I. Authority and Background

The U.S. Department of Energy's State Energy Program provides financial assistance in the form of formula grants to States, U.S. territories, and the District of Columbia (hereinafter referred to as States)  1 for a wide variety of energy efficiency and renewable energy initiatives authorized under the Energy Policy and Conservation Act (EPCA) (Pub. L. 94-163), as amended. 42 U.S.C. 6321 et seq. Section 40109(a)(3) of the Infrastructure Investment and Jobs Act (IIJA 2021) (Pub. L. 117-58) amended Section 362(c) of EPCA, which pertains to the mandatory features of State energy conservation plans. 42 U.S.C. 6322(c). The submission of such plans is required for a State's participation in SEP and receipt of a formula grant.

On April 29, 2024, DOE issued an interim final rule that amended SEP regulations in part 420 of title 10 of the Code of Federal Regulations to incorporate the IIJA 2021 amendments. 89 FR 33194. As discussed in the interim final rule, section 40109 of IIJA 2021 amended section 362(c) of EPCA to include a new paragraph (7) that mandates the inclusion of transmission and distribution planning support activities into States' energy conservation plans. 2 42 U.S.C. 6322(c). DOE amended 10 CFR 420.15 to include a new paragraph (g) adopting statutory requirement verbatim. DOE also revised the reference to the EPCA included in the 10 CFR part 420 authority line from Part D to Part B through the interim final rule.

DOE issued the interim final rule without prior notice and opportunity for public comment for two reasons. First, because the Administrative Procedure Act's (APA) requirements for notice and public comment do not apply “to the extent that there is involved . . . a matter related to agency . . . grants, benefits, or contracts.” 5 U.S.C. 553(a)(2), emphasis added. SEP is a program that provides formula and competitive grants, as well as technical assistance to States to enhance energy security, advance State-led energy initiatives, and increase energy affordability.

Second, the rulemaking covered a nondiscretionary action because DOE adopted the section 40109(a)(3) of IIJA 2021 amendment without further substantive change in SEP's regulations. A more comprehensive discussion is available in section II of the interim final rule.

In response to the interim final rule, SEP received no comments. Because DOE did not receive any comments in response to the interim final rule, the interim final rule is adopted as final without change. For the reasons stated in this document, SEP is finalizing the interim final rule without change.

This final rule has been determined not to be a “significant regulatory action” under E.O. 12866, Regulatory Planning and Review, 58 FR 51735 (October 4, 1993) as supplemented and reaffirmed by E.O. 13563, “Improving Regulation and Regulatory Review,” 76 FR 3821 (January 21, 2011) and amended by E.O. 14094, “Modernizing Regulatory Review,” 88 FR 21879 (April 11, 2023). Accordingly, this rule was not subject to review under the E.O. by the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB).

The APA, 5 U.S.C. 551 et seq., generally requires public notice and an opportunity for comment before a rule becomes effective. 5 U.S.C. 553(b)-(c). However, the APA provides that the requirements of 5 U.S.C. 553 do not apply “to the extent that there is involved . . . a matter relating to agency . . . grants, benefits, or contracts.” The interim final rule amended SEP's regulations to include the new mandatory State energy conservation plan features established by section 40109(a) of the IIJA 2021, which amended SEP's State energy conservation plan requirements. States applying for SEP grants are required to submit plans that consider these, and the other mandatory features established in statute and codified in SEP's regulations. Because the rulemaking amended SEP's regulations at 10 CFR 420.15 to include features States must satisfy to receive a grant from SEP, the APA's general notice and comment requirements do not apply.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

The Secretary of Energy has approved publication of this final rule.

This document of the Department of Energy was signed on December 5, 2024, by David Crane, Under Secretary for Infrastructure, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends the Class E surface area and Class E airspace extending upward from 700 feet above the surface at Ottumwa Regional Airport, Ottumwa, IA, to support IFR operations at this airport.

The FAA published an NPRM for Docket No. FAA-2024-2293 in the Federal Register (89 FR 80432; October 3, 2024) proposing to amend the Class E airspace at Ottumwa, IA. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraphs 6002 and 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11J, dated July 31, 2024, and effective September 15, 2024. FAA Order JO 7400.11J is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11J lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71:

Modifies the Class E surface area at Ottumwa Regional Airport, Ottumwa, IA, by removing the Ottumwa VOR/DME and associated extension from the airspace legal description; and updates the name (previously Ottumwa Industrial Airport) and geographic coordinates of the airport to coincide with the FAA's aeronautical database;

And modifies the Class E airspace extending upward from 700 feet above the surface at Ottumwa Regional Airport by removing the Ottumwa VOR/DME and the associated extensions from the airspace legal description; and updates the name (previously Ottumwa Industrial Airport) and geographic coordinates of the airport to coincide with the FAA's aeronautical database.

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

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

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

On January 31, 2024, the Department of Commerce published a final rule amending its regulations pertaining to the procedures and rules related to Article 1904 of the North American Free Trade Agreement (NAFTA) with appropriate references to the United States-Mexico-Canada Agreement (USMCA), which went into effect on July 1, 2020 (89 FR 6011). The final rule erroneously duplicated language in 19 CFR 356.8(b)(2) from § 356.8(b)(1). This amendment corrects § 356.8(b)(2).

Accordingly, 19 CFR part 356 is corrected by making the following correcting amendment:

The BLBA, 30 U.S.C. 901-944, provides for the payment of benefits to coal miners and certain of their dependent survivors for total disability or death due to pneumoconiosis, commonly known as black lung disease. 30 U.S.C. 901(a); Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 5 (1976). The BLBA places the primary responsibility for paying benefits on coal mine operators. 30 U.S.C. 932(b). When a coal miner is determined to be eligible for benefits, the operator responsible for paying benefits (the responsible operator) is generally the one that most recently employed the miner for a period of at least one year and is financially capable of paying benefits. 20 CFR 725.495(a)(1). If a responsible operator cannot be determined, is unable to pay, or defaults on its obligation to pay, the responsibility for paying benefits falls to the Black Lung Disability Trust Fund (the Trust Fund), which is financed by an excise tax on coal mined for domestic use and, as necessary, borrowing from the U.S. Treasury's general fund. 30 U.S.C. 932(j), 934(b); 26 U.S.C. 4121, 9501.

Because coal mine operators are principally responsible for paying benefits, the BLBA requires every operator to secure the payment of benefits for which it may be found liable. 30 U.S.C. 932(b). Each operator must secure the payment of benefits either by purchasing commercial insurance or by qualifying as a self-insurer “in accordance with regulations prescribed by the Secretary.” 30 U.S.C. 933(a); see also 20 CFR 726.1.

The current regulations—part 726, subpart B—establish the standards for a coal mine operator to qualify as a self-insurer. They provide that, to qualify as a self-insurer, an operator must meet certain minimum requirements, including “obtain[ing] security . . . in a form approved by [OWCP] and . . . in an amount to be determined by [OWCP].” 20 CFR 726.101(b)(4). The regulations identify four forms of security that OWCP may allow an operator to provide: (1) indemnity bonds; (2) deposits of negotiable securities; (3) letters of credit; or (4) trust funds under section 501(c)(21) of the Internal Revenue Code. 20 CFR 726.104(b). The regulations further provide that “[OWCP] shall require the amount of security which it deems necessary and sufficient to secure the performance by the applicant of all obligations imposed upon him as an operator by the Act.” 20 CFR 726.105. The regulations also set forth a non-exhaustive list of factors that OWCP will consider in setting the amount of security an operator must provide, including the operator's net worth, the existence of a guarantee by a parent corporation, and the operator's existing liability for benefits. Id.

OWCP historically has not required self-insured operators to post security with a face value that would cover all of the operator's expected black lung liability. See 62 FR 3338, 3370 (Jan. 22, 1997). Instead, OWCP has relied in part on a company's size as evidence of its ability to make future benefits payments. Id. Depending on the operator's assets, OWCP usually required security sufficient to cover from three to fifteen years of the operator's payments on claims currently in award status, rather than the operator's total liability for current and future claims. Id. Under this model, most large operators therefore posted fewer years of payment relative to smaller operators.

A number of bankruptcies in the mining industry revealed weaknesses in that process and demonstrated that a more substantial security amount would be required to adequately protect the Trust Fund. Specifically, beginning in 2014, three large self- insured operators filed for bankruptcy. Because these operators had insufficient securities to cover the full amount of expected benefits, an estimated $865 million in liabilities will ultimately transfer to the Trust Fund. See U.S. Government Accountability Office, Federal Black Lung Benefits Program: Improved Oversight of Coal Mine Operator Insurance is Needed, at 13 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21 .

In response, OWCP developed revised guidelines and procedures for authorizing coal mine operators to self-insure, which it began to implement in 2019. These guidelines were intended to standardize the process by which applicants provide financial and actuarial information to OWCP. OWCP required each company to calculate and report its projected black lung liabilities through actuarial reports using a set of standardized assumptions, including discount rate, claim cost trends, and the probability of awards. OWCP also developed a set of financial metrics and a methodology to assess each operator's solvency, profitability, and risk of default. This assessment would determine the proportion of the operator's projected liabilities it would be required to post as security. Operators determined to be at less risk of not meeting their obligations would be required to provide smaller amounts of security, while operators at higher risk would be required to provide larger amounts of security. These guidelines were summarized in a December 2020 bulletin, see BLBA Bulletin No. 21-01 (Dec. 7, 2020). 1

Although the revised guidelines were intended to allow OWCP to better identify and account for self-insured operators that presented significant bankruptcy risk, they proved problematic in several respects. The financial metrics were not able to consistently predict which operators were at risk of experiencing financial difficulties. The process contemplated by the guidelines also imposed significant burdens on OWCP in continuously monitoring the financial health of individual operators on a quarterly basis. In addition, although the guidelines were shared with the public in various ways while they were being developed, stakeholders raised procedural concerns about how the guidelines were developed.

Based on its experience administering the self-insurance program over the years and in response to stakeholder concerns, the Department issued a notice of proposed rulemaking (NPRM) on January 19, 2023, proposing a revised subpart B. 88 FR 3349-3366 (Jan. 19, 2023). The proposed rule would codify the practice of basing a self- insured operator's security requirement on an actuarial assessment of its total present and future black lung liability. The Department also proposed eliminating the financial scoring process. Instead, under the proposed rule, OWCP would require all self-insured operators to post security equal to 120 percent of their projected black lung liabilities, ensuring adequate coverage regardless of an operator's financial health. 2 The Department had determined that 120 percent was an appropriate level of security because, among other things, it would protect the Trust Fund in the event an operator's actual liabilities exceed its projected liabilities. In addition, the proposal removed the requirement that an operator's average current assets over the preceding three years must exceed its current liabilities, which would not be necessary to protect the Trust Fund under the proposed security scheme. The proposed rule also prospectively removed section 501(c)(21) trust funds, which have proven to be less reliable, as an acceptable form of security. Furthermore, the proposed rule clarified the process for operators to apply for authorization to self-insure, how long the authorization remains effective, the conditions under which OWCP will deny or revoke authorization to self-insure, and the process for operators to appeal OWCP's determinations.

The Department proposed these changes to better protect the Trust Fund when a self-insured operator becomes insolvent. Moreover, by eliminating the need to continuously monitor each individual operator's financial situation, the proposed rule lessens the administrative burden on OWCP to gather, review, and analyze operators' financial information, and lessens the burden on operators to collect and provide such information. The procedural changes clarify and add certainty with respect to OWCP's and operators' respective obligations in the self-insurance authorization process.

The public comment period closed on April 19, 2023, after an extension of the original March 20, 2023, deadline. 88 FR 14094-14095 (Mar. 7, 2023). The Department has fully evaluated the received comments and has determined that, with some changes in response to comments, proceeding with a final rule is in the best interests of the Trust Fund, stakeholders, and the program's administration.

Section 426(a) of the BLBA, 30 U.S.C. 936(a), authorizes the Secretary of Labor to prescribe rules and regulations necessary for the administration and enforcement of the statute.

The Department received 18 comments on the proposed regulations. In addition to comments received on specific sections of the proposed rule, discussed below in the Section-by-Section Explanation, a few commenters offered more general comments. A number of commenters supported the Department's promulgation of a proposed rule to clarify and reform the self-insurance program. Several commenters applauded some of the proposed rule's most significant changes, including the requirement for increased security from self-insured operators. They noted that Congress intended coal-mine operators to bear the cost of black lung disease, and that they should provide enough security to protect the Trust Fund, and ultimately, taxpayers, from any operator bankruptcy.

Other commenters argued the changes will negatively impact self-insured operators. Most of these negative comments asserted that self-insured operators would face too high a financial burden if required to post security equal to 120 percent of their projected liabilities. They also stated that the cost of surety bonds is much higher than the Department estimated. The commenters did not present any evidence of the true cost of surety bonds, however, such as actual quotes from surety bond companies.

Operators that deem surety bonds too expensive may use another form—or multiple forms—of security, see § 726.104(b), or obtain commercial insurance, see 30 U.S.C. 933(a); 20 CFR 726.1, 726.201.

Several commenters argued that in the proposed rule, the Department failed to consider operators' reliance on OWCP's historical practices in the self-insurance program. They stated that operators made business decisions based on OWCP's previous collateral requirements, and it would be arbitrary and capricious for the Department not to weigh that reliance against competing policy considerations. In addition, these commenters say, the Department neglected to offer accommodations for the operators' reliance interests, such as by grandfathering in existing self-insurance arrangements and phasing in the requirement for increased security over time.

The Department appreciates the commenters' concerns and has given them serious consideration in preparing this rule. The Department has also weighed operators' reliance interests against competing policy considerations—most importantly, the financial security of the Trust Fund. As many commenters acknowledged, OWCP's historical practices left vulnerabilities in the self-insurance program and contributed to the Trust Fund's current debt. That is why, as explained in the proposed rule's economic analysis, the Department considered but declined to maintain existing security levels. 88 FR 3356-3360 (Jan. 19, 2023). That is also why it is not a viable option to grandfather in all existing self-insurance arrangements, which would fail to adequately protect the Trust Fund.

To better balance the Department's obligation to protect the Trust Fund with the burden on self-insured operators to properly secure their liabilities, the Department has decided to revise the proposed rule in several ways. As explained more fully in the Section-by-Section Explanation, the Department is lowering the security requirement from 120 percent to 100 percent of self-insured operators' projected liabilities. Reducing the required security will lessen the financial burden on self-insured operators, while upholding the operators' obligation under the BLBA to adequately secure their liabilities in case they can no longer pay benefits directly. See 30 U.S.C. 932(b) (operators “shall be liable for and shall secure the payment of benefits”). The requirement for 100 percent security also preserves congressional intent that “individual coal operators rather than the trust fund bear the liability for claims arising out of such operators' mines to the maximum extent feasible.” Old Ben Coal Co. v. Luker, 826 F.2d 688, 693 (7th Cir. 1987) (quoting S. Rep. No. 209, 95th Cong., 1st Sess. 9 (1977), reprinted in House Comm. on Educ. and Labor, 96th Cong., Black Lung Benefits Reform Act and Black Lung Benefits Revenue Act of 1977, 612 (Comm. Print 1979); see also Arkansas Coals, Inc. v. Lawson, 739 F.3d 309, 313 (6th Cir. 2014); C & K Coal Co. v. Taylor, 165 F.3d 254, 258 (3d Cir. 1999); 20 CFR 725.1(e) (“The purpose of the [Black Lung Disability Trust Fund] and the Black Lung Benefits Revenue Act of 1977 was to insure that coal mine operators, or the coal industry, will fully bear the cost of black lung disease for the present time and in the future.”). In addition, OWCP will also allow operators that currently use section 501(c)(21) trusts as security instruments to continue doing so, see § 726.104(b), and will allow operators to phase in any increased security over the course of one year, see § 726.104(c).

One commenter argued that the Department's concern about the financial security of the Trust Fund is not a valid reason for the proposed rule, stating that self-insured operator bankruptcies are not a major threat to the Trust Fund. The commenter cited a report by the Government Accountability Office (GAO) for this conclusion. The Department believes the commenter misunderstood the report. GAO concluded the Trust Fund “faces financial challenges, and DOL's limited oversight of coal mine operator insurance has further strained Trust Fund finances by allowing operator liabilities to transfer to the federal government;” it opined that “the looming unsecured black lung benefit liabilities . . . still threaten the Trust Fund.” See GAO, Federal Black Lung Benefits Program: Improved Oversight of Coal Mine Operator Insurance is Needed, at 27, 29 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21. GAO also noted that the Trust Fund faced particular risk in the self-insurance context, because “in the past, DOL did not estimate future benefit liability when setting the amount of collateral required to self-insure.” Id. at 2. The report recommended the Department change this practice. Id. 3

Two commenters argued that the proposed rule would give OWCP such broad discretion to set collateral, without sufficient guidelines, that the rule would violate the Administrative Procedure Act. The Department disagrees with these comments. The rule provides clear guidelines and uniform requirements for self-insurance applications and determinations, and, as a result, limits the discretion OWCP has to set security amounts. For example, the rule requires the same documents from all applicants; provides that all operators must use the same OWCP-mandated actuarial assumptions in their actuarial reports; explains that OWCP will require the same percentage of security from all operators; and clarifies the timelines by which OWCP will process all applications and appeals. 4 Where the Department agreed with commenters that the rule should be clarified, it revised this final rule accordingly.

Several supporters of the proposed rule suggested that OWCP create a public database including information about all self-insurance applications, OWCP's estimates of operators' liability amounts, the amount and type of security that operators provide, the status of any operator appeals, and OWCP's decisions on self-insurance applications. While the Department understands the value of increased transparency in the self- insurance program, it declines to create such a public database out of concern for operators' confidential business interests. The Department believes this final rule will provide greater clarity, transparency, and efficacy in the self-insurance program.

No negative comments were received on the following revised or new regulations: sections 20 CFR 726.101(c) and (d); 726.102(a) and (c); 726.107; 726.108; 726.110 through 726.113, and 726.115. Thus, the Department is promulgating these regulations as proposed.

The following regulatory provisions were not revised in the proposed rule and thus were not open to comment: 20 CFR 726.101(a), 726.103, and 726.106.

Severability. If upon judicial review any provision of this rule is deemed invalid, the Department intends that such provision(s) will be severable and the rest of the provisions will remain intact. For example, the following provisions of the rule can operate independently and are mutually severable from the other provisions of the rule: (1) the minimum requirements for self-insurance authorization under § 726.101(b); (2) the requirement that applicants submit actuarial reports using OWCP-mandated actuarial assumptions under § 726.102(b)(2); (3) the updated process that OWCP will follow in issuing written determinations on self-insurance applications under § 726.104(a); (4) the limitation of section 501(c)(21) trusts to those established before publication of the rule, and the requirement for the submission of quarterly financial statements for such trusts under § 726.104(b)(4); (5) the option for operators to phase in their initial or increased security deposits over the course of one year under § 726.104(c); (6) the requirement that operators submit security equal to 100 percent of their actuarially estimated liabilities under § 726.105; (7) the timeframes for authorization and reauthorization to self-insure under § 726.114; and (8) the appeals process set forth under § 726.116. This list is not exhaustive. Generally, the Department believes that the provisions of the rule can operate independently and will improve the effectiveness of the self-insurance program, even if other provisions are deemed invalid.

(1) The Department is substantially revising § 726.101 to update the minimum requirements an operator must meet to qualify for authorization to self-insure and to remove the provisions requiring OWCP to continuously monitor each applicant's financial situation.

Current paragraph (b) establishes the minimum requirements that an operator must meet to qualify for authorization to self-insure. At present, paragraphs (b)(1), (3), and (5) respectively provide that an operator must have been in the business of coal mining for at least three consecutive years prior to applying, the operator's average current assets over the prior three years must exceed its current liabilities by a specified amount, and the operator must have five or more employee-miners. Paragraphs (b)(2) and (4) respectively provide that an operator must demonstrate the administrative capacity to fully service claims and that an operator must obtain security in a form approved by OWCP and in an amount determined by OWCP. The Department proposed removing paragraphs (b)(1), (3), and (5) because they would no longer be necessary when all self-insurers are required to post security that fully covers their projected black lung liabilities.

(2) Three commenters expressed concern that by no longer evaluating companies' financial health, OWCP is applying a “one-size-fits-all” approach that will harm financially sound companies. In their view, more profitable companies will present less risk to the Trust Fund and OWCP should therefore require less security (or no security) to cover their liabilities. Another commenter suggested OWCP maintain at least enough financial review to ensure companies could fulfill their self-insurance obligations. Other commenters questioned whether the financial review process would truly burden OWCP, and suggested that OWCP ought to be able to conduct a financial review because other federal agencies do so.

(3) The Department declines to revise the regulation in response to these comments. As explained in the proposed rule, the Department is eliminating the financial review process to reduce administrative burdens and avoid the ever-present challenge of predicting which operators are at risk of experiencing financial difficulties. Importantly, the requirement that self-insured operators post security equal to their projected black lung liabilities will adequately cover the Trust Fund regardless of an operator's continuously changing financial status, making the financial review process unnecessary. The commenters have not shown that these changes will cause any particular harm to companies that are financially stronger than others. In fact, those companies will arguably be able to meet a higher security requirement more easily than less financially secure companies. Similarly, the requirement to post 100 percent security addresses a commenter's concern that operators will not be able to fulfill their self-insurance obligations; if they default, the Trust Fund will have enough security to cover the operators' projected liabilities.

(4) For these reasons, as proposed in the NPRM, the Department is removing paragraphs (b)(1), (3), and (5). The Department is renumbering current paragraph (b)(2) as paragraph (b)(1), and paragraph (b)(4) as paragraph (b)(2).

(1) The Department is revising paragraph (b) to change and update the information that must be submitted with an application for authorization to self-insure or to renew authorization to self-insure.

(2) The Department is adding a new paragraph (b)(2) to require an applicant to include with its application an actuarial report using OWCP-mandated actuarial assumptions. OWCP has previously required such an actuarial report from applicants, as indicated on OWCP's self-insurance application form CM-2017 (Application or Renewal of Self-Insurance Authority), available on OWCP's website at https://www.dol.gov/agencies/owcp/dcmwc/regs/compliance/blforms. In that form, OWCP requires “[a] current, certified actuarial report on [the applicant's] existing and future BLBA liabilities,” unless renewal applicants have provided one in the previous three years. The proposed rule explained that form CM-2017 would still be required under the new regulations, and it requests much of the information required in current paragraphs (b)(1), (2), (3), and (5). In this new paragraph (b)(2), the Department is adding the actuarial report requirement to the regulatory text, including that an operator must submit a new actuarial report every three years. The new paragraph (b)(2) also allows an operator to submit an additional actuarial report using alternative assumptions.

(3) Several commenters objected to the requirement to use OWCP actuarial assumptions in their reports. They argued that OWCP's actuarial assumptions differ from the operators' assumptions, which are based on the operators' experiences in paying benefits. The Department declines to revise the regulation in response to these comments, but provides the following clarification. Requiring operators to use OWCP's actuarial assumptions, rather than their own, more accurately projects the Trust Fund's potential liability and promotes fairness and uniformity across operators. As noted in the proposed rule and again above, OWCP has previously required companies to provide actuarial reports that include data for different elements of actuarial analysis, such as the discount rate, claim cost trends, and the probability of awards. See 88 FR 3350 (Jan. 19, 2023). A numerical value is assigned to each element. This numerical value is called an actuarial assumption. Operators then apply those values in determining their liability. OWCP sets actuarial assumptions for the various elements of actuarial analysis every year, accounting for changing interest rates, medical costs, and other relevant fluctuations. Commenters have not challenged the elements of actuarial analysis that are to be included in their reports. Instead, commenters have argued that the numerical values that OWCP assigns to these elements—the actuarial assumptions themselves—differ from the values that operators would use based on their individual experiences, and are therefore improper. OWCP bases its actuarial assumptions on data from claims in which the Trust Fund is responsible for paying benefits. If a self-insured operator goes bankrupt and the Trust Fund absorbs its responsibility for paying benefits, it will cost the Trust Fund a different amount to pay those benefits than it would have cost the operator. For example, medical costs differ for the Trust Fund and operators because operators may use different payment formulas than the Trust Fund and may have arrangements with providers that result in lower medical costs that the Trust Fund does not have. For these reasons, OWCP must estimate how much it will cost the Trust Fund to bear responsibility for benefits that were formerly the responsibility of the operator. Further, using one set of actuarial assumptions, rather than different assumptions for each operator, promotes consistency and fairness.

