraphs 1-3 are enforceable against the offeror of an ATOP-eligible Offer or ASOP-eligible Offer by the Participant(s) identified in the applicable Agent's Message.
5. Prior to making an Offer eligible for ATOP or ASOP, the Agent shall have obtained authorization by the offeror of the Offer to make the acknowledgements and agreements in the preceding paragraphs 1-4.
6. The Agent must inspect all Agent's Messages promptly upon receipt and to immediately escalate any questions to the appropriate DTC contacts identified in the OA and in the LOA for the specific Offer.
7. If the Agent believes that the acceptance of an Offer (including acceptance by notice of guaranteed delivery and cover of protect instructions) and/or the tender of securities reflected in an Agent's Message is deficient for some reason, it is the sole responsibility of the Agent to promptly notify the affected Participant directly to resolve the issue and/or request that the Participant enter a withdrawal of its acceptance. The Agent must also promptly notify DTC about the deficiency by emailing the DTC contacts listed in the OA and in the LOA for the specific Offer.
8. The Agent acknowledges and agrees that if there are any events or amendments that occur during the life of the Offer, the Agent must immediately notify DTC, and confirm DTC's receipt of the notice. DTC may revoke the eligibility of an Offer, including, without limitation, in the event that the terms of the Offer are amended, or if DTC becomes aware of a fact, factor, or circumstance and determines, in its sole discretion, that it is not practical or feasible for DTC to provide services in respect of the Offer.
9. The Agent will ensure that DTC has, at all times, up-to-date contact information for the Agent, including, but not limited to, for senior management and operational personnel.
DTC is proposing to insert a new subsection VI.D.3.b. with the heading “ATOP Eligibility or ASOP Eligibility of an Offer.” Pursuant to the proposed rule change, this section would reflect the current procedure on how an Agent can make an Offer ATOP-eligible or ASOP-eligible and would add transparency to DTC's discretion to decline to process any Offer and to the ATOP and ASOP cutoff times for instructions, after which the ATOP/ASOP Agent would need to process instructions outside of DTC.
The proposed new subsection would first remind Agents and Issuers that DTC has discretion to decline to process any Offer, and DTC's acceptance of a particular Offer in one case does not set a precedent for future Offers. All Agents and Issuers with a proposed non-standard Offer that could require special processing must confirm with DTC whether the particular Offer can be processed on the ATOP or ASOP platform before including references to, or instructions or directions for, ATOP or ASOP processing in any documentation or filings. The new subsection would then explain that to make an Offer ATOP-eligible or ASOP-eligible, the Agent must send the offering announcement, including the source document, and a completed DTC questionnaire to DTC within the timeframes and in the manner described in the OA. DTC may require the Agent to provide additional documentation if needed. For an ASOP-eligible Offer, the Agent will also be required to provide the “Agent Wire Instructions Letter” for which DTC is to send the subscription payments.
Once DTC's receipt and review of the documentation and information is complete, DTC will post the terms of the Offer on ATOP or ASOP, as the case may be, viewable by the Agent only. Within one business day of posting, the Agent must review and approve the details of the Offer and to approve the terms of the LOA for the Offer by entering an acknowledgement in ATOP or ASOP, as applicable. Any delays by the Agent may impact the timeliness of opening the Offer to participants. If the Agent reviews the details of the Offer and the terms of the LOA and disagrees with one or more terms or details, the Agent must notify DTC of its disagreement by entering the LOA rejection and the reason for the rejection in ATOP or ASOP, as applicable, and by email to the DTC contacts listed in the LOA. DTC, at its option, may work with the Agent to modify the terms and details and resolve any differences with the Agent. DTC will not make an Offer available to Participants unless all approvals have been received from the Agent.
The proposed subsection would also note that when making an Offer ATOP-eligible or ASOP-eligible, DTC will confirm with the Agent the actual expiration date/time for the Offer and the DTC cutoff date/time for the Offer. For Offers in which the offering
DTC is proposing to insert a new subsection VI.D.3.c. with the heading “ATOP-eligible Offers.” As previously noted, pursuant to the proposed rule change, DTC would discontinue its practice of providing standalone ATOP Agent procedures and would insert clarified and updated ATOP procedures in the OA. This new subsection would provide such updated procedures in order to provide enhanced transparency and to reflect current processes relating to ATOP-eligible Offers.
DTC is proposing to insert a new subsection VI.D.3.c. (i) with the heading “Use of ATOP.” Pursuant to the proposed rule change, to enhance the transparency of possible uses of the ATOP platform, this subsection would briefly explain that ATOP can be used for processing any Offer as DTC may deem appropriate, and that the procedures and requirements may differ for ATOP-eligible Offers that are not standard tender and exchange Offers and/or require special or manual processing.
The new proposed subsection would reflect the existing language that with regard to certain Offers, such as tenders and exchanges and mergers with elections, ATOP procedures and systems must be used for all elections (
The proposed subsection will also note that the subsequent description of ATOP processing is for standard processing of a tender or exchange Offer on ATOP, but that ATOP may be used for processing any Offer as DTC may deem appropriate. Accordingly, certain processes and requirements may differ and, when applicable, will be communicated to the Agent by DTC in writing and/or in a rider to the ATOP/ASOP Master Agreement and/or in the LOA for the specific Offer. For illustration, a footnote would be added as follows: “By way of example, but without limitation, in order to make a voting solicitation Offer eligible for ATOP, the Agent must have a signed voting addendum to the ATOP/ASOP Master Agreement on file at DTC.”
The text of the proposed subsection would continue to explain that, in addition, for such Offers, including, but not limited to, Offers that require special or manual processing, the Agent and Issuer may be required to provide additional written instructions and indemnifications from the Agent and Issuer and to pay additional processing fees. Unless otherwise agreed between the parties, payment of such fees is due upon receipt of an invoice from DTC, prior to DTC's announcement of the Offer.
DTC is proposing to insert a new subsection VI.D.3.c.(ii) titled “Participant Acceptances and Surrender of Securities Through ATOP” to provide transparency into how instructions are inputted and processed through ATOP.
Pursuant to the proposed rule change, this subsection would briefly summarize how the ATOP system processes Participant instructions, stating that when a Participant submits an instruction to DTC for an ATOP-eligible Offer, such as an acceptance and surrender of securities, acceptance by submission of a notice of guaranteed delivery (a “protect”), or a surrender of securities to cover a notice of guaranteed delivery (a “cover of a protect”) through ATOP, the ATOP system will typically (x) process the Participant submission, and, in the case of an acceptance with surrender of securities or a cover of a protect, effect a book-entry delivery of the Participant's subject position in the securities to the Agent ATOP/ASOP Account, (y) enter information about the submission (including the time of the Participant's submission into DTC) into ATOP and transmit an Agent's Message to the Agent that indicates the Participant's acceptance of the ATOP-eligible Offer or its instruction to cover a protect, as the case may be, and, to the extent applicable, reflects the book-entry delivery of the securities into the Agent ATOP/ASOP Account.
DTC proposes to insert a new subsection VI.D.3.c.(iii) titled “Withdrawal of Acceptances (including acceptances by notice of guaranteed delivery or instructions to cover the protect)” to provide transparency into how withdrawals may be processed through ATOP. Pursuant to the proposed rule change, this subsection would briefly describe the process for a Participant to withdraw its acceptance or cover instruction.
The proposed subsection would provide that if permitted under the terms of the ATOP-eligible Offer, Participants can submit an instruction for a partial or full withdrawal of their acceptance of an ATOP-eligible Offer. When a Participant submits a withdrawal request, the ATOP System will transmit a message (“Withdrawal Message”) to the Agent indicating the withdrawal instruction submitted by the Participant. The Agent is required to inspect all Withdrawal Messages upon receipt to verify the validity of the withdrawal request. No later than 30 minutes after the instruction cutoff time on the day of the withdrawal instruction, the Agent must take one of the following actions: (i) if the Agent determines to accept the withdrawal, the Agent must transmit an acceptance (“Withdrawal Acceptance”) to DTC through ATOP; or (ii) if the Agent determines to reject the request, the Agent must transmit a rejection (“Withdrawal Rejection”) to DTC through ATOP.
The proposed subsection would also provide that the Agent's failure to timely accept or reject a pending
The proposed subsection would also clarify that if the withdrawal instruction relates to securities delivered to the Agent ATOP/ASOP Account in connection with the acceptance of the ATOP-eligible Offer, the Withdrawal Acceptance shall constitute an authorization from the Agent to DTC to deliver by book-entry from the Agent ATOP/ASOP Account to the account of the Participant submitting the withdrawal instruction the securities that are the subject of the Participant's withdrawal instruction. Upon receipt of such a Withdrawal Acceptance, DTC will affect a book-entry delivery returning the securities to the Participant from the Agent ATOP/ASOP Account. If the withdrawal request relates to an acceptance of the ATOP-eligible Offer by notice of guaranteed delivery, the Withdrawal Acceptance constitutes an authorization from the Agent to DTC to reduce the quantity of securities to which the Notice of Guaranteed Delivery relates by the quantity of securities that are subject to the withdrawal instruction.
DTC is proposing to add a new subsection VI.D.3.c.(iv) titled “After Expiration of an ATOP-eligible Offer,” which would include the existing enumerated list of requirements. DTC would also make grammatical changes, correct typos, and add the following sentence into No. 2 in the list: “Agent must reconcile balances with DTC at least one business day prior to the allocation of entitlements, and must receive DTC confirmation prior to wiring funds to DTC.” The purpose of this requirement is to prevent agents from overpaying or underpaying DTC, which would delay the allocation to Participants.
DTC is proposing to insert a new subsection VI.D.3.d. with the heading “ASOP-eligible Offers.” As previously noted, pursuant to the proposed rule change, DTC would discontinue its practice of providing standalone ASOP Agent procedures and would insert clarified and updated ASOP procedures in the OA. This new subsection would provide such updated procedures in order to provide enhanced transparency and to reflect current processes relating to ASOP-eligible Offers.
DTC is proposing to insert subsection VI.D.3.d.(i). titled “ASOP-eligible Offer Processing,” to enhance the transparency of possible uses of the ASOP platform. This subsection would generally describe the possible uses for ASOP, and what may be required from the Agent and Issuer for Offers that require special or manual processing.
Pursuant to the proposed rule filing, this subsection would state that in the case of rights offerings, DTC's ASOP procedures and systems must be used to process subscription exercise activities, including the submission of instructions for basic subscriptions, the exercise of oversubscriptions, sales of rights, and notices of guaranteed deliveries, and all related activities. Use of ASOP for these purposes is an eligibility requirement for securities that are the subject of rights offers. However, ASOP can be used for processing any corporate action as DTC may deem appropriate. Accordingly, certain processes and requirements may differ and, when applicable, will be communicated to the Agent by DTC in writing and/or in a rider to the ATOP/ASOP Master Agreement and/or in the LOA. In addition, for such Offers, including, but not limited to, Offers that require special or manual processing, the Agent and Issuer may be required to provide additional written instructions and indemnifications from the Agent and Issuer and to pay additional processing fees. Unless otherwise agreed between the parties, payment of such fees is due upon receipt of an invoice from DTC, prior to DTC's announcement of the Offer.
DTC is proposing to insert subsection VI.D.3.d.(ii) under the “ASOP-eligible Offers” subsection with the heading “Participant Acceptances of the ASOP-eligible Offer and Surrender of Rights through ASOP,” to provide transparency into how instructions are inputted and processed through ATOP.
Pursuant to the proposed rule change, this subsection would briefly summarize how the ASOP system processes Participant instructions, stating that when a Participant submits an instruction to DTC for an ASOP-eligible Offer, such as an acceptance and surrender of rights, acceptance by submission of a notice of guaranteed delivery (protect), or a surrender of securities to cover a notice of guaranteed delivery (cover of a protect), through ASOP, the ASOP system will typically (x) process the Participant submission, and in the case of an acceptance with surrender of rights or cover of a protect, effect a book-entry delivery of the Participant's subject position in the rights from Participant's account to the Agent ATOP/ASOP Account, (y) debit the required subscription payment from the Participant's account and credit the payment to the Agent ATOP/ASOP Account,
The subscription payment indicated on the Agent's Message is typically credited to the Agent ATOP/ASOP Account on the same day, except where the Agent agrees to, or the Terms and Conditions of the Offer provides for, different procedures with respect to payment. Once the funds are credited to the Agent ATOP/ASOP Account, the funds are usually wired to the Agent on the following business day.
DTC is proposing to insert subsection VI.D.3.d. (iii) under the “ASOP-eligible Offers” subsection with the heading “Instructions to Surrender and Sell Rights Through ASOP,” which would briefly describe the process through which a Participant could submit instructions to sell rights through ASOP.
Pursuant to the proposed rule change, the subsection would state that for any ASOP-eligible Offer on which the Agent accepts instructions to sell rights, when a Participant submits instructions to sell rights through the Agent by means of ASOP, the ASOP system will typically (x) process the Participant submission, (y) effect a book-entry delivery of the Participant's position in the subject rights from the Participant's account to the Agent ATOP/ASOP Account, (z) enter information about the submission (including the time of the Participant's submission into DTC) into ASOP, and transmit an Agent's Message to the Agent that indicates the Participant's instruction to sell rights and reflects the
Section 17A(b)(3)(F) of the Act)
DTC believes that the proposed rule change to amend the OA to (i) insert consolidated and updated procedures, including for an enhanced Master Agreement, for ATOP/ASOP Agents, and (ii) make related technical and clarifying changes relating to ATOP-eligible Offers or ASOP-eligible Offers will not have any impact on competition.
DTC has not received or solicited any written comments relating to this proposal. If any written comments are received, they would be publicly filed as an Exhibit 2 to this filing, as required by Form 19b-4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b-4, the Commission does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information.
All prospective commenters should follow the Commission's instructions on how to submit comments,
DTC reserves the right to not respond to any comments 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) of the Act and Rule 19b-4(f)(6) thereunder.
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.
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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that the Securities and Exchange Commission (“Commission”) has issued an Order, pursuant to Section 17(d) of the Securities Exchange Act of 1934 (“Act”),
Section 19(g)(1) of the Act,
Section 17(d)(1) of the Act
To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d-1 and Rule 17d-2 under the Act.
To address regulatory duplication in these and other areas, the Commission adopted Rule 17d-2 under the Act.
On December 3, 2010, the Commission approved the SRO participants' plan for allocating regulatory responsibilities pursuant to Rule 17d-2.
The proposed 17d-2 Plan is intended to reduce regulatory duplication for firms that are members of more than one Participating Organization.
The text of the Plan delineates the proposed regulatory responsibilities with respect to the Parties. Included in the proposed Plan is an exhibit (the “Covered Rules”) that lists the federal securities laws, rules, and regulations, for which the applicable DREA would bear examination and enforcement responsibility, and for which the applicable DCSA would bear surveillance, investigation, and enforcement responsibility, under the Plan for common members of the Participating Organization and their associated persons.
Specifically, the applicable DREA assumes examination and enforcement responsibility, and the applicable DCSA assumes surveillance, investigation, and enforcement responsibility, relating to compliance by common members with the Covered Rules. Covered Rules do not include the application of any rule of a Participating Organization, or any rule or regulation under the Act, to the extent that it pertains to violations of insider trading activities, because such matters are covered by a separate multiparty agreement under Rule 17d-2.
On July 31, 2024, the parties submitted a proposed amendment to the Plan. The primary purpose of the amendment is to add MIAX Sapphire as a Participant to the Plan.
The text of the proposed amended 17d-2 Plan is as follows (additions are in
This agreement (the “Agreement”) by and among Cboe BZX Exchange, Inc. (“
1. Assumption of Surveillance Responsibility. The Designated CAT Surveillance Authority (the “DCSA”) shall assume surveillance, investigation and enforcement responsibility relating to compliance by Common Members with SEA Rule 613 and the SRO Covered CAT Rules listed on Exhibit A (“Surveillance Responsibility”). Included in the Surveillance Responsibility assumed hereunder the DCSA shall perform investigations and enforcement resulting from reports and metrics concerning potentially non-compliant CAT reporting generated by the Plan Processor for the National Market System Plan Governing the Consolidated Audit Trail and as provided for in the Monitoring CAT Reporter Compliance Policy (dated August 13, 2019 and as amended from time to time) relating to Common Members. FINRA shall serve as DCSA for Common Members that are members of FINRA. The DREA allocated below shall serve as DCSA for Common Members that are not members of FINRA.
2. Assumption of Examination Responsibility. The Designated Regulation NMS Examining Authority (the “DREA”) shall assume examination and enforcement responsibilities relating to compliance by Common Members with the Covered Rules to which the DREA is allocated responsibility (“Examination Responsibility”). A list of the Covered Rules is attached hereto as Exhibit A.
a. For Covered Regulation NMS Rules Pertaining to “NMS stocks” (as defined in Regulation NMS) (
b. For Covered Regulation NMS Rules Pertaining to “NMS securities” (as defined in Regulation NMS) (
c. For purposes of this paragraph 2, any allocation of a Common Member to a Participating Organization other than as specified in paragraphs a. and b. above shall be based on the following principles, except to the extent all affected Participating Organizations consent to one or more different principles and any such agreement to different principles would be deemed an amendment to this Agreement as provided in paragraph 24:
i. The Participating Organizations shall not allocate a Common Member to a Participating Organization unless the Common Member is a member of that Participating Organization.
ii. To the extent practicable, Common Members shall be allocated among the Participating Organizations of which they are members in such a manner as to equalize, as nearly as possible, the allocation among such Participating Organizations.
iii. To the extent practicable, the allocation will take into account the amount of NMS stock activity (or NMS security activity, as applicable) conducted by each Common Member in order to most evenly divide the Common Members with the largest amount of activity among the Participating Organizations of which they are a members. The allocation will also take into account similar allocations pursuant to other plans or agreements to which the Participating Organizations are party to maintain consistency in oversight of the Common Members.
iv. The Participating Organizations may reallocate Common Members from time-to-time and in such manner as they deem appropriate consistent with the terms of this Agreement.
v. Whenever a Common Member ceases to be a member of its DREA (including FINRA), the DREA shall promptly inform the Participating Organizations, who shall review the matter and reallocate the Common Member to another Participating Organization.
vi. The DEA or DREA (including FINRA) may request that a Common Member be reallocated to another Participating Organization (including the DEA or DREA (including FINRA)) by giving 30 days written notice to the Participating Organizations. The Participating Organizations shall promptly consider such request and, in their discretion, may approve or disapprove such request and if approved, reallocate the Common
vii. All determinations by the Participating Organizations with respect to allocations shall be by the affirmative vote of a majority of the Participating Organizations that, at the time of such determination, share the applicable Common Member being allocated; a Participating Organization shall not be entitled to vote on any allocation related to a Common Member unless the Common Member is a member of such Participating Organization.
d. The Participating Organizations agree that they shall conduct meetings among them as needed for the purposes of ensuring proper allocation of Common Members and identifying issues or concerns with respect to the regulation of Common Members. To promote consistency in connection with regulation of Common Members, the Participating Organizations further agree to conduct meetings to discuss the overarching principles as to how Covered Rules, in particular SEA Rule 613 and the SRO Covered CAT Rules, should be surveilled, examined, investigated and enforced. On an ongoing basis, the Participating Organizations agree to consult with and solicit input from the Participating Organizations regarding their surveillance, examination, investigation and enforcement programs regarding SEA Rule 613 and the SRO Covered CAT Rules. In particular, FINRA will consult with Participating Organizations prior to finalizing its disposition and sanctions guidelines with respect to violations of SEA Rule 613 and the SRO Covered CAT Rules. Further, in the period preceding the full implementation of CAT for equities and options securities, FINRA will consult with other Participating Organizations prior to finalizing dispositions other than no further action that involve their Common Members.
e. By signing this Agreement, the Participating Organizations hereby certify that the list of SRO Covered CAT Rules listed on Exhibit A hereto are correct and are identical or substantially similar to each other.
f. Each year following the commencement date of operation of this Agreement, or more frequently if required by changes in any of the SRO Covered CAT Rules, each Participating Organization shall submit an updated list of SRO Covered CAT Rules to FINRA for review which shall (1) add SRO Covered CAT Rules not included in the current list of SRO Covered CAT Rules that are substantially similar to each other; (2) delete SRO Covered CAT Rules included in the current list that are no longer substantially similar; and (3) confirm that the remaining rules on the current list of SRO Covered CAT Rules continue to be substantially similar. FINRA shall review each Participating Organization's annual certification and confirm whether FINRA agrees with the submitted certified and updated list of SRO Covered CAT Rules. The DREA/DCSA shall not have Regulatory Responsibility for any provision in a SRO Covered CAT Rule provision requiring a member of a Participating Organization to provide notice, reports or any other filings directly to a Participating Organization.
3. Scope of Responsibility. Notwithstanding anything herein to the contrary, it is explicitly understood that the terms “Surveillance Responsibility” and “Examination Responsibility” (collectively referred to herein as the “Regulatory Responsibility”) do not include any responsibilities beyond those concerning the Covered Rules, and each of the Participating Organizations shall retain full responsibility for, examination, surveillance and enforcement with respect to trading activities or practices involving its own marketplace unless otherwise allocated pursuant to a separate Rule 17d-2 Agreement. The allocation of DCSA Responsibility to a Participating Organization shall not limit another Participating Organization's ability to utilize data from the Consolidated Audit Trail to perform examination, surveillance, investigative, enforcement or other regulatory work concerning potential or identified violations of statutes or rules other than the SRO Covered CAT Rules.
4. No Retention of Regulatory Responsibility. The Participating Organizations do not contemplate the retention of any responsibilities with respect to the regulatory activities being assumed by the DREA/DCSA under the terms of this Agreement. Nothing in this Agreement will be interpreted to prevent a DREA/DCSA from entering into Regulatory Services Agreement(s) to perform its Regulatory Responsibility.
5. No Charge. A DREA/DCSA shall not charge Participating Organizations for performing the Regulatory Responsibility under this Agreement.
6. Applicability of Certain Laws, Rules, Regulations or Orders. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the SEC. To the extent such statute, rule, or order is inconsistent with one or more provisions of this Agreement, the statute, rule, or order shall supersede the provision(s) hereof to the extent necessary to be properly effectuated and the provision(s) hereof in that respect shall be null and void.
7. Customer Complaints. If a Participating Organization receives a copy of a customer complaint relating to a DREA's/DCSA's Regulatory Responsibility as set forth in this Agreement, the Participating Organization shall promptly forward to such DREA/DCSA a copy of such customer complaint. It shall be such DREA's/DCSA's responsibility to review and take appropriate action in respect to such complaint.
8. Parties to Make Personnel Available as Witnesses. Each Participating Organization shall make its personnel available to the DREA/DCSA to serve as testimonial or non-testimonial witnesses as necessary to assist the DREA/DCSA in fulfilling the Regulatory Responsibility allocated under this Agreement. The DREA/DCSA shall provide reasonable advance notice when practicable and shall work with a Participating Organization to accommodate reasonable scheduling conflicts within the context and demands as the entity with ultimate regulatory responsibility. The Participating Organization shall pay all reasonable travel and other expenses incurred by its employees to the extent that the DREA/DCSA requires such employees to serve as witnesses, and provide information or other assistance pursuant to this Agreement.
9. Sharing of Work-Papers, Data and Related Information.
a. Sharing. A Participating Organization shall make available to the DREA/DCSA information necessary to assist the DREA/DCSA in fulfilling the Regulatory Responsibility assumed under the terms of this Agreement. Such information shall include
b. No Waiver of Privilege. The sharing of documents or information between the parties pursuant to this Agreement shall not be deemed a waiver as against third parties of regulatory or other privileges relating to the discovery of documents or information.
10. Special or Cause Examinations and Enforcement Proceedings. Nothing in this Agreement shall restrict or in any way encumber the right of a Participating Organization to conduct special or cause examinations of a Common Member, or take enforcement proceedings against a Common Member as a Participating Organization, in its sole discretion, shall deem appropriate or necessary.
11. Dispute Resolution Under this Agreement.
a. Negotiation. The Participating Organizations will attempt to resolve any disputes through good faith negotiation and discussion, escalating such discussion up through the appropriate management levels until reaching the executive management level. In the event a dispute cannot be settled through these means, the Participating Organizations shall refer the dispute to binding arbitration.
b. Binding Arbitration. All claims, disputes, controversies, and other matters in question between the Participating Organizations to this Agreement arising out of or relating to this Agreement or the breach thereof that cannot be resolved by the Participating Organizations will be resolved through binding arbitration. Unless otherwise agreed by the Participating Organizations, a dispute submitted to binding arbitration pursuant to this paragraph shall be resolved using the following procedures:
(i) The arbitration shall be conducted in a city selected by the DREA/DCSA in which it maintains a principal office or where otherwise agreed to by the Participating Organizations in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof; and
(ii) There shall be three arbitrators, and the chairperson of the arbitration panel shall be an attorney. The arbitrators shall be appointed in accordance with the Commercial Arbitration Rules of the American Arbitration Association.
12. Limitation of Liability. As between the Participating Organizations, no Participating Organization, including its respective directors, governors, officers, employees and agents, will be liable to any other Participating Organization, or its directors, governors, officers, employees and agents, for any liability, loss or damage resulting from any delays, inaccuracies, errors or omissions with respect to its performing or failing to perform regulatory responsibilities, obligations, or functions, except: (a) as otherwise provided for under the Act; (b) in instances of a Participating Organization's gross negligence, willful misconduct or reckless disregard with respect to another Participating Organization; or (c) in instances of a breach of confidentiality obligations owed to another Participating Organization. The Participating Organizations understand and agree that the regulatory responsibilities are being performed on a good faith and best effort basis and no warranties, express or implied, are made by any Participating Organization to any other Participating Organization with respect to any of the responsibilities to be performed hereunder. This paragraph is not intended to create liability of any Participating Organization to any third party.
13. SEC Approval.
a. The Participating Organizations agree to file promptly this Agreement with the SEC for its review and approval. FINRA shall file this Agreement on behalf, and with the explicit consent, of all Participating Organizations.
b. If approved by the SEC, the Participating Organizations will notify their members of the general terms of the Agreement and of its impact on their members.
14. Subsequent Parties; Limited Relationship. This Agreement shall inure to the benefit of and shall be binding upon the Participating Organizations hereto and their respective legal representatives, successors, and assigns. Nothing in this Agreement, expressed or implied, is intended or shall: (a) confer on any person other than the Participating Organizations hereto, or their respective legal representatives, successors, and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, (b) constitute the Participating Organizations hereto partners or participants in a joint venture, or (c) appoint one Participating Organization the agent of the other.
15. Assignment. No Participating Organization may assign this Agreement without the prior written consent of the DREAs/DCSAs performing Regulatory Responsibility on behalf of such Participating Organization, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that any Participating Organization may assign the Agreement to a corporation controlling, controlled by or under common control with the Participating Organization without the prior written consent of such Participating Organization's DREAs/DCSAs. No assignment shall be effective without Commission approval.
16. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.
17. Termination. Any Participating Organization may cancel its participation in the Agreement at any time upon the approval of the Commission after 180 days written notice to the other Participating Organizations (or in the case of a change of control in ownership of a Participating Organization, such other notice time period as that Participating Organization may choose). The cancellation of its participation in this Agreement by any Participating Organization shall not terminate this Agreement as to the remaining Participating Organizations.
18. General. The Participating Organizations agree to perform all acts and execute all supplementary instruments or documents that may be reasonably necessary or desirable to carry out the provisions of this Agreement.
19. Written Notice. Any written notice required or permitted to be given under this Agreement shall be deemed given if sent by certified mail, return receipt requested, or by a comparable means of electronic communication to each Participating Organization entitled to receipt thereof, to the attention of the Participating Organization's representative at the Participating Organization's then principal office or by email.
20. Confidentiality. The Participating Organizations agree that documents or information shared shall be held in confidence, and used only for the purposes of carrying out their respective regulatory obligations under this Agreement, provided, however, that each Participating Organization may disclose such documents or information as may be required to comply with applicable regulatory requirements or requests for information from the SEC. Any Participating Organization disclosing confidential documents or information in compliance with applicable regulatory or oversight requirements will request confidential treatment of such information. No
21. Regulatory Responsibility. Pursuant to Section 17(d)(1)(A) of the Act, and Rule 17d-2 thereunder, the Participating Organizations request the SEC, upon its approval of this Agreement, to relieve the Participating Organizations which are participants in this Agreement that are not the DREA or DCSA as to a Common Member of any and all responsibilities with respect to the matters allocated to the DREA or DCSA pursuant to this Agreement for purposes of §§ 17(d) and 19(g) of the Act.
22. Governing Law. This Agreement shall be deemed to have been made in the State of New York, and shall be construed and enforced in accordance with the law of the State of New York, without reference to principles of conflicts of laws thereof. Each of the Participating Organizations hereby consents to submit to the jurisdiction of the courts of the State of New York in connection with any action or proceeding relating to this Agreement.
23. Survival of Provisions. Provisions intended by their terms or context to survive and continue notwithstanding delivery of the regulatory services by the DREA/DCSA and any expiration of this Agreement shall survive and continue.
24. Amendment.
a. This Agreement may be amended to add a new Participating Organization, provided that such Participating Organization does not assume regulatory responsibility, by an amendment executed by all applicable DREAs/DCSAs and such new Participating Organization. All other Participating Organizations expressly consent to allow such DREAs/DCSAs to jointly add new Participating Organizations to the Agreement as provided above. Such DREAs/DCSAs will promptly notify all Participating Organizations of any such amendments to add a new Participating Organization.
b. All other amendments must be approved by each Participating Organization. All amendments, including adding a new Participating Organization but excluding changes to Exhibit B, must be filed with and approved by the Commission before they become effective.
25. Effective Date. The Effective Date of this Agreement will be the date the SEC declares this Agreement to be effective pursuant to authority conferred by § 17(d) of the Act, and Rule 17d-2 thereunder.
26. Counterparts. This Agreement may be executed in any number of counterparts, including facsimile, each of which will be deemed an original, but all of which taken together shall constitute one single agreement among the Participating Organizations.
* Covered Regulation NMS Rules with asterisks (*) pertain to NMS securities. Covered Regulation NMS Rules without asterisks pertain to NMS stocks.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing. 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.
The Commission finds that the Plan, as amended, is consistent with the factors set forth in Section 17(d) of the Act
The Commission is hereby declaring effective a plan that allocates regulatory responsibility for certain provisions of the federal securities laws, rules, and regulations as set forth in Exhibit A to the Plan. The Commission notes that any amendment to the Plan must be approved by the relevant Parties as set forth in Paragraph 24 of the Plan and must be filed with and approved by the Commission before it may become effective.
Under paragraph (c) of Rule 17d-2, the Commission may, after appropriate notice and comment, declare a plan, or any part of a plan, effective. In this instance, the Commission believes that appropriate notice and comment can take place after the proposed amendment is effective. In particular, the purpose of the amendment is to add MIAX Sapphire as a Participating Organization. The Commission notes that the most recent prior amendment to the Plan was published for comment and the Commission did not receive any comments thereon.
This Order gives effect to the Plan filed with the Commission in File No. 4-618. The Parties shall notify all members affected by the Plan of their rights and obligations under the Plan.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to modify Rule 7.31 regarding MPL-ALO Orders. The proposed rule change is available on the Exchange's 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 those 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 parts of such statements.
The Exchange proposes to amend Rule 7.31 regarding MPL-ALO Orders.
Rule 7.31(d)(3) defines a Mid-Point Liquidity Order (“MPL Order”) as a Limit Order to buy (sell) that is not displayed and does not route, with a working price at the lower (higher) of the midpoint of the PBBO or its limit price. An MPL Order is ranked Priority 3—Non-Display Orders and is valid for any session.
Rule 7.31(d)(3)(A) provides that an MPL Order to buy (sell) must be designated with a limit price in the MPV for the security and will be eligible to trade at the working price of the order.
Rule 7.31(d)(3)(B) provides that if there is no PBB, PBO, or the PBBO is locked or crossed, both an arriving and resting MPL Order will wait for a PBBO that is not locked or crossed before being eligible to trade. If a resting MPL Order to buy (sell) trades with an MPL Order to sell (buy) after there is an unlocked or uncrossed PBBO, the MPL Order with the later working time will be the liquidity-removing order.
Rule 7.31(d)(3)(C) provides that an Aggressing MPL Order to buy (sell) will trade at the working price of resting orders to sell (buy) when such resting orders have a working price at or below (above) the working price of the MPL Order. Resting MPL Orders to buy (sell) will trade against all Aggressing Orders to sell (buy) priced at or below (above) the working price of the MPL Order.
Rule 7.31(d)(3)(D) provides that an MPL Order may be designated IOC (“MPL-IOC Order”). Subject to such IOC instructions, an MPL-IOC Order will follow the same trading and priority rules as an MPL Order, expect that an MPL-IOC Order will be rejected if there is no PBBO or the PBBO is locked or crossed. An MPL-IOC Order cannot be designated ALO or with a Non-Display Remove Modifier.
Rule 7.31(d)(3)(E) and the subparagraphs thereunder define the MPL-ALO Order, which is an MPL Order designated with an ALO Modifier.
Currently, Aggressing MPL-ALO Orders to buy (sell) may trade with resting orders priced below (above) the less aggressive of the midpoint of the PBBO or the limit price of the MPL-ALO Order (
The Exchange next proposes to amend Rule 7.31(d)(3)(E)(ii) to provide that an MPL-ALO Order not eligible to trade as described in proposed Rule 7.31(d)(3)(E)(i) would be ranked in the Exchange Book at its working price and would not trade at that price if it would lock or cross displayed interest or cross non-displayed interest on the Exchange Book. Specifically, the Exchange proposes to add new Rules 7.31(d)(3)(E)(ii)(a) and (b) to provide that resting MPL-ALO Orders would not be eligible to trade (a) at a price equal to or above (below) any sell (buy) orders that are displayed and that have a working price equal to or below (above) the working price of the MPL-ALO Order, or (b) at a price above (below) any sell (buy) orders that are not displayed and that have a working price below (above) the working price of the MPL-ALO Order. The Exchange notes that the circumstances under which such orders would not be able to trade are consistent with the Exchange's existing priority and ranking rules.
The Exchange further proposes to renumber current Rule 7.31(d)(3)(E)(ii) as Rule 7.31(d)(3)(E)(iii) and to amend the text of the rule to provide that if an MPL-ALO Order to buy (sell) cannot trade with a same-priced resting order to sell (buy) that is not displayed, a subsequently arriving order to sell (buy) eligible to trade at the working price of the MPL-ALO Order will trade ahead of such resting order to sell (buy). This proposed change is not intended to change the meaning of the rule, but rather to clarify that, if an MPL-ALO Order is resting at the same price as resting non-displayed interest, a subsequently arriving order that is eligible to trade with that MPL-ALO Order would, as currently, be permitted to trade ahead of such interest. The Exchange further proposes to delete the last sentence of current Rule 7.31(d)(3)(E)(ii), which provides that an MPL-ALO Order would not be eligible to trade at the price of a displayed resting order to buy (sell), as duplicative of proposed Rule 7.31(d)(3)(E)(ii)(a) described above.
The following example demonstrates how an arriving Aggressing MPL-ALO Order would trade or be ranked on the Exchange Book, as proposed:
• Assume the PBBO
• Order 3 is an incoming MPL-ALO Order to buy 100 shares at $10.05. Order 3, as an Aggressing MPL-ALO Order, would not trade with either Order 1 or Order 2 because it would receive less than $0.01 price improvement over the midpoint. Pursuant to proposed Rule 7.31(d)(3)(E)(ii), Order 3 would be ranked on the Exchange Book at its working price, $10.025 (which is the midpoint, as the working price of an MPL-ALO Order to buy is the lower of the midpoint or the order's limit price).
• Order 4 is an incoming MPL-IOC Order to sell 100 shares at $10.00. Order 4 would not trade with Order 3 (which is now ranked on the Exchange Book at its working price) at $10.025 per proposed Rule 7.31(d)(3)(E)(ii)(a) because an execution at that price would be at a price above displayed interest on the Exchange Book (Order 1 at $10.02). Order 4, as an IOC Order, would be cancelled because it does not execute.
• Assume Order 1 is cancelled, and Order 5 is an incoming MPL-IOC Order to sell 100 shares at $10.00. Order 5 would trade with Order 3 (where Order 3 is the liquidity provider) at $10.025, consistent with proposed Rule 7.31(d)(3)(E)(iii), because the trade would execute at a price that is not above the price of any displayed or non-displayed interest on the Exchange Book, although it would be at the same price as Order 2 (non-displayed interest on the Exchange Book).
The following example demonstrates how an MPL-ALO Order that is resting on the Exchange Book and subsequently becomes an Aggressing MPL-ALO Order (in this example, when the PBBO is updated) would trade, as proposed:
• Assume the PBBO is $10.00 × $10.05 (midpoint is $10.025). Order 1 is a non-displayed Limit Order to sell 100 shares at $10.03, resting on the Exchange Book at its working price of $10.03. Order 2 is an MPL-ALO Order to buy 100 shares at $10.05. Order 2 is resting non-displayed on the Exchange Book at its working price of $10.025 (which is the midpoint, as the working price of an MPL-ALO Order to buy is the lower of the midpoint or the order's limit price).
• Assume the PBBO updates to $10.03 × $10.05 (midpoint is $10.04). Order 2 reprices to the new midpoint, $10.04, and becomes an Aggressing Order because its working price has changed and the PBBO has updated. Order 2 will trade as an Aggressing Order (as the liquidity taker) with Order 1 at $10.03 because it would receive
Finally, the Exchange proposes to renumber current Rule 7.31(d)(3)(E)(iii) as Rule 7.31(d)(3)(E)(iv) to reflect the addition of the new rule text described above, without any changes to the text of the rule.
The Exchange believes that the proposed change, which would allow an Aggressing MPL-ALO Order to trade only when it would receive price improvement over its working price of at least one MPV, would promote higher-quality executions for ETP Holders and provide ETP Holders with greater certainty regarding the amount of price improvement such executions would receive, thereby encouraging increased order flow to the Exchange and enhanced opportunities for order execution for all market participants. The Exchange notes that evaluating the economic benefit of an execution is not a novel concept on equity exchanges.
Because of the technology changes associated with this proposed rule change, the Exchange will announce the implementation date by Trader Update, which, subject to effectiveness of this proposed rule change, will be no later than in the fourth quarter of 2024.
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed change would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and protect investors and the public interest because allowing an Aggressing MPL-ALO Order to trade only when it would receive price improvement over its working price of at least one MPV would promote higher-quality executions for ETP Holders, thereby encouraging increased order flow to the Exchange and enhanced trading opportunities for all market participants. The Exchange also believes that the proposed conforming changes to Rule 7.31(d)(3)(E) would remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and protect investors and the public interest by clarifying how Aggressing MPL-ALO Orders that would not be eligible to trade based on the amount of price improvement would be ranked and would trade once resting, in accordance with the Exchange's priority and ranking rules. Finally, the Exchange notes that considering the economic benefit of an execution is not a novel concept and believes that this proposed change would remove impediments to, and perfect the mechanism of, a free and open market and a national market system by providing ETP Holders with greater certainty as to the amount of price improvement they would receive when an Aggressing MPL-ALO Order executes, as well as by promoting competition among equity exchanges.
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. The proposed rule change would amend Exchange rules to permit Aggressing MPL-ALO Orders to trade only when they would receive price improvement of at least one MPV over their working price, thereby providing a minimum amount of price improvement for ETP Holders entering such orders. To the extent the proposed rule change promotes higher-quality executions on the Exchange, the proposed change could encourage increased order flow to the Exchange and facilitate additional trading opportunities for all market participants. In addition, at least one other equity exchange considers the economic benefit to the entering party when evaluating whether a similar order type may trade, and the Exchange's proposal would thus promote competition among exchanges by providing a minimum amount of price improvement to Aggressing MPL-ALO Orders.
No written comments were solicited or received with respect to the proposed rule change.
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 after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) 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 26, 2023, KOR Reporting, Inc. (“KOR”) filed with the Securities and Exchange Commission (“Commission”) an application on Form SDR to register as a security-based swap data repository (“SDR”) pursuant to section 13(n)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and 17 CFR 240.13n-1 (“Rule 13n-1”) thereunder,
Section 13(n) of the Exchange Act makes it unlawful for any person, unless registered with the Commission, directly or indirectly, to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of an SDR.
The Commission also has adopted 17 CFR 242.900 to 909 under the Exchange Act (collectively, “Regulation SBSR”), which governs regulatory reporting and public dissemination of security-based swap transactions.
In 2019, the Commission stated that implementation of the SBS Reporting Rules can and should be done in a manner that carries out the fundamental policy goals of the SBS Reporting Rules while minimizing burdens as much as practicable.
As noted above, to be registered with the Commission as an SDR and maintain such registration, an SDR is required to comply with the requirements and core principles described in section 13(n) of the Exchange Act, as well as with any requirement that the Commission may impose by rule or regulation.
In determining whether an applicant meets the criteria set forth in Rule 13n-1(c), the Commission will consider the information reflected by the applicant on its Form SDR, as well as any additional information obtained from the applicant. For example, Form SDR requires an applicant to provide a list of the asset classes for which the applicant is collecting and maintaining data or for which it proposes to collect and maintain data, a description of the functions that it performs or proposes to perform, general information regarding its business organization, and contact information.
Consistent with the Commission's no-action statement in the ANE Adopting Release,
As noted above, KOR intends to operate as a registered SDR for the equity, credit, and interest rate derivatives asset classes.
KOR is a Delaware corporation and along with its affiliate, KOR Financial Inc. (“KOR Financial”), is a wholly owned subsidiary of KOR US Holdings, Inc. (“KOR Holdings”).
According to KOR, the KOR Board's principal oversight functions are to: (a) review, approve, and monitor KOR's major strategic financial business activities and opportunities, including declarations of dividends and major transactions; (b) review, approve and monitor the KOR's annual budget; (c) review, monitor and take reasonable actions with respect to KOR's financial performance; (d) review, assess, and provide oversight of KOR's risk management practices, the integrity and adequacy of its enterprise risk management program, which is designed to identify, manage, and plan for its Security-based Swap Data Repository, compliance, financial, operational, reputational, and strategic and commercial risks; (e) select, evaluate and compensate the Chief Compliance Officer and, if necessary, appoint a replacement; and (f) review and monitor plans for the succession of the Chief Executive Officer and other members of senior management.
In addition, the application provides that the KOR Board is responsible for the appointment and removal of the chief compliance officer (“CCO”) and approval of CCO compensation, which is at the discretion of the Board and effected by a majority vote.
According to KOR, the KOR Board has adopted a Conflict of Interest Policy that incorporates various provisions of applicable corporate law and other standards adopted by KOR to ensure that KOR Board and committee decisions are not impacted by conflicts of interests.
The application further provides that in the event the KOR Board or Committee determines the director has a conflict of interest or the appearance of a conflict of interest, the KOR Board or Committee, after consultation with the General Counsel and outside legal counsel, if necessary, shall determine the appropriate action to be taken.
According to KOR, access to and usage of its SDR service will be available to all market participants on a fair, open, and equal basis.
To be granted access to the KOR system, receive trade information, confirm or verify transactions, submit messages, or receive reports, a market participant must be an onboarded user.
To participate in the SDR services offered by KOR, each client will be required to enter into a KOR SA; by entering into the KOR SA each client agrees to be bound by the terms of the KOR SA, the KOR Rulebook, and any published policies and guides.
With respect to prohibiting or limiting a person's access to SDR services, the KOR Rulebook outlines the process required for KOR to decline, revoke, or suspend a user of SDR services.
The KOR Rulebook provides that KOR SBSDR will conduct regular, periodic, objective testing and review of its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity.
According to KOR, data accepted and maintained by the SBSDR may not be used for commercial or business purposes by the SBSDR or any of its affiliated entities.
KOR SBSDR uses the LEI and the Unique Trade Identifier (“UTI”).
The application provides that each swap will be identified in all recordkeeping and all Security-Based Swap Data reporting by the use of a UTI, which will be created, transmitted, and used for each swap.
The application provides that KOR has established procedures and provides facilities for effectively resolving disputes over the accuracy of the SBSDR Transaction Data and positions that are recorded in the KOR SBSDR.
The application includes KOR's fee schedules.
In the application, KOR states that, as a real-time messaging-based service, KOR assesses fees on a per message basis to align SBSDR services and the expense to offer.
KOR SBSDR offers simplified subscription plans where each tier plan limits the maximum number of messages a Reporting Client may report per month.
KOR SBSDR is a 100% cloud service leveraging the performance and scale available through the cloud infrastructure.
The KOR Rulebook provides that KOR will maintain transaction data and related identifying information for not less than five years after the applicable security-based swap expires and historical positions for not less than five years: (a) in a place and format that is readily accessible and usable to the Commission and other persons with authority to access or view such information, and (b) in an electronic format that is non-rewriteable and non-erasable.
KOR publishes a disclosure document to provide a summary of information regarding its service offerings and the SBS data it maintains.
As a registered SDR, KOR would carry out an important role in the regulatory reporting and public dissemination of SBS transactions. As noted above, KOR has stated that it intends to rely on the no-action statement included in the ANE Adopting Release for the period set forth in the ANE Adopting Release with respect to any SBS asset class or classes for which it intends to accept transaction reports.
Interested persons are invited to submit written data, views, and arguments concerning KOR's Form SDR, including whether KOR has satisfied the requirements for registration as an SDR and as a SIP. Commenters are requested, to the extent possible, to provide empirical data and other factual support for their views. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
Copies of the Form SDR, all subsequent amendments, all written statements with respect to the Form SDR that are filed with the Commission, and all written communications relating to the Form SDR between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Section, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m.
Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File Number SBSDR-2023-01 and should be submitted on or before August 28, 2024.
By the Commission.
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 seven individuals from the requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) that interstate commercial motor vehicle (CMV) drivers have “no established medical
The exemptions are applicable on August 31, 2024. The exemptions expire on August 31, 2026. Comments must be received on or before September 6, 2024.
You may submit comments identified by the Federal Docket Management System Docket No. FMCSA-2013-0109, Docket No. FMCSA-2013-044, or Docket No. FMCSA-2022-0044 using any of the following methods:
•
•
•
•
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, Washington, DC 20590-0001, (202) 366-4001,
If you submit a comment, please include the docket number for this notice (Docket No. FMCSA-2013-0109, Docket No. FMCSA-2013-044, or Docket No. FMCSA-2022-0044), 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 request. 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. 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 physical qualification standard for drivers regarding epilepsy found in 49 CFR 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
The seven individuals listed in this notice have requested renewal of their exemptions from the epilepsy and seizure disorders prohibition in § 391.41(b)(8), 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 drivers are not currently achieving the statutory level of safety should immediately notify FMCSA. The Agency will evaluate any adverse evidence submitted and, if safety is being compromised or if continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315(b), FMCSA
In accordance with 49 U.S.C. 31136(e) and 31315(b), each of the seven applicants has satisfied the renewal conditions for obtaining an exemption from the epilepsy and seizure disorders prohibition. The seven drivers in this notice remain in good standing with the Agency, have maintained their medical monitoring and have not exhibited any medical issues that would compromise their ability to safely operate a CMV during the previous 2-year exemption period. 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 renewal applicant for a period of 2 years is likely to achieve a level of safety equal to that existing without the exemption.
As of August 31, 2024, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following seven individuals have satisfied the renewal conditions for obtaining an exemption from the epilepsy and seizure disorders prohibition in the FMCSRs for interstate CMV drivers:
The drivers were included in docket number FMCSA-2013-0109, FMCSA-2013-044, or FMCSA-2022-0044. Their exemptions are applicable as of August 31, 2024 and will expire on August 31, 2026.
The exemptions are extended subject to the following conditions: (1) each driver must remain seizure-free and maintain a stable treatment during the 2-year exemption period; (2) each driver must submit annual reports from their treating physicians attesting to the stability of treatment and that the driver has remained seizure-free; (3) each driver must undergo an annual medical examination by a certified ME, as defined by § 390.5; and (4) each driver must provide a copy of the annual medical certification to the employer for retention in the driver's qualification file, or keep a copy of his/her driver's qualification file if he/she is self-employed. The driver must also have a copy of the exemption when driving, for presentation to a duly authorized Federal, State, or local enforcement official. 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 on its evaluation of the seven exemption applications, FMCSA renews the exemptions of the aforementioned drivers from the epilepsy and seizure disorders prohibition in § 391.41(b)(8). 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.
Office of the Secretary, Department of Transportation (DOT).
Notice of Performance Review Board (PRB) appointments.
DOT published the names of the persons selected to serve on Departmental PRBs.
Anne B. Audet, Director, Departmental Office of Human Resource Management (202) 366-2478.
The persons named below may be selected to serve on one or more Departmental PRBs.
Office of the Comptroller of the Currency (OCC), Treasury; Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); National Credit Union Administration (NCUA); Consumer Financial Protection Bureau (CFPB); and Federal Housing Finance Agency (FHFA).
Final rule.
The OCC, Board, FDIC, NCUA, CFPB, and FHFA (collectively, the agencies) are adopting a final rule to implement the quality control standards mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) for the use of automated valuation models (AVMs) by mortgage originators and secondary market issuers in determining the collateral worth of a mortgage secured by a consumer's principal dwelling. Under the final rule, institutions that engage in certain credit decisions or securitization determinations must adopt policies, practices, procedures, and control systems to ensure that AVMs used in these transactions to determine the value of mortgage collateral adhere to quality control standards designed to ensure a high level of confidence in the estimates produced by AVMs; protect against the manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and comply with applicable nondiscrimination laws.
This final rule is effective October 1, 2025.
Section 1473(q) of the Dodd-Frank Act amended title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA or title XI)
The term “automated valuation model” is commonly used to describe computer programs that estimate a property's value and are used for a variety of purposes, including loan underwriting and portfolio monitoring.
Section 1125 directs the agencies to promulgate regulations to implement quality control standards regarding AVMs.
Driven in part by advances in database and modeling technology and the availability of larger property datasets, the mortgage industry has begun to use AVMs with increasing frequency as part of the real estate valuation process. For example, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Government Sponsored Enterprises or GSEs) use proprietary AVMs in their collateral valuation processes. While advances in AVM technology and data availability have the potential to contribute to lower costs and shorten turnaround times in the performance of property valuations, it is important that institutions using such tools take appropriate steps, as required by section 1125, to ensure the credibility and integrity of the valuations produced by AVMs.
Since 2010, the OCC, Board, FDIC, and NCUA have provided supervisory guidance on the use of AVMs by the institutions they regulate in Appendix B to the Interagency Appraisal and Evaluation Guidelines (Appraisal Guidelines).
In addition to Appendix B of the Appraisal Guidelines, the OCC, Board, and FDIC have issued guidance on model risk management practices (Model Risk Management Guidance) that provides comprehensive supervisory guidance on validation and testing of models.
The CFPB and FHFA are also not parties to the Appraisal Guidelines or the Model Risk Management Guidance. The FHFA has separately issued model risk management guidance that provides the FHFA's supervisory expectations for its regulated entities in the development, validation, and use of models.
The OCC, Board, FDIC, NCUA, CFPB, and FHFA have also provided guidance on managing the risk inherent in the use of third-party service providers, such as outside entities that provide AVMs and AVM services.
Institutions that are not regulated by the agency or agencies providing the guidance may still look to the guidance for assistance with compliance. The OCC, FDIC, Federal Reserve, NCUA, CFPB, FHFA, FTC, and State attorneys general each have an important role in enforcing this rule as to their respective regulated entities or covered market participants.
The proposed rule would have required that mortgage originators and secondary market issuers adopt policies, practices, procedures, and control systems to ensure that AVMs used in certain credit decisions or covered securitization determinations (as defined below) adhere to quality control standards designed to (1) ensure a high level of confidence in the estimates produced; (2) protect against the manipulation of data; (3) avoid conflicts of interest; (4) require random sample testing and reviews; and (5) comply with applicable nondiscrimination laws. The proposed rule would not have set specific requirements for how institutions are to structure these policies, practices, procedures, and
The agencies received approximately 50 comments on the proposed rule to implement the quality control standards for AVMs in title XI, including comments from financial institutions, financial institution trade associations, real estate trade associations, mortgage insurance trade associations, appraiser trade associations, nonprofit advocacy organizations, AVM developers, and appraisers. Most commenters recognized that quality control standards for AVMs are required by title XI and are important to the safety and soundness of mortgage lending and securitizations involving mortgages. Most commenters also expressed support for the flexibility in the proposed rule for institutions to set quality controls for AVMs as appropriate based on the size, complexity, and risk profile of the institution and the transactions for which they would use AVMs covered by the proposed rule.
While most commenters recognized the importance of ensuring that AVMs used by mortgage originators and secondary market issuers do not violate fair lending laws, some commenters expressed concern about how to implement the proposed quality control standards, particularly the fifth quality control factor on nondiscrimination, and suggested that additional guidance from the agencies may be needed in the future. Some commenters suggested that the rule should apply to AVM developers and vendors, rather than lending institutions, given that mortgage originators have no control over how AVMs are created. A number of commenters recommended that the agencies work with the private sector to develop a standard setting organization (SSO) for AVMs and an independent third-party entity responsible for testing AVMs for compliance with the proposed quality control standards.
The agencies are finalizing the proposed rule largely as proposed. The agencies are also making clarifying edits to the definition of the term “mortgage originator,” adding a definition of “person” in response to comments received, and inserting the words “seek to” into the third quality control factor in order to match the language of section 1125, as discussed in the preamble to the proposed rule. The flexible approach to implementing the quality control standards provided by the final rule will allow the implementation of the standards to evolve along with changes in AVM technology and minimize compliance costs. Regarding the fifth quality control factor, the agencies note that existing nondiscrimination laws apply to appraisals and AVMs and that institutions have a preexisting obligation to comply with all Federal laws, including Federal nondiscrimination laws. Institutions will have flexibility to adopt approaches to implement this quality control factor in ways that reflect the risks and complexities of their individual business models. In addition, there is existing guidance on fair lending considerations to inform compliance with the nondiscrimination factor.
Regarding commenters' suggestion to apply the rule to AVM developers and vendors, the agencies note that, while section 1125 applies to mortgage originators and secondary market issuers, financial institutions should be able to work with AVM developers and vendors to assist them with their compliance obligations under the rule, as they do with other third-party vendors in order to comply with relevant regulatory requirements. The agencies recognize that one or more SSOs and third-party AVM testing entities could be beneficial to effective compliance with the AVM rule. As long as financial institutions meet the obligations provided in the final rule, they are free to work with third parties to assist them with their compliance obligations.
The following is a detailed discussion of the proposed rule, the comments the agencies received, the responses to the comments, and the final rule.
The proposed rule would have applied to AVMs used in connection with making a credit decision. The proposed rule would have defined “credit decision,” in part, to include a decision regarding whether and under what terms to originate, modify, terminate, or make other changes to a mortgage. The proposed rule would have expressly excluded the use of AVMs in monitoring the quality or performance of mortgages or mortgage-backed securities. The use of AVMs solely to monitor a creditor's mortgage portfolio would not have been a credit decision under the proposed rule because the lending institution has already made the credit decision. The scope of the proposed rule included, for example, decisions regarding originating a mortgage; modifying the terms of an existing loan; and renewing, increasing, or terminating a home equity line of credit (HELOC). The proposed rule used the term “credit decision” to help clarify that the proposed rule would have covered these various types of decisions.
The proposal to limit the scope of the rule to credit decisions (or, as discussed below, covered securitization determinations) reflected the statutory definition of AVM, which focuses on the use of an AVM “by mortgage originators and secondary market issuers to
Most commenters expressed support for limiting the scope of the rule to AVMs used in connection with making credit decisions (or, as discussed below,
Some commenters argued that the rule should apply to the use of AVMs to value a consumer's principal dwelling for any purpose. For example, one commenter argued that the statutory definition of “automated valuation model” at section 1125 does not limit applicability only to AVMs used during underwriting.
The final rule limits the scope of the rule to credit decisions and, as discussed below, covered securitization determinations. This scope is consistent with the statutory language in section 1125, which focuses on determinations of value. The focus on determinations of value made in connection with credit decisions or covered securitization determinations, and the exclusion of AVM use for portfolio monitoring, will also reduce the compliance costs associated with a broader application of the quality control standards.
The agencies received several comments on this topic. Two commenters asked the agencies to clarify how the rule would apply to certain credit decisions. The first of these commenters expressed support for treating a decision to modify a loan as a credit decision because, like an initial credit decision, when a mortgage originator assesses collateral value for a loan modification, the mortgage originator is assessing whether the value of the collateral is sufficient to support the decision to engage in the transaction. However, the commenter asked the agencies to strike the reference to “other changes” from the definition of “credit decision.” The commenter believed that this change would reduce ambiguity regarding the type of conduct covered by the definition of credit decision. The other commenter suggested that the agencies make clear that assumptions are a credit event and would fall under the rule. This commenter added that the use of assumptions may rise in the future, so the market would benefit from that clarity.
As discussed further below, the agencies have considered these two comments, but do not find it necessary to provide any additional clarification regarding how the rule applies to credit decisions. Section 1125 of FIRREA defines an AVM as “any computerized model used by mortgage originators and secondary market issuers
Several other commenters disagreed with applying the rule to AVMs used to modify or change the terms of an existing loan. One of these commenters suggested that covering loan modifications would present operational challenges and is unsupported by an articulated benefit to consumers. Another commenter stated that covering modifications could discourage the use of AVMs and push lenders to use appraisals for modifications, which are more costly and time-consuming. Two other commenters expressed concern that covering loan modifications could increase costs for borrowers already facing financial distress. One of these commenters further noted that covering loan modifications also could make the loss mitigation process take longer. Finally, another commenter stated that the proposal to include loan modifications should have minimal, if any, impact on the market because the majority of loan modifications do not require a valuation of the property. However, the commenter recommended that the rule align with the traditional practice described in the Truth in lending Act (TILA) of distinguishing the role of servicers from that of originators in cases where there is no new extension of credit. The commenter argued that, unless this rule's definition of credit decision excludes loan modifications that are not a new extension of credit, the regulatory framework for this rule could be misapplied to other regulations.
The agencies have considered these comments and are adopting the final rule as proposed. AVMs are often used to determine the value of collateral in connection with loan modifications and other changes to mortgages. Further, the agencies continue to view quality control standards for AVMs used to make credit decisions relating to loan modifications and other changes to mortgages as important both to safety and soundness and to consumer protection. As discussed below, many institutions have already set up quality control systems for AVMs and have third-party risk management programs in place. For those institutions, existing quality control systems and third-party risk management programs should mitigate the burden of implementing additional quality control standards for AVMs used to modify or to change the terms of existing loans as well as any related costs passed on to consumers. In addition, the flexibility the rule provides to institutions to design policies, practices, procedures, and control systems to implement the quality control standards should reduce the burden of implementing additional quality control standards for AVMs used to modify or to change the terms of existing loans. This flexibility should
Finally, the agencies considered the comment recommending that the rule align with the traditional practice described in TILA of distinguishing the role of servicers from that of mortgage originators in cases where there is no new extension of credit. However, the agencies decline to adopt changes to the proposed rule based on the comment. Although, as discussed in detail in part III.C.7 of this
The agencies received several comments on this topic. Two commenters generally supported applying the rule to HELOCs, while two commenters opposed this application. These commenters expressed the concern that the burden and expense of compliance would outweigh the consumer protection and safety and soundness benefits. Another commenter requested further clarification regarding how the rule would apply when AVMs are used to make credit decisions relating to HELOC reductions and suspensions.
The agencies have considered these comments and are adopting the final rule as proposed. The agencies have determined that AVMs used to make credit decisions relating to HELOC reductions and suspensions are important both to safety and soundness and to consumer protection. As discussed below, many institutions have already set up quality control systems for AVMs and have third-party risk management programs in place. These existing quality control systems and third-party risk management programs should mitigate the burden and expense of implementing additional quality control standards for AVMs used to make credit decisions relating to HELOC reductions and suspensions as well as any related costs passed on to consumers. In addition, the flexibility provided to institutions under the final rule to design policies, practices, procedures, and control systems to implement the quality control standards should also reduce both the burden of implementing additional quality controls standards for AVMs used to make credit decisions relating to HELOC reductions and suspensions and any related costs passed on to consumers.
The language of section 1125 includes not only mortgage originators, but also secondary market issuers.
Both GSEs have appraisal waiver programs and are the predominant issuers of appraisal waivers in the current mortgage market.
In this example, when the GSEs use AVMs to determine whether the mortgage originator's estimated collateral value or the contract price meets acceptable thresholds for issuing an appraisal waiver offer, the GSEs would be making a “covered securitization determination” under the proposed rule. As a result, the proposed rule would have required the GSEs, as secondary market issuers, to maintain policies, practices, procedures, and control systems designed to ensure that their use of such AVMs adheres to the rule's quality control standards. On the other hand, the mortgage originator in this context would not be making a “covered securitization determination” under the proposed rule because the GSE would be using its AVM to make the appraisal waiver decision. As a result, the mortgage originator would not be responsible for ensuring that the GSEs' AVMs comply with the proposed rule's quality control standards.
Most commenters agreed that the GSEs make the valuation decision in connection with appraisal waivers and should be covered by the quality control
Many commenters stated that it would be very difficult for lenders to conduct quality control of the GSEs' AVMs for reasons including that the GSEs have treated their data, analytics, and testing as proprietary and have not shared information with the industry. Commenters also suggested that requiring lenders to conduct quality control of secondary market issuers' AVMs would be redundant because the secondary market issuers are already covered by the proposed rule and are better positioned to implement quality controls on their AVMs.
The agencies have determined that secondary market issuers are best positioned to conduct quality control for the AVMs they use in appraisal waiver decisions. This is because the secondary market issuer would be using the AVM to make the appraisal waiver decision in this context, not the mortgage originator. For this reason and after considering the comments, the final rule adopts the proposal to require the secondary market issuers, rather than mortgage originators, to implement the final rule for such AVM use.
Regarding providing to consumers copies of valuations used in connection with appraisal waiver decisions, the comment is on a matter outside the scope of this rulemaking. The agencies also note that the CFPB's rules in Regulation B implementing ECOA generally require creditors to provide applicants for first-lien loans on a dwelling with copies of written valuations developed in connection with an application.
The proposed rule would have covered AVM usage when a secondary market issuer uses an AVM as part of a new or revised value determination in connection with a covered securitization determination. For example, the GSEs currently use the origination appraised value or the estimated value in appraisal waivers when issuing mortgage-backed securities (MBS). Hence, AVMs are not used by the GSEs to make a new or revised value determination in connection with MBS issuances. However, because the GSEs provide guarantees of timely payment of principal and interest on loans that are included in an MBS, they are obligated to purchase loans that are in default from MBS loan pools. The GSEs may modify such loans and subsequently re-securitize them as new MBS offerings. In these instances, the GSEs may use an AVM to estimate collateral value for investor transparency and disclosure. AVMs used in this manner by the GSEs would have been considered covered securitization determinations because there are new or revised value determinations. As discussed below, the proposed rule would have distinguished between secondary market issuers using AVMs to determine the value of collateral securing a mortgage versus using AVMs solely to review completed value determinations. For example, AVMs used solely to review appraisals obtained during mortgage origination would not have been covered by the proposed rule.
Most commenters supported the proposal to cover AVMs used by secondary market issuers in connection with covered securitization determinations. One commenter expressed general support for covering securitizations, stating that transparency in how AVMs are tested, measured, and applied would allow for better valuations and more informed risk decision-making. Another commenter expressed support for consistent requirements across all activities by institutions, including secondary market issuers, stating that covering securitizations would alleviate the risk of an inconsistent approach to the development of quality control standards. Another commenter stated that it is important for the GSEs to be covered by the proposed rule because the GSEs (1) finance more than half of all purchase originations, and (2) the internalization of valuation risk by the GSEs poses a systemic threat to the housing finance system that could undermine investor confidence if questioned, especially if they exit conservatorship without an explicit Federal backstop.
One commenter echoed this point, stating that it is important to cover secondary market issuers because the issuers significantly influence how mortgage originators perform their underwriting. Similarly, another commenter stated it is important to cover the GSEs because they are two of the largest users and managers of AVMs in the market. The commenter stated further that there is additional potential for increased taxpayer risk if an AVM
One commenter also suggested that, because AVMs are developed using data and models that reflect past and ongoing discrimination, the agencies should seek broad coverage of AVMs, including those used by the GSEs. Another commenter suggested that covering AVMs used by secondary market issuers also would promote financial stability. A number of commenters stated that Federal governmental support for the GSEs and the Government National Mortgage Association provides an additional reason to apply quality control standards to AVMs used by these entities.
As stated in the proposal, covering secondary market issuers is consistent with the plain language of the statute and provides quality control for AVMs used in an expansive and crucial segment of the mortgage lending market. For these reasons and after considering the comments, the agencies are adopting the proposal to cover secondary market issuers' use of AVMs in covered securitization determinations.
Under the appraisal regulations issued by the OCC, Board, FDIC, and NCUA, lenders regulated by those agencies are required to obtain “evaluations,” or “written estimates of market value” under the NCUA's regulations, for certain transactions that fall within exceptions specified in the appraisal regulations.
The proposed rule would have covered AVMs used in the process of preparing evaluations. This distinction between application of the rule to appraisals versus evaluations reflects the fact that USPAP standards and appraiser credentialing are not required for individuals who prepare evaluations. The proposed rule's coverage of AVMs used in the process of preparing evaluations also reflected the more extensive use of, and reliance on, AVMs within the evaluation function.
Most commenters agreed with the proposed exclusion of appraisals performed by licensed or certified appraisers from the scope of the rule. The commenters noted that appraisers are already subject to quality control standards and that exempting appraisers would avoid duplicative and burdensome regulation in an area where banks are already encountering shortages of appraisers. One commenter stated that the proposal's excluded uses do not involve credit decision making and suggested that excluding these uses will reduce burden and costs that may otherwise be passed on to consumers.