Still, the Department acknowledges an operator could, under unusual circumstances, have a compelling reason to use different actuarial assumptions than those required by OWCP. Therefore, the rule permits operators, as part of the application process, to submit reports using their own actuarial assumptions and explain why they should be used instead, and OWCP will consider each submission. See Section-by-Section Explanation for 20 CFR 726.104.

(4) Commenters raised concerns that while the proposed rule allows operators to submit an additional actuarial report and explain why alternate assumptions are appropriate, it does not specify that OWCP will consider that report or how OWCP would choose between or reconcile the two reports. The Department agrees the regulation should state that OWCP will review and consider an operator's additional report and, as stated below, is amending § 726.104(a) to clarify this. The Department is also clarifying the circumstances in which OWCP might use the actuarial assumptions an operator submits. For any alternative actuarial report OWCP receives, it will evaluate each of the operator's arguments about why alternative actuarial assumptions should apply. Some, but not all, of OWCP's considerations may include whether the operator's circumstances would persist if the Trust Fund took over benefit payments and whether sufficient and reliable data support the operator's arguments. For instance, if an operator's claimant population differs markedly from that of the Trust Fund, it may be reasonable to use one or more of an operator's actuarial assumptions. However, the Department expects this situation will be rare. In most cases it will be more appropriate to apply OWCP's assumptions based on the Trust Fund's experience. Again, using OWCP's assumptions in most cases will help ensure fairness and uniformity across operators.

(5) Commenters also claimed the proposed rule did not identify OWCP's actuarial assumptions (the numerical values), or explain how they were derived and whether they comply with generally accepted actuarial standards. OWCP provides its actuarial assumptions to the public on its website. 5 OWCP uses the same assumptions in reporting on the Trust Fund for the Department's Agency Financial Report and the U.S. Government's tracking of significant social insurance programs, which are also publicly available and prepared in accordance with Generally Accepted Accounting Principles (GAAP) and the financial reporting requirements of Office of Management and Budget (OMB) Circular A-136. 6 OWCP's actuaries review the assumptions annually, including peer review by other actuaries. OWCP determines the value for each assumption using actuarial judgment, by considering historical experience adjusted to current conditions, expected future trends, and the reliability of the available historical data as a predictor of future experience. Each of the assumptions represents values that, in the actuaries' professional judgment, are internally consistent and have no known significant bias to underestimation or overestimation. OWCP's assumptions comply with the Actuarial Standards of Practice as promulgated by the Actuarial Standards Board (ASB), available at http://www.actuarialstandardsboard.org.

(6) Some commenters asserted that OWCP's actuarial assumptions should have been included in the proposed rule and subject to notice and comment. The Department disagrees for several reasons. As the commenters made clear, one of their major objections was to the requirement to use OWCP's actuarial assumptions at all. This requirement was open for comment in the proposed rule, and the Department received and responded to related comments above. The actuarial assumptions themselves, though, were not included in the rule because, as explained above, the numerical values will vary from year to year as needed to adapt to new data and circumstances.

(1) The Department proposed deleting and replacing paragraph (a) to clarify what action OWCP must take with respect to an application and the timeframe within which OWCP will take such action. New paragraph (a) provides that OWCP will issue a written determination, either denying the application or determining the amount of security, within 30 days after determining that an application is complete. New paragraph (a) also allows OWCP to extend the 30-day deadline if it determines that additional evidence is needed or that the applicant's evidence is not in compliance with OWCP's requirements.

Commenters noted that while the proposed regulatory text allows operators to submit a report using actuarial assumptions other than those mandated by OWCP, it did not require OWCP to consider such reports. The Department agrees the regulation should state that OWCP will review and consider any relevant evidence the operator submits. To clarify this, the Department is amending section 104(a) to explain that OWCP will consider all relevant evidence and include its reasoning when issuing a written determination denying an application.

(2) The Department proposed removing current paragraph (b)(4), which allows a self-insurer to give security by funding a trust pursuant to section 501(c)(21) of the Internal Revenue Code. As explained in the proposed rule, few self-insured operators use section 501(c)(21) trusts as security and most of those operators use them in combination with other forms of security. Also, OWCP has determined that section 501(c)(21) trusts are a less reliable form of security and more burdensome for OWCP to monitor because, unlike other forms of security which generally guarantee a fixed dollar amount, the amounts kept in the trusts can fluctuate and significantly decrease as self-insurers use such trusts to pay claims and the costs of administration and for other allowed purposes.

One commenter asserted that the Department cannot remove section 501(c)(21) trusts as an optional form of security. The commenter states the Department does not have the authority to disallow section 501(c)(21) trusts, arguing Congress intended such trusts would be available for black lung self-insurance security deposits. It also argues that even if the Department has the authority to disallow the use of section 501(c)(21) trusts, it has no valid reason to do so, because such trusts pose no greater risk than other forms of security. Finally, the commenter urges the Department to accept any existing section 501(c)(21) trusts, because they are irrevocable and cannot be repurposed; operators would be prejudiced if no longer allowed to use the funds in such trusts toward their self-insurance security deposits.

The Department disagrees that it must offer section 501(c)(21) trusts as a form of security for self-insurance. The BLBA does not specify the form in which an operator must “secure the payment of benefits for which he is liable.” 30 U.S.C. 933(a). Moreover, the Internal Revenue Code does not require that OWCP accept section 501(c)(21) trusts as security for self-insurance. Section 501(c)(21) specifies the circumstances under which an entity may establish such trusts, but does not direct OWCP to allow them for self-insurance security.

The Department also disagrees that section 501(c)(21) trusts are no riskier than other forms of security. In arguing this, the commenter noted that such trusts can only hold qualified investments such as U.S., state, and municipal bonds. However, the Department is not concerned about the riskiness of the investments in the trust, but about the risk that the money in the trust may fall below the necessary security amount, given that the trust can also be used for paying claims and other expenses. 26 U.S.C. 501(c)(21)(A). Because trust assets can be (and are) used for a number of purposes other than security for a self-insurance arrangement, the trust assets are subject to continual erosion. As a result, use of the trusts as self-insurance security would place the Trust Fund at greater risk than the use of other forms of security. And unlike other forms of security, the Trust Fund does not have direct access to 501(c)(21) trust assets or even have ready access to the trusts' financial reports.

Nevertheless, the Department has determined that existing section 501(c)(21) trusts should be permitted to continue as self-insurance security, even though new trusts will not be allowed. As the commenter noted, 501(c)(21) trusts are irrevocable, and the Department agrees that it would prejudice those operators currently using this form of security if they are no longer allowed to do so. Rather than remove the option entirely, then, the Department is revising paragraph (b)(4) to provide that section 501(c)(21) trusts established before the publication of this rule can continue to be used as self-insurance security. However, to protect the Trust Fund, operators continuing to use existing section 501(c)(21) trusts must submit quarterly financial statements to OWCP documenting the value of the trust. This will allow OWCP to monitor the financial status of a trust, the value of which may decrease in the period between annual reviews. If, for any reason, the trust value decreases below the amount of the operator's required security, OWCP may require an increase in the operator's security under § 726.109. The Department is adding the requirement for quarterly financial reports to paragraph (b)(4).

(3) Several commenters expressed concern that a greatly increased security requirement would be difficult to fulfill immediately. These commenters suggested that OWCP collect the increased security over a period of years instead of all at once.

The Department agrees the burden on operators could be lessened by staggering the collection of security over a reasonable period of time. While commenters suggested phasing in the collection over a period of years, the Department believes this would leave the Trust Fund inadequately secured for too long. However, the Department will allow operators to post security in phases over the course of one year, which the Department has determined will properly balance the interests in providing operators more time while limiting the Trust Fund's risk of inadequate security. To further limit the Trust Fund's risk of delay in receiving adequate security, the Department is requiring that operators phase in their payments in quarterly installments. Thus, the Department is adding a new paragraph (c) to provide that operators may submit their increased security requirements in equal portions quarterly, to be complete in one year: operators opting for phased posting must deposit at least 25 percent of the increased security amount within 30 days of OWCP issuing the notification provided in newly redesignated paragraphs (d) and (e), followed by at least 50 percent of their increased security amount within four months of that notification, at least 75 percent within eight months, and 100 percent within one year. If an operator fails to timely pay any of one of these installments, it will be deemed non- compliant with its self-insurance authorization, and OWCP will revoke that authorization. The civil money penalty provisions of 20 CFR part 726, subpart D, will apply to any operator that fails to timely secure its benefits under this regulation. Accordingly, any operator that disagrees with the penalties imposed must follow the procedures at 20 CFR 726.307 for contesting penalties, and not the self-insurance authorization appeals process outlined below in the new 20 CFR 726.116.

In light of these changes, the Department is redesignating new paragraphs (c), (d), and (e) to paragraphs (d), (e), and (f), respectively. The Department is also revising paragraphs (d) and (e) to provide that self-insurance authorization or reauthorization will be effective upon OWCP's receipt of a completed agreement and undertaking, along with either the applicant's full security amount or its first quarterly installment.

(1) Current § 726.105 requires OWCP to set the amount of security each applicant is required to post by determining the amount “necessary and sufficient to secure the performance by the applicant of all obligations imposed upon him as an operator by the Act.”

The Department proposed replacing current § 726.105 with the requirement that any operator approved to self-insure must submit security equal to 120 percent of its actuarially estimated liabilities (all present and future liabilities) as determined by OWCP based on the actuarial report or reports submitted by the applicant with their application (or on file with OWCP), other information submitted with the operator's application, or any other materials or information that OWCP deems relevant. As noted in the proposed rule, this meant applicants would have to purchase an instrument that would pay out up to 120 percent of the projected liability, not that the applicant would have to actually spend that amount on collateral. The Department estimated that premiums on surety bonds would cost anywhere from 2 percent to 12 percent of the security amount and solicited comments on this estimation.

(2) Some commenters supported this proposed change. They stated that in keeping with congressional intent, the increased security amount would help avoid shifting liability from bankrupt operators to the Trust Fund and, ultimately, to taxpayers. One commenter noted that the requirement for increased security is all the more important now that severe forms of black lung disease are on the rise, meaning that operators' future liabilities would rise too. The commenters also believed the requirement would not unduly burden operators, who could secure their liability for benefits through other instruments or purchase commercial insurance instead of self-insuring.

(3) By contrast, several coal-mine operators and their associations commented that requiring security at 120 percent of projected liability would be too great an expense. As explained above, the Department has decided to lower the required security amount from 120 to 100 percent of an operator's projected liability. The Department has weighed the interests of protecting the Trust Fund and of reducing the burden on operators, and determined that 100 percent security is the proper balance. The new § 726.105 will provide that operators approved to self-insure must submit 100 percent of the actuarially estimated liabilities. This requirement comports with the BLBA's requirement that operators secure their liability (30 U.S.C. 932(b), 933(a)). The natural reading of this requirement is that operators must secure their full liability, not merely a portion of it. The requirement also harmonizes the treatment of self-insured operators with that of commercially insured operators, as an insurance policy for Federal black lung claims must cover all of an operator's liability—present and future. 20 CFR 726.202 and 726.203(c)(1)(ii).

(4) Some commenters asserted that the Department erred in expecting that operators could obtain surety bonds for an annual premium of 2 to 12 percent of the covered bond amount. These commenters highlighted that this range was based on general surety bonds, not those specific to the coal industry. Instead, they posited that in addition to premiums, operators would need to post collateral for the surety bonds, up to and including 100 percent of the bond amount.

In the proposed rule, the Department invited comment on the cost of surety bonds. The Department explained that the range of 2 to 12 percent of security was based on a review of public data from surety companies. While commenters alleged the cost would be far greater, they did not submit any direct evidence of the asserted cost, such as actual surety bond quotes. Notably, no surety company submitted comment on the proposed rule. Therefore, the Department has no basis on which to change its estimation.

(5) Some commenters complained that surety bonds are also harder for coal companies to obtain in today's market but did not submit evidence of this assertion. These commenters stated that they are aware of only three surety bonds used as security for self-insurance since 1980, and only one that is still active. These numbers are inaccurate. Over ten currently active self-insured operators have security in the form of surety bonds, and some of them have more than one; these operators have submitted proof of their surety bonds to OWCP as part of their participation in the self-insurance program. As the Department noted in the proposed rule, surety bonds are the most common form of security that current self-insured operators use. The Department recognizes, as these commenters noted, that coal companies and coverage of black lung benefits might be considered high risk in the surety industry. That is one reason the Department is acting to better protect the Trust Fund and ensure that self-insured operators are properly secured. The Trust Fund should not be subject to enhanced risk so that operators may self-insure. Rather, Congress intended that coal operators, and not taxpayers, bear responsibility for paying black lung benefits to the miners who worked for them. Furthermore, as stated above, operators have security options other than surety bonds. They may use other forms—or multiple forms—of security for self-insurance (negotiable securities and letters of credit) or purchase commercial insurance to satisfy their obligations under the BLBA.

(6) Several commenters argued that the Department could not require an operator to secure its future liabilities, and instead could only require security for current claims in award status. The Department finds no merit in this argument. The BLBA requires every operator to secure the payment of benefits for which it may be found liable. See 30 U.S.C. 932(b) (“each such operator shall be liable for and shall secure the payment of benefits”), 933(a) (“each operator of a coal mine . . . shall secure the payment of benefits for which he is liable under section 932 of this title by (1) qualifying as a self-insurer in accordance with regulations prescribed by the Secretary, or (2) [purchasing commercial insurance]”); 20 CFR 726.1 (“[the BLBA] requires each coal mine operator who is operating or has operated a coal mine . . . to secure the payment of benefits for which he may be found liable”).

Further, the BLBA and its implementing regulations  7 provide that liability extends to claims filed in the future. See 30 U.S.C. 932(i) (operators that acquire a mine or its assets “shall be liable for and shall . . . secure the payment of all benefits which would have been payable by the prior operator.”); 20 CFR 725.494(a) (“[a]n operator may be considered a ‘potentially liable operator’ . . . if . . . [t]he miner's disability or death arose at least in part out of employment in or around a mine or other facility during a period when the mine or facility was operated by such operator, or by a person with respect to which the operator may be considered a successor operator.”); 20 CFR 724.494(e)(2) (an operator that “qualified as a self-insurer . . . during the period in which the miner was last employed by the operator” is “deemed capable of assuming its liability for a claim[.]”).

By necessity, an operator's liability extends to future claims. As various commenters noted, black lung claims may be filed long after miners stopped working, due to the progressive nature of black lung disease; it may disable miners even years after their exposure to coal-mine dust ends. See 20 CFR 718.201(c) (black lung disease is “a latent and progressive disease which may first become detectable only after the cessation of coal mine dust exposure.”). As a result, a significant portion of operators' liability involves claims that are incurred but not reported (IBNR). In other words, these claims involve situations in which the miner has suffered or will suffer an injury (exposure to coal-mine dust), but has not yet filed a claim or received an award. The only accurate way of securing an operator's black lung liability, then, is to account for future claims.

Further, reading the BLBA as the commenters proposed would lead to untenable results, such as OWCP being unable to require a new operator to secure the payment of benefits at all, as it would have no claims currently in award status.

To support their arguments against securing future liability, several commenters asserted that state workers' compensation programs only require security for present claims in award status. This is not accurate. Although states vary in how they determine an employer's estimated liability, some states require actuarial reports estimating the total liability from all present and future claims. See, e.g., Minn. Stat. sec. 79A.04, subd. 2 (“The minimum deposit is 110 percent of the private self-insurer's estimated future liability . . . as determined by an Associate or Fellow of the Casualty Actuarial Society[.]”). Even the commenters acknowledge that a high percentage of black lung liability consists of IBNR claims. Thus, the Department believes that it must take IBNR claims into account when setting security amounts.

In its study of insurance in the black lung program, the GAO concluded that future liabilities should be factored into security amounts, and explained that not doing so in the past contributed to inadequate protection of the Trust Fund. See GAO, Federal Black Lung Benefits Program: Improved Oversight of Coal Mine Operator Insurance is Needed, at 18, 19 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21. The GAO reported that “[e]stimating future costs based on sound actuarial practice is essential to the integrity of the insurance and the risk financing system and is key to fulfilling the promises embodied in insurance contracts, according to Actuarial Standards Board standards.” Id. at 19 (internal citation omitted)). Providing for future liability also serves Congress's intent that operators bear the burden of paying benefits to the “maximum extent feasible. Luker, 826 F.2d at 693 (quoting S. Rep. No. 209, 95th Cong., 1st Sess. 9 (1977), reprinted in House Comm. on Educ. and Labor, 96th Cong., Black Lung Benefits Reform Act and Black Lung Benefits Revenue Act of 1977, 612 (Comm. Print 1979).

(7) The Department will not lower the required amount of security below 100 percent of an operator's liability. As noted above, the BLBA requires that operators secure their full liability. Moreover, as explained in the proposed rule, the Department decided to require 120 percent security in part because of the challenges in accurately estimating liabilities, and the possibility that an insolvent operator's actual liabilities could be greater than OWCP expected. Some of the factors that could increase an operator's actual liabilities over their estimated liabilities could include pneumoconiosis becoming more prevalent, or the costs of medical treatment increasing faster than expected. However, for the reasons discussed above, the Department is modifying the final rule to require only 100 percent security rather than the proposed 120 percent security.

(8) One commenter argued that the proposed rule would allow OWCP to disregard an operator's actuarial report(s) and rely instead on any other information it deems relevant. This was not the Department's intent. OWCP will review and consider all relevant information that operators submit with their application, including any information not identified in § 726.105 that would be pertinent. To clarify that OWCP will not disregard any submissions, the Department is revising the regulation to exchange the word “and” for “or” in the following: “Any operator approved to self-insure must submit 100 percent of the actuarial estimated liabilities (all present and future liabilities), as determined by OWCP based on the actuarial report or reports submitted with the operator's application or on file with OWCP, other information submitted with the operator's application, and any other materials or information that OWCP deems relevant” (emphasis added).

(1) The Department proposed deleting and replacing current § 726.109. New § 726.109 provides that OWCP may, at its discretion, increase the amount of security a self-insurer is required to post whenever OWCP determines that the amount of security on deposit is insufficient to secure the payment of benefits and medical expenses under the BLBA. This allows OWCP to require a correction in security if, between annual renewals, a self-insured operator's security has fallen below the requirement for 100 percent of their liability.

(2) Several commenters expressed concern that OWCP would increase an operator's security without a known reason or prescribed grounds, and could increase an operator's security beyond the percentage of collateral initially required.

(3) As stated in the proposed rule, OWCP could decide that the amount of an operator's security on deposit is insufficient if, for example, it learns that the data on which an operator's liability estimate were based have significantly changed or an operator acquires new mines or employees. The Department believes the ability to increase security for reasons like this is necessary to protect the Trust Fund, consistent with Congress's intent that the coal operators who expose coal miners to coal dust be responsible for paying black lung benefits, not taxpayers. Further, if an operator disagrees with OWCP's determination to increase its security amount, it would be free to appeal that determination using the appeals process set forth in § 726.116.

However, the Department agrees with the commenters that the regulation should clarify that OWCP will provide a written explanation of the reasons and grounds for increasing an operator's security. The Department, however, will not increase the required liability beyond 100 percent of the operator's actuarially estimated liability. The regulation has been revised to make this clear.

(1) The Department proposed deleting and replacing current § 726.114 to substantially revise the timeframe for authorizations and reauthorizations.

(2) Several commenters noted that legacy operators (those who have ceased mining operations but remain liable for black lung claims) should continue to be authorized for self-insurance. In revising § 726.114(a) and (b), the Department inadvertently omitted paragraph (c). Section 726.114(c) provides that self-insured operators must continue to reapply for self-insurance reauthorization after ceasing their mining operations. This regulation is consistent with other parts of the black lung regulations dealing with the requirement for operators to secure the payment of benefits after they cease coal-mining operations. See, e.g., 20 CFR 726.1, 726.4, and 726.302(c)(2)(ii). The Department intends to keep the current paragraph (c) as part of the new regulation.

(3) Therefore, the Department is clarifying that current § 726.114(c) is retained in its entirety. The Department is making stylistic changes to § 726.114(c). No alteration in meaning either results from or is intended by these changes.

(1) Section 726.116 is new. It establishes and clarifies the process for an operator to appeal a self-insurance determination made by the Division of Coal Mine Workers' Compensation (DCMWC). The proposed rule provided that a self-insurance applicant would submit a request for review of the initial determination within 30 days to DCMWC. Within 30 days of submitting the request, the applicant would have to submit any evidence and/or briefing on which they intended to rely. In its briefing, the applicant could request an informal conference with DCMWC. The conference would be limited to the issues identified in the applicant's written materials. Upon review, the Director of DCMWC would issue a supplemental decision. The proposed rule then provided that an applicant aggrieved by a supplemental decision could request further review by the Director of OWCP, who would review the evidence of record and not accept any new evidence or arguments. The Director of OWCP would then issue a final agency decision.

(2) Several commenters expressed concern about operators remaining under-secured during a potentially lengthy appeals process. One commenter requested that OWCP include timeframes for its decision-making, to ensure appeals do not drag on while the Trust Fund lacks sufficient security. Several commenters asserted that operators should post the required security during the pendency of their appeals, to protect the Trust Fund from inadequate funding if operators declare bankruptcy while contesting their security requirements. Expressing the opposite view, some commenters requested that the security requirement be stayed pending appeals and argued that operators would be irreparably harmed if forced to provide the security before their appeals were decided.

(3) The Department agrees that the timeline of the appeals process needs to be clear and limited, to ensure operators do not remain under-secured for too long, increasing the risk to the Trust Fund in case of bankruptcy. However, the Department is concerned that, as some commenters indicated, operators would be harmed if forced to post the required security during the pendency of their appeals. Therefore, the Department has decided to address the risk to the Trust Fund by streamlining the appeals process and setting clear deadlines for OWCP decision-making.

(4) The new regulation will provide a one-step—rather than two-step—appeals process. Instead of appealing to the Director of DCMWC first and, if unsatisfied, to the Director of OWCP, applicants will be able to appeal DCMWC's initial determination directly to the Director of OWCP. The Director of OWCP will not accept any new evidence, and instead review only the applicants' arguments about an error in the initial DCMWC determination. This is consistent with general appellate practices and provides an applicant with an adequate opportunity to be heard on its appeal.

The Director of OWCP will have 60 days to take up the appeal and issue a final agency decision. At this time, if the applicant had been authorized to self-insure and was seeking a renewal that OWCP denied, their self-insurance will end and they will need to secure commercial insurance or face civil penalties for failure to secure benefits. 30 U.S.C. 933(d)(1), 20 CFR 726.300. These changes are reflected in new paragraphs (a) through (d).

(5) Paragraph (a) sets forth the process to file an appeal. It provides that any applicant who wishes to appeal a determination made by DCMWC must submit an appeal to the Director of OWCP within 30 days after DCMWC issues such determination. It also provides that the 30-day deadline to appeal may not be extended. This method is consistent with general appellate practices and 30 days provides operators with sufficient time to determine whether to appeal a determination.

(6) Paragraph (b) sets forth the process for submitting briefs containing any arguments that DCMWC erred in its initial determination. It provides that, within 30 days of submitting an appeal, the applicant must submit any briefing on which the applicant intends to rely. It also provides that the Director of OWCP may, at their discretion, extend this deadline for up to 30 days upon a showing of good cause by the applicant. No more than two extensions will be granted. Examples of good cause may include the applicant representative's personal illness or an unusual circumstance prohibiting their access to necessary documents. The applicant must document an inability to comply or extreme hardship in complying on a timely basis.

(7) Paragraph (c) sets forth the process for requesting an informal conference on an appeal. Paragraph (c)(1) provides that an applicant may request an informal conference and that such requests must be made when the applicant submits briefing in support of its appeal. Paragraph (c)(2) provides that, if an applicant requests a conference, the Director of OWCP will hold a conference with OWCP, the Office of the Solicitor, and the applicant's representatives. Paragraph (c)(3) provides that, if the applicant does not request a conference, the Director of OWCP may either decide the appeal on the record or schedule a conference on their own initiative. Paragraph (c)(4) provides that the conference will be limited to the issues identified in the applicant's written materials. Again, this method is consistent with general appellate practices and provides an applicant with an adequate opportunity to be heard on its appeal.

(8) Paragraph (d) sets forth the Director of OWCP's obligations in the appeal process. Paragraph (d)(1) provides that the Director of OWCP will review the initial determination, evidence of record, and arguments submitted on appeal, and that the applicant may not submit any new evidence to the Director of OWCP. Paragraph (d)(2) provides that the Director of OWCP will have 60 days from receipt of the appeal to take up the appeal and issue a final agency decision. This requirement will ensure that there is a final agency action that is reviewable in the Federal courts as provided in the Administrative Procedure Act, 5 U.S.C. 701 et seq. See also 5 U.S.C. 704. Paragraph (d)(3) explains that if the Director of OWCP issues a final agency decision denying self- insurance, and the operator's self-insurance application is one for renewal (they have previously been approved for self-insurance), their self-insurance authorization will end and they must secure commercial insurance or face civil penalties for their failure to secure benefits.

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its implementing regulations, 5 CFR part 1320, require that the Department consider the impact of paperwork and other information collection burdens imposed on the public. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person may generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number. See 5 CFR 1320.5(a) and 1320.6.

Although the proposed rules contained information collections within the meaning of the PRA ( see proposed § 726.102), these collections related to the self- insurance application forms are not new. They are currently approved for use in the black lung program by OMB under Control Number 1240-0057 (CM-2017 Application or Renewal of Self-Insurance Authority; and CM-2017b Report of Claims Information for Self-Insured Operators). Aside from the removal of the collection associated with form CM-2017a, the requirements for completion of the forms and the information collected on the forms are not changed in this final rule; therefore, the overall burdens imposed by the information collections are reduced.

One commenter argued that an operator's information collection burden would increase under the new regulation's requirement to submit actuarial reports with OWCP- mandated actuarial assumptions. The Department disagrees with this contention. OWCP has required applicants to submit actuarial reports with OWCP-mandated actuarial assumptions since 2019. Further, OWCP already considered and requested public comment on the information collection burden of producing these actuarial reports. Along with the self-insurance application forms, OWCP explained in the notice to the public that applicants would need to submit actuarial reports, and estimated that twenty operators would have to submit actuarial reports they did not otherwise prepare in the course of business. 8 The main application form, CM-2017, approved under OMB Control Number 1240-0057, provides that applicants' actuarial reports “must comply with the standards specified by OWCP, which are posted on the black lung program's website: https://www.dol.gov/agencies/owcp/dcmwc/operators-insurers. ” The website, in turn, provides OWCP's current actuarial assumptions. Because applicants' information collection burden with respect to forms CM-2017 and CM-2017b will not increase under this regulation, OWCP will proceed with the burden estimates contained in the NPRM for these forms.

This final rule provides a minimal burden in requiring quarterly financial statements for section 501(c)(21) trusts. See § 726.104(b)(4). OWCP estimates this will add a minimal burden to the public, totaling under two hours per year for all statement submissions. Similarly, OWCP estimates this requirement will add a minimal burden to OWCP in reviewing the statements, amounting to 1.67 hours of review time and $85.47 in wages.

Under Executive Order (E.O.) 12866, as amended by E.O. 14904, the Office of Information and Regulatory Affairs (OIRA) of OMB determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB. Section 3(f) of E.O. 12866 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, or adversely affect in a material way 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 this Executive order.” See E.O. 12866, 58 FR 51735 (Oct. 4, 1993), as amended by E.O. 14094, 88 FR 21879 (Apr. 11, 2023).

Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. It also instructs agencies to review “rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them.” See E.O. 13563, 76 FR 3821 (Jan. 21, 2011).

OIRA has determined that this rule is a significant regulatory action. See E.O. 12866, 58 FR 51735, as amended by E.O. 14094, 88 FR 21879.

This final rule will have an economic impact on coal mine operators that currently participate in the self-insurance program, as well as any new applicants. This final rule nevertheless is necessary to better protect the Trust Fund, reduce the administrative burdens on OWCP and operators, and bring clarity to the self-insurance process.

As explained in the preamble, prior security requirements have proven inadequate to protect the Trust Fund when a self-insured operator becomes insolvent. From 2014 to 2016, three self-insured coal operators entered bankruptcy with combined collateral of $27.4 million; the resulting transfer of black lung liabilities to the Trust Fund was eventually estimated to be $865 million. See GAO, Federal Black Lung Benefits Program: Improved Oversight of Coal Mine Operator Insurance is Needed, at 13 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21 . Had this final rule been in effect at the time, the three operators would have had far more in collateral, producing dollar-for-dollar savings for the Trust Fund. Of note, the amount of the coal operators' black lung liability was originally estimated in 2019 to be around $313 million to $325 million. This was revised to $865 million in 2020 due to a variety of factors, including increases in black lung benefit award rates and higher medical treatment costs.

This final rule eliminates the financial scoring process and requires all self- insured operators to post security equal to 100 percent of their projected black lung liabilities. By requiring sufficient security based simply on projected liabilities, the Trust Fund will be better protected and the financial scoring process is no longer needed. This final rule also removes certain minimum requirements that are now unnecessary, including the requirement that an operator's average current assets over the preceding three years exceed its current liabilities.

This analysis provides the Department's estimate of the economic impact of this final rule, both on the economy as a whole and on individual operators.

To determine the rule's general economic impact, the Department calculated how the rule will affect several stakeholder groups, including: (i) OWCP, (ii) taxpayers, (iii) commercially insured operators, and (iv) self-insured operators.

This final rule does not impose additional demands on OWCP resources and in fact will result in a reduction in administration costs. 9 It eliminates the need for OWCP to repeatedly perform annual financial health assessments on each self-insured operator.

This produces a short-term savings in the administrative costs to perform the analysis, including both costs associated with OWCP time and contractors hired to assist OWCP in this analysis. This final rule will require OWCP to review actuarial liability estimates every three years and monitor authorized self-insureds for compliance with eligibility requirements, but these are not new costs because OWCP is already performing those functions under the current guidelines. The savings in administrative expenses is estimated to be, at a minimum, equivalent to the annual cost of one full-time financial analyst.

This final rule provides taxpayers with both short- and long-term benefits. In the short term, taxpayers will benefit from lower administration expenses, because savings can be used elsewhere in the government without requiring additional tax revenues. In the long term, this final rule reduces taxpayers' financial exposure by reducing the risk that the Trust Fund—which has borrowed from the U.S. Treasury's general fund nearly every year since 1979 to make needed expenditures—will need to assume liabilities of self-insured operators that become insolvent. This final rule will require security deposits that are 100 percent of the operators' actuarial liability, instead of only partial security deposits as is currently the case for most self-insured operators. Under the current guidelines, the Trust Fund remains partially exposed to the risk of coal operator bankruptcies for operators that do not secure 100 percent of their black lung liabilities under existing guidelines. Moreover, a number of operators have securities on deposit with OWCP that are substantially less than those required even under the existing guidelines.

Requiring a 100 percent liability security deposit transfers the risk of insufficient securities to commercial security bond underwriters and banks that specialize in financial risk assessments and are better equipped than OWCP to assess the financial stability of coal mine operators (and who are compensated for assuming that risk via operators' purchase of surety bonds or other forms of security). This final rule requires self-insured operators to post additional security in the aggregate, which would cover the claims for which they are responsible if they were to default on their claim payments (based on the operators' current estimates of their actuarial liabilities). This means the burden for self- insured operators' liabilities would remain with them instead of transferring to the Trust Fund and, indirectly, to taxpayers.

This final rule will not impose additional costs on operators that secure their BLBA liabilities through commercial insurance. This final rule affects only the eligibility criteria, security requirements, and other procedures for operators that secure their liabilities by qualifying to self-insure. At most, commercially insured operators might choose to reassess whether, in light of these changes, commercial insurance remains the most cost-effective option for securing their liabilities or, instead, whether to switch to self-insurance. The cost of any such assessment would be de minimis.

This final rule could increase costs for current operators that are self-insured. In 2019, OWCP identified a total of 20 operators that were, or recently had been, actively mining coal and participating in the self-insurance program. Four of these operators have since gone bankrupt and are not included in this impact analysis. Of the remaining 16 self-insured operators, seven have commercial insurance for their current operations, but self-insure their legacy liabilities. Nine secure both their current and legacy liabilities through self-insurance.

This final rule will apply to the 16 operators noted above. Table 1 lists the 16 operators' actuarially estimated liabilities, securities currently on deposit, the present security requirement under existing guidelines, and future security requirements under this final rule.

This final rule does not impose additional reporting or filing requirements on the coal operators currently in the self-insurance program beyond notifying OWCP of any business structure changes that could affect the operator's liability for benefits under the BLBA. If anything, this final rule decreases administrative burdens. Operators are required to continue updating their actuarial liability estimates on a three-year cycle but are no longer required to file quarterly financial reports. There will be a cost to the operators for the time required to review and understand the rule. Because of the small number of affected establishments, this rule familiarization cost is de minimis in aggregate and is not included in the rule's total cost estimate.

This final rule requires self-insured operators to adjust the amount of their security deposits to reach 100 percent of their reported actuarial black lung liability. Table 1 reflects that 13 of the 16 current self-insured operators will be required to increase their security deposits as a result. For each operator, the cost of the increase in security deposits depends on which security deposit option the operator employs (since different security options have different costs) and the amount of the required increase.

Operators with security deposits in the form of indemnity bonds will incur a cost determined by the commercial bond underwriters. OWCP does not have direct information on the cost of these bonds, as pricing is a function of multiple qualitative and quantitative attributes of each operator and is determined by underwriters on a case-by-case basis. Each underwriter has their own pricing formula and offers various payment options. To estimate the cost impacts of the final rule, an annual premium ranging from 2 percent to 12 percent of the additional security was used as an estimate. This range is based on a review of public data from several different surety companies; however, actual costs could be higher or lower. 10 As noted above, commenters did not provide alternative data on the cost of bonds. Additionally, this analysis focuses solely on surety bonds because that is both the most widely used option among currently self-insured operators and the most cost-effective option. If operators do not wish to use surety bonds, however, they may obtain a different form—or multiple forms—of security, or commercial insurance. See 20 CFR 726.104(b), 30 U.S.C. 933(a), and 20 CFR 726.1 and 726.201.

For operators with security deposits in the form of negotiable securities, the additional costs would consist of the opportunity costs of the additional deposits ( i.e., the difference in return between funds held in such accounts and funds invested elsewhere, such as in higher-performing investments or reinvested into the operations of the business itself). One common convention to estimate hypothetical returns on forgone investments is to use a company or industry-level Weighted Average Cost of Capital (WACC); the median WACC for the metals and mining industry is currently around 7.7 percent, although the WACC for coal mining companies specifically, and in particular for individual coal mining companies, may be higher or lower. The opportunity costs for these operators could be estimated by calculating the difference between their WACC and the annual return earned on their security deposit and multiplying that figure by the dollar increase in their security. OWCP has not quantified these costs for two principal reasons. First, as noted above, most self-insured operators use indemnity bonds as security. OWCP does not anticipate that these operators will begin using negotiable securities. Second, annual indemnity bond costs are likely to be lower than the one-time payment of negotiable securities and associated opportunity costs, making indemnity bonds the more cost-effective option. Furthermore, any operators that currently use negotiable securities to secure some or all of their liabilities can continue using those securities in combination with indemnity bonds to comply with any increased security requirement ( i.e., some portion of the operator's liabilities could be secured with negotiable securities and the remainder could be secured with indemnity bonds).

Table 2 calculates the estimated increased costs of a larger indemnity bond for each operator and compares this figure to each operator's annual revenues. Annual revenues are represented by the most recent revenue available to OWCP, as reported by S&P or operator-provided financial statements. Annual costs are estimated as the average of the maximum and minimum annual premium ( i.e., the midpoint of the 2 percent to 12 percent range). As shown in table 2, the estimated annual impact for operators as a percentage of annual revenue ranges from a high of 0.422 percent to less than one thousandth of a percent (including one negative value). 11

In the docket for the personal protective equipment in construction rulemaking, found at https://www.regulations.gov, every submission was assigned a document identification (ID) number that consists of the docket number (OSHA-2019-0003) followed by an additional four-digit number ( e.g., OSHA-2019-0003-0002). In this final rule, citations to items in the docket are referenced by the last four digits of the Document ID Number. For example, Document ID number OSHA-2019-0003-0002 would be referenced as “Document ID 0002.” In a citation that contains two or more documents, the citations are separated by commas. In cases where a commenter submitted multiple documents, the attachment number is included after the Document ID. OSHA may also cite items that appear in another docket. When that is the case, OSHA includes the full document ID number for the corresponding docket ( e.g., OSHA-2010-0034-4247).

OSHA is finalizing revisions to its personal protective equipment (PPE) standard for construction, at 29 CFR 1926.95(c), to explicitly state that PPE must fit properly. This revision will align the language in the PPE standard for construction with the corresponding language in OSHA's PPE standards for general industry and shipyards and affirm OSHA's interpretation of its PPE standard for construction as requiring properly fitting PPE. Properly fitting PPE is a critical element of an effective occupational safety and health program. PPE must fit properly to provide appropriate protection to employees from workplace hazards. Improperly fitting PPE may fail to provide any protection to an employee, reduce the effectiveness of protection, present additional hazards, or discourage employees from using such equipment in the workplace.

The Final Economic Analysis for this rulemaking demonstrates that this rule is economically feasible and will not have a significant economic impact on a substantial number of small entities.

Section 6(b)(7) of the OSH Act, 29 U.S.C. 655(b)(7), authorizes OSHA to include requirements for protective equipment within its safety and health standards. Employees wear PPE to minimize exposure to hazards that can cause severe injuries and illnesses in the workplace. These injuries and illnesses may result from contact with chemical, radiological, physical, electrical, mechanical, or other hazards. PPE includes many different types of protective equipment, such as hard hats, gloves, goggles, safety shoes, safety glasses, welding helmets and goggles, hearing protection devices, respirators, coveralls, vests, harnesses, and full body suits.

OSHA has specific standards that address PPE in general industry, shipyard employment, marine terminals, longshoring, and construction. These standards require employers to provide PPE when it is necessary to protect employees from job-related injuries, illnesses, and fatalities. With few exceptions, OSHA requires employers to pay for PPE when it is used to comply with an OSHA standard. In addition, the PPE standards for general industry (29 CFR 1910.132(d)(1)(iii)) and shipyard employment (29 CFR 1915.152(b)(3)) include a specific requirement that employers select PPE that properly fits each affected employee.

OSHA's standard at 29 CFR 1926.95 sets out the requirements for PPE in construction. Section 1926.95(a) requires that all types of PPE must be provided, used, and maintained in a sanitary and reliable condition whenever the PPE is necessary due to workplace hazards. Section 1926.95(b) further requires that, even when employees provide their own PPE, the employer must assure its adequacy, including proper maintenance, and sanitation. Section 1926.95(c) provides that all PPE must be of safe design and construction for the work to be performed. Unlike the general industry and shipyards PPE standards, the current PPE construction standard at § 1926.95 does not include an explicit requirement that PPE properly fit each affected employee.

PPE must fit properly to provide adequate protection to employees. If PPE does not fit properly, it can make the difference between an employee being safely protected, having inadequate protection, or being dangerously exposed. In some cases, ill-fitting PPE may not protect an employee at all, and in other cases it may present additional hazards to that employee and to employees who work around them. For example, sleeves of protective clothing that are too long or gloves that do not fit properly may make it difficult to use tools or operate equipment, putting the wearer and other workers at risk of exposure to hazards, or may get caught in machinery, resulting in injuries to the wearer such as fractures or amputations. The legs of protective garments that are too long could cause tripping hazards for the worker with the improperly fitting PPE and could also impact others working near that worker. Protective clothing that is too small may increase a worker's exposure to hazards by, for example, providing insufficient coverage from dangerous machinery or hazardous substances. The issue of improperly fitting PPE is particularly important for smaller construction workers, including some women, who may not be able to use currently existing standard-size PPE. Fit problems can also affect larger workers, and standard-size PPE does not always accommodate varying body shapes.

The Advisory Committee on Construction Safety and Health (ACCSH) is a continuing advisory body established by statute (40 U.S.C. 3701 et seq. ) that provides advice and assistance to the OSHA Assistant Secretary on construction standards and policy matters related to construction. The issue of proper PPE fit in construction was discussed at the ACCSH meeting held on July 28, 2011. At that meeting, the committee unanimously passed a motion recommending that OSHA use the Standards Improvement Project-Phase IV (SIP-IV) rulemaking “to update the Construction PPE Standards to mirror the General Industry PPE requirements, specifically that PPE fit the employee who will use it . . . .” (Document ID 0002). 1 On December 16, 2011, ACCSH unanimously passed another motion recommending that OSHA consider using the SIP-IV rulemaking to revise the construction standards to include the requirement that PPE properly fit construction workers (Document ID 0003). 2

On December 6, 2013, OSHA issued a SIP-IV Request for Information (RFI) asking the public “to identify provisions in OSHA standards that are confusing or outdated, or that duplicate, or are inconsistent with, the provisions of other standards, either OSHA standards or the standards of other agencies” (Document ID 0004). In response, several commenters, including the AFL-CIO and the International Safety Equipment Association (ISEA), recommended that OSHA use the SIP-IV rulemaking to revise its construction PPE standard to ensure that PPE properly fits all construction employees (Document ID 0005, 0006).

Based on stakeholder suggestions, on October 4, 2016, OSHA published the SIP-IV Notice of Proposed Rulemaking (NPRM) in the Federal Register (Document ID 0007). Among other things, OSHA proposed revising 29 CFR 1926.95(c) to include an explicit requirement that PPE must properly fit each affected employee. In the preamble to the SIP-IV NPRM, OSHA stated that the proposed revision would “clarify the construction PPE requirements on this point and make them consistent with general industry PPE requirements” (Document ID 0007). Additionally, OSHA stated that clarifying the requirement would “help ensure employers provide employees with properly fitting PPE, thereby adequately protecting employees exposed to hazards requiring PPE” (Document ID 0007).

OSHA received several comments specifically addressing the proposed revision to § 1926.95(c) in the SIP-IV NPRM. Some commenters fully supported the proposed revision while a coalition of construction industry stakeholders opposed it. OSHA discusses the specific comments received during the SIP-IV rulemaking in the next section of this preamble.

Based on the comments received and the rulemaking record, on May 13, 2019, OSHA published the SIP-IV final rule in the Federal Register (Document ID 0008). The final rule did not include the proposed revision to the construction standard at § 1926.95(c). Instead, OSHA determined that such a revision to the construction PPE standard should occur in a separate rulemaking outside the SIP process. In the preamble to the final rule, OSHA explained that proposing to revise the PPE requirements separately from the SIP-IV rulemaking “would provide the public with broader notice of the proposal, encourage robust commentary, and better inform OSHA's approach to employer obligations and worker safety in relation to PPE used in construction” (Document ID 0008).

On July 17, 2019, OSHA presented a draft proposed rule to ACCSH for its recommendation, as required by 29 CFR 1912.3(a). The committee asked OSHA to review enforcement statistics on PPE fit and consider including guidelines for what constitutes “proper fit” (Document ID 0009). One member of ACCSH expressed concern that OSHA would require employers to present a “fit verification” to an OSHA compliance officer during a workplace inspection. OSHA responded that the proposed rule would not change how employers assessed the PPE needs of their workers. OSHA also explained that the proposed revision had been included in the SIP-IV rulemaking in an effort to make the construction standard consistent with the general industry and shipyards PPE standards. In addition, while some ACCSH members did not believe there would be a cost associated with the proposed rule, one member asked OSHA to consider cost closely given the transient nature of the construction industry. After the period for comments and questions ended, ACCSH unanimously passed a motion recommending that OSHA move forward with the proposed rule.

OSHA received four comments on the proposed revision of § 1926.95(c) in response to the SIP-IV NPRM. The Laborers' Health & Safety Fund of North America (LHSFNA) and North America's Building Trades Unions (NABTU) both supported the proposed revision to clarify that PPE must properly fit each affected employee (Document ID 0016, 0017, Attachment 1). Both commenters also stated that improperly fitting PPE can limit or negate the ability of the PPE to protect employees. According to NABTU, “[t]his is particularly important for women in the construction industry, who often have difficulty obtaining properly fitting PPE” (Document ID 0017, Attachment 1). LHSFNA commented that the fit problem can also affect men, including with respect to harness sizes for men who are over certain weight limits (Document ID 0016). NABTU stated that the proposed revision not only would make the construction standard consistent with the general industry standard but also was supported by worker organizations, safety associations, and ACCSH (Document ID 0017, Attachment 1).

OSHA also received a comment in support of the proposed revision from Emmanuel Omeike (Document ID 0018), a safety professional, which included two studies addressing PPE and women in construction (Document ID 0018, Attachments 3, 4). The comment noted several examples of employees who were wearing PPE but nonetheless sustained injuries due to improper fit (Document ID 0018). Mr. Omeike stated that employees are more likely to remove improperly fitting PPE, thus negating whatever protection the PPE might otherwise provide (Document ID 0018). Lastly, the commenter stated that prevention through design can eliminate many costs associated with PPE because PPE designed to be adjustable and customizable can prevent employee exposure to hazards created by improperly fitting PPE.

Additionally, OSHA received comments from the Construction Industry Safety Coalition (CISC) (Document ID 0019) opposing the proposed revision to § 1926.95(c). This commenter raised concerns about the possible impact the proposed revision would have on the construction industry, the definition of “properly fits,” employer confusion regarding compliance, and whether the SIP-IV rulemaking was the appropriate means to revise the standard. CISC stated they “[did] not believe that OSHA seriously considered the full impact this revision will have on employers and the construction industry in general.” They argued that the proposed revision's “broad scope covers a wide variety of PPE and situations that are not fully appreciated in the SIP-IV” and that “[p]lacing an explicit requirement that employers must ensure that all types of construction PPE `properly fits' all different sized employees in all different situations would be a monumental task which in many cases is not necessary and will not improve safety.” They further argued that the proposed revision “fails to provide adequate notice to employers as to what `properly fit' would mean” and questioned whether the standard would be violated if an employee complained that a hard hat is uncomfortable or if arc-flash clothing was “too long in the legs for one employee” (Document ID 0019).

CISC also commented that revising § 1926.95(c) to include an explicit requirement that all PPE fit properly “greatly changes the dynamic of th[e] standard and places enormous new responsibilities on construction employers.” According to CISC, the proposed revision does not simply clarify the standard, but “opens up construction employers to subjective standards of whether particular PPE fits properly and what steps employers must take to ensure that such PPE fits properly, particularly when most PPE does not come in exact sizing for employees” (Document ID 0019). They added that, in many cases, whether PPE properly fits is subjective, and it would be difficult for employers in construction to assess PPE for many employees of varying sizes in every situation. “[T]he subjective nature of this standard would greatly increase the potential for enforcement actions without giving employers fair notice of what is required” (Document ID 0019).

CISC also stated that it disagreed with OSHA's statement in the preamble to the SIP-IV proposed rule that applying the same standard to construction employers will have the same effect or benefit as in general industry. The comment emphasized that the types of and need for PPE vary greatly in construction, therefore adding a new fit requirement would create more of a burden for construction employers (Document ID 0019). CISC also argued that SIP-IV was not the appropriate avenue for making the proposed change and urged OSHA to embark on “a more thorough and complete rulemaking process which gives fair notice to the regulated community and will allow the agency to receive comments from the regulated community as to the impact and implications that this change would have on employers” (Document ID 0019).

In response to CISC's comment on the SIP-IV proposal, OSHA acknowledged in the NPRM for this rule that there is a wide variety of PPE and hazards in the construction industry and stated that to protect workers from these varied hazards in the construction industry, it is critical that workers' PPE fit them properly. OSHA explained that it used the phrase “proper fit” in the SIP-IV rulemaking because that is the phrase used in OSHA's general industry and shipyards PPE standards. The agency's intention throughout the SIP-IV rulemaking was to apply the proposed “properly fits” provision in the same manner as in general industry and shipyards. OSHA further noted that the addition of the “properly fits” provision to the general industry standard was made for the same reason that it was proposed during the SIP-IV rulemaking—that standard-sized PPE does not fit all employees, particularly women (see 59 FR 16334 (April 6, 1994)). OSHA's experience is that employers in general industry have had no issue understanding the phrase “properly fits” with regard to PPE.

Given the limited purposes of SIP-IV ( i.e. “to remove or revise outdated, duplicative, unnecessary, and inconsistent requirements in OSHA's safety and health standards” (Document ID 0008)) and the comments on the PPE revision described above, OSHA determined not to finalize the revision to § 1926.95(c) in the SIP-IV rulemaking. Instead, OSHA concluded that such a change to the PPE construction standard should take place outside the SIP process, in order to encourage robust public comment and acquire relevant information from stakeholders.

On July 20, 2023, OSHA published the Personal Protective Equipment in Construction Notice of Proposed Rulemaking (NPRM) (Document ID 0001), proposing to revise 29 CFR 1926.95(c) to clarify that personal protective equipment used in the construction industry must properly fit workers to protect them from hazards they may encounter in the workplace. OSHA has considered the issues raised by commenters during the SIP-IV rulemaking along with the comments received on the NPRM and addresses them below in Section III, Summary and Explanation.