One commenter stated that, while appraisers often use an AVM or other tools to provide support and understanding for their opinions, appraisers are experts designated by Congress to protect public trust and they dedicate their lives to studying real estate data. Another commenter observed that appraisers do not use “lending grade” AVMs to develop full, traditional appraisals. The commenter stated that some appraisers may use AVMs to gauge a starting point for appraisals, but that appraisers have limited access to lending-grade AVMs. Another commenter noted that under USPAP, an AVM is a tool that appraisers may use for their work (such as for internal checks and balances), but not for the completion of an appraisal in determining the appraiser's opinion of value. The commenter expressed agreement with the statement in the preamble that an appraiser must make a valuation conclusion that is supportable independently and does not rely on an AVM to determine the value of the underlying collateral. One commenter stated that AVM use by appraisers is low and infrequent and noted that higher quality AVMs are often cost prohibitive for appraisers to use. The commenter suggested that imposing compliance costs on use of AVMs by appraisers would discourage the use of AVMs as a check for obvious errors.
A small number of commenters argued that the quality control standards should be broadly applicable and advocated for removing the exclusions for development of appraisals by appraisers. For example, one commenter suggested that allowing appraisers to use AVMs that are not subject to quality control would create institutional and consumer confusion and a heightened risk of misapplication of AVM results. The commenter noted that USPAP provides that an appraiser may only use an AVM as part of the valuation process if the appraiser has a basic understanding of how the AVM works.
As discussed earlier, while appraisers may use AVMs in preparing appraisals, they must achieve credible results in preparing an appraisal under USPAP and its interpreting opinions. As such, an appraiser must make a valuation conclusion that is supportable independently and does not rely on an AVM to determine the value of the underlying collateral. In addition, it may be impractical for mortgage originators and secondary market issuers to adopt policies, practices, procedures, and control systems to ensure quality controls for AVMs used by the numerous independent appraisers with whom they work. For these reasons and after considering the comments, the final rule excludes from coverage the use of AVMs by a certified or licensed appraiser in developing an appraisal, consistent with the proposal. The agencies did not receive specific comments on covering evaluations. For
Many commenters expressed support for not covering the use of AVMs for reviews of completed determinations in the rule. The commenters stated such exclusion would reduce some burdens and costs that may otherwise be passed on to borrowers. One commenter stated that an institution may, but is not required to, use an AVM to test the reasonableness of an appraisal or evaluation. The commenter recommended that the rule cover such AVM use. Other commenters suggested that AVMs used for appraisal review should be covered to avoid inconsistent standards, to ensure that discriminatory valuations are identified, or because all AVMs used in housing finance should be subject to quality control standards.
As discussed earlier, the agencies continue to view the focus on value determinations as consistent with section 1125. For this reason and those stated above, after considering the comments, the agencies are adopting the proposal to exclude reviews of completed determinations from the scope of the rule. The agencies note that the rule does not make distinctions based on the amount of time between the completed determination and the subsequent review; if an AVM is being used solely to review the completed determination, the AVM use is not covered by the rule regardless of when the AVM is used after that determination.
The proposed rule would have required mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third party or affiliate, to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs used in these transactions adhere to certain quality control standards. The proposed rule would have required those quality control standards be designed to ensure a high level of confidence in the estimates produced; protect against the manipulation of data; avoid conflicts of interest; and require random sample testing and reviews. These four quality control factors would have implemented the minimum standards required by the statute. The proposal would have allowed mortgage originators and secondary market issuers covered by the proposal the flexibility to set their quality control standards for covered AVMs as appropriate based on the size, complexity, and risk profile of the institution and the transactions for which they would use AVMs covered by the proposed rule.
Most commenters supported the proposed flexibility for implementing the statutory quality control standards. These commenters agreed that mortgage originators and secondary market issuers should have the flexibility to adopt policies, practices, procedures, and control systems to implement the quality control standards based on size, complexity, and risk profile of the institution and the transactions for which they would use AVMs covered by the rule. One commenter stated that AVM models will continue to grow and evolve, making the flexible approach appropriate in order to allow institutions to make refinements as technology changes. The commenter also stated that the flexible approach would reduce regulatory burden and that a prescriptive approach could constrain meaningful use of AVMs. Another commenter stated that a more prescriptive rule might not adjust to changing industry developments.
One commenter stated that the principles-based approach of the rule would give credit unions flexibility to narrowly tailor their quality control standards to their unique circumstances. Another commenter stated that a prescriptive rule could present an undue burden on small institutions. Another commenter indicated that a principles-based option could mitigate compliance costs and foster innovation in the AVM space but suggested that there is a need for uniformity and consistency when determinations of relevancy and confidence levels are required. The commenter suggested that the rule specifically cite those determinations of relevance and confidence levels.
One commenter who supported the flexible approach stated that banks already adhere to supervisory guidance on model risk management, appraisals, and third-party risk management, making prescriptive regulation unnecessary. This commenter also suggested that a “one size fits all” approach would not work well, given the variety of mortgage originators and their business models. The commenter also argued that prescriptive AVM standards would impede technical innovation but suggested that it would be helpful for the agencies to provide guidance on the types of issues the agencies have identified with AVMs, as well as potential remedies of those issues, with narratives, analytical and quantitative examples, and case studies to inform stakeholders. Another commenter stated that flexible, transparent, principles-based approaches to AVM standards are relatively inexpensive and not time-consuming to incorporate and apply and that AVM testing and individual AVM model performance detail may be readily available through a firm's internal testing group or numerous third-party, independent testing organizations.
One commenter stated that principles-based quality control standards would help foster innovation that will ultimately benefit consumers and the housing market. The commenter stated that as AVM technology continues to develop, a prescriptive approach to regulation would likely become outdated and ineffective quickly, impeding innovation and limiting regulators' ability to protect consumers as technology evolves. The commenter suggested, however, that focused guidance is warranted to address issues such as testing of AVMs and consideration of whether the use of pricing information in AVM models is appropriate.
One commenter stated that the proposed quality control standards would not hinder competition among AVM developers, AVM users, or future innovation. The commenter stated further that the standards would empower AVM users to utilize risk management practices consistent with the Appraisal Guidelines.
Another commenter who expressed support for the nonprescriptive approach suggested that the wide variety of AVMs and the vast diversity in lender, investor, guarantor, and related stakeholder uses of AVMs would make a prescriptive approach difficult
Another commenter stated that the proposed principles-based approach is appropriate because AVMs are constantly evolving and model development techniques, model deployment processes, data types, and data sources will change, AVMs will evolve, and risk mitigation, testing, and quality control will have to adapt.
Another commenter stated that the techniques used to train models, including AVMs, that rely on artificial intelligence and machine learning are developing rapidly, and that it would be imprudent to take an overly specific approach that may be incompatible with—or even deter the adoption of—advancements in AVM techniques that are likely to be forthcoming. The commenter stated further that a flexible and principles-based approach, on the other hand, will remain applicable regardless of changes in AVM methodologies, quality control best practices, and data availability. The commenter stated that this is especially true for the proposed nondiscrimination quality control factor, given that techniques for mitigating disparate impact, debiasing models, and searching for less discriminatory alternatives continue to develop. The commenter argued that a flexible, principles-based approach will encourage and enable entities to adopt the latest, most effective techniques for mitigating discrimination risk.
A minority of commenters preferred a more prescriptive approach to implementing the quality control standards. One commenter argued that the flexible approach would not likely help community banks that may prefer or require clear and simple instructions on how to comply with the quality control standards. Another commenter suggested that a prescriptive approach would create uniformity in the use of AVMs in the marketplace, provide broader consumer protection, and create a consistent level of safety and soundness when institutions rely on AVM conclusions.
One commenter suggested that the final rule include prescriptive standards for AVM testing, validation, and confidence needed to assess whether an AVM was appropriate to use for a particular transaction. Two commenters suggested that the agencies use a blended approach to quality control measures for AVMs, with some standardized reporting and testing requirements, while also allowing covered entities to develop tailored policies, practices, procedures, and control systems. One commenter suggested that AVMs need standardized confidence scores and standardized reporting formats to enable broader use and basic statistics on the temporality, proximity, and homogeneity of the data.
Another commenter stated that the rule should provide specific guidelines to explain how institutions are to structure policies, practices, procedures, and control systems, and should add specific minimum standards for the quality control standards in the final rule. The commenter stated that consumers deserve the same level of protection whether they are obtaining a loan from a larger or smaller originator and recommended that the agencies adopt the Appraisal Guidelines as a rule to make the Appraisal Guidelines stronger and more effective.
Two commenters noted that there was an inconsistency in the proposed rule concerning the third quality control factor relating to avoiding conflicts of interest. The commenters noted that the preamble referred to the third factor as “seek to avoid conflicts of interest” while the regulatory text used “avoid conflicts of interest.” These commenters stated that the use of “seek” would be consistent with the statutory language in section 1125. As discussed in more detail below, some commenters also suggested that AVMs should be tested or certified by a third-party tester instead of, or as a supplement to, the approach taken in the proposed rule.
After considering the comments, the agencies have determined that the proposed method was appropriate, and that a flexible approach to implementing the quality control standards would allow the implementation of the standards to evolve along with AVM technology and reduce compliance costs. Different policies, practices, procedures, and control systems may be appropriate for institutions of different sizes with different business models and risk profiles, and a more prescriptive rule could unduly restrict institutions' efforts to set their risk management practices accordingly. As modeling technology continues to evolve, this flexible approach will allow institutions to refine their implementation of the rule as appropriate. The proposed and now adopted approach will allow mortgage originators and secondary market issuers the flexibility to set their quality control standards for covered AVMs as appropriate based on the size, complexity, and risk profile of their institution and the transactions for which they would use AVMs covered by the rule.
In regard to the suggestion by some commenters that fostering uniformity in the AVM market would benefit consumers and stakeholders, such uniformity could interfere with the appropriate current and future use of AVMs. In addition, the agencies determined that prescriptive rules would pose a challenge due to the inherent complexity of AVMs and their use cases and the differing size and activities of the institutions that use AVMs. The quality control standards adopted are clear and simple and a more prescriptive rule would become unmanageable over time due to rapidly evolving technology.
Moreover, the quality control standards are also consistent with practices that many participants in the mortgage lending market already follow and with the guidance described above that applies to many regulated institutions that will be subject to the final rule. For example, the Model Risk Management Guidance provides comprehensive suggestions for assessing and monitoring model risk, including on appropriate governance, policies, and procedures for model risk management. In addition, Appendix B of the Appraisal Guidelines contains detailed guidance for institutions seeking to establish policies, practices, procedures, and control systems to ensure the accuracy, reliability, and independence of AVMs. The requirement for quality control standards is also consistent with third-party risk guidance, as discussed earlier. Furthermore, in line with the agencies' service provider guidance, regardless of whether mortgage originators and secondary market issuers use their own AVMs or third-party AVMs, the final rule requires mortgage originators and secondary market issuers to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs adhere to the rule's requisite quality control standards.
Regarding one commenter's suggestion that existing agency guidance be adopted as part of the rule, the agencies determined that doing so is not necessary at this time and could make it more difficult to adapt the guidance as new issues arise. As previously discussed, many of the institutions that
Section 1125 provides the agencies with the authority to “account for any other such factor” that the agencies “determine to be appropriate.”
Many commenters expressed support for the fifth factor, agreeing that it is important to assess whether AVMs are consistent with fair lending laws and that existing law requires this step. Many commenters endorsed the proposal to add this fifth factor on nondiscrimination to highlight this element of existing laws and create an independent legal requirement for institutions to adopt policies, practices, procedures, and control systems for AVMs that comply with applicable nondiscrimination laws.
Many commenters stated that discrimination is an issue in valuations, including in AVMs, and that specifying a nondiscrimination factor would be useful for reinforcing the applicability of nondiscrimination laws to AVMs. Several commenters asserted that AVMs risk reproducing bias and perpetuating discrimination if they are not adequately examined and tested. These commenters stated that the information used to develop and train AVMs is often drawn from existing data sets that may reflect human biases and historical prejudices. One commenter stated that inclusion of the nondiscrimination factor for AVM models serves as an important reminder to AVM developers and users about the necessity of fair lending and fair housing to a functional marketplace, while another commenter stated that it would help ensure a level playing field. Some commenters asserted that the nondiscrimination factor would work in parallel and reinforce the other quality control factors. One commenter noted that nondiscrimination is implicitly included in the first four factors. This commenter stated further that the nondiscrimination quality control factor does not introduce a new requirement, but rather emphasizes the applicability of nondiscrimination laws to AVMs and is consistent with current law and existing fair lending guidance.
One commenter stated that nondiscrimination should be understood as a dimension of model performance and a required aspect of quality control. The commenter further asserted that discrimination should be understood as a safety and soundness risk. One commenter stated that banks fully support fair lending laws and currently implement fair lending requirements. The commenter stated further that they are aware of the unique considerations that AVMs present and that banks in their State rely on current fair lending requirements and underwriting and appraisal management guidance to guide their use of AVMs, for example through current model risk management guidance. Another commenter stated that the advantages of specifying the fifth factor are that it will emphasize the safe and effective use of AVMs and encourage expanded use of AVMs as a valuation tool in the industry, both on a stand-alone and independent basis where appropriate, as well as in concert with, and as additional support for, traditional, hybrid, and alternative approaches to value.
A number of commenters suggested that AVM use has the potential to reduce bias in valuations, given that AVMs do not take into account the race of the participants to a particular transaction. One commenter suggested that use of nondiscriminatory AVMs has the potential to provide significant benefits to industry and consumers. The commenter stated that, since AVMs do not know the racial composition of the borrower or neighborhood, an AVM may help provide a fair and unbiased estimate of value. The commenter stated further that the fifth quality control factor would encourage expanded use of AVMs as a valuation tool in the industry. The commenter also stated that specifying a nondiscrimination quality control factor in the rule would be useful in emphasizing the importance of providing support for nondiscrimination or analysis of the potential disparate impact in the use of AVMs.
Similar to the first four quality control factors, most commenters supported a nonprescriptive approach to the
One commenter stated that agency guidance would be the appropriate venue to address the more nuanced issues of compliance, such as how to conduct particular types of testing, including outcomes-based testing for disparate impact, and how to evaluate potential less discriminatory alternatives to an AVM that results in disparate outcomes. The commenter suggested that the final rule should articulate baseline standards for nondiscrimination from applicable statutes and regulations, specifically the ECOA and Fair Housing Act's prohibitions on disparate treatment and disparate impact. The commenter also suggested that compliance with applicable antidiscrimination laws calls for more than simply avoiding the use of prohibited bases as predictive variables in an AVM and that a proper compliance program involves other forms of antidiscrimination testing, such as disparate impact and bias testing.
One commenter stated that existing compliance management systems and fair lending monitoring programs should be able to assess whether an AVM applies different standards or produces disparate valuations on a prohibited basis. A few commenters supported a more prescriptive approach and expressed a need for bias testing standards.
Commenters made additional recommendations, including that the agencies release loan-level data from the Uniform Appraisal Dataset to provide a robust data set to evaluate AVMs and identify less discriminatory alternatives. One commenter also suggested that the agencies organize and encourage private sector activities, such as conferences and research, to inform ongoing guidance on compliance with the quality controls standards. Other commenters suggested that the agencies issue guidance on how to implement the fifth quality control factor.
In contrast, several commenters opposed including the fifth factor. Commenters expressed various concerns, including that the factor would impose a significant compliance burden, lender systems are not able to assess whether an AVM discriminates, the factor is not required by statute, and the addition of the factor is unnecessary and duplicates existing law and the other quality control factors. Two commenters suggested that documented instances of bias in AVMs are not prevalent, and one of these commenters stated that it would be a mistake to attempt to eradicate through regulation the speculative possibility of bias in AVMs, which could reduce AVM use, when the use of this technology can remove the type of subjective, personal bias that traditional appraisals bring to the valuation process. In addition, some commenters stated that the agencies should use other tools to address AVM bias concerns and the onus should be on AVM vendors to ensure models comply with nondiscrimination laws. A few commenters stated that adding this factor may have unintended effects, such as increased loan costs for consumers and small institutions deciding to stop using AVMs altogether in mortgage origination due to uncertainty and the cost of compliance.
One commenter stated that banks support fair lending laws, dedicate considerable resources to comply with them, and are regularly examined for compliance with those laws. The commenter stated, however, that adding a fifth factor on nondiscrimination is not necessary. This commenter noted that long-standing fair lending laws have and will continue to apply to mortgage transactions and the agencies regularly assess banks' compliance management systems. According to this commenter, the agencies can ensure through their examinations that policies, procedures, and controls are in place to address fair lending risk in AVM use. The commenter stated that the agencies can heighten the awareness of fair lending risks without regulation through bulletins and policy guidance. The commenter also expressed concern that codifying the rule in Regulation Z could result in plaintiffs challenging originators with the private right of action and statutory damages set forth in the TILA, which could increase costs for banks and their customers. The commenter stated that Congress clearly did not intend such a result, given that it added the quality control requirements in FIRREA, not TILA.
Several commenters expressed concerns about the ability of lenders to apply quality control standards for fair lending to AVM models. Some commenters expressed concern about how small entities can assess fair lending issues in AVMs or know that they are violating the law. They asserted that existing compliance management systems and fair lending monitoring programs are not able to assess whether an AVM applies different standards or produces disparate valuations on a prohibited basis. They argued that small entities do not have access to an AVM's data or methodology, are unable to validate the algorithms that AVM providers use, and lack the staff to assess the AVM models results.
One commenter stated that most community banks lack in-house expertise needed to test for disparate impact and will lack the volume to yield the number of observations required for testing. The commenter stated that even many larger institutions lack sufficient mortgage lending activity to engage in testing and to justify the cost of disparate impact testing. Another commenter stated that the quality control factor for nondiscrimination may force community banks to shift to using appraisals because of the compliance challenges and uncertainty relating to implementation of the factor. The commenter stated that this will likely disincentivize mortgage lending in rural areas where AVMs can be utilized as a more cost-effective, efficient, and accurate option. The commenter stated that requiring community banks to assess and evaluate models for potential fair lending concerns would be unreasonable, redundant, and extremely costly. The commenter stated further that a community bank is unlikely to retain staff with sufficient expertise to determine valuation accuracy and reverse engineer the algorithms to assess any fair lending red flags.
One commenter stated that credit unions' existing systems are not able to assess whether AVMs discriminate and that the data and resources needed to undertake an analysis of AVMs, including analysis for discriminatory bias, would be significant. Another commenter argued that the inclusion of the factor may make it difficult for credit unions to use AVMs in originating loans. The commenter stated
Other commenters stated that the agencies should use other tools to address AVM bias concerns, including asserting supervisory authority over AVM vendors as service providers and utilizing Dodd-Frank Act authority to supervise nonbank companies that pose risks to consumers. Another commenter argued that fair lending guidelines and mandates should remain within the purview of the Interagency Fair Lending Examination Procedures, thereby creating clarity for compliance management systems and a consistent examiner approach.
Several commenters stated that the burden of compliance with the fifth factor should be placed on the AVM provider. Commenters argued that lenders do not have access to proprietary models used by third parties to be able to assess fair lending performance. One commenter argued that to place the burden on financial institutions would be excessive as financial institutions are obligated to comply with existing regulatory regimes under the ECOA and the Fair Housing Act. One commenter expressed concern regarding lender liability for violating nondiscrimination law when relying on third-party AVMs.
Several commenters requested additional guidance regarding compliance with the nondiscrimination factor. One commenter stated that the agencies have not provided a clear performance indicator by which a lender could discern any inherent bias within a data set. The commenter urged the agencies to provide clear guidance on discriminatory red flags in AVMs. The commenter stated that different industry players have access to varying quality of data, that the agencies should account for this in their guidance and recommendations, and that little legal clarity exists around practices in the AVM industry that may violate the Fair Housing Act.
As the agencies noted in the proposal, existing nondiscrimination laws apply to appraisals and AVMs, and institutions have a preexisting obligation to comply with all Federal laws, including Federal nondiscrimination laws. For example, the ECOA and its implementing Regulation B bar discrimination on a prohibited basis in any aspect of a credit transaction.
As with models more generally, there are increasing concerns about the potential for AVMs to produce property estimates that reflect discriminatory bias, such as by replicating systemic inaccuracies and historical patterns of discrimination. Models could discriminate because of the data used or other aspects of a model's development, design, implementation, or use.
While existing nondiscrimination law applies to an institution's use of AVMs, the agencies proposed to include a fifth quality control factor relating to nondiscrimination to heighten awareness among lenders of the applicability of nondiscrimination laws to AVMs. Specifying a fifth factor on nondiscrimination would create an independent requirement for institutions to establish policies, practices, procedures, and control systems to specifically ensure compliance with applicable nondiscrimination laws, thereby further mitigating discrimination risk in their use of AVMs. Specifying a nondiscrimination factor will increase confidence in AVM estimates and support well-functioning AVMs. In addition, specifying a nondiscrimination factor will help protect against potential safety and soundness risks, such as operational, legal, and compliance risks, associated with failure to comply with nondiscrimination laws.
In proposing to add a fifth quality control factor on nondiscrimination, the agencies noted that compliance with applicable nondiscrimination laws with respect to AVMs may be indirectly reflected within and related to three of the first four statutory quality control factors. For example, the first factor requires quality control standards designed to ensure a high level of confidence in the estimates produced by AVMs. AVMs that reflect discriminatory bias in the data or discriminatory assumptions could affect confidence in AVM outputs and may also result in a form of data manipulation, particularly with respect to model assumptions and in the interactions among variables in a
The fifth quality control factor is consistent not only with current law, but also with well-established fair lending guidance. The OCC, Board, FDIC, NCUA, CFPB, and FHFA have issued statements and other materials setting forth principles they will consider to identify discrimination.
The agencies have determined that the fifth factor is important to the quality control of AVMs and to fair lending. As with the four statutory quality control factors, the agencies are aware of the concerns expressed by some commenters that implementation hurdles, such as access to AVM data and design, could complicate compliance, especially for small entities. However, the existing guidance, as discussed earlier, already addresses many of the elements of quality control for AVMs, including fair lending considerations. In addition, institutions will have the flexibility to adopt approaches to implement the fifth factor in ways that reflect the risks and complexities of institutions' business models.
Regarding a commenter's concern about lender liability for third-party AVMs, the agencies remind institutions that make use of third-party providers that they remain responsible for ensuring that the third parties comply with applicable laws and regulations in performing their activities, including nondiscrimination laws and the safety and soundness requirements established by the OCC, Board, FDIC, and NCUA. As discussed earlier, the agencies have already provided guidance on implementing policies, practices, procedures, and control systems relating to model risk, third-party risk, AVMs, and nondiscrimination. Institutions should refer to relevant rules and statutes for the specific requirements which may apply. Regarding a commenter's concern that the CFPB codifying this rule in Regulation Z could result in plaintiffs challenging originators with a private right of action and statutory damages for some violations set forth in TILA, the CFPB notes that the statutory authority for this AVM rulemaking is FIRREA rather than TILA.
For these reasons and after considering the comments, the agencies are adopting the proposed quality control factor on nondiscrimination.
Section 1125 of title XI defines “automated valuation model” as “any computerized model used by mortgage originators and secondary market issuers to determine the collateral worth of a mortgage secured by a consumer's principal dwelling.”
Most comments supported using the statutory definition of AVM as the basis for the definition in the proposed rule. A few commenters questioned the need to revise the statutory language for “plain English” purposes and to reflect current practice. Other commenters offered proposals to expand the definition. One commenter stated that the agencies should amend the definition to add the components of an AVM, such as comparable sales values. Another commenter suggested that the proposed definition be modified to clarify that an AVM means a model used without alteration of valuation results by a person and that the final rule should include the components of an AVM. Some commenters suggested that the definition should be drafted more broadly to include all market participants using AVMs in mortgage lending and securitization determinations, rather than limiting the scope to mortgage originators and secondary market issuers. One commenter stated that a consumer-facing definition of AVM is needed that discloses the significant uncertainty that exists when using AVMs.
The agencies have concluded that the nonsubstantive changes to the statutory definition of AVM make the definition set forth in regulatory text clearer and more understandable. Changes suggested by commenters (to identify components of an AVM, add usages by other market participants, and serve as a consumer-facing disclosure) would represent a significant departure from the statutory language. For these reasons, and after considering the comments, the agencies are adopting the proposed definition of automated valuation model.
The proposal defined “control systems” as the functions (such as internal and external audits, risk review, quality control, and quality assurance) and information systems that institutions use to measure performance, make decisions about risk, and assess the effectiveness of processes and personnel, including with respect to compliance with statutes and regulations. Under the proposal, the agencies intended for institutions to use control systems that are appropriate for the size, complexity, and risk profile of the institution and the transactions for which they would use AVMs covered by the proposed rule.
Most commenters expressed support for the proposed definition of “control systems.” One commenter suggested that adding further detail to the “control systems” definition could contribute to a misalignment of controls and complexity, given that the proposed rule allows entities to align control systems to the size, complexity, and risk profile of the institution and the transactions for which they would use covered AVMs. Another commenter stated that the definition should address the analytical and statistical nature of control systems designed for an AVM. The commenter suggested that the agencies provide more guidance to ensure a clear understanding of control expectations. Similarly, another commenter asked that the agencies provide more information on how the proposed rule relates to existing guidance about control systems and model usage. The commenter suggested that the agencies issue a compliance guide and frequently asked questions to facilitate implementation for small entities. One commenter stated that, while a “policies and procedures” requirement is the established, well-understood compliance implementation framework for this type of regulation, the proposed definition of control systems is nonstandard and overly defined. The commenter further stated that the rule's related but undefined term “practices” is nonstandard. Other commenters suggested that the final rule include specific control standards.
As discussed earlier, guidance is already in place to assist regulated institutions in implementing policies, practices, procedures, and control systems relating to model risk, third-party risk, AVMs, and nondiscrimination. Institutions that are not regulated by the agency or agencies providing the guidance may still look to the guidance for assistance with compliance. Regarding the comments concerning the inclusion of control systems, the agencies note that policies, practices, procedures, and control systems are all part of ensuring that AVMs adhere to the rule's requisite quality control standards. In addition, many institutions already employ control systems with respect to AVM use. These factors, in addition to the rule's flexible approach to implementing the statute, should allow institutions to implement appropriate control systems and mitigate compliance costs, particularly for smaller institutions. For these reasons, and after considering the comments, the agencies are adopting the proposed definition of “control systems.”
The proposed rule defined “covered securitization determination” to mean a determination regarding (1) whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer, or (2) structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations. Monitoring collateral value in mortgage-backed securitizations after they have already been issued would not have been a covered securitization determination under the proposed rule. One commenter, however, stated that small entities do not securitize loans and remarked that the rule could create a cost burden and hinder access to the secondary market, particularly for small mortgage originators.
The agencies received few comments on the proposed definition of “covered securitization determination.” As discussed earlier, commenters supported the application of the quality control standards to secondary market issuers and in the appraisal waiver context. The agencies did not receive comments asking for changes to the proposed definition of “covered securitization determination.”
As discussed above, covering secondary market issuers' use of AVMs in covered securitization determinations—including determinations regarding appraisal waivers and structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations—is consistent with protecting the safety and soundness of institutions and protecting consumers and investors by reducing the risk that secondary market issuers would misvalue homes. For these reasons and after considering the comments, the agencies are adopting the proposed definition of covered securitization determination.
The proposed rule would have defined the term credit decision to mean a decision regarding whether and under what terms to originate, modify, terminate, or make other changes to a mortgage, including a decision on whether to extend new or additional credit or change the limit on a line of credit. Monitoring the value of the underlying real estate collateral in loan portfolios would not have been a credit decision for the purposes of the proposed rule. This point reflects the fact that the collateral worth of a mortgage is generally determined in connection with credit decisions or covered securitization determinations, rather than when the value of the collateral supporting a mortgage is monitored or verified.
The commenters generally did not offer any suggestions for making the proposed definition of “credit decision” clearer, but one commenter stated that the phrase “make other changes to a mortgage” is ambiguous and should be excluded from the definition. The phrase “make other changes to a mortgage” in the definition is clarified by the context of other words in the definition (
For these reasons, and for the reasons stated earlier with respect to the scope of the rule and after considering the comments, the agencies are adopting the proposed definition of “credit decision.”
The definition of AVM in section 1125 refers to a mortgage secured by a “consumer's principal dwelling.”
The CFPB proposed to codify its AVM requirements in Regulation Z, 12 CFR part 1026, which generally implements TILA. The definition of “dwelling” proposed by the other agencies was consistent with the CFPB's existing Regulation Z.
Several commenters suggested that the definition of “dwelling” should cover real property only and exclude AVMs used in lending for manufactured homes and recreational vehicles (RVs), trailers, and other structures that retain their mobility. These commenters similarly suggested that the final rule should exclude from coverage cost estimate guides and other valuation tools used to value such collateral that may be a consumer's principal dwelling but is not real estate. One commenter asked that the final rule confirm that the rule does not apply to cost estimates like those used in complying with the higher-priced mortgage loan appraisal requirements of Regulation Z § 1026.35. In explaining its suggestion, the commenter stated that a cost estimate is derived from closed sales data and that the designation as a cost approach is significant as it does not rely on comparable sales and is simply the cost to make less depreciation.
The commenter stated further that cost estimates are not location (address or neighborhood) specific; they are region specific. The commenter noted that, for example, one cost estimate guide was developed exclusively for the factory built, manufactured housing industry and that manufactured homeowners, consumers, retailers, and lenders all rely on such independent cost estimates to confirm home values. The commenter further stated that the burden of attempting to comply with the AVM rule, should it be read to cover these cost estimates, would be significant and nearly impossible, especially when compared with any negligible risk to consumers. Another commenter expressed similar concerns relating to valuation tools for non-real estate related loans. This commenter noted that lenders in some markets make non-real estate loans to meet the credit and housing needs of their customers, and, in making these loans, use different tools that might be considered AVMs under the proposed definition of dwelling. The commenter stated that the increased burden associated with complying with the rule could lead some lenders to exit this market.
One commenter expressed concern about the rule covering loans that are used for business purposes, but are secured by principal residences, suggesting that Congress intended to limit the statute to consumer-purpose credit given that the statute refers to a “consumer's principal dwelling.”
In contrast, several other commenters recommended that the agencies adopt a broad definition of dwelling. One stated that coverage should extend to all mortgages involving loans for dwellings, including manufactured housing classified as personal property and accessory dwelling units. Two commenters suggested the agencies define dwelling in a way consistent with uses in the Fair Housing Act and in other relevant statutes. Another commenter suggested that it would be consistent with safe and sound practices to expand the scope of the rule to cover all dwellings, not only those that are principal dwellings. One commenter stated that the agencies should consider how the principal dwelling requirement may apply to active military personnel who are purchasing a home for their future permanent residence but who are assigned temporarily to a different duty station.
In response to these comments, the agencies note that section 1125 does not limit the definition of AVM to collateral that is deemed to be real property, nor does it limit coverage by the AVM requirements to credit transactions that are primarily for personal, family, or household purposes. Instead, the statute focuses on the valuation of a consumer's principal dwelling that secures a mortgage. In response to the comments on limiting the rule to a principal dwelling, the agencies note that the statute expressly defines an AVM as one used to value a consumer's principal dwelling. The final rule is consistent with the plain language of the statute and the agencies decline to expand the scope of the requirements beyond principal dwellings.
With respect to the commenters' argument that valuation tools used for manufactured homes, RVs, and boats are not AVMs, the definition of AVM in the statute covers “
[T]he term
With respect to the comment that the agencies consider the effect of the rule on servicemembers who are purchasing a home for their future permanent residence, but are assigned to temporary duty stations, the final rule will not have an effect on the place servicemembers designate as their principal dwelling.
For these reasons and after considering the comments, the agencies are adopting the proposed definition of “dwelling.” Under the final rule, a dwelling is defined as a residential structure that contains one to four units, whether or not that structure is attached to real property. Mortgages secured by non-real estate property are covered by this rule if the property is used as the borrower's principal dwelling and the mortgage originator or secondary market issuer uses an AVM to determine the value of the collateral securing the loan.
Section 1125(d) defines an AVM with reference to determining “the collateral worth of a mortgage secured by a consumer's principal dwelling.”
Most commenters who addressed the definition of “mortgage” in the proposal expressed support for the proposed language. Several commenters supported including purchase money security interests arising under installment sales contracts in the definition of “mortgage.” One commenter stated that consumers should have the same protection in these contracts as in other types of mortgage financing. The commenter also stated that TILA, the Real Estate Settlement Procedures Act, and the S.A.F.E. Act apply to installment sales contracts to the same extent as to traditional mortgage loans (depending on whether the originating lender makes a certain volume of transactions), so including installment contracts in the rule would be consistent with other current laws. The commenter stated further that including sales contracts in the AVM rule would ensure appropriate protections for these transactions that disproportionately impact homebuyers of color. The commenter also stated that sales contracts are typically made for smaller amounts and used to purchase less expensive homes, and thus AVMs are more likely to be used in these transactions.
Another commenter in support of covering installment contracts stated that a narrower definition would have a disparate impact on protected classes by excluding broad swaths of the market from the quality control standards. Similarly, a different commenter stated that applying quality controls for AVMs used in these contracts would provide consumer protection in a space where consumers are often vulnerable to coercive agreements.
Conversely, one commenter stated that, when combined with the proposed definitions of “consumer” and “dwelling,” the definition of “mortgage” is not clear. The commenter stated that the rule proposes to adjust the definition of “primary use,” removing the exception for business-purpose lending, among other exceptions, from Regulation Z § 1026.3. The commenter suggested that the proposed definitions and changes to the TILA rules will cause a disconnect in how organizations apply the rest of the TILA standards, which take the exceptions into consideration when applying the rule to mortgage transactions. The commenter stated further that the definitions would not align with the current Federal credit union definitions of mortgage. For those reasons, the commenter suggested that definitions of “consumer,” “dwelling,” and “mortgage” should only be applicable to AVM use, and not cause universal changes to Regulation Z. In addition, a different commenter suggested that the inclusion of sales contracts in the definition of “mortgage” should be decided separately from a consideration of AVM standards and requested that the agencies clarify whether the rule would include HELOCs and closed-end home equity loans.
The agencies have determined that the comprehensive coverage of the mortgage market that the proposed definition would bring about is the best way to implement the statutory language. The agencies agree with those commenters who stated that this definition will provide appropriate consumer protection for the often-vulnerable consumers in the installment sales contracts market. The agencies do not agree that this definition, and the others adopted in this rule, will interfere with the current interpretation of Regulation Z. The agencies note that these definitions apply to AVM compliance alone, and are not meant to alter the current definitions in Regulation Z. Furthermore, the definition of “mortgage” does not exclude HELOCs and closed-end home equity loans that are secured by a consumer's principal dwelling. For these reasons and after considering the
The proposal would have defined the term “mortgage originator” in the rule by cross reference to the TILA definition of “mortgage originator”.
Although commenters generally supported this proposed definition, two commenters asked the agencies to consider making substantive changes to the definition. One of these commenters asked the agencies to amend the definition of “mortgage originator” in the final rule so that it would include servicing-only servicers in addition to the persons covered as mortgage originators under TILA § 103(dd)(2), 15 U.S.C. 1602(dd)(2). As explained in the proposal, the agencies proposed to define the term “mortgage originator” by cross reference to the TILA definition of “mortgage originator” because doing so “would maintain consistency in the usage of this term with other sections of title XI and the agencies' appraisal regulations.”
TILA § 103(dd)(2)(G), 15 U.S.C. 1602(dd)(2)(G), generally excludes servicers as well as their employees, agents, and contractors from TILA's definition of “mortgage originator” as long as they do not perform any of the activities listed in 15 U.S.C. 1602(dd)(2)(A) for a transaction that constitutes a new extension of credit, including a refinancing or an assumption. Accordingly, the final rule does not expand the definition of “mortgage originator” to cover servicing-only servicers in the final rule. Relatedly, the CFPB adopts proposed Regulation Z comment 42(i)(2)(vi)-2, which clarifies the activities that can make a mortgage servicer a mortgage originator for purposes of the rule, as proposed but redesignates it as Regulation Z comment 42(i)(2)(vi)-1.
Another commenter noted that the proposed definition of “mortgage originator” does not align with the proposed changes to the term “principal dwelling” and the inclusion of business purpose loans. To address this issue, the final rule no longer cross references the TILA definition of “mortgage originator,” but instead defines the term “mortgage originator” by incorporating the full text of the TILA definition of “mortgage originator” with several revisions as discussed herein.
The TILA definition of “mortgage originator” applies to persons performing activities relating to residential mortgage loans.
Title XI generally does not limit its coverage to consumer credit transactions.
The agencies' proposal intended the term “mortgage originator” to apply with breadth equal to that of the term “mortgage” and its application only to persons performing activities relating to residential mortgage loans was an oversight.
In defining “mortgage originator” by incorporating the full text of the TILA definition of “mortgage originator”, the final rule replaces the term “residential mortgage transaction” with the term “mortgage” wherever it appears in the TILA definition. As discussed in the next section, the term “mortgage” retains its meaning from the proposal and means “a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in a consumer's principal dwelling.” In line with the intent of the
The final rule includes three additional conforming changes to the text of the TILA definition of “mortgage originator” as incorporated in the final rule's definition of “mortgage originator.” First, the final rule removes the exclusion for seller financers provided at TILA § 103(dd)(2)(E), 15 U.S.C. 1602(dd)(2)(E), and replaces it with the seller financer exclusions contained in Regulation Z § 1026.36(a)(4) and (5). This change reflects that the seller financer exclusion in TILA § 103(dd)(2)(E) contains five elements, the last of which is that the transaction “meets any other criteria the Board may prescribe.” These additional criteria are incorporated into Regulation Z § 1026.36(a)(4) and (5),
Second, the final rule removes the exclusion provided at TILA § 103(dd)(2)(F), 15 U.S.C. 1602(dd)(2)(F). That exclusion provides that the term “mortgage originator” is inapplicable to creditors for purposes of TILA § 129B(c)(1), (2), and (4), 15 U.S.C. 1639b(c)(1), (2), and (4) (which relate to TILA's prohibition on the payment of steering incentives).
One commenter that noted that the proposed definition of “mortgage originator” does not align with the proposed changes to the term “principal dwelling” and the inclusion of business purpose loans also noted that some entities that make business purpose loans may not make consumer purpose loans and that, consequently, those entities may face uncertainty about their compliance obligations if, as proposed, they were mortgage originators for purposes of the rule. The agencies have considered this comment. However, because, as previously noted, title XI generally does not limit its coverage to consumer credit transactions, the agencies have determined that the final rule should broadly cover the mortgage market. Accordingly, the final rule applies the definition of “mortgage originator” to any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain, takes a mortgage application, assists a consumer in obtaining or applying to obtain a mortgage, or offers or negotiates terms of a mortgage secured by a consumer's principal dwelling, even if the mortgage is primarily for business, commercial, agricultural, or organizational purposes.
The final rule includes another technical change relating to the definition of “mortgage originator.” This technical change is the addition of a definition of person by cross reference to the definition of person in TILA. The addition of a stand-alone definition of “person” is needed because the final rule, unlike the proposed rule, does not define “mortgage originator” by incorporating by reference the definition of “mortgage originator” in TILA. As a result, the definition of “person,” which is defined by cross reference within the TILA definition of “mortgage originator,” is no longer part of the final rule's revised definition of “mortgage originator.” The adoption of a stand-alone definition of “person” does not change the incorporated definition of person and is a technical change only. The agencies other than the CFPB provide this clarification to ensure that the definition of “mortgage originator” in the final rule covers both natural persons and organizations. The CFPB's final rule does not require this clarification because Regulation Z already defines the term “person” at § 1026.2(a)(22) in a manner that is consistent with the meaning provided in TILA § 103(e), 15 U.S.C. 1602(e).
The agencies proposed to define a “secondary market issuer” as any party that creates, structures, or organizes a mortgage-backed securities transaction. The agencies proposed the definition in this manner due to the statutory focus in section 1125 on “issuers” and “determin[ing] the collateral worth” of a mortgage. This type of determination, as opposed to verification or monitoring of such determination, would typically take place in the secondary market in connection with the creation, structuring, and organization of a mortgage-backed security. A number of parties may be involved in the securitization process. The proposed definition was designed to ensure coverage of entities responsible for the core decisions required for the issuance of mortgage-backed securities, including making determinations of the value of collateral securing the loans in the securitization transaction.
The agencies received two comments on the proposed definition of “secondary market issuer.” One commenter expressed support for the definition as proposed. Another commenter stated that the rule should cover not only the GSEs, but also other secondary market issuers that structure and market residential mortgage-backed securities, such as in private-label securitization. The commenter asked that the agencies clarify that the final rule will apply beyond the GSEs to these other entities.
The agencies have determined that the proposed definition will ensure coverage of entities responsible for the core decisions required for the issuance of mortgage-backed securities. For this reason and after considering the comments, the agencies are adopting the proposed definition of “secondary market issuer,” which includes not only the GSEs, but any other party that creates, structures, or organizes a mortgage-backed securities transaction.
One commenter stated that the terms “mortgage-backed securities transaction,” “securitizations,” and “mortgage-backed securitizations” should be defined. In response, the agencies note that related terms (
The agencies proposed an effective date of the first day of a calendar quarter following the 12 months after publication in the
The agencies have determined that a 12-month effective date is appropriate, given that many institutions already have in place measures to assess AVMs for quality control and that the final rule provides flexibility to tailor policies, practices, procedures, and control systems as appropriate. For these reasons and after considering the comments, the final rule will be effective on the first day of the calendar quarter following the 12 months after publication in the
A number of commenters suggested that the agencies work with the public to foster the development of an SSO for AVMs to create a level playing field for AVM users and to reduce regulatory burden. One commenter requested that the agencies engage in a full notice and comment rulemaking process if the use of an SSO is contemplated. Another commenter recommended that SSO members be comprised of AVM providers, consumer advocates, investors, mortgage guarantors, mortgage insurers, mortgage originators, underwriters, and servicers. The commenter also suggested that regulators participate in the SSO. A number of commenters called for the establishment of a separate, fully independent third-party nonprofit organization to test AVM systems for both accuracy and racial bias. Some commenters stated that SSOs and third-party testing would save lenders considerable time and effort and bolster quality control for AVMs. One commenter, for example, suggested that it would be useful to have a set of standards similar to USPAP for AVMs that includes key definitions, minimum reporting requirements, and required certifications.
One commenter stated that it would be beneficial to have some level of standardization of metrics used to measure an AVM's success or failure. The commenter suggested that the industry is best suited to continue working with developers and users of AVMs to promote consistency in AVM measurement and testing, such as by developing a consistent approach to confidence scores.
Another commenter suggested that regulated parties would greatly benefit from more transparency and access to data from the FHFA, the Uniform Collateral Data Portal, and the Uniform Mortgage Data Program. This commenter further suggested that Federal regulators should evaluate real estate data availability at the State and local level, as these data are essential for ensuring AVM credibility.
In contrast, one commenter stated that industry stakeholders, including originators, secondary market participants, and property valuation vendors have already established straightforward, transparent, and fair AVM testing and ranking (
Another commenter stated that AVM vendors already provide comprehensive information to financial institutions to demonstrate the quality control of their AVMs. The commenter further stated that financial institutions currently require AVM vendors to fill out numerous questionnaires (usually once to twice per year) to address large numbers of compliance issues and best practices, in addition to AVM developer, lender, and third-party testing. The commenter also stated that financial institutions require explanations and testing detail that documents how AVMs work, their accuracy, their multiple models, and the models' infrastructure. The commenter stated that the predominant purpose of the questionnaires is to address concerns that the financial institution has, and that the financial institution is following a process to protect its customers and its safety and soundness. In addition, another commenter recommended that there be education and training for users of AVMs.
The agencies recognize that SSOs and third-party AVM testing entities could be beneficial to effective compliance with the AVM rule. As long as financial institutions meet the obligations stated in the final rule, they are free to work with third parties to assist them with their compliance obligations. In regard to comments suggesting other methods to promote uniformity in metrics and policies, the agencies note that existing standards and guidance on model risk management and on testing of AVMs remain applicable, and can be used by institutions to assist with compliance.
A number of commenters suggested that the agencies issue guidance focused specifically on AVM quality control to help institutions, especially small institutions, implement the quality control standards. Many of these commenters acknowledged that existing guidance, such as model risk guidance and the Appraisal Guidelines, already address elements of how to implement the AVM rule, but a number of commenters requested additional guidance on how to evaluate AVMs, particularly with respect to how to assess AVMs for potential discrimination under the fifth factor. One commenter stated that the agencies should provide some structure or examples of policies, practices, procedures, or control systems. The commenter also stated that it should be
One commenter stated that additional guidance is not necessary, highlighting the current guidance on third-party and model risk management. However, the commenter suggested that commentary on how existing guidance applies to third-party oversight of the AVM quality control standards may be beneficial at some point in the future.
Another commenter stated that the Appraisal Guidelines and NCUA's third-party risk management expectations already advise credit unions that they need to understand the AVMs they use, including the AVM's limitations; have controls in place to mitigate risks (including with regard to non-discrimination laws); and monitor the relationship and results to ensure that the AVM is working and being used as designed.
As discussed earlier, many of the agencies have already provided guidance on implementing policies, practices, procedures, and control systems relating to model risk, third-party risk, AVMs, and nondiscrimination. As explained above, institutions that are not regulated by the agency or agencies providing the guidance may still look to the guidance for assistance with compliance. In addition, institutions should be able to work with AVM providers to assist them with their compliance obligations under the rule.
Under safety and soundness standards, and as reflected in related guidance, while institutions should not rely solely on testing and validation representations provided by an AVM vendor, an institution does not necessarily need to conduct its own testing and validation, provided that the institution's policies, practices, procedures, and control systems for evaluating the sufficiency of the vendor's testing and validation are appropriate based on the size, complexity, and risk profile of the institution and the transactions for which they would use AVMs covered by the rule.
As described above, the agencies have determined that a flexible approach to implementing the quality control standards would allow the implementation of the standards to evolve along with AVM technology and reduce compliance costs. Different policies, practices, procedures, and control systems may be appropriate for institutions of different sizes with different business models and risk profiles, and a more prescriptive rule could unduly restrict institutions' efforts to set their risk management practices accordingly. For these reasons and after considering the comments, the agencies are not issuing additional guidance at this time and recommend that institutions review and consider existing guidance when establishing and implementing appropriate policies, practices, procedures, and control systems for AVM quality control.
Several commenters asked the agencies to adopt a transaction threshold for application of the AVM quality control standards. For example, one commenter suggested that the agencies revise the proposed rule to exempt loans at or below $400,000 held in portfolio from the quality control requirements for AVMs, allow reliance on third-party certifications of AVM providers, or provide a safe harbor for small lenders. One commenter cited the appraisal thresholds as an example of how the agencies could reduce burden for smaller lenders.
Another commenter stated that small entities do not control the data that is used in the AVM and, therefore, do not have the ability to quality control the data or the algorithms used by AVM vendors. This commenter also argued that small businesses do not have the bargaining power that a large company may have to demand information from an AVM vendor and do not have the resources to assess the algorithms that are used by AVMs. The commenter suggested that it is unreasonable to hold small entities responsible for the actions of AVM vendors. The commenter stated further that if an exemption is not possible, the agencies should consider some type of safe harbor or a certification program where a third party reviews the AVM and provides an approval to assure small entities that the AVM complies with the regulatory requirements.
As discussed earlier, the flexibility in the rule will limit the burden of complying with the rule for institutions, particularly smaller entities. As explained above, the policies, practices, procedures, and control systems used to ensure compliance may vary based on the size, complexity, and risk profile of the institution and the transactions for which they would use AVMs covered by the rule. The agencies also note that section 1125 does not include safe harbors or exemptions, including for smaller entities. For these reasons and after considering the comments, the final rule does not include an exemption threshold, or other specific provision for smaller institutions.
Certain provisions of the final rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995.
The agencies received three comments on estimated labor hours and costs for the information collection requirements of the proposed rule. One commenter stated that the agencies' estimate of the labor hours associated with recordkeeping by covered entities in years following implementation may be appropriate for documentation of policies and procedures, but suggested that the proposed rule underestimated other regulatory burdens associated with ongoing compliance. Another commenter stated that the agencies' estimate of labor hours associated with recordkeeping by covered entities seemed relatively low given the effort needed to establish control systems. Finally, one commenter stated that incorporating principles-based guidelines regarding AVMs is not costly or time consuming.
The agencies have carefully reviewed burdens associated with recordkeeping, reporting, and disclosure for each section of the rule in consideration of the comments received. The agencies note that, consistent with the PRA, the PRA burden estimates reflect only the burden related to recordkeeping, reporting, and disclosure requirements in the final rule. PRA burdens, like compliance costs, may vary across institutions, and the agencies' PRA burden estimates are meant to be overall averages. The agencies believe the estimates of burden hours are reasonable considering the recordkeeping requirements of the final rule. For further discussion of response to commenters, particularly related to other regulatory costs incurred by covered entities, please refer to the part titled “Discussion of the Proposed Rule,
The final rule establishes quality control standards mandated by the Dodd-Frank Act for the use of AVMs by mortgage originators and secondary market issuers in determining the collateral worth of a mortgage secured by a consumer's principal dwelling. Section 1473(q) of the Dodd-Frank Act amended title XI to add section 1125 relating to the use of AVMs in valuing real estate collateral securing mortgage loans. Section 1125 directs the agencies to promulgate regulations to implement quality control standards regarding AVMs.
The final rule requires supervised mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
The quality control standards in the final rule are applicable only to covered AVMs, which are AVMs as defined in the final rule. The final rule requires the regulated mortgage originators and secondary market issuers to adopt policies, practices, procedures, and control systems to ensure that AVMs adhere to the specified quality control standards whenever they use covered AVMs while engaging in certain credit decisions or covered securitization determinations.
As a result, the final rule creates new recordkeeping requirements. The agencies therefore revised their current information collections related to real estate appraisals and evaluations. The OMB control numbers are for the OCC, 1557-0190; for the Board, 7100-0250; for the FDIC, 3064-0103; and for the NCUA, 3133-0125. These information collections will be extended for three years, with revision. In addition to accounting for the PRA burden incurred, as a result of this final rule, the agencies are also updating and aligning their information collections with respect to the estimated burden hours associated with the Appraisal Guidelines.
The information collection requirements contained in this final rule have been submitted by the OCC, the FDIC, and the NCUA to the OMB for review and approval under section 3507(d) of the PRA
Comments are invited on:
(a) Whether the collections of information are necessary for the proper performance of the agencies' functions, including whether the information has practical utility;
(b) The accuracy of the estimate of the burden of the information collections, including the validity of the methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on the collections of information should be sent to the address listed in the
For federally related transactions, title XI requires regulated institutions
The final rule requires supervised mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
The CFPB, in consultation with OMB, and the FHFA do not believe that they have any supervised entities that will incur burden as a result of this final rule and therefore will not be making a submission to OMB. Comments are invited on this determination by the CFPB and the FHFA.
The Regulatory Flexibility Act (RFA) requires an agency to prepare a regulatory flexibility analysis describing the impact of the final rule on small entities (defined by the Small Business Administration (SBA) for purposes of the RFA to include commercial banks and savings institutions with total assets of $850 million or less and trust companies with total revenue of $47.5 million or less) or certify that the rule will not have a significant economic impact on a substantial number of small entities.
The OCC has assessed the burden of the final rule and has determined that the costs associated with the rule will be limited to reviewing the rule; ensuring that existing policies, practices, procedures, and control systems adequately address the four statutory quality control standards; and adopting policies, practices, procedures, and control systems to ensure that AVMs adhere to quality control standards designed to comply with applicable nondiscrimination laws. To estimate expenditures, the OCC reviews the costs associated with the activities necessary to comply with the final rule. These include an estimate of the total time required to implement the final rule and the estimated hourly wage of bank employees who may be responsible for the tasks associated with achieving compliance with the rule. The OCC uses a bank employee compensation rate of $128 per hour.
The OCC currently supervises approximately 636 small entities.
An initial regulatory flexibility analysis (IRFA) was included in the proposal in accordance with section 603(a) of the RFA.
The RFA requires an agency to prepare a final regulatory flexibility analysis (FRFA) unless the agency certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. Based on its analysis and for the reasons stated below, the Board certifies that the rule will not have a significant economic impact on a substantial number of small entities.
1.
As discussed above, the Dodd-Frank Act amended title XI to add a new section governing the use of AVMs in mortgage lending and directing the agencies to promulgate regulations to implement specified quality control standards. The final rule serves to implement this statutory mandate.
2.
The final rule implements statutorily mandated quality control standards for the use of AVMs. The Board is adopting this rule pursuant to section 1125 of title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
3.
The final rule applies to Board-regulated small entities that are mortgage originators or secondary market issuers. There are approximately 462 state member banks and approximately 3,281 bank holding companies and savings and loan holding companies that qualify as small entities for purposes of the RFA.
4.
The final rule requires Board-regulated small entities that are mortgage originators or secondary market issuers to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs used in credit decisions or covered securitization determinations adhere to specified quality control standards. These quality control standards must ensure a high level of confidence in the estimates produced, protect against the manipulation of data, seek to avoid conflicts of interest, and require random sample testing and reviews and comply with applicable nondiscrimination laws. To the extent that small entities do not already maintain adequate policies, practices, procedures, and control systems, they could incur administrative costs to do so. It is likely that the majority of Board-regulated small entities that are mortgage originators or secondary market issuers either do not use AVMs in credit decisions or covered securitization determinations or would already be in compliance with the specified standards or could become compliant with relatively minor modifications to their current practices.
Board staff estimates that impacted Board-supervised small entities would spend 160 hours establishing or modifying policies, practices, procedures, and control systems, at an hourly cost of $116.86.
5.
Although there are multiple statutes and regulations that apply to various aspects of real estate lending, the Board has not identified any Federal statutes or regulations that would duplicate, overlap, or conflict with the final rule's quality control standards for AVMs. The Board is required by statute to promulgate regulations to implement the quality control standards required under section 1125 of title XI, and thus no significant alternatives are available.
Therefore, the Board concludes that the final rule will not have a significant
The RFA generally requires an agency, in connection with a final rule, to prepare and make available for public comment a FRFA that describes the impact of the final rule on small entities.
The final rule applies to all FDIC-supervised insured depository institutions (IDIs) that are mortgage originators or secondary market issuers. As of the quarter ending December 31, 2023, the FDIC supervised 2,936 insured depository institutions, of which 2,221 are considered small entities for the purposes of the RFA. Of these, 2,183 FDIC-supervised small institutions reported a non-zero value for mortgages on their books.
The FDIC lacks data on the number of small FDIC-supervised institutions that use AVMs for their mortgage originations. FDIC subject matter experts believe that up to approximately 10 percent of all FDIC-supervised institutions currently use an AVM for mortgage origination decisions, loan modification decisions, and securitization decisions covered by the rule. However, based on supervisory experience, these experts believe a smaller percentage of small, FDIC-supervised institutions use AVMs because they believe AVM use is strongly positively correlated with institution size.
The final rule generally reflects existing Guidelines, supervisory expectations, and statutory obligations regarding the use of AVMs by supervised institutions. As mentioned, since 2010, the FDIC has provided supervisory Guidelines on the use of AVMs by its regulated institutions.
The final rule's fifth quality control standard is consistent with existing applicable nondiscrimination laws. For example, the ECOA and its implementing Regulation B, bar discrimination on a prohibited basis in any aspect of a credit transaction.
The FDIC lacks information on the labor hours and costs that will be incurred by covered institutions to comply with the final rule. Therefore, it assumes that small, FDIC-supervised institutions will expend 120 labor hours, on average, to comply with the final rule during the first year of implementation, and 40 labor hours, on average, in each successive year. In the first year, the FDIC's estimates include the review of the newly enacted rule, conducting a review of existing policies, practices, procedures, and controls for their consistency with the rule; identifying any deficiencies; and implementing corrective action as needed. In the second year, the FDIC believes that institutions' expected costs would be lower on average, as they limit their actions to primarily reviewing and maintaining their compliance.
This analysis subdivides the assumed compliance-related average labor hours spent by small FDIC-supervised IDIs into two types: (1) compliance with recordkeeping, reporting, and disclosure requirements under the PRA; and (2) hours for non-PRA compliance activities. According to supervisory experience, covered, small, FDIC-supervised IDIs using AVMs for originations or modifications would spend 40 hours in the first year and 5 hours in each subsequent year, on average for recordkeeping.
The FDIC believes small, FDIC-supervised IDIs affected by the final rule will incur additional labor hours and costs associated with compliance activities other than recordkeeping. For the first four quality control standards, these requirements may include, for
This analysis estimates the total labor hours and costs incurred by small, FDIC-supervised IDIs associated with the final rule by adding compliance estimates associated with recordkeeping with activities other than recordkeeping. The FDIC estimates first year compliance labor hours per covered institution to be 120 on average,
Further analysis shows that the estimated costs of the final rule would not impose a significant economic impact on a substantial number of small institutions. The analysis estimates that small, FDIC-supervised IDIs will incur approximately $11,960 in compliance costs on average in the first year
The compliance costs incurred by any one covered institution is likely to vary with the volume of covered AVM activity, the degree to which current AVM compliance activities differ from the robust quality control standards in the proposed rule, or the usage of in-house or third-party AVM service providers.
Some commenters expressed concerns that the proposed rule would be costly and burdensome, especially for small entities and their ability to ensure that their policies and procedures meet the quality control standards. Some commenters cautioned that the proposed rule would create an uneven playing field between large and small companies and that some small entities would be at risk of going out of business. For additional discussion of the comments received on the proposed rule, please refer to part III (Discussion of the Proposed Rule, Comments Received, and the Final Rule) within the
In light of the foregoing, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small, supervised entities.
The RFA generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment, unless the agency certifies it will not have a
The RFA establishes terms for various subgroups that potentially qualify as a “small entity”—including “small business,” “small organization,” and “small governmental jurisdiction.”
FICUs tend to be much smaller than commercial banks. Indeed, at year-end 2023, median asset size was $55.9 million—less than one-sixth the median for U.S. commercial banks. As of December 31, 2023, there were 4,604 FICUs, of which 2,831 (61.5 percent) qualified as “small entities” by holding fewer than $100 million in assets.
1. Why
The final rule fulfills the statutory mandate in the Dodd-Frank Act requiring agencies to promulgate quality control standards for AVMs used by mortgage originators and secondary market issuers to value principal dwellings used as collateral. As noted, this final rule follows publication of a June 23, 2023, proposed rule and takes into consideration the public comments received in response to the proposal. Interested readers are referred to the discussion elsewhere in this preamble of the significant issues raised by the public comments, the assessment of the agencies of such issues, and changes made in the proposed rule as a result of such comments. Further, the RFA analysis provided by the CFPB elsewhere in this preamble responds to the comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule and provide a detailed statement of any change made to the proposed rule in the final rule as a result of the comments.
2.
The NCUA is issuing this final rule to: (1) promote credit union safety and soundness by enhancing the integrity of collateral valuation for residential mortgage lending; and (2) help ensure credit unions comply with all applicable nondiscrimination laws. The legal basis for this rule is section 1125 of title XI of the FIRREA, as added by the Dodd-Frank Act—which directs covered agencies (in consultation with the staff of the Appraisal Subcommittee and Appraisal Standards Board of the Appraisal Foundation) to promulgate regulations with AVM quality-control standards.
3.
The final rule will apply to FICUs relying on AVMs in their residential mortgage-lending decisions. Year-end 2023 data indicate 1,789 small-entity FICUs held residential real-estate loans (1st or junior liens). This represents 63.2 percent of small credit unions.
The NCUA does not currently require supervised credit unions to note in their quarterly data submissions whether AVMs are used in mortgage originations/modifications for owner-occupied residential real estate. In prior AVM analysis, the FDIC estimated that as many as 10 percent of their supervised institutions currently use an AVM for mortgage origination decisions, loan modification decisions, and securitization decisions covered by the final rule.
4.
As noted, since 2010, the OCC, Board, FDIC, and NCUA have provided supervisory guidance on AVM use to regulated institutions in Appendix B to the Appraisal Guidelines.
Based on interviews with examiners and supervisors (about experience with rules largely codifying existing practice as well as the specifics of the AVM rule), the NCUA estimates the upper-bound for compliance burden is 33 labor hours annually. The upper-bound estimate for AVM usage of 178 credit unions implies the aggregate compliance burden should not exceed 5,874 hours. To put this figure in context, the 1,789 credit unions under $100 million with residential mortgages on their books paid their employees an average of $33.13 per hour in salary and benefits.
5.
The NCUA has not identified any likely duplication, overlap, or potential conflict with this final rule and any other federal rule.
6.
As noted, the final rule implements a statutory mandate, thereby limiting the ability of covered agencies to consider alternatives. That said, agencies did exercise authority provided by section 1125 to include the nondiscrimination quality-control factor (given continued evidence of disparities in residential property lending terms along racial and ethnic lines). Further, covered agencies determined this factor should impose little additional burden since institutions have a preexisting obligation to comply with all federal law, including federal nondiscrimination laws. For the above reasons, the NCUA certifies that this final rule will not have a significant economic impact on a substantial number of small entities.
The RFA
The CFPB has not certified that the proposed rule would not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. Accordingly, the CFPB convened and chaired a SBREFA Panel to consider the impact of the proposed rule on small entities that would be subject to that rule and to obtain feedback from representatives of such small entities. On May 13, 2022, the CFPB released the Final Report of the Panel on the CFPB's Proposals and Alternatives Under Consideration for the AVM Rulemaking (SBREFA Panel Report).
The FRFA for this rulemaking follows this discussion. Section 604(a) of the RFA sets forth the required elements of the FRFA. Section 604(a)(1) requires the FRFA to contain a statement of the need for, and objectives of, the rule. Section 604(a)(2) requires the FRFA to contain a statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments. Section 604(a)(3) requires the CFPB to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (Advocacy)
The FRFA further must contain a description of and an estimate of the number of small entities to which the rule will apply or an explanation of why no such estimate is available.
1.
As discussed in part I of the
The objectives of the final rule include protecting consumers and protecting Federal financial and public policy interests in real estate related transactions. To achieve these objectives, the final rule will require mortgage originators and secondary market issuers to adopt policies, practices, procedures, and control systems to ensure that covered AVMs adhere to quality control standards designed to meet specific quality control factors. The objectives of the final rule are further discussed in parts I and III of the
2.
In the IRFA, the CFPB estimated the possible compliance cost for small entities with respect to a pre-statute baseline. Additionally, the IRFA discussed possible impacts on small entities.
Very few commenters specifically addressed the IRFA included in the proposal. Comments made by Advocacy related to the estimates included in the IRFA are addressed below in part V.E.3 of this document. This section addresses specific significant comments that affect the FRFA analysis.
Many industry commenters expressed concerns that the proposed rule would be costly and burdensome, especially for small entities and their ability to ensure that their policies and procedures meet the quality control standards. Some commenters even cautioned that the proposed rule would create an uneven playing field between large and small companies and that some small entities would be at risk of going out of business. These commenters did not provide specifics about the costs or burdens on small entities. The CFPB reviewed these comments and recognizes that small entities will experience some new compliance costs in the final rule. The CFPB accounted for these costs in the IRFA and therefore is not making any changes related to these concerns in the FRFA.
Some industry commenters provided feedback on the magnitude of the estimated burden hours, which form a core part of the IRFA analysis. Two commenters provided estimates for what they believe the burden hours will be. One of these commenters stated that a statistically-based, rigorous analytical approach would require between 100 and 400 hours a year and that, in particular, testing AVMs for compliance with nondiscrimination laws requires building a database, cleaning data, carefully building samples, and running regression tests. The commenter noted that if a company were to outsource their validation of AVMs, then the agencies' estimated burden hours might be adequate, but that there would be a cost to outsourcing. Another commenter stated that covered institutions would need to create some controls that would be based on statistical analysis and provided a rough estimate of 320 to 480 hours. The CFPB outlined the estimated burden hours that it uses in the IRFA analysis more explicitly in the SBREFA Panel Report: 69 hours for verifying compliance, 65 hours for drafting and developing policies, practices, procedures, and control systems, and 60 hours for training. Therefore, the total number of estimated hours in the first year is 194 and primarily includes costs for “Legal Services.” In both the SBREFA Panel Report and the IRFA, the CFPB did not assume costs for statistician services. If a small entity needs statistician services, the SBREFA analysis “anticipates that most third parties would be able to provide institution-specific . . . service that accompanies an AVM.” As discussed in part III.E.2 of the
Furthermore, the SBREFA analysis states that “Whether small entities' costs increase depends ultimately on whether third-party service providers [such as AVM providers] pass along costs. For example, costs may increase if each third-party service provider has . . . to customiz[e] . . . for each small entity. Costs may not increase if third-party service providers can sell the same general set . . . to many small entities with little modification.” The CFPB has considered the estimates provided by the commenters and either considers them consistent with the CFPB's estimates or deficient in showing that more burden hours are necessary. Therefore, the CFPB is not making any changes related to the estimated burden hours in the FRFA.
3.
Advocacy provided a formal comment letter to the agencies in response to the proposed rule. This letter stated that small entities should not be responsible for the actions of AVM providers, that the agencies should reduce the burden of the rule so that harm to small entities and consumers would be minimized, and that the nondiscrimination quality control factor should not be included in the final rule. Additionally, Advocacy suggested that small entities be exempt from the rule and, if that was not possible, that they should be allowed to rely on third-party certification of AVM providers or be provided a safe harbor for compliance. Finally, Advocacy asked that the agencies provide clear guidance to small entities to aid in compliance with the rule.
4.
A “small business” is determined by application of SBA regulations in reference to the North American Industry Classification System (NAICS) classification and size standards.