This final rule amends 29 CFR 1926.95, Criteria for personal protective equipment, to make explicit the existing requirement that employers in the construction industry must ensure PPE worn by employees properly fits. Specifically, OSHA is revising § 1926.95(c) to state that employers must ensure all personal protective equipment: (1) is of safe design and construction for the work to be performed; and (2) is selected to ensure that it properly fits each affected employee. 3 After reviewing the comments received, OSHA is finalizing the provision as proposed because the agency has determined the proposed language appropriately clarifies employers' obligations under the standard. OSHA has also determined that additional clarifying language is not necessary for the reasons discussed in section III.C. below.

As OSHA explained in the NPRM, the agency has historically interpreted § 1926.95 as requiring that PPE properly fit each employee, has published guidance to that effect, and has issued citations to employers in the construction industry who failed to provide properly fitting PPE (88 FR 46710-46712). As such, the revision in this final rule does not represent a substantive change to the standard. Rather, the goal of the revision is to clarify employers' existing obligations while aligning the language in the construction PPE standard with similar requirements for properly fitting PPE in OSHA's general industry (29 CFR 1910.132(d)(1)(iii)) and shipyards (29 CFR 1915.152(b)(3)) standards.

In response to the proposed rule, OSHA received 85 public comments. The vast majority of commenters supported the change. These commenters generally agreed that the change would provide greater clarity about employers' responsibility to make sure employees wear properly fitting PPE and would improve the workplace safety and health of construction workers. Some commenters raised concerns about the revisions, stating, for example, that the specifics of the requirement were unclear or that the change would result in prohibitive costs for employers. The issues raised by these comments and others are discussed in more detail below.

In the NPRM, OSHA discussed the importance of properly fitting PPE in the construction industry, explaining that improperly fitting PPE may not protect workers from hazards and could create additional hazards (81 FR 46710-46711). The agency noted several studies and reports that identified instances of improperly fitting PPE either failing to protect workers from the hazard for which the PPE was intended ( e.g., loose-fitting goggles exposing an employee's eyes to flying debris) or introducing additional hazards ( e.g., loose-fitting gloves becoming caught in machinery). In addition, OSHA identified evidence that employees are more likely to remove or not use ill-fitting PPE.

In response to the NPRM, many commenters agreed with OSHA that improperly fitting PPE poses a hazard to workers in the construction industry (see, e.g., Document ID 0040, 0052, 0057, 0073, 0076, 0079-0081, 0115). For example, the American Industrial Hygiene Association (AIHA) commented that “[a]ny worker's safety and health can be adversely impacted by PPE that does not fit properly,” adding that workers who are smaller and larger than average size are most likely to be impacted by improperly fitting PPE (Document ID 0058). NABTU similarly stated that “[p]roperly fitting PPE is essential in the construction industry because poorly fitting PPE does not provide the wearer with adequate protection” (Document ID 0108). The National Institute for Occupational Safety and Health (NIOSH) identified several studies demonstrating that poorly fitting PPE can inadequately protect workers and can create additional hazards (Document ID 0073).

Numerous commenters shared their personal experiences with the lack of properly fitting PPE. For example, one commenter (Document ID 0061) was the first woman hired on a jobsite and resorted to buying her own extra small and small gloves because her employer refused to provide her with anything other than gloves that were too large. After running out of gloves that properly fit her, she was forced to wear the improperly fitting larger gloves. While working on an air conditioning unit, the improperly fitting gloves became caught in a pulley, resulting in a wrist sprain, torn ligaments, fractured fingers, and nerve damage. If this commenter had been provided properly fitting PPE, these injuries might have been avoided. Another commenter, who stated that OSHA's proposal “would directly improve my safety on the job,” shared that, as a woman who has been provided improperly fitting PPE, she has suffered “multiple injuries and near misses” because properly sized PPE often is not available (Document ID 0065). Another commenter explained how they have had to purchase their own gloves because they have been told it's impossible to find gloves small enough to fit them (Document ID 0056). For fear of losing her job or not being paid, a commenter who has worked 18 years as a laborer described using tape and raingear to protect herself while working in water because the only waders provided by the employer were too large and presented a drowning risk (Document ID 0080).

Many commenters raised concerns about being provided various items of improperly fitting PPE, with fall protection harnesses frequently cited as an item that often does not fit properly (Document ID 0031, 0035-0037, 0039, 0044, 0048, 0053, 0056, 0063, 0064, 0066, 0068, 0073, 0075-0077, 0080, 0081, 0084, 0087, 0090, 0093, 0098, 0108, 0112, 0113). Although harnesses come in various sizes and can be adjusted to some extent, many commenters describe receiving harnesses that were too large. There were commenters who mentioned receiving extra large harnesses that did not fit them appropriately because they were too long (Document ID 0076, 0081). When given larger harnesses, one commenter stated that the employer tells them to “shrink it down to make it fit” (Document ID 0068). A woman new to the construction industry commented that she has been dealing with ill-fitting PPE such as harnesses that are too loose on her and become a “safety HAZARD and a hinderance” (Document 0035). Several commenters noted that harnesses and other PPE designated as “unisex” are not truly appropriate for women (Document ID 0036, 0037, 0041, 0063, 0108).

Some commenters noted that the lack of properly fitting PPE can lead to a less inclusive workplace. According to Chicago Women in Trades and Allied Organizations (CWIT), “As a result, women struggle to secure consistent employment and find work on safe and respectful jobsites. In this sense, the disproportionate challenges tradeswomen face around accessing properly fitted PPE is a consequence of the way women are seen and valued in the construction industry” (Document ID 0098). Flatiron Construction added that the proposed rule is not only essential for preventing injuries in the workplace, but “having proper fitting PPE is also crucial to promoting a sense of belonging within the industry” and helping the construction industry attract and retain workers (Document ID 0106). Another commenter also argued that clarifying OSHA's PPE requirement could lead to greater recruitment and retention of workers, specifically women (Document ID 0047). The International Painters and Allied Trades and the Signatory Wall and Ceiling Contractors Alliance (Painters et al.) added that “[i]f we are going to bring more women into the trades both the industry and the regulatory structure that surrounds it must evolve to ensure the safety of women on the job. Establishing that an employer's obligation to provide PPE in construction extends to providing properly fitting PPE is a critical part of this” (Document ID 0078). One commenter simply stated that putting workers at risk because they do not fit standard-size PPE is “inequitable and immoral” (Document ID 0059).

A few commenters mentioned efforts to address improperly fitting harnesses. NIOSH commented that they have conducted studies on fall protection harnesses that have resulted in “guidelines to develop improved sizing systems and strap lengths for whole body fall arrest harnesses” and “improved harness configuration to fit construction workers” (Document ID 0073). The ISEA notes that modern fall arrest harnesses, especially those with adjustable hip belts, are ergonomically designed to fit women, and some harnesses that are designed for women will also fit men. They recommended that “employers and their distributors should work with employees to identify a harness that fits properly and is designed to protect against the hazards at hand” (Document ID 0112). NABTU cited examples of harnesses that are designed to fit women, explaining that “harnesses designed to fit women aim to provide improved protection against fall hazards and increased comfort. They offer a range of features tailored for varied anthropometry, including hip and chest adjustability, increased hip and back support, vertical shoulder straps, comfort padding and more” (Document ID 0108).

In the NPRM, OSHA preliminarily determined that revising § 1926.95 to include clear and explicit language that PPE must fit properly would help ensure workers in the construction industry are protected from workplace hazards (81 FR 46711). OSHA requested comment on whether the inclusion of an explicit requirement in § 1926.95(c) would help clarify construction employers' obligations to provide properly fitting PPE to their employees. Numerous commenters were supportive of OSHA's clarifying language (Document ID 0024, 0028, 0029, 0031, 0034-0048, 0050-0068, 0071-0081, 0083-0088, 0091-0098, 0106-0108, 0110, 0112, 0113, 0115, 0116). Of these comments, many expressed the need for an explicit requirement in the standard to ensure that workers receive properly fitting PPE. Kentucky's Department of Workplace Standards commended OSHA for proposing explicit language on properly fitting PPE, agreeing with OSHA that “providing clear and explicit language in the construction PPE standard clarifies employers' responsibility to provide employees with properly fitting PPE, thereby ensuring employee protection” (Document ID 0095). CWIT commented that “[t]he rule clarification aids in reaffirming OSHA's existing interpretation of its current construction standard and clearly communicates to employers their obligations to provide properly fitting PPE” (Document ID 0098). California's Occupational Safety and Health Standards Board (Cal/OSHSB) responded that clarification of the PPE requirements is necessary and supported OSHA's proposed revision (Document ID 0107). The National Safety Council (NSC) commented that the clarifying language “will save lives and prevent injuries” (Document ID 0096). The American Society of Safety Professionals (ASSP) Chesapeake Chapter also supported the proposed revision (Document ID 0083).

Some commenters who support the proposed changes believe including explicit language that PPE must properly fit construction workers could spur the manufacture, distribution, and availability of PPE in more wide-ranging sizes and fits. A commenter who has “been too often confronted with the challenge of finding PPE scaled to fit smaller and female workers” supports the clarification and hopes it will create more of a market for PPE that fits smaller workers and women (Document ID 0031). One commenter likewise expressed hope that this clarification would “create the market demand for smaller PPE that merchants currently refuse to see” (Document ID 0046). Another commenter said it was imperative for women to get safety equipment that fits them correctly (Document ID 0113). After mentioning how it is difficult to find options of smaller sizes for various PPE, a commenter said that the proposal would “lead to more demand . . . and encourage manufacturers to make these products” (Document ID 0039).

To this point, OSHA mentioned in its proposed rule that The Center for Construction Research and Training (CPWR) and ISEA have a list of manufacturers of PPE specifically for women (81 FR 46711). In their comment to the proposed rule, ISEA also noted that “PPE manufacturers provide safety equipment in size ranges and adjustability to fit a vast majority of the construction workforce. ISEA members are willing to work with occupational safety stakeholders to make sure all workers have PPE that is required. . . .” (Document ID 0112).

A number of commenters stated that an explicit requirement for properly fitting PPE will not only ensure they have PPE to protect them from hazards but would increase their productivity. CWIT highlighted in their comment that “[w]hen PPE fits incorrectly, it can cause a disruption to a worker's . . . capacity to complete projects” (Document ID 0098). A commenter expressed how being asked to “make due [sic]” with improperly fitting PPE put them at risk of going home without pay or losing their job because they couldn't complete the assigned tasks. Properly fitting PPE would not just protect them but allow them to do complete tasks that would benefit their employer (Document ID 0045). Another commenter stated how the proposal would drastically change their productivity at work (Document ID 0048) while another explained how it is difficult to do their job when safety equipment does not fit correctly (Document ID 0054). These comments demonstrate how improperly fitting PPE not only affords the wearer inadequate protection from hazards but also hurts employers' productivity and makes it difficult for workers who need non-standard sizes of PPE  4 to remain employed in the construction industry.

OSHA received two comments that questioned the necessity of the proposed revision and suggested that existing standards are sufficient. One commenter stated that OSHA could cite 29 CFR 1926.28(a), the general requirement that PPE be worn in hazardous conditions on construction worksites (Document ID 0026); another appeared to say that 29 CFR 1910.132(d), the general industry standard on which OSHA is modeling this revision to the construction standard, renders this revision unnecessary. That standard, however, applies only to general industry work, not construction work. And the general requirement for PPE in construction is inadequate because, as explained above, it is clear from the record that workers in the construction industry have either struggled to obtain properly fitting PPE or are still being provided PPE that does not fit. This often leaves these employees exposed to the hazards the PPE is meant to protect against and may be creating additional hazards. This is especially true for workers of larger and smaller stature, women in particular.

Based on the comments received and the information in the record, OSHA reaffirms its finding that improperly fitting PPE is a hazard to workers in the construction industry and finds that an explicit requirement in § 1925.95 is appropriate to clarify employers' existing obligation to ensure PPE properly fits each employee.

Section 6(b)(8) of the OSH Act (29 U.S.C. 655(b)(8)) requires OSHA, in adopting a standard, to consider national consensus standards; where the agency decides to depart from the requirements of a national consensus standard, it must explain why the OSHA standard better effectuates the purposes of the OSH Act. OSHA has reviewed national consensus standards on PPE and determined that revising 29 CFR 1926.95 as proposed will better effectuate the purposes of the OSH Act than relying on the language of existing national consensus standards.

While there are many consensus standards that address PPE, there is no general consensus standard on PPE that incorporates a fit requirement. Instead, each standard focuses on a different type of equipment. For example, OSHA incorporates by reference American National Standards Institute (ANSI) Z87.1, Occupational and Educational Personal Eye and Face Protection Devices, and ANSI Z89.1, Head Protection, into its construction standards. However, there are several other PPE consensus standards that address not only different types of PPE, but also different uses for that PPE, such as NFPA 2113, Standard on Selection, Care, Use, and Maintenance of Flame-Resistant Garments for Protection of Industrial Personnel Against Flash Fire. Rather than adopting each PPE consensus standard and whatever language it may include on proper fit, OSHA is revising its existing construction standard to make it clear that all types of PPE used in the workplace must fit properly. OSHA believes that centralizing the requirement in the OSHA construction standard will make employers more aware of their responsibility to ensure that PPE used to protect workers from hazards must fit properly. This revision also makes clear that all PPE must fit properly, regardless of whether there is an applicable consensus standard.

Additionally, many consensus standards do not include mandatory language. For example, both ANSI standards discussed above include specific language concerning properly fitting PPE. However, while ANSI Z87.1 discusses the importance of properly fitting eye and face protection, the standard does not include mandatory language regarding its use. Similarly, rather than including mandatory language, ANSI Z89.1 merely refers users of head protection equipment to the manufacturer for advice on proper fit. The revision to § 1926.95(c) in this final rule will clarify that properly fitting PPE is an enforceable requirement rather than the non-mandatory suggestions contained in those consensus standards. The agency believes that a clear and explicit requirement will help ensure that employers provide employees with properly fitting PPE.

OSHA requested comments on whether the proposed revision would effectuate the purpose of the OSH Act better than existing consensus standards. Several commenters agreed that it would (Document ID 0073, 0098, 0108, 0112). NABTU responded that the proposed revision would do so because “[w]hile some national consensus standards address fit, there is no requirement that employers follow consensus standards” (Document ID 0108). Similarly, CWIT stated that revisions to the OSHA standards would be better than “adopting each consensus standard, with varying language around type, use, and fit” and relying on “a non-mandatory suggestion as described in certain consensus standards” (Document ID 0098). NIOSH also supported revisions to the standard over reliance on consensus standards because “[p]roviding all the information in one place will ensure all PPE fitting guidelines are readily accessible and consistent” (Document ID 0073). AIHA also commented that this rule would effectuate the purpose of the OSH Act better than consensus standards because “[r]egulatory language is helpful for employers to have a better understanding of what is required and thresholds for compliance” (Document ID 0058). One commenter even identified an instance of a consensus standard obstructing their company's efforts to develop a Class 3 safety vest for women (Document ID 0106).

ISEA, an organization whose members design, test, manufacture, and supply PPE and which serves as secretariat for several consensus standards on PPE, supports the new regulatory language, noting that while consensus standards ANSI/ISEA Z87.1-2020, Current Safety Standards for Safety Glasses and Z89.1-2019, Industrial Head Protection, effectuate the purpose of the OSH Act, “a requirement that PPE fit properly will help to make certain that workers get PPE that meets these standards and fits the wearer” (Document ID 0112). Having evaluated the information relevant to this particular issue, OSHA concludes that revising the existing standard as proposed will better effectuate the purpose of the OSH Act than relying on the language of existing consensus standards.

OSHA requested comment on the wording of the agency's proposed addition to 29 CFR 1926.95, which, as explained above, is substantially similar to the language in OSHA's general industry and shipyards standards that require properly fitting PPE.

Some commenters suggested language for the regulatory text that would refer to manufacturers' instructions regarding fit. A representative from Cook's Excavating, LLC, commented that OSHA should adopt the language “[a]ll personal protective equipment shall properly fit the affected employee in accordance with the manufacturer's recommendations” (Document ID 0034). The World Floor Covering Association also recommended relying on “manufacturer's recommendations or specifications to determine proper fit” as well as suggesting that “PPE that meets applicable national consensus standards should also be deemed to properly fit” (Document ID 0114). Cal/OSHSB encouraged OSHA to adopt language similar to their standards, which provide that PPE be used according to the manufacturer's instructions (Document ID 0107). NIOSH also recommended a reference to manufacturers' recommendations for proper fit to provide additional guidance to stakeholders (Document ID 0073). One commenter, however, was skeptical of using manufacturers' recommendations because “manufacturer's instructions may not provide clear or accurate guidance on how to measure or adjust fit, especially for women's sizes or models” (Document ID 0091).

OSHA believes that the manufacturer's instructions and recommendations can be an important source of information concerning the proper fit of PPE. OSHA encourages employers to look to manufacturer's instructions and recommendations for guidance on how an item of PPE should properly fit the wearer. However, the agency is not including it as a requirement in its construction standard because doing so would limit employers' flexibility when finding and choosing PPE that meets the individual needs of their workers. In addition, the clarified requirement for employers to provide properly fitting PPE applies regardless of whether the manufacturer of the PPE provides instructions or recommendations on proper fit. Where the manufacturer's instructions or recommendations are silent on proper fit, the employer can often look to consensus standards for additional guidance on the appropriate fit of an item of PPE. Employers can also choose PPE products for which guidance on proper fit exists, either from the manufacturer or otherwise, over items where such information is lacking.

OSHA also requested comment on whether there was any confusion about what “properly fits” means for PPE used in the construction industry. In the NPRM, OSHA explained that “properly fits” means the PPE is the appropriate size to provide an employee with the necessary protection from hazards and does not create additional safety and health hazards arising from being either too small or too large. Most commenters expressed no confusion about what “properly fits” means, but some had additional suggestions for explaining the term. For example, the AIHA suggested an “operational definition . . . so that employers know what is meant and for proper compliance documentation . . . . The standard should point employers to specific actions per PPE item that can be taken” (Document ID 0058). NIOSH commented that they agree with OSHA's interpretation of “properly fits” but that based on responses to the SIP-IV rulemaking, it is clear it is not “universally understood” (Document ID 0073). They suggested that OSHA define the phrase. CWIT endorsed OSHA's interpretation of the term but noted that assessments of proper fit must take into account workers' body changes during pregnancy (Document ID 0098).

Some comments requested additions to the proposed regulatory text. The ASSP Chesapeake Chapter asked for clarification of employer and employee responsibilities to “emphasize the gravity of the issue and encourage proactive measures in ensuring properly fitting PPE is available” (Document ID 0083). One commenter asked OSHA to “expound[ ] on `proper fit' in the standard . . .” (Document ID 0032), while another asked for “clarifications, specifications, or resources for the employers who are responsible to provide the properly fitting PPE in question” (Document ID 0033). The latter commenter also suggested that OSHA include a requirement for a qualified or competent person to determine the proper fit of PPE (Document ID 0033). The United Brotherhood of Carpenters & Joiners of America (UBCJA) suggested expanding the regulatory text to add, “To properly fit personal protective equipment must be comfortable to wear, not pose a danger and provide effective protection” (Document ID 0074).

OSHA believes its explanation of “properly fits” provides employers with enough information that they can select PPE for their workers that will adequately protect them from the hazards of the worksite without creating additional hazards. Given the significant variety in types and models of PPE, the varied circumstances in which they are used, and the potential for new technology and new forms of PPE in the future, OSHA does not believe it is appropriate or necessary for the agency to prescribe specific fit criteria for all possible forms of PPE. Similarly, OSHA does not believe it is necessary for the agency to prescribe specific criteria for workers' changing bodies, as the requirement for properly fitting PPE applies every time the PPE is used. Rather, the agency believes a performance-based approach is appropriate, just as the underlying requirement to identify and provide necessary PPE is performance-based (see 29 CFR 1926.95).

In the general industry and maritime sectors, OSHA has not needed to accompany the requirement for properly fitting PPE with specific directions regarding fit for each item of PPE or other details about what “properly fits” means; nor do those standards include a requirement that a designated competent person assess PPE fit. There is no indication that this has resulted in significant confusion among employers in those sectors. Indeed, as noted in the NPRM, OSHA issued only 51 citations for improperly fitting PPE in general industry and shipyards between the years 1994 and 2021, which suggests the vast majority of employers have been able to comply (88 FR 46712). Providing specific fit requirements for each individual type of PPE item also might undermine the manufacturer's recommendations for a particular PPE item. Accordingly, OSHA is not convinced that further details within the regulatory text are necessary for the construction industry. In any event, OSHA can issue additional guidance in the future if the agency determines it is needed.

In the proposed rule, OSHA stated that “properly fits” means, in part, that the PPE “does not create additional safety and health hazards arising from being either too small or too large” (88 FR 46711). OSHA listed examples of the additional hazards to which workers can be exposed because of improperly fitting PPE (81 FR 46710-46711). These examples demonstrate a few of the ways that improperly fitting PPE can create additional hazards, with a few examples coming directly from OSHA inspections. Commenters also submitted examples of how improperly fitting PPE can create additional hazards. The UBCJA agreed with OSHA's emphasis on additional hazards, adding that “[e]ven a loose safety vest can pose a danger if it is unexpectedly caught in equipment” (Document ID 0074). NIOSH explained that “[s]afety glasses slipping off, loose gloves getting caught on machines or exposing skin, or blisters forming from ill-fitting safety boots make working more difficult and can adversely affect worker safety and job satisfaction” (Document ID 0073. The State Building and Construction Trades Council of California noted that “oversized protective clothing can lead to tripping hazards or get caught in machinery. . . . Poorly-fitted fall protection harnesses may lead to other injuries. . . . Gloves that are too big put a worker at risk of coming into contact with chemicals that can cause dermatitis or other skin diseases” (Document ID 0028). Another commenter mentioned how ill-fitting PPE could snag on scissor lifts (Document ID 0097) while a member of IBEW Local 48 commented that “[i]tems that are too large run the risk of becoming entangled in machinery. . . .” (Document ID 0040).

CISC raised concerns about OSHA's discussion of additional hazards. They contend that “[w]ithout additional clarification on what `additional hazards' employers must address in order to comply with the proposed rule, employers will be forced to re-evaluate every single piece of PPE they provide to their employees. Employers will be tasked with identifying additional hazards that could result from their PPE not `properly fitting' in every situation” (Document ID 0109). CISC suggested OSHA “provide notice of specific hazards that are associated with PPE that does not properly fit” and “clarify what `additional hazards' improperly fitting PPE may cause” (Document ID 0109).

It is neither necessary nor possible for OSHA to identify all hazards that might arise from improperly fitting PPE, just as the agency does not identify all hazards that might necessitate PPE in the first place (see 29 CFR 1926.95(a)). Given the many combinations of PPE that can be selected to protect workers from the multitude of workplace-specific hazards, employers are in the best position to identify what hazards exist at their particular worksite, the appropriate PPE to address those hazards, and the proper fit of PPE that will not result in additional hazards. This is both because employers have the most knowledge of the work tasks involved and the hazards faced by employees at their worksite and because they have access to the people with the most direct knowledge about proper fit: the employees who must wear the PPE. In most cases, the affected employee will be able to indicate whether the provided PPE fits properly or whether it poses a hazard from their work tasks. The employer also knows the specific PPE involved in a given case and can refer to the manufacturer's instructions for that specific item for additional guidance. Finally, to the extent that relevant national consensus standards address proper fit of particular PPE, employers may look to those standards for guidance as well.

The ASSP Chesapeake Chapter asked for clarification of how the proposed change affects the employer/employee relationship, stating that “[c]learly defined responsibilities for employers will emphasize the gravity of this issue and encourage proactive measures in ensuring properly fitting PPE is available” (Document ID 0083). This revision has no impact on the employer/employee relationship; it simply clarifies that every employer is responsible for ensuring that their workers have properly fitting PPE. Additional responsibilities employers have regarding PPE of their workers in the construction industry can be found in Subpart E—Personal Protective and Life Saving Equipment, 29 CFR 1926.95 through 1926.107.

OSHA requested comments on whether any differences between general industry and maritime and the construction industry impact whether OSHA should include “properly fits” in the construction standard as proposed in the NPRM. Commenters expressed support for language that reflects the requirements for properly fitting PPE in the general industry and maritime industries. NIOSH, for example, stated that “mirroring the language for general industry and maritime standards is appropriate because of the significant hazards and injury burden in the construction industry. The change will provide added emphasis on the documented need to ensure all PPE fits all workers well” (Document ID 0073). The AIHA noted that it knew of no differences between general industry, maritime, and construction that would impact OSHA's inclusion of “properly fits” in the construction standards (Document ID 0058). Painters et al. commented that “[t]here is nothing unique to the construction industry that would put an undue burden on employers to ensure that each worker has access to PPE that fits their size and shape properly and can be used for the purpose for which it was intended: to protect the worker from hazards of injury or illness” (Document ID 0078).

Some commenters suggested that it is inappropriate to align the language in the construction industry with the language of general industry and shipyards because the construction industry is different from general industry and shipyards. CISC argued that an important difference between the construction industry and other industries is the changing conditions of the worksite. “The construction industry does not operate in static, permanent worksites” with known hazards that “have long since been identified and documented” like in general industry and shipyards; rather, it is “dynamic” and “[w]hat PPE is needed and when, can vary from day to day . . .” (Document ID 0109). The National Demolition Association (NDA) made a similar argument, stating that construction worksites present different challenges and work conditions than other industries, but did not elaborate on what those differences are and how they would be impacted by OSHA's proposal (Document ID 0111). 5

OSHA does not find this argument persuasive. First, § 1926.95(a) requires construction employers to provide appropriate PPE to employees when necessitated by workplace hazards. This is true regardless of how dynamic the work activities are. Given that employers must already analyze the hazards on their worksites, no matter how dynamic, and provide necessary PPE, these commenters fail to explain why the dynamic nature of the activities warrants permitting employers to provide PPE that does not fit.

Moreover, although there are differences between the construction industry and other industries, many of the hazards that necessitate properly fitting PPE to protect workers are the same. In the NPRM, OSHA referenced citations in general industry and maritime for violation of the requirement for properly fitting PPE. Many of those violations were for PPE that is also used in the construction industry, such as harnesses and gloves. As evidenced by the comments to the NPRM, several stakeholders' primary concerns about properly fitting PPE involve these types of items (see, e.g., OSHA's discussion of comments related to harnesses in B. Impact of Properly Fitting PPE). Neither CISC nor NDA identified examples of PPE that are unique to the construction industry.

OSHA also emphasizes that the Advisory Committee on Construction Safety and Health (ACCSH), which is composed of an equal number of employee and employer representatives along with representatives from State and Federal agencies and subject-matter experts (see 29 CFR 1912.3(b)), has on several occasions urged OSHA to align the language in the construction PPE standards with those in general industry and shipyards (Document ID 0002, 0003, 0020). Finally, as explained in Section VI, Technological Feasibility, OSHA finds that there are no technological barriers to providing construction employees with properly fitting PPE.

In sum, OSHA is not convinced any differences that exist between the construction industry and other industries warrant depriving construction employees of protection against the hazards posed or not prevented by improperly fitting PPE. Indeed, as discussed above, properly fitting PPE is already an implicit requirement under the construction standard for PPE and this final rule makes that requirement explicit. Accordingly, OSHA concludes that the proposed language is appropriate for inclusion in the standard.

Prior to the publication of the proposed rule, ACCSH recommended that OSHA provide additional guidance explaining what “proper fit” means for the construction industry. As described above, in the NPRM, OSHA explained that “ `properly fits' means the PPE is the appropriate size to provide an employee with the necessary protection from hazards and does not create additional safety and health hazards arising from being either too small or too large” (88 FR 46711). OSHA also requested comment on whether existing OSHA guidance regarding PPE “proper fit” in construction is adequate and if it is not, what type of additional guidance OSHA should provide.

OSHA received a variety of comments in response to this request. While NIOSH responded that existing guidance was not adequate, they commented that revising OSHA's construction standards to explicitly state that PPE must properly fit would help address this concern. NIOSH also suggested that OSHA should define “properly fitting” (Document ID 0073). The NSC noted they have a PPE training that teaches that PPE should fit comfortably and not be too large or too small (Document ID 0096). CWIT suggested that OSHA develop an eTool to provide guidance on proper fit of PPE (Document ID 0098). Cal/OSHSB recommended that OSHA work with manufacturers and provide guidance on conformity assessments for all PPE (Document ID 0107). The ISEA, while agreeing with OSHA's interpretation of proper fit, suggested that OSHA work with stakeholders to develop additional guidance such as FAQs to minimize any confusion about the requirement to provide properly fitting PPE.

OSHA is willing to work with construction industry stakeholders to develop specific guidance that will broadly address any confusion or concerns the industry has about providing PPE that properly fits workers. To do that, OSHA must first have clear and explicit language in its construction standards that communicates an employer's obligations. After a review of the comments received in response to this proposed rule, OSHA believes that the proposed language accomplishes this goal.

In the NPRM, OSHA explained that enforcement of the requirement for properly fitting PPE in construction would be the same as it has been in general industry and maritime, relying on enforcement guidance the agency has already created for those industries and applying it to the construction industry. OSHA also provided citation data and examples of violations of the requirement to have properly fitting PPE to demonstrate how the agency has been enforcing this requirement in general industry and shipyards (88 FR 46711).

Some commenters requested additional information on how OSHA will enforce this requirement. CISC argued that the proposed rule “does not discuss how investigators will be evaluating PPE for compliance” resulting in “concern that employers will be held to subjective standards of whether PPE fits properly and what steps employers must take to ensure they are in compliance” (Document ID 0109). Other commenters who supported the proposed rule overall agreed with this concern that enforcement could be subjective (Document ID 0088, 0091). Painters et al., on the other hand, noted that the proposed changes do not introduce new concepts. “[W]e think it is important to note that the uncertainty often associated with the revision of an OSHA standard does not pertain to this proposed rule. OSHA is adopting language it has long applied in the general industry and maritime standards” (Document ID 0078).

With regard to enforcement-related concerns, OSHA believes that this preamble adequately explains what OSHA expects from employers: to select PPE for their workers that is appropriately designed and sized to adequately protect them from hazards without creating additional hazards. OSHA believes this performance-based interpretation of “properly fits” provides sufficient specificity while maintaining flexibility to allow employers to select the PPE necessary to protect their workers on the job. Additionally, there is existing guidance that can assist employers in selecting properly fitting PPE. Several commenters pointed out that the manufacturer's instructions are an important source of information on the proper fit of PPE (see Document ID 0034, 007, 0107, 0114). Although consensus standards do not carry mandatory obligations to meet their standards, they also can provide guidance on how various PPE items should fit.

One important aspect of determining what PPE should be provided to workers is comfort. OSHA stated in the proposed rule that improperly fitting PPE can be uncomfortable for the wearer, which in turn can lead workers to modify or disregard the PPE and become vulnerable to a hazard (81 FR 46711). Several commenters echoed this concern. Some commenters mentioned that ill-fitting, uncomfortable PPE could be dangerous (Document ID 0076, 0081). NIOSH stated that comfort is an important factor that can positively impact PPE use (Document ID 0073). Cal/OSHSB commented that “[m]aking sure that PPE not only fits but is comfortable is imperative to ensuring that employees wear the PPE throughout their shift” (Document ID 0107). UBCJA requested that OSHA adopt language stating that for PPE to properly fit, it must be comfortable to wear (Document ID 0074).

Some commenters expressed concern about whether comfort would be an indication of proper fit and, if so, how OSHA would address that from an enforcement standpoint. CISC asked, “Is comfort important because it encourages employees to keep PPE on, or is it a citable offense even if `uncomfortable' PPE is being worn?” (Document ID 0109). Similarly, the Wood Floor Covering Association asked, “Is simply finding the PPE to be uncomfortable sufficient to claim it does not properly fit even [if] the equipment provides full protection?” (Document ID 0114).

OSHA reaffirms its position that comfort is an important consideration for properly fitting PPE, both because more comfortable PPE is more likely to be worn by workers rather than discarded and unused and because discomfort in many cases can indicate improper fit. An employee's expression of discomfort should be taken seriously by the employer, as it may signal that the PPE warrants further evaluation to ensure it will serve its protective purpose and will not create additional hazards.

At the same time, OSHA also recognizes that discomfort during the use of PPE may not always be the result of improper fit. Some PPE may be inherently uncomfortable, despite fitting properly. OSHA has explained in other contexts that personal discomfort alone does not give rise to a violation of the OSH Act's General Duty Clause, absent a related recognized hazard that could cause death or serious physical harm (see Reiteration of Existing OSHA Policy on Indoor Air Quality: Office Temperature/Humidity and Environmental Tobacco Smoke, available at https://www.osha.gov/laws-regs/standardinterpretations/2003-02-24 ). The same is true with respect to PPE under 29 CFR 1926.95: OSHA cannot issue a citation simply because PPE that properly fits is uncomfortable. 6 However, OSHA cautions that regardless of fit, employers have an independent duty to ensure that appropriate PPE is worn at all times when necessitated by a workplace hazard (29 CFR 1926.28). Because the record clearly indicates uncomfortable PPE is more likely to go unused, employers would be wise to take seriously employees' concerns about discomfort.

Finally, a few commenters suggested that increased enforcement from OSHA and/or a “culture change” among employers would be more effective in achieving the goal of properly fitting PPE than changing the rule (Document ID 0026, 0027). While OSHA operates, as always, with limited resources, the agency believes that the amended standard, by making employers' responsibilities explicit, will encourage a more protective approach to PPE across the construction industry.

The purpose of the Occupational Safety and Health Act (29 U.S.C. 651 et seq. ) (“the Act” or “the OSH Act”) is “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources” (29 U.S.C. 651(b)). To achieve this goal Congress authorized the Secretary of Labor (“the Secretary”) to promulgate standards to protect workers, including the authority “to set mandatory occupational safety and health standards applicable to businesses affecting interstate commerce” (29 U.S.C. 651(b)(3); see also 29 U.S.C. 654(a) (requiring employers to comply with OSHA standards), 655(a) (authorizing summary adoption of existing consensus and Federal standards within two years of the Act's enactment), 655(b) (authorizing promulgation, modification or revocation of standards pursuant to notice and comment)), and 655(b)(7) (authorizing OSHA to include among a standard's requirements labeling, monitoring, medical testing, and other information-gathering and information-transmittal provisions)). An occupational safety or health standard is a standard which requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes “reasonably necessary or appropriate” to provide safe or healthful employment and places of employment (29 U.S.C. 652(8)).

Section 6(b)(7) of the OSH Act (29 U.S.C. 655(b)(7)) authorizes OSHA to include requirements for protective equipment within a standard. It provides that, where appropriate, standards must prescribe suitable protective equipment and control or technological procedures to be used in connection with workplace hazards and must provide for monitoring or measuring employee exposure as necessary to protect employees (29 U.S.C. 655(b)(7)).

The OSH Act imposes several requirements OSHA must satisfy before adopting a safety standard. Among other things, the standard must provide a high degree of employee protection, substantially reduce a significant risk to workers, be technologically feasible, and be economically feasible (see 58 FR 16612, 16614-16 (Mar. 30, 1993); UAW v. OSHA, 37 F.3d 665, 668-69 (D.C. Cir. 1994)). OSHA need not make additional findings on risk for this final rule because the rule involves a clarification of an existing OSHA standard and does not create any new requirements for employers. Accordingly, OSHA is not required to conduct a significant risk analysis for the change to § 1926.95 (see Edison Elec. Inst. v. OSHA, 849 F.2d 611, 620 (D.C. Cir. 1988)).

A standard is technologically feasible if the protective measures it requires already exist, can be brought into existence with available technology, or can be created with technology that is reasonably expected to be developed (see Am. Iron and Steel Inst. v. OSHA, 939 F.2d 975, 980 (D.C. Cir. 1991)). Courts have also interpreted technological feasibility to mean that a typical firm in each affected industry or application group will reasonably be able to implement the requirements of the standard in most operations most of the time (see, e.g., Public Citizen v. OSHA, 557 F.3d 165, 170-71 (3d Cir. 2009); United Steelworkers of Am. v. Marshall, 647 F.2d 1189, 1272 (D.C. Cir. 1981)).

In determining economic feasibility, OSHA must consider the cost of compliance in an industry rather than for individual employers. In its economic analyses, OSHA “must construct a reasonable estimate of compliance costs and demonstrate a reasonable likelihood that these costs will not threaten the existence or competitive structure of an industry, even if it does portend disaster for some marginal firms” ( Am. Iron and Steel Inst., 939 F.2d at 980, quoting United Steelworkers of Am., 647 F.2d at 1272).

OSHA has examined the impacts of this rule as required by Executive Order 12866, Regulatory Planning and Review (September 30, 1993); Executive Order 13563, Improving Regulation and Regulatory Review (January 18, 2011); Executive Order 14094, Modernizing Regulatory Review (April 6, 2023) (hereinafter, the Modernizing E.O.); the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96354); section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4); and Executive Order 13132, Federalism (August 4, 1999).

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). 7 The Modernizing E.O. amends section 3(f) of Executive Order 12866. As amended, section 3(f) 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 in any 1 year (adjusted every 3 years by the Administrator of the Office of Information and Regulatory Affairs (OIRA) for changes in gross domestic product), or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or Tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impacts of entitlement 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 [the Modernizing E.O.], as specifically authorized in a timely manner by the Administrator of OIRA in each case.

OIRA has determined that this final rule is a significant regulatory action under E.O. 12866 (but not under section 3(f)(1)), and that it does not meet the criteria set forth in 5 U.S.C. 804(2) under the Congressional Review Act.

OSHA has prepared this Final Economic Analysis (FEA) which presents the agency's estimates of the costs and benefits of the rulemaking.

As discussed above, OSHA is finalizing this rule with the same changes to the regulatory text that the agency proposed. Public comments received in response to the proposal generally support the need for the rule. A number of commenters gave examples of employers not providing them with properly fitting PPE. One commenter said “I buy my own PPE, i.e., glasses, gloves because no contractor ever has small of either. I've been in the trade 27 years and have never had a contractor have those for me” (Document ID 0094). Another stated that “[a]s an electrician since 2015, there have been years I have not been provided correctly fitting PPE. Employers did not anticipate my pregnancy, so high-visibility coats were hard to find and expensive. . . . A coat for males had sleeves that were too long and got in the way of working” (Document ID 0115). However, public comments also support several changes to the economic analysis. Those changes are as follows.

For the proposal, OSHA estimated minimal costs to comply with the rule since it simply clarifies an existing requirement. OSHA did, however, request information from commenters about the impact of the rule on the provision of properly fitting PPE. Based on responsive comments in the record, OSHA has determined that it is appropriate to account for additional costs. In particular, OSHA has added costs for purchasing properly fitting harnesses and earplugs, which were not included in the proposal. In addition, OSHA has added ongoing annual costs for non-compliant employers to continue to provide properly fitting PPE to their employees after initially replacing it. OSHA has also added costs for rule familiarization time as well as the time for employers to assess, research, and identify properly fitting PPE for those workers who are not currently being provided with it. Where more recent economic data is available, OSHA has updated the data used for its analysis. Finally, OSHA is attributing (although not quantifying) health and safety benefits to this final standard based on evidence in the record that workers are being injured due to improperly fitting PPE. These updates are discussed in more detail later in this section.

This final rule amends the construction standard at 29 CFR 1926.95—Criteria for Personal Protective Equipment, paragraph (c), to clarify that PPE must properly fit each employee. This revision clarifies an existing requirement and OSHA therefore concludes that the rule will impose only limited costs on employers that are not already providing their employees with properly fitting PPE. OSHA normally assumes full compliance with existing requirements when performing its analysis of costs related to a new or amended standard. However, in this case, the purpose of the final rule is to clarify an existing requirement about which there may have been confusion in the regulated community. Given the public comments indicating that some employees are not being provided with PPE that properly fits, the record supports the need for changes in behavior among some employers. As a result, OSHA has estimated the costs for a portion of employers to come into compliance with the already-existing requirement to provide properly fitting PPE. This analysis demonstrates that the rule will be feasible to implement.

On November 15, 2007, OSHA published its final rule on Employer Payment for Personal Protective Equipment (PPE Payment) (72 FR 64342). A brief description of this rulemaking is provided here because certain estimates and parameters used in the economic analysis for this rule are taken from the analysis accompanying that final rule. In the PPE Payment rulemaking, OSHA identified the various types of PPE that are worn by employees, the percentage of employees who use PPE, and the numbers of employees that would typically use each type of PPE in the construction industries: NAICS 236 (Construction of Buildings), NAICS 237 (Heavy and Civil Engineering Construction), and NAICS 238 (Specialty Trade Contractors). Information on employee PPE use was derived from a statistically representative nationwide telephone survey of 3,722 employers conducted for OSHA. The survey was benchmarked to the whole working population based on employment data available at that time (see 72 FR 64391). For this rulemaking, OSHA developed assumptions about the types of PPE that are universal fit versus those that are not universal fit and the types of PPE that are provided by the employer versus purchased by employees for reimbursement.

When the economic analysis for the PPE Payment rule was performed, the most recent data available on number of employees were from the U.S. Census' 2004 County Business Patterns. Using that data, OSHA estimated the number of employees using PPE and the industries in which they worked. Total use of PPE in the construction industries as derived in the PPE Payment rule is presented in table 1. Note that only the types of PPE that are subject to replacement under this PPE Fit rule are presented. OSHA uses the values in table 1 as the basis for its updated 2022  8 figures for PPE items used (see table 7).

OSHA determined the number of establishments that would need to comply with this rule using County Business Patterns (CBP) data for 2022. All establishments within NAICS 236 (Construction of Buildings), NAICS 237 (Heavy and Civil Engineering Construction), and NAICS 238 (Specialty Trade Contractors) are considered to be within the scope of this rule. As shown in table 2, there are a total of 800,651 establishments in the affected Construction NAICS industry codes.

Overall employment and the number of employees using PPE in these NAICS industries—both broken out by sex—are shown in table 3. Based on BLS Current Employment Statistics for 2022, the construction industry was made up of about 86 percent men and 14 percent women. According to the CBP, there were 7,361,847 employees in the construction industry in 2022. Taken together, these data indicate that employment in the construction industry is comprised of 6,313,488 men and 1,048,359 women. OSHA estimated in the PPE Payment rule that 79.85 percent of construction employees use PPE of any type. Using this percentage, the agency estimates that 5,041,402 men and 837,128 women in the construction industry use any type of PPE. OSHA used these parameters and this methodology to identify employees by sex and PPE usage in the proposed rule and received no comment on this approach; OSHA therefore has maintained the same methodology for the final rule.

OSHA has determined that this rule could impose three main types of costs on establishments in the construction industry: (1) rule familiarization, (2) researching PPE, and (3) replacing PPE. The costs for researching properly fitting PPE for purchase and for replacing improperly fitting PPE will only be incurred by employers who are out of compliance with the already-existing requirement to provide workers with PPE that fits properly.

Employers in some affected establishments will spend time familiarizing themselves with the rule. OSHA estimates that rule familiarization will take ten minutes for a health and safety coordinator to complete  9 and that 50 percent of the establishments in the three construction NAICS industries will take time to familiarize themselves with the rule. OSHA has assumed that only 50 percent of establishments will need familiarization time not only because this final rule is simply a clarification of an existing requirement, but because the rule aligns the construction regulatory text on PPE fit with the general industry requirement, with which many construction employers are likely familiar. OSHA, therefore, believes that many employers already know that they must provide PPE that fits properly and will not need to spend time familiarizing themselves with this final rule. The loaded wages  10 used to calculate the cost of rule familiarization time are taken from BLS' Occupational Employment and Wage Statistics (OEWS) dataset for 2023 ( https://www.bls.gov/oes/tables.htm ) for Occupational Health and Safety Specialists and Technicians. 11 Table 4 shows the costs of rule familiarization.

For this final rule, OSHA is accounting for costs related to researching and finding non-standard-sized PPE. Some commenters said that it is difficult to locate PPE in certain non-standard sizes. For instance, one commenter said that it was challenging finding PPE, including protective footwear, to fit her smaller frame and that she hopes this final rule will eliminate the need for “extensive searches for `small' gear” (Document ID 0031). Another commenter said that “[h]igh-visibility coats that fit a pregnant belly are hard to find” (Document ID 0115), while a third commenter said that small size high visibility vests and boots are difficult to come by and that even proactive employers can encounter limited supply in non-standard sizes (Document ID 0079). Other commenters, however, noted the availability of PPE to fit a wide range of worker body shapes and sizes (Document ID 0108, 0112; see also Document ID 0014, 0117). Based on these comments, OSHA has estimated that it may take some additional time for employers to find appropriate PPE in non-standard sizes for workers not currently wearing properly fitting PPE. 12

In order to provide properly fitting PPE for the employees who need it, OSHA estimates that affected establishments will spend 10 minutes assessing the needs of their employees related to PPE (assessment) and another 10 minutes researching and identifying specific replacement PPE for employees (identification). The agency estimates that 184,935 construction employees might require non-standard sizes of PPE (see table 9) but recognizes that not all those employees are using improperly fitting PPE. This is especially true given that construction employers are already required to provide their employees with properly fitting PPE. OSHA assumes that up to 10 percent of those workers—or 18,494 workers—were being provided with incorrectly fitting PPE prior to promulgation of this final rule. While it potentially overstates the number of employers who will need to assess PPE needs and spend time researching PPE in different sizes, OSHA assumes that each employee needing replacement PPE works at a different company, such that the number of employers that will need to research PPE equals the number of affected employees. A more detailed explanation of the estimated number of affected employees and thus employers is described in the next section and presented in tables 9 and 10.

OSHA calculated one-time, initial costs for the PPE needs assessment and identification of non-standard size PPE. OSHA also estimated annually recurring costs to identify properly fitting PPE for newly-hired employees who may need non-standard sizes of PPE. To calculate the number of employers that would need to incur this cost annually, OSHA multiplies the estimated 18,494 workers mentioned above by the JOLTS annual hire rate within the construction sector for 2023, which is 55.7 percent (BLS JOLTS, 2024). For this analysis, OSHA uses the loaded wage rate for a purchasing manager  13 based on BLS' OEWS dataset for 2023 to estimate the costs for identifying the correct PPE, and the loaded wage rate for Occupational Health and Safety Specialists and Technicians  14 for PPE assessment costs. 15 Table 5 shows the initial costs for the assessment and identification of properly fitting PPE. Table 6 presents the ongoing, annual costs of identifying non-standard sizes of PPE for newly hired employees. The cost of the PPE itself is estimated in the next section.

As shown in table 7, the types of PPE used in construction fall into the following three categories: PPE provided by the employer and not of universal fit, PPE items purchased by the employee and reimbursed by the employer, and PPE of universal fit. PPE items identified as universal fit are those that are adjustable and capable of fitting most people. 16 OSHA assumes that PPE items purchased by the employee and then reimbursed by the employer already fit properly, since the employee will select the size that fits them best. The remaining PPE items are those provided by the employer that are not universal fit.

In this analysis, the only PPE that OSHA is estimating may need replacement as a result of this final rule are the items that are provided by the employer and not universal fit. For these items, the standard size may not fit all workers. Therefore, in cases where employers have provided only standard-sized PPE, some workers may not have been provided properly fitting PPE.

OSHA derives the total number of PPE items currently used by employees by multiplying the number of PPE items used by employees in 2004 as estimated in the PPE Payment rule analysis by the employment growth rate in the construction industry from 2004 to 2022 per County Business Patterns data. Using currently available supply catalogs, the agency identified up to three cost estimates for “standard” sizes of each PPE item potentially requiring replacement, taking the average of those estimates for use in this analysis. 17 OSHA then calculates the total costs of replacing all employer-supplied, non-universal fit PPE by applying these unit costs to the total number of PPE items used by all employees who wear PPE. Finally, to get the total one-time replacement costs related to this rule, OSHA estimates the number of employees needing replacement PPE and the average per-employee cost for replacing their PPE with non-standard sized PPE and multiplies them. A detailed description of this approach is provided in the following paragraphs.

In the PPE Payment rule, OSHA estimated that the total number of employer-provided, non-universal fit PPE items worn by construction employees in 2004 was about 13 million. However, that analysis did not include safety vests in the list of necessary PPE. For this rulemaking, as presented in the proposal, the agency estimated the cost and use of safety vests, including them in the number of PPE items worn by construction workers in 2022, the unit cost, and the total cost.