The following table summarizes the CFPB's estimate of the number and industry of entities that may be affected by the final rule:
In developing these estimates, the CFPB chose assumptions that would likely overcount the number of small entities and explains this reasoning in detail herein. Thus, the true number of small entities is likely to be less than the estimates reported. The following paragraphs describe the categories of entities that the CFPB expects will be affected by the final rule.
Finally, only small entities that themselves, or through or in cooperation with a third-party or affiliate, utilize AVMs in credit decisions or covered securitization determinations will be covered by the final rule. The remaining small entities may opt for alternative valuation methods not involving AVMs. Due to the lack of data on the usage of AVMs by small entities in credit decisions or covered securitization determinations, the CFPB follows the FDIC and makes the following assumption: the range of AVM usage lies between 10 percent (lower bound) and 100 percent (upper bound). Applying this assumption to the estimated total number of small entities results in the estimated range of covered small entities shown in the following table:
In summary, the CFPB estimates that between 478 and 4,779 small entities will be covered by the final rule.
In this analysis, the CFPB also considered including other NAICS categories, most notably “Mortgage and Nonmortgage Loan Brokers” (NAICS 522310). This industry includes establishments primarily engaged in arranging loans by bringing borrowers and lenders together on a commission or fee basis. Based on this definition, the CFPB believes that this industry is generally not involved in credit decisions or covered securitization determinations and, thus, typically will not be covered by the final rule.
5.
The final rule will not impose new reporting or recordkeeping requirements for CFPB respondents but will impose new compliance requirements on small entities subject to the rule. The final rule requirements and the costs associated with them are discussed herein.
Entities will likely have to spend time and resources reading and understanding the regulation and developing the required policies,
Using the cost methodology outlined in the SBREFA Panel Report, the CFPB estimates that the one-time costs in the first year for each covered small nondepository entity will be the following: $7,000 for drafting and developing policies, practices, procedures, and control systems, $10,000 for verifying compliance, and $6,000 for training. Thus, the total costs per entity will be $23,000 in the first year and $7,667 for each subsequent year.
The CFPB calculates the overall market impact of the final rule on small entities by multiplying the costs per entity by the estimated number of covered small entities. The CFPB estimates that the overall market impact of one-time costs in the first year for covered small nondepositories will be between $10,994,000 and $109,917,000. The CFPB estimates that the overall market impact of ongoing costs in each subsequent year for covered small nondepositories will be between $3,664,826 and $36,640,593 per year. The ranges in estimated impact are wide due to uncertainty surrounding the percentage of small entities using AVMs in credit decisions or covered securitization determinations.
In an effort to minimize the significant economic impact on small entities, the CFPB considered a number of alternatives while drafting the final rule, including those considered as part of the SBREFA process. Many of the alternatives considered would have resulted in greater costs to small entities than would the final rule. For example, the CFPB considered proposing a prescriptive rule with more detailed and specific requirements, and the CFPB considered a rule that would also cover the use of AVMs solely to review completed value determinations (
The CFPB also considered alternatives that might have resulted in a smaller economic impact on small entities than would the final rule. Some of these alternatives are briefly described and their impacts relative to the final provisions are discussed herein.
The CFPB acknowledges that for small entities with a limited volume of AVM valuation observations, detecting discrimination in AVMs may not be feasible. Nevertheless, there are other steps small entities could take towards satisfying the nondiscrimination quality control factor. For example, the SBREFA process described various points in the valuation process where humans interact with AVMs and make decisions regarding AVM usage and application of AVM outputs; having policies, practices, procedures, and control systems in place that ensure such human interactions and decision-making comply with applicable nondiscrimination laws would be feasible for small entities. As another example, in choosing third-party AVM providers, small entities can do research into how providers assess and account for discrimination in their AVMs and opt for providers who have taken such factors into consideration.
During the proposed rule stage, the CFPB requested comments on the likely impact of the nondiscrimination quality control factor of the rule on the compliance costs of small entities and did not receive specific feedback to warrant not specifying a nondiscrimination quality control factor.
The CFPB believes that there will be little to no impact on the cost of credit incurred by small entities covered by the final rule. Should a covered small entity apply for a business loan, the lender is unlikely to consider that covered small entity's use of AVMs or their compliance with the final rule in their credit pricing or credit extension decisions.
During the SBREFA process, the CFPB asked SERs (including community banks, credit unions, and non-depository mortgage lenders) about this possible impact, but they did not provide feedback on how their credit would be affected by the rule. This lack of feedback is consistent with the above assertions.
The RFA requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an analysis describing the regulation's impact on small entities.
Section 722 of the Gramm-Leach- Bliley Act
Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),
The agencies have considered the administrative burdens and the benefits of the proposed rule in preparing this final rule and have adopted a 12-month delayed effective date. The final rule will be effective on the first day of the calendar quarter following the 12 months after publication in the
The OCC has analyzed the final rule under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1532. Under this analysis, the OCC considered whether the final rule includes a federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $183 million or more in any one year.
The burden associated with the final rule will be limited to reviewing the rule, ensuring that existing practices, procedures, and control systems adequately address the four statutory quality control standards, and adopting policies, practices, procedures, and control systems to ensure that AVMs adhere to quality control standards designed to comply with applicable nondiscrimination laws. To estimate expenditures, the OCC reviews the costs associated with the activities necessary to comply with the final rule. These include an estimate of the total time required to implement the final rule and the estimated hourly wage of bank employees who may be responsible for the tasks associated with achieving compliance with the final rule. For the cost estimates, the OCC uses a compensation rate of $128 per hour.
Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on State and local interests. The NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order to adhere to fundamental federalism principles. This final rule will not have substantial direct effects on the states, on the relationship between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government. Although the AVM statute and the final rule apply to federally insured, state-chartered credit unions, the NCUA does not believe that the rule will change the relationship between the NCUA and state regulatory agencies. The NCUA anticipates coordinating with state regulatory agencies to implement and enforce the rule as part of its ongoing coordination with these agencies. Accordingly, the NCUA believes that the effect of this change on the states will be limited. The NCUA has therefore determined that this rule does not constitute a policy that has federalism implications for purposes of the executive order.
The NCUA Board has determined that this final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999.
Each of the agencies intend 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 in effect.
Appraisal, Appraiser, Banks, banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
Administrative practice and procedure, Banks, banking, Federal Reserve System, Holding companies, Investments, Reporting and recordkeeping requirements, Securities.
Banks, banking, Mortgages, Reporting and recordkeeping requirements, Savings associations.
Appraisal, Appraiser, Credit unions, Mortgages, Reporting and recordkeeping requirements, Truth in lending.
Credit, Credit unions.
Advertising, Banks, banking, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
Appraisals, Government-sponsored enterprises, Mortgages.
For reasons set out in the joint preamble, the Office of the Comptroller of the Currency amends part 34 of chapter I of title 12 of the Code of Federal Regulations to read as follows:
12 U.S.C. 1
(a)
(b)
(2) This subpart does not apply to the use of automated valuation models in:
(i) Monitoring of the quality or performance of mortgages or mortgage-backed securities;
(ii) Reviews of the quality of already completed determinations of the value of collateral; or
(iii) The development of an appraisal by a certified or licensed appraiser.
As used in this subpart:
(1) Whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer; or
(2) Structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations.
(1) Any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain—
(i) Takes a mortgage application;
(ii) Assists a consumer in obtaining or applying to obtain a mortgage; or
(iii) Offers or negotiates terms of a mortgage;
(2) Includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any of the services or perform any of the activities described in paragraph (1) of this definition;
(3) Does not include any person who is—
(i) Not otherwise described in paragraph (1) or (2) of this definition and who performs purely administrative or clerical tasks on behalf of a person who is described in any such paragraph; or
(ii) A retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—
(A) Does not receive compensation or gain for engaging in activities described in paragraph (1) of this definition that is in excess of any compensation or gain received in a comparable cash transaction;
(B) Discloses to the consumer—
(
(
(C) Does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs);
(4) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;
(5) Does not include a person that meets all of the following criteria:
(i) The person provides seller financing for the sale of three or fewer properties in any 12-month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing;
(ii) The person has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The person provides seller financing that meets the following requirements:
(A) The financing is fully amortizing;
(B) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay;
(C) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(6) Does not include a natural person, estate, or trust that meets all of the following criteria:
(i) The natural person, estate, or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property, which is owned by the natural person, estate, or trust and serves as security for the financing;
(ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The natural person, estate, or trust provides seller financing that meets the following requirements:
(A) The financing has a repayment schedule that does not result in negative amortization;
(B) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(7) Does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a mortgage for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.
Mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, must adopt and maintain policies, practices, procedures, and control systems to ensure that automated valuation models used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
For the reasons set forth in the joint preamble, the Board amends part 225 of chapter II of title 12 of the Code of Federal Regulations, as follows:
12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3354, 3906, 3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.
(a)
(2) Nothing in this part shall be read to limit the authority of the Board to take action under provisions of law other than 12 U.S.C. 3354, including but not limited to action to address unsafe or unsound practices or conditions, or violations of law or regulation, under section 8 of the Federal Deposit Insurance Act, as amended (12 U.S.C. 1818).
(b)
(2) This subpart does not apply to the use of automated valuation models in:
(i) Monitoring of the quality or performance of mortgages or mortgage-backed securities;
(ii) Reviews of the quality of already completed determinations of the value of collateral; or
(iii) The development of an appraisal by a certified or licensed appraiser.
As used in this subpart:
(1) Whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer; or
(2) Structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations.
(1) Any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain—
(i) Takes a mortgage application;
(ii) Assists a consumer in obtaining or applying to obtain a mortgage; or
(iii) Offers or negotiates terms of a mortgage;
(2) Includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any of the services or perform any of the activities described in paragraph (1) of this definition;
(3) Does not include any person who is—
(i) Not otherwise described in paragraph (1) or (2) of this definition and who performs purely administrative or clerical tasks on behalf of a person who is described in any such paragraph; or
(ii) A retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—
(A) Does not receive compensation or gain for engaging in activities described in paragraph (1) of this definition that is in excess of any compensation or gain received in a comparable cash transaction;
(B) Discloses to the consumer—
(
(
(C) Does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs);
(4) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;
(5) Does not include a person that meets all of the following criteria:
(i) The person provides seller financing for the sale of three or fewer properties in any 12-month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing;
(ii) The person has not constructed, or acted as a contractor for the
(iii) The person provides seller financing that meets the following requirements:
(A) The financing is fully amortizing;
(B) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay;
(C) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(6) Does not include a natural person, estate, or trust that meets all of the following criteria:
(i) The natural person, estate, or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property, which is owned by the natural person, estate, or trust and serves as security for the financing;
(ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The natural person, estate, or trust provides seller financing that meets the following requirements:
(A) The financing has a repayment schedule that does not result in negative amortization;
(B) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(7) Does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a mortgage for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.
Mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, must adopt and maintain policies, practices, procedures, and control systems to ensure that automated valuation models used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
For the reasons set forth in the joint preamble, the FDIC amends 12 CFR part 323 as follows:
12 U.S.C. 1818, 1819(a) (“Seventh” and “Tenth”), 1831p-1 and 3331
(a)
(b)
(2) This subpart does not apply to the use of automated valuation models in:
(i) Monitoring of the quality or performance of mortgages or mortgage-backed securities;
(ii) Reviews of the quality of already completed determinations of the value of collateral; or
(iii) The development of an appraisal by a certified or licensed appraiser.
As used in this subpart:
(1) Whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer; or
(2) Structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations.
(1) Any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain—
(i) Takes a mortgage application;
(ii) Assists a consumer in obtaining or applying to obtain a mortgage; or
(iii) Offers or negotiates terms of a mortgage;
(2) Includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any of the services or perform any of the activities described in paragraph (1) of this definition;
(3) Does not include any person who is—
(i) Not otherwise described in paragraph (1) or (2) of this definition and who performs purely administrative or clerical tasks on behalf of a person who is described in any such paragraph; or
(ii) A retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—
(A) Does not receive compensation or gain for engaging in activities described in paragraph (1) of this definition that is in excess of any compensation or gain received in a comparable cash transaction;
(B) Discloses to the consumer—
(1) In writing any corporate affiliation with any creditor; and
(2) If the retailer has a corporate affiliation with any creditor, at least 1 unaffiliated creditor; and
(C) Does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs);
(4) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;
(5) Does not include a person that meets all of the following criteria:
(i) The person provides seller financing for the sale of three or fewer properties in any 12-month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing;
(ii) The person has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The person provides seller financing that meets the following requirements:
(A) The financing is fully amortizing;
(B) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay;
(C) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(6) Does not include a natural person, estate, or trust that meets all of the following criteria:
(i) The natural person, estate, or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property, which is owned by the natural person, estate, or trust and serves as security for the financing;
(ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The natural person, estate, or trust provides seller financing that meets the following requirements:
(A) The financing has a repayment schedule that does not result in negative amortization;
(B) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(7) Does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a mortgage for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.
Mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, must adopt and maintain policies, practices, procedures, and control systems to ensure that automated valuation models used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
For the reasons set forth in the joint preamble, the NCUA Board amends 12 CFR parts 722 and 741 as follows:
12 U.S.C. 1766, 1789, and 3331
(a)
(b)
(2) This subpart does not apply to the use of automated valuation models in:
(i) Monitoring of the quality or performance of mortgages or mortgage-backed securities;
(ii) Reviews of the quality of already completed determinations of the value of collateral; or
(iii) The development of an appraisal by a certified or licensed appraiser.
As used in this subpart:
(1) Whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer; or
(2) Structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations.
(1) Any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain—
(i) Takes a mortgage application;
(ii) Assists a consumer in obtaining or applying to obtain a mortgage; or
(iii) Offers or negotiates terms of a mortgage;
(2) Includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any of the services or perform any of the activities described in paragraph (1) of this definition;
(3) Does not include any person who is—
(i) Not otherwise described in paragraph (1) or (2) of this definition and who performs purely administrative or clerical tasks on behalf of a person who is described in any such paragraph; or
(ii) A retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—
(A) Does not receive compensation or gain for engaging in activities described in paragraph (1) of this definition that is in excess of any compensation or gain received in a comparable cash transaction;
(B) Discloses to the consumer—
(1) In writing any corporate affiliation with any creditor; and
(2) If the retailer has a corporate affiliation with any creditor, at least 1 unaffiliated creditor; and
(C) Does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs);
(4) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;
(5) Does not include a person that meets all of the following criteria:
(i) The person provides seller financing for the sale of three or fewer properties in any 12-month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing;
(ii) The person has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The person provides seller financing that meets the following requirements:
(A) The financing is fully amortizing;
(B) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay;
(C) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(6) Does not include a natural person, estate, or trust that meets all of the following criteria:
(i) The natural person, estate, or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property,
(ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The natural person, estate, or trust provides seller financing that meets the following requirements:
(A) The financing has a repayment schedule that does not result in negative amortization;
(B) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(7) Does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a mortgage for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.
Mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, must adopt and maintain policies, practices, procedures, and control systems to ensure that automated valuation models used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
12 U.S.C. 1757, 1766(a), 1781-1790, 1790d, 3331
(b) Adhere to the requirements stated in part 722 of this chapter.
For reasons set out in the joint preamble, the CFPB amends Regulation Z, 12 CFR part 1026, as follows:
12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 3354, 5511, 5512, 5532, 5581; 15 U.S.C. 1601
(c) * * *
(6) The requirements of § 1026.42(i) apply to certain persons regardless of whether they are creditors and even if the mortgage, as defined in § 1026.42(i)(2)(v), is primarily for business, commercial, agricultural, or organizational purposes.
(a) * * *
(11)
(i) The exemptions in this section are not applicable to § 1026.42(i) (Quality Control Standards for Automated Valuation Models).
(a)
(i)
(i) Monitoring of the quality or performance of mortgages or mortgage-backed securities;
(ii) Reviews of the quality of already completed determinations of the value of collateral; or
(iii) The development of an appraisal by a certified or licensed appraiser as defined in § 1026.35(c)(1)(i).
(2)
(i)
(ii)
(iii)
(A) Whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer; or
(B) Structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations.
(iv)
(v)
(vi)
(A) Any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain—
(
(
(
(B) Includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any of the services or perform any of the activities described in paragraph (A) of this definition;
(C) Does not include any person who is not otherwise described in paragraph (A) or (B) of this definition and who performs purely administrative or clerical tasks on behalf of a person who is described in any such paragraph;
(D) Does not include a retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—
(
(
(
(E) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;
(F) Does not include a person that meets the criteria for seller financers provided in § 1026.36(a)(4) and (5); and
(G) Does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a mortgage for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.
(vii)
(3)
(i) Ensure a high level of confidence in the estimates produced;
(ii) Protect against the manipulation of data;
(iii) Seek to avoid conflicts of interest;
(iv) Require random sample testing and reviews; and
(v) Comply with applicable nondiscrimination laws.
The revisions and additions read as follows:
1.
2.
3.
4.
1.
2.
1.
2.
1.
1.
For the reasons stated in the joint preamble, the Federal Housing Finance Agency amends 12 CFR part 1222, of chapter 12 of title 12 of the Code of Federal Regulations as follows:
12 U.S.C. 3354(b); 12 U.S.C. 4501
(a)
(b)
(2) This subpart does not apply to the use of automated valuation models in:
(i) Monitoring of the quality or performance of mortgages or mortgage-backed securities;
(ii) Reviews of the quality of already completed determinations of the value of collateral; or
(iii) The development of an appraisal by a certified or licensed appraiser.
As used in this subpart:
(1) Whether to waive an appraisal requirement for a mortgage origination in connection with its potential sale or transfer to a secondary market issuer; or
(2) Structuring, preparing disclosures for, or marketing initial offerings of mortgage-backed securitizations.
(1) Any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain—
(i) Takes a mortgage application;
(ii) Assists a consumer in obtaining or applying to obtain a mortgage; or
(iii) Offers or negotiates terms of a mortgage;
(2) Includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any of the services or perform any of the activities described in paragraph (1) of this definition;
(3) Does not include any person who is—
(i) Not otherwise described in paragraph (1) or (2) of this definition and who performs purely administrative or clerical tasks on behalf of a person who is described in any such paragraph; or
(ii) A retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—
(A) Does not receive compensation or gain for engaging in activities described in paragraph (1) of this definition that is in excess of any compensation or gain received in a comparable cash transaction;
(B) Discloses to the consumer—
(
(
(C) Does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs);
(4) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;
(5) Does not include a person that meets all of the following criteria:
(i) The person provides seller financing for the sale of three or fewer properties in any 12-month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing;
(ii) The person has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The person provides seller financing that meets the following requirements:
(A) The financing is fully amortizing;
(B) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay;
(C) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(6) Does not include a natural person, estate, or trust that meets all of the following criteria:
(i) The natural person, estate, or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property, which is owned by the natural person, estate, or trust and serves as security for the financing;
(ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person;
(iii) The natural person, estate, or trust provides seller financing that meets the following requirements:
(A) The financing has a repayment schedule that does not result in negative amortization;
(B) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or SOFR.
(7) Does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a mortgage for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.
Mortgage originators and secondary market issuers that engage in credit decisions or covered securitization determinations themselves, or through or in cooperation with a third-party or affiliate, must adopt and maintain policies, practices, procedures, and control systems to ensure that automated valuation models used in these transactions adhere to quality control standards designed to:
(a) Ensure a high level of confidence in the estimates produced;
(b) Protect against the manipulation of data;
(c) Seek to avoid conflicts of interest;
(d) Require random sample testing and reviews; and
(e) Comply with applicable nondiscrimination laws.
By order of the Board Governors of the Federal Reserve System.
By order of the Board of Directors.
Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).
Final action.
This final action updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPF), which include psychiatric hospitals and excluded psychiatric units of an acute care hospital or critical access hospital. This final action also revises the patient-level adjustment factors, the Emergency Department adjustment, and the payment amount for electroconvulsive therapy. These changes will be effective for IPF discharges occurring during the fiscal year (FY) beginning October 1, 2024 through September 30, 2025 (FY 2025). In addition, this final action finalizes the adoption of a new quality measure. It does not finalize modifications to the reporting requirements under the IPF Quality Reporting Program beginning with the FY 2027 payment determination. Furthermore, this final action summarizes comments received through Requests for Information regarding potential future revisions to the IPF PPS facility-level adjustments and regarding the development of a standardized IPF Patient Assessment Instrument.
This final action is effective on October 1, 2024.
The IPF Payment Policy mailbox at
Nick Brock (410) 786-5148, for information regarding the inpatient psychiatric facilities prospective payment system (IPF PPS) and regulatory impact analysis.
Kaleigh Emerson (470) 890-4141, for information regarding the inpatient psychiatric facilities quality reporting program (IPFQR).
Addendum A to this final rule summarizes the fiscal year (FY) 2025 IPF PPS payment rates, outlier threshold, cost of living adjustment factors (COLA) for Alaska and Hawaii, national and upper limit cost-to-charge ratios, and adjustment factors. In addition, Addendum B to this final rule shows the complete listing of ICD-10 Clinical Modification (CM) and Procedure Coding System (PCS) codes, the FY 2025 IPF PPS comorbidity adjustment, and electroconvulsive therapy (ECT) procedure codes. Addenda A and B to this final rule are available on the CMS website at:
This final rule updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPFs) for discharges occurring during fiscal year (FY) 2025 (beginning October 1, 2024, through September 30, 2025). This rule also adopts the Core-Based Statistical Area (CBSA) Labor Market Areas for the IPF PPS wage index as defined in the Office of Management and Budget (OMB) Bulletin 23-01. In addition, this rule refines the patient-level adjustment factors and increases the payment amount for electroconvulsive therapy (ECT) treatments. This final rule also clarifies the eligibility criteria for an IPF to be approved to file all-inclusive cost reports. This rule includes a summary of the public comments received to inform revisions to the payment adjustments for rural location and teaching status, along with a potential payment adjustment for safety net population. In addition, this final rule includes a summary of the public comments received in response to our request for information (RFI) regarding the creation of a patient assessment instrument (PAI), as mandated by section 4125 of the Consolidated Appropriations Act (CAA), 2023 (hereafter referred to as CAA, 2023) (Pub. L. 117-328). Lastly, this final rule updates quality measures and discusses reporting requirements under the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program.
For the IPF PPS, we are finalizing our proposals to:
• Revise the patient-level IPF PPS adjustment factors and increase the ECT per treatment payment amount.
• Update the IPF PPS wage index to use the CBSAs defined within OMB Bulletin 23-01.
• Clarify the eligibility criteria for an IPF to be approved to file all-inclusive cost reports. Only a government-owned or tribally owned facility satisfies these criteria and is eligible to file its cost report using an all-inclusive rate or no charge structure.
• Make technical rate setting updates: The IPF PPS payment rates will be adjusted annually for input price inflation, as well as statutory and other policy factors.
This rule updates:
++ The IPF PPS Federal per diem base rate from $895.63 to $876.53.
++ The IPF PPS Federal per diem base rate for providers who failed to report quality data to $859.48.
++ The ECT payment per treatment from $385.58 to $661.52.
++ The ECT payment per treatment for providers who failed to report quality data to $648.65.
++ The labor-related share from 78.7 percent to 78.8 percent.
++ The wage index budget neutrality factor to 0.9996. This rule applies a refinement standardization factor of 0.9524.
++ The fixed dollar loss threshold amount from $33,470 to $38,110, to maintain estimated outlier payments at 2 percent of total estimated aggregate IPF PPS payments.
For the IPFQR Program, we are finalizing our proposal to adopt the 30-Day Risk- Standardized All-Cause Emergency Department (ED) Visit Following an IPF Discharge measure
We also refer readers to the summary of the comments to our RFI in which we solicited comments to inform elements to be included in the IPF PAI, which the CAA, 2023 requires the Centers for Medicare & Medicaid Services (CMS) to develop and implement for Rate Year (RY) 2028.
Section 124 of the Medicare, Medicaid, and State Children's Health Insurance Program Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) required the establishment and implementation of an IPF PPS. Specifically, section 124 of the BBRA mandated that the Secretary of the Department of Health and Human Services (the Secretary) develop a per diem payment perspective system (PPS) for inpatient hospital services furnished in psychiatric hospitals and excluded psychiatric units including an adequate patient classification system that reflects the differences in patient resource use and costs among psychiatric hospitals and excluded psychiatric units. “Excluded psychiatric unit” means a psychiatric unit of an acute care hospital or of a Critical Access Hospital (CAH), which is excluded from payment under the Inpatient Prospective Payment System (IPPS) or CAH payment system, respectively. These excluded psychiatric units will be paid under the IPF PPS.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-17-3) extended the IPF PPS to psychiatric distinct part units of CAHs.
Sections 3401(f) and 10322 of the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by section 10319(e) of that Act and by section 1105(d) of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to jointly as “the Affordable Care Act”) added subsection (s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled “Reference to Establishment and Implementation of System,” refers to section 124 of the BBRA, which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the IPF PPS for the rate year (RY) beginning in 2012 (that is, a RY that coincides with a FY) and each subsequent RY.
Section 1886(s)(2)(A)(ii) of the Act required the application of an “other adjustment” that reduced any update to an IPF PPS base rate by a percentage point amount specified in section 1886(s)(3) of the Act for the RY beginning in 2010 through the RY beginning in 2019. As noted in the FY 2020 Inpatient Psychiatric Facilities Prospective Payment System and Quality Reporting Updates for fiscal year Beginning October 1, 2019 final rule, for the RY beginning in 2019, section 1886(s)(3)(E) of the Act required that the other adjustment reduction be equal to 0.75 percentage point; that was the final year the statute required the application of this adjustment. Because FY 2021 was a RY beginning in 2020, FY 2021 was the first year section 1886(s)(2)(A)(ii) of the Act did not apply since its enactment.
Sections 1886(s)(4)(A) through (D) of the Act require that for RY 2014 and each subsequent RY, IPFs that fail to report required quality data with respect to such a RY will have their annual update to a standard Federal rate for discharges reduced by 2.0 percentage points. This may result in an annual update being less than 0.0 for a RY, and may result in payment rates for the upcoming RY being less than such payment rates for the preceding RY. Any reduction for failure to report required quality data will apply only to the RY involved, and the Secretary will not consider such reduction in computing the payment amount for a subsequent RY. Additional information about the specifics of the current IPFQR Program is available in the FY 2020 Inpatient Psychiatric Facilities Prospective Payment System and Quality Reporting Updates for fiscal year beginning October 1, 2019 (FY 2020) final rule (84 FR 38459 through 38468).
Section 4125 of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328), which amended section 1886(s) of the Act, requires CMS to revise the Medicare prospective payment system for psychiatric hospitals and psychiatric units. Specifically, section 4125(a) of the CAA, 2023 added section 1886(s)(5)(A) of the Act to require the Secretary to collect data and information, as the Secretary determines appropriate, to revise payments under the IPF PPS. CMS discussed this data collection last year in the FY 2024 Inpatient Psychiatric Facilities Prospective Payment System—Rate Update (FY 2024 IPF PPS) final rule, as CMS was required to begin collecting this data and information not later than October 1, 2024. As discussed in that rule, the Agency has already been collecting data and information consistent with the types set forth in the CAA, 2023 as part of our extensive and years-long analyses and consideration of potential payment system refinements. We refer readers to the FY 2024 IPF PPS final rule (88 FR 51095 through 51098) where we discussed existing data collection and requested information to inform future IPF PPS revisions.
In addition, section 1886(s)(5)(D) of the Act, as added by section 4125(a) of the CAA, 2023 requires that the Secretary implement revisions to the methodology for determining the payment rates under the IPF PPS for psychiatric hospitals and psychiatric units, effective for RY 2025 (FY 2025). The revisions may be based on a review of the data and information collected under section 1886(s)(5)(A) of the Act.
Section 4125(b) of the CAA, 2023 amended section 1886(s)(4) of the Act by inserting a new subparagraph (E), which requires IPFs participating in the IPFQR Program to collect and submit to the Secretary standardized patient assessment data, using a standardized patient assessment instrument, for RY 2028 (FY 2028) and each subsequent rate year. IPFs must submit such data with respect to at least the admission and discharge of an individual, or more frequently as the Secretary determines appropriate. For IPFs to meet this new data collection and reporting requirement for RY 2028 and each subsequent rate year, the Secretary must implement a standardized patient assessment instrument that collects data with respect to the following categories: functional status; cognitive function and mental status; special services, treatments, and interventions; medical conditions and comorbidities; impairments; and other categories as determined appropriate by the Secretary. This patient assessment instrument must enable comparison of such patient assessment data that IPFs submit across all such IPFs to which such data are applicable.
Section 4125(b) of the CAA, 2023 further amended section 1886(s) of the Act by adding a new subparagraph (6) that requires the Secretary to implement revisions to the methodology for determining the payment rates for psychiatric hospitals and psychiatric units (that is, payment rates under the IPF PPS), effective for RY 2031 (FY 2031), as the Secretary determines to be appropriate, to take into account the patient assessment data described in paragraph (4)(E)(ii).
To implement and periodically update the IPF PPS, we have published various proposed and final rules and notices in the
We issued the RY 2005 IPF PPS final rule which appeared in the November 15, 2004
The IPF PPS established the Federal per diem base rate for each patient day in an IPF derived from the national average daily routine operating, ancillary, and capital costs in IPFs in FY 2002. The average per diem cost was updated to the midpoint of the first year under the IPF PPS, standardized to account for the overall positive effects of the IPF PPS payment adjustments, and adjusted for budget neutrality.
The Federal per diem payment under the IPF PPS is comprised of the Federal per diem base rate described previously and certain patient- and facility-level payment adjustments for characteristics that were found in the regression analysis to be associated with statistically significant per diem cost differences, with statistical significance defined as
The patient-level adjustments include age, Diagnosis-Related Group (DRG) assignment, and comorbidities, as well as adjustments to reflect higher per diem costs at the beginning of a patient's IPF stay and lower costs for later days of the stay. Facility-level adjustments include adjustments for the IPF's wage index, rural location, teaching status, a cost-of-living adjustment for IPFs located in Alaska and Hawaii, and an adjustment for the presence of a qualifying emergency department (ED).
The IPF PPS provides additional payment policies for outlier cases, interrupted stays, and a per treatment payment for patients who undergo ECT. During the IPF PPS mandatory 3-year transition period, stop-loss payments were also provided; however, since the transition ended as of January 1, 2008, these payments are no longer available.
Section 124 of the BBRA did not specify an annual rate update strategy for the IPF PPS and was broadly written to give the Secretary discretion in establishing an update methodology. Therefore, in the RY 2005 IPF PPS final rule, we implemented the IPF PPS using the following update strategy:
• Calculate the final Federal per diem base rate to be budget neutral for the 18-month period of January 1, 2005 through June 30, 2006.
• Use a July 1 through June 30 annual update cycle.
• Allow the IPF PPS first update to be effective for discharges on or after July 1, 2006 through June 30, 2007.
The RY 2005 final rule (69 FR 66922) implemented the IPF PPS. In developing the IPF PPS, and to ensure that the IPF PPS can account adequately for each IPF's case-mix, we performed an extensive regression analysis of the relationship between the per diem costs and certain patient and facility characteristics to determine those characteristics associated with statistically significant cost differences on a per diem basis. That regression analysis is described in detail in our RY 2004 IPF proposed rule (68 FR 66923; 66928 through 66933) and our RY 2005 IPF final rule (69 FR 66933 through 66960). For characteristics with statistically significant cost differences, we used the regression coefficients of those variables to determine the size of the corresponding payment adjustments.
In the RY 2005 IPF final rule, we explained the reasons for delaying an update to the adjustment factors, derived from the regression analysis, including waiting until we have IPF PPS data that yields as much information as possible regarding the patient-level characteristics of the population that each IPF serves. We indicated that we did not intend to update the regression analysis and the patient-level and facility-level adjustments until we complete that analysis. Until that analysis is complete, we stated our intention to publish a notice in the
We issued a final rule which appeared in the May 6, 2011
CMS issued the most recent IPF PPS annual update, which appeared in a final rule on August 2, 2023, in the
Section 902 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and requires the Secretary, in consultation with the Director of the Office of Management and Budget, to establish and publish timelines for the publication of Medicare final regulations based on the previous publication of a Medicare proposed or interim final regulation. Section 902 of the MMA also states that the timelines for these regulations may vary but shall not exceed 3 years after publication of the preceding proposed or interim final regulation except under exceptional circumstances.
This final rule finalizes provisions set forth in the April 3, 2024 Medicare Program; FY 2025 Inpatient Psychiatric Facilities Prospective Payment System—Rate Update; Proposed Rule (89 FR 23145). In addition, this final rule has been published within the 3-year time limit imposed by section 902 of the MMA. Therefore, we believe that the final rule is in accordance with the Congress' intent to ensure timely publication of final regulations.
We received 69 public comments that pertain to proposed IPF PPS payment policies, requests for information, and the proposed updates to the IPFQR Program. Comments were from inpatient psychiatric facilities, health systems, national and state level provider and patient advocacy organizations, the Medicare Payment Advisory Commission (MedPAC), and individuals. We reviewed each comment and grouped related comments, after which we placed them in categories based on subject matter or section(s) of the regulation affected. Summaries of the public comments received and our responses to those comments are provided in the appropriate sections in the preamble of this final rule.
In addition, we received a few comments that were out of the scope of the FY 2025 IPF PPS proposed rule. We appreciate these comments but note that, because they fall outside the scope of this rulemaking, we do not address them in this rule. We will consider these comments as we continue to develop policies for future rulemaking.
Originally, the input price index used to develop the IPF PPS was the Excluded Hospital with Capital market basket. This market basket was based on 1997 Medicare cost reports for Medicare-participating inpatient rehabilitation facilities (IRFs), IPFs, long-term care hospitals (LTCHs), cancer hospitals, and children's hospitals. Although “market basket” technically describes the mix of goods and services used in providing health care at a given point in time, this term is also commonly used to denote the input price index (that is, cost category weights and price proxies) derived from that market basket. Accordingly, the term “market basket,” as used in this document, refers to an input price index.
Since the IPF PPS inception, the market basket used to update IPF PPS payments has been rebased and revised to reflect more recent data on IPF cost structures. We last rebased and revised the IPF market basket in the FY 2024 IPF PPS rule, where we adopted a 2021-based IPF market basket, using Medicare cost report data for both Medicare participating freestanding psychiatric hospitals and psychiatric units. We refer readers to the FY 2024 IPF PPS final rule for a detailed discussion of the 2021-based IPF PPS market basket and its development (88 FR 51057 through 51081). References to the historical market baskets used to update IPF PPS payments are listed in the FY 2016 IPF PPS final rule (80 FR 46656).
For FY 2025 (beginning October 1, 2024 and ending September 30, 2025), we proposed to update the IPF PPS payments by a market basket increase factor with a productivity adjustment as required by section 1886(s)(2)(A)(i) of the Act. Consistent with historical practice, we proposed to estimate the market basket update for the IPF PPS based on the most recent forecast available at the time of rulemaking from IHS Global Inc. (IGI). IGI is a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the components of the market baskets and productivity adjustment. For the proposed rule, based on IGI's fourth quarter 2023 forecast with historical data through the third quarter of 2023, the 2021-based IPF market basket increase factor for FY 2025 was 3.1 percent.
Section 1886(s)(2)(A)(i) of the Act requires that, after establishing the increase factor for a FY, the Secretary shall reduce such increase factor for FY 2012 and each subsequent FY, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of this productivity adjustment. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period) (the “productivity adjustment”). The United States Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measures of productivity for the United States economy. We note that previously the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private nonfarm business MFP. Beginning with the November 18, 2021 release of productivity data, BLS replaced the term “multifactor productivity” with “total factor productivity” (TFP). BLS noted that this is a change in terminology only and will not affect the data or methodology. As a result of the BLS name change, the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as private nonfarm business TFP. However, as mentioned previously, the data and methods are unchanged. We refer readers to
Section 1886(s)(2)(A)(i) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the IPF PPS for the RY beginning in 2012 (a RY that coincides with a FY) and each subsequent RY. For the FY 2025 IPF PPS proposed rule, based on IGI's fourth quarter 2023 forecast, the proposed productivity adjustment for FY 2025 (the 10-year moving average of TFP for the period ending FY 2025) was projected to be 0.4 percent. Accordingly, we proposed to reduce the 3.1 percent IPF market basket increase by this 0.4 percentage point productivity adjustment, as mandated by the Act. This resulted in a proposed FY 2025 IPF PPS payment rate update of 2.7 percent (3.1−0.4 = 2.7). We also proposed that if more recent data became available, we would use such data, if appropriate, to determine the FY 2025 IPF market basket increase and productivity adjustment for the final rule.
We solicited comments on the proposed IPF market basket increase and productivity adjustment for FY 2025.
One commenter stated that the proposed 3.1 percent increase in the market basket is insufficient at this crucial time for many healthcare facilities, especially those in rural and underserved areas. One commenter recommended exploring all options to ensure that provider reimbursement is adequate to meet patient needs. They further stated that in the Medicare behavioral health arena, CMS has leverage to improve financial stability for providers and their patients because the IPF PPS authorizing statute did not specify an annual rate update, giving the Secretary discretion in establishing an update methodology. One commenter noted that in some instances, hospital beds go unused despite increasing demand due to the lack of sufficient staffing. The commenter suggested a 5-percent increase consistent with recently experienced inflation, which they stated would be compounded by the anticipated inflation during the coming year.
One commenter stated that from 2019 to 2023, costs per adjusted discharge rose 25 percent; however, base payment rates for Medicare have failed to keep pace with input price inflation. They recommended CMS use data that better reflects the input price inflation that IPFs have experienced and are projected to experience in 2025.
One commenter generally supported the proposed rate increase; however, they noted that this increase is likely still at a level insufficient to sustain capacity and improve access to high—quality care effectively. One commenter supported increasing the IPF PPS rate by 2.7 percent, noting that increased funding for IPFs would improve access to care and quality of services. One commenter suggested that CMS use more recent data, as proposed, that includes the recent inflationary increases in costs. In absence of such data, they requested that CMS consider an alternative approach to better align the market basket increases with the rising cost of treating patients.
As stated in the FY 2024 IPF final rule (88 FR 51057), the 2021-based IPF market basket is a fixed-weight, Laspeyres-type index that measures price changes over time. Since the inception of the IPF PPS, the IPF payment rates (with the exception of statutorily mandated updates) have been updated by a projection of a market basket percentage increase, consistent with other CMS PPS updates (including for inpatient hospitals, skilled nursing facilities, and home health agencies). CMS established this practice in the RY 2004 IPF PPS final rule (69 FR 66928 through 66930), in accordance with section 1886(b)(3)(B)(ii) of the Act. Because the market basket is designed to measure price inflation for IPF providers, it would not reflect increases in costs associated with changes in the volume or intensity of input goods and services (such as the quantity of labor used) or Medicare allowable costs per risk-adjusted discharge.
As is our general practice, we proposed in the FY 2025 IPF proposed rule (89 FR 23150) that if more recent data became available, we would use such data, if appropriate, to derive the final FY 2025 IPF market basket update for the final rule. As noted in that rule and above, the projection of the 2021-based IPF market basket is based on the most recent forecast from IGI, a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the price proxies of the market baskets. We also note that when developing its forecast for labor prices, IGI considers overall labor market conditions (including rise in contract labor employment due to tight labor market conditions), as well as trends in contract labor wages, which both have an impact on wage pressures for workers employed directly by the hospital. For this final rule, based on the more recent IGI second quarter 2024 forecast with historical data through the first quarter of 2024, the projected 2021-based IPF market basket increase factor for FY 2025 is 3.3 percent, which is 0.2 percentage point higher than the projected FY 2025 market basket increase factor in the proposed rule, and reflects an increase in compensation prices of 3.7 percent. We note that the 10-year historical average (2014 through
One commenter stated that hospitals continue to encounter difficulties obtaining nurses and nursing assistants to care for patients, and these struggles could potentially be exacerbated by the recently finalized minimum staffing requirement at nursing facilities. They argued that these issues should be accounted for when determining a productivity factor. One commenter requested CMS lower the productivity adjustment factor to the rate used in FY 2024, which was 0.2 percentage point.
As stated in the FY 2025 IPF proposed rule (89 FR 23149), the United States Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measures of annual economy-wide, private nonfarm business total factor productivity (previously referred to as annual economy-wide, private nonfarm business multifactor productivity). IGI forecasts total factor productivity consistent with BLS methodology by forecasting the detailed components of TFP. A complete description of IGI's TFP projection methodology is available on the CMS website at
We believe our methodology for the productivity adjustment is consistent with the statute that states the productivity adjustment is equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period).
The FY 2025 proposed productivity adjustment of 0.4 percent was based on IGI's forecast of the 10-year moving average of annual economy-wide private nonfarm business TFP, reflecting historical data through 2022 as published by BLS and forecasted TFP for 2023 through 2025. The higher productivity adjustment for FY 2025 (0.4 percent proposed and 0.5 percent for the final rule) compared to FY 2024 (0.2 percent) is primarily a result of incorporating BLS revised historical data through 2022 and preliminary historical growth in TFP for 2023, and an updated forecast for TFP growth for 2024 reflecting higher expected growth in economic output.
Finally, we note that CMS appreciates the concerns that the commenter raised about challenges related to staffing. We remain focused on improving the health and safety of patients seeking care at IPFs, and ensuring access to care.
Several commenters stated that they believed the persistent gap between the forecasted market basket percentage increase and the actual market basket percentage increase is indefensible on policy grounds, particularly when considering what the commenters described as an overwhelming urgency of the behavioral health service shortages facing the United States. The commenters requested that CMS apply a 0.7 percentage point increase to the per diem base rate for FY 2025 to account for the forecast error for FY 2023.
Several commenters requested that CMS make a one-time 3.5 percent adjustment to the IPF market basket in FY 2025 to account for what the commenters consider to be underpayments from FYs 2022 through FY 2024. One commenter requested that CMS adopt a one-time forecast error adjustment to the FY 2025 IPF PPS update based on the 3.9 percentage points difference in the IPF PPS market basket in FYs 2021, 2022, and 2023.
While there is no precedent for adjusting for market basket forecast error in the IPF payment update, a forecast error can be calculated for a prior year by comparing the actual market basket increase for a given year less the forecasted market basket increase. Due to the uncertainty regarding future price trends, forecast errors can be both positive and negative. As of now, the cumulative forecast error since IPF PPS inception (rate year 2007 to FY 2023) is −0.2 percent, which reflects that forecasted market basket updates for each payment year for IPFs were higher than the actual market basket updates from 2012 through 2020 (with the exception of 2018); the opposite was true for 2021 through 2023. Only considering the forecast error for years when the IPF market basket update was lower than the actual market basket update does not consider the full experience and impact of forecast error.
Due to variations in geographic wage levels and other labor-related costs, we believe that payment rates under the IPF PPS should continue to be adjusted by a geographic wage index, which will apply to the labor-related portion of the Federal per diem base rate (hereafter referred to as the labor-related share). The labor-related share is determined by identifying the national average proportion of total costs that are related to, influenced by, or vary with the local labor market. We proposed to continue to classify a cost category as labor-related if the costs are labor-intensive and vary with the local labor market.
Based on our definition of the labor-related share and the cost categories in the 2021-based IPF market basket, we proposed to continue to include in the labor-related share the sum of the relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-Related Services; and a portion of the Capital-Related relative importance from the 2021-based IPF market basket. For more details regarding the methodology for determining specific cost categories for inclusion in the labor-related share based on the 2021-based IPF market basket, we refer readers to the FY 2024 IPF PPS final rule (88 FR 51078 through 51081).
The relative importance reflects the different rates of price change for these cost categories between the base year (FY 2021) and FY 2025. Based on IGI's fourth quarter 2023 forecast of the 2021-based IPF market basket, the sum of the FY 2025 relative importance moving average of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-Related Services was 75.7 percent. We proposed, consistent with prior rulemaking, that the portion of Capital-Related costs that are influenced by the local labor market is 46 percent. Since the relative importance for Capital-Related costs was 6.8 percent of the 2021-based IPF market basket for FY 2025, we proposed to take 46 percent of 6.8 percent to determine a labor-related share of Capital-Related costs for FY 2025 of 3.1 percent. Therefore, we proposed a total labor-related share for FY 2025 of 78.8 percent (the sum of 75.7 percent for the labor-related share of operating costs and 3.1 percent for the labor-related share of Capital-Related costs). We also proposed that if more recent data became available, we would use such data, if appropriate, to determine the FY 2025 labor-related share for the final rule. For more information on the labor-related share and its calculation, we refer readers to the FY 2024 IPF PPS final rule (88 FR 51078 through 51081). We solicited comments on the proposed labor-related share for FY 2025.
Table 1 shows the final FY 2025 labor-related share and the final FY 2024 labor-related share using the 2021-based IPF market basket relative importance.
The IPF PPS is based on a standardized Federal per diem base rate calculated from the IPF average per diem costs and adjusted for budget neutrality in the implementation year. The Federal per diem base rate is used as the standard payment per day under the IPF PPS and is adjusted by the patient-level and facility-level adjustments that are applicable to the IPF stay. A detailed explanation of how we calculated the average per diem cost appears in the RY 2005 IPF PPS final rule (69 FR 66926).
Section 124(a)(1) of the BBRA requires that we implement the IPF PPS in a budget neutral manner. In other words, the amount of total payments under the IPF PPS, including any payment adjustments, must be projected to be equal to the amount of total payments that will have been made if the IPF PPS were not implemented. Therefore, we calculated the budget neutrality factor by setting the total estimated IPF PPS payments to be equal to the total estimated payments that will have been made under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been implemented. A step-by-step description of the methodology used to estimate payments under the TEFRA payment system appears in the RY 2005 IPF PPS final rule (69 FR 66926).
Under the IPF PPS methodology, we calculated the final Federal per diem base rate to be budget neutral during the IPF PPS implementation period (that is, the 18-month period from January 1, 2005, through June 30, 2006) using a July 1 update cycle. We updated the average cost per day to the midpoint of the IPF PPS implementation period (October 1, 2005), and this amount was used in the payment model to establish the budget neutrality adjustment.
Next, we standardized the IPF PPS Federal per diem base rate to account for the overall positive effects of the IPF PPS payment adjustment factors by dividing total estimated payments under the TEFRA payment system by estimated payments under the IPF PPS. The information concerning this standardization can be found in the RY 2005 IPF PPS final rule (69 FR 66932) and the RY 2006 IPF PPS final rule (71 FR 27045). We then reduced the standardized Federal per diem base rate to account for the outlier policy, the stop loss provision, and anticipated behavioral changes. A complete discussion of how we calculated each component of the budget neutrality adjustment appears in the RY 2005 IPF PPS final rule (69 FR 66932 through 66933) and in the RY 2007 IPF PPS final rule (71 FR 27044 through 27046). The final standardized budget neutral Federal per diem base rate established for cost reporting periods beginning on or after January 1, 2005 was calculated to be $575.95.
The Federal per diem base rate has been updated in accordance with applicable statutory requirements and 42 CFR 412.428 through publication of annual notices or proposed and final rules. A detailed discussion on the standardized budget neutral Federal per diem base rate and the Electroconvulsive Therapy (ECT) payment per treatment appears in the FY 2014 IPF PPS update notice (78 FR 46738 through 46740). These documents are available on the CMS website at
As discussed in section IV.B.2 of this final rule, we proposed to revise the patient-level adjustment factors and increase the ECT payment amount for FY 2025. Section 1866(s)(5)(D)(iii) of the Act, as added by section 4125(a) of the CAA, 2023, requires that revisions to the IPF PPS adjustment factors must be made budget-neutrally. Therefore, as discussed in section IV.F of this final rule, we proposed to apply a
In the RY 2005 IPF PPS final rule (69 FR 66951), we analyzed the costs of IPF stays that included ECT treatment using the FY 2002 MedPAR data based on comments we received on the RY 2005 IPF PPS proposed rule. Consistent with the comments we received about ECT, our analysis and review indicated that cases with ECT treatment are substantially more costly than cases without ECT treatment. Based on this analysis, in that final rule we finalized an additional payment for each ECT treatment furnished during the IPF stay. This ECT payment per treatment is made in addition to the per diem and outlier payments under the IPF PPS. To receive the payment per ECT treatment, IPFs must indicate on their claims the revenue code and procedure code for ECT (Rev Code 901; procedure code 90870) and the number of units of ECT, that is, the number of ECT treatments the patient received during the IPF stay.
To establish the ECT per treatment payment, we used the pre-scaled and pre-adjusted median cost for procedure code 90870 developed for the Hospital Outpatient Prospective Payment System (OPPS), based on hospital claims data. We explained in the RY 2005 IPF PPS final rule that we used OPPS data because after a careful review and analysis of IPF claims, we were unable to separate out the cost of a single ECT treatment (69 FR 66922). We used the unadjusted hospital claims data under the OPPS because we did not want the ECT payment under the IPF PPS to be affected by factors that are relevant to OPPS, but not specifically applicable to IPFs. The median cost was then standardized and adjusted for budget neutrality. We also adjusted the ECT rate for wage differences in the same manner that we adjust the per diem rate.
Since the ECT payment rate was established in the RY 2005 IPF PPS rule, it has been updated annually by application of each year's market basket, productivity adjustment, and wage index budget neutrality factor to the previous year's ECT payment rate (referred to as our “standard methodology” in this section). While the ECT payment rate has been updated each year by these factors, we have not recalculated the ECT payment per treatment based on more recent cost data since the establishment of the IPF PPS.
For the FY 2025 IPF PPS proposed rule, we analyzed data in both the IPF PPS and the OPPS. In the IPF PPS setting, our analysis of recent IPF PPS data indicates that IPF costs have increased for stays that include ECT treatments. As discussed in the next paragraph, our analysis of these costs led us to consider whether the current payment per treatment for ECT is aligned with the additional costs associated with stays that include ECT treatments. We began by analyzing IPF stays with ECT treatment using the CY 2022 Medicare Provider and Analysis Review (MedPAR) data. IPF stays with ECT treatment comprised about 1.7 percent of all stays, which is a decrease from the FY 2002 MedPAR data discussed in the RY 2005 IPF PPS final rule, where stays with ECT treatment were 6.0 percent of all IPF stays. A total of 288 IPF facilities had stays with ECT treatment in 2022, with an average 6.7 units of ECT per stay. We compared the total cost for stays with and without ECT treatment, and found that IPF stays with ECT treatment were approximately three times more costly than IPF stays without ECT treatment ($44,687.50 per stay vs. $15,432.30 per stay). Most of the variance in cost was due to differences in the IPF length of stay (LOS) (28.00 days for stays with ECT treatment vs. 13.43 days for stays without ECT treatment). We note that the IPF PPS makes additional per diem payments for longer lengths of stay, which makes the total payment larger for a longer stay. However, we also observed that there are differences in the per-day cost for stays with and without ECT. We calculated the average cost per day for stays with and without ECT treatment and found that stays with ECT treatment have an average cost per day of $1,595.76, while stays without ECT treatment have an average cost per day of $1,149.51.
Furthermore, as we discuss in section IV.C.3.d.(2) of this final rule, our latest regression analysis includes a control variable to account for the presence of ECT during an IPF stay. That control variable indicates that, holding all other patient-level and facility-level factors constant, there is a statistically significant increase in cost per day for IPF stays that include ECT, further demonstrating that resource use is higher for IPF stays with ECT than those without ECT. As we previously noted in the RY 2005 IPF PPS final rule (69 FR 66922), IPF claims and cost data are not sufficiently granular to identify the per-treatment cost of ECT. Therefore, we examined the difference in ancillary costs for IPF stays with and without ECT treatment. In the CY 2022 MedPAR data, the ancillary costs per IPF stay with ECT treatment were $7,116.85 higher than ancillary costs per IPF stay without ECT treatment. The ancillary costs were calculated as follows: for each ancillary department (for example, drugs or labs), the charges were multiplied by the department-level CCR, and those department-level costs were summed across departments for each stay. The average ancillary costs per stay were calculated accordingly for stays with and without ECT treatment, revealing that average ancillary costs per day are three times higher for stays with ECT treatment: $99.36 for stays without ECT treatment versus $301.77 for stays with ECT treatment. Accounting for differences in length of stay between stays with and without ECT, the average additional ancillary cost per ECT unit was approximately $849.72.
We noted that the application of our standard methodology for updating the ECT payment would have resulted in an FY 2025 payment of $377.54. We note that for this final rule, that figure is $378.23 per ECT treatment, based on the FY 2024 ECT payment amount of $385.58, increased by the market basket update of 2.8 percent and reduced by the FY 2025 wage index budget neutrality factor of 0.9996 and a refinement standardization factor of 0.9546, which is the standardization factor that would account for all other proposed refinements without increasing the ECT per treatment. As we noted above, this ECT payment would be added to the per diem and any applicable outlier payments for the entire stay. CMS considered this rate in proposing to adjust the ECT per treatment rate. However, the analysis of ancillary costs for IPF stays with ECT treatment suggested that a further increase to the current ECT payment amount per treatment could better align IPF PPS payments with the increased costs of furnishing ECT. The ancillary cost data showed that costs for furnishing ECT have risen by a factor greater than the standard methodology for updating the rate will adjust for.
It continues to be the case that, as we discussed in the RY 2005 IPF PPS final rule, current IPF cost and claims data are not sufficiently granular to identify the per-treatment cost of ECT. We believe that using the costs in the OPPS setting are the most accurate for purposes of updating the ECT per treatment rate because we believe this treatment requires comparable resources
The original methodology for determining the ECT payment per treatment was based on the median cost for procedure code 90870 developed for the OPPS, as discussed in the RY 2005 IPF PPS final rule (69 FR 66951). Since that time, the OPPS has adopted certain changes to its methodology for calculating costs. In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 through 68270), CMS finalized a methodology for developing the relative payment weights for Ambulatory Payment Classifications using geometric mean costs instead of median costs. We explained that geometric means better capture the range of costs associated with providing services, including those cases where very efficient hospitals have provided services at much lower costs. While medians and geometric means both capture the impact of uniform changes, that is, those changes that influence all providers, only geometric means capture cost changes that are introduced slowly into the system on a case-by-case or hospital-by-hospital basis, allowing us to detect changes in the cost of services earlier.
We believe the rationale for using geometric mean cost in the OPPS setting as the underpinning methodology for establishing payments applies equally to the costs of providing ECT on a per treatment basis under the IPF PPS. Therefore, in considering changes for the IPF PPS ECT payment per treatment for FY 2025, we compared the costs observed in the IPF setting to the geometric mean cost for an ECT treatment posted as part of the CY 2024 OPPS/ASC update, which is based on CY 2022 outpatient hospital claims. Although we proposed to increase the ECT payment with reference to the CY 2024 OPPS ECT geometric mean cost for FY 2025, we did not propose to adopt the OPPS rate (which is distinct from the geometric mean cost) for the ECT payment per treatment for FY 2025 because the final OPPS rates include policy decisions and payment rate updates that are specific to the OPPS. We intend to continue to monitor the costs associated with ECT treatment and may propose adjustments in the future as needed.
The pre-scaled and pre-adjusted CY 2024 OPPS geometric mean cost for ECT is $675.93. Comparatively, the FY 2024 IPF ECT payment rate was $385.58 (88 FR 51054). As discussed in the prior paragraphs, our analysis of updated ancillary cost data indicates that the IPF PPS ECT payment rate per treatment, when updated according to the standard methodology alone, has not kept pace with the cost of furnishing the treatment in the IPF setting. As we stated previously, we believe this treatment requires comparable resources when performed in outpatient and inpatient settings. Therefore, we proposed to use the pre-scaled and pre-adjusted CY 2024 OPPS geometric mean cost of $675.93 as the basis for the IPF PPS ECT payment per treatment in FY 2025, as discussed below. We proposed to update $675.93 by the FY 2025 IPF PPS payment rate update of 2.7 percent (3.1 percent IPF market basket increase, reduced by the 0.4 percentage point productivity adjustment), and the wage index budget neutrality factor of 0.9998 for FY 2025, in alignment with our current standard methodology. We also proposed to update this amount based on more recent data of the market basket, productivity adjustment, and wage index budget neutrality factor.
To account for budget neutrality, as discussed in section IV.F of this final rule, we proposed to apply a refinement standardization factor to the FY 2025 IPF PPS Federal per diem base rate and to the ECT payment amount per treatment to account for this proposed change to the ECT payment amount per treatment and all proposed changes to the patient-level adjustment factors and to the ED adjustment factor for FY 2025. We noted that this proposed increase to the ECT per treatment amount would be associated with a minor decrease to the IPF Federal per diem base rate as a result of the refinement standardization factor (0.9514 instead of 0.9536). We estimated that this change would increase payments for IPFs that provide ECT, and would decrease payments for IPFs that do not provide ECT. However, we explained that the decrease in payments associated with this change would be no more than approximately 0.2 percent, which would be offset by various other proposed changes such as the proposed wage index changes, proposed revisions to the IPF PPS patient-level adjustments, and the proposed market basket increase for FY 2025.
We noted that we have monitored the provision of ECT through analysis of claims data since the beginning of the IPF PPS and have not observed any indicators that payment is inappropriately incentivizing the provision of ECT to IPF patients. We stated that we intend to continue monitoring the provision of ECT through further analysis of IPF PPS claims data. In addition, we presented a detailed discussion of the distributional impacts of this proposed change and we welcomed comments regarding our analysis, including any comments that could inform our understanding of where ECT costs are allocated in cost reports in order to potentially inform improved collection of data on ECT treatment costs in the IPF setting. We also welcomed comments on whether it may be appropriate to collect additional ECT-specific costs on the hospital cost report. Lastly, we proposed that if more recent data became available, we would use such data, if appropriate, to determine the FY 2025 Federal per diem base rate and ECT payment per treatment for the FY 2025 IPF PPS final rule.
As we stated in the proposed rule, we intend to continue monitoring the provision of ECT through further analysis of IPF PPS claims data. (89 FR 23153)
IPFs must include a valid procedure code for ECT services provided to IPF beneficiaries to bill for ECT services, as described in our Medicare Claims Processing Manual, Chapter 3, Section 190.7.3 (available at
The current (FY 2024) Federal per diem base rate is $895.63 and the ECT payment per treatment is $385.58. For the final FY 2025 Federal per diem base rate, we applied the payment rate update of 2.8 percent—that is, the final 2021-based IPF market basket percentage increase for FY 2025 of 3.3 percent reduced by the final productivity adjustment of 0.5 percentage point—the final wage index budget neutrality factor of 0.9996 (as discussed in section IV.D.1 of this final rule), and a final refinement standardization factor of 0.9524 (as discussed in section IV.F of this final rule) to the FY 2024 Federal per diem base rate of $895.63, yielding a final Federal per diem base rate of $876.53 for FY 2025. As discussed in section IV.B.2 of this final rule, we are finalizing our proposal to increase the ECT payment per treatment for FY 2025 in addition to our routine updates to the rate. We applied the 2.8 percent IPF market basket update, the 0.9996 wage index budget neutrality factor, and the 0.9524 refinement standardization factor to the final payment per treatment based on the CY 2024 OPPS geometric mean cost of $675.93, yielding a final ECT payment per treatment of $661.52 for FY 2025.
Section 1886(s)(4)(A)(i) of the Act requires that for RY 2014 and each subsequent RY, in the case of an IPF that fails to report required quality data with respect to such RY, the Secretary will reduce any annual update to a standard Federal rate for discharges during the RY by 2.0 percentage points. Therefore, we applied a 2.0 percentage point reduction to the annual update to the Federal per diem base rate and the proposed ECT payment per treatment as follows:
• For IPFs that fail to report required data under the IPFQR Program, we will apply a 0.8 percent payment rate update—that is, the final IPF market basket increase for FY 2025 of 3.3 percent reduced by the productivity adjustment of 0.5 percentage point for an update of 2.8 percent, and further reduced by 2.0 percentage points in accordance with section 1886(s)(4)(A)(i) of the Act. We will also apply the refinement standardization factor of 0.9524 and the wage index budget neutrality factor of 0.9996 to the FY 2024 Federal per diem base rate of $895.63, yielding a Federal per diem base rate of $859.48 for FY 2025.
• For IPFs that fail to report required data under the IPFQR Program, we will apply the 0.8 percent annual payment rate update, the 0.9524 refinement standardization factor, and the 0.9996 wage index budget neutrality factor to the payment per treatment based on the CY 2024 OPPS geometric mean cost of $675.93, yielding an ECT payment per treatment of $648.65 for FY 2025.
The current (FY 2024) IPF PPS payment adjustment factors were derived from a regression analysis of 100 percent of the FY 2002 Medicare Provider and Analysis Review (MedPAR) data file, which contained 483,038 cases. For a more detailed description of the data file used for the regression analysis, we refer readers to the RY 2005 IPF PPS final rule (69 FR 66935 through 66936).
For FY 2025, we proposed to implement revisions to the methodology for determining payment rates under the IPF PPS. As we noted earlier in this FY 2025 IPF PPS final rule, section 1886(s)(5)(D) of the Act, as added by section 4125(a) of the CAA, 2023 requires that the Secretary implement revisions to the methodology for determining the payment rates under the IPF PPS for psychiatric hospitals and psychiatric units, effective for FY 2025. The revisions may be based on a review of the data and information collected under section 1886(s)(5)(A) of the Act. Accordingly, we proposed to revise the patient-level IPF PPS payment adjustment factors as discussed in section IV.C.4. of this final rule, effective for FY 2025. We explained that we developed proposed adjustment factors based on a regression analysis of IPF cost and claims data, which is discussed in greater detail in the following sections of this final rule. The primary sources of this analysis are CY 2019 through 2021 MedPAR files and Medicare cost report data (CMS
In the FY 2023 IPF PPS proposed rule (87 FR 19428 through 19429), we briefly discussed past analyses and areas of interest for future refinement, about which we previously solicited comments. CMS also released a technical report posted to the CMS website
In the FY 2024 IPF PPS proposed rule (88 FR 21269 through 21272), we requested information from the public to inform revisions to the IPF PPS required by the CAA, 2023. Specifically, we sought information about which data and information will be most appropriate and useful for the purposes of refining IPF PPS payments. We requested information related to the specific types of data and information mentioned in the CAA, 2023. We also solicited comments on the reporting of ancillary charges, such as labs and drugs, on IPF claims. Lastly, we presented and solicited comments on the latest results of our analysis of Social Drivers of Health (SDOH).
In response to the requests for information, commenters offered a number of suggestions for further analysis, including recommendations to consider adjusting payment for patients with sleep apnea, violent behavior, and patients that transfer from an acute care unit. We discuss the analysis conducted and our findings as related to patient-level adjustment factors in section IV.C.3 of this final rule.
In the FY 2025 IPF PPS proposed rule, we explained that the primary goal in refining the IPF PPS payment adjustment factors is to pay each IPF an appropriate amount for the efficient delivery of care to Medicare beneficiaries. We stated that the system must be able to account adequately for each IPF's case-mix to allow for both fair distribution of Medicare payments and access to adequate care for those beneficiaries who require more costly care. We also noted that as required by section 1886(s)(5)(D)(iii) of the Act, as added by section 4125(a) of the CAA, 2023, proposed revisions to the IPF PPS adjustment factors must be budget neutral. We explained that we applied a refinement standardization factor to the proposed IPF PPS payment rates to maintain budget neutrality for FY 2025.
In the proposed rule, we explained that to ensure that the IPF PPS continues to account adequately for each IPF's case-mix, we performed an extensive regression analysis of the relationship between the per diem costs and both patient and facility characteristics to identify those characteristics associated with statistically significant cost differences. We discuss the results of this regression analysis in section IV.C.3.e. of this final rule. We further discuss final policies related to the proposed revisions to the IPF PPS patient-level adjustment factors based on this regression analysis in section IV.C.4 of this final rule.
As we discussed in the proposed rule, we computed a per diem cost for each Medicare inpatient psychiatric stay, including routine operating, ancillary, and capital components using information from the CY 2019 through CY 2021 MedPAR files and data from the 2019 through 2021 Medicare cost reports, backfilling with Medicare cost reports from the most recent prior year when necessary.
We began with a 100-percent sample of the CY 2019 through CY 2021 MedPAR data files, which contain a total of 1,111,459 stays from 1,684 IPFs. We explained in the proposed rule that we applied several data restrictions and exclusions to obtain the set of data used for our regression analysis. The MedPAR data files used for this regression analysis contain a total of 806,611 stays from 1,643 IPFs, which reflect the removal of 41 providers and 304,848 stays with missing or erroneous data. To include as many IPFs as possible in the regression, we used the cost report information for each provider corresponding to the year of claims, when available, and substituted the most recent prior available cost report information for routine cost and ancillary cost to charge ratios if the corresponding year's data was not available.
For the regression analysis, we stated in the proposed rule that we chose to use a combined set of CY 2019 through 2021 MedPAR data. Our analysis showed that using a combined set of data from multiple years yields the most stable and consistent result. We noted that when we looked at the results for each year individually, we found that some DRGs and comorbidity categories were not statistically significant due in part to small sample size. In addition, we noted that during FY 2020, the U.S. healthcare system undertook an unprecedented response to the Public Health Emergency (PHE) declared by the Secretary of the Department of Health and Human Services on January 31, 2020 in response to the outbreak of respiratory disease caused by a novel (new) coronavirus that has been named “SARS CoV 2” and the disease it causes, which has been named “coronavirus disease 2019” (abbreviated “COVID-19”). We stated that we believe the aggregated three-year regression serves to smooth the impact of changes in utilization driven by the COVID-19 PHE, as well as significant changes in staffing and labor costs that commenters noted in response to the FY 2023 and FY 2024 IPF PPS proposed rules. We also explained in the proposed rule that we used 2019 through 2021 Medicare cost report data to retain as many records as possible for analysis.