In addition, in the proposed PPE Fit rule, OSHA treated body harnesses as universal fit, which was consistent with how body harnesses were treated in the PPE Payment rule. However, OSHA received a number of comments suggesting that standard body harnesses frequently do not fit women. One commenter stated, “[o]ur research suggests that there are a very limited number of harnesses available on the market that are truly `universal fit' harnesses” (Document ID 0108). Several commenters pointed out that women's bodies are shaped differently and that unisex harnesses are not properly adjustable to accommodate breasts, hips, leg length, and height; that use of improperly fitting harnesses could lead to bodily harm; and that use of unisex harnesses is uncomfortable for women ( e.g., Document ID 0048, 0068, 0076, 0077, 0080, 0084, 0093, 0098). One commenter noted that in a fall, a traditional unisex harness could damage a woman's pelvic region. That commenter pointed out that while there are harnesses that are designed specifically to accommodate women's bodies, some employers think unisex is “good enough” (Document ID 0063). Another commenter said “Women have breasts so harnesses are not very comfortable when they are designed for men. There are, apparently, harnesses designed for women but I never to this day have even seen one” (Document ID 0066). Yet another commenter noted that “On more than one job I have had to use the generic one size fits all XL safety harness where leg straps on the tightest eyelet hang to my knees” (Document ID 0090). Therefore, in the final rule, OSHA has added body harnesses to the list of PPE that are non-universal fit and might require replacement. As a result, they have been moved to the first column of table 7 above.

In addition, a comment from the ISEA indicated that earplugs (referred to as “ear inserts” in the proposal) “are designed and manufactured in multiple sizes and shapes to accommodate the wide range of sizes and shapes of ear canals” (Document ID 0112). NIOSH agreed, stating that earplugs “should be reclassified as `provided by the employer, not universal fit' because earplugs are not completely adjustable and may not be capable of fitting every person” (Document ID 0073, attachment 2). Based on these comments, OSHA reclassified earplugs from universal fit to provided by the employer, not universal fit, and adjusted the cost model accordingly.

Based on the most recent data (2022) available from CBP ( https://www.census.gov/programs-surveys/cbp/data/tables.html ), employment in the construction industries has increased by 10.74 percent since 2004. OSHA applied this 10.74 percent increase to the agency's estimates, in the PPE Payment rule, of the numbers of PPE items in 2004 that were employer-supplied and not universal fit. As described above, OSHA also added estimates for the use of several PPE items that were not included in that category in the PPE Payment rule (safety vests, body harnesses, and earplugs). Body harnesses and ear plugs were accounted for in the PPE Payment analysis as universal fit PPE, and their use was estimated there; thus, the estimates of current use of these items are derived from the PPE Payment analysis in the same way as use of the other items accounted for in PPE Payment.

Because safety vests were not included in the PPE Payment rule, OSHA estimated the number of safety vests used by construction workers using occupation-level employment data from BLS OEWS for 2023. A certain subset of the employees in the three affected NAICS industries is estimated to need safety vests based on general assumptions about the specific occupation. As an example, while all employees in occupations deemed in-scope for this rule in the Heavy and Civil Engineering Construction industry (NAICS 237) are assumed to need safety vests, Security Guards in the other two industries (Construction of Buildings, NAICS 236, and Specialty Trade Contractors, NAICS 238) are considered to be employees who are not near roads and thus OSHA assumed only 5 percent of these employees would need safety vests. 18

Based on the calculations described above, the agency estimates that the total number of non-universal fit PPE items worn by construction employees in 2022 was about 20.0 million. Dividing the total number of PPE items in use from table 8 (20,020,424) by the total number of construction workers in 2022 wearing PPE from table 3 (5,878,530) yields an estimate that each construction employee wearing PPE provided by the employer, and not universal fit, wears an average of 3.41 items of PPE.

Based on current pricing information, OSHA estimated a total cost of purchasing “standard” sizes of non-universal fit PPE of approximately $262.0 million, including an estimated $6.3 million for safety vests, $147.3 million for body harnesses, and $442,000 for earplugs. OSHA divided the total cost of PPE by the total number of items of PPE for an average per unit PPE cost of $13.08. The agency then multiplied the per unit PPE cost by the average number of items of PPE per employee to calculate an average cost of $44.56 ($13.08 × 3.41) to outfit a construction employee in their needed PPE, assuming that employee can use standard sizes.

Finally, OSHA estimated the costs of purchasing replacement PPE for employees with improperly fitting PPE. Given the current lack of data on how many employees might be wearing improperly fitting PPE, OSHA estimated this parameter by combining sex specific construction employment data with general population height and weight distributions. The numbers of women and men in the construction industry who wear PPE is presented above in table 3.

To estimate the numbers of women and men who might require non-standard sizes of PPE, the agency relied on height and weight data for the general population in the Census Bureau's 2010 National Health and Nutrition Examination Survey (NHANES) ( https://www2.census.gov/library/publications/2010/compendia/statab/130ed/tables/11s0205.pdf ). 19 OSHA assumed, as shown in table 9, that women and men weighing above 300 pounds and women shorter than five feet tall might require non-standard sizes of PPE and thus could currently be using improperly fitting PPE. 20 21 OSHA acknowledges that this assumption results in only a rough estimate of workers who might be using PPE that fits improperly, for several reasons. First, using the general population height and weight distributions may not align precisely with the height and weight distributions for construction workers. For example, Hispanic males make up a greater proportion of the construction workforce than the population in general and are, on average, slightly shorter than, and weigh less than, non-Hispanic white males. Second, it is possible that there are fewer people who are much smaller or larger than average in the construction industry. Finally, OSHA acknowledges that this estimate is imprecise because it assumes that all workers who weigh more than 300 pounds and all female workers who are shorter than five feet tall require PPE that is not standard sized; conversely, it assumes that standard-sized PPE is appropriate for all other workers, both male and female. 22 Note that OSHA used an identical approach to this issue in its preliminary analysis and did not receive any comments on it. Therefore, the agency decided to retain this approach for the final analysis.

Due to data limitations and as a simplifying assumption for this analysis, the agency also assumes that construction workers are distributed across age groups in the same proportions as the general population examined in the NHANES. The agency then multiplies the average percentages for each weight and height category by the total number of men, and the total number of women, in the construction industry that wear any type of PPE, as shown in table 9.

The agency estimates that 184,935 construction employees might require non-standard sizes of PPE but recognizes that not all of those employees are using improperly fitting PPE. This is especially true given that construction employers are already required to provide their employees with properly fitting PPE. OSHA assumes that up to 10 percent of those workers—or 18,494 workers—were being provided with incorrectly fitting PPE prior to promulgation of this final rule. OSHA used the same assumption in the preamble to the proposed rule and received no comments on the estimate nor suggestions on a different estimate the agency should use; therefore, OSHA has maintained this methodology and simply updated the underlying data used for this final analysis.

OSHA received a number of comments on the issue of whether non-standard sizes of PPE are more expensive than standard sizes. For example, some commenters expressed that “outlier sizes” tend to cost more and that because of this, employers are less likely to purchase them (Document ID 0038, 0047). Similarly, others said that employers' “costs or compliance burdens” would increase because employers will have to purchase multiple sizes of PPE, purchase smaller quantities, or purchase from manufacturers with which they do not typically do business (Document ID 0082, 0107, 0112). Some commenters who asserted that the rule would increase costs for businesses cited very high PPE unit costs that OSHA could not corroborate or suggested employers would be required to amass inventories of PPE that the rule does not require (Document ID 0082, 0114).

Other commenters argued that the costs associated with purchasing properly fitting PPE will be minimal. For example, CWIT stated that this final rule should result in “[l]ittle economic burden” (Document ID 0098). NABTU commented, “. . . over 90 percent of construction establishments employ less than 20 workers. As such, to the extent some construction employers are not already in compliance, the cost of doing so will not be substantial” (Document ID 0108). ISEA noted that while there may be costs for special orders of PPE in extremely small or large sizes, “the size ranges of current PPE are likely to be able to provide a proper fit to the vast majority of the nation's construction workforce” (Document ID 0112).

To address these comments, OSHA estimates that larger and smaller sizes of PPE cost 15 percent more than the average size PPE of that type. OSHA thus calculated the average, per-person cost to issue replacement PPE in non-standard sizes by increasing the base price of $44.56 by 15 percent, for an estimate of $51.24. As indicated in table 10, OSHA estimates that replacing the PPE for 18,494 employees would cost roughly $948,000 for the entire construction industry.

In addition to the cost of initially replacing improperly fitting PPE for some employees, employers will need to continue providing these non-standard sizes of PPE to those employees on an ongoing basis. OSHA calculates the recurring annual costs of providing these non-standard sizes of PPE using the marginal cost of non-standard sizes of PPE compared to the cost of standard sizes of PPE. As noted above, OSHA estimates this marginal cost increase is 15 percent. As shown in table 12, OSHA multiplies this marginal unit cost by the number of PPE items per employee for each PPE type, the total number of employees needing non-standard sizes of PPE, and the number of units of each PPE type needed in a year. OSHA determined the average useful life for the PPE items being considered here, as presented in table 11, based on estimates the agency developed for the PPE Payment rule and adjusted according to comments in the record for this rulemaking. 23

The number of PPE items per employee presented in table 12 are calculated using the average number of items needed per employee (3.41) and proportionally distributing that estimate based on the overall numbers of each PPE item compared to the total number of all PPE items (see table 8). The number of units of each PPE type needed in a year is based on the useful life estimates presented in table 11.

As presented in table 13, the agency estimates that if 10 percent of employees who might require non-standard sizes of PPE are provided with properly fitting PPE as a result of this clarifying rule, 50 percent of employers in the construction industry take time to familiarize themselves with the rule, and one establishment for each employee who requires new PPE spends time researching properly fitting PPE, the rule could have a one-time total cost to the construction industry of $5,475,450 plus $436,392 in annual recurring costs. These estimated costs translate to an annualized cost of $1,045,955 over 10 years using a 2 percent discount rate.

The primary analysis above assumes that only 10 percent of the employees who may require non-standard sizes of PPE would need to have their PPE replaced as a result of this rule. For the first sensitivity analysis, the agency compared the assumed 10 percent of potentially affected employees with a lower rate of 5 percent and, alternatively, a higher rate at each quartile of the group (25, 50, and 100 percent). Additionally, as discussed above, OSHA has estimated that affected employees in construction wear an average of 3.41 pieces of PPE of the type (provided by the employer, not universal fit) covered by OSHA's analysis; the primary analysis assumes they would all need to be replaced. In reality, for individual employees, some items might need to be replaced and not others. The second sensitivity analysis examines the cases where employees need replacements for 1, 2, 3, or 4 items of PPE, along with the 3.41 items used in the primary analysis.

In the first sensitivity analysis, OSHA multiplied the total number of employees who may require non-standard sizes of PPE (184,935) by the various assumed non-compliance percentages. Table 14, below, presents a range of 5 percent to 100 percent non-compliance with the requirement to provide PPE for construction workers who may not be able to wear standard sizes of PPE. OSHA believes most companies want to act in the best interest of their employees and are already in compliance with the existing requirement to provide properly fitting PPE. As such, OSHA believes the actual non-compliance rate is towards the lower end of the range presented in table 14. At most, fewer than 200,000 employees might be affected.

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule under the 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 it is impracticable. The NPRM process would delay the establishment of the safety zone until after the date of the event and compromise public safety. We must establish this temporary safety zone by December 31, 2024, and lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule.

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 Federal Register . Delaying the effective date of this rule would be contrary to the public interest because action is needed to respond to the potential safety hazards associated with the waterborne fireworks displays on December 31, 2024.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Lower Mississippi River (COTP) has determined that potential hazards associated with a waterborne fireworks display will be a safety concern for anyone located on the Lower Mississippi River mile markers 364.4 to mile marker 365.5. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone during the operation of the waterborne fireworks display.

This rule establishes a temporary safety zone on December 31, 2024, from 6 p.m. through 7 p.m. The safety zone will cover all navigable waters on the Lower Mississippi River from mile marker 364.4 to mile marker 365.5. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters during the operation of the waterborne fireworks display. 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, and duration of the temporary safety zone. This temporary safety zone will temporarily restrict navigation on the Lower Mississippi River from mile marker 364.4 to mile marker 365.5, in the vicinity of Natchez, MS, on December 31, 2024, from 6 p.m. through 7 p.m.

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 temporary 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 FOR FURTHER INFORMATION CONTACT section.

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 temporary safety zone lasting only one hour that will prohibit entry on the Lower Mississippi River from mile marker 364.4 to mile marker 365.5. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

Section 111 of the Copyright Act (“Act”), title 17 of the United States Code, provides cable operators with a statutory license to retransmit a performance or display of a work embodied in a “primary transmission” made by a television station licensed by the Federal Communications Commission (“FCC”). Cable operators that retransmit broadcast signals in accordance with this provision are required to pay royalty fees to the Copyright Office (“Office”), among other requirements. The royalty amounts are determined based on a specified percentage of cable operators' reported gross receipts collected for secondary transmissions, as well as additional amounts for any distant signal equivalent (“DSEs”) carried by the cable system. 1 These royalty fees are remitted semi-annually to the Office, which invests the royalties in United States Treasury securities pending distribution to copyright owners eligible to receive a share of the royalties. 2

In conjunction with their royalty payments, cable operators must complete and file statements of account (“SOAs”), which provide a record regarding their retransmissions and associated royalty payments to “promote uniform and accurate reporting, assist cable operators in meeting their obligations under the Act and regulations, and aid copyright owners, the Copyright Office, and the Copyright [Royalty Judges] in reviewing and using the information provided.”  3 Section 111 identifies a variety of information that must be reported to the Copyright Office on the SOA, including the number of channels by which the system made secondary transmissions, the names and locations of all primary transmitters used, and, as particularly relevant here, the “total number of [cable system] subscribers” and the “gross amounts” paid to the cable system by these subscribers “for the basic service of providing secondary transmissions of primary broadcast transmitters.”  4

Section 111 tasks the Register of Copyrights (“Register”) with prescribing the specific requirements for the SOA by regulation. 5

As directed by section 111, the Office has adopted regulations to implement the statute's reporting requirements  6 as well as the design of the SOA form. 7 In 1977, to address the law's requirement that the “number of subscribers” and “gross amounts” paid to cable operators be reported, 8 the Office “proposed . . . that the number of subscribers be accompanied by certain related information concerning subscriber categories and charges in order reasonably to accomplish this purpose.”  9 In the subsequent 1978 final rule, which adopted regulatory language almost identical to the present § 201.17(e)(6), the Office noted that “although this information `will not provide a definitive or detailed comparison with the reported gross receipts,' it will be useful for at least a rough comparison with the reported gross receipts, and gives meaning to the statutory requirement that the `number of subscribers' be given.”  10 The Office has consistently followed this approach in its subsequent rulemakings in this area.

The Office's current regulations require the following information, among other data, to be reported on SOAs by cable operators: “[t]he designation `Area Served', followed by the name of the community or communities served by the system”; “[a] brief description of each subscriber category for which a charge is made by the cable system for the basic service of providing secondary transmissions of primary broadcast transmitters”; “[t]he number of subscribers to the cable system in each such subscriber category”; and “[t]he charge or charges made per subscriber to each such subscriber category for the basic service of providing such secondary transmissions.”  11 The SOA form organizes this information into specific areas, several of which are relevant to this rulemaking. Space D of the SOA (titled “Area Served”) requests information identifying “each separate community served by the cable system.” Space E (titled “Secondary Transmission Service: Subscribers and Rates”) requests information that “should cover all categories of secondary transmission service of the cable system,” including “the number of subscribers to the cable system, broken down by categories of secondary transmission service,” and the “rate charged for each category of service.”  12 Space K (titled “Gross Receipts”) requires cable operators to “[e]nter the total of all amounts (gross receipts) paid to [the] cable system by subscribers for the system's secondary transmission service (as identified in Space E) during the accounting period.”  13 Finally, Space F (titled “Services Other Than Secondary Transmissions: Rates”) requires cable operators to list rate information “with respect to all . . . services that were not covered in space E, that is, those services that are not offered in combination with any secondary transmission service for a single fee.”  14

This rulemaking began after the Motion Picture Association of America, Inc. (“MPA”)  15 filed a petition on behalf of its member companies and other producers and/or distributors of movies and television series (hereinafter “Program Suppliers”) asking the Office to address a number of issues relating to the SOA reporting practices of cable operators under section 111. 16 The Program Suppliers expressed concerns that the subscriber and rate information reported by cable operators under the Office's regulations failed to provide sufficient data to support the intended “rough comparison” copyright owners should be able to conduct between subscriber information and gross receipts. Their concerns focused on the relationship between the information provided in Space E and Space K. 17 They asked the Office to “require greater congruity between the `gross receipts' information and the subscriber and rate information provided on the SOAs,” and “greater detail concerning the nature of revenues that a cable operator includes and excludes in its `gross receipts.' ”  18

After reviewing the Petition, the Office published a notice of inquiry (“NOI”) seeking comment on the regulatory proposals and recommendations raised by the Program Suppliers. 19 Multiple parties submitted responsive comments and reply comments. 20 After the NOI's publication, Congress took action that addressed some of the issue raised by the Office. The Satellite Television Extension and Localism Act of 2010 (“STELA”), followed by the STELA Reauthorization Act of 2014 (“STELARA”), 21 made amendments to section 111, including the royalty rate calculations for cable operators and addressing the transition to digital television broadcasts. 22 STELA also added a right for copyright owners to conduct confidential audits to verify the information provided on the SOAs. 23 The Register of Copyrights was directed to issue regulations establishing the procedure by which copyright owners could pursue a confidential audit to “confirm the correctness of the calculations and royalty payments reported” on SOAs commencing on or after January 1, 2010. 24 These regulations were enacted in 2014. 25

In 2017, the Office published a notice of proposed rulemaking (“NPRM”) on the NOI issues that remained open after the intervening statutory and regulatory changes. 26 In addition, the rulemaking proposed revisions to SOA forms and/or the Office's related regulations to streamline administration of SOAs. The responses to the NPRM  27 reflected agreement on some proposals, but also raised a number of issues for the Office to consider and address before finalizing this rule. The Office convened multiple ex parte meetings with groups of stakeholders to discuss these issues and to attempt to narrow areas of disagreement. 28 Having reviewed and considered the feedback received in response to the NOI and NPRM, the Office is issuing a final rule that adopts certain of its proposals, withdraws others, and makes some modifications. 29

After careful consideration of the comments and the record as a whole, the Office is adopting several changes to the regulations governing SOAs. First, the Office is revising the regulatory definition of “gross receipts” to clarify that equipment fees (formerly called “converter” fees) and broadcast fees must be included and reported in Space E. Second, the final rule removes the regulatory provision requiring remitters to provide information regarding “Services Other Than Secondary Transmissions: Rates” in Space F, and eliminates all references to Grade B contour in § 201.17 and on the cable SOAs. Third, the final rule revises reporting requirements related to the name of the community or communities served by requiring cable system operators to provide “county” information in Space D. Fourth, while the Office is withdrawing proposals to amend the regulatory definition of the phrase “cable system” and to require more detailed reporting of subscriber and rate information in Space E, it is amending Space E to require that operators fill in the spaces requesting information regarding categories of service.

Finally, the final rule makes several technical amendments and revises certain reporting practices that are also pertinent to the filing of SOAs for other statutory licenses. For example, it clarifies that cable system operators must use the SOA form prescribed by the Office, and include any and all information requested in the instructions for the SOA, as well as the information required by the regulations. The final rule also includes the technical changes proposed in the NPRM relating to the processing of refunds, supplemental or amended payments, and calculation of interest, as well as case management procedures. These latter changes will be reflected in parallel amendments to regulations for satellite carrier and digital audio recording equipment and media.

The amendments to the regulations reflected in this rule require the development of new SOA forms, which the Office is preparing. Until new forms are developed, cable service operators should use the most current forms posted on the Office's website while complying with the new regulatory requirements regarding the information to be reported.

In response to the Program Suppliers' original request that cable operators provide more detailed information on the SOA, the NPRM proposed a number of changes to the information sought in Space E regarding subscribers. Having reviewed and considered all of the comments received, the Office has been persuaded not to make the majority of the proposed changes and only to make minor adjustments to accommodate its conclusions about reporting equipment fees and broadcast fees. Its specific findings and conclusions are explained below.

37 CFR 201.17(e)(6) currently requires remitters to provide in Space E “[a] brief description of each subscriber category for which a charge is made by the cable system for the basic service of providing secondary transmissions of primary broadcast transmitters.”  30 The regulation further states that “[e]ach entity (for example, the owner of a private home, the resident of an apartment, the owner of a motel, or the owner of an apartment house) . . . shall be considered one subscriber”  31 subject to charges by the cable system for the basic service of providing secondary transmissions. These requirements are intended to complement the regulatory definition of “gross receipts,” which includes “the full amount of monthly (or other periodic) service fees for any and all services or tiers of services which include one or more secondary transmissions of television or radio broadcast signals, for additional set fees, and for converter fees.”  32

In response to the request for more granularity, the NPRM proposed to update the subscriber and rate information required in Space E to require remitters to break out subscription data into separate tiers of service and list the per-tier rate or range of rates. The intent was to provide copyright owners with more information when deciding whether to make use of the audit right included in section 111.

In its initial comments to the NPRM, AT&T disagreed with the Office's proposal. 33 It stated that the availability of audits after passage of STELA, through which companies make their books available for inspection by copyright owners, rendered unnecessary the additional information proposed in the NPRM. In addition, AT&T noted that compliance with the proposed regulations would result in significant extra work and expense for cable companies. 34 NCTA—The Internet and Television Association (“NCTA”) also opposed the proposal. It stated that, due to the bundling of services and “promotional discounts,” providing the information proposed in the NPRM would be onerous and could lead to the disclosure of the cable companies' proprietary information. 35

In their initial comments, the Copyright Owners observed that “the disparities [between Space K and Space E] seem to rest largely, though not fully, on a disconnect between (1) the monthly rate that subscribers must actually pay to receive broadcast signals and (2) the monthly service fees that cable operators report in Space E.”  36 They questioned whether the NPRM's Space E proposal would provide “rough comparability” with Space K “unless the rate information reflects what subscribers actually pay to receive broadcast signals.”  37 They suggested instead that cable operators report “each category of service that includes retransmitted broadcast signals, with the number of subscribers in each group, the published rate card fee for each, and average monthly fee actually paid.”  38 In its reply comments, NCTA opposed the Copyright Owners' proposed requirement for reporting monthly subscriber information. Instead, it suggested reducing the number of categories of service reported on Space E. 39

In subsequent ex parte meetings with the Office, NCTA and MPA jointly proposed that the current Space E requirements be replaced with requirements that cable operators report aggregated average number of monthly subscribers for the six-month accounting period and average monthly per subscriber fees collected during that period. 40 In response to the joint NCTA-MPA proposal, the Copyright Owners, 41 in a separate ex parte meeting, stated that section 111 permits the Office to require reporting of “other data,” and is not limited to an aggregated six month report. 42 They further stated that reporting monthly averages, as opposed to a six-month aggregate, would not be “unduly burdensome.”  43 Responding to these statements, NCTA and MPA expressed concern that by providing monthly data, instead of a six-month average, “competitors could use that information to their competitive advantage by closely tracking the operator's relative success and failure under discrete promotional campaigns.”  44

The Office appreciates the inputs from stakeholders, including their efforts to narrow their differences. It is apparent from the comments of the parties, and their statements at ex parte meetings, that they do not support the NPRM proposal to provide more detail in Space E. The Office is therefore withdrawing its proposal. At the same time, it declines to adopt the NCTA-MPA proposal to limit Space E reporting to a six-month aggregation of subscribers and average rates. It concludes that this proposal would not provide sufficient information to allow the Copyright Owners to make the “rough comparison” between the gross receipts reported in Space K and the subscriber information reported in Space E. Therefore, except as described below, the Office is not changing the requirements of Space E at this time. It will continue to monitor the issue of comparability between Space E and Space K going forward.

The final rule includes several changes to Space E that were either raised by the NPRM or introduced during the comment process and fully considered by stakeholders during the rulemaking proceeding. Specially, the Office is revising the regulatory definition of “gross receipts” to make clear that equipment fees (formerly called “converter” fees) and broadcast fees must be included in gross receipts and reported in Space E. The Office will revise its Section E instructions for the SOA accordingly. The rationale for these amendments is discussed in Section 3 below.

In addition, as discussed in the NPRM, the Office will require that spaces on the SOA seeking information regarding categories of service not be left blank. 45 If a cable operator does not serve a specific category, a “zero” or a “N/A” (not applicable) must be reported in the appropriate space. These revisions are intended to facilitate the review of cable SOAs by the Office's Licensing Division; they will be implemented in the instructions to Space E in the SOA and do not require amending the regulations.