In addition, we explained that we used several other data sources to identify the IPF population for analysis and to construct variables in the regression model:
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In the proposed rule, we noted that among the 1,643 providers included in the regression analysis sample, the majority had their most recent Medicare cost report information corresponding to the year of the MedPAR data file. Specifically, for the CY 2019 MedPAR data file, 99.5 percent (1,551 providers) used FY 2019 Medicare cost reports, and 0.5 percent (8 providers) used FY 2018 Medicare cost reports. For CY 2020, 99.7 percent (1,523 providers) used FY 2020 Medicare cost reports, and 0.3 percent (5 providers) used FY 2019 Medicare cost reports. For CY 2021, 97.6 percent (1,435 providers) used FY 2021 Medicare cost reports, and 2.4 percent (35 providers) used FY 2020 Medicare cost reports. We explained that this approach allowed us to use the most current and relevant cost report data, ensuring the robustness and accuracy of our analysis.
In the proposed rule, we explained that to identify the IPF population for analysis, we matched MedPAR records to facility-level information from Medicare cost reports, the POS file, and the PSF. We further explained that we included MedPAR stays that met the following criteria:
• Hospital CMS Certification Number (CCN) contains “40,” “41,” “42,” “43,” or “44” in the third and fourth position or a special unit code of “S” or “M” for psychiatric unit or psychiatric unit in a critical access hospital.
• Beneficiary primary payer code is equal to “Z” or blank, indicating Medicare is the primary payer.
• Group Health Organization (GHO) paid code is equal to zero or blank, indicating that a GHO has not paid the facility for the stay.
• National Claims History (NCH) claim type code is equal to “60,” an inpatient claim.
• Number of utilization days was greater than zero.
We noted in the proposed rule that we completed a series of trimming steps to remove missing and outlier data, to promote the accuracy and completeness of data included in the regression model. We stated that before any trims or exclusions were applied, there were 1,684 providers in the MedPAR data file. We described these trimming steps in detail in the proposed rule.
First, we matched facilities from the MedPAR dataset to the most recent Medicare cost report file available from CY 2018 to CY 2021, and excluded facilities that did not have a Medicare cost report available from 2018 to 2021. If facilities had more than one Medicare cost report in a given year, we used the Medicare cost report representing the longest time span. We identified 1 provider in CY 2019, 5 providers in CY 2020, and 4 providers in CY 2021 that had no available Medicare cost report information. In total, we excluded data from 5 unique providers that had no available Medicare cost report information from CY 2019 to CY 2021.
Next, we trimmed facilities with extraordinarily high or low costs per day. We removed facilities with outlier routine per diem costs, defined as those falling outside of the range of the mean logarithm of routine costs per diem plus or minus 3.00 standard deviations. We also removed stays with outlier total per diem costs, defined as those falling outside the range of the mean per diem cost by facility type (psychiatric hospitals and psychiatric units) plus or minus 3.00 standard deviations. The average and standard deviations of the total per diem cost (routine and ancillary costs) were computed separately for stays in psychiatric hospitals and psychiatric units because we did not want to systematically exclude a larger proportion of cases from one type of facility. In applying these trims across all three data years used in our regression model, there were 104 providers with routine per diem costs outside 3.00 standard deviations from the mean, and 47 providers with total per diem costs outside 3.00 standard deviations from the mean. Specifically, this includes 24 providers in CY 2019, 41 providers in CY 2020, and 39 providers in CY 2021 excluded for outlier routine per diem costs. We identified 25 providers in CY 2019, 1 provider in CY 2020, and 21 providers in CY 2021 that we excluded for outlier total per diem costs. In total, we excluded data from 23 unique providers with outlier routine per diem costs and 8 unique providers with outlier total per diem costs.
We also removed stays at providers without a POS file or PSF. There were 5 providers without a POS file or PSF during the period CY 2019 to CY 2021; therefore, we excluded data from these 5 providers. Only 1 unique provider was entirely excluded with no POS file or PSF from CY 2019 to CY 2021. Additionally, 1 provider was excluded because no stays had one of the recognized IPF PPS DRGs assigned.
In summary, the application of these data preparation steps resulted in excluding 5 providers because they did not have a cost report available from 2018 to 2021, 23 providers with routine per diem costs outside 3.00 standard deviations from the mean, and 8 providers with total per diem costs outside 3.00 standard deviations from the mean. We also excluded 1 provider without a POS file or PSF, 1 provider with no stays with IPF PPS DRGs, and 3 providers based on IPF stays restrictions. In total, the exclusion of these 41 providers resulted in the removal of 304,848 stays from our original total of 1,111,459 stays.
In the proposed rule, we explained that we considered trimming stays from facilities where 95 percent or more of stays had no ancillary charges because we assumed that the cost data from these facilities were inaccurate or incomplete. We noted that this is the trimming methodology that we applied to the analysis described in the technical report released along with the FY 2023 IPF PPS proposed rule. As previously discussed, the IPF PPS regression model uses the sum of routine and ancillary costs as the dependent variable, and we assumed that data from facilities without ancillary charge data will be inadequate to capture variation in costs. We explained that when we examined the claims from 2018, which we used for prior analysis, this trimming step resulted in removing almost one-quarter of total stays from the unrestricted 2018 MedPAR dataset (82,491 out of 364,080 total stays). We stated that this trimming step also resulted in disproportionate exclusion of certain types of facilities, particularly freestanding psychiatric hospitals that were for-profit or government-operated, as well as all-inclusive rate providers. We noted that approximately 55 percent of stays from freestanding facilities would be removed, compared to just 0.3 percent of stays in psychiatric units. In the analysis described in the FY 2023 IPF PPS proposed rule (87 FR 19429), we attempted to address this disproportionate removal of stays by facility type by applying weights by facility type and ownership in the regression model to account for excluded providers and to avoid biasing the sample towards stays from providers in psychiatric units.
We explained that in response to the analysis described in the FY 2023 IPF PPS proposed rule (87 FR 19429), commenters raised concerns about the large number of stays excluded from the regression analysis, and questioned whether the ancillary charge data were truly missing, as all-inclusive rate providers are not required to report separate ancillary charges. We stated that we agree that this trimming step reduces the representativeness of the IPF population used in the regression model and may increase the potential
In this year's proposed rule, we explained that when we examined the claims from CY 2019 to CY 2021, we observed that this trimming step would have resulted in a loss of a significant number of providers (324 providers in CY 2019, 330 providers in CY 2020, and 336 providers in CY 2021). Due to the concerns that commenters previously raised (which we summarized in the FY 2024 IPF PPS final rule (88 FR 51097 through 51098)), and to include as many claims as possible in the regression analysis, we explained that we did not trim stays from facilities with zero or minimal ancillary charges. As a result, we noted that we observed a significant reduction in data loss when comparing our latest regression model with the model described in the FY 2023 IPF PPS proposed rule. We further stated that by including, rather than trimming, facilities with low or no ancillary charge data, we prevented the loss of 288 providers across the three years, allowing for a more inclusive analysis. We noted that these providers accounted for approximately 194,673 stays included in our data set.
We clarified that the regression results presented in the proposed rule did not include the application of any trimming or subsequent weighting to account for the removal of stays from facilities with zero or minimal ancillary charges.
In the proposed rule, we explained that the IPF PPS regression model uses the natural logarithm of per diem total cost as the dependent variable. We stated that we computed a per diem cost for each Medicare inpatient psychiatric stay, including routine operating, ancillary, and capital components, using information from the combined CY 2019 through 2021 MedPAR file and data from the 2018 through 2021 Medicare cost reports. We explained that for each MedPAR CY, we examined the corresponding Medicare cost report, and if a provider's cost-to-charge ratio was missing from the matching year's cost report, we looked at the provider's cost report from the prior year to obtain the most recent cost-to-charge value for the provider. We noted that we applied a prior-year cost-to-charge ratio to 8 providers from the CY 2019 MedPAR claims, 5 providers from the CY 2020 MedPAR claims, and 35 providers from the CY 2021 MedPAR claims.
We further explained that to calculate the total cost per day for each inpatient psychiatric stay, routine costs were estimated by multiplying the routine cost per day from the IPF's Medicare cost report (Worksheet D-1, Part II, column 1, line 38) by the number of Medicare covered days in the MedPAR stay record. We explained that ancillary costs were estimated by multiplying each departmental cost-to-charge ratio (calculated by dividing the amount obtained from Worksheet C, columns 5, by the sum of Worksheet C, columns 6 and 7) by the corresponding ancillary charges in the MedPAR stay record. We stated that the total cost per day was calculated by summing routine and ancillary costs for the stay and dividing it by the number of Medicare covered days for each day of the stay.
As discussed in the proposed rule, we winsorized the distributions of the 17 ancillary cost centers from Worksheet C of the cost report at the 2nd and 98th percentiles to address extreme cost-to-charge ratios. That is, if the cost-to-charge ratio was missing and there was a charge on the claim, the cost-to-charge ratio was imputed to the calculated median value for each respective cost center.
In addition, we explained that the total cost per day (also referred to as per diem cost) was adjusted for differences in cost across geographic areas using the FY 2019 through 2021 IPF wage indices and COLAs corresponding to each MedPAR data year. We stated that we adjusted the labor-related portion of the per diem cost using the IPF wage index to account for geographic differences in labor cost and adjusted the non-labor portion of the per diem cost by the COLA adjustment factors for IPFs in Alaska and Hawaii. We stated that we used IPF PPS labor-related share and non-labor-related share finalized for each year, FY 2019 through FY 2021, to determine the amount of the per diem cost that is adjusted by the wage index and the COLA, respectively. We explained that we calculated the adjusted cost using the following formula:
In the proposed rule, we stated that the independent variables in the regression model are patient-level and facility-level characteristics that affect the dependent variable in the model, which is per diem cost. As discussed in the following sections, we noted that the updated regression model for the proposed rule included adjustment-related variables and control variables. We explained that adjustment-related variables are used for adjusting payment, and we proposed to revise the IPF PPS patient-level adjustment factors based on the regression results for many of the adjustment-related variables in the model. We further explained that control variables are used to account for variation in the dependent variable that is associated with factors outside the adjustment factors of the payment model.
Patient-level adjustment-related variables included in the regression model are variables for DRG assignment, comorbidity categories, age, and length of stay. We note that facility-level adjustment-related variables for rural status and teaching status are also included in the model; however, we did not propose revisions to the rural or teaching adjustments for FY 2025. We discuss the latest results of the regression analysis for facility-level adjustments in greater detail in section IV.A. of this final rule.
The regression model used to determine IPF PPS payment adjustments in the RY 2005 IPF PPS final rule (69 FR 66922) included control variables to account for facilities' occupancy rate, a control variable to indicate if the patient received ECT, and a control variable for IPFs that do not bill for ancillary charges. In the proposed rule, we explained that the updated regression model for the FY 2025 IPF PPS proposed rule removed the occupancy control variables and the control variable for IPFs that do not bill for ancillary charges. In addition, we explained that we retained the control variable for patients receiving ECT and added control variables for the data year. We also explained that we added a control variable for the presence of ED
The 2004 regression model included two control variables for occupancy rate. One was a continuous variable for the facility's logarithmic-transformed occupancy rate. The other was a categorical variable indicating a facility had an occupancy rate below 30 percent. Both of these variables were found to be associated with statistically significant increases in cost. In the RY 2005 IPF PPS final rule, we adopted the structural approach and included these control variables in the regression. We explained that it was appropriate to control for variations in the occupancy rate in estimating the effects of the payment variables on per diem cost to avoid compensating facilities for inefficiency associated with underutilized fixed costs (69 FR 66934). As we discussed in the FY 2023 IPF PPS proposed rule, our analysis found that the occupancy control variables were associated with rural status. We solicited comments on the potential removal of the occupancy control variables from the model (87 FR 19429). In response, we received several comments in support of removing the occupancy control variables, due to the relationship between these control variables and the rural adjustment (87 FR 46865). Commenters cited the importance of rural IPFs as the primary points of care and access for many Medicare beneficiaries who cannot travel to urban areas for mental health services. As we discussed in the FY 2025 IPF PPS proposed rule, we considered the potential negative impact to rural facilities of retaining the occupancy control variables in the regression model. We stated that we agree with the commenters who noted the importance of maintaining stability in payments for rural IPFs; therefore, we did not include any occupancy control variables in our regression model.
In addition, we stated that we considered including a control variable for IPFs that do not bill for ancillary services. As we discussed in the RY 2005 IPF PPS final rule (69 FR 66936), we included variables in the regression to control for psychiatric hospitals that do not bill ancillary costs. However, at that time, the number of IPFs who did not bill for ancillary costs was relatively small and consisted mostly of government-operated facilities. As we discuss later in section IV.E.4 of this final rule, an increasing number of IPFs have stopped reporting ancillary charges on their claims, which means that ancillary cost information is not available for stays at these IPFs.
We explained in the proposed rule that we considered whether to include a control variable for facilities that do not report ancillary charges. We stated that we considered that the inclusion of a control variable would only account for differences in the level of cost between IPFs with and without reported ancillary costs and would not facilitate comparison of costs between all IPFs in our sample. In addition, we noted that facilities that did not report ancillary charges also tended to have lower routine costs; that is, our analysis showed that these facilities will have overall lower costs per day, regardless of whether ancillary costs were considered in the cost variable. We explained that the inclusion of a control variable in the regression model would account for these differences in overall cost, which would impact the size of payment-related adjustment factors that are correlated with the prevalence of missing ancillary charge data. We stated that for this reason, in developing a regression model for proposing revisions to the IPF PPS, we did not include a control variable to account for facilities that report zero or minimal ancillary charges.
As noted earlier, the original model also included a control variable for the presence of ECT. This is because ECT is paid on a per-treatment basis under the IPF PPS. As discussed in more detail in section IV.B.2. of this FY 2025 IPF PPS final rule, we continue to observe that IPF stays with ECT have significantly higher costs per day. We proposed to continue paying for ECT on a per-treatment basis; therefore, we explained that we included a control variable to account for the additional costs associated with ECT, which will continue to be paid for outside the regression model.
Similarly, we stated that we included a control variable for stays with emergency department (ED)-related charges. The original model did not include an ED control variable, because ED costs were excluded from the dependent variable of IPF per diem costs. We explained that our regression model for the FY 2025 IPF PPS proposed rule includes all costs associated with each IPF stay, including ED costs. As we explained in the proposed rule, we proposed to calculate the ED adjustment in accordance with our longstanding methodology, separate from the regression model. However, we included a control variable for stays with ED charges to control for the additional costs associated with ED admissions, which are paid under the ED adjustment outside the regression model.
Lastly, we stated that we included control variables for the data year. We stated that because the model used a combined set of data from 3 years, these control variables are included in the model to account for differences in cost levels between 2019, 2020, and 2021, which would be driven by economic inflation and other external factors unrelated to the independent variables in the regression model.
In the proposed rule, we presented the results of our regression model, which we noted includes a total of 806,611 stays, and had an r-squared value of 0.32340, meaning that the independent variables included in the regression model were able to explain approximately 32.3 percent of the variation in per diem cost among IPF stays.
In the proposed rule, we explained that except for the teaching variable, each of the adjustment factors we presented was the exponentiated regression coefficient of our regression model, which as we previously noted uses the natural logarithm of per diem total cost as the dependent variable. We stated that we presented the exponentiated regression results, as these most directly translate to the way that IPF PPS adjustment factors are calculated for payment purposes. That is, the exponentiated adjustment factors presented in the proposed rule represent a percentage increase or decrease in per diem cost for IPF stays with each characteristic. In the case of the teaching variable, we noted that the result presented in the proposed rule is the un-exponentiated regression coefficient. As discussed in section IV.D of this final rule, the current IPF PPS teaching adjustment is calculated as 1 + a facility's ratio of interns and residents to beds, raised to the power of 0.5150. We explained that the coefficient for teaching status presented in the proposed rule can be interpreted in the same way.
We explained that for certain categorical variables, including DRG, age, length of stay, and the year control variables, results for the reference groups were not shown. We stated that the DRG reference group is DRG 885, because this DRG represents the majority of IPF PPS stays. In addition, we explained that the age reference group is the Under 45 category, because this group is associated with the lowest costs after accounting for all other patient characteristics in the model. We further explained that the reference
Lastly, we stated that we considered the regression factors to be statistically significant when the p-value was less than or equal to the significance level of 0.05 (*), 0.01 (**), and 0.001 (***), as notated in the table presented in the proposed rule.
We received several comments regarding the regression methodology discussed in the proposed rule.
Regarding the suggestion to apply a constrained regression analysis, we do not believe this methodology would be appropriate. We note that a constrained regression analysis of the type the commenter suggested would apply mathematical constraints such that the coefficients for rural status and teaching status would remain at their current levels. A constrained regression analysis would therefore calculate the patient-level and control variables that minimize the sum of squared errors, given the constraints on the rural and teaching coefficients. We agree with the commenter's assertion that a constrained regression analysis would yield different patient-level adjustment factors for FY 2025. As a result, if CMS were to propose revisions to the facility-level adjustment factors in a future year, a constrained regression methodology of the type that the commenter recommended could result in further changes to the patient-level adjustment factors, which would be contrary to the goal of minimizing the impact of revisions in a single year, which CMS articulated in the proposed rule. Rather, in the case of the application of the regression-derived adjustment factors to the IPF PPS, we have controlled for aggregate changes in spending by applying a refinement standardization factor to the IPF PPS Federal per diem base rate. We believe that our proposed regression analysis appropriately incorporates the relevant payment variables and control variables into the regression model and produces results that can be implemented in accordance with our stated goals. We will take the commenter's methodological suggestions into consideration to potentially inform future changes to the IPF PPS, if appropriate.
We note that the regression results for this final rule have been updated based on more recent available data, as proposed. Specifically, we note that in reviewing the methodology used to calculate the IPF PPS regression model presented in the proposed rule, we discovered that the computer code incorrectly failed to assign several sleep apnea codes to the proposed Chronic Obstructive Pulmonary Disease and Sleep Apnea comorbidity category. As a result, our regression model underestimated the magnitude of the adjustment factor for this comorbidity category and slightly overestimated the magnitude of the adjustment factor for other independent variables in the model. We note that most of the changes in the adjustment factors in Table 2 are within the threshold of rounding, and therefore do not result in differences to the proposed adjustment factors for payment. We further discuss the impact of these changes to the adjustment factors in section IV.C.4 of this final rule.
This revised final model has an r-squared value of 0.32490, meaning that the independent variables included in the regression model were able to explain approximately 32.5 percent of the variation in per diem cost among IPF stays. We discuss the results of these changes to the final adjustment factors in section IV.C.4 of this final rule, and we discuss the final refinement standardization factor in section IV.F of this final rule.
Table 2 below shows the final calculated adjustment factors and significance level, as well as the number and percent of stays associated with each independent variable. Columns 6 and 7 of Table 2 show the lower and upper bounds of the 95-percent confidence interval (CI). For this final rule, we continue to consider the regression factors to be statistically significant when the p-value was less than or equal to the significance level of 0.05 (*), 0.01 (**), and 0.001 (***).
The IPF PPS includes payment adjustments for the following patient-level characteristics: Medicare Severity Diagnosis Related Groups (MS-DRGs) assignment of the patient's principal diagnosis, selected comorbidities, patient age, and the variable per diem adjustments. We proposed to derive updated IPF PPS adjustment factors for FY 2025 using a regression analysis of data from the CY 2019 through 2021 MedPAR data files and Medicare cost report data from the 2018 through FY 2021 Hospital Cost Report Information System (HCRIS). In the proposed rule, however, we noted that we used more recent claims (specifically, the December 2023 update of the FY 2023 IPF PPS MedPAR claims) and cost data from the January 2024 update of the provider-specific file (PSF) to simulate payments to finalize the outlier fixed dollar loss threshold amount and to assess the impact of the IPF PPS updates. More information about the data used for the impact simulations is found in section VIII.C of this FY 2025 IPF PPS final rule. We explained that by adjusting for DRGs, comorbidities, age, and length of the stay, along with the facility-level variables and control variables in the model, we were able to explain approximately 32.3 percent of the variation in per diem cost among IPF stays.
In addition, we proposed routine coding updates for FY 2025 for our longstanding code first and IPF PPS comorbidities. Furthermore, as discussed in section IV.C.4.a.(2) of this final rule, we proposed to adopt a sub-regulatory process for future routine coding updates.
We believe it is important to maintain for IPFs the same diagnostic coding and DRG classification used under the IPPS for providing psychiatric care. For this reason, when the IPF PPS was implemented for cost reporting periods beginning on or after January 1, 2005, we adopted the same diagnostic code set (ICD-9-CM) and DRG patient classification system (MS-DRGs) that were utilized at the time under the IPPS. In the RY 2009 IPF PPS notice (73 FR 25709), we discussed CMS's effort to better recognize resource use and the severity of illness among patients. CMS adopted the new MS-DRGs for the IPPS in the FY 2008 IPPS final rule with comment period (72 FR 47130). In the RY 2009 IPF PPS notice (73 FR 25716), we provided a crosswalk to reflect changes that were made under the IPF PPS to adopt the new MS-DRGs. For a detailed description of the mapping changes from the original DRG adjustment categories to the current MS-DRG adjustment categories, we refer readers to the RY 2009 IPF PPS notice (73 FR 25714).
The IPF PPS includes payment adjustments for designated psychiatric DRGs assigned to the claim based on the patient's principal diagnosis. The DRG adjustment factors were expressed relative to the most frequently reported psychiatric DRG in FY 2002, that is, DRG 430 (psychoses). The coefficient values and adjustment factors were derived from the regression analysis discussed in detail in the RY 2004 IPF proposed rule (68 FR 66923; 66928 through 66933) and the RY 2005 IPF final rule (69 FR 66933 through 66960). Mapping the DRGs to the MS-DRGs resulted in the current 17 IPF MS-DRGs, instead of the original 15 DRGs, for which the IPF PPS provides an adjustment.
In the FY 2015 IPF PPS final rule which appeared in the August 6, 2014
As discussed in the FY 2015 IPF PPS proposed rule (79 FR 26047) every year, changes to the ICD-10-CM and the ICD-10-PCS coding system have been addressed in the IPPS proposed and final rules. The changes to the codes are effective October 1 of each year and must be used by acute care hospitals as well as other providers to report diagnostic and procedure information. In accordance with § 412.428(e), we have historically described in the IPF PPS proposed and final rules the ICD-10-CM coding changes and DRG classification changes that have been discussed in the annual proposed and final hospital IPPS regulations. This has typically involved a discussion in the proposed rule about coding updates to be effective October 1 of each year, with a summary of comments in the final rule along with a description of additional finalized codes for October.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950 through 44956), we adopted an April 1 implementation date for ICD-10-CM diagnosis and ICD-10-PCS procedure code updates in addition to the annual October 1 update of ICD-10-CM diagnosis and ICD-10-PCS procedure codes, beginning with April 1, 2022. In that rule, we noted the intent of this April 1 implementation date is to allow flexibility in the ICD-10 code update process. Currently, as noted earlier in this final rule, the IPF PPS uses the IPPS DRG assignments, which are applied to IPF PPS claims; these DRG assignments reflect the change in process that the IPPS adopted for FY 2022. To maintain consistency with IPPS policy, we proposed to follow the same process beginning in FY 2025. This means that for routine coding updates that incorporate new or revised codes, we proposed to adopt these changes through a sub-regulatory process. Beginning in FY 2025, we will operationalize such coding changes in a Transmittal/Change Request, which would align with the way coding changes are announced under the IPPS.
For example, we proposed that for April 2025, we would adopt routine coding updates for the IPF PPS comorbidity categories, code first policy, ECT code list, and DRG assignment via sub-regulatory guidance. We stated that these coding updates would take effect April 1, 2025. We explained that in accordance with § 412.428(e), we would describe these coding changes, along with any coding updates that would be effective for October 1, 2025, in the FY 2026 IPF PPS proposed rule. We noted we would summarize and respond to any comments on these April and October coding changes in the FY 2026 IPF PPS final rule.
We further stated that this proposed update aims to allow flexibility in the ICD-10 code update process for the IPF PPS and reduce the lead time for making routine coding updates to the IPF PPS code first list, comorbidities, and ECT coding categories. In addition, we noted that the IPPS sub-regulatory process continues to manage DRG assignment changes which apply to the DRG assignments used in the IPF PPS. Finally, we clarified that we only anticipate applying this sub-regulatory process for routine coding updates. Any future substantive revisions to the IPF PPS DRG adjustments, comorbidities, code first policy, or ECT payment policy would be proposed through notice and comment rulemaking. We solicited public comments on this proposed rule.
We did not receive any comments on our proposal to adopt routine coding updates that incorporate new or revised codes through a sub-regulatory process. We are finalizing the use of a sub-regulatory process, as proposed.
The diagnoses for each IPF MS-DRG will be updated as of October 1, 2024, using the final IPPS FY 2025 ICD-10-CM/PCS code sets. The FY 2025 IPPS/LTCH PPS final rule will include tables of the changes to the ICD-10-CM/PCS code sets that underlie the proposed FY 2025 IPF MS-DRGs. Both the FY 2025 IPPS final rule and the tables of final changes to the ICD-10-CM/PCS code sets, which underlie the FY 2025 MS-DRGs, will be available on the CMS IPPS website at
As discussed in the ICD-10-CM Official Guidelines for Coding and Reporting, certain conditions have both an underlying etiology and multiple body system manifestations due to the underlying etiology. For such conditions, the ICD-10-CM has a coding convention that requires the underlying condition be sequenced first, followed by the manifestation. Wherever such a combination exists, there is a “use additional code” note at the etiology code, and a “code first” note at the manifestation code. These instructional notes indicate the proper sequencing order of the codes (etiology followed by manifestation). In accordance with the ICD-10-CM Official Guidelines for Coding and Reporting, when a primary (psychiatric) diagnosis code has a code first note, the provider will follow the instructions in the ICD-10-CM Tabular List. The submitted claim goes through the CMS processing system, which will identify the principal diagnosis code as non-psychiatric and search the secondary codes for a psychiatric code to assign a DRG code for adjustment. The system will continue to search the secondary codes for those that are appropriate for comorbidity adjustment. For more information on the code first policy, we refer readers to the RY 2005 IPF PPS final rule (69 FR 66945). We also refer readers to sections I.A.13 and I.B.7 of the FY 2020 ICD-10-CM Coding Guidelines, which is available at
We proposed to continue our existing code first policy. We did not receive any comments on our proposal to continue the existing code-first policy, and we are finalizing the policy as proposed. As discussed in section IV.C.4.a.(2) of this final rule, we are also finalizing our proposal to adopt a sub-regulatory approach to handle the coding updates, which will remove the requirement to discuss coding updates in the
For FY 2025, we proposed to revise the payment adjustments for designated psychiatric DRGs assigned to the claim based on the patient's principal diagnosis, following our longstanding policy of using the ICD-10-CM/PCS-based MS-DRG system. As discussed in the following paragraphs, we proposed to maintain DRG adjustments for 15 of the existing 17 IPF MS-DRGs for which we currently adjust payment in FY 2024. We proposed to replace two existing DRGs with two new DRGs to reflect changes in coding practices over time and proposing to add two DRGs that are associated with poisoning. We also proposed to revise the adjustment factors for the DRG adjustments based on the results of the regression analysis described in the proposed rule. In accordance with our longstanding policy, we proposed that psychiatric principal diagnoses that do not group to one of the 19 proposed designated MS-DRGs would still receive the Federal per diem base rate and all other applicable adjustments; however, the payment would not include an MS-DRG adjustment.
We proposed to implement all of these revisions to the DRG adjustments budget-neutrally, and we provided a detailed discussion of the distributional impacts of these proposed changes. Lastly, we proposed that if more recent data become available, we would use such data, if appropriate, to determine the FY 2025 DRG adjustment factors.
We proposed to remove DRGs 080 (Nontraumatic stupor & coma w MCC) and 081 (Nontraumatic stupor & coma w/o MCC), and to replace these with DRGs 947 (Signs and Symptoms w MCC) and 948 (Signs and Symptoms w/out MCC). As previously discussed, we observed that the number of cases in DRGs 080 and 081 have decreased significantly since 2004. We explained that we selected DRGs 947 and 948 as the most clinically appropriate replacements, because most of the ICD-10-CM codes that previously grouped to DRGs 080 or 081 now group to DRGs 947 or 948. We explained that the proposed adjustment factors for DRGs 947 and 948 would each be greater than the current DRG adjustment for DRGs 080 and 081. Therefore, we proposed that claims with DRGs 080 or 081 would still receive the Federal per diem base rate and all other applicable adjustments; however, the payment would not include an MS-DRG adjustment.
We proposed to recognize DRG adjustments for two DRGs associated with poisoning; specifically, DRGs 917 (Poisoning and toxic effects of drugs w MCC) and 918 (Poisoning and toxic effects of drugs w/out MCC). As we discussed in the proposed rule, we identified that a small but increasing number of IPF stays contain these poisoning-related DRG assignments, and that stays with these DRGs have increased costs per day that are statistically significant.
We proposed to revise the adjustment factors for the remaining 15 of the existing 17 DRGs that currently receive a DRG adjustment in FY 2024. We stated that these revisions were based on the results of our latest regression analysis described in section IV.C.3 of the proposed rule.
We also stated that our analysis found that some of the adjustment factors in the regression model for DRGs that currently receive an adjustment are no longer statistically significant. Specifically, we found that the adjustment factors for DRG 882 (Neuroses except depressive), DRG 887 (Other mental disorder diagnoses), and
We received comments regarding the proposed changes to the MS-DRG adjustments, which are summarized in the following paragraphs.
Using the same regression model described in section IV.C.3 of this final rule, we added the following categorical variables:
• Bipolar Disorders and Schizophrenia—Stays with principal diagnosis in the ICD-10-CM code family of F20, F21, F22, F23, F24, F25, F26, F27, F28, F29, F30, or F31
• Depression and Mood Disorders—Stays with principal diagnosis in the ICD-10-CM code family of F32, F33, or F39; or with principal diagnosis of F349 or F3489.
• Other—All other DRG 885 stays.
For this analysis, we applied Bipolar Disorders and Schizophrenia as the reference group; therefore, there is no adjustment factor assigned in Table 3. The adjustment factors for other categories can be interpreted as the cost per day relative to the reference category. Table 3 also presents the significance level and confidence interval for each factor. We note than none of these factors is considered significant because the p-value was not less than or equal to the significance level of 0.05 (*), 0.01 (**), and 0.001 (***) for any of these factors.
Lastly, we acknowledge that even though there may be differences in total cost or differences in cost per day for treating patients with these conditions, other adjustment factors in the IPF PPS, such as the age adjustment or the variable per diem adjustment may account for these differences in cost for such patients.
These changes to the DRG adjustments will be included in Addendum A, which is available on the CMS website at
The intent of the comorbidity adjustments is to recognize the increased costs associated with active comorbid conditions by providing additional payments for certain existing medical or psychiatric conditions that are expensive to treat.
Comorbidities are specific patient conditions that are secondary to the patient's principal diagnosis and that require active treatment during the stay. Diagnoses that relate to an earlier episode of care and have no bearing on the current hospital stay are excluded and must not be reported on IPF claims. Comorbid conditions must exist at the time of admission or develop subsequently, and affect the treatment received, LOS, or both treatment and LOS.
The current comorbidity adjustments were determined based on the regression analysis using the diagnoses reported by IPFs in FY 2002. The principal diagnoses were used to establish the DRG adjustments and were not accounted for in establishing the comorbidity category adjustments, except where ICD-9-CM code first instructions applied. In a code first situation, the submitted claim goes through the CMS processing system, which identifies the principal diagnosis code as non-psychiatric and searches the secondary codes for a psychiatric code to assign an MS-DRG code for adjustment. The system continues to search the secondary codes for those that are appropriate for a comorbidity adjustment.
In our RY 2012 IPF PPS final rule (76 FR 26451 through 26452), we explained that the IPF PPS includes 17 comorbidity categories and identified the new, revised, and deleted ICD-9-CM diagnosis codes that generate a comorbid condition payment adjustment under the IPF PPS for RY 2012 (76 FR 26451).
As discussed in section IV.C.4.a.(1) of this final rule, it is our policy to maintain the same diagnostic coding set for IPFs that is used under the IPPS for providing the same psychiatric care. The 17 comorbidity categories formerly defined using ICD-9-CM codes were converted to ICD-10-CM/PCS in our FY 2015 IPF PPS final rule (79 FR 45947 through 45955). The goal for converting the comorbidity categories is referred to as replication, meaning that the payment adjustment for a given patient encounter is the same after ICD-10-CM implementation as it would be if the same record had been coded in ICD-9-CM and submitted prior to ICD-10-CM/PCS implementation on October 1, 2015. All conversion efforts were made with the intent of achieving this goal.
For each claim, an IPF may receive only one comorbidity adjustment within a comorbidity category, but it may receive an adjustment for more than one comorbidity category. Current billing instructions for discharge claims, on or after October 1, 2015, require IPFs to enter the complete ICD-10-CM codes for up to 24 additional diagnoses if they co-exist at the time of admission, or develop subsequently and impact the treatment provided.
As previously discussed in section IV.C.4.a.(2) of this final rule, we proposed to adopt an April 1 implementation date for ICD-10-CM diagnosis and ICD-10-PCS procedure code updates, in addition to the annual October 1 update, beginning with April 1, 2025 for the IPF PPS. For FY 2025 and future years, coding updates related to the IPF PPS comorbidity categories would be adopted following a sub-regulatory process as discussed earlier in this final rule.
For FY 2025, we proposed to revise the comorbidity adjustment factors based on the results of the 2019 through 2021 regression analysis described in section IV.C.3.e. of this final rule. We proposed additions and changes to the comorbidity categories for which we adjust payment based on our analysis of ICD-10-CM codes currently included in each category as well as public comments received in response to the FY 2022 and FY 2023 IPF PPS proposed rules.
Based on analysis of the ICD-10-CM codes, we considered the statistical significance of the adjustment factor and whether the current (FY 2024) adjustment factor fell within the confidence interval in the 2019 through 2021 regression to determine the FY 2025 IPF PPS proposed comorbidity categories and adjustment factors. As previously discussed for the DRG adjustment factors, when the regression factor is not statistically significant, but the current adjustment factor is within the confidence interval, we proposed to maintain the current adjustment factor. When a regression factor is not statistically significant and the current adjustment factor is not within the confidence interval, we proposed to remove the comorbidity category.
Specifically, we proposed to increase the adjustment factors for the Gangrene, Severe Protein Malnutrition, Oncology Treatment, Poisoning, and Tracheostomy comorbidity categories based on the adjustment factors derived from the regression analysis discussed in section IV.C.3 of this final rule. For these comorbidity categories, the regression results produced a statistically significant increase in the adjustment factors.
We did not receive any comments on our proposal to increase the adjustment factors for the Gangrene, Severe Protein Malnutrition, Oncology Treatment, Poisoning, and Tracheostomy comorbidity categories. We are finalizing the increased the adjustment factors for these comorbidity categories as proposed.
We proposed to remove the comorbidity categories for the Coagulation Factor Deficit, Drug/Alcohol Induced Mental Disorders, and Infectious Diseases adjustment factors because the regression factor for the ICD-10-CM codes associated with Coagulation Factor Deficit and Infectious Diseases were not statistically significant, and the current adjustment factors did not fall within the confidence intervals in the 2019 through 2021 regression.
The current adjustment factor for Drug/Alcohol Induced Mental Disorders is 1.03; however, the adjustment factor derived from our latest regression results was statistically significant at 0.96084, meaning payments would be reduced if we applied the regression-derived adjustment factor as a comorbidity adjustment for this category. To understand the drivers of changing costs for the Drug/Alcohol Induced Mental Disorders comorbidity category, we examined a subset of ICD-10-CM codes within the comorbidity category associated with opioid disorders which make up the majority of stays that qualify for the current Drug/Alcohol Induced Mental Disorders comorbidity adjustment. These opioid disorder codes are listed in Table 7. When we separately analyzed these codes associated with opioid disorder, the results suggested that patients with opioid disorder are significantly less expensive than patients without opioid disorder. Because stays with opioid disorders make up the majority of stays in the Drug/Alcohol Induced Mental Disorders comorbidity category, we observe a statistically significant negative adjustment factor for the comorbidity category overall. The application of a comorbidity adjustment derived from our latest regression analysis would result in reduced payments for all stays in this comorbidity category. We do not believe it is appropriate to apply negative adjustment factors (that is, adjustment factors less than 1.00) for comorbidities because that would result in reduced rather than increased payments. Although we apply adjustment factors less than 1.00 for DRGs, this is because the DRG adjustment reflects the cost of stays relative to stays with the baseline DRG 885. In contrast, comorbidity adjustments reflect the cost relative to a stay with no comorbidities. A negative payment adjustment would not be consistent with the intent of a comorbidity adjustment, which is intended to provide additional payments to providers to account for the costs of treating patients with comorbid conditions. Therefore, we have not historically included any negative adjustment factors for comorbid conditions.
Therefore, we proposed to remove the Drug/Alcohol Induced Mental Disorders comorbidity category beginning in FY 2025. IPF stays that include these codes as a non-principal diagnosis would no longer receive the current Drug/Alcohol Induced Mental Disorders comorbidity category adjustment factor of 1.03; nor would they receive a reduction in payment. However, many IPF stays that include these ICD-10-CM diagnosis codes as a principal diagnosis would continue to receive a DRG adjustment. We refer readers to section IV.C.3.a of this final rule for a detailed discussion of proposed DRG adjustments under the IPF PPS.
We believe removal of the Drug/Alcohol Induced Mental Disorders comorbidity category under the IPF PPS more appropriately aligns payment with resource use, as reflected in the latest regression results. As previously discussed in section IV.F of this final rule, all of these proposed revisions would be applied budget-neutrally. Therefore, we believe the removal of the Drug/Alcohol Induced Mental Disorders comorbidity adjustment would appropriately increase the IPF PPS Federal per diem base rate and thereby increase payment for IPF stays that are costlier. However, we solicited comments on whether a lack of ancillary charge data may be contributing to the results of our regression analysis as it relates to opioid disorders. We note that our analysis of the ICD-10-CM codes associated with opioid disorder also indicates that there is significant overlap between facility characteristics and stays including opioid disorder diagnoses. In particular, for-profit freestanding IPFs were found to serve the majority of patients with opioid disorders. As discussed in section IV.E.4 of this final rule, our ongoing analysis has found an increase in the number of for-profit freestanding IPFs that are consistently reporting no ancillary charges or very minimal ancillary charges on their cost report. As a result, we noted that these IPFs do not report complete information on patient-level cost for the patients treated in these hospitals.
As stated previously, the regression factor for Drug/Alcohol Induced Mental Disorders was statistically significant, but is less than 1, meaning payments would be reduced if we applied it as a comorbidity adjustment. We stated that we were interested in understanding whether there is data and information that could better inform our understanding of the costs of treating these conditions. In addition, we stated that we were interested in understanding whether commenters believe it may be more appropriate to maintain the existing Drug/Alcohol Induced Mental Disorders comorbidity category adjustment factor of 1.03, given that many providers that treat these patients also report minimal or no ancillary charges on their claims and cost reports. We noted that if we were to maintain the adjustment factor of 1.03 for these IPF stays, we expected it would have a negative impact on the refinement standardization factor, thereby slightly reducing the IPF PPS Federal per diem base rate and ECT per treatment amount.
Additionally, we did not receive any public comments regarding data and information that could better inform our understanding of the costs of treating these conditions. We believe the best available data was used in the regression. We anticipate that CMS will gain additional cost information on the treatment of IPF patients with substance abuse disorders and we intend to analyze such data for consideration in future refinements of the IPF PPS.
We also proposed to modify the Eating and Conduct Disorders comorbidity category and redesignate it as the Eating Disorders comorbidity category. That is, we proposed to remove conduct disorders from the codes eligible for a comorbidity adjustment. When we separately analyzed the ICD-10-CM codes for eating disorders (specifically,
We did not receive any comments on our proposal to remove conduct disorders from the current Eating and Conduct Disorders comorbidity category. We are finalizing the newly designated Eating Disorders comorbidity category as proposed.
In addition, we proposed to modify the Chronic Obstructive Pulmonary Disease comorbidity category to include ICD-10-CM and ICD-10-PCS codes associated with sleep apnea (specifically, G
Further, we analyzed costs associated with the ICD-10-CM codes in Table 8 that indicate high-risk behavior. In response to the FY 2023 and FY 2024 IPF PPS proposed rules, commenters requested that CMS analyze the additional cost associated with patients exhibiting violent behavior during their stay in an IPF. We considered these comments in coordination with CMS Medical Officers, and determined that patients exhibiting violent behavior would require more intensive management during an IPF stay. We determined that certain ICD-10-CM codes could describe the types of high-risk behaviors that require intensive management during an IPF stay. These could include patients exhibiting violent behavior as well as other high-risk, non-violent behaviors. We examined ICD-10-CM codes in the R45 code family (Symptoms and Signs Related to Emotional State) that could indicate high-risk behavior during an IPF stay, which would lead to increased resource use. The regression analysis found that several codes,
Lastly, we proposed to maintain the adjustment factors for the Developmental Disabilities and Uncontrolled Diabetes comorbidity categories. Based on the regression analysis, the Developmental Disabilities comorbidity category adjustment factor was not statistically significant; however, the current adjustment factor is within the confidence interval. As discussed in section IV.C.3.a of this final rule, a non-statistically significant adjustment factor within the confidence interval indicates that the current adjustment factor would be a reasonable approximation of the increased costs. The Uncontrolled Diabetes comorbidity category adjustment factor did not change from the current adjustment factor based on the 2019 through 2021 regression.
We did not receive any comments on our proposal to maintain the adjustment factors for the Developmental Disabilities and Uncontrolled Diabetes comorbidity categories. We are finalizing maintaining these adjustment factors, as proposed.
We also proposed to decrease the adjustment factors for the following comorbidity categories: Renal Failure—Acute, Artificial Openings—Digestive & Urinary, Cardiac conditions, Renal Failure—Chronic, Chronic Obstructive Pulmonary Disease, and Severe Musculoskeletal & Connective Tissue Diseases.
The regression analysis found the Renal Failure—Acute, Artificial Openings—Digestive & Urinary, Cardiac conditions, Renal Failure—Chronic, Chronic Obstructive Pulmonary Disease, and Severe Musculoskeletal & Connective Tissue Diseases comorbidity categories resulted in a statistically significant adjustment factor. While payment would still be increased when the claim includes one of these comorbidity categories, the proposed adjustment factors for FY 2025 would be less than the current adjustment factors for these categories.
We did not receive any comments on our proposal to decrease the adjustment factors for the following comorbidity categories: Renal Failure—Acute, Artificial Openings—Digestive & Urinary, Cardiac conditions, Renal Failure—Chronic, Chronic Obstructive Pulmonary Disease, and Severe Musculoskeletal & Connective Tissue Diseases. We are finalizing a decrease to these adjustment factors, as proposed.
The FY 2025 comorbidity adjustment factors are displayed in Table 10, and can be found in Addendum A, available on the CMS website at
As discussed in section IV.F of this final rule, we proposed to implement revisions to the comorbidity category adjustments budget-neutrally. A detailed discussion of the distributional impacts of these changes is found in section VIII.C of this final rule.
For FY 2025, we proposed to add 2 ICD-10-CM/PCS codes to the Oncology Treatment comorbidity category. The FY 2025 comorbidity codes are shown in Addenda B, available on the CMS website at
In accordance with the policy established in the FY 2015 IPF PPS final rule (79 FR 45949 through 45952), we reviewed all new FY 2025 ICD-10-CM codes to remove codes that were site “unspecified” in terms of laterality from the FY 2023 ICD-10-CM/PCS codes in instances where more specific codes are available. As we stated in the FY 2015 IPF PPS final rule, we believe that specific diagnosis codes that narrowly identify anatomical sites where disease, injury, or a condition exists should be used when coding patients' diagnoses whenever these codes are available. We finalized in the FY 2015 IPF PPS rule, that we would remove site “unspecified” codes from the IPF PPS ICD-10-CM/PCS codes in instances when laterality codes (site specified codes) are available, as the clinician should be able to identify a more specific diagnosis based on clinical assessment at the medical encounter. There were no proposed changes to the FY 2025 ICD-10-CM/PCS codes, therefore, we did not propose to remove any of the new codes.
As explained in the RY 2005 IPF PPS final rule (69 FR 66922), we analyzed the impact of age on per diem cost by examining the age variable (range of ages) for payment adjustments. In general, we found that the cost per day increases with age. The older age groups are costlier than the under 45 age group, the differences in per diem cost increase for each successive age group, and the differences are statistically significant. While our regression analysis of CY 2019 through CY 2021 data supports maintaining a payment adjustment factor based on age as was established in the RY 2005 IPF PPS final rule, the results suggest that revisions to the adjustment factor for age are warranted.
For FY 2025, we proposed to revise the patient age adjustments as shown in Addendum A of this final rule, which is available on the CMS website at (see
We solicited comments on these proposed revisions to the patient age adjustment factors. Lastly, we proposed that if more recent data become available, we would use such data, if appropriate, to determine the final FY 2025 patient age adjustment factors.
We did not receive any comments on our proposal. We are finalizing the revisions to the patient age adjustment factors as proposed.
We explained in the RY 2005 IPF PPS final rule (69 FR 66946) that the regression analysis indicated that per diem cost declines as the LOS increases. The variable per diem adjustments to the Federal per diem base rate account for ancillary and administrative costs that occur disproportionately in the first days after admission to an IPF. As discussed in the RY 2005 IPF PPS final rule, where a complete discussion of the variable per diem adjustments can be found, we used a regression analysis to estimate the average differences in per diem cost among stays of different lengths (69 FR 66947 through 66950). As a result of this analysis, we established variable per diem adjustments that begin on day 1 and decline gradually until day 21 of a patient's stay. For day 22 and thereafter, the variable per diem adjustment remains the same each day for the remainder of the stay. However, the adjustment applied to day 1 depends upon whether the IPF has a qualifying ED. If an IPF has a qualifying ED, it receives a 1.31 adjustment factor for day 1 of each stay. If an IPF does not have a qualifying ED, it receives a 1.19 adjustment factor for day 1 of the stay. The ED adjustment is explained in more detail in section IV.D.4 of this final rule.
For FY 2025, we proposed to revise the variable per diem adjustment factors as indicated in the table below, and shown in Addendum A to this rule, which is available on the CMS website at
We solicited comments on these proposed revisions to the variable per diem adjustment factors. Lastly, we proposed that if more recent data become available, we will use such data, if appropriate, to determine the final FY 2025 variable per diem adjustment factors.
The IPF PPS includes facility-level adjustments for the wage index, IPFs located in rural areas, teaching IPFs, cost of living adjustments for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED. We proposed to use the existing regression-derived facility-level adjustment factors established in the RY 2005 IPF final rule and did not propose changes to the facility-level adjustment factors for rural location and teaching status for FY 2025. As discussed in the following sections, we proposed updates to the FY 2025 IPF PPS wage index. In addition, we proposed to update the ED adjustment for FY 2025 to reflect more recent cost and claims data.
As discussed in the RY 2007 IPF PPS final rule (71 FR 27061), and the RY 2009 IPF PPS (73 FR 25719) and RY 2010 IPF PPS notices (74 FR 20373), to provide an adjustment for geographic wage levels, the labor-related portion of an IPF's payment is adjusted using an appropriate wage index. Currently, an IPF's geographic wage index value is determined based on the actual location of the IPF in an urban or rural area, as defined in § 412.64(b)(1)(ii)(A) and (C).
Due to the variation in costs and because of the differences in geographic wage levels, in the RY 2005 IPF PPS final rule, we required that payment rates under the IPF PPS be adjusted by a geographic wage index. We proposed and finalized a policy to use the unadjusted, pre-floor, pre-reclassified IPPS hospital wage index to account for geographic differences in IPF labor costs. We implemented use of the pre-floor, pre-reclassified IPPS hospital wage data to compute the IPF wage index since there was not an IPF-specific wage index available. We believe that IPFs generally compete in the same labor market as IPPS hospitals, and therefore, the pre-floor, pre-reclassified IPPS hospital wage data should be reflective of labor costs of IPFs. We believe this pre-floor, pre-reclassified IPPS hospital wage index to be the best available data to use as proxy for an IPF-specific wage index. As discussed in the RY 2007 IPF PPS final rule (71FR 27061 through 27067), under the IPF PPS, the wage index is calculated using the IPPS wage index for the labor market area in which the IPF is located, without considering geographic reclassifications, floors, and other adjustments made to the wage index under the IPPS. For a complete description of these IPPS wage index adjustments, we refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41390). Our wage index policy at § 412.424(a)(2) provides that we use the best Medicare data available to estimate costs per day, including an appropriate wage index to adjust for wage differences.
When the IPF PPS was implemented in the RY 2005 IPF PPS final rule, with an effective date of January 1, 2005, the pre-floor, pre-reclassified IPPS hospital wage index that was available at the time was the FY 2005 pre-floor, pre-reclassified IPPS hospital wage index. Historically, the IPF wage index for a given RY has used the pre-floor, pre-reclassified IPPS hospital wage index from the prior FY as its basis. This has been due in part to the pre-floor, pre-reclassified IPPS hospital wage index data that were available during the IPF rulemaking cycle, where an annual IPF notice or IPF final rule was usually published in early May. This publication timeframe was relatively early compared to other Medicare payment rules because the IPF PPS follows a RY, which was defined in the implementation of the IPF PPS as the 12-month period from July 1 to June 30 (69 FR 66927). Therefore, the best available data at the time the IPF PPS was implemented was the pre-floor, pre-reclassified IPPS hospital wage index from the prior FY (for example, the RY 2006 IPF wage index was based on the FY 2005 pre-floor, pre-reclassified IPPS hospital wage index).
In the RY 2012 IPF PPS final rule, we changed the reporting year timeframe for IPFs from a RY to FY, which begins October 1 and ends September 30 (76 FR 26434 through 26435). In that FY 2012 IPF PPS final rule, we continued
In FY 2020, we finalized the IPF wage index methodology to align the IPF PPS wage index with the same wage data timeframe used by the IPPS for FY 2020 and subsequent years. Specifically, we finalized the use of the pre-floor, pre-reclassified IPPS hospital wage index from the FY concurrent with the IPF FY as the basis for the IPF wage index. For example, the FY 2020 IPF wage index was based on the FY 2020 pre-floor, pre-reclassified IPPS hospital wage index rather than on the FY 2019 pre-floor, pre-reclassified IPPS hospital wage index.
We explained in the FY 2020 proposed rule (84 FR 16973), that using the concurrent pre-floor, pre-reclassified IPPS hospital wage index will result in the most up-to-date wage data being the basis for the IPF wage index. We noted that it would also result in more consistency and parity in the wage index methodology used by other Medicare payment systems. We indicated that the Medicare skilled nursing facility (SNF) PPS already used the concurrent IPPS hospital wage index data as the basis for the SNF PPS wage index. We proposed and finalized similar policies to use the concurrent pre-floor, pre-reclassified IPPS hospital wage index data in other Medicare payment systems, such as hospice and inpatient rehabilitation facilities. Thus, the wage adjusted Medicare payments of various provider types are based upon wage index data from the same timeframe. For FY 2025, we proposed to continue to use the concurrent pre-floor, pre-reclassified IPPS hospital wage index as the basis for the IPF wage index.
In the FY 2023 IPF PPS final rule (87 FR 46856 through 46859), we finalized a permanent 5-percent cap on any decrease to a provider's wage index from its wage index in the prior year, and we stated that we will apply this cap in a budget neutral manner. In addition, we finalized a policy that a new IPF will be paid the wage index for the area in which it is geographically located for its first full or partial FY with no cap applied because a new IPF will not have a wage index in the prior FY. We amended the IPF PPS regulations at § 412.424(d)(1)(i) to reflect this permanent cap on wage index decreases. We refer readers to the FY 2023 IPF PPS final rule for a more detailed discussion about this policy.
For FY 2025, we proposed to apply the IPF wage index adjustment to the labor-related share of the national IPF PPS base rate and ECT payment per treatment. The proposed labor-related share of the IPF PPS national base rate and ECT payment per treatment is 78.8 percent in FY 2025. This percentage reflects the labor-related share of the 2021-based IPF market basket for FY 2025 and is 0.1 percentage point higher than the FY 2024 labor-related share (see section IV.A.3 of this final rule). We received several comments on this proposal, which are discussed in the following paragraphs.
Regarding the suggestion to apply the wage index for the CBSA of the nearest IPPS hospital in cases when an IPF's CBSA includes only a closed IPPS hospital, we disagree with the commenter that wage data from a hospital that has closed is more likely to be unreliable and that such data would inappropriately deflate the wage index for that CBSA. Rather, following
Lastly, as discussed in the FY 2024 IPPS proposed rule (88 FR 26966), in constructing the proposed FY 2024 wage index, wage data was included for facilities that were IPPS hospitals in FY 2020, inclusive of those facilities that have since terminated their participation in the Medicare program as hospitals, as long as those data did not fail any of our edits for reasonableness. These edits excluded providers with aberrant data that should not be included in the wage index. We believe that including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period and to ensure that the current wage index represents the labor market area's current wages as compared to the national average of wages.
We appreciate the commenter's suggestion to apply an out-migration adjustment to IPFs to account for employment of hospital staff who commute to work in counties with a higher wage index. However, we note that the out-migration adjustment is applied to the IPPS hospital wage index under section 1886(d)(13) of the Act, which is a statutory provision that specifically applies to subsection (d) hospitals paid under the IPPS. As discussed in the prior paragraph, CMS does not believe it is appropriate for the IPF PPS to apply an out-migration adjustment that is not statutorily required, because such a policy would increase administrative burden and have distributional impacts on IPFs.
The wage index used for the IPF PPS is calculated using the unadjusted, pre-reclassified and pre-floor IPPS wage index data and is assigned to the IPF based on the labor market area in which the IPF is geographically located. IPF labor market areas are delineated based on the Core-Based Statistical Area (CBSAs) established by the OMB.
Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses through OMB Bulletins. These bulletins contain information regarding CBSA changes, including changes to CBSA numbers and titles. OMB bulletins may be accessed online at
In the RY 2007 IPF PPS final rule (71 FR 27061 through 27067), we adopted the changes discussed in the OMB Bulletin No. 03-04 (June 6, 2003), which announced revised definitions for Metropolitan Statistical Areas (MSAs), and the creation of Micropolitan Statistical Areas and Combined Statistical Areas. In adopting the OMB CBSA geographic designations in RY 2007, we did not provide a separate transition for the CBSA-based wage index since the IPF PPS was already in a transition period from TEFRA payments to PPS payments.
In the RY 2009 IPF PPS notice, we incorporated the CBSA nomenclature changes published in the most recent OMB bulletin that applied to the IPPS hospital wage index used to determine the current IPF wage index and stated that we expected to continue to do the same for all the OMB CBSA nomenclature changes in future IPF PPS rules and notices, as necessary (73 FR 25721).
Subsequently, CMS adopted the changes that were published in past OMB bulletins in the FY 2016 IPF PPS final rule (80 FR 46682 through 46689), the FY 2018 IPF PPS rate update (82 FR 36778 through 36779), the FY 2020 IPF PPS final rule (84 FR 38453 through 38454), and the FY 2021 IPF PPS final rule (85 FR 47051 through 47059). We direct readers to each of these rules for more information about the changes that were adopted and any associated transition policies.
As discussed in the FY 2023 IPF PPS final rule, we did not adopt OMB Bulletin 20-01, which was issued March 6, 2020, because we determined this bulletin had no material impact on the IPF PPS wage index. This bulletin creates only one Micropolitan statistical area, and Micropolitan areas are considered rural for the IPF PPS wage index. That is, the constituent county of the new Micropolitan area was considered rural effective as of FY 2021 and would continue to be considered rural if we adopted OMB Bulletin 20-01.
Finally, on July 21, 2023, OMB issued Bulletin 23-01, which revises the CBSA delineations based on the latest available data from the 2020 census. This bulletin contains information regarding updates of statistical area changes to CBSA titles, numbers, and county or county equivalents.
We believe it is important for the IPF PPS to use, as soon as is reasonably possible, the latest available labor market area delineations to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. We believe that using the most current delineations will increase the integrity of the IPF PPS wage index system by creating a more accurate representation of geographic variations in wage levels. In the FY 2025 IPF PPS proposed rule, we explained that we have carefully analyzed the impacts of adopting the new OMB delineations and find no compelling reason to delay implementation. Therefore, we proposed to implement the new OMB delineations as described in the July 21, 2023, OMB Bulletin No. 23-01, effective beginning with the FY 2025 IPF PPS wage index. We proposed to adopt the updates to the OMB delineations announced in OMB Bulletin No. 23-01 effective for FY 2025 under the IPF PPS.
As previously discussed, we finalized a 5-percent permanent cap on any decrease to a provider's wage index from its wage index in the prior year. For more information on the permanent 5-percent cap policy, we refer readers to the FY 2023 IPF PPS final rule (87 FR 46856 through 46859). In addition, we proposed to phase out the rural adjustment for IPFs that are transitioning from rural to urban based on these CBSA revisions, as discussed in section IV.D.1.c. of this final rule.
OMB defines a “Micropolitan Statistical Area” as a CBSA associated with at least one urban cluster that has a population of at least 10,000, but less than 50,000 (75 FR 37252). We refer to these as Micropolitan Areas. After extensive impact analysis, consistent with the treatment of these areas under the IPPS as discussed in the FY 2005 IPPS final rule (69 FR 49029 through 49032), we determined the best course of action was to treat Micropolitan Areas as “rural” and include them in the calculation of each state's IPF PPS rural wage index. We refer readers to the FY 2007 IPF PPS final rule (71 FR 27064 through 27065) for a complete discussion regarding treating Micropolitan Areas as rural. We did not propose any changes to this policy for FY 2025.
The June 6, 2022, Census Bureau Notice (87 FR 34235 through 34240), OMB Bulletin No. 23-01 replaced the 8 counties in Connecticut with 9 new “Planning Regions.” Planning regions now serve as county-equivalents within the CBSA system. In the proposed rule, we explained that we have evaluated the changes and are proposed to adopt the planning regions as county equivalents for wage index purposes. We stated that we believe it is necessary to adopt this migration from counties to planning region county-equivalents to maintain consistency with OMB updates. We provided the following crosswalk for each county in Connecticut with the current and proposed FIPS county and county-equivalent codes and CBSA assignments.
As previously discussed, we proposed to implement the new OMB labor market area delineations (based upon OMB Bulletin No. 23-01) beginning in FY 2025. We stated that our analysis shows a total of 53 counties (and county equivalents) and 15 providers are located in areas that were previously considered part of an urban CBSA but would be considered rural beginning in FY 2025 under these revised OMB delineations. Table 14 lists the 53 urban counties that we noted would be rural if we finalized our proposal to implement the revised OMB delineations.
We proposed that the wage data for all providers located in the counties listed above would now be considered rural, beginning in FY 2025, when calculating their respective state's rural wage index. This rural wage index value would also be used under the IPF PPS. We recognize that rural areas typically have lower area wage index values than urban areas, and providers located in these counties may experience a negative impact in their IPF payment due to the proposed adoption of the revised OMB delineations. However, we noted that providers located in these counties would receive a rural adjustment beginning in FY 2025, which would mitigate the impact of decreases to the wage index for these providers. In addition, we explained that the permanent 5-percent cap on wage index decreases under the IPF PPS would further mitigate large wage index decreases for providers in these areas.
As previously discussed, we proposed to implement the new OMB labor market area delineations (based upon OMB Bulletin No. 23-01) beginning in FY 2025. We stated that analysis of these OMB labor market area delineations shows that a total of 54 counties (and county equivalents) and 10 providers are located in areas that were previously considered rural but will now be considered urban under the revised OMB delineations. Table 15 lists the 54 rural counties that we stated would be urban if we finalized our proposal to implement the revised OMB delineations.
We proposed that when calculating the area wage index, beginning with FY 2025, the wage data for providers located in these counties would be included in their new respective urban CBSAs. Typically, providers located in an urban area receive a wage index value higher than or equal to providers located in their state's rural area. We also noted that providers located in these areas would no longer be considered rural beginning in FY 2025. We refer readers to section IV.D.1.c of this final rule for a discussion of the proposed policy to phase out the payment of the rural adjustment for providers in these areas.
In the proposed rule, we noted that in certain cases adopting the new OMB delineations would involve a change only in CBSA name and/or number, while the CBSA continues to encompass the same constituent counties. For example, CBSA 10540 (Albany-Lebanon, OR) would experience a change to its name, and become CBSA 10540 (Albany, OR), while its one constituent county would remain the same. Table 16 shows the current CBSA code and our proposed CBSA code where we proposed to change either the name or CBSA number only. We did not further discuss these proposed changes in the proposed rule, because they are inconsequential changes with respect to the IPF PPS wage index.
We explained that in some cases, if we adopt the new OMB delineations, counties would shift between existing and new CBSAs, changing the constituent makeup of the CBSAs. We stated that we consider this type of change, where CBSAs are split into multiple new CBSAs, or a CBSA loses one or more counties to another urban CBSA to be significant modifications.
Table 17 lists the urban counties that we stated would move from one urban CBSA to another newly proposed or modified CBSA if we adopted the new OMB delineations.
We stated in the proposed rule that we identified 68 IPF providers located in the affected counties listed in Table 17. We noted that if providers located in these counties move from one CBSA to another under the revised OMB delineations, there may be impacts, either negative or positive, upon their specific wage index values.
We received mixed comments on the proposal to adopt the revised CBSA delineations. Several commenters recognized the impact of these delineation changes, and some commenters were supportive of this action, while others voiced concerns. In addition, we received comments regarding the permanent 5-percent cap on wage index decrease.
In the FY 2022 IPF PPS final rule (86 FR 42616 through 42617), we stated that we continued to believe that applying the 5-percent cap transition policy in year one provided an adequate safeguard against any significant payment reductions associated with the adoption of the revised CBSA delineations in FY 2021, allowed for sufficient time to make operational changes for future FYs, and provided a reasonable balance between mitigating some short-term instability in IPF payments and improving the accuracy of the payment adjustment for differences in area wage levels.
In FY 2023 (87 FR 46856 through 46859), we finalized a permanent 5-percent cap on any decrease to a provider's wage index from its wage index in the prior year. Effective for FY 2025, the adoption of the updates to the OMB delineations announced in OMB Bulletin No. 23-01 will be subject to the 5-percent cap on wage index decreases policy.
As discussed in the FY 2023 IPF PPS final rule (87 FR 46856 through 46859), we continue to believe this methodology will maintain the IPF PPS wage index as a relative measure of the value of labor in prescribed labor market areas, increase predictability of IPF PPS payments for providers, and mitigate instability and significant negative impacts to providers resulting from significant changes to the wage index. Therefore, we do not believe implementing a transition period to updated OMB CBSA delineations effective for FY 2025 is appropriate.
With respect to the suggestion that CMS consider whether it would be appropriate to use additional data to modify OMB's delineation to ensure that such changes are appropriate for purposes of defining regional labor markets for IPF workers, we do not believe use of such additional data is appropriate. As we have previously discussed in the RY 2007 final rule (71 FR 27066) and as we noted earlier in this final rule, we believe that the actual location of an IPF (as opposed to the location of affiliated providers) is most appropriate for determining the wage adjustment, because the prevailing wages in the area in which the IPF is located influence the cost of a case. Accordingly, we do not believe it would be appropriate to use additional data to modify OMB's delineations for the same reasons we previously stated with regard to floors or reclassifications. For example, using additional data to modify OMB's CBSA delineations would significantly increase administrative burden, both for IPFs and for CMS, associated with particular geographical areas or even individual IPFs moving from one CBSA to another, and it would significantly increase the complexity of the methodology.
Furthermore, because all CBSA delineation changes would be applied budget-neutrally under the wage index,
We note that the MACs maintain, on an ongoing basis, detailed information about the location, including the applicable wage index, for each IPF. The MACs also have information as to whether the 5-percent cap is applicable for each individual IPF. IPFs can contact their MACs for provider specific wage index information and any related questions. We note that CMS has provided instructions to the MACs on applying the 5-percent cap policy (see publication 100-04 Medicare Claims Processing Manual, chapter 3).
In the RY 2005 IPF PPS final rule, (69 FR 66954), we provided a 17-percent payment adjustment for IPFs located in a rural area. This adjustment was based on the regression analysis, which indicated that the per diem cost of rural facilities was 17-percent higher than that of urban facilities after accounting for the influence of the other variables included in the regression. This 17-percent adjustment has been part of the IPF PPS each year since the inception of the IPF PPS. As discussed earlier in this rule, we proposed a number of revisions to the patient-level adjustment factors as well as changes to the CBSA delineations. In order to minimize the scope of changes that would impact providers in any single year, we proposed to use the existing regression-derived adjustment factor, which was established in RY 2005, for FY 2025 for IPFs located in a rural area as defined at § 412.64(b)(1)(ii)(C). See the RY 2005 IPF PPS final rule (69 FR 66954) for a complete discussion of the adjustment for rural locations. However, as discussed in the section IV.A of this FY 2025 IPF PPS final rule, we have completed analysis of more recent cost and claims and solicited comments on those results in the FY 2025 IPF PPS proposed rule.
As we explained in the proposed rule, the adoption of OMB Bulletin No. 23-01 in accordance with our established methodology would determine whether a facility is classified as urban or rural for purposes of the rural payment adjustment in the IPF PPS. Overall, we stated that we believe implementing updated OMB delineations would result in the rural payment adjustment being applied where it is appropriate to adjust for higher costs incurred by IPFs in rural locations. However, we noted we recognize that implementing these changes would have distributional effects among IPF providers, and that some providers would experience a loss of the rural payment adjustment because of our proposals. Therefore, we explained that we believe it would be appropriate to consider, as we have in the past, whether a transition period should be used to implement these proposed changes.