The NPRM also addressed how gross receipts should be reported when cable services are offered by cable operators as part of a “bundle” of services to subscribers. For example, many cable operators now offer video services plus internet and/or voice services together at a price that is less than what a subscriber would pay to subscribe to each service separately (so-called “double play” and “triple play” bundles). 46 Noting that the Office receives questions on how gross receipts for cable services should be reported when sold as part of a bundle, the NPRM stated that it was “considering whether to amend its regulations to provide specific guidance on how remitters should report cable television services sold as a bundled service.” It proposed the addition of the following new language in its regulatory definition of “gross receipts” to address bundled services: when cable services are bundled with non-cable services, “gross receipts shall not include any fees collected from subscribers for the sale of internet services or telephony services when such services are bundled together with cable service.” “[I]nstead, when cable services are sold as part of a bundle of other services, gross receipts shall include fees in the amount that would have been collected if such subscribers received cable services as an unbundled stand-alone product.”  47 The Office sought public comment on the proposed definition and “on how cable operators currently report the price of cable television service in gross receipts on their SOAs when it is sold as part of a bundle of services, and whether the Office's regulations should be amended to provide more guidance.”  48

The NPRM proposal is consistent with the Office's decades-long interpretation of “gross receipts” in section 111 as requiring reporting of all subscription fees collected by a cable operator when its service includes broadcast stations. For example, when a video service tier includes both broadcast and non-broadcast stations, the Office requires the cable operator to report all of the revenues from the broader tier to be included in gross receipts, not just the revenues that would have been garnered from a broadcast-only tier. This interpretation of gross receipts, barring proration of mixed cable channel tiers, was issued in 1984. 49 In other words, cable operators are not permitted to prorate gross receipts within tiers of service that contain broadcast channels according to the ratio of broadcast to non-broadcast channels in a given tier.

In their initial comments, NCTA agreed that the exclusion of internet and voice services in the proposed rule was proper. 50 At the same time, however, it suggested that the Office substantively change its approach to the reporting of revenue in this circumstance. It asked the Office to recognize generally accepted accounting principles, or GAAP, as the method for determining the amount of revenue to be reported for bundled services. 51 It suggested that employing GAAP would be a more appropriate standard for reporting the video portion of the bundled revenue than the proposed rule and pointed out that other compulsory licenses use GAAP in their analyses. 52 NCTA criticized the proposed rule on the grounds that it purportedly assigns the discount for the bundled services to the non-video services and therefore allows royalty payments to be computed against revenue from services that do not include broadcast video. 53

In support of its comments, NCTA submitted the declaration of Professor William Holder, which states that GAAP is the method recognized as the most authoritative for businesses to prepare their financial statements. 54 As explained by Prof. Holder, the application of GAAP by the Financial Accounting Standards Board (“FASB”) is intended to provide financial information that is relevant and a “faithful representation” of the financial status of the business that is neutral and non-biased. 55 His declaration states that several regulatory bodies require businesses to present their financial statements in accordance with GAAP. 56 According to Prof. Holder, applying the principles of GAAP, the FASB has created a method of allocating the revenue received in a bundled discount arrangement. 57 In his view, this allocation is “based on the relative proportion of each element in the arrangement to the total consideration that is expected to be received.”  58 He concludes that using a GAAP approach would allocate the discount in the bundled price to each element according to its relative percentage of the unbundled price of the group of discounted goods or services. 59

In their initial comments, Copyright Owners I, whose members then included the MPA, Joint Sports Claimants, the National Association of Broadcasters (“NAB”), Public Broadcasting Service, Settling Devotional Claimants, and Canadian Claimants Group, 60 stated that there was disagreement among the group as to the proper method of reporting bundled services. 61 They agreed with the Office that internet and voice services should not be included in gross receipts  62 and noted that the language of the proposed rule appeared to track “prior Office and judicial guidance concerning the meaning of the term Gross Receipts.”  63 In their first reply comments responding to NCTA's proposal, the they stated that they “do not have a common position on the issue” and indicated that they would file separate comments. 64

In their second reply comments, the Copyright Owners II—representing the same groups as before except for the MPA—stressed that the Office's proposed rule “is consistent with (and indeed mandated by) the Office's longstanding interpretation of the term Gross Receipts.”  65 They stated that “where CSOs [cable service operators] offer bundled products or services that include broadcast signals, they must include in Gross Receipts the full amount that they charge subscribers to receive the Basic Service alone.”  66 They suggested that NCTA's proposal would be contrary to the Cablevision decision, in which the court upheld the Office's interpretation of gross receipts as including the total revenues from any tier of video services that includes broadcast services. 67 They took the position that, whatever the merits of GAAP in various other contexts, the statutory mandate of section 111 was to the contrary. 68 From their perspective, employing GAAP would permit greater subjectivity in the reporting of revenues than was implied by NCTA's comments, 69 and would be unfair to copyright owners. 70 For example, different bundles offered by a single cable operator might contain a variety of different video services, not all of which would have a stand-alone price. 71

Copyright Owners II submitted a declaration from Sam D. Wild, CPA, in response to Prof. Holder's declaration submitted by NCTA. 72 Mr. Wild stated that although it is appropriate to use GAAP in financial reporting, “calculating royalties is different than and distinct from preparing financial statements.”  73 He stated that royalties are calculated according to contracts or statutory mandates, which may differ from the requirements of GAAP. 74 He also stated that GAAP would not provide an easy answer if each service in the bundle does not have a separate stand-alone price; he asserted that in such a circumstance, using GAAP would increase the subjectivity of the calculation. 75

In its reply comments, NCTA repeated its suggestion that GAAP provides the proper method for reporting revenues from bundled services. 76 It reiterated that the proposed rule would apply the bundle discount to the non-video services only, which NCTA claimed would result in royalties being paid on non-video revenues. 77 It suggested that using GAAP aided consumers by allowing cable operators to offer bundles in a competitive market, giving consumers additional choices at a variety of price levels. 78 NCTA again stated that GAAP is a well-recognized method of accounting for revenues, and that it is used by the government, including the Office, in other contexts. 79

In their separate reply comments, Program Suppliers also supported the use of GAAP for reporting bundled revenues. They stated that the circumstances in the cable industry today are significantly different from those in 1988, when Cablevision was decided and when the Office issued regulations implementing that decision. 80 They took the position that the bundling of non-video with video services at a single price is not the same as combining broadcast and non-broadcast channels in a single tier at a single price. 81 They stated that the changed circumstances “demonstrates that the Office could adopt a new gross receipts interpretation to allow use of GAAP methodology, . . . but still leaves open the question of whether adoption of the GAAP methodology would be consistent with Section 111's purpose and intent.”  82 Program Suppliers stated that the use of GAAP “represents a change from how gross receipts were calculated under the 1988 Notice's policy,” but argued that GAAP now represents the more appropriate method of reporting bundled revenues. 83

TSCA section 5(a)(2) (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the factors in TSCA section 5(a)(2).

EPA is finalizing SNURs under TSCA section 5(a)(2) for the chemical substances identified in Unit III. These chemical substances were the subject of PMNs and are also subject to an Order issued by EPA pursuant to TSCA section 5(e)(1)(A), as required by the determinations made under TSCA section 5(a)(3)(B). The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying TSCA Orders, consistent with TSCA section 5(f)(4). The SNURs require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use in the SNURs to notify EPA at least 90 days before commencing that activity.

Previously, EPA proposed SNURs for these chemical substances in the Federal Register of June 11, 2024 (89 FR 49121 (FRL-11912-01-OCSPP)). The docket includes information considered by the Agency in developing the proposed and final rules, including public comments and EPA's responses to the comments received as discussed in Unit II.E.

This action applies to you if you manufacture, process, or use the chemical substances identified in Unit III. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This action may also apply to certain entities through pre-existing import certification and export notification requirements under TSCA ( https://www.epa.gov/tsca-import-export-requirements ).

Chemical importers are subject to TSCA section 13 (15 U.S.C. 2612), the requirements in 19 CFR 12.118 through 12.127, 19 CFR 127.28, and 40 CFR part 707, subpart B. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA, including regulations issued under TSCA sections 5, 6, 7 and Title IV.

Pursuant to 40 CFR 721.20, any persons who export or intend to export a chemical substance identified in Unit III. are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) and must comply with the export notification requirements in 40 CFR part 707, subpart D.

EPA has evaluated the potential costs of establishing SNUN reporting requirements for potential manufacturers and processors of the chemical substances identified in Unit III. This analysis, which is available in the docket, is briefly summarized here.

A SNUR requires that any person who intends to engage in such activity in the future must first notify EPA by submitting a SNUN. If a SNUN is submitted, costs are an estimated $45,000 per SNUN submission for large business submitters and $14,500 for small business submitters. These estimates include the cost to prepare and submit the SNUN (including registration for EPA's Central Data Exchange (CDX)), and the payment of a user fee. Businesses that submit a SNUN would be subject to either a $37,000 user fee required by 40 CFR 700.45(c)(2)(ii) and (d), or, if they are a small business as defined at 13 CFR 121.201, a reduced user fee of $6,480 (40 CFR 700.45(c)(1)(ii) and (d)). These estimates reflect the costs and fees as they are known at the time of this rulemaking.

EPA has also evaluated the potential costs associated with the pre-existing export notification requirements under TSCA section 12(b) and the implementing regulations at 40 CFR part 707, subpart D. For persons exporting a substance that is the subject of a SNUR, a one-time notice to EPA must be provided for the first export or intended export to a particular country. The total costs of export notification will vary by chemical, depending on the number of required notifications ( i.e., the number of countries to which the chemical is exported). While EPA is unable to make any estimate of the likely number of export notifications for the chemical substances covered by these SNURs, as stated in the accompanying economic analysis, the estimated cost of the export notification requirement on a per unit basis is approximately $106.

Unit II. of the proposed rule provides general information about SNURs, and additional information about EPA's new chemical program is available at https://www.epa.gov/reviewing-new-chemicals-under-toxic-substances-control-act-tsca.

To establish a significant new use, EPA must determine that the use is not ongoing. As discussed in Unit II.E. of the proposed rule, EPA concluded that the proposed significant new uses were not ongoing. If EPA subsequently determines that such a use was ongoing as of the date of publication of the proposed rule and did not cease prior to issuance of the final rule, EPA will not designate that use as a significant new use in the final rule. EPA has no information to suggest that any of the significant new uses identified in this rule are ongoing.

As discussed in the Federal Register of April 24, 1990 (55 FR 17376 (FRL-3658-5)), EPA has decided that the intent of TSCA section 5(a)(1)(B) is best served by designating a use as a significant new use as of the date of publication of the proposed rule rather than as of the effective date of the final rule. The objective of EPA's approach is to ensure that a person cannot impede finalization of a SNUR by initiating a significant new use after publication of the proposed rule but before the effective date of the final rule. Uses arising after the publication of the proposed rule are distinguished from uses that are identified in the final rule as having been ongoing on the date of publication of the proposed rule. The former would be new uses, the latter ongoing uses, except that uses that are identified as ongoing as of the publication of the proposed rule would not be considered ongoing uses if they have ceased by the date of issuance of a final rule.

In the unlikely event that before a final rule becomes effective a person begins commercial manufacturing (including importing) or processing of the chemical substances for a use that is designated as a significant new use in that final rule, such a person would have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons would have to first comply with all applicable SNUR notification requirements and wait until all TSCA prerequisites for the commencement of manufacture or processing have been satisfied.

Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at https://www.epa.gov/tsca-inventory.

SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40 and 721.25. E-PMN software is available electronically at https://www.epa.gov/reviewing-new-chemicals-under-toxic-substances-control-act-tsca.

EPA recognizes that TSCA section 5 does not require development of any particular new information ( e.g., generating test data) before submission of a SNUN. There is an exception: If a person is required to submit information for a chemical substance pursuant to a rule, order or consent agreement under TSCA section 4, then TSCA section 5(b)(1)(A) requires such information to be submitted to EPA at the time of submission of the SNUN.

In the absence of a rule, TSCA Order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. To assist with EPA's analysis of the SNUN, submitters are encouraged, but not required, to provide the potentially useful information as identified for the chemical substance in Unit III.C. of the proposed rule.

EPA strongly encourages persons, before performing any testing, to consult with the Agency pertaining to protocol selection. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h). For more information on alternative test methods and strategies to reduce vertebrate animal testing, visit https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/alternative-test-methods-and-strategies-reduce.

The potentially useful information described in Unit III. may not be the only means of providing information to evaluate the chemical substance associated with the significant new uses. However, submitting a SNUN without any test data may increase the likelihood that EPA will take action under TSCA section 5(e) or 5(f). EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information about human exposure and environmental release that may result from the significant new use of the chemical substances.

EPA received public comments on the proposed SNURs, and prepared a Response to Comment document that provides the Agency responses. The comments and the Response to Comment document are available in the docket. As described in the Response to Comment document, EPA is finalizing these SNURs with the following changes:

• For PMN P-21-56 (40 CFR 721.11868), EPA has reviewed the new test data submitted by the PMN submitter and no longer has the concern for skin sensitization based on the weight of available scientific evidence. The explanation is provided in the revised human health risk assessment, which has been added to the docket. EPA is modifying the significant new use terms included in the final SNUR. Two significant new uses, manufacturing the substance beyond 24 months and the requirement that the substance be classified as a skin sensitization risk on labels and the Safety Data Sheets, are not included in the final SNUR, and the company's consent order is being modified accordingly.

• EPA inadvertently assigned the same CFR number to several proposed SNURs and has updated the CFR numbering for those SNURs. The proposed CFR numbering ranged from §§ 721.11860 through 721.11890, and the corrected CFR numbering ranges from §§ 721.11863 through 721.11893.

EPA designates the date of publication of the proposed rule as the cutoff date for determining whether the new use is ongoing, i.e., June 11, 2024 (89 FR 49121 (FRL-11912-01-OCSPP)). This designation is explained further in Unit II.B.

In Unit III.C. of the proposed rule, EPA provided the following information for each chemical substance subject to these SNURs:

• PMN number (the CFR citation assigned in the regulatory text section of this document).

• Chemical name (generic name, if the specific name is claimed as CBI).

• Chemical Abstracts Service Registry Number (CASRN) or Accession Number (if assigned for non-confidential chemical identities).

• Basis for the SNUR ( e.g., Effective date of and basis for the TSCA Order).

• Potentially useful information.

The regulatory text section of this document specifies the activities designated as significant new uses. Certain new uses, including production volume limits and other uses designated, may be claimed as CBI.

In addition, as discussed in Unit III.B. of the proposed rule, these SNURs include PMN substances that are subject to orders issued under TSCA section 5(e)(1)(A), as required by the determinations made under TSCA section 5(a)(3)(B). Those TSCA Orders require protective measures to limit exposures or otherwise mitigate the potential unreasonable risk. As such, the SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying TSCA Orders, consistent with TSCA section 5(f)(4).

Additional information about these statutes and Executive orders can be found at https://www.epa.gov/laws-regulations-and-executive-orders.

This action establishes SNURs for new chemical substances that were the subject of PMNs. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866 (58 FR 51735, October 4, 1993), as amended by Executive Order 14094 (88 FR 21879, April 11, 2023).

According to the PRA (44 U.S.C. 3501 et seq. ), an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable.

The information collection requirements related to SNURs have already been approved by OMB pursuant to PRA under OMB control number 2070-0038 (EPA ICR No. 1188). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per submission. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

EPA always welcomes your feedback on the burden estimate. Send any comments about the accuracy of the burden estimate, and any suggested methods for improving the collection instruments or instruction or minimizing respondent burden, including through the use of automated collection techniques.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA (5 U.S.C. 601 et seq. ). The requirement to submit a SNUN applies to any person (including small or large entities) who intends to engage in any activity described in the final rule as a “significant new use.” Because these uses are “new,” based on all information currently available to EPA, EPA has concluded that no small or large entities presently engage in such activities.

A SNUR requires that any person who intends to engage in such activity in the future must first notify EPA by submitting a SNUN. Although some small entities may decide to pursue a significant new use in the future, EPA cannot presently determine how many, if any, there may be. However, EPA's experience to date is that, in response to the promulgation of SNURs covering over 1,000 chemicals, the Agency receives only a small number of notices per year. For example, the number of SNUNs received was 7 in Federal fiscal year (FY) 2020, 13 in FY2021, 11 in FY2022, and 15 in FY2023, and only a fraction of these were from small businesses.

In addition, the Agency currently offers relief to qualifying small businesses by reducing the SNUN submission fee from $37,000 to $6,480. This lower fee reduces the total reporting and recordkeeping cost of submitting a SNUN to about $14,500 per SNUN submission for qualifying small firms. Therefore, the potential economic impacts of complying with these SNURs are not expected to be significant or adversely impact a substantial number of small entities. In a SNUR that published in the Federal Register of June 2, 1997 (62 FR 29684) (FRL-5597-1), the Agency presented its general determination that SNURs are not expected to have a significant economic impact on a substantial number of small entities, which was provided to the Chief Counsel for Advocacy of the Small Business Administration.

This action does not contain an unfunded mandate of $100 million or more (in 1995 dollars) in any one year as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by SNURs, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by these SNURs. In addition, the estimated costs of this action to the private sector do not exceed $183 million or more in any one year (the 1995 dollars are adjusted to 2023 dollars for inflation using the GDP implicit price deflator). The estimated costs for this action are discussed in Unit I.D

This action will not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it is not expected to have a substantial direct effect on 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. Accordingly, the requirements of Executive Order 13132 do not apply to this action.

This action will not have Tribal implications as specified in Executive Order 13175 (65 FR 67249, November 9, 2000), because it is not expected to have substantial direct effects on Indian Tribes, significantly or uniquely affect the communities of Indian Tribal governments and does not involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175 do not apply to this action.

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it does not concern an environmental health or safety risk. Since this action does not concern a human health risk, EPA's 2021 Policy on Children's Health also does not apply. Although the establishment of these SNURs do not address an existing children's environmental health concern because the chemical uses involved are not ongoing uses, SNURs require that persons notify EPA at least 90 days before commencing manufacture (defined by statute to include import) or processing of the identified chemical substances for an activity that is designated as a significant new use by the SNUR. This notification allows EPA to assess the intended uses to identify potential risks and take appropriate actions before the activities commence.

This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355, May 22, 2001), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

This action does not involve any technical standards subject to NTTAA section 12(d) (15 U.S.C. 272 note).

EPA believes that this type of action does not concern human health or environmental conditions and therefore cannot be evaluated with respect to potentially disproportionate and adverse effects on communities with environmental justice concerns in accordance with Executive Orders 12898 (59 FR 7629, February 16, 1994) and 14096 (88 FR 25251, April 26, 2023). Although this action does not concern human health or environmental conditions, the notifications required by these SNURs allows EPA to assess the intended uses to identify potential disproportionate risks and take appropriate actions before the activities commence.

This action is subject to the CRA (5 U.S.C. 801 et seq. ), and 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).

Therefore, for the reasons stated in the preamble, 40 CFR chapter I is amended as follows:

Section 553 of the Administrative Procedure Act (APA), U.S.C. 553(b)(B), provides that an agency may issue a rule without providing notice and an opportunity for public comment when that agency finds for good cause that notice and public procedure are impracticable, unnecessary, or contrary to public interest. The EPA has determined that there is a good cause for issuing this finding without prior proposal and opportunity for comment because there is little or no judgment involved for the EPA to make a finding of failure to submit SIPs or elements of SIPs required by the CAA, where states have not submitted a required SIP revision, made incomplete submissions, or, as in this case, withdrawn an existing submission. In such circumstances, the EPA finds that notice and public procedures are unnecessary and that this constitutes good cause under 5 U.S.C 553(b)(B).

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

Emissions of volatile organic compounds (VOCs) and oxides of nitrogen (NO X ) contribute to the production of ground-level ozone, smog, and particulate matter (PM), which harm human health and the environment. Section 110(a) of the CAA requires states to submit regulations that control VOC and NO X emissions. Sections 182(b)(2) and (f) require that SIPs for ozone nonattainment areas that are classified as Moderate or above implement RACT for any source covered by a Control Techniques Guidelines (CTG) document and for any major source of VOCs or NO X . Section III.D of the preamble to the EPA's final rule to implement the 2008 ozone NAAQS further discusses RACT requirements. 1 Section III.D states, in part, that RACT SIPs must contain adopted RACT regulations, certifications that existing provisions meet the RACT requirement (where appropriate), and/or negative declarations that no sources in the nonattainment area are covered by a specific CTG. 2 It also provides that states must submit appropriate supporting information for their RACT submissions as described in the EPA's implementation rule for the 1997 ozone NAAQS. 3

The San Diego County ozone nonattainment area is classified as “Severe” nonattainment for the 2008 and 2015 ozone standards. 4 On March 27, 2008, the EPA finalized an action to revise the 8-hour ozone NAAQS to 0.075 parts per million (ppm). 5 San Diego County was originally designated as a “Marginal” nonattainment area and has subsequently been reclassified to a Severe nonattainment area for the 2008 8-hour ozone NAAQS. 6 On October 26, 2015, the EPA finalized an action to revise the 8-hour ozone NAAQS to 0.070 ppm. 7 San Diego County was originally designated as a “Moderate” nonattainment area, and has subsequently been reclassified to a Severe nonattainment area for the 2015 8-hour ozone NAAQS. 8

The San Diego County Air Pollution Control District (SDCAPCD or “District”) has jurisdiction over the entirety of San Diego County, and as a result of the area's Severe classification for the 2008 and 2015 ozone standards, SDCAPCD must, at a minimum, adopt RACT-level controls for all sources covered by a CTG document and for all major non-CTG sources of VOCs or NO X within the nonattainment area. Any stationary source that emits or has the potential to emit at least 25 tons per year (tpy) of VOCs or NO X is a major stationary source in a Severe ozone nonattainment area. 9

On October 14, 2020, the District adopted a SIP revision containing an analysis of its compliance with the CAA section 182 RACT requirements for the 2008 and 2015 8-hour ozone standards (“2020 RACT SIP”). Specifically, the 2020 RACT SIP contained a RACT demonstration for the 2015 8-hour ozone standard, an updated RACT demonstration for the 2008 8-hour ozone standard following the area's reclassification to a Severe ozone nonattainment area, as well as updated information for certain RACT elements for the 2008 8-hour standard at the Moderate classification. The California Air Resources Board (CARB) submitted the District's 2020 RACT SIP to the EPA on December 28, 2020. 10 The EPA subsequently took final action to approve all elements of the 2020 RACT SIP related to the 2008 ozone standard at the Moderate classification. In addition, while the EPA took final action to approve the negative declarations for certain elements of the 2020 RACT SIP related to the 2015 ozone standard and 2008 ozone standard at the Severe classification, we have not acted upon the majority of the other elements related to the two standards. 11

On August 23, 2024, CARB submitted a letter to the EPA from SDCAPCD that withdrew a majority of the 2020 RACT SIP because it was no longer deemed appropriate for inclusion into the California SIP. 12 The withdrawal encompasses all elements of the 2020 RACT SIP with the exception of the negative declaration associated with the Control Techniques Guideline (CTG) titled Control Techniques Guidelines for the Oil and Natural Gas Industry (EPA-453/B-16-001).

For plan requirements under part D, title I, of the CAA, such as those for ozone nonattainment areas, if the EPA finds that a state has failed to make the required SIP submission, then CAA section 179 establishes specific consequences, including the eventual imposition of mandatory sanctions for the affected area. Additionally, such a finding triggers an obligation under CAA section 110(c) for the EPA to promulgate a FIP no later than two years from the effective date of the finding, if the affected state has not submitted, and the EPA has not approved, the required SIP submissions.

If the EPA has not affirmatively determined that a state has submitted a complete SIP addressing the deficiency that is the basis for these findings within 18 months of the effective date of this rulemaking, pursuant to CAA sections 179(a) and (b) and 40 CFR 52.31, the emissions offset sanction identified in CAA section 179(b)(2) will apply to the affected nonattainment area. If the EPA has not affirmatively determined that the state has submitted a complete SIP addressing the deficiency that is the basis for these findings within six months after the offset sanction is imposed, the highway funding sanction will apply in the affected nonattainment area, in accordance with CAA section 179(b)(1) and 40 CFR 52.31. The State must make the required SIP submission, and the EPA must take final action to approve the submission within two years of the effective date of this finding; otherwise, the EPA is required to promulgate a FIP to address the relevant requirements. This is required pursuant to CAA section 110(c) for the affected nonattainment area.