In the proposed rule, we explained that prior changes to the CBSA delineations have included a phase-out policy for the rural adjustment for IPFs transitioning from rural to urban status. On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas in the United States and Puerto Rico based on the 2010 Census. We adopted these new OMB CBSA delineations in the FY 2016 IPF final rule (80 FR 46682 through 46689), and identified 105 counties and 37 IPFs that will move from rural to urban status due to the new CBSA delineations. To reduce the impact of the loss of the 17-percent rural adjustment, we adopted a budget-neutral 3-year phase-out of the rural adjustment for existing FY 2015 rural IPFs that became urban in FY 2016 and that experienced a loss in payments due to changes from the new CBSA delineations. These IPFs received two-thirds of the rural adjustment for FY 2016 and one-third of the rural adjustment in FY 2017. For FY 2018, these IPFs did not receive a rural adjustment.
For subsequent adoptions of OMB Bulletin No. 15-01 for FY 2018 (82 FR 36779 through 36780), OMB Bulletin 17-01 for FY 2020 (84 FR 38453 through 38454), and OMB Bulletin 18-04 for FY 2021 (85 FR 47053 through 47059), we identified that fewer providers were affected by these changes than by the changes relating to the adoption of OMB Bulletin 13-01. We did not phase out the rural adjustment when adopting these delineation changes.
In the FY 2025 IPF PPS proposed rule, we explained that for facilities located in a county that transitioned from rural to urban in Bulletin 23-01, we considered whether it will be appropriate to phase out the rural adjustment for affected providers consistent with our past practice of using transition policies to help mitigate negative impacts on hospitals of OMB Bulletin proposals that have a material effect on a number of IPFs. We noted that adoption of the updated CBSAs in Bulletin 23-01 would change the status of 10 IPF providers currently designated as “rural” to “urban” for FY 2025 and subsequent fiscal years. As such, we explained that these 10 newly urban providers would no longer receive the 17-percent rural adjustment. Consistent with the transition policy adopted for IPFs in FY 2016 (80 FR 46682 through 4668980 FR 46682 through 46689), we proposed a 3-year budget neutral phase-out of the rural adjustment for IPFs located in the 54 rural counties that would become urban under the new OMB delineations, given the potentially significant payment impacts for these IPFs. We stated that we believe a phase-out of the rural adjustment transition period for these 10 IPFs specifically is appropriate because we expect these IPFs would experience a steeper and more abrupt reduction in their
We received comments on the proposal to maintain the 17-percent rural adjustment for FY 2025, and the proposal to establish a 3-year budget-neutral transition policy for rural IPFs that become urban in FY 2025. We discuss these comments below. In addition, we refer readers to section V.A of this final rule for a discussion of comments received in response to a request for information about potential future revisions to the IPF PPS facility-level adjustments.
Changes to the wage index are made in a budget neutral manner so that updates do not increase expenditures. Therefore, for FY 2025, we proposed to continue to apply a budget neutrality adjustment in accordance with our existing budget neutrality policy. This policy requires us to update the wage index in such a way that total estimated payments to IPFs for FY 2025 are the same with or without the changes (that is, in a budget neutral manner) by applying a budget neutrality factor to the IPF PPS rates. We proposed a budget neutrality factor of 0.9998 in to ensure that the rates reflect the FY 2025 update to the wage indexes (based on the FY 2021 hospital cost report data) and the labor-related share in a budget neutral manner.
Finally, we note that in the April 3, 2024 IPF PPS proposed rule (89 FR 23188), there was a technical error in describing the calculation of the FY 2025 proposed wage index budget neutrality factor. We erroneously stated that on that page that the wage index budget neutrality factor was 0.9995; however, the correct wage index budget neutrality factor base rate was 0.9998, as discussed in section I.B of the same proposed rule (89 FR 23147) and in Addendum A to the proposed rule. To be clear, this error only affected the description of the wage index budget neutrality factor in section IV.D.1.d of the FY 2025 IPF PPS proposed rule, and the calculations themselves, as well as the rates indicated in the proposed rule, were correct and consistent with our longstanding methodology for updating the IPF Federal per diem base rate and ECT payment per treatment.
For this FY 2025 IPF PPS final rule, we use the following steps to ensure that the rates reflect the FY 2025 update to the wage indexes (based on FY 2021 hospital cost report data) and the labor-related share in a budget-neutral manner:
In the RY 2005 IPF PPS final rule, we implemented regulations at § 412.424(d)(1)(iii) to establish a facility-level adjustment for IPFs that are, or are part of, teaching hospitals. The teaching adjustment accounts for the higher indirect operating costs experienced by hospitals that participate in graduate medical education (GME) programs. The payment adjustments are made based on the ratio of the number of fulltime equivalent (FTE) interns and residents training in the IPF and the IPF's average daily census.
Medicare makes direct GME payments (for direct costs such as resident and teaching physician salaries, and other direct teaching costs) to all teaching hospitals including those paid under a PPS and those paid under the TEFRA rate-of-increase limits. These direct GME payments are made separately from payments for hospital operating costs and are not part of the IPF PPS. The direct GME payments do not address the estimated higher indirect operating costs teaching hospitals may face.
The results of the regression analysis of FY 2002 IPF data established the basis for the payment adjustments included in the RY 2005 IPF PPS final rule. The results showed that the indirect teaching cost variable is significant in explaining the higher costs of IPFs that have teaching programs. We calculated the teaching adjustment based on the IPF's “teaching variable,” which is (1 + [the number of FTE residents training in the IPF's average daily census]). The teaching variable is then raised to the 0.5150 power to result in the teaching adjustment. This formula is subject to the limitations on the number of FTE residents, which are described in this section of this final rule.
We established the teaching adjustment in a manner that limited the incentives for IPFs to add FTE residents for the purpose of increasing their teaching adjustment. We imposed a cap on the number of FTE residents that may be counted for purposes of calculating the teaching adjustment. The cap limits the number of FTE residents that teaching IPFs may count for the purpose of calculating the IPF PPS teaching adjustment, not the number of residents teaching institutions can hire or train. We calculated the number of FTE residents that trained in the IPF during a “base year” and used that FTE resident number as the cap. An IPF's FTE resident cap is ultimately determined based on the final settlement of the IPF's most recent cost report filed before November 15, 2004 (69 FR 66955). A complete discussion of the temporary adjustment to the FTE cap to reflect residents due to hospital closure or residency program closure appears in the RY 2012 IPF PPS proposed rule (76 FR 5018 through 5020) and the RY 2012 IPF PPS final rule (76 FR 26453 through 26456).
In the regression analysis that informed the RY 2004 IPF PPS final rule, the logarithm of the teaching variable had a coefficient value of 0.5150. We converted this cost effect to a teaching payment adjustment by treating the regression coefficient as an exponent and raising the teaching variable to a power equal to the coefficient value. We note that the coefficient value of 0.5150 was based on the regression analysis holding all other components of the payment system constant. A complete discussion of how the teaching adjustment was calculated appears in the RY 2005 IPF PPS final rule (69 FR 66954 through 66957) and the RY 2009 IPF PPS notice (73 FR 25721).
We proposed to retain the coefficient value of 0.5150 for the teaching adjustment to the Federal per diem base rate as we did not propose refinements to the facility-level payment adjustments for rural location or teaching status for FY 2025. As noted earlier, given the scope of changes to the wage index and patient-level adjustment factors, we believe this will minimize the total impacts to providers in any given year. We refer readers to section V.A of this final rule for a discussion of comments received in response to a request for information about potential future revisions to the IPF PPS facility-level adjustments.
Regarding the commenter's suggestion to recognize affiliation agreements, we did not propose to recognize affiliation agreements for the IPF PPS teaching adjustment and are not making a change to this policy. As we previously stated in the RY 2005 IPF PPS final rule (69 FR 66956), our intent is not to affect affiliation agreements and rotational arrangements for hospitals that have residents that train in more than one
The IPF PPS includes a payment adjustment for IPFs located in Alaska and Hawaii based upon the area in which the IPF is located. As we explained in the RY 2005 IPF PPS final rule, the FY 2002 data demonstrated that IPFs in Alaska and Hawaii had per diem costs that were disproportionately higher than other IPFs. As a result of this analysis, we provided a COLA in the RY 2005 IPF PPS final rule. We refer readers to the FY 2024 IPF PPS final rule for a complete discussion of the currently applicable COLA factors (88 FR 51088 through 51089).
We adopted a new methodology to update the COLA factors for Alaska and Hawaii for the IPF PPS in the FY 2015 IPF PPS final rule (79 FR 45958 through 45960). For a complete discussion, we refer readers to the FY 2015 IPF PPS final rule.
We also specified that the COLA updates will be determined every 4 years, in alignment with the IPPS market basket labor-related share update (79 FR 45958 through 45960). Because the labor-related share of the IPPS market basket was updated for FY 2022, the COLA factors were updated in FY 2022 IPPS/LTCH rulemaking (86 FR 45547). As such, we also finalized an update to the IPF PPS COLA factors to reflect the updated COLA factors finalized in the FY 2022 IPPS/LTCH rulemaking effective for FY 2022 through FY 2025 (86 FR 42621 through 42622). This is reflected in Table 18 below. We proposed to maintain the COLA factors in Table 18 for FY 2025 in alignment with the policy described in this paragraph.
We did not receive any comments on our proposal; we are finalizing the COLA factors for IPFs located in Alaska and Hawaii as proposed.
The final IPF PPS COLA factors for FY 2025 are also shown in Addendum A to this rule, which is available on the CMS website at
The IPF PPS includes a facility-level adjustment for IPFs with qualifying EDs. As defined in § 412.402, qualifying emergency department means an emergency department that is staffed and equipped to furnish a comprehensive array of emergency services and meets the requirements of 42 CFR 489.24(b) and § 413.65.
We provide an adjustment to the Federal per diem base rate to account for the costs associated with maintaining a full-service ED. The adjustment is intended to account for ED costs incurred by a psychiatric hospital with a qualifying ED, or an excluded psychiatric unit of an IPPS hospital or a critical access hospital (CAH), and the overhead cost of maintaining the ED. This payment applies to all IPF admissions (with one exception which we describe in this section), regardless of whether the patient was admitted through the ED. The ED adjustment is made on every qualifying claim except as described in this section of this final rule. As specified at § 412.424(d)(1)(v)(B), the ED adjustment is not made when a patient is discharged from an IPPS hospital or CAH, and admitted to the same IPPS hospital's or CAH's excluded psychiatric unit. We clarified in the RY 2005 IPF PPS final rule (69 FR 66960) that an ED adjustment is not made in this case because the costs associated with ED services are reflected in the DRG payment to the IPPS hospital or through the reasonable cost payment made to the CAH.
For FY 2025, we proposed to update the adjustment factor from 1.31 to 1.53 for IPFs with qualifying EDs using the same methodology used to determine ED adjustments in prior years. We proposed that those IPFs with a qualifying ED would receive an adjustment factor of 1.53 as the variable per diem adjustment for day 1 of each patient stay. If an IPF does not have a qualifying ED, we proposed that it would receive an adjustment factor of 1.27 as the variable per diem adjustment for day 1 of each patient stay. We proposed to apply this revision to the ED adjustment budget-neutrally by applying a refinement standardization factor, and we presented a detailed discussion of the distributional impacts
We solicited comment on this proposal. We also discussed alternative analysis of adjustment factors based on source of admission, which we did not propose to adopt. Lastly, we proposed that if more recent data become available, we would use such data, if appropriate, to determine the FY 2025 ED adjustment factor.
The ED adjustment is incorporated into the variable per diem adjustment for the first day of each stay for IPFs with a qualifying ED. A detailed discussion of the distributional impacts of this proposed change is found in section VIII.C of this final rule.
The IPF PPS includes an outlier adjustment to promote access to IPF care for those patients who require expensive care and to limit the financial risk of IPFs treating unusually costly patients. In the RY 2005 IPF PPS final rule, we implemented regulations at § 412.424(d)(3)(i) to provide a per case payment for IPF stays that are extraordinarily costly. Providing additional payments to IPFs for extremely costly cases strongly improves the accuracy of the IPF PPS in determining resource costs at the patient and facility level. These additional payments reduce the financial losses that would otherwise be incurred in treating patients who require costlier care; therefore, reduce the incentives for IPFs to under-serve these patients. We make outlier payments for discharges where an IPF's estimated total cost for a case exceeds a fixed dollar loss threshold amount (multiplied by the IPF's facility-level adjustments) plus the federal per diem payment amount for the case.
In instances when the case qualifies for an outlier payment, we pay 80 percent of the difference between the estimated cost for the case and the adjusted threshold amount for days 1 through 9 of the stay (consistent with the median LOS for IPFs in FY 2002), and 60 percent of the difference for day 10 and thereafter. The adjusted threshold amount is equal to the outlier threshold amount adjusted for wage area, teaching status, rural area, and the COLA adjustment (if applicable), plus the amount of the Medicare IPF payment for the case. We established the 80 percent and 60 percent loss sharing ratios because we were concerned that a single ratio established at 80 percent (like other Medicare PPSs) might provide an incentive under the IPF per diem payment system to increase LOS to receive additional payments.
After establishing the loss sharing ratios, we determined the current fixed dollar loss threshold amount through payment simulations designed to compute a dollar loss beyond which payments are estimated to meet the 2 percent outlier spending target. Each year when we update the IPF PPS, we simulate payments using the latest available data to compute the fixed dollar loss threshold so that outlier payments represent 2 percent of total estimated IPF PPS payments.
In accordance with the update methodology described in § 412.428(d), we proposed to update the fixed dollar loss threshold amount used under the IPF PPS outlier policy. Based on the regression analysis and payment simulations used to develop the IPF PPS, we established a 2 percent outlier policy, which strikes an appropriate balance between protecting IPFs from extraordinarily costly cases while ensuring the adequacy of the federal per diem base rate for all other cases that are not outlier cases. We proposed to maintain the established 2 percent outlier policy for FY 2025.
Our longstanding methodology for updating the outlier fixed dollar loss threshold involves using the best available data, which is typically the most recent available data. We note that for FY 2022 and FY 2023 only, we made certain methodological changes to our modeling of outlier payments, and we discussed the specific circumstances that led to those changes for those years (86 FR 42623 through 42624; 87 FR 46862 through 46864). We direct readers to the FY 2022 and FY 2023 IPF PPS proposed and final rules for a more complete discussion.
We proposed to update the IPF outlier threshold amount for FY 2025 using FY 2023 claims data and the same methodology that we have used to set the initial outlier threshold amount each year beginning with the RY 2007 IPF PPS final rule (71 FR 27072 and 27073). Based on an analysis of the December 2023 update of FY 2023 IPF claims, we estimated that IPF outlier payments as a percentage of total estimated payments would be approximately 2.1 percent in FY 2024. Therefore, we proposed to update the outlier threshold amount to $35,590 to maintain estimated outlier payments at 2 percent of total estimated aggregate IPF payments for FY 2025. We noted that the proposed rule update would be an increase from the FY 2024 threshold of $33,470. Lastly, we proposed that if more recent data become available for the FY 2025 IPF PPS final rule, we would use such data as appropriate to determine the final outlier fixed dollar loss threshold amount for FY 2025.
Regarding the suggestion to limit increases to the outlier threshold to no more than the market basket update, we are concerned that this methodology would not be technically appropriate for the IPF PPS outlier policy. As discussed earlier in this section, the longstanding IPF PPS 2-percent outlier policy was established based on the regression analysis and payment simulations used to develop the IPF PPS. We have previously explained that the 2-percent outlier policy strikes an appropriate balance between protecting IPFs from extraordinarily costly cases while ensuring the adequacy of the Federal per diem base rate for all other cases that are not outlier cases. Each year when we update the IPF PPS, we simulate payments using the latest available data to compute the fixed dollar loss threshold so that outlier payments represent 2 percent of total estimated IPF PPS payments. For this FY 2025 IPF PPS final rule, we have simulated payments using the latest available data, and these payment simulations indicate that an increase to the outlier fixed dollar loss threshold is necessary to maintain outlier payments at 2 percent of total payments. We are concerned that limiting increases to the outlier fixed dollar loss threshold to no more than the market basket update percentage would not appropriately target outlier payments such that they remain at 2 percent of total IPF PPS payments. Moreover, such a policy would increase outlier payments above the 2-percent target for FY 2025. Likewise, a methodology in which CMS would calculate the IPF PPS outlier threshold based on a three-year rolling average would not effectively target outlier payments at 2 percent of total IPF PPS payments. This is because the outlier threshold in FY 2023 and FY 2024 are lower than the threshold level that our payment simulations suggest would most effectively target outlier payments at 2 percent. Therefore, if we were to use a rolling average to calculate the FY 2025 IPF PPS outlier threshold, such a methodology would likely result in outlier payments that exceed the target.
Under the IPF PPS, an outlier payment is made if an IPF's cost for a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS amount. To establish an IPF's cost for a particular case, we multiply the IPF's reported charges on the discharge bill by its overall cost-to-charge ratio (CCR). This approach to determining an IPF's cost is consistent with the approach used under the IPPS and other PPSs. In the RY 2004 IPPS final rule (68 FR 34494), we implemented changes to the IPPS policy used to determine CCRs for IPPS hospitals, because we became aware that payment vulnerabilities resulted in inappropriate outlier payments. Under the IPPS, we established a statistical measure of accuracy for CCRs to ensure that aberrant CCR data did not result in inappropriate outlier payments.
As indicated in the RY 2005 IPF PPS final rule (69 FR 66961), we believe that the IPF outlier policy is susceptible to the same payment vulnerabilities as the IPPS; therefore, we adopted a method to ensure the statistical accuracy of CCRs under the IPF PPS. Specifically, we adopted the following procedure in the RY 2005 IPF PPS final rule:
• Calculated two national ceilings, one for IPFs located in rural areas and one for IPFs located in urban areas.
• Computed the ceilings by first calculating the national average and the standard deviation of the CCR for both urban and rural IPFs using the most recent CCRs entered in the most recent Provider Specific File (PSF) available.
For FY 2025, we proposed to continue following this methodology to update the FY 2025 national median and ceiling CCRs for urban and rural IPFs based on the CCRs entered in the latest available IPF PPS PSF, and we proposed that if more recent data became available, we would use such data to calculate the rural and urban national median and ceiling CCRs for FY 2025. We did not receive any comments on this proposal, and we are finalizing it as proposed.
To determine the final rural and urban ceilings, we multiplied each of the standard deviations by 3 and added the result to the appropriate national CCR average (either rural or urban). The final upper threshold CCR for IPFs in FY 2025 is 2.3181 for rural IPFs, and 1.8287 for urban IPFs, based on current CBSA-based geographic designations. If an IPF's CCR is above the applicable ceiling, the ratio is considered statistically inaccurate, and we assign the appropriate national (either rural or urban) median CCR to the IPF.
We apply the national median CCRs to the following situations:
• New IPFs that have not yet submitted their first Medicare cost report. We continue to use these national median CCRs until the facility's actual CCR can be computed using the first tentatively or final settled cost report.
• IPFs whose overall CCR is in excess of three standard deviations above the corresponding national geometric mean (that is, above the ceiling).
• Other IPFs for which the Medicare Administrative Contractor (MAC) obtains inaccurate or incomplete data with which to calculate a CCR.
Specifically, for FY 2025, for each of the three situations listed above, using the most recent CCRs entered in the CY 2023 PSF, we estimate a national median CCR of 0.5720 for rural IPFs and a national median CCR of 0.4200 for urban IPFs. These calculations are based on the IPF's location (either urban or rural) using the current CBSA-based geographic designations. A complete discussion regarding the national median CCRs appears in the RY 2005
As discussed in section IV.E.4.b of this final rule, to analyze variation in cost between patients with different characteristics, it is crucial for us to have complete cost information about each patient, including data on ancillary services provided. Currently, IPFs and psychiatric units are required to report ancillary charges on cost reports. As specified at 42 CFR 413.20, hospitals are required to file cost reports on an annual basis and maintain sufficient financial records and statistical data for proper determination of costs payable under the Medicare program.
However, our ongoing analysis has found a notable increase in the number of IPFs, specifically for-profit freestanding IPFs, that appear to be erroneously identifying on form CMS-2552-10, Worksheet S-2, Part I, line 115, as eligible for filing all-inclusive cost reports. These hospitals identifying as eligible for filing all-inclusive cost reports (indicating that they have one charge covering all services) are consistently reporting no ancillary charges or very minimal ancillary charges and are not using charge information to apportion costs in their cost report. Generally, based on the nature of IPF services and the conditions of participation applicable to IPFs, we expect to see ancillary services and correlating charges, such as labs and drugs, on most IPF claims.
In the FY 2016 IPF PPS final rule (80 FR 46693 through 46694), we discussed analysis conducted to better understand IPF industry practices for future IPF PPS refinements. This analysis revealed that in 2012 to 2013, over 20 percent of IPF stays show no reported ancillary charges, such as laboratory and drug charges, on claims. In the FY 2016 IPF PPS final rule (80 FR 46694), FY 2017 IPF PPS final rule (81 FR 50513), FY 2018 IPF PPS final rule (82 FR 36784), FY 2019 IPF PPS final rule (83 FR 38588), and FY 2020 IPF PPS final rule (84 FR 38458), we reminded providers that we only pay the IPF for services furnished to a Medicare beneficiary who is an inpatient of that IPF, except for certain professional services, and payments are considered to be payments in full for all inpatient hospital services provided directly or under arrangement (see 42 CFR 412.404(d)), as specified in 42 CFR 409.10.
On November 17, 2017, we issued Transmittal 12, which made changes to the hospital cost report form CMS-2552-10 (OMB No. 0938-0050) and included cost report level 1 edit 10710S, effective for cost reporting periods ending on or after August 31, 2017. Edit 10710S required that cost reports from psychiatric hospitals include certain ancillary costs or the cost report will be rejected. On January 30, 2018, we issued Transmittal 13, which changed the implementation date for Transmittal 12 to be for cost reporting periods ending on or after September 30, 2017. CMS suspended edit 10710S effective April 27, 2018, pending evaluation of the application of the edit to all-inclusive rate providers. We issued Transmittal 15 on October 19, 2018, reinstating the requirement that cost reports from psychiatric hospitals, except all-inclusive rate providers, include certain ancillary costs. This requirement is still currently in place. For details, we refer readers to see these Transmittals, which are available on the CMS website at
Under IPF PPS regulations at § 412.404(e), all inpatient psychiatric facilities paid under the IPF PPS must meet the recordkeeping and cost reporting requirements as specified at § 413.24. Historically, in accordance with § 413.24(a)(1), most hospitals that were approved to file all-inclusive cost reports were Indian Health Services (IHS) hospitals, government-owned psychiatric and acute care hospitals, and nominal charge hospitals. Although IPFs are no longer reimbursed on the basis of reasonable costs, we continue to expect that most IPFs, other than government-owned or tribally owned IPFs, should report cost data that is based on an approved method of cost finding and on the accrual basis of accounting. The option to elect to file an all-inclusive rate cost report is limited to providers that do not have a charge structure and that, therefore, must use an alternative statistic to apportion costs associated with services rendered to Medicare beneficiaries.
Current cost reporting rules allow hospitals that do not have a charge structure to file an all-inclusive cost report using an alternative cost allocation method. We refer readers to the Provider Reimbursement Manual (PRM) 15-1; chapter 22, § 2208 for detailed information on the requirements to file an alternative method.
In general, most providers allocate their Medicare costs using costs and charges as described at § 413.53(a)(1)(i) and referred to as the Departmental Method, which is the ratio of beneficiary charges to total patient charges for the services of each ancillary department. For cost reporting periods beginning on or after October 1, 1982, the cost report uses the Departmental Method to apportion the cost of the department to the Medicare program. Added to this amount is the cost of routine services for Medicare beneficiaries, determined based on a separate average cost per diem for all patients for general routine patient care areas as required at § 413.53(a)(1)(i) and (e); and 15-1, chapter 22, § 2200.1.
We use cost-to-charge ratios (CCRs) from Medicare cost reports as the method of establishing reasonable costs for hospital services and as the basis for ratesetting for several hospital prospective payment systems. In general, detailed ancillary cost and charge information is necessary for accurate Medicare ratesetting. When hospitals identify as all-inclusive, they are excluded from ratesetting because they do not have CCRs but use an alternative basis for apportioning costs. When hospitals erroneously identify as all-inclusive but have a charge structure, data that is necessary for accurate Medicare ratesetting is improperly excluded.
Since the issuance of Transmittal 15, we have continued to identify an increase in the number of IPFs, specifically for-profit freestanding IPFs, that appear to be erroneously identifying on form CMS-2552-10, Worksheet S-2, Part I, line 115, as filing all-inclusive cost reports. In conjunction with the FY 2023 IPF PPS proposed rule (87 FR 19428 through 19429), we posted a report on the CMS website that summarizes the results of the latest analysis of more recent IPF cost and claim information for potential IPF PPS adjustments and requested comments about the results summarized in the report. The report showed that approximately 23 percent of IPF stays were trimmed from the data set used in
Section 4125 of the CAA, 2023 authorizes the Secretary to collect data and information, specifically including charges related to ancillary services, as appropriate to inform revisions to the IPF PPS.
In the FY 2024 IPF PPS proposed rule (88 FR 21270 through 21272), we included a request for information (RFI) related to the reporting of charges for ancillary services, such as labs and drugs, on IPF claims. We were interested in better understanding IPF industry practices pertaining to the billing and provision of ancillary services to inform statutorily mandated IPF PPS refinements. We stated that we were considering whether to require charges for ancillary services to be reported on claims and potentially reject claims if no ancillary services are reported, and whether to consider payment for such claims to be inappropriate or erroneous and subject to recoupment.
In response to the comment solicitation, we received a comment from MedPAC regarding facilities that do not report ancillary charges on most or any of their claims. MedPAC stated that it is not known: whether IPFs fail to report ancillary charges separately because they were appropriately bundled with all other charges into an all-inclusive per diem rate; if no ancillary charges were incurred because the IPF cares for a patient mix with lower care needs or inappropriately fails to furnish the kinds of care reflected in ancillary charges when medically necessary; or if ancillary charges for services furnished during the IPF stay are inappropriately billed outside of the IPF base rate (unbundling). MedPAC recommended CMS conduct further investigation into the lack of certain ancillary charges and whether IPFs are providing necessary care and appropriately billing for inpatient psychiatric services under the IPF PPS.
MedPAC also encouraged CMS to require the reporting of ancillary charges and clarify the requirements related to IPFs' “all-inclusive-rate” hospital status. MedPAC noted that it observed in cost report data that IPFs that previously were not all-inclusive-rate hospitals have recently changed to an all-inclusive-rate status. MedPAC noted that the timing of many of these changes appears to correspond to CMS's transmittals requiring ancillary services to be reported on cost reports for IPFs that do not have an all-inclusive rate.
Other commenters, including IPFs and hospital associations, responded to the RFI stating that the lack of ancillary charges on claims does not indicate a lack of services being provided. The commenters strongly opposed any claim-level editing and stated that reporting ancillary charges at the claim level would be inefficient and burdensome, particularly for government and IHS all-inclusive hospitals.
After taking into consideration the feedback we received from both MedPAC and IPF providers, for FY 2025 (89 FR 23193 through 23194) we clarified the eligibility criteria to be approved to file all-inclusive cost reports. We explained that only government-owned or tribally owned facilities are able to satisfy these criteria, and thus only these facilities will be permitted to file an all-inclusive cost report for cost reporting periods beginning on or after October 1, 2024.
We reminded readers that in order to be approved to file an all-inclusive cost report, hospitals must either have an all-inclusive rate (one charge covering all services) or a no-charge structure.
We stated that for cost reporting periods beginning on or after October 1, 2024, we will issue instructions to the MACs and put in place edits to operationalize our longstanding policy that only government-owned or tribally owned IPF hospitals are permitted to file an all-inclusive cost report. We explained that all other IPF hospitals must have a charge structure and must report ancillary costs and charges on their cost reports. IPFs that have previously filed an all—inclusive cost report erroneously will no longer be able to do so. We further noted that to the extent government-owned or tribally owned hospitals can report ancillary charges on their cost reports, we strongly encourage them to do so to allow CMS to review and analyze complete and accurate data.
We stated that we believe clarifying the current eligibility criteria to be approved to file all-inclusive cost reports and implementing these operational changes will appropriately require freestanding IPFs with the ability to have a charge structure, that is, all IPFs other than those which are government-owned or tribally owned, to track and report ancillary charge information. In addition, we stated that we expect that more IPFs reporting ancillary charge information will result in an increase of IPFs having a CCR, which will in turn result in an increased number of IPFs being included in ratesetting. Therefore, we explained that we believe these operational changes will improve the quality of data reported, which will result in increased accuracy of future payment refinements to the IPF PPS.
Furthermore, we explained that we believe collecting charges of ancillary services from freestanding IPFs supports the directive for competition under the Executive Order on Promoting Competition in the American Economy as it facilitates accurate payment, cost efficiency, and transparency.
We remind readers that implementing the proposed operational changes to limited all-inclusive cost reporting would, at the earliest, affect cost reports submitted after October 1, 2025. This means that affected IPFs would have at least one year to make operational changes. While we acknowledge the concerns from commenters regarding systems changes needed to track ancillary costs, we believe putting in place edits for cost reporting periods beginning on or after October 1, 2024, to operationalize our longstanding policy provides IPF hospitals sufficient time to generally track and submit the ancillary cost and charge information.
Further, we disagree with the commenters' assertion that reporting ancillary costs does not have a direct influence on payment. As discussed in section IV.C.3.c of this final rule, we analyzed ancillary cost and charge data to inform our proposed FY 2025 refinements to the IPF PPS. In addition, in section and III.C.4.b if this final rule, we solicited comments on whether a lack of ancillary charge data may be contributing to the results of our regression analysis as it relates to opioid use disorders. For future refinements of the IPF PPS, such as those related to the patient assessment instrument as discussed in section V.B. of this final rule, the quality of the analyses of patient-level costs that CMS performs will ultimately depend on the quality of data that IPFs report.
Section 1886(s)(5)(D)(iii) of the Act, as added by section 4125(a) of the CAA, 2023, states that revisions in payment implemented pursuant to section 1886(s)(5)(D)(i) for a rate year shall result in the same estimated amount of aggregate expenditures under this title for psychiatric hospitals and psychiatric units furnished in the rate year as would have been made under this title for such care in such rate year if such revisions had not been implemented. We interpret this to mean that revisions in payment adjustments implemented for FY 2025 (and for any subsequent fiscal year) must be budget neutral.
Historically, we have maintained budget neutrality in the IPF PPS using the application of a standardization factor, which is codified in our regulations at § 412.424(c)(5) to account for the overall positive effects resulting from the facility-level and patient-level adjustments. As discussed in section IV.B.1 of this final rule, section 124(a)(1) of the BBRA required that we implement the IPF PPS in a budget neutral manner. In other words, the amount of total payments under the IPF PPS, including any payment adjustments, must be projected to be equal to the amount of total payments that would have been made if the IPF PPS were not implemented. Therefore, we calculated the standardization factor by setting the total estimated IPF PPS payments, taking into account all of the adjustment factors under the IPF PPS, to be equal to the total estimated payments that would have been made under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been implemented. A step-by-step description of the methodology used to estimate payments under the TEFRA payment system appears in the RY 2005 IPF PPS final rule (69 FR 66926).
We believe the budget neutrality requirement of section 4125(a) of the CAA, 2023 is consistent with our longstanding methodology for maintaining budget neutrality under the IPF PPS. Therefore, for FY 2025, we proposed to apply a refinement standardization factor in accordance with our existing policy at § 412.424(c)(5). This policy requires us to update IPF PPS patient-level adjustment factors, ED adjustment, and ECT per treatment amount as proposed in FY 2025 IPF PPS proposed rule, in such a way that total estimated payments to IPFs for FY 2025 are the same with or without the changes (that is, in a budget neutral manner) by applying a refinement standardization factor to the IPF PPS rates. We proposed to apply a refinement standardization factor of 0.9514 to the IPF PPS federal per diem base rate and ECT per treatment amount to maintain budget neutrality.
We did not receive any comments on our proposed methodology for applying a refinement standardization factor. We are finalizing our proposal to use the following steps to ensure that the rates reflect the FY 2025 update to the patient-level adjustment factors (as previously discussed in section IV.C and IV.D of this final rule, and summarized in Addendum A) in a budget neutral manner:
In the FY 2025 IPF PPS proposed rule, we requested information on two main topics to inform future revisions to the IPF PPS, in accordance with the CAA, 2023. First, we requested information regarding potential revisions to the IPF PPS facility-level adjustments. Second, we requested information regarding the development of a patient assessment instrument under the IPFQR program.
In section IV of the FY 2025 IPF PPS proposed rule (89 FR 23194 through 23200), we described the results of our latest analysis and requested public comment on them. Specifically, we presented the latest results of our analysis of the adjustments for rural location and teaching status, as well as a potential new adjustment for safety net population. We explained that the potential inclusion of a safety net adjustment could affect the magnitude of the adjustment factors for rural and teaching status, and we noted that future additional data and analysis may produce results that differ from those presented in the proposed rule. Lastly, we presented informational data about the distributional impacts of adopting such adjustment factors for the IPF PPS. We refer readers to the proposed rule for detailed description and explanation of these regression analyses and results.
In the proposed rule, we solicited comments on the following topics:
• Would it be appropriate to consider proposing revisions to the IPF PPS facility-level adjustments for rural location and teaching status in the future based on the results of our latest regression analysis?
• Should we consider adjusting payment using MedPAC's Medicare Safety Net Index (MSNI) formula with adaptations, as described in the proposed rule? What, if any, changes to the methodology should we consider for the IPF setting? For example, should we develop a separate payment adjustment for each component (that is, the low-income ratio, uncompensated care ratio, and Medicare dependency ratio)?
• We note that our construction of the MSNI did not scale or index facility-level variables to a national standard or median value. We anticipate that doing so would result in less of a change to the IPF Federal per diem base rate but would still result in comparable distributional impacts (that is, IPFs with lower MSNIs would receive lower payments, and IPFs with higher MSNIs would receive higher payments). Should we consider scaling or indexing the MSNI to a national average MSNI for all IPFs?
• Is MedPAC's MSNI formula, as adapted, an accurate and appropriate measure of the extent to which an IPF acts as a safety-net hospital for Medicare beneficiaries?
• Should additional data be collected through the cost report to improve the calculation of MSNI, such as collecting UCC and revenue at the IPF unit level?
• Is the current cost report data submitted by IPFs sufficiently valid and complete to support the implementation of an MSNI payment? We note our concerns about the low or non-existent amounts reported for uncompensated care for freestanding IPFs and the use of hospital-level UCC and revenue amounts to calculate the UCC ratio for IPF units.
• What administrative burden or challenges might providers face in reporting their UCC and low-income patient stays?
• Would IPFs have the information necessary to report their low-income patient stays to CMS for the purpose of the MSNI calculation? What challenges might IPFs face in gathering and reporting this information?
• In the FY 2023 IPPS proposed rule, CMS noted that, when calculating the MSNI, the following circumstances may be encountered: new hospitals (for example, hospitals that begin participation in the Medicare program after the available audited cost report data), hospital mergers, hospitals with multiple cost reports and/or cost reporting periods that are shorter or longer than 365 days, cost reporting periods that span fiscal years, and potentially aberrant data. How should CMS consider addressing these circumstances when calculating the MSNI for IPFs?
The majority of commenters who responded to the RFI about a payment adjustment for MSNI opposed the addition of this adjustment factor under the construction presented in the proposed rule because of insufficient data to support the adjustment because of the substantial decrease to the base rate or because of the redistribution of resources away from IPFs with a low MSNI. Several of these commenters, concerned that the adjustment would substantially decrease the base rate, noted that a decrease of this size would have unintended consequences such as further reducing access to care. Some commenters noted concerns that the inclusion of an MSNI adjustment would reduce the size of the rural adjustment, while other commenters noted that the adjustment would reduce the teaching adjustment. A couple of commenters recommended developing a DSH payment for IPFs as an alternative to MSNI. About half of these commenters advocated for an MSNI adjustment that is not budget neutral (
MedPAC supported CMS's efforts to develop an adjustment factor based on MSNI. They recommended that CMS analyze whether a facility's low-income subsidy (LIS) and Medicare share of days are correlated with higher costs and lower profit margins, noting that factors that are important for identifying
Section 4125(b)(1) of CAA, 2023 amended section 1886(s)(4) of the Act, by inserting a new paragraph (E), to require IPFs participating in the IPFQR Program to collect and submit to the Secretary certain standardized patient assessment data, using a standardized patient assessment instrument (PAI) developed by the Secretary, for RY 2028 (FY 2028) and each subsequent rate year. IPFs must submit such data with respect to at least the admission to and discharge of an individual from the IPF, or more frequently as the Secretary determines appropriate. For IPFs to meet this new data collection and reporting requirement for RY 2028 and each subsequent rate year, the Secretary must implement a standardized PAI that collects data with respect to the following categories: functional status; cognitive function and mental status; special services, treatments, and interventions for psychiatric conditions; medical conditions and comorbidities; impairments; and other categories as determined appropriate by the Secretary. This IPF-PAI must enable comparison of the patient assessment data across all IPFs which submit these data. In other words, the data must be standardized such that data from IPFs participating in the IPFQR Program can be compared; the IPF-PAI each IPF administers must be made up of identical questions and identical sets of response options to which identical standards and definitions apply.
As we develop the IPF-PAI, in accordance with these new statutory requirements, we seek to collect information that will help us achieve the following goals: (1) improve the quality of care in IPFs, (2) improve the accuracy of the IPF PPS in accordance with section 4125(b)(2) of CAA, 2023, and (3) improve health equity.
The RFI consisted of four sections. The first section discussed a general framework or set of principles for development of the IPF-PAI. The second section outlined potential approaches that could be used to develop the items or data elements that make up the PAI. This section also discussed patient assessment data elements in use in PAIs for skilled nursing facilities and other healthcare settings that could potentially be adapted for use in the IPF-PAI. The third section outlined potential approaches that could be used to collect patient assessment data. Finally, the fourth section solicited public comment on the principles and approaches listed in the first three sections and sought other input regarding the IPF-PAI.
We considered similar legislatively derived PAIs previously implemented for certain post-acute care (PAC) providers to inform the goals and guiding principles for the IPF-PAI because of similarities of section 4125(b) of CAA, 2023 to the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185, October 6, 2014), codified at section 1899B of the Act. Similar to section 4125(b) of CAA, 2023, section 1899B of the Act requires certain PAC providers, specifically home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs), to submit certain standardized patient assessment data (as set forth at section 1899B(b)(1)(B)) using a standardized PAI under the PAC providers' respective quality reporting programs. While IPFs are acute care providers and not PAC providers, given the similarities between the CAA, 2023 and section 1899B of the Act, we considered the goals and guiding principles that we followed to implement section 1899B of the Act for certain PAC providers and examined their applicability and appropriateness for IPFs.
We previously identified four key considerations when assessing Standardized Patient Assessment Data Elements for the PAC PAIs to collect: (1) Overall clinical relevance; (2) Interoperable exchange to facilitate care coordination during transitions in care; (3) Ability to capture medical complexity and risk factors that can inform both payment and quality; and (4) Scientific reliability and validity, general consensus agreement for its usability.
In each category of assessment required by section 1886(s)(4)(E)(ii), as added by section 4125(b) of CAA, 2023, (functional status; cognitive function and mental status; special services, treatments, and interventions for psychiatric conditions; medical conditions and comorbidities; impairments, and other categories as determined appropriate by the Secretary), we seek to establish Standardized Patient Assessment Data Elements that providers can use to support high quality care and outcomes in the IPF setting. As we evaluate Standardized Patient Assessment Data Elements in PAIs designed for other care settings, we intend to work with CMS Medical Officers, including
To ensure the clinical relevance of the instrument across a diverse group of IPF patients, we are considering structuring the assessment with conditional questions, so that certain sets of questions are only indicated if the questions are relevant to the patient. Furthermore, we note that some data elements may only be appropriate for collection at certain times during the patient's stay (for example, only at admission or only at discharge). We solicited comments regarding the most effective structure to employ in the development of the IPF-PAI.
Interoperability is a key priority and initiative at CMS. Across the organization, we aim to promote the secure exchange, access, and use of electronic health information to support better informed decision making and a more efficient healthcare system. As a part of this effort, we make interoperability a priority for standardized data collection. We intend to ensure that the IPF-PAI meets Health Level 7® (HL7®) Fast Healthcare Interoperability Resources® (FHIR®) standards.
As part of our interoperability considerations, we are interested in whether Standardized Patient Assessment Data Elements already in use in the CMS Data Element Library (DEL)
We intend to expand our efforts to refine the IPF PPS to increase the accuracy of the payment system by better identifying patient characteristics that best predict resource use during an IPF stay. To identify Standardized Patient Assessment Data Elements that would help predict resource use, we intend to evaluate Standardized Patient Assessment Data Elements for their ability to explain medical complexity, the need for special services and treatments, and to measure case-mix differences that impact costs. It is our expectation that an IPF-PAI that effectively differentiates treatment needs between patients will also help IPFs plan and distribute their resources. Our hope is that the IPF-PAI can therefore integrate with IPFs' business practices. In addition, Standardized Patient Assessment Data Elements that capture patient risk factors can contribute to quality of care and patient safety.
Standardized Patient Assessment Data Elements considered for inclusion in the IPF-PAI must be scientifically reliable and valid in IPF settings.
We anticipate that our development process for new Standardized Patient Assessment Data Elements will include working with teams of researchers for each category including a group of advisors made up of clinicians and academic researchers for each team with expertise in IPFs. We expect to convene a Technical Expert Panel (TEP) to provide expert input on new and existing Standardized Patient Assessment Data Elements that merit consideration for inclusion and testing, including environmental scans and reviews of scientific literature. In an ideal scenario, Standardized Patient Assessment Data Elements would be tested in a representative sample of IPFs for appropriateness in different IPF settings and across a range of patients. Standardized Patient Assessment Data Elements would be tested for inter-rater (that is, consistency in results regardless of who is administering the assessment) and inter-organizational reliability, for validity in all IPF settings, for internal consistency, and for breadth of application among a range of IPF patients. We anticipate that Standardized Patient Assessment Data Elements would also need to be tested for their ability to detect differences among patients and costs of treatment. Due to the constraints of the statutorily required implementation timeframe, it may not be possible to complete all testing before launching the IPF-PAI.
The process for scientifically testing each question and set of responses is lengthy and resource-intensive. This process is based on the steps for quality measure development described in the Blueprint Measure Lifecycle,
In evaluating Standardized Patient Assessment Data Elements for inclusion in the IPF-PAI, we are considering the burden of data collection through the PAI and aiming to minimize additional burden by considering whether any data that is currently collected through IPFQR Program measures or on IPF claims could be collected as Standardized Patient Assessment Data Elements to avoid duplication of data that IPFs are already reporting. We are also considering how collecting some data for some IPFQR Program measures through the IPF-PAI and collecting other data through the Hospital Quality Reporting (HQR) system would affect the reporting burden for participating IPFs. Licensing, permissions costs, or copyright restrictions that would add to administrative costs and burdens are also a consideration as we evaluate existing PAIs and mechanisms or tools for submitting IPF-PAI data.
As we develop the IPF-PAI, we are interested in receiving information about how to find a balance between collecting the most relevant and useful information and the administrative burden of administering the assessment and submitting the assessment data.
Section 1886(s)(4)(E)(ii) of the Act, added by section 4125(b)(1)(C) of the CAA, 2023, requires that the standardized patient assessment data to be collected in the IPF-PAI must be with respect to six enumerated categories.
The first enumerated category of data for the IPF-PAI is functional status. Section 1886(s)(4)(E)(ii)(I) of the Act provides that functional status may include mobility and self-care at admission to a psychiatric hospital or unit and before discharge from a psychiatric hospital or unit. We note that information in this category is generally found in a patient's discharge summary and are interested in learning about standardized elements that correspond to functional status as relevant to IPFs. In the FY 2025 IPF PPS proposed rule, we stated our interest in learning about assessments that may be currently in use in the IPF setting and meet criteria for inclusion in the IPF-PAI (89 FR 23202).
The second enumerated category of data for the IPF-PAI is cognitive function and mental status. Section 1886(s)(4)(E)(ii)(II) of the Act provides that cognitive function may include the ability to express ideas and to understand, and mental status may include depression and dementia. We note that in the IPF setting, a patient's diagnoses, which can be abstracted from their medical chart, provide some information related to this category. We are aware that IPFs may be currently assessing cognitive function using existing instruments. In the FY 2025 IPF PPS proposed rule, we stated our interest in hearing from IPFs about which instruments are currently in use to measure cognitive function in IPFs and which have high clinical relevance for the IPF setting (89 FR 23202).
The third enumerated category of data for the IPF-PAI is special services, treatments, and interventions for psychiatric conditions. Section 1886(s)(4)(E)(ii)(III) of the Act neither addresses what these terms mean nor provides any illustrative examples. As discussed in section VII.C. of this rule, the IPFQR Program already collects information about the use of restraint and seclusion through quality measures (Hospital Based Inpatient Psychiatric Services (HBIPS)-2, Hours of Physical Restraint, and HBIPS-3, Hours of Seclusion Use), while claims include information about ECT treatments provided. Other areas of interest in this category may include high-cost medications, use of chemical restraints, one-to-one observation, and high-cost technologies. In the FY 2025 IPF PPS proposed rule, we stated our interest in whether these or any other special services, treatments, or interventions should be considered for inclusion in the IPF-PAI (89 FR 23202 through 23203).
The fourth enumerated category of data for the IPF-PAI is medical conditions and comorbidities. Section 1886(s)(4)(E)(ii)(IV) of the Act provides that medical conditions and comorbidities may include diabetes, congestive heart failure, and pressure ulcers. We note that IPF claims record a significant number of medical conditions and comorbidities to receive the payment adjustment for comorbidities in the IPF PPS and conditions that are relevant to the IPF stay. In reviewing Standardized Patient Assessment Data Elements listed in this category in PAIs in use in PAC settings, we observed that these PAIs include Standardized Patient Assessment Data Elements regarding pain interference in this category, such as the effect of pain on sleep, pain interference with therapy activities, and pain interference with day-to-day activities. In the FY 2025 IPF PPS proposed rule, we stated our interest in learning from commenters whether these existing data elements from the PAC settings would be clinically relevant for inclusion in this category for the IPF-PAI (89 FR 23203).
The fifth enumerated category of data for the IPF-PAI is impairments. Section 1886(s)(4)(E)(ii)(V) of the Act provides that impairments may include incontinence and an impaired ability to hear, see, or swallow. PAIs in use in other settings include Standardized Patient Assessment Data Elements regarding hearing and vision (for example, Section B, “Hearing, Speech, and Vision” of the IRF-PAI Version 4.2 (Effective October 1, 2024)).
The sixth enumerated category of data for the IPF-PAI is other categories as determined appropriate by the Secretary. We believe this provision allows for flexibility to include additional areas in the IPF-PAI.
One of our strategic priorities, as laid out in the CMS Strategic Plan,
We note that, beginning with mandatory reporting of CY 2025 data for FY 2027 payment determination, the IPFQR Program includes the Screening for SDOH measure, which assesses the percentage of patients, aged 18 years and over at the time of admission, who are screened for five specific health-related social needs (HRSNs) (food insecurity, housing instability, transportation needs, utility difficulties, and interpersonal safety) but which does not require reporting of that information at the patient-level (88 FR 51117). Furthermore, we note that PAIs adopted for the PAC settings discussed previously include collection of SDOH data under section 1899B(b)(1)(B)(vi) of the Act, which contains a similar provision for other categories deemed appropriate by the Secretary.
We note that, if we deem it appropriate to add a SDOH category for the IPF-PAI and these SDOH data are included as Standardized Patient Assessment Data Elements in the PAI, they could potentially be used to risk adjust or stratify measures collected for the IPFQR Program. In the FY 2025 IPF PPS proposed rule, we stated our interest in learning whether using some of these SDOH data adopted in other PAIs to risk adjust or stratify these measures would make the measures in the IPFQR Program more meaningful (89 FR 23203).
We plan to develop flexible methods for providers to submit IPF-PAI data to CMS, including batch uploads in specified formats and a portal for submission of files. We welcomed public comment on tools and methods for submission of data that balance administrative burden and ease of use.
In the FY 2025 IPF PPS proposed rule, we requested information from the public to inform the selection of Standardized Patient Assessment Data Elements to be collected on the IPF-PAI and the implementation process (89 FR 23203). We sought information about PAIs IPFs currently use upon admission and discharge, as well as information about how IPFs estimate resource needs to determine capacity before a patient is admitted. We also sought information about methods for IPFs to submit patient assessment data and the potential administrative burden on IPFs, Medicare Administrative Contractors (MACs), and CMS. Finally, we sought input on the relationship between the IPF-PAI and the measures within the IPFQR Program.
We solicited comment on the following topics:
• To what extent do you agree with the principles for selecting and developing Standardized Patient Assessment Data Elements for the IPF-PAI?
• What, if any, principles should CMS eliminate from the Standardized Patient Assessment Data Element selection criteria?
• What, if any, principles should CMS add to the Standardized Patient Assessment Data Element selection criteria?
Several commenters recommended CMS include data elements that reflect resource use in the IPF-PAI, and a few commenters stated the belief that data elements in the IPF-PAI should be selected with consideration of their ability to capture quality of care or support quality improvement efforts. A commenter stated that CMS should not collect any additional information that would not ultimately impact IPF payments.
Several commenters suggested ways that CMS should approach instrument development to minimize administrative burdens related to the PAI, such as leveraging or aligning with current IPFQR requirements and other common, existing IPF workflows, and focusing on data elements that are easy to collect and assessment instruments that are already in widespread use, rather than developing de novo tools. A commenter recommended that CMS compare the content of the IPF-PAI to other required data submissions in order to reduce duplicative data entry. A commenter recommended that CMS attempt to align data elements, data collection time periods, and measures between the IPFQR Program and The Joint Commission, a national accrediting body that establishes quality and safety standards for health care organizations.
Several commenters agreed with CMS that data elements selected for the IPF-PAI should have demonstrated scientific acceptability, including testing that
Several commenters described unique characteristics of IPF patients and limitations of IPFs and recommended that CMS prioritize appropriateness for IPFs when developing the IPF-PAI. Several commenters noted concerns that leveraging data elements used in post-acute care or with geriatric populations would not be appropriate for the majority of IPF patients. A few commenters recommended that CMS select data elements that would be applicable to diverse patient populations and facility types. A commenter noted the importance of using standardized data elements in the IPF-PAI that apply to the broadest range of patients, focusing, for example, on function rather than symptoms, as measures of function apply to all patients while measurement of specific symptomology would need to be tailored to patients' conditions.
Some commenters noted that patients in IPFs may be unwilling or unable to complete any patient interviews to inform data elements. A commenter recommended that testing be conducted with IPFs to understand these dynamics and inform policies on acceptable completion rates.
Several commenters stated concerns about the timeline for development and implementation of the IPF-PAI. To accomplish its goals while minimizing burden to providers, a few commenters recommended that CMS start with a basic tool that is limited in scope while meeting the statutory requirements, then expand the tool as additional data elements are tested for validity and reliability. A commenter suggested that CMS identify what is already being collected by IPFs and require reporting of these data elements, rather than developing a new tool.
Many commenters noted the importance of engaging with experts and other interested parties in the development of the IPF-PAI. A few commenters suggested that CMS engage with specific interested parties, including mental health specialty societies, psychiatric mental health nurses, and software vendors. A commenter recommended that CMS engage with the provider community to solicit their comments before finalizing the IPF-PAI. A commenter suggested that CMS form a working group that meets quarterly in order to incorporate and respond to feedback from interested parties.
Regarding CMS intention to design the IPF-PAI to be interoperable, a commenter recommended that CMS align the IPF-PAI with United States Core Data for Interoperability (USCDI), while another commenter stated support for CMS commitment to interoperability for the IPF-PAI, specifically for data on social risk factors and HRSNs. Several commenters noted that IPFs did not receive funding to adopt certified EHR technology and suggested that CMS consider how the implementation of the IPF-PAI would affect providers without EHRs.
• Are there PAIs currently available for use, or that could be adapted or developed for use in the IPF-PAI, to assess patients': (1) functional status; (2) cognitive function and mental status; (3) special services, treatments, and interventions for psychiatric conditions; (4) medical conditions and comorbidities; (5) impairments; (6) health disparities; or (7) other areas not mentioned in this RFI?
We summarize the comments we received regarding existing assessment instruments or data elements in current use with respect to each patient assessment topic in sections V.B.4.c through V.B.4.h of this rule. We include the names of the instruments that commenters identified in the summaries of comments that pertain to each topic area in sections V.B.4.c through V.B.4.h of this rule.
• What aspects of function are most predictive of medical complexity or increased resource needs to treat a patient in the IPF setting?
• Which of the Standardized Patient Assessment Data Elements related to mobility (that is, the ability to toilet transfer, walk 10 feet, car transfer, walk 10 feet on an uneven surface, 1 step up (that is, a curb), 4 steps up, 12 steps up, and pick up an object) currently collected by PAC settings in their respective PAIs are clinically relevant in the IPF setting? Do they otherwise meet the principles for inclusion in the IPF-PAI?
A few commenters stated that the standardized patient assessment data elements on functional status that CMS presented for comment were not relevant to the IPF patient population. They stated that IPF patients are generally younger and have fewer functional impairments than the post-acute and geriatric populations for which these data elements were developed. A commenter suggested that these data elements would only be appropriate for geriatric psychiatry patients, and that the IPF-PAI could
A commenter stated concerns about the accuracy of provider-assessed functional assessments, in the event that data on functional assessments would be used in payment models (that is, facilities would be paid more for patients with poor functional status), as providers would have an incentive to assess patients as more functionally impaired than they might be. Another commenter stated support for the standardized assessment of functional status, and stated their belief that functional status is the only topic appropriate for standardized patient assessment due to the clinical diversity of IPF patients.
• What aspects of cognitive function and mental status are most predictive of medical complexity or increased resource needs to treat a patient in the IPF setting?
• What components or instruments are used to assess cognitive function, mental status, or a combination thereof upon admission? What, if any, differences are there between assessments administered at admission and at discharge? What are the components of the mental status assessments administered at admission and discharge?
Several commenters stated a belief that assessment of cognitive function is not appropriate for most IPF patients, specifically for patients who do not show signs of cognitive impairment. These commenters stated that cognitive impairment is most common in older adults and questioned the value of universal screening for cognitive impairment for the IPF population.
Commenters shared the names of several assessments on the topics of cognitive function and mental status, including the St. Louis University Mental Status Exam,
A commenter stated concerns about the time required to collect standardized assessments of cognitive function and mental status. This commenter noted that, although individual assessments may be brief, when combined with other data elements, this could make the IPF-PAI very long.
• What special services, treatments, and interventions are most predictive of increased resource intensity during an IPF stay?
• Do data currently collected as part of the IPFQR Program related to special services and treatments (such as HBIPS-2 Hours of Physical Restraint Use and HBIPS-3 Hours of Seclusion Use) meet the criteria for inclusion in the IPF-PAI?
A commenter recommended that CMS include recreational therapy as a distinct and separate service to be collected in the IPF-PAI.
A commenter noted concerns that treatments and interventions cannot be assessed in a standardized way in the IPF-PAI because they are different for every patient. Another commenter recommended that CMS not require that minutes of therapy time be tracked on the IPF-PAI, as they believe this would be resource intensive and have little value.
A commenter noted that IPFs already collect and submit patient data relevant to this category through the IPFQR Program's Tobacco Use Treatment Provided or Offered at Discharge measure (TOB-3)
• Is the Standardized Patient Assessment Data Element regarding pain interference (effect on sleep, interference with therapy activities, interference with day-to-day activities) currently collected by PAC settings in their respective PAIs clinically relevant in the IPF setting? Does it otherwise meet the criteria for inclusion in the IPF-PAI?
• Do the medical conditions and comorbidities coded on IPF claims meet the criteria for inclusion in the IPF-PAI?
Commenters shared a list of common comorbidities that could be collected in the IPF-PAI, including chronic lower respiratory diseases, diseases of esophagus/stomach, metabolic disorders, hypertensive diseases, and episodic and paroxysmal disorders (for example, insomnia, migraine). A commenter agreed that the Standardized Patient Assessment Data Element regarding pain interference (effect on sleep, interference with therapy activities, interference with day-to-day activities)
A commenter recommended three topics to include in this domain: presence of medical conditions requiring standing medication, medical/surgical consult required, and need for medical testing/procedure. This commenter described how the need for patients to leave the IPF to receive specialized care creates additional staffing demand. Another commenter recommended that the IPF-PAI include psychiatric diagnoses, medical comorbidities, and levels of intervention required, as these impact resources. Another commenter noted that allowing for the documentation of multiple psychiatric comorbidities would help to capture the resource costs to treat these complex patients.
A few commenters stated concerns or challenges. A commenter noted concerns that standardizing assessment of comorbidities would be difficult, as assessment requires individualized consideration. Another commenter noted that IPFs already collect and submit patient data relevant to this category through the IPFQR Program's Screening for Metabolic Disorders measure
• Are Standardized Patient Assessment Data Elements related to impairments (that is, the ability to hear and see in adequate light) currently collected PAC settings in their respective PAIs clinically relevant in the IPF setting? Do they otherwise meet the principles for inclusion in the IPF-PAI?
• What impairments are most predictive of increased resource intensity during an IPF stay?
Several commenters suggested assessing more global concepts of impairment, stating that the ability to participate in life and perform daily functions is clinically relevant for the IPF population.
A commenter recommended that the IPF-PAI also assess functional neurologic impairments such as incontinence and dysphagia.
• What other assessment elements would contribute to the clinical utility of the IPF-PAI?
• What other assessment elements would best capture medical complexity in the interest of refining and improving the accuracy of the IPF PPS?
• What other assessment elements would inform CMS' understanding of health equity for IPF patients?
• Are there special interventions that IPFs provide which support patients after discharge, and which could serve to reduce the incidence of hospital readmissions for psychiatric conditions? What, if any, assessment elements would inform CMS' understanding of such interventions?
Regarding other topics that could be included in the IPF-PAI, a commenter recommended that the assessment include data elements related to whether an individual has identified and is participating in activities that promote enjoyment, engagement, and social interaction with others. Another commenter recommended that CMS consider quality of life, such as measured by the World Health Organization's Quality-of-Life Scale (WHOQOL-BREF).
• We anticipate that IPFs will need to make changes to systems and processes and train staff in order to administer the assessment and submit assessment data by the implementation date. What operational or practical limitations would IPFs face in making those necessary changes? Are there particular categories of Standardized Patient Assessment Data Elements that would be more or less feasible for IPFs to operationalize? We are particularly interested in impacts to facilities of varying sizes and ownership characteristics.
• What forms of training and guidance would be most useful for CMS to provide to support IPFs in the implementation of the IPF-PAI?
Several commenters recommended that CMS engage with the EHR and other software vendors that would be likely to support IPFs' implementation of the IPF-PAI. Two commenters recommended that CMS allow ample time for software vendors to develop data collection and reporting tools for IPFs; a commenter recommended at least 18 months between finalizing technical specifications and implementation, while another recommended 2 years. A commenter recommended that CMS commit to making updates to the IPF-PAI no more than once per year. A commenter recommended that CMS develop the IPF-PAI in such a way that it could be populated from the patient's record in the EHR at the time of discharge.
Regarding implementation at the facility level, a few commenters recommended clarifying what training and guidance that would be provided to IPFs in advance of implementation and suggested that thorough training and clear instructions for completing the IPF-PAI will be important to support data quality.
• Would having some measures which require data submission through the HQR system and having other measures, which require data collection and submission through the IPF-PAI increase operational complexity or administrative burden? If so, how would you recommend mitigating this complexity or burden?
• Would any of the current chart-abstracted measures be easier to report through the IPF-PAI? If so, which measures?
• Would any of the current measures in the program be more meaningful if they were stratified or risk-adjusted using data from the required patient assessment categories or other categories not specified by the CAA, 2023 that should be added to the IPF-PAI?
• What new measure concepts, which would use data collected through Standardized Patient Assessment Data Elements in the IPF-PAI, should we consider?
Another commenter stated concerns about duplication of data collection or data entry between existing IPFQR Program measures and the IPF-PAI. However, that commenter suggested that it would be appropriate to move data reporting to the IPF-PAI for a few of the current IPFQR Program measures.
The Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program is authorized by section 1886(s)(4) of the Act, and it applies to psychiatric hospitals and psychiatric units paid by Medicare under the IPF PPS (see section II.A. of this final rule for a detailed discussion of entities covered under the IPF PPS). Section 1886(s)(4)(A)(i) requires the Secretary to reduce by 2 percentage points the annual update to the standard Federal rate for discharges occurring during such rate year
Section 1886(s)(4)(C) of the Act requires IPFs to submit to the Secretary data on quality measures specified by the Secretary under section 1886(s)(4)(D) of the Act. Except as provided in section 1886(s)(4)(D)(ii) of the Act, section 1886(s)(4)(D)(i) of the Act requires that any measure specified by the Secretary must have been endorsed by the consensus-based entity (CBE) with a contract under section
Section 4125(b)(1) of CAA, 2023 amended section 1886(s)(4) of the Act, by inserting a new paragraph (E), to require IPFs participating in the IPFQR Program to collect and submit to the Secretary certain standardized patient assessment data, using a standardized patient assessment instrument (PAI) developed by the Secretary, for RY 2028 (FY 2028) and each subsequent rate year. We refer readers to section V.B of this final rule in which we discuss responses to our solicitation of public comment on the development of this PAI.
We refer readers to the FY 2019 IPF PPS final rule (83 FR 38589) for a discussion of the background and statutory authority of the IPFQR Program. We have codified procedural requirements and reconsideration and appeals procedures for IPFQR Program decisions in our regulations at 42 CFR 412.433 and 412.434. Consistent with previous IPFQR Program regulations, we refer to both inpatient psychiatric hospitals and psychiatric units as “facilities” or “IPFs.” This usage follows the terminology in our IPF PPS regulations at § 412.402.
For additional information on procedural requirements related to statutory authority, participation and withdrawal, data submission, quality measure retention and removal, extraordinary circumstances exceptions, and public reporting we refer readers to 42 CFR 412.433 Procedural requirements under the IPFQR Program.
For the IPFQR Program, we refer to the year in which an IPF would receive the 2-percentage point reduction to the annual update to the standard Federal rate as the
We strive to put patients and caregivers first, ensuring they are empowered to partner with their clinicians in their healthcare decision making using information from data driven insights that are increasingly aligned with meaningful quality measures. We support technology that reduces burden and allows clinicians to focus on providing high-quality healthcare for their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care while paying particular attention to improving clinicians' and beneficiaries' experiences when interacting with our programs. In combination with other efforts across HHS, we believe the IPFQR Program helps to incentivize IPFs to improve healthcare quality and value while giving patients and providers the tools and information needed to make the best individualized decisions. Consistent with these goals, our objective in selecting quality measures for the IPFQR Program is to balance the need for information on the full spectrum of care delivery and the need to minimize the burden of data collection and reporting. We have primarily focused on measures that evaluate critical processes of care that have significant impact on patient outcomes and support CMS and HHS priorities for improved quality and efficiency of care provided by IPFs. When possible, we also propose to incorporate measures that directly evaluate patient outcomes and experience. We refer readers to the CMS National Quality Strategy,
Section 1890A(a) of the Act requires that the Secretary establish and follow a pre-rulemaking process, in coordination with the CBE contracted under 1890(a) of the Act, to solicit input from multi-stakeholder groups on the selection of quality and efficiency measures for the IPFQR Program. Before being proposed for inclusion in the IPFQR Program, measures are placed on a list of Measures Under Consideration (MUC list), which is published annually. Following publication on the MUC list, a multi-stakeholder group convened by the CBE reviews the measures under consideration for the IPFQR Program, among other federal programs, and provides input on those measures to the Secretary. Under the Partnership for Quality Measurement (PQM), which is convened by the entity which currently holds the contract under 1890(a) of the Act, this process is known as the Pre-Rulemaking Measure Review (PRMR). We consider the input and recommendations provided by this multi-stakeholder group in selecting all measures for the IPFQR Program, including the 30-Day Risk-Standardized All-Cause Emergency Department (ED) Visit Following an IPF Discharge measure discussed in this final rule.
We have consistently stated our commitment to identifying measures that examine the care continuum for patients with mental health conditions and substance use disorders and to quantify outcomes following IPF-discharge (see for example, the adoption of the Medication Continuation Following Hospitalization in an IPF measure in the FY 2020 IPF PPS Final Rule, 84 FR 38460 through 38462). Post-discharge outcomes are an important part of our measurement strategy because patient-centered discharge planning and coordination of care for patients with any combination of mental health conditions and substance use disorders improves long-term outcomes,
Although not all post-discharge acute care visits are preventable, there are actions that the IPF can take to maximize the chance for patients' successful community reintegration.
The IPFQR Program currently has three measures that assess post-discharge outcomes: (1) Follow-up After Psychiatric Hospitalization (FAPH); (2) Medication Continuation Following Inpatient Psychiatric Discharge; and (3) Thirty Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization (CBE #2860, the IPF Unplanned Readmission measure). Each of these measures serves a unique role in assessing care coordination and post-discharge outcomes.
The FAPH measure, which we adopted in the FY 2022 IPF PPS Final Rule (86 FR 42640 through 42645), uses Medicare FFS claims to determine the percentage of inpatient discharges from an IPF stay for which the patient received a follow-up visit for treatment of mental illness. The FAPH measure represents an important component of post-discharge care coordination, specifically the transition of care to an outpatient provider. However, this measure does not quantify patient outcomes.
The Medication Continuation Following Inpatient Psychiatric Discharge measure, which we adopted in FY 2020 IPF PPS Final Rule (84 FR 38460 through 38465), assesses whether patients admitted to IPFs with diagnoses of Major Depressive Disorder (MDD), schizophrenia, or bipolar disorder filled at least one evidence-based medication prior to discharge or during the post-discharge period. Medication continuation is important for patients discharged from the IPF setting with these disorders because of significant negative outcomes associated with non-adherence to medication regimes. However, this measure does not quantify patient outcomes with respect to the use of acute care services post-discharge.
The IPF Unplanned Readmission measure, which we adopted in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57241 through 57246), assesses outcomes associated with worsening condition, potentially due to insufficient discharge planning and post-discharge care coordination, by assessing post-discharge use of acute care. The IPF Unplanned Readmission measure estimates the incidence of unplanned, all-cause readmissions to IPFs or short-stay acute care hospitals following discharge from an eligible IPF index admission. A readmission is defined as any admission that occurs within 3 to 30 days after the discharge date from an eligible index admission to an IPF, except those considered planned.
To further understand this gap, we analyzed post-discharge outcomes using claims data. In this analysis, we determined that, for patients discharged from IPFs, the risk-adjusted rate of ED visits after an IPF discharge between June 1, 2019 and July 31, 2021 (excluding the first two quarters of 2020 due to the COVID-19 public health emergency) was 20.7 percent. The rate of readmissions captured under the IPF Unplanned Readmission measure for this same period was 20.1 percent.
To address this gap, we developed and proposed the inclusion of the new, claims-based 30-Day Risk-Standardized All-Cause ED Visit Following an IPF Discharge measure (the IPF ED Visit measure) in the IPFQR Program beginning with the CY 2025 performance period/FY 2027 payment determination. The IPF ED Visit measure aims to provide information to patients, caregivers, other members of the public, and IPFs about the proportion of patients who seek care in ED in the 30 days following discharge from an IPF but are not admitted as an inpatient to an acute care hospital or IPF. This measure would assess the proportion of patients 18 and older with an ED visit, including observation stays, for any cause, within 30 days of discharge from an IPF, without subsequent admission.
We recognize that not all post-discharge ED visits are preventable, nor are all post-discharge ED visits associated with the initial IPF admission. However, we developed an all-cause ED visit rate, as opposed to a more narrowly focused measure of ED admissions for mental health or substance use concerns, for three primary reasons. First, such a measure aligns most closely with the IPF Unplanned Readmission measure as this measure is also an all-cause measure. Second, an all-cause measure emphasizes the importance of whole-person care for patients. Whole-person care, during the inpatient stay and through referral at discharge, includes addressing the conditions that may jeopardize a patient's health, but are not the reason for admission to the IPF, if the IPF has reason to identify these conditions during the course of treatment. For example, if an IPF were to identify through metabolic screening that a patient has diabetes, it would be appropriate for that IPF to recommend appropriate follow-up for that patient, such as with a primary care provider, endocrinologist, or dietician. Such post-discharge coordination of care could prevent the patient from seeking acute care after discharge from the IPF for complications of diabetes, such as diabetic ketoacidosis. Third, this measure includes ED visits for all conditions because patients visiting the ED may do so for physical symptoms associated with a mental health condition or substance use disorder. An example is a patient with anxiety that presents to the ED with chest pain and shortness of breath. If the clinician documents the primary diagnosis as chest pain (R07.9) or shortness of breath (R06.02), the patient would not be included in a mental health and substance use-specific IPF ED Visit measure, despite their history of anxiety (F41.9), a potential contributor to their presenting symptoms at the ED. We recognize that it is possible that such a visit may not be related to the patient's anxiety. However, while not all acute care visits after discharge from an IPF are preventable or necessarily related to the quality of care provided by the IPF, there is evidence that improvements in the quality of care for patients in the IPF setting can reduce rates of patients seeking acute care after discharge from an IPF, representing an improved outcome for patients.
Additionally, we considered whether 30 days was an appropriate timeframe for this measure. That is, we sought to identify whether a measure that assessed post-discharge ED visits over a period shorter or longer than 30 days would be more appropriate. Because IPFs are already familiar with interpreting data for the 30-day period in the IPF Unplanned Readmission measure, we determined that it would be appropriate to maintain the 30-day period for the IPF ED Visit measure. Additionally, by maintaining the same timeframe as the IPF Unplanned Readmission measure, we can provide IPFs and patients with a more complete picture of acute care among IPF patients after discharge from the IPF.
Pursuant to the Meaningful Measures 2.0 Framework (a CMS initiative that identifies priority domains for measures within CMS Programs
The IPF ED Visit measure was developed with input from clinicians, patients, and policy experts; the measure was subject to the pre-rulemaking process required by section 1890A of the Act, as discussed further in section VI.B.1 of this rule. Consistent
The focus population for this measure is adult Medicare FFS patients with a discharge from an IPF. The measure is based on all eligible index admissions from the focus population. An eligible index admission is defined as any IPF admission for which the patient meets the following criteria: (1) age 18 or older at admission; (2) discharged alive from an IPF; (3) enrolled in Medicare FFS Parts A and B during the 12 months before the admission date, the month of admission, and at least one month after the month of discharge from the index admission (that is, the original stay in an IPF); and (4) discharged with a principal diagnosis that indicates a psychiatric disorder. Excluded from the measure are patients discharged against medical advice (AMA) from the IPF index admission (because the IPF may not have had the opportunity to conduct full discharge planning for these patients); patients with unreliable data regarding death, demographics, or a combination thereof in their claims record (because these data are unreliable, they may lead to inaccuracies in the measure calculation); patients who expired during the IPF stay (because post-discharge care is not applicable to these patients); patients with a discharge resulting in a transfer to another care facility (because the receiving care facility would be responsible for discharge planning for these patients); and patients discharged but readmitted within 3 days of discharge, also known as an interrupted stay (because interrupted stays are often reflective of patient needs outside of the IPF, such as treatment for another condition).
To calculate the measure, we proposed to use the following data sources which are all available from Medicare administrative records and data submitted by providers through the claims process: (1) Medicare beneficiary and coverage files, which provide information on patient demographic, enrollment, and vital status information to identify the measure population and certain risk factors; (2) Medicare FFS Part A records, which contain final action claims submitted by acute care and critical access hospitals, IPFs, home health agencies, and skilled nursing facilities to identify the measure population, readmissions, and certain risk factors; and (3) Medicare FFS Part B records, which contain final action claims submitted by physicians, physician assistants, clinical social workers, nurse practitioners, and other outpatient providers to identify certain risk factors. To ensure that diagnoses result from encounters with providers trained to establish diagnoses, we proposed that this measure will not use claims for services such as laboratory tests, medical supplies, or other ambulatory services. Index admissions and ED visits would be identified in the Medicare FFS Part A records. Comorbid conditions for risk-adjustment would be identified in the Medicare Part A and Part B records in the 12 months prior to admission, including the index admission. Demographic and FFS enrollment data would be identified in the Medicare beneficiary and coverage files.
To calculate the IPF ED Visit measure, we proposed that CMS would: (1) identify all IPF admissions in the one-year performance period; (2) apply inclusion and exclusion criteria to identify index admissions; (3) identify ED visits and observation stays within 30 days of discharge from each index admission; (4) identify risk factors in the 12 months prior to index admission and during the index admission; and (5) run hierarchical logistic regression to compute the risk-standardized ED visit rate for each IPF.
As required under section 1890A of the Act, the CBE established the Partnership for Quality Measurement (PQM) to convene clinicians, patients, measure experts, and health information technology specialists to participate in the pre-rulemaking process and the measure endorsement process. The pre-rulemaking process, also called the Pre-Rulemaking Measure Review (PRMR), includes a review of measures published on the publicly available list of Measures Under Consideration (MUC List) by one of several committees convened by the PQM for the purpose of providing multi-stakeholder input to the Secretary on the selection of quality and efficiency measures under consideration for use in certain Medicare quality programs, including the IPFQR Program. The PRMR process includes opportunities for public comment through a 21-day public comment period, as well as public listening sessions. The PQM posts the compiled comments and listening session inputs received during the public comment period and the listening sessions within five days of the close of the public comment period.
The CBE-established PQM also conducts the measure endorsement and maintenance (E&M) process to ensure measures submitted for endorsement are evidence-based, reliable, valid, verifiable, relevant to enhanced health outcomes, actionable at the caregiver-level, feasible to collect and report, and responsive to variations in patient characteristics, such as health status, language capabilities, race or ethnicity, and income level, and are consistent across types of health care providers, including hospitals and physicians (see section 1890(b)(2) of the Act). The PQM convenes several E&M project groups twice yearly, formally called E&M Committees, each comprised of an E&M Advisory Group and an E&M Recommendations Group, to vote on whether a measure meets certain quality measure criteria. More details regarding the E&M process may be found in the E&M Guidebook, including details of the measure endorsement process in the section titled, “Endorsement and Review Process.”
As part of the PRMR process, the IPF ED Visit measure was reviewed during the PRMR Hospital Recommendation Group meeting on January 18, 2024. For the voting procedures of the PRMR and E&M process, the PQM utilized the Novel Hybrid Delphi and Nominal Group (NHDNG) multi-step process, which is an iterative consensus-building approach aimed at a minimum of 75 percent agreement among voting members, rather than a simple majority vote, and supports maximizing the time spent to build consensus by focusing discussion on measures where there is disagreement. For example, the PRMR Hospital Recommendation Group can reach consensus and have the following voting results: (A) Recommend, (B) Recommend with conditions (with 75 percent of the votes cast as recommend with conditions or 75 percent between recommend and recommend with conditions), and (C) Do not recommend. If no voting category reaches 75 percent or greater (including the combined [A] Recommend and [B] Recommend with conditions) the PRMR Hospital Recommendation Group is considered not to have come to consensus and the voting result is “Consensus not reached.” Consensus not reached signals continued disagreement amongst the committee despite being presented with perspectives from public comment, committee member feedback and discussion, and highlights the multi-faceted assessments of quality measures. More details regarding the PRMR voting procedures may be found in Chapter 4 of the PQM Guidebook of Policies and Procedures for Pre-Rulemaking Measure Review and Measure Set Review.
Seven members of the group recommended adopting the measure into the IPFQR program without conditions; eleven members recommended adoption with conditions; and one committee member voted not to recommend the measure for adoption. Taken together, 94.73 percent of the votes were between recommend & recommend with conditions.
The conditions specified by the PRMR Hospital Recommendation Group were: (1) that the measure be considered for endorsement by a consensus-based entity; and (2) further consideration of how the measure addresses 72-hour transfers to the ED. We have taken those considerations into account and proposed this measure for adoption because we believe we have adequately addressed the concerns raised by those considerations.
To address the first condition, we have submitted the measure to the CBE for consideration. For more information on submission to and consideration by the CBE we refer readers to section VI.B.2.b.(3) of this rule.
The second voting condition requested that we further consider how the measure addresses 72-hour transfers to the ED because of concerns that IPFs may appear to have worse performance if “interrupted stays” are not excluded from the measure. An “interrupted stay” occurs when a patient is discharged from an IPF and readmitted to the same IPF within 72 hours. This frequently occurs when a patient needs medical treatment that is beyond the scope of the IPF, such as care in an ED for an emergent health issue. We believe that this concern is sufficiently addressed in the ED Visit measure's specifications because these “interrupted stays” are excluded from the measure, as described in section VI.B.2.b.(1) of this rule. This exclusion is defined as an index admission with a readmission on Days 0, 1, or 2 post-discharge. In other words, patients transferred to the ED and subsequently readmitted to the IPF within 72 hours are excluded from the measure. Therefore “interrupted stays” are excluded from the measure as per the group's recommendation.
Section 1886(s)(4)(D)(i) of the Act generally requires that measures specified by the Secretary shall be endorsed by the entity with a contract under section 1890(a) of the Act (that is, the CBE). After a measure has been submitted to the CBE, the committee responsible for reviewing the measure evaluates the measure on five domains: (1) Importance; (2) Feasibility; (3) Scientific Acceptability (that is, reliability and validity); (4) Equity; and (5) Use and Usability. Committee members evaluate whether the measure the domain is “Met”, “Not Met but Addressable” or “Not Met” for each measure using a set of criteria provided by the CBE.
The measure developer submitted the measure for CBE endorsement consideration in the Fall 2023 review cycle. The measure was assigned to the Cost and Efficiency Project. The CBE Cost and Efficiency Endorsement committee met on January 31, 2024 and did not reach consensus regarding the IPF ED Visit measure, with 60.6 percent voting in favor of endorsement or endorsement with conditions and the remaining members voting to not endorse, which is below the 75 percent threshold necessary for the endorsement of the measure, as described in VI.B.2.b. During the Cost and Efficiency Endorsement committee's meeting, members of the committee discussed whether an all-cause measure was appropriate and whether IPFs are able to
As discussed in section VI.B.2.a of this final rule, an all-cause measure complements the IPF Unplanned Readmission measure, emphasizes whole-person care, and captures visits to the ED for patients with physical symptoms associated with mental health conditions. Additionally, evidence shows that there are interventions that reduce post-discharge acute care. These include adopting care transition models, proactively connecting patients with post-discharge providers, identifying and addressing patients' barriers to post-discharge care, and focusing on providing patient-centered care and improving patient experience of care.
Although section 1886(s)(4)(D)(i) of the Act generally requires that measures specified by the Secretary shall be endorsed by the entity with a contract under section 1890(a) of the Act, section 1886(s)(4)(D)(ii) of the Act states that, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed as long as due consideration is given to a measure that has been endorsed or adopted by a consensus organization identified by the Secretary.
We have determined that this is an appropriate topic for the adoption of a measure absent CBE endorsement because where possible we focus on measures that assess patient outcomes. Unplanned use of acute care after discharge from an IPF is often associated with worsening condition, potentially due to insufficient discharge planning and post-discharge care coordination. While the IPFQR Program currently has a measure that assesses unplanned readmissions after discharge from an IPF, there is a gap in the measure set with respect to unplanned ED visits without a subsequent admission to an acute care hospital or IPF. The IPF ED Visit measure fills that gap. We also reviewed CBE-endorsed measures and were unable to identify any other CBE-endorsed measures that assess outcomes that solely result in a patient's ED visit after the patient's discharge from an IPF. The only endorsed measure that we identified that addresses an IPF patient seeking acute care after discharge is the IPF Unplanned Readmission measure. As we discussed previously, the IPF Unplanned Readmission measure does not assess ED visits that do not result in an admission. Therefore, we believe that the IPF ED Visit measure is an important complement to the IPF Unplanned Readmission measure. We did not find any other measures that assess post-discharge ED visits without a subsequent admission, and therefore the exception in section 1886(s)(4)(D)(ii) of the Act applies.
Because all data used to calculate the IPF ED Visit measure are available on Medicare claims, this measure requires no additional data collection or submission by IPFs. We proposed to adopt the ED Visit Measure with a reporting period beginning with data from CY 2025 performance period/FY 2027 payment determination year.
We received public comments on this proposal. The following is a summary of the comments we received and our responses.
We reiterate that the goal of this measure is to reduce rates of 30-day post-discharge ED visits in comparison to other similarly situated IPFs and that we seek to achieve this by publicly reporting IPF performance on this measure. We note that the IPF ED Visit measure is not intended to allow comparisons between post-discharge outcomes of patients discharged from IPFs and patients discharged from other facility types.
We also note that, as part of the measure development and testing process, the measure developer performed an equity analysis in which
While there are many circumstances that may cause a patient to seek emergency care that are unrelated to the IPF, approximately 40 percent of Medicare beneficiaries discharged from IPFs seek acute care treatment in hospitals within 30 days of their discharge from the IPF, with approximately half of those patients being admitted to an inpatient hospital and half of those patients receiving treatment in the emergency department without a subsequent admission.
Furthermore, we developed an all-cause measure for the three reasons previously discussed: (1) to align with the IPF Unplanned Readmissions measure; (2) to emphasize whole-person care; and (3) to ensure that patients who visit the ED for symptoms related to their behavioral health condition or that could have been appropriately addressed by the IPF during the patient's stay or at discharge are included in the measure. These reasons continue to be important elements of assessing and reporting on post-discharge use of acute care.
We recognize that other CMS quality reporting and value-based purchasing programs have developed measures that assess the use of acute care services for more narrowly defined groups of patients or that focus on “potentially preventable” use of acute care services. However, we note that other programs have developed measures that more broadly assess outcomes after discharge. For example, the Hospital Inpatient Quality Reporting Program (IQR) Program has two measures that broadly assess outcomes after discharge: (1) the Hybrid Hospital-Wide Unplanned Readmission (HWR) measure
We note that unmanaged behavioral health conditions can present in many ways including physical and mental symptoms. During an ED visit it is possible that the relationship between the presenting condition and the patient's behavioral health condition may not be assessed and documented. Therefore, we chose to develop a more broadly specified measure than some of the measures in use in other programs. This does not imply that IPFs have more control over or accountability for use of acute care than other care providers. It is a consequence of the complexity of the patients that seek care in IPFs. We reiterate we do not expect IPFs to achieve zero post-discharge acute care visits.
We believe that commenters may have been concerned regarding financial accountability for patients seeking emergency care after discharge from an IPF. We note that the IPFQR Program is a pay-for-reporting program. CMS only has the authority under section 1886(s)(4)(A) to apply a financial penalty if an IPF fails to submit data on a quality measure in the form and manner, and at a time, specified by CMS. CMS does not otherwise adjust payments based on the IPF's performance on the measures adopted in the IPFQR Program.
Receiving lower acuity care in the ED can be time-consuming for the patient and can lead to increased spending and unnecessary testing and treatment,
However, we recognize that EDs are valuable resources, which provide necessary care for urgent needs, and that there are areas in which EDs may be the only source of care available to patients. We also recognize that there are many situations in which care in an ED is clinically appropriate and not related to the care provided by the discharging IPF. We reiterate that the IPF ED Visit measure is designed to provide information regarding how IPFs perform relative to similar IPFs, including IPFs in the same geographic areas and shared community resources. The goal of this measure is to reduce rates of 30-day post-discharge ED visits in comparison to other similarly situated IPFs, but there is no expectation that IPFs would reach zero 30-day post-discharge ED visits.
Regarding the concern that this measure may restrict access to EDs following discharge from an IPF, we note that the intention of this measure is not for IPFs to discourage patients from seeking care in EDs when appropriate. Rather, we believe that IPFs play an important role in helping patients understand purposes of, and how to access, all levels of care within their communities, and that it is also their responsibility to help patients understand when to seek treatment in an ED setting. We also reiterate that, while lower scores on this measure are better, we would not expect IPFs to reach zero ED visits following discharge because there are circumstances that require the use of the ED.
We understand commenters may be concerned about the impact of public reporting of IPFs performance on this measure as required by section 1886(s)(4)(F) of the Act, such as patients seeking care at higher performing IPFs. We reiterate that the goal of this measure is to reduce rates of 30-day post-discharge ED visits in comparison to other similarly situated IPFs and that we seek to achieve this by publicly reporting IPF performance on this measure. In addition, because the IPF ED Visit measure is risk standardized, it provides a tool for comparing IPFs that treat clinically different patient populations. Furthermore, by comparing IPFs which treat patients with similar levels of unmet social needs (by comparing IPFs which report similar rates on the Screen Positive for SDOH measure), patients would be able to use the IPF ED Visit measure as an element of their care decisions. We note that IPFs that experience extraordinary events, such as natural disasters, which affect their ability to submit required measure data under the IPFQR Program could request an extraordinary circumstances exception in accordance with our regulation at § 412.433(f).
Consistent with the CMS National Quality Strategy's Focus on a health care system that promotes quality outcomes,
Regarding the recommendation that we include care transition questions in a patient experience measure, we agree that the patient's experience of being prepared to successfully reintegrate into the community is an important element of discharge planning and care coordination. We note that the Psychiatric Inpatient Experience (PIX) survey measure, which we finalized in the FY 2024 IPF PPS final rule (88 FR 51121 through 51128), includes a treatment effectiveness domain, including questions related to the patient's perspective of whether their care experience has prepared them to transition back into the community. However, the patient's perspective at time of discharge is only one element of a complex set of elements that lead to a successful reintegration into the community, including, for example, the appropriateness and completeness of documentation and whether recommendations for outpatient care appropriately account for the patient's ability to access this care.
Specifically, the measure developer tested the measure for reliability using a bootstrapped test-retest approach (which is a statistical method for testing using a single data set)
To test the validity, the measure developer assessed the relationship between the IPF ED Visit measure rate and the IPF Unplanned Readmission measure rate. The measure developer also performed hypothesis-driven validity testing to determine if performance rates among subgroups of patients (including based on sex, race/ethnicity, dual eligibility status, and patients with a longer length of stay) were consistent with empirical literature regarding ED usage among these patients. There was a positive relationship between facility rates on the IPF ED Visit measure and the IPF Unplanned Readmissions measure and there were small differences in the ED measure rate across the patient subgroups they evaluated in the direction consistent with expectations based on literature.
Regarding the concern that the measure developer misinterpreted the statistical data, we have assessed the results achieved in testing to be consistent with appropriate statistical methods.
While there is limited research focused entirely on reducing ED visits without subsequent admission following discharge from an IPF, the literature that exists, as well as literature on reducing readmissions following IPF discharge, show clear links between steps IPFs can take and reduced use of acute care after discharge from the IPF. Additionally, IPFs can play a role in care coordination by arranging follow-up appointments for patients, ensuring medications are available at discharge, assisting patients with accessing medications from external providers, and engaging the patients' social support system. Patients who missed their first post-IPF discharge follow-up appointment had a 140 percent increased risk of readmission,
When we propose a measure that is not endorsed by the CBE, we must evaluate whether the exception in 1886(s)(4)(D)(ii) of the Act applies. This exception states that in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed as long as due consideration is given to a measure that has been endorsed or adopted by a consensus organization identified by the Secretary. We stated in the proposed rule that there are no measures that address this topic that have been adopted by the CBE to explain why the second part of this exception applies to this measure (89 FR 23210). We are adopting the IPF ED Visit measure because it is a measure that has been tested for feasibility, validity, and reliability, which was developed with input from a diverse set of experts, that will provide data that patients and their families can use to inform care decisions and IPFs can use to drive quality improvement activities. We gave due consideration to measures endorsed by the CBE and there were no measures that address this important outcome.
We are adopting one new measure for the FY 2027 payment determination for the IPFQR Program. With the adoption of this measure, the FY 2027 IPFQR Program measure set includes 16 mandatory and one voluntary measure. Table 19 sets forth the measures in the FY 2027 IPFQR Program.
Section 1886(s)(4)(C) of the Act requires the submission of quality data in a form and manner, and at a time, specified by the Secretary. In the Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Fiscal Year 2013 Rates; Hospitals' Resident Caps for Graduate Medical Education Payment Purposes; Quality Reporting Requirements for Specific Providers and for Ambulatory Surgical Centers (FY 2013 IPPS/LTCH PPS) final rule (77 FR 53655), we specified that data must be submitted between July 1 and August 15 of the calendar year preceding a given payment determination year (for example, data were required to be submitted between July 1, 2015 and August 15, 2015 for the FY 2016 payment determination). In the Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation; Payment Policies Related to Patient Status (FY 2014 IPPS/LTCH PPS) final rule (78 FR 50899), we clarified that this policy applied to all future years of data submission for the IPFQR Program unless we changed the policy through future rulemaking.
In the FY 2018 IPF PPS final rule (82 FR 38472 through 38473) we updated this policy by stating that the data submission period will be a 45-day period beginning at least 30 days following the end of the data collection period and that we will provide notification of the exact dates through subregulatory means.
In the FY 2022 IPF PPS Final Rule (86 FR 42658 through 42661), we finalized voluntary patient-level data reporting for the FY 2023 payment determination and mandatory patient-level data reporting for chart-abstracted measures within the IPFQR Program beginning with FY 2024 payment determination and subsequent years. The measures currently in the IPFQR Program affected by this requirement are set forth in Table 20.
As we have gained experience with patient-level data submission for the IPFQR program, during the voluntary data submission period for FY 2023 (which occurred in CY 2022) and the first mandatory data submission period for FY 2024 (which occurred in CY 2023), we have observed that annual data submission periods require IPFs to store large volumes of patient data to prepare for transmission to CMS. Furthermore, the volume of data associated with all IPFs reporting a full year of patient-level data during one data submission period creates the risk that systems will be unable to handle the volume of data.
We have reviewed how other quality reporting programs that require patient-level data submission address these concerns and determined that the Hospital Inpatient Quality Reporting (IQR) Program (78 FR 50811) and the Hospital Outpatient Quality Reporting (OQR) Program (72 FR 66872) both require quarterly submission of patient-level data. As we considered requiring quarterly reporting for the IPFQR Program, we also determined that increasing the frequency of data submission would allow additional analysis of measure trends over time. In the FY 2025 IPF PPS proposed rule, we stated that having additional data points (from additional quarters of data) could allow for more nuanced analyses of the IPFQR Program's measures (89 FR 23212). We stated that specifically, we would be able to better identify quarterly highs or lows that may be less apparent when data are combined over a full year. We recognized that, if we updated data reporting requirements to require reporting four times per year instead of once per year, then IPFs would need to meet four incremental deadlines instead of one deadline, and that this increased the risk that an individual IPF may fail to submit data specified for the measures and not receive its full market basket update. However, we believe that this risk is low because IPFs already have experience submitting some data required by the IPFQR Program on a more frequent basis. Specifically, the COVID-19 Healthcare Personnel (HCP) Vaccination Measure is currently reported into the CDC's National Healthcare Safety Network (NHSN) for one week per month resulting in a quarterly measure result (as originally adopted in the FY 2022 IPF PPS final rule (86 FR 42636) and restated in the FY 2024 IPF PPS final rule (88 FR 51131 through 51132). In addition, if this proposal for quarterly data submission were finalized, data submission for each calendar quarter would have been required during a
Furthermore, we proposed that all data which continue to be reported on an annual basis (that is, non-measure data, aggregate measures, and attestations) would have been required to be reported concurrently with the data from the fourth quarter of the applicable year. For example, data reflecting the entirety of CY 2025 (that is, non-measure data, aggregate measures, and attestations) would have been required by the Q4 2025 submission deadline (that is, May 15, 2026).
We received public comments on this proposal. The following is a summary of the comments we received and our responses.
If we propose to adopt quarterly reporting in the future, we will consider the transition time required for IPFs to update their submissions, evaluate the timing of the CMS Specifications Manual with respect to reporting deadlines, and ensure that newly certified facilities are able to participate in the IPFQR Program.
Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
This final rule refers to associated information collections that are not discussed in the regulation text contained in this document.
The following changes will be submitted to OMB for review under control number 0938-1171 (CMS-10432). We did not propose changes that would change any of the data collection instruments that are currently approved under that control number.
In the FY 2024 IPF PPS final rule, we utilized the median hourly wage rate for Medical Records Specialists, in accordance with the Bureau of Labor Statistics (BLS), to calculate our burden estimates for the IPFQR Program (88 FR 51145). While the most recent data from the BLS reflects a mean hourly wage of $24.65 per hour for all medical records specialists, $26.06 is the mean hourly wage for “general medical and surgical hospitals,” which is an industry within medical records specialists.
Some of the activities previously finalized for the IPFQR Program require beneficiaries to undertake tasks such as responding to survey questions on their own time. In the FY 2024 IPF PPS final rule, we estimated the hourly wage rate for these activities to be $20.71/hr (88 FR 51145). We updated the estimate to a post-tax wage of $24.04/hr. The Valuing Time in U.S. Department of Health and Human Services Regulatory Impact Analyses: Conceptual Framework and Best Practices identifies the approach for valuing time when individuals undertake activities on their own time.
We finalized provisions that impact policies beginning with the FY 2027 payment determination. For the purposes of calculating burden, we attribute the costs to the year in which the costs begin. Under our previously finalized policies, data submission for the measures that affect the FY 2027 payment determination occurs during CY 2026 and generally reflects care provided during CY 2025. Our currently approved burden for CY 2025 is set forth in Table 22.
In section VI.A of this final rule, we described our updated wage rates which increase from $44.86/hr to $52.12/hr (an increase of $7.26/hr) for activities performed by Medical Records Specialists and from $20.71/hr to $24.04/hr (an increase of $3.33/hr) for activities performed by individuals. The effects of these updates are set forth in Table 23.
In section VI.B.2 of this final rule, we are adopting the 30-Day Risk-Standardized All-Cause ED Visit Following an IPF Discharge (IPF ED Visit) measure beginning with the CY 2025 performance period/FY 2027 payment determination. As described in section VI.B.2.c. of this final rule, we will calculate the IPF ED Visit measure using Medicare claims that IPFs and other providers submit for payment. Since this is a claims-based measure, there is no additional burden outside of submitting a claim. The claim submission is approved by OMB under control number 0938-0050 (CMS-2552-10). This rule does not warrant any changes under that control number.
In Section VI.D. of this final rule, we are not finalizing our proposal to require IPFs to submit data on chart-abstracted measures quarterly. Because we are not finalizing this proposal it will have no effect on information collection burden.
As discussed in section IV.E.4 of this final rule, we clarified the eligibility criteria to be approved to file all-inclusive cost reports. Only government-owned, IHS, and tribally owned facilities are able to satisfy these criteria, and thus only these facilities will be permitted to file an all-inclusive cost report for cost reporting periods beginning on or after October 1, 2024.
We do not estimate any change in the burden associated with the hospital cost report (CMS-2552-10) OMB control number 0938-0050. We anticipate that IPFs which are currently filing all-inclusive cost reports, but are not government-owned or tribally owned, will not incur additional burden related to the submission of the cost report. The approved burden estimate associated with the submission of the hospital cost report includes the same amount of burden for the submission of an all-inclusive cost report as for the submission of a cost report with a charge structure.
We recognize that these IPFs will be required to track ancillary costs and charges using a charge structure; however, we expect that any burden associated with this tracking will be part of the normal course of a hospital's activities.
We have submitted a copy of the final rule's information collection requirements to OMB for their review. The requirements are not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms for the proposed collections discussed above, please visit the CMS website at
We invited public comments on these potential information collection requirements.
This rule finalizes updates to the prospective payment rates for Medicare inpatient hospital services provided by IPFs for discharges occurring during FY 2025 (October 1, 2024 through September 30, 2025). We are finalizing our proposal to apply the 2021-based IPF market basket increase for FY 2025 of 3.3 percent, reduced by the productivity adjustment of 0.5 percentage point as required by section 1886(s)(2)(A)(i) of the Act for a final total FY 2025 payment rate update of 2.8 percent. In this final rule, we are finalizing our proposal to update the outlier fixed dollar loss threshold amount, update the IPF labor-related share, adopt new CBSA delineations based on OMB Bulletin 23-01, and update the IPF wage index to reflect the FY 2025 hospital inpatient wage index. Section 1886(s)(4) of the Act requires IPFs to report data in accordance with the requirements of the IPFQR Program for purposes of measuring and making publicly available information on health care quality; and links the quality data submission to the annual applicable percentage increase.
We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866, as amended by Executive Order 14094, defines a “significant regulatory action” as an action that is likely to result in a rule that may: (1) have an annual effect on the economy of $200 million or more (adjusted every 3 years by the Administrator of 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 a 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 legal or policy issues for which centralized review would meaningfully further the President's priorities or the principles set forth in Executive Order 12866. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
A regulatory impact analysis (RIA) must be prepared for regulatory actions that are significant under section 3(f)(1) of Executive Order 12866. We estimate that the total impact of these changes for FY 2025 payments compared to FY 2024 payments will be a net increase of approximately $65 million. This reflects a $75 million increase from the update to the payment rates (+$90 million from the 2nd quarter 2024 IGI forecast of the 2021-based IPF market basket of 3.3 percent, and −$15 million for the productivity adjustment of 0.5 percentage point), as well as a $10 million decrease as a result of the update to the outlier threshold amount. Outlier payments are estimated to change from 2.3 percent in FY 2024 to 2.0 percent of total estimated IPF payments in FY 2025.
Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined this rulemaking is not significant per section 3(f)(1) as measured by the $200 million or more in any 1 year, but does meet the criteria under 5 U.S.C. 804(2) (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act). Nevertheless, because of the potentially substantial impact to IPF providers, we have prepared a Regulatory Impact Analysis that to the best of our ability presents the costs and benefits of the rulemaking. Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined that this rulemaking is “significant.” Therefore, OMB has reviewed the final regulations, and the Departments have provided the following assessment of their impact.
In this section, we discussed the historical background of the IPF PPS and the impact of the final rule on the Federal Medicare budget and on IPFs.
As discussed in the RY 2005 and RY 2007 IPF PPS final rules, we applied a budget neutrality factor to the Federal per diem base rate and ECT payment per treatment to ensure that total estimated payments under the IPF PPS in the implementation period would equal the amount that would have been paid if the IPF PPS had not been implemented. This budget neutrality factor included the following components: outlier adjustment, stop-loss adjustment, and the behavioral offset. As discussed in the RY 2009 IPF PPS notice (73 FR 25711), the stop-loss adjustment is no longer applicable under the IPF PPS.
As discussed in section IV.D.1.d of this final rule, we are updating the wage index and labor-related share, as well as update the CBSA delineations based on OMB Bulletin 23-01, in a budget neutral manner by applying a wage index budget neutrality factor to the Federal per diem base rate and ECT payment per treatment. In addition, as discussed in section IV.F of this final rule, we are applying a refinement standardization factor to the Federal per diem base rate and ECT payment per treatment to account for the proposed revisions to the ECT per treatment amount, ED adjustment, and patient-level adjustment factors (as previously discussed in sections IV.B, IV.C, and IV.D of this final rule, and summarized in Addendum A), which must be made budget-neutrally. Therefore, the budgetary impact to the Medicare program of the final rule will be due to the final market basket update for FY 2025 of 3.3 percent (see section IV.A.2 of this final rule) reduced by the productivity adjustment of 0.5 percentage point required by section 1886(s)(2)(A)(i) of the Act and the update to the outlier fixed dollar loss threshold amount.
We estimate that the FY 2025 impact will be a net increase of $65 million in payments to IPF providers. This reflects an estimated $75 million increase from the update to the payment rates and a $10 million decrease due to the update to the outlier threshold amount to set total estimated outlier payments at 2.0 percent of total estimated payments in FY 2025. This estimate does not include the implementation of the required 2.0 percentage point reduction of the productivity-adjusted market basket update factor for any IPF that fails to meet the IPF quality reporting requirements (as discussed in section IV.B.2. of this final rule).
To show the impact on providers of the changes to the IPF PPS discussed in this final rule, we compared estimated payments under the IPF PPS rates and factors for FY 2025 versus those under FY 2024. We determined the percent change in the estimated FY 2025 IPF PPS payments compared to the estimated FY 2024 IPF PPS payments for each category of IPFs. In addition, for each category of IPFs, we have included the estimated percent change in payments resulting from the update to the outlier fixed dollar loss threshold amount; the revisions to the patient-level adjustment factors, ED adjustment, and ECT per treatment amount; the updated wage index data including the labor-related share and the changes to the CBSA delineations; and the market basket increase for FY 2025, as reduced by the productivity adjustment according to section 1886(s)(2)(A)(i) of the Act.
To illustrate the impacts of the final FY 2025 changes in this rule, our analysis begins with FY 2023 IPF PPS claims (based on the 2023 MedPAR claims, March 2024 update). We estimated FY 2024 IPF PPS payments using these 2023 claims, the finalized FY 2024 IPF PPS Federal per diem base rate and ECT per treatment amount, and the finalized FY 2024 IPF PPS patient and facility level adjustment factors (as published in the FY 2024 IPF PPS final
Each of the following changes is added incrementally to this baseline model in order for us to isolate the effects of each change:
• The update to the outlier fixed dollar loss threshold amount.
• The revisions to patient-level adjustment factors, ED adjustment, and the ECT per treatment amount.
• The FY 2025 IPF wage index, the changes to the CBSA delineations, and the FY 2025 labor-related share (LRS).
• The market basket increase for FY 2025 of 3.3 percent reduced by the productivity adjustment of 0.5 percentage point in accordance with section 1886(s)(2)(A)(i) of the Act for a payment rate update of 2.8 percent.
Our column comparison in Table 24 illustrates the percent change in payments from FY 2024 (that is, October 1, 2023, to September 30, 2024) to FY 2025 (that is, October 1, 2024, to September 30, 2025) including all the final payment policy changes.
Table 24 displays the results of our analysis. The table groups IPFs into the categories listed here based on characteristics provided in the Provider of Services file, the IPF PSF, and cost report data from the Healthcare Cost Report Information System:
• Facility Type.
• Location.
• Teaching Status Adjustment.
• Census Region.
• Size.
The top row of the table shows the overall impact on the 1,419 IPFs included in the analysis. In column 2, we present the number of facilities of each type that had information available in the PSF, had claims in the MedPAR dataset for FY 2023. We note that providers are assigned urban or rural status in Table 24 based on the current CBSA delineations for FY 2024.
In column 3, we present the effects of the update to the outlier fixed dollar loss threshold amount. We estimate that IPF outlier payments as a percentage of total IPF payments are 2.3 percent in FY 2024. Therefore, we adjusted the outlier threshold amount to set total estimated outlier payments equal to 2.0 percent of total payments in FY 2025. The estimated change in total IPF payments for FY 2025, therefore, includes an approximate 0.3 percent decrease in payments because we would expect the outlier portion of total payments to decrease from approximately 2.3 percent to 2.0 percent.
The overall impact of the estimated decrease to payments due to updating the outlier fixed dollar loss threshold (as shown in column 3 of Table 24), across all hospital groups, is a 0.3 percent decrease. The largest decrease in payments due to this change is estimated to be 0.8 percent for urban government-owned IPF units.
In column 4, we present the effects of the revisions to the patient-level adjustment factors, ED adjustment, and ECT per treatment amount and the application of the refinement standardization factor that is discussed in section IV.F of this final rule. These revisions are budget neutral; therefore, there is no projected change in aggregate payments to IPFs, as indicated in the first row of column 4. We estimate the largest payment increases would be 1.6 percent for rural government-owned IPF hospitals. Conversely, we estimate that rural for-profit IPF hospitals would experience the largest payment decrease of −2.3 percent. Payments to IPF units in urban areas would increase by 0.5 percent, and payments to IPF units in rural areas would increase by 0.1 percent.
In column 5, we presented the effects of the budget-neutral update to the IPF wage index, the LRS, and the changes to the CBSA delineations for FY 2025. In addition, this column includes the application of the 5-percent cap on any decrease to a provider's wage index from its wage index in the prior year as finalized in the FY 2023 IPF PPS final rule (87 FR 46856 through 46859). The change in this column represents the effect of using the concurrent hospital wage data as discussed in section IV.D.1.a of this final rule. That is, the impact represented in this column reflects the update from the FY 2024 IPF wage index to the FY 2025 IPF wage index, which includes basing the FY 2025 IPF wage index on the FY 2025
Overall, IPFs are estimated to experience a net increase in payments of 2.5 percent as a result of the updates in this final rule. IPF payments are estimated to increase by 2.3 percent in urban areas and 3.8 percent in rural areas. The largest payment increase is estimated at 5.0 percent for IPFs located in the East South Central region.
Under the FY 2025 IPF PPS, IPFs will continue to receive payment based on the average resources consumed by patients for each day. Our longstanding payment methodology reflects the differences in patient resource use and costs among IPFs, as required under section 124 of the BBRA. We expect that updating IPF PPS rates in this rule will improve or maintain beneficiary access to high quality care by ensuring that payment rates reflect the best available data on the resources involved in inpatient psychiatric care and the costs of these resources. We continue to expect that paying prospectively for IPF services under the FY 2025 IPF PPS will enhance the efficiency of the Medicare program.
As discussed in sections V.B.2 of this final rule, we expect that the additional IPFQR Program measure will support improving discharge planning and care coordination to decrease the likelihood that a patient will need to seek emergency care within 30 days of discharge from an IPF.
In section V.B.2. of the rule, we are adopting the 30-Day Risk-Standardized All-Cause ED Visit Following an Inpatient Psychiatric Facility Discharge measure beginning with data from the CY 2025 performance period for the FY 2027 payment determination.
We do not believe this update will impact providers' workflows or information systems to collect or report the data because this measure is calculated by CMS using information that IPFs already submit as part of the claims process. There may be some effects of this measure on IPF workflows and clinical processes to improve care coordination and discharge planning to improve performance on the measure.
We are not finalizing our proposal to adopt a quarterly data submission requirement for measures for which we require patient-level data. We do not believe there will be any effect of maintaining our previously finalized policy.
In accordance with section 1886(s)(4)(A) of the Act, we will apply a 2-percentage point reduction to the FY 2025 market basket update for IPFs that have failed to comply with the IPFQR Program requirements for FY 2025, including reporting on the mandatory measures. For the FY 2024 payment determination, of the 1,568 IPFs eligible for the IPFQR Program, 194 IPFs did not receive the full market basket update because of the IPFQR Program; 42 of these IPFs chose not to participate and 152 did not meet the requirements of the program.
We intended to closely monitor the effects of the IPFQR Program on IPFs and help facilitate successful reporting outcomes through ongoing education, national trainings, and a technical help desk.
If regulations impose administrative costs on private entities, such as the time needed to read and interpret the proposed rule, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will be directly impacted and will review this final rule, we assume that the total number of unique commenters on the most recent IPF proposed rule will be the number of reviewers of the final rule. For this FY 2025 IPF PPS final rule, the most recent IPF proposed rule was the FY 2025 IPF PPS proposed rule, and we received 67 unique comments on the proposed rule. We acknowledged that this assumption may understate or overstate the costs of reviewing the final rule. It is possible that not all commenters reviewed the FY 2025 IPF proposed rule in detail, and it is also possible that some reviewers chose not to comment on that proposed rule. For these reasons, we thought that the number of commenters would be a fair estimate of the number of reviewers who are directly impacted by this final rule. We solicited comments on this assumption.
We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this final rule; therefore, for the purposes of our estimate, we assume that each reviewer reads approximately 50 percent of this final rule.
Using the May, 2023 mean (average) wage information from the BLS for medical and health service managers (Code 11-9111), we estimated that the cost of reviewing this final rule is $129.28 per hour, including other indirect costs
The statute gives the Secretary discretion in establishing an update methodology to the IPF PPS. We continued to believe it is appropriate to routinely update the IPF PPS so that it reflects the best available data about differences in patient resource use and costs among IPFs, as required by the statute. Therefore, we proposed and are finalizing updates to: the IPF PPS using the methodology published in the RY 2005 IPF PPS final rule (our “standard methodology”) pre-floor, pre-reclassified IPPS hospital wage index as its basis, along with the proposed changes to the CBSA delineations. Additionally, we apply a 5-percent cap on any decrease to a provider's wage index from its wage index in the prior year. Lastly, we are finalizing our proposal to revise the patient-level adjustment factors, ED adjustment, and to increase the ECT per treatment amount for FY 2025 (reflecting the pre-scaled and pre-adjusted CY 2024 OPPS geometric mean cost).
As required by OMB Circular A-4 (available at
The RFA requires agencies to analyze options for regulatory relief of small entities if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. The great majority of hospitals and most other health care providers and suppliers are small entities, either by being nonprofit organizations or by meeting the Small Business Administration (SBA) definition of a small business (having revenues of less than $47 million in any 1 year).
According to the SBA's website at
As discussed earlier in this final rule, the only costs imposed by this final rule are the regulatory review costs, which we estimate at $22,260.75 per IPF.
According to Table 26, 213 psychiatric and substance abuse hospitals can be considered small according to the SBA. As we stated earlier, the SBA defines small Psychiatric and Substance Abuse hospitals as businesses having less than $47 million. Note, Tables 26 and 27 show revenue more than $49.9 million since the data does not provide the exact estimate for $47 million. Table 27 shows that there are 181 Psychiatric and Substance Abuse hospitals that earn revenue in excess of $49 million.
The Department of Health and Human Services generally uses a revenue impact of 3 to 5 percent as a significance threshold under the RFA. For the purposes of the RFA, we estimate that only 0.1 percent of small Psychiatric and Substance Abuse hospitals are small entities as that term is used in the RFA.
As its measure of significant economic impact on a substantial number of small entities, HHS uses a change in revenue of more than 3 to 5 percent. According to Table 27, we believe that this threshold will not be reached, 0.1 percent, by the requirements in this final rule. Therefore, the Secretary has certified that this final rule will have a
Since there is not a significant impact on a substantial number of small entities, the Secretary has certified that this final rule will not have a significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. As discussed in section VIII.C.2 of this final rule, the rates and policies set forth in this final rule will not have an adverse impact on the rural hospitals based on the data of the 197 rural excluded psychiatric units and 60 rural psychiatric hospitals in our database of 1,419 IPFs for which data were available. Therefore, the Secretary has determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2024, that threshold is approximately $183 million. This final rule does not mandate any requirements for state, local, or tribal governments, or for the private sector. This final rule will not impose a mandate that will result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of more than $183 million in any 1 year.
In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & Medicaid Services, approved this document on July 24, 2024.
Food Safety and Inspection Service (FSIS), U.S. Department of Agriculture (USDA).
Proposed rule and Proposed Determination.
FSIS is announcing its proposed determination that raw chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey products contaminated with certain
Comments on this proposal must be received on or before October 7, 2024.
FSIS invites interested persons to submit comments on this document. Comments may be submitted by one of the following methods:
•
•
•
Rachel Edelstein, Assistant Administrator, Office of Policy and Program Development, FSIS, USDA; Telephone: (202) 205-0495.
FSIS is responsible for verifying that the nation's commercial supply of meat, poultry, and egg products is safe, wholesome, and properly labeled. In support of this mission, FSIS established a
While the results of FSIS'
Poultry is among the leading sources of
In addition to initiating these activities, on October 17, 2022, FSIS shared with stakeholders a draft regulatory framework that the Agency was considering for a new strategy to control
The draft framework under consideration also addressed cross-cutting issues associated with testing for
After carefully evaluating the written comments and other stakeholder input provided on the October 2022 draft framework, along with new studies and information that have become available since the Agency made the October 2022 draft framework available to the public, FSIS is proposing a new regulatory framework targeted at reducing
First, consistent with Component Three of the October 2022 draft framework, FSIS is proposing final product standards that would define whether certain raw poultry products contaminated with certain
The
Should FSIS finalize these proposed standards, the Agency intends to conduct a routine sampling and verification testing program for
When FSIS tests a product sample for adulterants, establishments must maintain control of products tested for adulterants to ensure that the products do not enter commerce while waiting for receipt of the test results. Thus, if FSIS finalizes its proposed routine
As FSIS implements the final product standards verification sampling program, the Agency has tentatively decided to phase out all current
Consistent with Component Two of the initial proposed framework, FSIS is proposing to revise the regulations in 9 CFR 381.65(g) and (h) that require that all poultry slaughter establishments develop, implement, and maintain written procedures to prevent contamination by enteric pathogens throughout the entire slaughter and dressing operation and maintain records documenting those procedures. FSIS is proposing to amend these regulations to establish new requirements pertaining to how establishments monitor and document whether their processes for preventing microbial contamination are in control. The proposed revisions are intended to clarify existing regulatory requirements related to process control monitoring in 9 CFR 381.65(g) and (h).
Under this proposal, establishments would be required to incorporate statistical process control (SPC) monitoring principles into their microbial monitoring programs (MMPs). The proposed revisions would require that establishments use only validated and fit for purpose microbial sampling and analysis procedures, generate and record statistically meaningful microbial monitoring data, set benchmarks by which to evaluate microbial monitoring data, and otherwise define the statistical methods the establishment will use to evaluate the recorded data against the predefined limits. To offset the costs associated with this proposal, eligible very small (VS) and very low volume (VLV) establishments would have access to laboratory services provided by FSIS at no charge to analyze the establishments' microbial monitoring samples for them.
FSIS is further proposing to revise the regulations to ensure that establishments comply with the corrective action provisions required under HACCP as they apply to the establishment's MMP. FSIS is proposing to specifically require establishments to, at a minimum, implement written corrective actions, including a root cause assessment, when microbial monitoring results deviate from the predefined criteria in the MMP, the other process control monitoring results, or the process control determination made for the entire HACCP system.
FSIS has developed new guidance to help establishments meet the proposed updated sampling and analysis requirements under 9 CFR 381.65(g). The new guidance includes a SPC sampling plan based on paired sampling for Aerobic Count (AC) at the rehang and post-chill locations, with a one-sided process control statistical model that charts and calculates against minimum monitoring criteria at the minimum required frequency. Establishments that incorporate the guidance into their MMPs would not be required to provide FSIS with additional scientific or technical information to support their chosen statistical methods. FSIS also is proposing to make available to all poultry slaughter establishments an electronic spreadsheet file that is pre-programmed to calculate the monitoring measures for the guidance sampling plan as results are entered.
In addition, FSIS is proposing to amend the recordkeeping requirements under 9 CFR 381.65(h) to require that establishments submit their microbial monitoring sampling results to FSIS electronically. FSIS is developing a web portal that will allow external partners to securely upload sampling information and submit it to FSIS electronically in a machine-readable format.
Under Component One of the October 2022 draft framework, FSIS considered whether it should require poultry slaughter establishments to characterize
FSIS considered the available scientific research as well as input from the NACMCF and concluded that, at this time, the research does not support the use of a threshold for test results at the receiving step to reduce or eliminate
FSIS estimates this proposal would have a net benefit of $4.1 million per year, ranging from $1.1 million to $6.7 million, assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate, as discussed below (Table 1). This proposal is estimated to cost industry $16.4 million per year, ranging from $3.3 to $32.3 million. The main cost component in this proposal is the requirement that establishments subject to FSIS verification sampling for adulterants maintain control of sampled product pending test results. This cost is likely an overestimate as discussed below. Industry may also incur costs associated with HACCP plan
FSIS estimates this proposal would result in benefits to society of $20.5 million per year, ranging from $4.4 million to $39.0 million. The majority of the benefits are derived from prevented illnesses of $12.9 million per year, ranging from $0.3 to $28.7 million. FSIS also estimated avoided costs from a reduction in the risk of outbreak-related recalls for industry. Additional industry actions in response to this proposal may lead to additional benefits.
FSIS is responsible for verifying that the nation's commercial supply of meat, poultry, and egg products is safe, wholesome, and properly labeled. In support of this mission, FSIS began its
FSIS has established
• Category 1: Establishments that have achieved 50 percent or less of the maximum allowable percent positive during the most recently completed 52- week moving window;
• Category2: Establishments that meet the maximum allowable percent positive but have results greater than 50 percent of the maximum allowable percent positive during the most recently completed 52-week moving window; and
• Category 3: Establishments that have exceeded the maximum allowable percent positive during the most recently completed 52-week moving window.
The current
With respect to
The overall findings of another study indicated declining trends in illness due to
The Healthy People 2030 target is to reduce the
Consumer advocacy organizations and other stakeholders have noted that the Healthy People
In May 2022, FSIS denied the petition without prejudice, citing a lack of sufficient data available to support the sweeping actions requested in the petition. In the response, FSIS agreed that an updated
On January 25, 2021, the Center for Science in the Public Interest (CSPI) and other consumer advocacy organizations petitioned FSIS to establish enforceable standards targeting
The 2021 CSPI petition also requested that FSIS initiate rulemaking to require that poultry establishments identify and control foodborne hazards within their supply chains, including
In September 2021, FSIS received a letter from the Food Safety Coalition (FSC), a coalition of several food safety leaders, public health and consumer advocates, scientists, and members of the food industry. Like the CSPI petition, the FSC letter noted that although FSIS' current prevalence-based pathogen reduction performance standards have led to reduced occurrence of
After considering the available data on
Following this announcement, the Coalition for Poultry Safety Reform, a multistakeholder coalition that includes individuals and organizations representing consumers, victims of foodborne illness, food safety scientists, food safety officials, and members of the poultry industry, submitted a letter to the USDA Deputy Under Secretary for Food Safety in 2022 expressing support for a new effort to address
After FSIS announced its new initiative to reduce
Since March 2023, FSIS has granted pilot projects to 9 establishments to examine the merits and logistics of excluding
On September 23, 2023, FSIS granted a pilot to 2 establishments to examine the merits of using preharvest results to optimize establishment interventions.
In August 2022, FSIS announced that FSIS laboratories would begin using new technology to quantify
On January 30, 2023, FSIS added
1. What
2. Are these
3. Can exposure to a small number of these
4. Can exposure to these
5. How can these
6. Would ordinary consumer handling or preparation practices affect exposure to
The risk profile was submitted for independent peer-review
1. What is the public health impact (change in illnesses, hospitalizations, and deaths) achieved by eliminating at receiving a proportion of chicken (or turkey) contaminated with specific levels of
2. What is the public health impact (change in illnesses, hospitalizations, and deaths) achieved by eliminating final product contaminated with specific levels of
3. What is the public health impact of monitoring/enforcing process control from rehang to post-chill? Monitoring could include analytes such as
4. What is the public health impact of implementing combinations of the risk management options listed above?
The risk assessments were submitted for independent peer-review
After FSIS announced its new
On April 28, 2023, FSIS published a proposed determination to declare that NRTE breaded stuffed chicken products that contain
FSIS received 3,386 comments on the proposed determination. After careful consideration of the comments, on May 1, 2024, FSIS finalized the determination as proposed, with one change (89 FR 35033). Instead of collecting samples after the establishment has completed all processes needed to prepare the chicken component to be stuffed and breaded to produce a final NRTE breaded stuffed chicken product, as was proposed, FSIS will collect verification samples on the raw incoming chicken components. This change was intended to provide greater flexibility and reduce costs to industry.
As noted above, NRTE breaded stuffed chicken products are adulterated if they contain
On October 17, 2022, FSIS published a
The three components under consideration in the draft framework included:
1. Requiring that incoming flocks be tested for
2. Enhancing establishment process control monitoring and FSIS verification; and
3. Implementing an enforceable final product standard.
The framework under consideration also addressed cross-cutting issues associated with testing for
At the November 3, 2022, public meeting, stakeholders presented oral comments to FSIS panels comprised of FSIS leadership and experts on the three separate components of the framework and the cross-cutting issues. The primary purpose of the panels was to listen to stakeholder input and ask clarifying questions as needed.
During the comment period for the proposed framework, FSIS received 1,034 comments. Seven hundred seventy-three comments were identical or similar comment letters from individuals in support of the proposed framework, and 75 were identical or similar comment letters from individuals opposed to the proposed framework. One consumer advocacy organization submitted a comment letter with a spreadsheet containing 4,916 names in support of the framework. Another consumer advocacy organization submitted a comment letter with a spreadsheet containing 3,487 names in support of the framework. FSIS also received 149 unique comments from individuals, most in opposition to the proposed framework. In addition to the individual comments and form letters, FSIS received approximately 35 separate comment letters from trade associations representing the meat and poultry industries, consumer advocacy organizations, animal welfare advocacy organizations, small poultry growers and processors, organizations that support independent family farmers, a large meat producer, a trade association representing the veterinary profession, a State Department of Agriculture, an organic/sustainable agriculture organization, a biotech company representative, a meat scientist, and academics. The general issues raised on each of the components under consideration in the framework and on the cross-cutting issues are described below.
Comments from individuals, consumer advocacy organizations, and animal welfare advocacy organizations expressed general support for the measures under consideration in Component One. A consumer advocacy organization commented that requiring incoming flocks be tested for
Comments from small poultry processors and producers, organizations representing small poultry producers and independent family farmers, and trade associations representing the meat and poultry industries expressed concerns that the measures under consideration in Component One would impose an overwhelming burden on small producers. An organization representing small poultry producers and several individual comments stated that requiring that flocks be tested for
Several comments, including comments from trade associations representing the meat and poultry industries and organizations that support independent family farmers, asserted that FSIS lacks legal authority to require the measures under consideration in Component One, particularly the requirements that incoming flocks be tested for
Comments from trade associations representing the meat and poultry industries asserted that FSIS had presented no data to demonstrate that an incoming
FSIS received several comments in support of the measures under consideration in Component Two from consumer advocacy organizations and academia. These commenters generally agreed with the proposal but recommended that FSIS consider additional measures, such as requiring establishments to test more broadly for indicator organisms and/or requiring testing at more sampling points. These commenters also recommended that FSIS work with stakeholders to develop the SPC approach after conducting research to determine the best points predictive of end product
Trade associations representing the meat and poultry industries, a State Department of Agriculture, and an organic/sustainable agriculture organization expressed concerns about some of the measures under consideration in Component Two. The commenters asserted that there is a lack of necessary data to support creating a rigid SPC framework for all establishments. An organic/sustainable agriculture organization requested that small producers be exempt from this component. A trade association representing the meat and poultry industry suggested that FSIS consider conducting verification sampling at specific locations and allow establishments to develop their own sampling plans. An association representing small and VS poultry establishments stated that the Component Two measures under consideration will be costly and will not reduce
Consumer advocacy organizations, coalitions promoting food safety, and individuals with expertise in food and meat science generally supported Component Three and recommended that FSIS prioritize developing and implementing Component Three. According to these commenters, it is the most critical part of the framework. These commenters recommended an enforceable approach to combatting
Some of the comments in support of Component Three requested that FSIS provide increased transparency and data regarding how the product standards under consideration would look. One consumer advocacy organization emphasized that FSIS should use scientifically sound risk assessments in determining final product standards. A consumer advocacy organization recommended establishing separate standards for different poultry products and stated that, for chicken, the standard could be based on FSIS' KPI serotypes Enteritidis, Infantis, and Typhimurium, and that for turkey, the standard could be based on serotypes Reading, Infantis, and Typhimurium. A
Comments from trade associations representing the meat and poultry industries, trade associations representing small poultry processors and family farmers, a state government entity, and both large and small businesses associated with poultry production did not support the establishment of enforceable final product standards. These comments opposed considering
On the other hand, comments from consumer advocacy organizations stated that
Commenters that opposed Component Three expressed concern about the delay that would result from a national verification testing program. A trade association representing the chicken industry argued that the extra time required for poultry producers to hold their product pending FSIS'
Some commenters recommended alternatives to Component Three that the commenters believed would more effectively reduce
Many comments opposed to Component Three asserted that the proposed measures under consideration lacked information on the data and methods that would be used to establish the final product standards. A trade association representing the chicken industry questioned whether FSIS had sufficient laboratory space needed to sample different product lots for
In addition to the November 2022 public meeting, FSIS also participated in technical meetings with representatives from the poultry industry, consumer advocacy organizations, academia, and other stakeholders to further discuss aspects of the proposed
FSIS has carefully evaluated the written comments and other stakeholder input provided on the proposed
The proposed modified framework components are discussed in more detail under separate headings in this document. The headings for the proposed modified framework correspond to the component headings used for the draft framework that FSIS presented to the public,
Following is a general summary of the modifications.
•
•
•
FSIS is also proposing that the Agency would routinely collect samples of raw final products subject to the proposed standards and analyze them for
The Agency will continue to explore and develop strategies for addressing
While the three components in this proposal support a comprehensive approach to controlling
These proposals are discussed in more detail below.
As discussed above, although FSIS sampling data show that the occurrence of
FSIS' current
Additionally, and independently, the Agency's ability to directly enforce the pathogen reduction performance standards has been limited since 2001, after a ruling by the U.S. Court of Appeals for the Fifth Circuit in
When FSIS initially established the pathogen reduction
Since FSIS implemented the
The CSPI 2014 petition was a refiling of the 2011 petition and asked that FSIS declare certain strains of ABR
As discussed above, FSIS also considered whether certain
Since FSIS denied the 2020 Marler petition, many of the activities that were initiated to inform an updated
As part of Component Three of the draft
Accordingly, FSIS is proposing final product standards that would define whether certain raw poultry products contaminated with certain
Under this proposed determination, chicken parts subject to the final product standards would include legs, breasts, wings, thighs, quarters, and halves. FSIS is not proposing final product standards for turkey carcasses or parts because historically there have been very few
The basis for the proposed final product standards and FSIS' proposed determination that products that contain the
Under the FMIA (21 U.S.C. 601
Historically, most foodborne pathogens, including
When FSIS determined that certain STEC are adulterants in non-intact raw beef products, the Agency identified characteristics associated with both the pathogen and the product that distinguish them from other raw products contaminated with other pathogens. Specially, FSIS considered that these STEC had been associated with illnesses and outbreaks, have a relatively low infectious dose, cause serious human illness, and can survive what many consumers consider to be ordinary preparation and cooking practices of non-intact beef products.
As discussed above, on May 1, 2024, FSIS published a final determination to declare that NRTE breaded stuffed chicken products that contain
Specifically, FSIS determined that NRTE breaded stuffed chicken products that contain
Consistent with its approach used to determine the status of certain STEC in certain raw beef products and to determine the status of
Approximately 2,500
The NACMCF report noted that several approaches have been used to attribute human salmonellosis to specific foods and sources. These include case-control studies, analysis of reported foodborne outbreaks, and most recently, source attribution based on WGS genotyping. The report concluded that attribution based on outbreak data and on genotype both give the greatest weight to data from the most recent years. NACMCF found that poultry is the leading source of human salmonellosis, based on both reported outbreaks and genotype-based attribution methods. The committee also stated that these data show that a small number of serotypes account for most poultry-associated salmonellosis led by Enteritidis, Typhimurium, I:4,5,12:i:-, Infantis, and Heidelberg, and even fewer serogroups: groups O:4 (formerly group B), O:7 (group C1), and O:9 (group D1).
For the purposes of the risk profile,
According to the data compiled for the risk profile, the 210 outbreaks include 7,018 illnesses, 1,202 hospitalizations, and 10 deaths attributed to poultry products. When considering outbreaks associated with either chicken or turkey products, nine serotypes accounted for 85 percent (5,794/7,018) of illnesses. Each of these subtypes caused 200 or more outbreak associated illnesses in chicken and/or turkey from 1998-2020. The top seven subtypes associated with chicken were Enteritidis, Heidelberg, Typhimurium, I 4,[5],12:i:-, Montevideo, Thompson, and Infantis. The top four subtypes associated with turkey were Enteritidis, Reading, Muenchen, and Heidelberg. The most common subtypes of concern associated with poultry products overall were Enteritidis, Heidelberg, Typhimurium, and I 4,[5],12:i:-.
The analysis in the chicken risk assessment found the probability of illness from chicken contaminated with “higher virulence” serotypes exposures is 5.66 times larger than the probability of illness from chicken contaminated with “lower virulence” serotypes. In FSIS sampling, the average annual percentage of “higher virulence” serotypes is approximately 26 percent for chicken carcasses, 32 percent for comminuted chicken product, and 35 percent for chicken parts. The chicken risk assessment identified Enteritidis, Typhimurium, I 4,[5], 12:i:-, Hadar, and Litchfield as the five most frequent “higher virulence” serotypes in chicken. The chicken risk assessment identified Kentucky, Infantis, Schwarzengrund, Heidelberg, and Thompson as the five most frequent “lower virulence” serotypes in chicken.
The analysis in the turkey risk assessment found there are 49 different serotypes in comminuted turkey products, as compared to only 19 serotypes isolated on turkey carcasses in the Agency's pathogen reduction
The turkey risk assessment identified Hadar, I 4,[5], 12:i: -, Muenchen Typhimurium, and Saintpaul as the five most frequent “higher virulence” serotypes in turkey. The turkey risk assessment identified Reading, Infantis, Schwarzengrund, Uganda, and Agona as the five most frequent “lower virulence” serotypes in turkey.
The list of serotypes of public health significance is highly important for this framework, as it determines whether products are adulterated as defined in the PPIA. FSIS recognizes that science constantly evolves and therefore our understanding of virulence and other factors will evolve over time.
The FSIS risk assessments utilized bioinformatic tools and methods for clustering
FSIS recognizes that science consistently evolves, and therefore the Agency's understanding of virulence and other factors will evolve over time. Because the scientific understanding of virulence and other relevant factors evolves, FSIS is requesting comments on whether the EpiX Analytics serotype clustering and dose-response adjustment (
When developing the proposed final product standards, FSIS considered incorporating the KPI serotypes as the “serotypes of public health significance” as suggested by some of the comments on the initial draft
Therefore, instead of proposing serotypes of public health significance based solely on the KPI criteria, FSIS has decided that the proposed serotypes of public health significance should be based on a thorough review of multiple FSIS scientific analyses in this area, including the 2023 NACMCF report, the externally peer-reviewed 2023 risk profile, and the two externally peer-reviewed risk assessments. Based on consideration of these scientific efforts, these serotypes are Enteritidis, Typhimurium, and I 4,[5],12:i:- for chicken carcasses, chicken parts, and comminuted chicken, and Hadar, Typhimurium, and Muenchen for comminuted turkey. FSIS has determined that these serotypes more accurately reflect serotypes most likely
The 2023 NACMCF report, the 2023 risk profile, and the Agency's KPI all identify Infantis as among the serotypes commonly associated with poultry-related illnesses, the scientific evidence does not support that the rising trend in Infantis illnesses is associated with chicken consumption. The emergence of Infantis in FSIS chicken sampling in 2016 did not correspond to a proportional increase in human Infantis illnesses, which have been on the rise in the United States since 2010.
However, FSIS is aware
As research into
As summarized in the 2023 risk profile, although
In a study published in 2010 (the Teunis 2010 study), and included in the 2023 risk profile, using a dose-response model approach utilizing outbreak data, and accounting for variation among outbreaks represented by the data, the
A study published after the 2023 FSIS risk profile was peer-reviewed revisited the 2010 Teunis study discussed above.
Furthermore, the 2023 FSIS risk assessments developed two virulence-adjusted dose-response models (one for low virulence
As summarized in the 2023 risk profile, five
The 2023 risk profile identified 32
The 2023 risk profile found that exposure to the profile's
Furthermore, a study that allows for a comparison of case-fatality proportions of both
As noted above, until recently, with the publication of the proposed determination on
In a study published in 2017, a web-enabled panel survey of U.S. adult grocery shoppers (n = 1,504) was conducted to describe consumers' handling and preparation practices for raw poultry.
Participants who reported owning a food thermometer identified various reasons for not using a thermometer the last time they cooked poultry at home. For all cuts of poultry, the most common reason reported for not using a thermometer was use of another method to determine that the product was properly cooked (49.8 to 61.5 percent of respondents). The next most common reason selected was that the respondent never thought to use a thermometer (27 to 37.6 percent of respondents), which the researcher concluded suggests that these respondents do not consider it very important to use a food thermometer.
Of the respondents that reported using another method instead of a food thermometer, most reported that they determined that poultry is properly cooked by using visual cues,
In an observational study published in 2016, 101 participants were observed as they prepared poultry and egg items to determine whether they followed food safety guidelines.
The study also highlighted the importance of correctly using a thermometer to determine that poultry is properly cooked. Of the study participants who used a thermometer, 36 percent did not use it correctly in the chicken breast, the turkey patty, or both. The study also found that there was no statistical difference between a participant who did and did not use a thermometer in achieving an end point temperature of at least 165 °F in both the chicken breast and the turkey patty. Seventy-eight percent of participants that used a thermometer to cook the chicken breast reached a final internal temperature above 165 °F, compared to 75 percent for those who did not use a thermometer. Seventy-seven percent of participants who used a thermometer to cook a turkey patty reached a final internal temperature of at least 165 °F, compared to 66 percent of participants who did not use a thermometer.
In another observational study published in 2014,
In this study, fewer than 5 percent of the participants voluntarily used a thermometer to record chicken temperature during meal preparation. When asked by the researcher if they wanted to check the cooked chicken's temperature, 34 percent of the participants checked the internal temperature using either their own thermometer or the thermometer provided by the researcher. When chicken temperature was taken, the internal temperature of 60 percent of the cooked chicken registered 165 °F or above. However, 39 percent of households stopped cooking even though the internal temperature of the poultry registered below 165 °F.
A 2020 study used a randomized experimental design and direct observation of meal preparation to test the effectiveness of a USDA food safety video intervention for consumer thermometer use.
Sixty-one percent of the control group participants and 63 percent of the treatment group participants reported owning a food thermometer, which is consistent with the percentage of the respondents that reported owning a food thermometer in the 2017 study discussed above (62 percent). During the meal preparation session, the control group used a thermometer to determine whether the turkey patties were properly cooked 34 percent of the time, while the treatment group used a thermometer 75 percent of the time. The control participants were also less likely to insert the thermometer into the side of the patty (23 percent), the recommended practice, than the treatment participants (52 percent). Of the participants that used a thermometer and for whom temperature data were available, the turkey patties were observed to reach an internal temperature of 165 °F 54 percent of the time for the control group and 73 percent of the time for the treatment group. Thus, while both the control and treatment groups were likely to own a food thermometer, the control group was much less likely to use a food thermometer, correctly place a thermometer, and cook patties to a safe internal temperature than the treatment group.
The study also addressed whether the participants used methods other than a thermometer to determine whether the turkey patty was properly cooked. The study found that 45 percent of all participants used a method other than a thermometer to determine that the turkey patty was done cooking. Among participants who did not use the thermometer and for whom usable data were available, 46 percent of control group participants and 29 percent of the treatment group participants relied on the firmness or texture of the patty to determine that it was properly cooked, and 4 percent in the control group and 16 percent in the treatment group relied on patty color. Twenty-five percent of control group and 42 percent of treatment group were observed using both firmness and color of the patty.
Thus, consumer research shows that, rather than using a thermometer to check the internal temperature of whole chicken, chicken parts, comminuted chicken products, and comminuted turkey products, many consumers ordinarily rely on visual and textural cues to determine that these products are properly cooked. However, because these subjective cues have not been correlated with safe internal cooking temperature, they are unreliable for gauging whether poultry products have reached an internal temperature sufficient to destroy
A 2015 observational study of consumers handling raw poultry as part of an at-home meal preparation event found that hands were washed 12 percent of the time after handling raw poultry.
Research shows that washing poultry can spread bacteria to kitchen surfaces and other foods.
Additional research indicates that food handling education on the recommendation to not wash or rinse raw poultry may have limited impact on consumer behavior. In 2016, a four-week intervention survey study exposed participants to an educational pilot program developed to raise awareness and influence consumers to not wash raw poultry.
Approximately 97 percent of chicken carcasses and 93 percent of chicken parts test negative for
A summary of probability of illness per serving for the main scenarios that were considered in the risk assessments is provided in Table 4. The average
The model-derived baseline probability of illness for chicken carcasses is 0.2 illnesses per 100,000 servings, for chicken parts is 0.3 illnesses per 100,000 servings, and 2.5 illnesses per 100,000 servings for comminuted chicken, and 2.5 illnesses per 100,000 servings for comminuted turkey. Comparison of the threshold probability of illness to the baseline quantifies how much higher than average the risk per serving is for each scenario.
Table 4—Average characteristics (level, dose, and probability of illness by serocluster) of failing lots for
As illustrated in Table 4, the risk assessments found that the probability of illness for servings of raw chicken carcasses that are contaminated with
For raw chicken parts, the risk assessment found that chicken parts servings that are contaminated with
For raw comminuted chicken servings, the risk assessments found that products that are contaminated with at least 10 cfu/g of
For raw comminuted turkey servings, the risk assessments found that products that are contaminated with at least 10 cfu/g of
The resulting overlapping 95 percent credible intervals around the estimated number of illnesses prevented suggest that there is little meaningful difference in effectiveness between the threshold standards with respect to annual illnesses prevented. However, as discussed above, when compared with the majority of servings, chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey that contain
After careful consideration of the information presented above, FSIS has concluded that raw chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey contaminated with
Additionally,
Thus, because
The adulteration definition in 21 U.S.C. 453(g)(1) includes two separate standards for determining whether a product is adulterated. Under 21 U.S.C. 453(g)(1), if a substance is an “added substance” the product is adulterated if the substance “may render” the product injurious to health. If the substance is not added, the product is adulterated “if the quantity of such substance in or on” the product “ordinarily” renders it injurious to health.
As noted above, in response to the draft October 2022
Comments from trade associations representing the meat and poultry industries asserted that
In addition, the comments stated that the case law provides that to be “added,” a substance must not otherwise be present in the food and must be artificially introduced by a person.
FSIS had traditionally viewed
As noted above, under 21 U.S.C. 453(g)(1), there are two definitions for adulteration, depending on whether a substance in a poultry product is “added” or “not added.” However, the PPIA does not define the circumstances in which a substance in a poultry product is “added” within the meaning of the statute. Prior court decisions that address whether
As noted above, some of the comments on the October 2022 draft
As noted by the comments,
Another step in the process in which
In addition to processes that can contribute to
Comminuted products are those that are ground, mechanically separated, or hand- or mechanically deboned and further chopped, flaked, minced, or otherwise processed to reduce particle size. Because of the nature of comminuted processes,
FSIS requests comments on whether the available science supports that some
As discussed above, consumer behavior research shows that
FSIS requests comments on its proposed determination that, when contaminated with
The HACCP system regulations require that every establishment reassess the adequacy of its HACCP plan at least annually and whenever any changes occur that could affect the underlying hazard analysis or alter the HACCP plan (9 CFR 417.4(a)(3)). If finalized, FSIS' proposed determination that chicken carcasses, chicken parts, comminuted chicken and comminuted turkey that contain
The final product samples collected under the proposed verification sampling plan would be determined on an establishment basis. Thus, all raw final products produced by an establishment that are not intended to be further processed into a RTE product would be subject to verification sampling regardless of where the product is shipped. For example, FSIS would consider whole carcasses or parts to be final products subject to verification sampling if the establishment that produced the carcasses or parts ships them to another establishment for further processing into a raw parts or comminuted product. FSIS would not, however, collect verification samples from raw whole carcasses, parts, or comminuted products that are shipped to another establishment for cooking or to be further processed into a ready-to-eat product. If off-site interventions, such as high-pressure processing or irradiation, are applied to prevent or control
Additionally, should FSIS finalize these proposed final product standards, the Agency intends to conduct testing for
FSIS Directive 9900.6, Laboratory Sampling Program for Imported Meat, Poultry, and Egg Products (Nov 3, 2015). Available at:
Based on current testing methodologies, FSIS estimates that
FSIS is proposing the combined quantification and serotype final product standards recognizing current efforts underway by ARS and private sector laboratories to develop rapid, reliable,
FSIS requests comments on available technologies and methods for of quantification and serotyping. If FSIS finalizes this proposed sampling plan, data gathered from the sampling plan would enable the Agency to gauge more precisely the hazard posed by certain
Under any final verification sampling plan, FSIS IPP would give establishments and official import inspection establishments advance notice before IPP collect a product sample for
Generally, FSIS recommends that establishments develop and implement in-plant sampling plans that define production lots or sub-lots that are microbiologically independent of other production lots or sub-lots. Production lots that are so identified may bear distinctive markings on the shipping cartons. FSIS has issued guidance to help establishments and official import inspection establishments comply with the Agency's policy that does not allow product that FSIS has tested for adulterants to enter commerce until test results become available.
As discussed above, establishments would be required to control the raw poultry products sampled by FSIS pending the test results. If test results detect
For imported products tested at port of entry, if the product tests positive for
Should FSIS finalize the proposed final product standards, the Agency intends to use a phased approach to initiate verification sampling in establishments that produce raw chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey. However, instead of implementing the Agency's verification sampling program based on the current large, small, and VS establishment size definitions, FSIS has tentatively decided to establish implementation dates based on annual number of birds slaughtered or, for establishments that do not conduct slaughter operations, production volume. The current small establishment size definition was established in the HACCP final rule and corresponded to the Small Business Administration's size standards for business entities at that time (61 FR 38819). However, because FSIS has applied these standards to individual establishments rather than business entities, establishments classified as “small” may have up to 500 employees. Thus, FSIS believes that a phased implementation based on production volume would be a more effective approach to mitigate the impact of this proposed determination on low and VLV establishments than the current establishment size definitions.
As FSIS implements the final product standards verification sampling program, the Agency has tentatively decided to phase out all current
The proposed production volume categories and proposed verification sampling implementation schedule are as follows.
FSIS requests comments on this proposed implementation approach and on the proposed establishment production volume categories. FSIS also requests comments on whether the Agency should phase out the current performance standards as the Agency implements the final product standards or if the Agency should retain the current performance standards and later determine if these standards are still
FSIS also requests comments on whether the Agency should consider an alternative implementation approach that would focus its final product verification sampling on establishments that have a demonstrated lack of process control. Under such an approach, FSIS would establish a microbial process control standard based on a threshold or some other parameter and require that establishments conduct sampling at a frequency sufficient to demonstrate that they are meeting the process control standard. Establishments whose results exceed the process control standard would be required to conduct intensified sampling, including environmental sampling and sampling at multiple points in the process, to determine if the initial results were an outlier or if there are problems with the establishment's production process. If an establishment's intensified sampling results show that it is meeting the process control standard, the establishment would return to the standard sampling protocol. If the establishment continues to exceed the process control standard, it would be required to take corrective actions and continue to conduct intensified sampling. If the establishment exceeds the process control standard again, FSIS would collect and analyze final product samples for
Process control monitoring, in the context of poultry slaughter, consists of the programs and procedures an establishment implements to ensure its processes are operating as intended in preventing contamination (including contamination with enteric pathogens and fecal material) of poultry carcasses and parts throughout the slaughter and dressing process and to ensure that the resulting products meet applicable regulatory standards or definitions (79 FR 49565, 49602). Establishments must demonstrate that their process is in control by implementing verification procedures, collecting data, and developing and maintaining accurate records to demonstrate that their processes and procedures are performing as intended and as required (9 CFR 381.65(g) and (h) and 9 CFR part 417). An effective process control system entails an establishment responding effectively to re-establish control when its ongoing verification activities show that its processes are not producing the expected results. Effective process control monitoring procedures should lead to lower rates of pathogen contamination because establishments will discover deficiencies in processing sooner and more reliably than would be the case without effective process control monitoring procedures.
Contamination of poultry carcasses and parts by enteric pathogens and fecal material (
Microbiological test results that represent levels of microbiological contamination at key steps in the slaughter process are necessary for establishments to provide comprehensive, objective evidence that they are effectively maintaining process control to prevent carcasses from becoming contaminated before and after they enter the chiller (79 FR 49565, 49602). At present, establishments conduct pre-chill testing to monitor how well an establishment is minimizing contamination on live birds coming to slaughter and on carcasses throughout the slaughter and dressing process, and post-chill testing to monitor how well an establishment is minimizing contamination during chilling and the overall effectiveness of any antimicrobial interventions that were applied (79 FR 49565, 49566). FSIS also collects a verification sample at the post-chill location and tests for
Regulations at 9 CFR 381.65 (h) and 9 CFR 417.5 (a)(1) require establishments to document their procedures and results in records subject to Agency verification. At a minimum, these procedures must include sampling and analysis for microbial organisms at the pre- and post-chill location to monitor for process control, with an exception for VS and VLV establishments operating under the Traditional Inspection System (9 CFR 381.65 (g)(1)).
In addition to prescribing the sampling locations for monitoring process control, the regulations specify a minimum sampling frequency to ensure establishments can detect changes in processing or inconsistencies
When FSIS updated its poultry inspection regulations in 2014 (79 FR 49565), it referenced data from FSIS' 2007-2008 Young Chicken Baseline survey (hereinafter, the “baseline survey”), which found levels of detectable generic
Despite the baseline survey findings, FSIS did not require that establishments use a specific microbial organism to monitor process control when it updated its regulations in 2014. Thus, at present, establishments decide which microbiological organisms will best help them to monitor the effectiveness of their process control procedures and may develop sampling plans to test carcasses for enteric pathogens, such as
Based on NACMCF recommendations, an analysis of PHIS inspection results, sampling data, and the findings of the 2023 risk assessments, FSIS has determined that there is a need to enhance establishment process control monitoring. These recommendations and findings are discussed below and collectively support FSIS' conclusion that regulatory revision will improve establishments' ability to monitor microbiological process control; demonstrate the effectiveness of their measures to prevent carcasses from becoming contaminated; and ensure that both FSIS and establishments have the documentation necessary to verify the effectiveness of these measures on an on-going basis. These recommendations and findings have also prompted FSIS to evaluate the need for additional resources, services, and guidance to help establishments develop microbiological process control monitoring programs and comply with FSIS requirements.
According to NACMCF, process control can be defined as maintaining the output of a process within a desired range based on stability and capability to meet specifications.
In 2015, NACMCF provided microbiological limits for food categories that reflect process control and sanitary manufacturing conditions. These limits can help FSIS-regulated establishments develop systems for measuring SPC. SPC is an approach that uses statistical methods to monitor and control a process. A process is under statistical control when the output varies as expected within a statistical range. Process variability is caused by chance or assignable causes. Assignable causes can be linked to improperly adjusted or controlled machines, operator errors, or defective raw material. A process that is operating with assignable causes is out-of-control.
Using microbiological testing to monitor SPC presents some challenges. Some testing may result in a discrete (presence/absence or binary) result or a continuous measure such as a plate
When a microbiological sampling program is properly designed and implemented, it can provide valuable information about an establishment's process control. A well-designed microbiological sampling program should clearly define the intended use of the testing program, organisms of concern that will be the target of testing, sampling units (flocks, houses at preharvest, carcasses or parts at post-harvest), sampling scheme, microbiologically independent lotting practices, sampling locations, procedures for sample collection and for maintaining sample integrity, testing method, method for evaluating test results, and actions taken based on test results.
In 2019, NACMCF concluded that most carcass contamination results from leakage of ingesta during crop removal, from feces during evisceration, as well as aerosolization during picking.
In its October 2021 charge to the NACMCF Subcommittee on Enhancing
In response to FSIS' request for guidance on setting microbiological criteria to assess process control in poultry, the 2023 NACMCF report discussed process control as a method of determining trends over time and how it is useful to determine the sources of variation within a process. It noted that “indicator organisms such as
Although the report found that the available data show that in many cases there may not be a strong statistical correlation between the presence or amount of an indicator and the presence or amount of
The purpose of 9 CFR 381.65(g) and (h) is to ensure that establishments implement appropriate measures to prevent carcasses from becoming contaminated throughout the slaughter and dressing operation. Establishments must design and implement a program that uses microbiological sampling and analysis to monitor their ability to maintain process control and produces the documentation needed for FSIS and the establishment to continuously verify the effectiveness of these measures on an on-going basis,
As discussed, SPC monitoring evaluates microbial data against predefined quantitative and qualitative specifications. SPC monitoring results that do not fall within the predefined specifications with assignable causes indicate a process is not capable or in control. An effective MMP must, therefore, define and support the quantitative and qualitative microbial monitoring criteria an establishment will use to gauge whether its process is in control and the corrective actions it will take when its microbial monitoring results are not within its predefined parameters. Specifically, the establishment MMP must incorporate three criteria—target change, quantitative consistency, and qualitative consistency standards. “Target change” refers to the expected change in quantified levels of microbial contamination detected between two monitoring points that supports the procedures' ability to control contamination as required in 9 CFR 381.65(g) and as expected by the establishment. “Quantitative consistency” is measured by how close individual sampling results are to defined target change parameters and how much variation is expected amongst the results over time. “Qualitative consistency” is measured by assessing whether MMP process control findings are consistent with other process control monitoring results representing the same procedures (
A recent analysis of PHIS inspection data identified issues with the design and implementation of establishment MMPs, including how establishments respond to MMP results.
NRs also indicated establishments failed to identify monitoring criteria, monitoring deviations, or documented trends or—when identified—failed to perform any root cause assessment for the deviation or perform corrective actions (31 percent). Further, NRs show that establishments failed to implement their sample collection or laboratory analysis methods as written (12 percent). These findings indicate establishments are not adequately considering or utilizing the MMP monitoring of process control in their overall consideration of whether the procedures incorporated into the HACCP system are performing as expected and the HACCP system is overall controlling the hazard to the acceptable level as intended.
As noted above, from April to November 2022, FSIS implemented an exploratory sampling program
Overall, FSIS analyzed 4,654 paired samples collected from 204 of the 272 establishments that slaughtered young chicken in Calendar Year 2022. Testing results indicated that 2,910 rehang and 232 post-chill samples were positive for
Of the 3,177 paired samples with quantified levels of AC, 98.7 percent demonstrated a reduction in AC from rehang to post-chill; while only 1.29 percent of paired samples demonstrated an increase in AC.
Based on these findings, FSIS concluded that microbial monitoring of EB or
4. FSIS Risk Assessments
The 2023 risk assessments for
In addition to identifying a decrease in the average level of log AC detected at post-chill between the 2007-2008 baseline survey and 2022 exploratory sampling program from 2.46 to 1.39 log AC per mL, respectively, the 2023 chicken risk assessment identified a decrease in the proportion of young chicken carcass post-chill AC results above the limit of detection (LOD), from 97.1 percent at baseline to 70.0 percent currently. EB followed a similar trend with 57.4 percent during the prior baseline to just 16.1 percent above the LOD currently.
The 2023 turkey risk assessment reported that the correlation between AC or EB and
FSIS is proposing to amend 9 CFR 381.65(g) and (h) to establish new requirements pertaining to how establishments monitor and document whether their processes for preventing microbial contamination throughout the slaughter and dressing operation are in control. The goal of the proposed amendments is to clarify existing regulatory requirements related to process control monitoring and recordkeeping in 9 CFR 381.65(g) and (h) and to better define requirements with respect to the type of microbial data that should be collected, how the data should be analyzed, the level of acceptable process control deviations, and how establishments should respond to process control deviations. The clarifications are also intended to promote the collection of more standardized data by establishments to facilitate data quality. If this proposed rule is finalized, FSIS intends to update relevant guidance to help establishments comply with new requirements.
This proposed rule revises 9 CFR 381.65(g) to require establishments to incorporate SPC monitoring principles into their MMPs. As discussed, SPC monitoring uses statistical methods to compare quantitative results against predefined benchmarks and, thereby, determine whether a process is operating within expected parameters.
The proposed revisions to 9 CFR 381.65(g) would therefore require establishments to use only validated microbial sampling and laboratory analysis procedures, generate and record statistically meaningful microbial monitoring data, set benchmarks by which to evaluate microbial monitoring data, and to otherwise define the statistical methods the establishment will use to evaluate the recorded data against the predefined limits. The MMP design should also be consistent with other process control monitoring procedures and the establishment's HACCP system. For example, if an establishment assesses process control independently by evisceration line for visible fecal contamination, the establishment's MMP for process control of procedures to prevent fecal contamination should also be separated by evisceration line.
FSIS has developed a Lower Capability Process Index (CPL) Statistical Measurement Model (SMM) which fits parameters for normally distributed data. The CPL-SMM is available for review and comment on the FSIS website.
FSIS requests comments on its proposed CPL-SMM and the related electronic file. FSIS also requests input on any other statistical monitoring methods that FSIS should recognize as satisfying the requirements of 9 CFR 381.65(g) without further scientific support, including but not limited to methods for normally and non-normally distributed results, use with specific indicator organisms, and various analyzed results sample sizes. FSIS requests that commenters include the appropriate data necessary to support any proposed alternatives as these data may not have been available to FSIS at the time of this rulemaking.
AC and EB are routinely utilized to monitor poultry slaughter process control and are frequently reported in logarithmic format (log).
Based on these findings, the Agency would consider an establishment's target change criteria to meet the requirements in 9 CFR 381.65(g) when its MMP sets an expected reduction of at least 1.0 log in detected microbial levels between sampling locations.
MMPs must also define quantitative consistency criteria. As discussed, SPC monitoring includes assessing the variation of results as each result is reported and over time to identify and detect when procedures may not be functioning as intended to prevent the enteric pathogen and fecal contamination from being introduced at one or more points in the process. In statistical applications, 99 percent of results fall within 6 standard deviations of the mean, or 3 standard deviations on either side of the mean. For an MMP monitoring whether the minimum target change expected is met (lower specification), the detected change between the two points monitored is within 3 standard deviations less than the average change detected for all samples in the monitoring period.
The establishment MMP must define and support the acceptable quantitative consistency (statistical variation) expected among the changes detected over time. The quantitative consistency expected must not exceed 3 standard deviations lower than the mean and for the establishment to conclude microbial contamination variability was controlled (one-side for lower specification). That is, FSIS recognizes the MMP defined quantified value is minimally supported when the sample result is no more than 3 standard deviations below the mean. As with target change criteria, establishments are
As shown in Table 10 below, FSIS recommends that establishment MMPs define the monitoring periods as follows by the minimum monitoring frequency (paired carcass collection) prescribed in 9 CFR 381.65(g): (1) Poultry establishments collecting samples at a frequency of once per 22,000 (chicken) or 3,000 (other species) head slaughtered, respectively, or greater, are to designate a monitoring period of 140 samples or 52 weeks, whichever is shortest; (2) any poultry establishments collecting at a weekly frequency are to designate a monitoring period of the 52 most current weeks; (3) and VLV poultry establishments collecting 13 samples annually are to designate their monitoring period as all of the samples available in the most recent 52 weeks or all the samples in the current period of operations if slaughter of the predominant species is seasonal and not continuous. All poultry slaughter establishments are required to assess for trends during their designated monitoring period, as well as compare the monitoring periods for the current 52 weeks against the prior 52 weeks. Further, those establishments that collect less than weekly are to also compare trends going back an additional 52 weeks (
FSIS is proposing to amend 9 CFR 381.65(g) to establish new criteria that an establishment must meet to demonstrate that its selection of microbial organism is fit for purpose. Specifically, FSIS is proposing that establishments analyze for microbial organisms that are quantifiably detectable in the establishment's slaughter process and that will generate microbial monitoring data that is adequate to monitor their ability to maintain process control for enteric pathogens. Under this proposal, the establishment's measured results at each sample location must yield statistically reliable quantified value results.
The Agency recognizes that in order to successfully analyze quantified data, at least 20 percent or more of the sample size results must be quantified; otherwise, the data will be skewed,
The Agency would consider the use of AC to monitor process control to meet the proposed criteria discussed above. FSIS has evaluated the available published studies and data at the time of rulemaking and concluded that AC are the microbial organisms most likely to result in quantified results that are reliably detectable at rehang and post-chill. Available paired microbial data representing pathogens like
Regardless of the microbial monitoring organism chosen, the proposed revisions would require establishments to demonstrate that their chosen sample collection method is appropriate for the product sampled, the microbial organism monitored, and the laboratory method used to analyze the samples. Moreover, the proposed revision would require establishments' microbial sampling results to be generated by validated laboratory analyses and methods. Current HACCP regulations also require ongoing verification of the establishment's microbial monitoring procedures including the methods and equipment used (9 CFR 417.4).
Establishments that adhere to the Agency's carcass rinse and sponge sample collection method
In lieu of requiring the VS or VLV establishments that slaughter the predominate species of poultry under Traditional Inspection to utilize their own resources to meet compliance with the proposed revisions to 9 CFR 381.65(g), FSIS is proposing that such establishments have access to laboratory services provided by FSIS at no monetary cost for sample supplies, analyses, or shipment. Eligible establishments would be required to agree to terms of participation that would be publicly announced following the publication of any final rule resulting from this proposal. These terms would limit the use of laboratory microbial analyses service to eligible establishments that sample for AC, given more than 75 percent of the post-chill carcass samples analyzed as part of the recent FSIS exploratory sampling assessment were below the FSIS lower limit of detection for EB and nearly 85 percent of the enumerated post-chill
FSIS is proposing to revise the sampling location regulations at 9 CFR 381.65(g)(1) to require that establishments, at a minimum, collect and analyze samples for microbial organisms at the rehang and post-chill points in the process, as opposed to the pre-chill and post-chill locations. FSIS has determined that sampling at the rehang point in the process,
Under this proposal, establishments would be required to identify and provide supporting rationale for the exact point where they intend to collect their rehang sample. Establishments would be permitted to collect a pre-chill sample at a location other than rehang if they provide supporting data to demonstrate that the alternative location is at least as effective as rehang sampling for monitoring their ability to maintain process control. However, one benefit of rehang sampling is that it allows establishments to assess the level of microbial contamination early in the slaughter process and, thereby, better understand the level of enteric pathogen hazard associated with flocks at receiving. Also, according to NACMCF, monitoring change in AC “from an early sampling point on the slaughter line to the final sampling point on the processing line . . . may provide useful information about the effectiveness of the process in maintaining hygiene conditions.”
Finally, FSIS' proposed amendments to 9 CFR 381.65(g)(1) would require VS and VLV establishments operating under Traditional Inspection to—like all other establishments—collect and analyze microbial samples at rehang and
As discussed, a recent FSIS review of PHIS inspection data found that MMP noncompliance issues were frequently associated with sampling frequency and that the noncompliant establishments were most often those that produced lower volumes of product. FSIS is proposing, therefore, to amend 9 CFR 381.65(g) to make it easier for establishments to understand and comply with minimum sampling frequency requirements. First, FSIS is proposing to update the sampling frequency regulations for VLV establishments, which currently require that such establishments collect and analyze 13 weekly samples starting on June 1 of each year. FSIS has concluded that the current requirement would not generate statistically robust process control monitoring data regardless of if the results are collected over 13 consecutive weeks or at other intervals throughout the year. FSIS has also concluded that the June 1 requirement makes it difficult for VLV establishments to demonstrate that their MMP is adequate to monitor process control without collecting additional samples at other times of the year, such as during the establishment's greatest seasonal production or the slaughter of poultry from growers associated with greater risks of increased microbial carcass contamination. As such, FSIS is proposing to revise 9 CFR 381.65(g)(2)(ii) to remove the June 1 requirement and otherwise give VLV establishments the flexibility to collect their 13 weekly samples in accordance with their slaughter operations throughout the year. The MMP decision making rationale for all establishments, regardless of annual slaughter volume, must support how the establishment will determine when the monitoring will be performed and how the specific carcass will be selected for sampling.
Second, to help all establishments better understand their minimum sampling frequency requirements and develop their sampling frequency procedures, FSIS is proposing to tie sampling frequency requirements to annual slaughter volumes, as opposed to weekly slaughter volumes. As discussed, FSIS review of NRs found that many establishments have trouble planning or adjusting their sampling frequency regime to comply with current regulations given actual weekly slaughter volumes tends to fluctuate irregularly. Moreover, FSIS reviewed current sampling frequency requirements relative to annual slaughter volumes and determined that they require many lower volume establishments to collect samples at a greater rate than larger establishments.
FSIS is proposing to amend 9 CFR 381.65(g) to further clarify that MMP monitoring results and documented corrective actions must be part of the pre-shipment review process required under 9 CFR 417.5(c). Current regulations at 9 CFR 381.65(g) require establishments to incorporate microbial monitoring procedures into their HACCP systems. Under 9 CFR 417, HACCP records must be maintained and continuously evaluated as part of the establishment's validation, ongoing verification, and reassessment process. Moreover, HACCP regulations at 9 CFR 417.3 and 417.5 specifically require establishments to identify, in writing, the corrective actions that they will take when a HACCP system procedure may have failed. This failure may be observed by either the establishment or FSIS and may include failure to implement or maintain a procedure, evidence that the outcome of a procedure was ineffective, or when monitoring identifies the defined allowable limits have not been met.
FSIS is proposing to revise the regulations to ensure that establishments comply with these corrective action provisions as they apply to the establishment's MMP. Specifically, FSIS is proposing to amend 9 CFR 381.65(g) to require establishments to, at a minimum, implement written corrective actions, including a root cause assessment, when microbial monitoring results deviate from predefined target change, quantitative consistency, or other criteria defined in the MMP.
FSIS is also proposing that establishments' MMPs define the corrective actions the establishment intends to take when its MMP results do not align with other process control monitoring conclusions or when its MMP results do not support the conclusion that its HACCP system is controlling hazards as intended. FSIS recognizes a qualitative analysis of MMP results is necessary, given that a process can be stable and not capable of meeting quantitative specifications or unstable yet produce product that meets quantitative specifications.
FSIS is proposing to add a new paragraph (2) to 381.65(h) that would require establishments to electronically submit a copy of their microbial monitoring results to FSIS on a monthly basis. As part of the publication of any final requirements, FSIS would provide a template to each establishment for submitting monthly results. While FSIS inspectors would continue to review process control sampling data in establishments, the proposed change would allow FSIS headquarters personnel to evaluate national trends to determine the efficacy of the revised process control requirements in reducing final product contamination and to inform FSIS' decision-making concerning agency verification sampling.
As part of the
FSIS is also seeking comment on specific data use opportunities which could be pursued that would support FSIS investing additional resources into the technology systems necessary to
Under Component One of the October 2022 draft framework, FSIS indicated that it was considering whether it should require poultry slaughter establishments to characterize
The results of the 2023 risk assessments underscore the potential public health benefit of requiring pre-harvest interventions and management practices to reduce
If rehang testing is considered as a verification of pre-harvest strategies, between 27,000 and 55,000 annual salmonellosis cases could be avoided if flocks that have higher virulence serotypes were not being processed for food. Alternatively, if rehang testing is used to identify and divert contaminated carcasses, about 36,000 cases could be avoided. However, to achieve these outcomes, flocks with a higher virulence serotype would be diverted to a safe end point (
Testing results at or before the receiving step may have a substantial public health impact. However, the requirements associated with the first option (verification of pre-harvest
FSIS does not have a routine sampling program at the rehang location, but the Agency evaluated such a program as part of the 2022 young chicken exploratory sampling program discussed above. Among 180 establishments sampled twelve or more times at the rehang location,
Two recent NACMCF reports, one published in March 2019 and the March 2023 NACMF Final Report, support the important role pre-harvest measures play in controlling
Question three asked whether removing flocks of highly
Question six asked the committee to identify the top three focus points, control measures, or best practices that would be compatible with industry-wide practices and could be addressed or implemented to achieve the highest rate of reductions of
Together, the 2019 and 2023 NACMCF report responses related to pre-harvest measures support the use of these measures to control
As discussed above, FSIS received comments on Component One of the October 2022 draft
In light of these comments, FSIS has decided at this time not to establish a regulatory requirement that establishments characterize
FSIS has decided, instead, for the time being, to focus on non-regulatory approaches to controlling
FSIS will explore whether existing or new certification programs under the National Poultry Improvement Program (“NPIP” or the “Plan”) could serve to verify and document producers' actions (such as use of
Administered by APHIS, NPIP is a cooperative industry, state, and federal program initially established to improve poultry and poultry products and prevent and control poultry diseases.
FSIS will more actively encourage the development, licensure, and use of poultry vaccines against
FSIS will continue to collect data on the impact of vaccine use on FSIS verification testing through pilot projects. As noted above, since March 2023, FSIS has granted pilot projects to 9 establishments to examine the merits and logistics of excluding
FSIS examined
Establishments operating under HACCP regulations (
FSIS intends to revise its existing guideline on
States that have their own poultry inspection programs for poultry
Foreign countries that are eligible to export poultry products to the United States must apply inspection, sanitary, and other standards that are equivalent to those that FSIS applies to those products (21 U.S.C. 466). Thus, in evaluating a foreign country's poultry inspection system to determine the country's eligibility to export products to the United States, FSIS will consider whether the sampling procedures and testing methods that the country implements for detection of
Executive Orders (E.O.) 12866, as amended by 14094, 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This proposed rule and proposed determination have been designated a “significant” regulatory action by the Office of Information and Regulatory Affairs under section 3(f) of E.O. 12866. Accordingly, the proposed rule and proposed determination have been reviewed by the Office of Management and Budget under E.O. 12866.
FSIS is proposing to clarify certain process control requirements for poultry slaughter establishments and establish final product standards for chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey. This proposal is aimed at reducing
FSIS is proposing to clarify current requirements for monitoring compliance with 9 CFR 381.65(g) for poultry slaughter establishments and to require poultry slaughter establishments to submit process control monitoring data electronically to FSIS. These establishments are currently required to monitor their processes to ensure they comply with FSIS regulations. FSIS is clarifying that MMPs need to be statistically based and is requiring that establishments collect samples specifically at rehang, or an alternative location if they submit and maintain supporting documentation. The proposed clarifications are estimated to have minimal economic impact on most establishments, while the potential effects on VLV and VS establishments operating under Traditional Inspection, as described in this analysis, would be potentially mitigated by the use of laboratory services provided by FSIS.
FSIS is also proposing to implement new standards for chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey as final products that would enter commerce. Product subject to these standards, as described in the foregoing, would be subject to FSIS routine sampling and verification testing for
Finally, FSIS is encouraging establishments to consider including pre-harvest measures in their HACCP systems to address the hazard of
This regulatory action is necessary because while the results of FSIS'
As part of this proposal for
FSIS is taking this regulatory action to protect public health and reduce the number of
Poultry consumption has grown 13 percent over the past 10 years, with broiler meat accounting for 83 percent of the total consumption, while turkey accounts for about 16 percent. Poultry—mainly chicken—is the main source of animal protein across demographic groups and is consumed both at home and away from home.
On average, U.S. poultry establishments slaughtered 9.5 billion birds annually between 2017 and 2021, which is approximately 49.4 billion pounds of poultry. Broiler and turkey meat accounted for 87 and 12 percent of this production, respectively.
FSIS used 2021 Public Health Information System (PHIS) data to identify establishments under the current
In 2021, there were a total of 188 establishments under FSIS verification sampling for chicken carcasses that slaughtered over 8.3 billion chickens. FSIS classified these establishments into one of four volume categories (Table 13). Of these, 142 establishments were high-volume establishments, 9 were medium-volume, 4 were low-volume, and 33 were VLV chicken slaughter establishments. The 142 high-volume establishments accounted for over 99.5 percent of the total head count slaughtered in 2021.
In 2021, there were 490 establishments under FSIS verification sampling that produced chicken legs, breasts, wings, halves, and/or quarters (Table 14). Of these, 484 establishments were subject to FSIS performance standards sampling for chicken legs, breasts, and wings. The proposal would apply to establishments that produce chicken legs, breasts, wings, thighs, halves, and quarters. In 2021, most of the establishments producing chicken halves and quarters also produced legs, breasts, and wings. FSIS sampling at these establishments would be adjusted to incorporate chicken halves and quarters samples, while maintaining the current sampling frequency. In 2021, six establishments produced chicken halves and quarters, but did not produce legs, breasts, or wings. These six establishments are currently sampled as part of FSIS' exploratory sampling program for chicken halves and quarters.
FSIS estimates that these establishments produced over 31.2 billion pounds of chicken parts in 2021. FSIS classified these establishments according to the volume categories the Agency used in the 2016 cost-benefit analysis in support of FSIS “Chicken Parts and Not Ready-To-Eat Comminuted Poultry Performance Standards.”
In 2021, there were 74 establishments under FSIS verification sampling for comminuted chicken (Table 15). FSIS estimates that these establishments produced about 2.3 billion pounds of comminuted chicken in 2021. Using the categories in the 2016 cost-benefit analysis, the Agency classified 35 establishments as medium-volume and 39 establishments as low-volume. The
In 2021, there were 48 establishments under FSIS verification sampling for comminuted turkey (Table 16). FSIS estimates that these establishments produced about 1.7 billion pounds of comminuted turkey in 2021. Using the categories in the 2016 cost-benefit analysis, the Agency classified 5 establishments as high-volume, 25 establishments as medium-volume, and 18 as low-volume establishments. The 5 high-volume establishments accounted for 54.2 percent of the total production in 2021, while medium-volume establishments accounted for 45.3 percent, and low-volume establishments accounted for less than 1 percent of the total.
In 2023, FSIS developed a risk profile that details current knowledge on
FSIS estimates that this proposal would result in a reduction in
This proposal would also benefit industry as FSIS would clarify process control requirements for poultry slaughter establishments, which would likely contribute to a reduction in
In the following sections, this analysis presents potential costs and benefits generated over a range of assumptions that could accrue as a result of FSIS' action, if this rule is finalized. To implement this proposal, FSIS would adopt an implementation schedule that would allow medium-, low-, and very low-volume establishments additional flexibility. Specifically, medium-volume establishments would have two years after the proposal is finalized to comply with the proposed requirements, while low- and very low-volume establishments would have three years. High-volume establishments would be required to comply with these proposed requirements one year after this rule is finalized. The Agency incorporated this implementation schedule into the annualization of costs and benefits estimates in this analysis, which are presented after the one-time and recurring cost estimates for each requirement. FSIS annualized costs and benefits using a 7 percent discount rate over a period of 10 years. FSIS applied the share of production for each establishment category to derive the lost value and prevented illness estimates that correspond with the implementation schedule. FSIS is seeking comment on these assumptions.
FSIS currently requires poultry slaughter establishments to develop, implement, and maintain written procedures to prevent contamination by enteric pathogens and fecal contamination throughout the entire slaughter operation and incorporate these procedures into their HACCP systems (9 CFR 381.65(g)). At a minimum, these procedures must include sampling and analysis for microbial organisms at pre-and post-chill to monitor their ability to maintain process control, with some exceptions for VS and VLV establishments operating under Traditional Inspection. The proposal specifies that establishments must collect the pre-chill sample at rehang (post-picking and pre-evisceration) and clarifies that its microbial organism monitoring practices must result in data suitable for monitoring process control. While many establishments already meet the proposed specifications, some establishments may change where they collect the pre-chill sample or change the microbial organism they test for. However, establishments may continue their current sampling location and microbial organism monitoring practices, or adopt an alternative location and organism, if they submit and maintain supporting documentation. The Agency is also providing guidance for establishments to develop their MMPs. FSIS assumes that most establishments would meet the proposed MMP requirements without having to make any changes that would result in costs, while some establishments would have to make minor changes in response to this proposal at de minimis costs. The Agency is seeking comments on these assumptions.
FSIS regulations currently require that VLV establishments collect process control monitoring samples minimally once per week for a minimum of 13 consecutive weeks per year, beginning the first week of June.
FSIS estimates that 90 VLV and 2 VS poultry slaughter establishments operating under Traditional Inspection would likely need to make changes in response to the proposed process control requirements.
FSIS would reduce the burden this proposed increase in sampling places on VLV and VS establishments operating under Traditional Inspection by making laboratory services available to these establishments. Use of the laboratories provided by FSIS would enable these establishments to comply with the proposed minimum requirements for MMPs. Should these establishments elect not to use the laboratory services provided by FSIS, the Agency estimated the combined cost for these establishments to meet the proposed increase in sampling would be $48,412 annually (Table 17). Assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate, the cost for these establishments to meet the proposed increase in sampling would be $35,950. This analysis assumed samples collected at these establishments are analyzed for AC, at a cost of $38 per sample.
FSIS would require poultry slaughter establishments subject to 9 CFR 381.65(g) and (h) to electronically submit data generated as part of their process control monitoring. FSIS estimates that high- and medium-volume establishments already compile process control data electronically due to the large volume of their operations and the frequency of their sample collection and analysis. To mitigate the impact on low- and VLV establishments, should this rule become final, the Agency would develop and publish a template these establishments could use to record and submit their monthly results.
In 2021, there were 298 establishments that would have been subject to this change, of which 175 were high-volume, 15 medium-, 14 low-, and 94 very low-volume.
FSIS assumed it would take a quality control (QC) manager 30 minutes (0.5 hours) once a month to submit these data. FSIS estimates that the average wage for a QC manager is $113.24, which includes an average hourly wage of $56.62 multiplied by a benefits and overhead factor of two.
The Agency assumed that every poultry slaughter establishment would reassess their HACCP plans and incur associated costs. This likely overestimates costs because not every establishment would reassess their HACCP plans. For chicken slaughter establishments that produce chicken carcasses subject to these proposed final product standards and are also subject to the proposed process control requirements, FSIS assumed they would only reassess their slaughter HACCP plan once. However, for establishments that produce multiple products subject to these final product standards, FSIS assumed they would reassess their HACCP plans for each of the products they produce that are affected by the proposed changes. However, establishments that have to reassess HACCP plans for multiple products would likely experience some economies of scope. Furthermore, establishments could coordinate reassessing their HACCP plans in response to this proposal with currently required annual reassessments.
FSIS estimates that the total cost to industry from reassessing HACCP plans as a result of this proposal is $1.39 million, ranging from $0.70 to $2.09 million (Table 19). Assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate, the cost for HACCP plan reassessment is $0.18 million, ranging from $0.09 million to $0.26 million. High- and medium-volume establishments need an average of 60 hours (ranging from 30 to 90), while low and VLV establishments need an average of 30 hours (ranging from 15 to 45) to reassess a HACCP plan, according to the 2015 “Costs of Food Safety Investments” report. This report estimated costs for large and small establishments. FSIS assumed the large category would correspond with high- and medium-volume establishments, while the small category would correspond with low- and very low-volume establishments. FSIS used data from the U.S. Bureau of Labor Statistics to update the hourly wage for estimating these labor costs. Specifically, FSIS used the 2021 hourly wage for a production worker of $30.78, which includes an average hourly wage of $15.39 multiplied by a benefits and overhead factor of two.
If an establishment makes changes to their HACCP plan, they would also have to validate it, incurring associated costs. However, the Agency assumed few establishments would make changes to their MMPs and only those that make changes would need to validate their HACCP plans. Additionally, the Agency assumed that many establishments have already implemented
FSIS is proposing that chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey with
If this proposal is finalized, establishments would be required to prevent product sampled as part of FSIS verification sampling from entering commerce until a negative test result or one above the 10 cfu/mL(g) level but not containing a serotype of public health significance is received. FSIS does not require establishments to hold product at their physical location; thus, product can be stored off-site at an establishment's storage facility, or another private or public storage facility, pending test results. Product subject to FSIS verification sampling can also be diverted and processed into a product that is not subject to these final product standards (
FSIS anticipates that the Agency would provide establishments with final adulteration results five days after the sample is collected.
To estimate the industry cost for holding product pending test results, FSIS used 2021 data from PHIS. FSIS assumed that establishments subject to these final product standards would maintain control of each sampled lot pending FSIS verification sampling results. Regulated establishments define their production lots according to their specific conditions and FSIS allows establishments to adjust their lot sizes if they provide scientific justification for defining lots.
Since FSIS is proposing to sample these products at the same rate as the current performance standards, the Agency used the number of samples collected in 2021 at establishments that would be subject to this proposal and the estimated lot sizes to approximate the volume of product that would be subject to the Agency's verification sampling program.
FSIS used the per pound cost of cold storage as estimated in the 2015 “Costs of Food Safety Investments” report to monetize the cost to industry from holding product due to this proposal.
FSIS estimated that in 2021 establishments subject to the performance standards produced 33.2 billion pounds of chicken carcasses.
Estimates from the National Chicken Council indicate that about 9 percent of broilers, the main chicken subclass produced in the United States, were marketed as whole birds in 2021. National Chicken Council (NCC), “How Broilers are Marketed,” accessed May 11, 2023,
This analysis assumed establishments would maintain control of sampled product until results on the level of
FSIS estimated that in 2021 establishments subject to the performance standards processed 31.2 billion pounds of chicken parts.
This analysis assumed establishments would maintain control of sampled product until results on the level of
FSIS estimated that in 2021 establishments subject to the performance standards processed 2.3 billion pounds of comminuted chicken. Raw comminuted chicken processed at FSIS regulated establishments can be sent into commerce as final products or further processed into a variety of preparations, including cooked products (
This analysis assumed establishments would maintain control of this product until results on the level of
FSIS estimated that in 2021 establishments subject to the performance standards processed 1.7 billion pounds of comminuted turkey. Raw comminuted turkey processed at FSIS regulated establishments can be sent into commerce as final products or further processed into preparations including cooked products (
This analysis assumed establishments would maintain control of this product until results on the level of
FSIS conducts sampling activities at official import inspection establishments to verify that a foreign country's poultry inspection system is equivalent to the U.S. poultry inspection system. If this rule is finalized, FSIS would adapt its current
FSIS estimates the cost to import establishments for maintaining control of imported product subject to FSIS verification sampling for
Currently, FSIS samples and tests imported chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey for the presence of
FSIS estimated the cost for these import establishments assuming that establishments would maintain control pending test results of all sampled product identified in 2021 data, which is likely an overestimate. The estimated cost for import establishments is $0.07 million per year (15.8 million pounds × 2 days × $0.0023). While data on the volume imported of product with results at or above 10 cfu/mL(g) are not available, FSIS estimates this would be a relatively low volume of product. In 2021, about 17 percent of imported poultry samples were positive for the presence of
FSIS estimated that the total cost to industry from complying with FSIS verification sampling requirements in this proposal is $14.47 million annually, ranging from $2.11 to $29.26 million (Table 28), assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate. As previously described, establishments are required to maintain control pending test results for product subject to FSIS verification sampling for adulterants. FSIS estimated that an average of 3.2 billion pounds of product per year would be subject to FSIS verification sampling. FSIS allows establishments to move product to an alternate location pending test results for an adulterant as long as they maintain control of the sampled product. Producers can also elect to divert sampled product into a product that is not subject to these standards (
FSIS estimated the cost to industry from lost value resulting from diverting adulterated product subject to these final product standards. FSIS assumed that establishments would divert product after receiving final results showing a level of
The 2023 risk assessments estimated that approximately 0.2 million pounds of chicken carcasses, 0.07 million pounds of chicken parts, 1.6 million pounds of comminuted chicken, and 0.6 million pounds of comminuted turkey per year would have
To estimate the cost to industry of this lost value as a result of this proposal, FSIS applied the per pound retail price of select poultry products to the estimated volume of lost product. FSIS used data from 2017 to 2021 and used a range in these prices to account for variability and uncertainty: the lowest retail price in the five-year period as the minimum, the highest as the maximum, and the five-year average as the medium estimate. For chicken carcasses, FSIS used the retail price for whole fresh chicken while for chicken parts the Agency used the retail price for chicken breasts (Table 30). Because data for the five-year period for comminuted or ground chicken were not readily available, FSIS used the retail price for chicken legs as a proxy. For comminuted turkey, FSIS used data for whole frozen turkeys as data for the five-year period for comminuted or ground turkey were not available.
Previous FSIS analyses assumed that diverted product would lose 66 percent of its value.
Establishments subject to these proposed final product standards may incur costs associated with reassessing their sampling plans. Current performance standards focus on the presence or absence of
FSIS estimated that the total cost to industry from reassessing their sampling plans is $0.3 million, ranging from $0.1 to $0.6 million (Table 32). Assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate, the cost for microbiological sampling plan reassessment is $0.04 million, ranging from $0.02 million to $0.08 million. High- and medium-volume establishments need an average of 40 hours (ranging from 20 to 60), while low- and very low-volume establishments need an average of 20 hours (ranging from 10 to 30) to reassess a sampling plan, according to the 2017
If an establishment makes changes to their microbiological sampling plans in response to this proposal, they would incur costs associated with validating these changes. The 2015 “Costs of Food Safety Interventions” report indicates that high- and medium-volume establishments would need an average of 960 labor hours for validation of a microbiological sampling plan and 1,200 labor hours for low- and very low-volume establishments. On a per plan basis, the cost for validation of a microbiological sampling plan for a high- or medium-volume establishment is $77,683, on average, while for low- or very low-volume establishments, the average cost is $97,104. FSIS used the 2021 hourly wage for a food scientist of $80.92, which includes an average hourly wage of $40.46 multiplied by a benefits and overhead factor of 2.
FSIS would require establishments that do not meet the final product standards to take corrective actions. These corrective actions would be aimed at removing adulterated product from market and making changes to prevent production of adulterated product in the future. Interventions available to the poultry industry include antimicrobial agents, new equipment, and employee practices. FSIS does not have information on the types or frequency of corrective actions establishments may take in response to not meeting the final products standards, and the Agency is seeking comments on the potential costs associated with these.
FSIS estimated the main cost to industry to comply with this proposal is $16.4 million annually, with a range of $3.3 to $32.3 million (Table 33), assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate. The principal component of this cost is the requirement that establishments must maintain control of product subject to FSIS verification sampling for adulterants pending test results. The cost estimate associated with this requirement is likely an overestimate as it is possible that establishments' current practices and procedures would allow them to maintain control of a lower volume of product. Additionally, all timeframes and methods for
FSIS estimates industry would incur annual costs in response to this rule. Table 34 includes the expected undiscounted annual costs of this proposal assuming the implementation schedule over a 10-year period.
FSIS does not anticipate the proposal, including using laboratory services provided by FSIS for analyzing process control samples for VS and VLV establishments under Traditional Inspection, as well as conducting verification sampling for the final product standards, will increase Agency costs. The Agency would adapt its current sampling for
Costs related to follow-up sampling and conducting FSAs are not expected to increase. The Agency would conduct follow up sampling and a PHRE for any establishments that does not meet the final product standards. FSIS would use the results of the PHRE to determine the need for an FSA. FSIS currently conducts follow up sampling and PHREs on establishments that do not meet the current
FSIS is proposing to declare
The 2023 risk assessments estimated the number of illnesses that could be prevented if product lots with results at or above 10 cfu/mL(g) of
FSIS estimated that if this proposal becomes final, the number of illnesses prevented may range from 765 to 4,300 cases per year (Table 34).
For the low estimate, the Agency used sampling data and results from the 2023 risk assessments to estimate the number of prevented illnesses from the final products standards. FSIS sampling data show that the serotypes of public health significance identified in this proposal are present in 24 percent of the chicken carcass samples and 25 percent of the comminuted turkey samples.
For the medium estimate, FSIS used the 2023 risk assessments results of illnesses prevented from diverting chicken carcasses (1,000 illnesses) and comminuted turkey (2,100 illnesses) with
For the high estimate, FSIS used the combined estimated number of prevented illnesses from diverting chicken carcasses (1,000 illnesses), chicken parts (200 illnesses), comminuted chicken (1,000 illnesses), and comminuted turkey (2,100 illnesses) product from the 2023 risk assessments. As noted above, the prevented illness estimates in the 2023 risk assessments reflect a standard at the 10 cfu/mL(g) level for these products. While these estimates do not reflect the final products standards in this proposal, FSIS is including these as a high estimate for the reasons outlined above. For the low and medium estimates, FSIS used only the prevented illness estimates for chicken carcasses as the 2023 chicken risk assessment could not assess the effect of carcasses and secondary products (parts and comminuted chicken) standards sequentially, as mentioned above. In contrast, for the high estimate, FSIS used the sum of all three estimates (chicken carcasses, chicken parts, and comminuted chicken) to illustrate a potential number of illnesses prevented from implementing this proposed policy, including the potential compounding benefits across product types and the upper limit of direct and indirect (
Public health benefits, including in the form of prevented illnesses, are difficult to monetize as a market for these does not exist. Typically, economic analyses use alternative methods for these non-market measures that approximate the value of these benefits. To monetize the estimated direct public health impact of this proposal, and consistent with other Agency regulatory impact analyses,
FSIS estimated the total benefits from prevented illness for this proposal at $13.49 million ([1,000 prevented illnesses from chicken products + 2,100 prevented illnesses from comminuted turkey products] × $4,351), with a range from $0.3 million to $29.55 million (Table 35). Assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate, the benefits associated with the estimated prevented illnesses are $12.92 million, ranging from $0.28 million to $28.66 million.
The cost estimate of foodborne illness for
FSIS estimates that this proposal would result in prevented outbreak-related recalls. Specifically, by diverting adulterated products entering commerce, should this rule become final, official establishments would likely have a reduction in the risk of recalls due to
Recalls are companies' actions to remove product that may be adulterated or misbranded from commerce.
Poultry establishments have economic incentives to prevent recalls, which are costly to industry and have spillover effects beyond the product lot that is subject to it. Recalls have a direct cost for establishments in the form of lost profits, product retrieval and disposal costs, business interruptions, and customer reimbursement, among others. Additional indirect costs are also part of the economic impact of a food recall, including external costs to distributors, wholesalers, and retailers, among others, which have been estimated to be 51, 6, and 5 percent of the total cost of a recall for manufacturers, wholesalers, and retailers, respectively.
Individual establishments may not currently effectively control for
If this proposal is finalized, establishments producing chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey products would have the same incentives for controlling for
FSIS estimated that one outbreak-related recall may cost the U.S. poultry industry about $31.3 million in 2021 dollars.
FSIS estimated this proposal would have a net benefit of $4.1 million per year, ranging from $1.1 million to $6.7 million, assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate (Table 35).
This proposal is estimated to cost industry $16.4 million per year, ranging from $3.3 to $32.3 million, assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate. The majority of this cost, $14.5 million, ranging from $2.1 million to $29.3 million, is associated with requiring establishments to maintain control of sampled product pending test results, followed by industry cost due to lost product value of $1.5 million, ranging from $0.9 million to $2.4 million. Industry may also incur costs associated with HACCP and microbiological sampling plan reassessments and changes to MMPs for process control. To varying degrees, industry may also incur other costs associated with their individual responses to this proposal.
In terms of benefits, this proposal is estimated to result in benefits to society of $20.5 million per year, ranging from $4.4 million to $39.0 million (Table 36), assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate. The majority of the benefits are derived from prevented illnesses of $12.9 million per year, ranging from $0.3 to $28.7 million. Additional benefits from this proposal include the reduction in the risk of outbreak-related recalls for products subject to these final product standards, which represent an estimated $7.6 million in benefits to industry, ranging from $4.2 million to $10.3 million. Moreover, industry might take additional actions in response to this proposal, which may lead to additional benefits. For example, producers may adopt testing programs, process control measures, or pre-harvest measures that may result in additional benefits from this proposal.
This regulatory impact analysis provides potential cost and benefits scenarios. As discussed in the
FSIS compared the respective low, medium, and high costs and benefits estimates as the Agency's primary estimates to summarize the potential economic outcomes of this proposal. However, each of the cost scenarios in this analysis could result in any of the benefit scenarios also previously discussed. As such, when considering a wider range for these scenarios, FSIS estimated this proposal would have a net benefit of $4.1 million per year, ranging from −$31.9 million to $35.7 million, assuming the proposed implementation schedule and annualizing over 10 years at a 7 percent discount rate.
FSIS considered the following five alternatives in the analysis for this proposal (Table 37). To evaluate potential alternatives, FSIS first analyzed the costs and benefits associated with taking no regulatory action, which is discussed under Alternative 1 and represents the baseline for this analysis. Alternative 2 discusses the proposal. For Alternative 3, which is a more stringent regulatory scenario, FSIS estimated the costs and benefits associated with declaring adulterated chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey with levels of
FSIS considered keeping the current performance standards for
Under this proposal, chicken carcasses and parts and comminuted chicken and turkey products which are final products that will enter commerce that test at or above 10 cfu/mL(g) and contain a
Alternative 3 would consider product under this proposal to be adulterated if it contains 1 cfu/mL(g) and a
Alternative 4 would consider product under this proposal to be adulterated if it contains 100 cfu/mL(g) and a
Alternative 5 would consider product under this proposal to be adulterated if it contains 1 cfu/mL(g)
The FSIS Administrator has made a preliminary determination that this proposed rule and proposed determination, if finalized, would not have a significant economic impact on a substantial number of small entities in the U.S., as defined by the Regulatory Flexibility Act (5 U.S.C. 601
FSIS established volume categories for this proposal based on Agency data on establishments' production volumes and the 2016 cost-benefit analysis in support of the FSIS “Chicken Parts and Not Ready-To-Eat Comminuted Poultry Performance Standards,” as shown in tables 38 and 39.
The volume categories for establishments subject to the proposed final product standards are summarized in Table 38. Of these, 37 establishments produced chicken carcasses, 127 produced chicken parts, 39 produced comminuted chicken, and 18 produced comminuted turkey products that would be subject to the final product standards. This represents roughly 27.6 percent of the establishments impacted by this proposal.
As a result of the proposal, based on the assumptions and estimates described in the
FSIS used the per pound retail prices described in the
FSIS also expects the cost burden of this proposal on low- and very low-volume establishments to be limited due to several factors:
(1) FSIS estimates that the total cost for low- and very low-volume establishments for complying with this proposal is small. As proposed, final product standards account for the largest proportion of estimated costs, which are estimated to cost these establishments $1,569, on average, per establishment per year. This cost will vary depending on an establishment's production level.
(2) The cost estimates presented as part of this analysis are based on FSIS' estimated lot size. FSIS allows establishments to produce smaller representative batches of product for sampling.
(3) FSIS is also adopting an implementation schedule that allows low- and very low-volume establishments additional flexibility to adjust to the new regulations. Low- and very low-volume establishments would have three years to comply with this proposal after it is finalized.
The volume categories for establishments subject to the statistical process control requirements are summarized in Table 39. Of the 284 small entities impacted by this proposal, 108 are poultry slaughter establishments subject to the statistical process control requirements, or about 36.2 percent of all poultry slaughter establishments. This proposal requires that very low-volume and very small establishments operating under Traditional Inspection collect an additional sample for monitoring process control, as explained in the
FSIS estimated process control requirements would cost $2,129 per establishment per year. As these establishments produce a wide variety of products, including multiple poultry classes, FSIS is unable to estimate the share this cost represents of establishments' total revenue. However, FSIS production data show that 79 establishments (73 percent) slaughter more than one class of poultry. Additionally, 36 establishments (about 33 percent) produce other nonpoultry FSIS inspected products. Nonpoultry products represent 54 percent, on average, of these establishments' total production by volume. However, to mitigate the impact and costs of this requirement, the Agency is proposing to make laboratory services available to analyze process control samples instead of the establishment using establishment resources or commercial laboratories. In addition, FSIS is providing a template for establishments to use when submitting data to the Agency. Consequently, these costs could be mitigated is represents potential cost savings for these establishments.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), FSIS has reviewed the proposed rule. All establishments that slaughter poultry are currently required to
Should FSIS finalize this proposal, the Agency would provide a template that establishments could use to record and submit their monthly results. FSIS is developing a web portal that will allow external partners to securely upload sampling information and submit it to FSIS in a machine- readable format. The proposed fields that would be uploaded into the portal are: a sample identification number, the establishment number, date, time, slaughter line number, location of sample collection (
FSIS is revising this information collection to add 1,788 total burden hours due to the proposed new requirements. The burden estimate has also been updated to reflect the current number of poultry slaughter establishment respondents, which has increased from 289 to 298 since the initial information collection approval. FSIS requests comments on the proposed data fields and on the proposed electronic data submission process.
FSIS estimates that a total of 298 establishments would conduct microbial testing and enter 6-12 associated data points into the spread sheet, or directly into the portal, 12 times annually for a total of 1,788 hours.
Copies of this information collection assessment can be obtained from Gina Kouba, Office of Policy and Program Development, Food Safety and Inspection Service, USDA, 1400 Independence Avenue SW, Mailstop 3758, South Building, Washington, DC 20250-3700; (202) 937-4272. Comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of FSIS' functions, including whether the information will have practical utility; (b) the accuracy of FSIS' estimate of the burden of the proposed collection of information, including the validity of the method and 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, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques, or other forms of information technology. Comments may be sent to both FSIS, at the addresses provided above, and the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Washington, DC 20253
FSIS and USDA are committed to achieving the purposes of the E-Government Act (44 U.S.C. 3601,
This proposed rule has been reviewed under E.O. 12988, Civil Justice Reform. Under this proposed rule: (1) All State and local laws and regulations that are inconsistent with this proposed rule will be preempted; (2) no retroactive effect will be given to this proposed rule; and (3) no administrative proceedings will be required before parties may file suit in court challenging this proposed rule.
E.O. 13175 requires Federal agencies to consult and coordinate with tribes on a government to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes. FSIS has assessed the impact of this proposed rule on Indian tribes and determined that this proposed rule does not, to our knowledge, have tribal implications that require tribal consultation under E.O. 13175. If a tribe requests consultation, FSIS will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified herein are not expressly mandated by Congress.
In accordance with Federal civil rights law and USDA civil rights regulations and policies, USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status,
USDA is an equal opportunity provider, employer, and lender.
Each USDA agency is required to comply with 7 CFR part 1b of the Departmental regulations, which supplements the National Environmental Policy Act regulations published by the Council on Environmental Quality. Under these regulations, actions of certain USDA agencies and agency units are categorically excluded from the preparation of an Environmental Assessment (EA) or an Environmental Impact Statement (EIS) unless the agency head determines that an action may have a significant environmental effect (7 CFR 1b.4(b)). FSIS is among the agencies categorically excluded from the preparation of an EA or EIS (7 CFR 1b.4(b)(6)). This proposed rule would establish final product standards for certain raw poultry products. Under this proposal, raw chicken carcasses, chicken parts, comminuted chicken, and comminuted turkey that contain
Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this
Meat inspection, Poultry and poultry products.
For the reasons set forth in the preamble, FSIS proposes to amend 9 CFR part 381 as follows:
7 U.S.C. 138f, 1633; 21 U.S.C. 451-472; 7 CFR 2.7, 2.18, 2.53.
(g)
(1)
(i) The establishment's microbial monitoring program must identify and provide supporting rationale for the specific point in the process where rehang and post-chill samples will be collected.
(ii) An establishment may collect samples at a location other than rehang if the establishment provides supporting data to demonstrate that the alternate location is at least as effective as rehang sampling for monitoring the establishment's ability to maintain process control.
(2)
(i) Except as provided in paragraph (g)(2)(ii) of this section, all official poultry establishments must collect and analyze paired monitoring samples at the following rates. Establishments that slaughter multiple species may conduct sampling on the type of poultry slaughtered in the greatest number.
(A) Chickens
(B) Turkeys, ducks, geese, guineas and squabs
(ii) Very low volume establishments as defined in paragraphs (g)(2)(i)(A) and (B) of this section that plan to operate less than 13 weeks per year may collect and analyze 13 samples less than weekly if the establishment can demonstrate that it is effectively maintaining process control throughout the year and during any periods of slaughter operations.
(iii) Establishments must sample at a frequency that is adequate to monitor their ability to maintain process control for enteric pathogens.
(iv) Establishments must maintain accurate records of all test results and retain these records as provided in paragraph(h) of this section.
(3)
(i) The establishment's measured results at each sample location must yield statistically reliable quantified value results
(ii) The establishments' sample collection method must be appropriate for the product sampled, the microbial organism monitored, and the laboratory method used to analyze the samples.
(iii) The establishment's microbial sampling results must be generated by validated laboratory analyses and methods.
(4)
(i) The minimal expected change in microbial levels measured between sampling locations; and
(ii) The expected consistency of the levels of change detected over a specified monitoring period.
(5)
(i) The microbial monitoring results deviate from predefined quantitative limits;
(ii) The microbial monitoring results are not consistent with the other process control monitoring results for the same procedures; or
(iii) The microbial monitoring results are not consistent with the process control determination made for the entire slaughter HACCP system.
(h)
(1) Official poultry slaughter establishments must submit their microbial sampling results to FSIS electronically on a monthly basis.
(2) [reserved]
Done in Washington, DC.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking.
This document contains proposed regulations that address certain issues arising under the dual consolidated loss rules, including the effect of intercompany transactions and items arising from stock ownership in calculating a dual consolidated loss. The proposed regulations also address the application of the dual consolidated loss rules to certain foreign taxes that are intended to ensure that multinational enterprises pay a minimum level of tax, including exceptions to the application of the dual consolidated loss rules with respect to such foreign taxes. Finally, the proposed regulations include rules regarding certain disregarded payments that give rise to losses for foreign tax purposes.
Written or electronic comments and requests for a public hearing must be received by October 7, 2024.
Commenters are strongly encouraged to submit public comments electronically via the Federal eRulemaking Portal at
Concerning the proposed regulations generally, Andrew L. Wigmore at (202) 317-5443; concerning the proposed regulations regarding intercompany transactions, Julie Wang at (202) 317-6975; concerning submissions of comments or requests for a public hearing, Publications and Regulations Section at (202) 317-6901 (not toll-free numbers) or by email at
Section 1503(d) was enacted in response to concerns that taxpayers were isolating expenses in dual resident corporations to enable two profitable companies, subject to tax in two different jurisdictions, to use the dual resident corporation's losses.
Section 1503(d)(1) generally provides that a dual consolidated loss of a domestic corporation cannot reduce the taxable income of a domestic affiliate (a “domestic use”).
A dual resident corporation is generally defined as a domestic corporation that is subject to an income tax of a foreign country on its worldwide income or on a residence basis.
Pursuant to section 1503(d)(2)(B), the dual consolidated loss regulations provide certain exceptions to the general prohibition against the domestic use of a dual consolidated loss. For example, the domestic use limitation does not apply if, pursuant to a “domestic use election,” the taxpayer certifies that there has not been and will not be a “foreign use” of the dual consolidated loss during a certification period.
In general, the income or dual consolidated loss of a dual resident corporation for a taxable year is computed based on the dual resident corporation's items of income, gain, deduction, and loss for the taxable year.
The income or dual consolidated loss of a dual resident corporation or separate unit does not, however, include items attributable to an interest in a “transparent entity.”
For purposes of attributing items to a separate unit, only items of the domestic owner of the separate unit that are regarded for U.S. tax purposes are taken into account.
In the case of a foreign branch separate unit (as defined in § 1.1503(d)-1(b)(4)(i)(A)), items of the domestic owner generally are attributable to the separate unit based on rules under section 864 and § 1.882-5 (by treating the domestic owner as a foreign corporation and the foreign branch separate unit as a trade or business within the United States).
In the case of a hybrid entity separate unit (as defined in § 1.1503(d)-1(b)(4)(i)(B)), items of a domestic owner generally are attributable to the separate unit to the extent they are reflected on the books and records of the hybrid entity.
Pursuant to a special rule, any amount included in income of a domestic owner arising from the ownership of stock in a foreign corporation through a separate unit (for example, a subpart F inclusion) is attributable to the separate unit if an actual dividend from such foreign corporation would have been so attributed.
In general, these rules are intended to attribute items existing for U.S. tax purposes to a separate unit to the extent that it is likely that the relevant foreign country would take into account the item (assuming the item is recognized) for tax purposes, with such approach serving as a proxy for determining whether a double-deduction outcome could result.
A foreign use may occur if any portion of a dual consolidated loss is made available to offset income, even if there are no items of income to actually offset in that taxable year.
In general, any amount of the dual consolidated loss being put to a foreign use would cause the entire amount of the dual consolidated loss to be recaptured and reported as income.
A foreign use of a dual consolidated loss may also be deemed to occur pursuant to the “mirror legislation” rule if the foreign income tax laws would deny any opportunity for the foreign use of the dual consolidated loss in the year in which the dual consolidated loss is incurred (assuming the foreign country recognized the loss in the same year), provided that the foreign use of the loss is denied under such laws for any of the following reasons: (i) the dual resident corporation or separate unit that incurred the loss is subject to income taxation by another country (for example, the United States) on its worldwide income or on a residence basis; (ii) the loss may be available to offset income (other than income of the dual resident corporation or separate unit) under the laws of another country (for example, the United States); or (iii) the deductibility of any portion of a deduction or loss taken into account in computing the dual consolidated loss depends on whether such amount is deductible under the laws of another country (for example, the United States).
The mirror legislation rule is intended to prevent foreign jurisdictions from enacting legislation that gives taxpayers no choice but to use a dual consolidated loss to offset an affiliate's income in the United States.
Section 1503(d)(2)(A) defines a dual consolidated loss as any net operating loss of a domestic corporation which is subject to an income tax of a foreign country on its income without regard to whether such income is from sources in or outside of such foreign country, or is subject to such a tax on a residence basis. The exception to the definition of a dual consolidated loss under section 1503(d)(2)(B) similarly references “foreign income tax law.” The legislative history to section 1503(d) references foreign taxes on income without further discussion of the characteristics of a foreign income tax.
The regulations under § 1.1502-13 (the “intercompany transaction regulations”) provide rules for taking into account items of income, gain, deduction, and loss of consolidated group members from intercompany transactions (as defined in § 1.1502-13(b)(1)(i)). Their purpose is to provide rules to clearly reflect the taxable income (and tax liability) of the group as a whole by preventing intercompany transactions from creating, accelerating, avoiding, or deferring consolidated taxable income (or consolidated tax liability). This is accomplished by treating the selling member (“S”) and the buying member (“B”) as separate entities for some purposes, but as divisions of a single corporation for other purposes. S's income, gain, deduction, or loss arising from an intercompany transaction is an intercompany item, and B's income, gain, deduction, or loss arising from an intercompany transaction, or from property acquired in an intercompany transaction, is the corresponding item. The amount and location of S's intercompany items and B's corresponding items are determined on a separate entity basis (“separate entity treatment”). The timing, character, source, and other attributes of the intercompany items and corresponding items, although initially determined on a separate entity basis, generally are redetermined under the intercompany transaction regulations to produce the effect of transactions between divisions of a single corporation (“single entity treatment”).
One of the principal rules within the intercompany transaction regulations that implements single entity treatment is the matching rule of § 1.1502-13(c). Section 1.1502-13(c)(1) requires the attributes of the intercompany and corresponding items to be redetermined to the extent necessary to achieve the same overall effect as if the members were divisions of a single corporation.
Under the matching rule, although treated as divisions of a single corporation, S and B are treated as engaging in their actual transaction and owning any actual property involved in the transaction (rather than treating the transaction as not occurring). Accordingly, under § 1.1502-13(c), the existence of the intercompany transaction and the intercompany items generally is not disregarded. Although treated in the same manner as divisions of a single corporation, S and B are treated as having any special status that they have under the Code or regulations.
Section 1.1502-13(c)(4) provides rules for allocating and redetermining attributes under the matching rule. To the extent that B's corresponding item matches S's intercompany item in amount, the attributes of B's corresponding item generally will control S's offsetting intercompany item. The symmetry that is ordinarily required under the matching rule by conforming the source, character, and other attributes of one member's items to the other member's items is expressly overridden when either S or B has a “special status.” Section 1.1502-13(c)(5) provides that, when the attributes otherwise determined under § 1.1502-13(c)(1)(i) for a member's item are permitted or not permitted under the Code or regulations because of a member's special status, the attributes required by the Code or regulations apply to that member's items, but not to the items of another member. The special status rule lists examples of members with special status, including banks, life insurance companies, and a member carrying forward a loss subject to limitation under the separate return limitation year (“SRLY”) rules.
Sections 301.7701-1 through 301.7701-3 classify a business entity with two or more members as either a corporation or a partnership, and a business entity with a single owner as either a corporation or disregarded as an entity separate from its owner (“disregarded entity”). Certain business entities with a single owner are classified as disregarded entities by default or through an election.
On December 20, 2021, the OECD/G20 Inclusive Framework on BEPS published model rules (the “GloBE Model Rules”)
Under the GloBE Model Rules, an in-scope MNE Group must compute the GloBE Income or Loss of each of its Constituent Entities.
The MNE Group must then calculate its Effective Tax Rate (“ETR”) for each jurisdiction in which it operates. The ETR of a jurisdiction equals (i) the sum of Adjusted Covered Taxes of each Constituent Entity located in the jurisdiction, divided by (ii) the Net GloBE Income of the jurisdiction for the Fiscal Year. The Net GloBE Income of the jurisdiction is determined by aggregating the GloBE Income or Loss of all Constituent Entities of the MNE Group located in the same jurisdiction.
On December 20, 2022, the OECD/G20 Inclusive Framework on BEPS published the Safe Harbours and Penalty Relief document, which includes guidelines on aspects of the design and operation of a Transitional CbCR Safe Harbour to the GloBE Model Rules.
On December 11, 2023, the Treasury Department and the IRS released Notice 2023-80, which, among other things, described the interaction of the dual consolidated loss rules with the GloBE Model Rules. The notice explains that in certain cases, the aggregation of GloBE Income or Loss of Constituent Entities in the same jurisdiction in calculating the ETR can be viewed as giving rise to double-deduction outcomes that the dual consolidated loss rules were intended to address. Moreover, the notice recognizes that these concerns could exist with respect to a dual consolidated loss incurred in a taxable year ending before the effective date of foreign legislation implementing the GloBE Model Rules, for example, due to certain timing differences. The notice also recognizes that certain features of the GloBE Model Rules may differ from traditional foreign income tax systems. For example, the GloBE Model Rules do not include a mechanism that would permit taxpayers to forgo the aggregation of GloBE Income and GloBE Losses, and in some cases where the ETR in the jurisdiction is or would otherwise be at or above the Minimum Rate, a loss may not reduce the amount of a Jurisdictional Top-up Tax.
The notice announces limited guidance that would be proposed for certain “legacy DCLs,” which in general are dual consolidated losses that a taxpayer incurred before the effective date of the GloBE Model Rules.
Finally, the notice states that the Treasury Department and the IRS are studying the interaction of the dual consolidated loss rules and the GloBE Model Rules and the notice requests comments on the interaction of the dual consolidated loss rules with the GloBE Model Rules, including Article 3.2.7 (relating to Intragroup Financing Arrangements), which is intended to prevent certain avoidance transactions involving arbitrage. The notice also states that the Treasury Department and the IRS are studying the interaction of the GloBE Model Rules with the anti-hybrid rules under sections 245A(e) and 267A.
On December 15, 2023, the OECD/G20 Inclusive Framework on BEPS published additional Administrative Guidance on the GloBE Model Rules (“December 2023 Administrative Guidance”).
The December 2023 Administrative Guidance involving Hybrid Arbitrage Arrangements is intended, in part, to address avoidance transactions that are designed to exploit differences between tax and financial accounting treatment to allow a Tested Jurisdiction to qualify for the Transitional CbCR Safe Harbour, which would be contrary to the purposes of the GloBE Model Rules. One of the Hybrid Arbitrage Arrangements addressed under the guidance is a “duplicate loss arrangement.” A duplicate loss arrangement includes an arrangement that results in an expense or loss being included in the financial statement of a Constituent Entity to the extent that the arrangement also gives rise to a duplicate amount that is deductible for purposes of determining the taxable income of another Constituent Entity in another jurisdiction. An arrangement will not be a duplicate loss arrangement, however, to the extent that the amount of the relevant expense is offset against revenue or income that is included in both (i) the financial statements of the Constituent Entity including the expense or loss in its financial statements; and (ii) the taxable income of the Constituent Entity claiming the deduction for the relevant expense or loss. Under this guidance, a Tested Jurisdiction's Transitional CbCR Safe Harbour calculation is adjusted by excluding any expense or loss arising as a result of a duplicate loss arrangement from the Tested Jurisdiction's profit before tax.
The December 2023 Administrative Guidance states that further guidance will be provided to address Hybrid Arbitrage Arrangements, including those addressed in the December 2023 Administrative Guidance, that may otherwise affect the application of the GloBE Model Rules outside the context of the Transitional CbCR Safe Harbour.
As discussed in part I.B of the Background section of this preamble, the dual consolidated loss regulations provide that, in the case of an affiliated dual resident corporation or an affiliated domestic owner acting through a separate unit (a “section 1503(d) member”), the computation of income or dual consolidated loss takes into account rules under section 1502 regarding the computation of consolidated taxable income. No specific guidance is provided as to the interaction of rules under section 1502 and those under section 1503(d).
Comments with respect to proposed regulations addressing certain hybrid arrangements that were published in the
The comments recommended that the Treasury Department and the IRS clarify that the matching rule does not apply to cause regarded items to be redetermined (and thus effectively disregarded) for purposes of the dual consolidated loss rules. The comments stated that such an approach promotes the policies of the dual consolidated loss rules and leads to more accurate computations. In addition, a comment asserted that such an approach is consistent with how taxpayers generally apply the rules, and that for these taxpayers a contrary approach could have a significant and unanticipated effect on existing structures.
However, one of the comments cautioned that, if the dual consolidated loss rules were to apply differently with respect to an item arising from an intercompany transaction and an item arising from a disregarded transaction, then the disparity could produce inappropriate policy outcomes. For example, a taxpayer might structure its internal transactions so that (i) payments by separate units are made pursuant to disregarded transactions, such that the payments would not increase or create a dual consolidated loss, and (ii) payments to separate units are made pursuant to intercompany transactions, such that the payments would reduce or eliminate a dual consolidated loss. The comment described additional rules—including a rule that would require a consolidated group to treat intercompany transactions and disregarded payments consistently for purposes of the dual consolidated loss rules—that might minimize tax planning opportunities arising from any such disparity. These proposed regulations address the concern raised in this comment with the disregarded payment loss rules, as discussed in part II of this Explanation of Provisions.
Another comment raised the possibility that taxpayers may have differing views regarding the interaction of the matching rule with the dual consolidated loss rules under current law. As a result, taxpayers currently may be adopting different treatments of the section 1503(d) member's intercompany (or corresponding) items. Accordingly, the comment recommended clarifying how these rules interact.
The dual consolidated loss rules are intended to take into account an item of a dual resident corporation, or attribute an item of a domestic owner to a separate unit, to the extent that the item is likely taken into account for foreign tax purposes. Because it is unlikely that a foreign jurisdiction would disregard an intercompany transaction (or, more generally, transactions between separate legal entities), it is consistent with the policies of the dual consolidated loss rules to take into account items arising from an intercompany transaction on a separate entity basis, to the extent of the application of section 1503(d). In
Accordingly, and consistent with the approach recommended by the comments, the proposed regulations would amend § 1.1502-13 to clarify the treatment of items that are subject to the section 1503(d) rules and the intercompany transaction regulations. Specifically, the proposed regulations clarify that a section 1503(d) member has special status under § 1.1502-13(c)(5) for purposes of applying the dual consolidated loss rules. This approach is consistent with treating a member with losses from separate return limitation years as having special status under § 1.1502-13(c)(5) for purposes of determining the member's SRLY limitation.
As a result, if a section 1503(d) member's intercompany (or corresponding) loss otherwise would be taken into account in the current year, and if the dual consolidated loss rules apply to limit the use of that loss (causing the loss to not be currently deductible), the intercompany transaction regulations would not redetermine that loss as not being subject to the limitation under section 1503(d). Therefore, a section 1503(d) member's intercompany (or corresponding) loss could be limited (and therefore not currently deductible) under the dual consolidated loss rules, even though such an outcome is inconsistent with single entity treatment.
In conjunction with the special status rule for the section 1503(d) member, the proposed regulations also clarify the treatment of the section 1503(d) member's counterparty in an intercompany transaction. Proposed § 1.1502-13(j)(10)(iv) applies § 1.1502-13(c) (the matching rule), or principles of the matching rule as relevant in § 1.1502-13(d) (the acceleration rule), to the counterparty member as if the section 1503(d) member were not subject to the dual consolidated loss rules. This approach is consistent with the special status rule in § 1.1502-13(c)(5), which provides that, even though the Code or regulations require certain treatment of the special status member's items by reason of its special status, that treatment does not affect the attributes of the counterparty member's items under the matching rule.
For example, assume that, in the current year, S (the counterparty member) has interest income, and B (a section 1503(d) member) has an interest deduction on an intercompany loan. Even if B's interest deduction were limited under the domestic use limitation under § 1.1503(d)-4(b) and therefore not currently deductible, S nevertheless would take its interest income into account in the current year under proposed § 1.1502-13(j)(10)(iv). In other words, this rule clarifies that the intercompany transaction regulations would not redetermine the attributes of S's interest income to match the treatment of B's interest deduction in situations where B's deduction is limited due to B's special status as a section 1503(d) member. The Treasury Department and the IRS are of the view that redetermining S's interest income as not currently includible in these situations effectively would give the consolidated group the benefit of B's deduction and would not achieve the appropriate result under dual consolidated loss policy.
These proposed regulations also clarify the order of operation between § 1.1502-13 and the dual consolidated loss rules. The dual consolidated loss rules apply to an item only to the extent that the item is otherwise taken into account in income or loss. Consistent with this general rule, the proposed regulations clarify that (i) the intercompany transaction regulations apply first to determine when an intercompany (or corresponding) item is taken into account, and (ii) such item is then included in the dual consolidated loss computations. Thus, for example, in a year in which an intercompany deduction of S (a section 1503(d) member) is deferred under the intercompany transaction regulations, the deduction would not be included in computing S's income or dual consolidated loss for that year under section 1503(d). Moreover, when S's deduction is taken into account under the matching rule in a later year, that deduction would be included in S's dual consolidated loss computations for that year.
As discussed in part I.B of the Background section of this preamble, an item of income, gain, deduction, or loss is generally taken into account for purposes of computing income or dual consolidated loss to the extent it is likely that the relevant foreign country would take into account the item (assuming the item is recognized) for tax purposes. In many cases, gain from the sale or exchange of stock of a corporation, or a dividend from a corporation, is unlikely to be included in income in the foreign country due to, for example, a participation exemption or indirect foreign tax credits. In addition, an inclusion with respect to stock of a foreign corporation (such as under section 951(a)(1)(A) or 951A(a)) is unlikely to be taken into account (and therefore is unlikely to be included in income) in the foreign country; moreover, the difference resulting from these inclusions is likely to be permanent because the related earnings of the foreign corporation are unlikely to be included in income in the foreign country when distributed.
Further, the Treasury Department and the IRS are aware that taxpayers may be affirmatively structuring into these rules to produce inappropriate double-deduction outcomes. For example, in order to eliminate a dual consolidated loss otherwise attributable to an interest in a disregarded entity, a domestic corporation could transfer the stock of a controlled foreign corporation (as defined in section 957(a)) that gives rise to inclusions under section 951A(a) to that disregarded entity, even though the foreign country in which the disregarded entity is subject to tax does not tax income of, or distributions from, the controlled foreign corporation.
In light of the prevalence of participation exemptions (or similar regimes that exempt income with respect to stock), coupled with taxpayers structuring into the rules to reduce or eliminate dual consolidated losses, the Treasury Department and the IRS are of the view that the rules should be revised. The proposed regulations therefore generally provide that items arising from the ownership of stock—such as gain recognized on the sale or exchange of stock, dividends (including by reason of section 1248), inclusions under section 951(a) (including by reason of section 245A(e)(2) or 964(e)(4)) or 951A(a), as well as deductions with respect thereto (including under section 245A(a) or 250(a)(1)(B))—are not taken into account for purposes of computing income or a dual consolidated loss.
However, these rules do not apply with respect to a dividend (or other inclusion) arising from a separate unit or dual resident corporation's ownership of portfolio stock of a corporation (domestic or foreign), which generally is defined as stock representing less than ten percent of the value of the corporation.
The Treasury Department and the IRS are of the view that this approach is simpler and more administrable than an alternative approach that would consider the extent to which an item is, or will be, actually taken into account under the tax law of the foreign country in which the separate unit or dual resident corporation is subject to tax and not offset or reduced by an exemption, exclusion, deduction, credit, or other similar relief particular to the item. Further, in most cases a more precise approach would not lead to significantly different results given the likelihood that items of income arising from the ownership of stock will be offset or reduced under the tax laws of the foreign country.
The Treasury Department and the IRS recognize that certain amounts included in the income of a domestic owner arising from the ownership of stock in a foreign corporation (in the case of a separate unit, regardless of whether the stock of the foreign corporation is held through the separate unit) may reflect amounts that have been subject to tax, to some extent, by both the foreign jurisdiction and the United States. For example, where a domestic owner of a separate unit that is taxed as a resident in a particular foreign jurisdiction holds stock of a controlled foreign corporation that is also taxed as a resident in the same foreign jurisdiction, the controlled foreign corporation's income may be taxed, to some extent, under the income tax laws of the foreign jurisdiction and by the United States through inclusions under section 951(a) or 951A(a); this could occur regardless of whether the inclusion itself is taken into account by the same foreign jurisdiction. To the extent such amounts are taxed in the same manner and to the same extent as if they were earned directly by the domestic owner, they could be viewed as representing dual inclusion income (that is, items that are included in income in both the United States and the foreign country and not offset or reduced by certain amounts particular to the item) that could be taken into account when determining the dual consolidated loss attributable to the separate unit.
The proposed regulations do not provide a rule that would permit taxpayers to identify and take into account such amounts as dual inclusion income. Doing so would require complicated rules, and raise related administrability concerns, to isolate the amount of dual inclusion income with respect to a particular foreign jurisdiction (for example, where a controlled foreign corporation owns one or more disregarded entities that are subject to tax in different foreign jurisdictions). Such an approach would also need to take into account rate disparities (for example, as a result of the deduction allowed under section 250(a)(1)(B) with respect to inclusions under section 951A) and other differences that may result between income earned directly by a domestic owner and earned indirectly through a controlled foreign corporation.
As discussed in part I.B of the Background section of this preamble, regarded items of a domestic owner generally are attributable to a hybrid entity separate unit to the extent they are reflected on the books and records of the hybrid entity. These items reflected on the books and records must, however, be adjusted to conform to U.S. tax principles. Such adjustments would include, for example, adjustments to reflect differences in the calculation of depreciation for accounting and tax purposes, and adjustments to eliminate items reflected on the books and records that are not deductible for tax purposes (such as a penalty or fine).
The Treasury Department and the IRS are aware that certain taxpayers may be taking the position that items that are not reflected on the books and records of a hybrid entity may nevertheless be attributable to the hybrid entity separate unit. Specifically, taxpayers may assert that the adjustments to the books and records necessary to conform to U.S. tax principles can include an item that has not been (and will not be) reflected on the books and records of the hybrid entity. For example, if a hybrid entity provides services to its domestic owner and receives a payment as compensation for those services that is generally disregarded for U.S. tax purposes, a taxpayer may take the position that a portion of the domestic owner's regarded income can be reallocated to the books and records of the hybrid entity (and, thus, taken into account by the hybrid entity separate unit) under, for example, the principles of section 482 or section 864(c).
This position is incorrect under the current regulations and misinterprets the required adjustments under § 1.1503(d)-5(c)(3)(i). Such adjustments account for discrepancies between accounting treatment and U.S. tax treatment; they are not permitted to give effect to disregarded payments that § 1.1503(d)-5(c)(1)(ii) explicitly excludes from the calculation of income or dual consolidated loss.
As discussed in sections I.A (interaction with the matching rule), I.B.1 (items arising from ownership of stock), I.B.2 (adjustments to conform to U.S. tax principles), and II.A. (disregarded payment losses) of this Explanation of Provisions, the Treasury Department and the IRS continue to learn of transactions or structures that attempt to obtain a double-deduction outcome while avoiding the application of the dual consolidated loss rules. In
Even if these particular transactions were also addressed by new rules in these proposed regulations, other avoidance transactions could continue to be developed. Accordingly, and rather than continuing to address these transactions on a case-by-case basis, the proposed regulations include an anti-avoidance rule that, in general, is intended to address additional transactions, or interpretations, that may attempt to avoid the purposes of the dual consolidated loss rules.
As discussed in part IV.B of the Background section of this preamble, Notice 2023-80 requested comments on the interaction of the dual consolidated loss rules with the GloBE Model Rules. In response, comments requested that the dual consolidated loss rules be made inapplicable with respect to a foreign tax based on the GloBE Model Rules. In support of these recommendations, comments asserted that the QDMTT, IIR, and UTPR have unique characteristics that are not present in the income taxes that were in existence when section 1503(d) was enacted. According to some comments, these taxes are not based on the traditional concept of tax residency and thus do not present the possibility for the mismatches in tax residency that the dual consolidated loss rules were intended to address. Comments further noted that the QDMTT, IIR, and UTPR are minimum taxes based on an MNE Group's financial accounting income and, in contrast to typical tax consolidation or group relief regimes, the aggregation of revenue or expense under the GloBE Model Rules is not elective. Finally, comments asserted that the IIR differs from a typical foreign income tax because it is not a tax on an entity's income (including income imputed from a subsidiary) arising in the foreign jurisdiction where the entity is a tax resident. According to these comments, a foreign use cannot occur under the current dual consolidated loss rules as a result of a loss being taken into account under an IIR if the entity incurring the loss is not a tax resident in the foreign jurisdiction imposing the IIR—that is, these comments assert a foreign use can only occur if a dual consolidated loss is made available under the laws of the foreign jurisdiction in which the loss arises.
As indicated in Notice 2023-80, the Treasury Department and the IRS are of the view that the aggregation of items of revenue and expense of Constituent Entities in the same jurisdiction in calculating the ETR can result in double-deduction outcomes that the dual consolidated loss rules were intended to address. First, despite the differences between the GloBE Model Rules and more traditional foreign income tax systems, the GloBE Model Rules can also present a typical example of tax residency arbitrage that the dual consolidated loss rules were intended to address. For example, assume USP, a domestic corporation, owns all the interests in DEx, an entity organized under the laws of Country X that is disregarded as an entity separate from its owner. DEx, in turn, owns all the stock in CFCx, a foreign corporation organized under the laws of Country X. DEx incurs a $100x loss and CFCx generates $100x of income. If Country X does not impose an income tax on Country X entities, then the $100x loss incurred by DEx would not be a dual consolidated loss with respect to USP's interests in DEx.
Moreover, the features of the IIR or QDMTT noted by comments—such as using financial accounting income as a starting point for purposes of determining GloBE Income or Loss, or being a minimum tax—do not preclude an IIR or QDMTT from being the type of tax to which the dual consolidated loss rules were intended to apply. Indeed, these types of features are included in the U.S. income tax.
As an alternative to a foreign use exception, some comments recommended an anti-abuse rule that provides that a foreign use can only occur as a result of aggregation under the GloBE Model Rules if the losses were created for a tax-avoidance purpose. These proposed regulations do not provide such an anti-abuse rule because there is no indication in the statutory language or legislative history that the application of the dual consolidated loss rules should be limited to losses incurred for a tax-
Accordingly, the proposed regulations provide that an income tax may include a tax that is intended to ensure a minimum level of taxation on income or computes income or loss by reference to financial accounting net income or loss.
As discussed in parts I.A, I.B, and I.E of the Background section of this preamble, the definitions of hybrid entity, hybrid entity separate unit, and dual resident corporation are each based, in part, on whether the relevant entity is subject to an income tax of a foreign country on its worldwide income or on a residence basis. The definition of a foreign branch separate unit, on the other hand, is based on the level of activities required to constitute a foreign branch under § 1.367(a)-6T(g)(1) (subject to an exception where business operations do not constitute a permanent establishment under an applicable income tax convention). Among other requirements, an entity is a transparent entity only if it is not subject to an income tax of a foreign country on its worldwide income or on a residence basis.
As discussed in part IV.A of the Background section of this preamble, a top-up tax may be collected by a jurisdiction with respect to the Net GloBE Income of a Constituent Entity under a QDMTT or an IIR. The top-up tax under an IIR with respect to the Net GloBE Income of an entity located in one jurisdiction may be collected by a different jurisdiction from another Constituent Entity in the MNE Group. As mentioned in part I.D.1 of this Explanation of Provisions, comments have asserted that the IIR is not based on the traditional concept of tax residency and, if a loss does not arise in the foreign jurisdiction that assesses the tax, the dual consolidated loss rules do not apply.
The Treasury Department and the IRS are of the view, that where a loss reduces or eliminates the amount of Net GloBE Income in a jurisdiction, the results under the dual consolidated loss rules should be the same regardless of the jurisdiction collecting tax with respect to the amount of Jurisdictional Top-up Tax. For example, assume a domestic corporation (“DC”) owns a foreign disregarded entity (“FDEx”), a tax resident in Country X that imposes a QDMTT that is an income tax. Further assume that FDEx owns all the stock of a foreign corporation organized under the laws of Country X (“CFCx”) and that is also a tax resident in Country X. FDEx should be treated as subject to the QDMTT, and as a hybrid entity as a result of being subject to the QDMTT, to prevent the double-deduction outcome discussed in part I.D.1 of this Explanation of Provisions.
Alternatively, assume that DC owns another disregarded entity (“FDEy”), that is a tax resident in Country Y, a jurisdiction that imposes an IIR that is income tax, and FDEy owns FDEx, which owns CFCx, and that Country X does not impose a QDMTT. In this case, a loss of FDEx can reduce the GloBE Income of CFCx for purposes of the Country Y IIR and, as was the case with a Country X QDMTT (that is also calculated in part by reference to FDEx's income), a double-deduction outcome may result. The treatment of an interest in FDEx as a separate unit should not be affected if, instead of the QDMTT being collected from FDEx with respect to its GloBE Income, an IIR is collected on FDEy, the owner of FDEx, with respect to the GloBE Income of FDEx. Moreover, a loss of FDEx cannot offset income of a Country Y Constituent Entity for purposes of the Country Y IIR and, therefore, the FDEx separate unit should not be part of a combined separate unit that includes FDEy, which would otherwise distort the calculation of income or loss attributable to the combined Country Y separate unit. In other words, specifically identifying these separate units is necessary to apply the separate unit combination rule, including for purposes of describing the location of separate units arising from a QDMTT or an IIR.
Accordingly, the proposed regulations generally provide that if the income or loss of a foreign entity that is not taxed as an association for Federal income tax purposes is taken into account in determining the amount of tax under an IIR, then a domestic corporation's directly or indirectly held interest in such an entity is a hybrid entity separate unit.
These new definitions of hybrid entity separate unit and foreign branch separate unit do not apply to an interest in an entity, or place of business, respectively, that would otherwise qualify as a separate unit under the definitions included in the current regulations. This is because a loss attributable to a separate unit as defined under the current regulations is already a dual consolidated loss and, thus, additional rules are not necessary to prevent a double-deduction outcome from occurring as a result of the use of losses attributable to such separate units for purposes of a QDMTT or IIR. For example, if a hybrid entity's loss is also taken into account in determining the amount of tax under an IIR, a foreign use may result if a dual consolidated loss attributable to an interest in the entity is made available to offset income either for purposes of the foreign income tax to which the entity is subject or for purposes of the IIR.
Under the proposed regulations, being subject to an IIR would not cause an interest in a Tax Transparent Entity to be a hybrid entity separate unit.
The Treasury Department and the IRS are of the view that the treatment of a foreign entity or a place of business outside the United States as a Stateless Constituent Entity should not preclude treating a domestic corporation's interest in such an entity or the place of business as an individual separate unit. Even though the GloBE Income or Loss of a Stateless Constituent Entity is not combined with the GloBE Income or Loss of any other Constituent Entity, treating an interest in such an entity or a place of business as an individual separate unit is appropriate to prevent double-deduction outcomes that may nevertheless arise (for example, if the foreign entity were to generate a loss during the first half of the taxable year and then elect to be treated as a foreign corporation for U.S. tax purposes).
The income or loss of a domestic entity may also be taken into account in determining the amount of tax imposed under an IIR (for example, if a domestic corporation were wholly owned by a foreign corporation organized under the laws of a jurisdiction that imposed an IIR). However, the Treasury Department and the IRS are of the view that the IIR alone should not cause a domestic entity to be treated as a dual resident corporation or a hybrid entity. The dual consolidated loss rules are intended to prevent double-deduction outcomes that can arise from structures involving the possibility of a form of arbitrage, such as from an entity or place of business being subject to tax in more than one country, or from the entity or place of business having different tax classifications under U.S. and foreign tax law. Absent this type of arbitrage, the dual consolidated loss rules would not apply to limit the deductibility of a domestic entity's loss due to that entity's income or loss being reflected in the amount of tax imposed under an IIR (or a similar shareholder-level tax). Moreover, if a loss of a domestic entity were viewed as giving rise to a second deduction because it is taken into account to determine the amount of tax imposed under an IIR, the loss is likely only available to offset dual inclusion income (and therefore would not give rise to a double-deduction outcome) since the income of any domestic affiliate that could be offset by the loss for domestic tax purposes should also be taken into account in determining the amount of tax imposed under the IIR. Accordingly, under the proposed regulations a domestic entity is not treated as a dual resident corporation or a hybrid entity solely as a result of the domestic entity's income or loss being taken into account in determining the amount of an IIR.
Comments requested guidance providing that, even if the dual consolidated loss rules apply with respect to the GloBE Model Rules, a foreign use should not occur solely because a dual consolidated loss is taken into account for purposes of the Transitional CbCR Safe Harbour. The comments noted that, unlike the QDMTT, IIR, and UTPR, the Transitional CbCR Safe Harbour is not a collection mechanism and thus does not operate to impose a tax liability. Instead, according to some comments, the Transitional CbCR Safe Harbour can be viewed as a “gating” mechanism to determine if a taxpayer is subject to tax, similar to a determination of whether activity rises to the level of a permanent establishment under an applicable tax treaty. Further, comments claimed that the calculation of income and expenses under the Transitional CbCR Safe Harbour is substantially different from such calculations under the general GloBE Model Rules and generally accepted accounting principles.
Because the Transitional CbCR Safe Harbour is intended to serve as a simplified proxy for determining whether the Tested Jurisdiction is likely to have an ETR that is at or above the minimum rate, the Treasury Department and the IRS are of the view that a foreign use exception for the Transitional CbCR Safe Harbour is not appropriate where, in the absence of the Transitional CbCR Safe Harbour, a dual consolidated loss could be made available to reduce the amount of income subject to a Top-up Tax. In other words, the use of a loss or expense to qualify for the Transitional CbCR Safe Harbour, and thereby avoid tax that may otherwise be imposed under the GloBE Model Rules absent the application of the Transitional CbCR Safe Harbour, has the same double-deduction outcome effect as if the loss or expense were made available to directly reduce the tax. As a result, a foreign use may occur with respect to the application of the Transitional CbCR Safe Harbour.
Finally, one comment requested guidance that jurisdictional blending in a Tested Jurisdiction under the GloBE Model Rules does not constitute a foreign use of a dual consolidated loss if the Transitional CbCR Safe Harbour is satisfied in that Tested Jurisdiction after the application of the duplicate loss arrangement rules. This concern could arise because satisfying the Transitional CbCR Safe Harbour in a Tested Jurisdiction technically does not preclude the application of the GloBE Model Rules (and, thus, technically would not preclude a foreign use that could occur under the “made available” standard), but rather only deems the Jurisdictional Top-up Tax in the Tested Jurisdiction to be zero. Consistent with the guidance requested in this comment, the proposed regulations provide a limited foreign use exception under which there is deemed to be no foreign use with respect to the GloBE Model Rules where the Transitional CbCR Safe Harbour is satisfied and no foreign use occurs with respect to the Transitional CbCR Safe Harbour due to the application of the duplicate loss arrangement rules.
As discussed in part IV.C. of the Background section of this preamble, the December 2023 Administrative Guidance contains rules that disallow expenses for purposes of qualifying for the Transitional CbCR Safe Harbour if there is a duplicate loss arrangement. An arrangement qualifies as a duplicate loss arrangement, in relevant part, if an
As discussed in part I.D of the Background section of this preamble, the taxpayer's ability to choose the jurisdiction in which a dual consolidated loss is used is a long-standing feature of the dual consolidated loss rules. The mirror legislation rule was issued to address situations where foreign legislation undermines the taxpayer's ability to choose by denying any opportunity for a foreign use of a particular dual consolidated loss and thereby compelling the taxpayer to make a domestic use election. However, not all forms of foreign law that deny the foreign use of deductions composing a dual consolidated loss are mirror legislation.
The Treasury Department and the IRS are of the view that a taxpayer's ability to choose whether to put a dual consolidated loss to a domestic use or a foreign use can be preserved even if the foreign law does not explicitly provide an election to use the loss (like the dual consolidated loss rules) and instead only denies a loss to avoid a double-deduction outcome. The duplicate loss arrangement rules in the December 2023 Administrative Guidance preserve such a choice and thus do not constitute mirror legislation because a dual consolidated loss could be put to a foreign use for purposes of the Transitional CbCR Safe Harbour. That is, if no domestic use election is made with respect to a dual consolidated loss, then the loss is subject to the domestic use limitation, and the duplicate loss arrangement rules should not apply because the loss would not be deductible for purposes of determining the taxable income of another Constituent Entity in another jurisdiction. If, on the other hand, a domestic use election is made for a dual consolidated loss, then the loss would be put to a domestic use and the duplicate loss arrangement rules should prevent the expense or loss from being taken into account for purposes of the Transitional CbCR Safe Harbour (that is, they should prevent a foreign use). Thus, through its ability to make or forgo a domestic use election, a taxpayer retains the choice to put a dual consolidated loss to a domestic use or a foreign use (but not both). For the same reason, the double-deduction rules included in the OECD report addressing hybrid and branch mismatch arrangements,
Expenditure incurred by a US taxpayer, or a New Zealand hybrid entity which is deductible by a US owner, will not be subject to [New Zealand's deduction disallowance rules] so long as the US taxpayer is subject to the [dual consolidated loss] rules and has not made a domestic use election. If the US taxpayer has made a domestic use election, then [the New Zealand deduction disallowance rules] will apply to deny a deduction for the expenditure. That is because the domestic use election is an election that the [dual consolidated loss] rules do not apply to the US taxpayer in respect of the relevant expenditure.
As discussed in part IV.B of the Background section of this preamble, Notice 2023-80 announced that future regulations would be promulgated concerning legacy DCLs (that is, certain dual consolidated losses incurred before any legislation enacting the GloBE Model Rules is effective).
Several comments requested that the foreign use exception described in Notice 2023-80 be extended to include dual consolidated losses incurred in taxable years beginning after December 31, 2023 (for example, for taxable years ending on or before December 31, 2024, or taxable years beginning in the year that final regulations concerning the applicability of the dual consolidated loss rules with respect to the QDMTT and IIR are issued). Comments asserted that the extension of the foreign use exception is warranted to provide certainty and to take into account further developments from the OECD, such as the possible future application of the duplicate loss arrangement rules outside the context of the Transitional CbCR Safe Harbour.
The Treasury Department and the IRS are of the view that it is appropriate to extend, for a limited period, relief from the application of the dual consolidated loss rules with respect to the GloBE Model Rules. This would provide taxpayers more certainty, allow for further consideration of these proposed regulations and comments that may be submitted, and allow for consideration of any future developments at the OECD. Extending the relief only for a limited period is intended to minimize the double-deduction outcomes that may result. Accordingly, and subject to an anti-abuse rule, these proposed regulations provide that the dual consolidated loss rules apply without taking into account QDMTTs or Top-up Taxes with respect to losses incurred in taxable years beginning before August 6, 2024.
In addition to not being limited to legacy DCLs, this transition relief differs from the relief provided in Notice 2023-80 in that it applies beyond foreign use, applying with respect to all the dual consolidated loss rules (including foreign use). This broader relief is intended, in part, to relieve the administrative burden of having to file a domestic use election and annual certifications for dual consolidated losses that would otherwise qualify for the foreign use exception described in Notice 2023-80 (or for the additional relief provided under the proposed regulations). Further, this would prevent a loss from being subject to recapture as a result of a triggering event other than a foreign use, such as the failure to file an annual certification.
As noted in part IV.B of the Background section of this preamble, the Treasury Department and the IRS are studying the interaction of the GloBE Model Rules with the rules under sections 245A(e) and 267A and request comments in this regard. For example, the Treasury Department and the IRS are considering whether a foreign country's traditional income tax and a Top-up Tax with respect to the operations in the foreign country should be viewed as part of the same “tax laws”
Proposed § 1.1502-13(j)(10), relating to the interaction of the dual consolidated loss rules with the intercompany transaction regulations, is proposed to apply to taxable years for which the original Federal income tax return is due (without extensions) after the date that final regulations are published in the
The parenthetical in proposed § 1.1503(d)-1(c)(1)(ii), clarifying that a specified foreign tax resident that is a disregarded entity can be related to a domestic consenting corporation for purposes of § 1.1503(d)-1(c)(1)(ii), is proposed to apply to determinations relating to taxable years ending on or after August 6, 2024.
Proposed § 1.1503(d)-5(b)(2)(iv) and (c)(4)(iv), relating to the attribution of items arising from ownership of stock, are proposed to apply to taxable years ending on or after August 6, 2024.
The fourth and fifth sentences of proposed § 1.1503(d)-5(c)(3)(i), relating to the adjustments to conform to U.S. tax principles, are proposed to apply to taxable years ending on or after August 6, 2024.
Proposed § 1.1503(d)-8(b)(12), relating to the application of the dual consolidated loss rules without regard to QDMTTs or Top-up Taxes, applies with respect to losses incurred in taxable years beginning before August 6, 2024.
Proposed § 1.1503(d)-3(c)(9), relating to the foreign use exception for qualification for the Transitional CbCR Safe Harbour, is proposed to apply to taxable years beginning on or after August 6, 2024.
Proposed §§ 1.1503(d)-1(b)(4)(i)(A)(
Proposed § 1.1503(d)-1(f), relating to an anti-avoidance rule, is proposed to apply to taxable years ending on or after August 6, 2024.
Proposed § 1.1503(d)-1(b)(6)(ii), relating to minimum taxes and taxes based on financial accounting principles, is proposed to apply to taxable years ending on or after August 6, 2024.
A taxpayer may rely on these proposed regulations for any taxable year ending on or after August 6, 2024 and beginning on or before the date that regulations finalizing these proposed regulations are published in the
The preamble to the 2018 proposed regulations describes structures involving payments from foreign disregarded entities to their domestic corporate owners that are regarded for foreign tax purposes but disregarded for U.S. tax purposes. For foreign tax purposes, the payments give rise to a deduction or loss that, for example, can be surrendered (or otherwise used, such as through a consolidation regime) to offset non-dual inclusion income. The preamble notes that these structures are not addressed under the current section 1503(d) regulations but give rise to significant policy concerns that are similar to those arising under sections 245A(e), 267A, and 1503(d). In addition, the preamble states that the Treasury Department and the IRS are studying these transactions and request comments.
In response to this request, a comment agreed that these structures can produce a deduction/no-inclusion (“D/NI”) outcome. In a similar context, the comment asserted that arriving at the correct result would generally require, for U.S. tax purposes, disaggregating a disregarded payment into a regarded item of deduction and a regarded item of income, and taking such items into account for purposes of the dual consolidated loss rules to the extent reflected on the books and records of the entity. However, the comment did not recommend this approach due to complexity, noting, for example, that it would require tracking of transactions between a foreign disregarded entity and its domestic corporate owner, as well as determining the character and source of items that would not otherwise exist for U.S. tax purposes. To mitigate certain D/NI outcomes, the comment recommended an alternative approach, which would track disregarded items only so as to offset regarded items, and thus not so as to create items of income and deduction. The comment conceded, however, that this approach would not address the paradigm structure involving only disregarded deductions that give rise to D/NI outcomes and therefore would not address the policy concerns. The comment queried whether it might be better for the dual consolidated loss rules not to apply, with the expectation that the foreign jurisdiction could, in some cases, eliminate D/NI outcomes by denying the foreign tax deduction.
The Treasury Department and the IRS are of the view that treating items otherwise disregarded for U.S. tax purposes as regarded could give rise to considerable complexity, and that the alternative approach recommended by the comment would not address the paradigm structure, and therefore would not sufficiently address the policy concerns underlying these structures. Accordingly, neither of these approaches is adopted. However, the Treasury Department and the IRS are not of the view that these structures should be addressed only to the extent of applicable foreign tax rules addressing D/NI outcomes; in the absence of a foreign tax rule denying a foreign tax deduction, these structures would continue to give rise to the significant policy concerns noted above. In addition, the OECD/G20 recommends defensive rules that require income inclusions to neutralize D/NI outcomes.
Accordingly, the proposed regulations address these structures through the entity classification rules under section 7701 and the dual consolidated loss rules under section 1503(d), in a manner that is consistent with the “domestic consenting corporation” approach under §§ 301.7701-3(c)(3) and 1.1503(d)-1(c) addressing domestic reverse hybrids. Under this approach, when certain eligible entities (“specified eligible entities”) are treated as disregarded entities for U.S. tax purposes, a domestic corporation that acquires, or on the effective date of the election directly or indirectly owns, interests in such a specified eligible entity consents to be subject to the rules of proposed § 1.1503(d)-1(d).
Pursuant to these rules (the “disregarded payment loss” rules), and as further discussed in part II.B. of this Explanation of Provisions, the domestic corporation agrees that it will monitor a net loss of the entity under a foreign tax law that is composed of certain payments that are disregarded for U.S. tax purposes and, if a D/NI outcome occurs as to the loss, include in gross income an amount equal to the loss.
The proposed regulations also include a deemed consent rule pursuant to which, beginning on the date that is twelve months after the date that the disregarded payment loss rules are applicable, a domestic corporation that directly or indirectly owns interests in a specified eligible entity is deemed to consent to be subject to the rules, to the extent it has not otherwise so consented.
When a domestic corporation consents to be subject to the disregarded payment loss rules, the domestic corporation agrees that if the specified eligible entity (described below) incurs a disregarded payment loss during a certification period (discussed in section II.B.3 of this Explanation of Provisions) and a triggering event occurs with respect to that loss, then the domestic corporation will include in gross income the DPL inclusion amount.
In general, a specified eligible entity is an entity that, when classified as a disregarded entity, could pay or receive amounts that could give rise to a D/NI outcome by reason of being disregarded for U.S. tax purposes but deductible for foreign tax purposes. Thus, a specified eligible entity includes an eligible entity (regardless of whether domestic or foreign) that is a foreign tax resident (which, in the case of a domestic eligible entity, may occur, for example, if the entity is managed and controlled in a foreign country), because amounts paid by such an entity may be disregarded for U.S. tax purposes but deductible for foreign tax purposes.
A disregarded payment loss with respect to a specified eligible entity or a foreign branch (in either case, a “disregarded payment entity,” and the domestic corporation that consents to be subject to the disregarded payment loss rules, the “specified domestic owner” of the disregarded payment entity) is computed for each foreign taxable year of the entity.
In general, the items of deduction taken into account for purposes of computing a disregarded payment loss include any item that is deductible under the relevant foreign tax law, is disregarded for U.S. tax purposes and, if regarded for U.S. tax purposes, would be interest, a structured payment, or a royalty within the meaning of § 1.267A-5(a)(12), (b)(5)(ii), or (a)(16), respectively.
The rules for computing a disregarded payment loss therefore differ in certain respects from comparable rules applicable for purposes of computing a dual consolidated loss. For example, the latter rules do not take into account the deductibility of an item under a foreign tax law and are not limited to interest, structured payments, or royalties.
In general, the specified domestic owner must include in gross income the DPL inclusion amount with respect to a disregarded payment loss if either of two triggering events occurs with respect to the loss during a certification period (the “DPL certification period”).
The two triggering events are based on certain principles of the dual consolidated loss rules.
The second triggering event is a failure by the specified domestic owner to comply with certification requirements.
For simplicity purposes, the proposed regulations include fewer triggering events than the dual consolidated loss rules. For example, the disregarded payment loss triggering events do not include specific triggering events related to the transfer of assets of, or interests in, a disregarded payment entity. Nevertheless, the scope of the disregarded payment loss triggering events is, in general, consistent with that of the dual consolidated loss triggering events because a foreign use triggering event typically occurs, or will occur, in connection with other dual consolidated loss triggering events that are not rebutted. For example, the transfer of all the interests in a disregarded entity by its domestic owner to a related and wholly owned foreign corporation would constitute a triggering event described in § 1.1503(d)-6(e)(1)(v) (transfer of 50 percent or more of an interest in a separate unit). However, such a transfer would also typically give rise to a foreign use triggering event described in § 1.1503(d)-6(e)(1)(i) because a portion of a deduction or loss taken into account in computing the dual consolidated loss would generally carry over under foreign law following the transfer and thus be made available to offset or reduce an item that is recognized as income or gain under foreign law and that is, or would be, considered under U.S. tax principles to be an item of a foreign corporation.
In general, the DPL inclusion amount is, with respect to a disregarded payment loss as to which a triggering event occurs during the DPL certification period, the amount of the disregarded payment loss.
In certain cases, the DPL inclusion amount is reduced by the positive balance, if any, of the “DPL cumulative register” with respect to the disregarded payment entity.
Similar to the dual consolidated loss rules, the proposed regulations include a rule pursuant to which disregarded payment entities for which the relevant foreign tax law is the same (“individual disregarded payment entities”) are generally combined and treated as a single disregarded payment entity (“combined disregarded payment entity”) for purposes of the disregarded payment loss rules.
This combination rule is intended to prevent the application of the disregarded payment loss rules to cases in which, taking into account the overall effect of disregarded payments under a foreign tax law, there is not an opportunity for a disregarded payment loss of an individual disregarded payment entity to produce a D/NI outcome. For example, assume USP, a domestic corporation, wholly owns DE1X, which wholly owns DE2X, and each of DE1X and DE2X is a disregarded payment entity tax resident in Country X. Further assume that, computed on a separate basis during a foreign taxable year, DE1X has a $100x disregarded payment loss (consisting solely of a $100x payment by DE1X to DE2X), and DE2X has $100x of disregarded payment income (consisting solely of the $100x payment received by DE2X from DE1X). Absent the combination rule, the specified domestic owner of DE1X would be required to monitor DE1X's disregarded payment loss and annually certify that no foreign use has occurred with respect to the loss. However, taking into account the overall effect of the payment under Country X law, there is likely to be no net loss attributable to the payment and, as a result, there likely is not an opportunity for the payment to give rise to a D/NI outcome. The combination rule thus limits the application of the disregarded payment loss rules to cases in which it is likely that disregarded payments could give rise to a D/NI outcome.
The proposed regulations include special rules pursuant to which the disregarded payment loss rules also apply to dual resident corporations, because a disregarded payment by a dual resident corporation to its disregarded entity could also give rise to a D/NI outcome (for example, if the dual resident corporation surrenders the loss to a foreign corporation). Thus, pursuant to the consent rules described in part II.A of this Explanation of Provisions, a dual resident corporation that directly or indirectly owns interests in an eligible entity that is classified as a disregarded entity agrees, for purposes of the disregarded payment loss rules, to be treated as a disregarded payment entity and as a specified owner of such disregarded payment entity.
Although the disregarded payment loss rules address similar policy concerns as, and rely on certain aspects of, the existing dual consolidated loss rules, the Treasury Department and the IRS are of the view that integrating the two regimes would result in considerable complexity and administrative burden. For example, integrating the regimes could require rules pursuant to which a disregarded payment entity's deduction under a foreign tax law for a disregarded payment is considered to in part offset the entity's items of regarded income (which would have the effect of increasing a dual consolidated loss, relative to not taking into account the payment for purposes of the dual consolidated loss rules) and to in part offset the entity's items of income that are disregarded for U.S. tax purposes (which would have the effect of decreasing a disregarded payment loss, relative to only taking into account the payment for purposes of the disregarded payment loss rules).
The disregarded payment loss rules therefore operate independently of the dual consolidated loss rules. Thus, for example, only items that are regarded for U.S. tax purposes are taken into account in computing a dual consolidated loss (or cumulative register), and only items that are disregarded for U.S. tax purposes are taken into account in computing a disregarded payment loss (or DPL cumulative register). In addition, a disregarded payment entity may have both a dual consolidated loss and a disregarded payment loss for the same taxable year, and both of these items could be triggered by a single event (such as a foreign use pursuant to a foreign loss surrender regime); in contrast, a foreign use could be avoided both for a dual consolidated loss and disregarded payment loss of the same disregarded payment entity if, for example, an election is required to enable a foreign use and no such election is made.
As discussed in part I.B of the Background section of this preamble, the dual consolidated loss rules do not take into account disregarded transactions (that typically are regarded for foreign tax purposes) for purposes of attributing items to a separate unit or an interest in a transparent entity. This approach, which minimizes the need for additional complex rules, can result in both the over- and under-application of the dual consolidated loss rules as compared to more precise rules that would take into account such items to the extent necessary to neutralize double-deduction outcomes. Thus, the decision to ignore disregarded transactions in the dual consolidated loss rules for this purpose reflects a balance of policy and administrability. In other contexts, various policy objectives have required giving effect to certain disregarded transactions.
The proposed rules relating to consent to be subject to the disregarded payment loss rules are proposed to apply to entity classification elections filed on or after August 6, 2024 (regardless of whether the election is effective before August 6, 2024). See proposed § 301.7701-3(c)(4)(vi)(A). The proposed rule relating to deemed consent is proposed to apply on or after August 6, 2025. See proposed § 301.7701-3(c)(4)(vi)(B). The proposed rules relating to disregarded payment losses are proposed to apply to taxable years ending on or after August 6, 2024.
The Treasury Department and the IRS intend to make conforming amendments to the regulations under section 1503(d), including with respect to examples, upon finalization of the proposed regulations.
Pursuant to the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the IRS are not subject to the requirements of section 6 of Executive Order 12866, as amended. Therefore, a regulatory impact assessment is not required.
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (“PRA”) requires that a Federal agency obtain the approval of the OMB before collecting information from the public, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit. Section 1.1503(d)-1(d)(4) of these proposed regulations requires the collection of information.
As discussed in part II.B of this Explanation of Provisions, the proposed regulations require certain taxpayers to certify that no foreign use has occurred with respect to a disregarded payment loss. The IRS will use this information to determine the extent to which these taxpayers need to recognize income under the proposed regulations.
The reporting burden associated with this collection of information will be reflected in the PRA submissions associated with Form 1120 (OMB control number 1545-0123). The Treasury Department and the IRS do not have readily available data to determine the number of taxpayers affected by this collection of information because no reporting module currently identifies these types of disregarded payments. The Treasury Department and the IRS request comments on all aspects of information collection burdens related to the proposed regulations, including ways for the IRS to minimize the paperwork burden.
When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (5 U.S.C. chapter 6) (“RFA”) requires the agency to prepare and make available for public comment an initial regulatory flexibility analysis that will describe the impact of the proposed rule on small entities.
The Treasury Department and the IRS do not expect that the proposed dual consolidated loss regulations described in parts I.A, I.B, and I.C of the Explanation of Provisions will have a significant economic impact on a substantial number of small entities because those regulations refine computations under the current dual consolidated loss regulations without changing the economic impact of the current regulations. Further, the Treasury Department and the IRS do not expect the proposed dual consolidated loss regulations described in parts I.D.1 through I.D.6 of the Explanation of Provisions will have a significant economic impact on a substantial number of small entities because they provide exceptions and other rules that limit the application of the current dual consolidated loss regulations. However, because there is a possibility of significant economic impact on a substantial number of small entities, an initial regulatory flexibility analysis for the regulation is provided below. The Treasury Department and the IRS request comments from the public on the number of small entities that may be impacted and whether that impact will be economically significant.
The proposed dual consolidated loss regulations described in parts I.A through I.D of the Explanation of Provisions address potential uncertainty, and refine or adjust certain computations, under current law. In addition, the proposed dual consolidated loss regulations provide limited exceptions to the application of the dual consolidated loss rules where not inconsistent with the general policy underlying those rules. As a result, this portion of the proposed regulations increases the precision of the dual consolidated loss regulations and reduces inappropriate planning opportunities.
As explained in part II.A of the Explanation of Provisions, the proposed disregarded payment loss regulations address certain hybrid payments that can give rise to deduction/no-inclusion outcomes.
The proposed regulations described in parts I.A, I.B, I.C, I.D.1, I.D.2, and I.D.4 of the Explanation of Provisions address potential uncertainty, and refine or adjust certain computations, under the current dual consolidated loss regulations. The proposed dual consolidated loss regulations described in parts I.D.3 and I.D.5 of the Explanation of Provisions limit the application of the current dual consolidated loss regulations. The proposed disregarded payment loss regulations described in part II of the Explanation of Provisions require an income inclusion for U.S. tax purposes to eliminate the deduction/no-inclusion outcome that would otherwise arise from certain hybrid payments. The legal basis for these regulations is contained in sections 1502, 1503(d), 7701, and 7805.
Because an estimate of the number of small businesses affected is not currently feasible, this initial regulatory flexibility analysis assumes that a substantial number of small businesses will be affected. The Treasury Department and the IRS do not expect that these proposed regulations will affect a substantial number of small nonprofit organizations or small governmental jurisdictions.
The proposed dual consolidated loss regulations do not impose additional reporting or recordkeeping obligations. The proposed disregarded payment loss regulations impose a certification requirement that is filed with a domestic corporation's tax return.
These proposed regulations would replace portions of the dual consolidated loss regulations. The Treasury Department and the IRS are not aware of any Federal rules that duplicate, overlap, or conflict with these proposed regulations.
The Treasury Department and the IRS did not consider any significant alternative to the proposed dual consolidated loss regulations. The proposed regulations described in parts I.A, I.B, I.C, I.D.1, I.D.2, and I.D.4 of the Explanation of Provisions simply address potential uncertainty, or refine or adjust certain computations, under current law. The proposed regulations described in parts I.D.3 and I.D.5 of the Explanation of Provisions limit the application of the dual consolidated loss regulations. As a result, the proposed dual consolidated loss regulations do not impose an additional economic burden and, consequently, the regulations represent the approach with the least economic impact.
As discussed in part II.A of the Explanation of Provisions, the proposed disregarded payment loss regulations address policy concerns that are similar to the concerns underlying the enactment of sections 245A(e), 267A, and 1503(d). Sections 245A, 267A, and 1503(d) apply uniformly to large and small business entities, and the Treasury Department and the IRS are of the view that the proposed disregarded payment loss regulations should generally apply without regard to the size of the corporation—a small business exception would undermine the anti-hybridity policies underlying these regulations. Accordingly, there is no viable alternative to the proposed regulations for small entities.
Pursuant to section 7805(f) of the Code, the proposed regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small businesses. The Treasury Department and the IRS also request comments from the public on the analysis in part III of the Special Analyses.
Section 202 of the Unfunded Mandates Reform Act of 1995 (“UMRA”) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. The proposed rules do not include any Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of that threshold.
Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of Executive Order 13132. The proposed rules do not have federalism implications and do not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of Executive Order 13132.
Sections 1.1503(d)-1(b)(4)(i)(A)(
The GloBE Model Rules and Administrative Guidance addressing Hybrid Arbitrage Arrangements are discussed in Part IV of the Background section of this preamble. The GloBE Model Rules and the GloBE Model Rules Consolidated Commentary were issued by the OECD on December 20, 2021, and April 25, 2024, respectively, and are available at
Before these proposed amendments to the final regulations are adopted as final regulations, consideration will be given to comments that are submitted timely to the IRS as prescribed in this preamble under the
A public hearing will be scheduled if requested in writing by any person who timely submits electronic or written comments. Requests for a public hearing are also encouraged to be made electronically. If a public hearing is scheduled, notice of the date and time for the public hearing will be published in the
The principal authors of these regulations are Andrew L. Wigmore of the Office of Associate Chief Counsel (International) and Julie Wang of the Office of Associate Chief Counsel (Corporate). However, other personnel from the Treasury Department and the IRS participated in their development.
IRS Revenue Procedures, Revenue Rulings, Notices, and other guidance cited in this document are published in the Internal Revenue Bulletin or Cumulative Bulletin and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at
Income taxes, Reporting and recordkeeping requirements.
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.
Accordingly, the Treasury Department and the IRS propose to amend 26 CFR parts 1 and 301 as follows:
26 U.S.C. 7805 * * *
Sections 1.1503(d)-1 through 8 also issued under 26 U.S.C. 953(d), 26 U.S.C. 1502, 26 U.S.C. 1503(d), 26 U.S.C. 1503(d)(2)(B), 26 U.S.C. 1503(d)(3), and 26 U.S.C. 1503(d)(4).
The additions and revision read as follows:
(a) * * *
(6) * * *
(ii) * * *
(j) * * *
(10)
(A) An affiliated dual resident corporation (as defined in § 1.1503(d)-1(b)(10)); or
(B) An affiliated domestic owner (as defined in § 1.1503(d)-1(b)(10)) acting through a separate unit (as defined in § 1.1503(d)-1(b)(4)) that is not regarded as separate from the domestic owner for Federal income tax purposes.
(ii)
(iii)
(iv)
(15) * * *
(x)
(B)
(
(C)
(D)
(E)
(xi)
(B)
(
(C)
(l) * * *
(11)
The revisions and additions read as follows:
(a) * * * Paragraph (c) of this section provides rules for a domestic consenting corporation. Paragraph (d) of this section provides rules for disregarded payment losses. Paragraph (e) of this section provides relief for certain compliance failures due to reasonable cause and a signature requirement for filings. Paragraph (f) of this section provides an anti-avoidance rule.
(b) * * *
(4) * * *
(i)
(A)
(
(
(B)
(
(
(ii)
(B)
(
(6)
(ii)
(21)
(i) OECD (2021),
(ii) OECD (2024),
(iii) OECD (2024),
(d)
(ii)
(2)
(ii)
(iii)
(3)
(i)
(ii)
(4)
(i) For its taxable year that includes the date on which the foreign taxable year in which the disregarded payment loss is incurred ends, the specified domestic owner must attach with its timely filed tax return a certification labeled “Initial Disregarded Payment Loss Certification,” which must contain—
(A) The information set forth in § 1.1503(d)-6(c)(2)(ii) (determined by substituting the phrase “disregarded payment entity” for the phrase “separate unit”);
(B) A statement of the amount of the disregarded payment loss; and
(C) A statement that a foreign use of the disregarded payment loss has not occurred during the DPL certification period.
(ii) During the DPL certification period, for each of its subsequent taxable years that includes a date on which a foreign taxable year ends, the specified domestic owner must attach with its timely filed tax return a certification labeled “Annual Disregarded Payment Loss Certification” and satisfying the requirements of this paragraph (d)(4)(ii). Certifications with respect to multiple disregarded payment losses may be combined in a single certification, but each disregarded payment loss must be separately identified. To satisfy the requirements of this paragraph (d)(4)(ii), the certification must—
(A) Identify the disregarded payment loss to which it pertains by setting forth the foreign taxable year in which the disregarded payment loss was incurred and the amount of such loss;
(B) State that there has been no foreign use of the disregarded payment loss; and
(C) Warrant that arrangements have been made to ensure that there will be no foreign use of the disregarded payment loss and that the specified domestic owner will be informed of any such foreign use.
(5)
(i) The
(ii) The term
(iii) The reduced amount must be demonstrated to the satisfaction of the Commissioner. To so demonstrate, the specified domestic owner of the disregarded payment entity must attach a statement labeled “Reduction of Disregarded Payment Loss Amount” to the income tax return for the taxable year in which the triggering event occurs and provide any other information as requested by the Commissioner. The statement must show the disregarded payment income or disregarded payment loss of the disregarded payment entity for each foreign taxable year up to and including the foreign taxable year during which the triggering event occurs.
(6)
(i) The term
(ii) The terms
(A)
(B)
(C)
(
(
(
(D)
(
(
(
(iii) The term
(iv) The term
(v) The term
(vi) The term
(vii) The term
(viii) The term
(7)
(ii)
(iii)
(iv)
(v)
(vi)
(f)
The addition reads as follows:
(c) * * *
(9)
The revisions and additions read as follows:
(b) * * *
(1) * * * For examples illustrating the interaction of the intercompany transaction rules in § 1.1502-13 with the dual consolidated loss rules, see § 1.1502-13(j)(15)(x) and (xi). * * *
(2) * * *
(i)
(ii)
(iii)
(iv)
(B)
(c) * * *
(1) * * *
(i) * * * For examples illustrating the interaction of the intercompany transaction rules in § 1.1502-13 with the dual consolidated loss rules, see § 1.1502-13(j)(15)(x) and (xi). * * *
(3) * * *
(i) * * * For this purpose, an adjustment to conform to U.S. tax principles does not include the attribution to a hybrid entity separate unit or an interest in a transparent entity of any items that have not and will not be reflected on the books and records of the hybrid entity or transparent entity; for example, items that are reflected on the books and records of the domestic owner cannot be attributed to a hybrid entity separate unit or an interest in a transparent entity as a result of disregarded payments made between the domestic owner and the hybrid entity or transparent entity. See § 1.1503(d)-5(c)(1)(ii) (providing that items reflected on the books and records of the hybrid entity or transparent entity are eliminated if they are otherwise disregarded for U.S. tax purposes). See also § 1.1503(d)-7(c)(6) and (c)(23) through (25) for examples illustrating the application of this paragraph (c)(3)(i). * * *
(4) * * *
(iv)
(B)
(C)
(
(
The revisions and additions read as follows:
(b) * * *
(16) No country imposes a tax collected under either a Qualified Domestic Minimum Top-up Tax, IIR, or UTPR.
(c) * * *
(3)
(B)
(ii)
(B)
(
(C)
(iii)
(B)
(
(
(6) * * *
(iii) * * *
(B) * * * But see § 1.1503(d)-1(d), which takes into account certain payments that are otherwise disregarded for purposes of section 1503(d) and the regulations thereunder. * * *
(18) * * *
(iv)
(23) * * *
(ii) * * * But see § 1.1503(d)-1(d), which takes into account certain payments that are otherwise disregarded for purposes of section 1503(d) and the regulations thereunder. * * *
(iii)
(24) * * *
(i) * * * In year 1, FSX distributes $50x to DE3Y, the entire amount of which is a dividend for U.S. tax purposes and is included in gross income by P. * * *
(ii) Pursuant to § 1.1503(d)-5(c)(4)(iv)(A), neither the $50x dividend nor any deduction or loss with respect to the dividend (for example, a deduction allowed to P under section 245A(a)) is taken into account for purposes of determining the items of income, gain, deduction, and loss of P that are attributable to P's interest in DE3Y; thus, regardless of whether the dividend is reflected on the books and records of DE3Y, no portion of the dividend or any deduction or loss with respect to the dividend is attributable to P's interest in DE3Y. * * *
(25) * * *
(ii) * * *
(B) * * * But see § 1.1503(d)-1(d), which takes into account certain payments that are otherwise disregarded for purposes of section 1503(d) and the regulations thereunder. * * *
(42)
(ii)
(43)
(ii)
The revisions and additions read as follows:
(b) * * *
(6) * * * The parenthetical in § 1.1503(d)-1(c)(1)(ii) applies to determinations under §§ 1.1503(d)-1 through 1.1503(d)-7 relating to taxable years ending on or after August 6, 2024.
(9)
(10)
(11)
(12)
(ii)
(13)
(14)
(15)
(16)
26 U.S.C. 7805. * * *
(a) * * * Paragraph (c) of this section provides rules for making express elections, including a rule under which a domestic eligible entity that elects to be classified as an association consents to be subject to the dual consolidated loss rules of section 1503(d), as well as a rule under which certain owners of certain eligible entities that are disregarded as entities separate from their owners consent to be subject to the disregarded payment loss rules of § 1.1503(d)-1(d). * * *
(c) * * *
(4)
(ii)
(iii)
(iv)
(v)
(A) The term
(B) The term
(C) The term
(D) The term
(E) The term
(vi)
(B)