Based upon the withdrawal of the 2020 RACT SIP as described in Section I of this rulemaking, the EPA is finding that California has failed to make the required submittals for the RACT elements for the 2008 and 2015 ozone NAAQS for the San Diego County nonattainment area listed in Table 1 below.

In addition, we have previously taken action on several RACT elements for the 2008 and 2015 ozone NAAQS for the San Diego County nonattainment area. A summary of the status of the elements that were not withdrawn are listed below in Table 2.

With this finding, section 179 of the CAA starts sanctions clocks and a FIP clock. California may avoid these sanctions by taking timely action to remedy this finding. The clock governing the CAA's imposition of sanctions for these areas will stop and sanctions will not take effect if the EPA finds that the State has made a complete SIP submission addressing the RACT elements listed in Table 1 for this area within 18 months of the date of this finding. Similarly, the EPA is not required to promulgate a FIP if California makes the required SIP submissions, and the EPA takes final action to approve the submissions within two years of this finding of failure to submit a required SIP. In sum, the CAA does not require sanctions or a FIP if the State and the EPA take timely action to remedy this finding.

In this action, the EPA finds that, following the August 23, 2024 withdrawal of the 2020 RACT SIP for the San Diego County ozone nonattainment area, California has failed to submit certain RACT SIP elements for the 2008 and 2015 ozone NAAQS required under subpart 4 of part D of title I of the CAA. Specifically, California has failed to submit those RACT SIP elements listed in Table 1. The consequences of this finding are discussed in Section II of this action.

Additional information about these statutes and Executive orders can be found at https://www2.epa.gov//laws-regulations/laws-and-executive-orders.gov.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action does not impose an information collection burden under the provisions of the PRA because it does not impose additional requirements beyond those imposed by state law.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, will result from this action.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and it will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does impose additional requirements beyond those imposed by state law.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.

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

The District did not evaluate EJ 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 to positive 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 goals of Executive Order 12898 of achieving EJ for communities with EJ concerns.

This action is subject to the CRA, 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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 10, 2025. 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)).

Throughout this document, whenever “we,” “us,” “the Agency,” or “our” is used, we mean EPA. Acronyms that are used in this rulemaking that may be helpful include:

You may be affected by this rule if you manufacture, import, export, sell, distribute, or install residential and light commercial air conditioning and heat pump equipment. Potentially affected categories, by North American Industry Classification System (NAICS) code, include:

• New Multifamily Housing Construction (except For-Sale Builders) (236116).

• New Housing For-Sale Builders (236117).

• Residential Remodelers (236118).

• Industrial Building Construction (236210).

• Commercial and Institutional Building Construction (236220).

• Plumbing, Heating, and Air Conditioning Contractors (238220).

• Air Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing (333415).

• Plumbing and Heating Equipment and Supplies (Hydronics) Merchant Wholesalers (423720).

• Warm Air Heating and Air Conditioning Equipment and Supplies Merchant Wholesalers (423730).

This list is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This list includes the types of entities that the EPA is aware could potentially be regulated by this action. Other types of entities not included could also be regulated. To determine whether your entity is regulated by this action, you should carefully examine the regulatory text at the end of this document. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

This rule provides one additional year, until January 1, 2027, for the installation of new variable refrigerant flow (VRF) systems used for residential and light-commercial air-conditioning and heat pumps when using components that are manufactured in the United States or imported into the United States before January 1, 2026. Specifically, this rule allows for pre-2026 condensing units, evaporators, and air handlers using hydrofluorocarbons (HFCs) and blends containing HFCs, such as R-410A, not meeting the October 2023 Technology Transitions Rule's (88 FR 73098) restrictions, to be assembled into new VRF systems ( i.e., installed), so long as those systems are assembled prior to January 1, 2027. For projects that were issued a building permit which approved the use of an HFC or blend containing an HFC in a VRF system prior to October 5, 2023, this rule provides for installation of such systems until January 1, 2028, provided that they use components that are manufactured in the United States or imported into the United States prior to January 1, 2026.

On December 27, 2020, the American Innovation and Manufacturing Act of 2020 (AIM Act) was enacted as section 103 in Division S, Innovation for the Environment, of the Consolidated Appropriations Act, 2021 (codified at 42 U.S.C. 7675). Subsection (k)(1)(A) of the AIM Act provides EPA with the authority to promulgate necessary regulations to carry out EPA's functions under the Act, including its obligations to ensure that the Act's requirements are satisfied. Subsection (k)(1)(C) of the AIM Act also provides that the Clean Air Act (CAA) sections 113, 114, 304, and 307 apply to the AIM Act and any regulations EPA promulgates under the AIM Act as though the AIM Act were part of title VI of the CAA. Accordingly, this rulemaking is subject to CAA section 307(d) (see 42 U.S.C. 7607(d)(1)(l)) (CAA section 307(d) applies to “promulgation or revision of regulations under subchapter VI of this chapter (relating to stratosphere and ozone protection)”).

The AIM Act authorizes EPA to address HFCs by providing authorities in three main areas: phasing down the production and consumption of listed HFCs; promulgating certain regulations for purposes of maximizing reclamation and minimizing releases of these HFCs from equipment and ensuring the safety of technicians and consumers; and facilitating the transition to next-generation technologies by restricting use of these HFCs in sectors or subsectors in which they are used. Subsection (i) of the AIM Act, “Technology Transitions,” provides that “the Administrator may by rule restrict, fully, partially, or on a graduated schedule, the use of a regulated substance in the sector or subsector in which the regulated substance is used.” 42 U.S.C. 7675(i)(1). The AIM Act lists 18 HFCs, and by reference any of their isomers not so listed, that are covered by the statute's provisions, referred to as “regulated substances” under the Act. 1 (42 U.S.C. 7675(c)(1)). This rule amends restrictions on the use of regulated substances, or blends containing regulated substances, with a global warming potential (GWP) above 700 for VRF systems. EPA's regulations at 40 CFR 84.64 describe how to determine the GWP of a regulated substance or blend containing a regulated substance for purposes of complying with regulations under the Technology Transitions program.

This rule will reduce regulatory burden associated with the Technology Transitions restrictions on VRF systems used for residential and light commercial air-conditioning and heat pumps while having a negligible environmental impact. Original equipment manufacturers (OEMs) and distributors have indicated that manufactured inventory of VRF equipment could go unsold without an extension of the installation compliance date. Commenters representing builders and owners of large residential buildings have also described how they may be unable to install already-purchased VRF equipment in projects that are currently under development within the existing timeframes. Stranding equipment that does not meet the new GWP limits is counter to the overall approach EPA took in the October 2023 Technology Transitions Rule. Providing additional time for the installation of these systems will not affect the environmental benefits modeled under that rule given EPA is limiting the extension of the installation compliance date to equipment manufactured in the United States or imported into the United States before the existing compliance date of January 1, 2026 (88 FR 73098). Therefore, we do not anticipate an increase in the amount of VRF equipment manufactured or imported as a result of this rule.

On October 24, 2023, EPA published the final rule establishing the Technology Transitions program (88 FR 73098; hereafter “October 2023 Technology Transitions Rule”). That rule restricted the use of certain HFCs in many sectors and subsectors in which they are used by establishing limits for those uses based on GWP. Among other things, that rule prohibited the manufacture and import of factory-completed products and the installation of certain refrigeration, air conditioning, and heat pump systems that use HFCs or blends containing HFCs above specified GWP limits. The compliance dates for these restrictions vary by subsector and range generally from January 1, 2025, to January 1, 2028. The rule also included a prohibition on the sale, distribution, and export of factory-completed products that applies three years after the subsector manufacture and import compliance dates, to allow for a sell-through period of previously manufactured or imported products.

After issuance of the October 2023 Technology Transitions Rule, manufacturers, importers, and distributors of residential and light commercial air conditioning and heat pump equipment requested clarification about split systems and VRF systems. A letter dated November 13, 2023, to EPA from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), the Alliance for Responsible Atmospheric Policy (the Alliance), and Heating, Air-conditioning & Refrigeration Distributors International (HARDI) states that these organizations understand that components for these systems that are manufactured or imported before January 1, 2025, and January 1, 2026, respectively, using an HFC or blend containing an HFC with a GWP of 700 or more, cannot be installed as new systems after each such compliance date (See Docket ID No. EPA-HQ-OAR-2021-0643-0246). The letter states that not allowing time between the manufacture and import compliance date and the installation date would be “particularly problematic for residential new construction, including both single-family and multi-family dwellings, where builders order heating and cooling equipment well in advance of knowing the exact date of install. Such equipment is not installed until construction is nearly complete, but at time of order builders do not know when this date will be.” The letter further articulates that allowing the use of components manufactured or imported prior to the compliance date to be installed as part of new systems for one year after the compliance date would provide some relief to these economic and practical burdens.

In response to this letter from industry trade groups, EPA indicated on November 29, 2023, that the Agency “intends to act swiftly to address concerns regarding the January 1, 2025, installation compliance date, including by potentially amending the final regulation to allow for installation of previously manufactured components until January 1, 2026, and separately intends timely consideration of VRF systems” (See Docket ID No. EPA-HQ-OAR-2021-0643-0235). Subsequently, EPA issued an interim final rule (88 FR 88825; December 26, 2023) to reevaluate the specific circumstances for residential and light commercial air conditioning and heat pump systems. That rule extended the installation compliance date for those systems from January 1, 2025, to January 1, 2026, when using components that are manufactured or imported prior to January 1, 2025, to prevent the stranding of existing inventories of equipment. That rule did not address VRF systems, which are subject to this action.

In response to stakeholder concerns raised in the aforementioned letter received by EPA after the finalization of the October 2023 Technology Transitions Rule, EPA proposed to adjust the installation compliance date for VRF systems manufactured or imported prior to January 1, 2026 (89 FR 53373; June 26, 2024; hereafter “VRF Proposed Rule”). VRF systems are described in the October 2023 Technology Transitions Rule as direct expansion multi-split systems that incorporate the following: a split system air conditioner or heat pump incorporating a single refrigerant circuit that is a common piping network to two or more indoor evaporators, each capable of independent control, or compressor units. VRF systems contain a single module outdoor unit or combined module outdoor units with at least one variable capacity compressor that has three or more steps of capacity, with air or water as the heat source. While this technology is used in air conditioning and heat pump equipment of any size, the October 2023 Technology Transitions Rule restrictions for VRF systems apply only to air-source VRF systems with capacities of 65,000 BTU/h (19 kW) or more and water-source VRF systems of any capacity. The regulatory text at 40 CFR 84.54(c)(2) refers to these systems as “variable refrigerant flow systems for use as residential and light commercial air-conditioning or heat pumps.”  2 Throughout this preamble, these systems are referred to as “VRF systems.”

The number of VRF systems is small compared to the overall number of residential and light commercial air conditioning and heat pump equipment. EPA used data from AHRI (See Docket ID No. EPA-HQ-OAR-2021-0643-0245)  3 and eJARN  4 to estimate that approximately 42,000 VRF units that had a capacity of 65,000 BTU/h or more were sold in 2023. This represents 0.49% of total air conditioning and heat pump equipment sales that year. The available data also indicate that approximately 37,000 VRF units with capacities below 65,000 BTU/h were sold in 2023. Adding together these estimates of units sold in 2023 for VRF units of any capacity provides an overall estimate of 79,000 VRF units, which is approximately 0.91% of all air conditioning and heat pump equipment sold in 2023. EPA notes that this number and percentage of VRF units is a rough estimate intended to describe its use currently as an extremely small percentage of all residential and light commercial air conditioning and heat pump equipment.

In the VRF Proposed Rule, EPA proposed to extend the installation compliance date for new VRF systems from January 1, 2026, to January 1, 2027, when using components that are manufactured or imported prior to January 1, 2026 (89 FR 53373; June 26, 2024). In the alternative, EPA proposed to extend the installation compliance date for new VRF systems from January 1, 2026, to January 1, 2027, when using components that are manufactured or imported prior to January 1, 2026, but only for projects where a building permit both approved the HFC or blend containing the HFC to be used and was issued prior to October 5, 2023.

EPA received public comments on its proposal from stakeholders representing VRF equipment manufacturers, distributors, industry trade groups, real estate developers, contractors, and environmental groups. After the initial 30-day comment period ended on July 26, 2024, the Agency reopened the comment period via a document published in the Federal Register to offer the public an opportunity to request a public hearing to provide oral comment, if desired (89 FR 65575; August 12, 2024). A public hearing was requested, and the Agency held a public hearing on August 27, 2024. The comment period remained open for 30 days after the date of the public hearing, closing on September 26, 2024. All comments received on the VRF Proposed Rule and a transcript of the public hearing are available in the docket for this action (See Docket ID No. EPA-HQ-OAR-2021-0643).

After considering the comments and input received on the VRF Proposed Rule, EPA is finalizing the extended installation compliance date for new VRF systems to January 1, 2027, as proposed. EPA is also providing additional time, to January 1, 2028, for the installation of such systems in projects where a building permit approved the use of an HFC or blend containing an HFC in such a system, and was issued prior to October 5, 2023. Building permits are government-issued documents that grant authorization to an entity to begin a construction project, which are typically issued by local permitting authorities, or authorities having jurisdiction. This includes county or city offices of permits and licensing, departments of housing, or other authorities having jurisdiction. Building permits vary in the level of specificity provided; for purposes of EPA's regulations in 40 CFR part 84, subpart B, EPA considers a building permit to include designs submitted as part of the application that is approved by the authority having jurisdiction.

These extensions only allow for installation of new VRF systems using an HFC, or blend containing an HFC, with a GWP above 700 in components that are manufactured in the United States or imported into the United States prior to January 1, 2026.

To further limit the possibility of stranded inventory, EPA is providing the additional time for installation to January 1, 2028, for projects where three conditions are met: (1) an approved building permit was issued for a project prior to October 5, 2023, (2) that building permit approves the use of an HFC or blend containing an HFC in a VRF system, and (3) all specified components of that VRF system are manufactured in the United States or imported into the United States prior to January 1, 2026. Stakeholder input indicated that even a January 1, 2027, extended installation compliance deadline could still risk stranding VRF equipment for larger buildings using VRF systems with particularly long construction timelines. EPA is finalizing this rule with the additional extension given the complexity of these systems, the size of the projects in which these systems are typically installed, and recognizing that the projects were issued approved building permits prior to the issuance of the Technology Transitions Rule on October 5, 2023. EPA recognizes that a subset of construction projects that use VRF equipment were issued approved building permits prior to October 5, 2023, and may not be completed by the new installation date of January 1, 2027, and thus determines that this additional flexibility for those projects using VRF systems with HFCs or blends containing HFCs above the new GWP threshold is reasonable in light of the goal to avoid stranding inventory.

An important consideration in the October 2023 Technology Transitions Rule was to avoid stranding inventory of equipment manufactured ahead of the various compliance deadlines. This includes systems that are already installed and operating as well as unsold equipment in the manufacturing and distribution chain. EPA stated that “[w]e recognize that the production and purchase of products or components that are unable to be sold to consumers is an economic and environmental outcome no parties desire, and the proposed rule's forward-looking compliance dates were intended to allow all parties in the market supply chain sufficient time to avoid that outcome” (88 FR 73123; October 24, 2023). EPA's goal of avoiding the stranding of inventory is consistent with the requirement in subsection (i)(6) that Technology Transitions restrictions may not take effect sooner than one year from the date of promulgation; this provision also serves to ensure that regulated parties have sufficient time to prepare for and comply with restrictions under this provision. In response to concerns about stranded inventory raised during the public comment period on that proposed rule, EPA made two significant adjustments in the October 2023 Technology Transitions Rule.

First, EPA removed the applicability of the rule's use restrictions to components. EPA explained that components are pieces of equipment that do not function independently and must be assembled together in the field in order to function for its intended purpose. Components are replaceable and a faulty component can be swapped out to avoid replacing an entire system. Recognizing the ongoing need for servicing and updating previously installed systems, EPA allowed for the continued manufacture, import, sale, distribution, offer for sale and distribution, and export of components that rely on higher-GWP HFC refrigerants. Aside from reporting and labeling requirements, components are not subject to the restrictions in the October 2023 Technology Transitions Rule, except insofar as those components may not be installed in new systems on or after the applicable installation compliance dates.

Second, EPA extended the sell-through period for factory-completed products in the October 2023 Technology Transitions Rule from one year to three years after the manufacture and import compliance date. For the purposes of the restrictions under that rule for the refrigeration, air conditioning, and heat pump (RACHP) sector, factory-completed products are pieces of equipment that are functional upon completion of manufacturing in a factory. Functional means that the equipment's refrigerant circuit is complete, it is charged with refrigerant, and it is ready to use for its intended purpose. The Agency received many comments on this topic, including from those commenters that considered one year to be insufficient for the sale of seasonal products.

EPA believed it had minimized the potential for stranded inventory with these two modifications to the October 2023 Technology Transitions Rule. Specifically with respect to components, the Agency's view was that there would continue to be a market for components not meeting the GWP limit thresholds for new systems, because those components could continue to enter the market to service existing systems.

EPA also finalized later compliance dates for the installation of most field-assembled refrigeration systems, recognizing, in part, that refrigeration systems would require manufacturers and importers to make components available and that such systems can be specifically designed for an individual facility and would need more time to transition. 5 For some refrigeration subsectors, EPA also recognized in the October 2023 Technology Transitions Rule that buildings may have already been issued an approved building permit prior to finalization of that rule. Recognizing that where earlier issued permits approved the use of an HFC or blend containing an HFC, and where such permitted systems were likely to be highly complex and costly to redesign, EPA provided one additional year beyond the final rule compliance dates for the installation of certain field-assembled systems. Specifically, that extension applied to the following refrigeration systems or subsectors (certain industrial process refrigeration systems; retail food refrigeration—supermarkets; cold storage warehouses; and ice rinks) if an approved building permit was issued prior to the signature date of the final rule ( i.e., October 5, 2023), and the permit specified the use of a system containing an HFC or blend containing an HFC with a GWP above the relevant GWP threshold for that subsector (88 FR 73120; 40 CFR 84.54(d)).

EPA intended this limited flexibility in the October 2023 Technology Transitions Rule to prevent the need to redesign these systems and, in some cases, the facility that houses these systems, given that facilities or systems may already have been well along on the construction timeline. EPA granted this permit-based extension selectively, as most systems are not typically designed specifically for an individual facility and/or most systems covered by the October 2023 Technology Transitions Rule have a later compliance date and thus could make any necessary adjustments with the GWP restrictions in mind.

EPA did not finalize later compliance dates for the installation of residential and light commercial air conditioning and heat pump systems and VRF systems in the October 2023 Technology Transitions Rule. 6 After issuing that rule, EPA learned that additional time, which EPA had extended to nearly all of the subsectors covering field-assembled refrigeration systems, was also needed for residential and light commercial air conditioning systems and VRF systems. As noted previously, EPA responded by issuing an interim final rule reevaluating the specific circumstances for residential and light commercial air conditioning and heat pump systems and extending the installation compliance date for those systems by one year to January 1, 2026 (88 FR 88825; December 26, 2023), and by undertaking this rulemaking for VRF systems.

EPA has reevaluated the planning, purchasing, and installation timeframes for VRF systems in new construction projects as referenced in the Agency's response to industry stakeholders (See Docket ID No. EPA-HQ-OAR-2021-0643-0235). EPA is providing one additional year to install VRF systems, which aligns with the additional time already provided for system installations in many refrigeration subsectors in the October 2023 Technology Transitions Rule and in the interim final rule for installation of residential and light commercial air conditioning and heat pump systems. In addition, EPA is allowing installation of VRF systems that use an HFC, or a blend containing an HFC, with a GWP above 700 until January 1, 2028, in projects where a building permit approves the use of an HFC or blend containing an HFC in a VRF system, and that approved building permit was issued prior to October 5, 2023, provided the components were manufactured or imported prior to January 1, 2026. EPA is providing this additional extension based on information received from commenters that detailed the length of the timeline from initial design, to permitting, to construction completion of projects that incorporate VRF systems, which are typically much larger and more complex than other projects. Given the longer lead times for the compliance dates for new projects incorporating VRF systems, EPA does not anticipate similar scenarios for equipment used in other sectors and subsectors covered by the October 2023 Technology Transitions Rule.

The construction of new multi-unit residential and commercial buildings is planned well in advance, including plans for the heating and cooling systems intended to be installed in that new construction. Builders may order those planned heating and cooling systems in concert with the planning process well in advance of when those systems are installed. As noted by commenters, installation of these systems is often one of the final steps in construction. For construction planned to occur after January 1, 2026, components of VRF systems that use a regulated substance, or a blend containing a regulated substance, with a GWP above 700 may have already been incorporated into the design of the building and ordered by builders. In addition, such buildings may have already been issued a building permit approving the use of an HFC or blend containing an HFC with a GWP above 700, from the appropriate local permitting authority or the authority having jurisdiction, prior to October 5, 2023. In these cases, the VRF equipment associated with these projects are at risk of being stranded. EPA also recognizes that as one of the first systems facing a system installation compliance date under the October 2023 Technology Transitions Rule, the ability of installers of VRF systems to comply with this deadline relies on equipment manufacturers, importers, and distributors to quickly make commercially available component parts that comply with the GWP thresholds. For this reason, as well, EPA has determined it is appropriate to provide a limited extension for compliance.

As discussed in the October 2023 Technology Transitions Rule, EPA established the compliance date of January 1, 2026, for these systems based on consideration of the AIM Act's subsection (i)(4) factors, and in particular, the assessment that VRF systems will be able to meet the GWP limit of 700 and transition from the current use of HFCs. EPA's consideration of the statutory factors continues to support a swift transition for these systems, but the January 1, 2026, installation compliance date could result in builders of new construction being left with stranded inventory that could not be used. Stranding inventory is an economically and environmentally undesirable outcome, and the issue addressed in this rule—that the January 1, 2026 installation deadline for new VRF systems could result in stranded inventory—was not brought to the Agency's attention until after the October 2023 Technology Transitions Rule was finalized. Through this action, EPA is extending the January 1, 2026, installation compliance date to January 1, 2027, provided the new installation uses components that are manufactured or imported prior to January 1, 2026. In addition, for those projects that were issued a building permit prior to October 5, 2023 which approves the use of an HFC or blend containing an HFC in a VRF system, EPA is extending the installation compliance deadline to January 1, 2028, provided all specified components of that VRF system were manufactured or imported prior to January 1, 2026.

The Agency received several comments on the VRF Proposed Rule. These comments are addressed in this section.

Comment: Several commenters, representing original equipment manufacturers (OEMs), distributors, air conditioning contractors, developers, and trade associations—including the groups that contacted the Agency in the November 13, 2023, letter—expressed support for the proposal to extend the installation compliance date by one year. They reiterated that the proposal “provides indispensable relief to manufacturers, homebuilders, and other stakeholders in the implementation of the . . . AIM Act and the [October 2023 Technology Transitions Rule]” (See Docket ID No. EPA-HQ-OAR-2021-0643-0255). Commenters underscored the importance of the proposed extension to mitigate the potential for significant stranded inventory that would otherwise burden the industry (See Docket ID No. EPA-HQ-OAR-2021-0643-0249). Some requested this rule to be finalized soon, or before the end of 2024, to provide clarity for the industry (See Docket ID No. EPA-HQ-OAR-2021-0643-0253, and Docket ID No. EPA-HQ-OAR-2021-0643-0276).

Response: EPA agrees with commenters that extending the installation compliance date by one year, until January 1, 2027, for such equipment would avoid stranding inventory and provide relief to most manufacturers, distributors, builders, and other stakeholders. EPA takes note of the request to finalize this rule quickly to provide clarity for the industry.

Comment: Three commenters requested the Agency exempt projects that were already permitted. One commenter suggested EPA exempt buildings from any VRF system installation compliance date if they received a permit prior to October 5, 2023. Another commenter encouraged EPA to consider a variance or exemption for already-designed projects that had applied for permits based on heating, ventilation, and air conditioning (HVAC) systems then-available on the market. One commenter requested the Agency consider a further exemption of previously permitted VRF equipment.

Response: While some flexibility is fitting, it would not be appropriate with the application of the subsection (i)(4) factors to provide a broad, indefinite exemption for VRF systems from the October 2023 Technology Transitions Rule to any project where the project in which the system would be installed was issued an approved building permit prior to October 5, 2023. EPA was cognizant in establishing restrictions in the October 2023 Technology Transitions Rule, and in considering the new information provided after finalization of the October 2023 Technology Transitions Rule that there may be equipment that would need to work its way through the distribution chain. As demonstrated in the October 2023 Technology Transitions Rule, EPA recognized that in discrete situations, projects that were issued approved building permits prior to October 5, 2023, may not have the system installed by the relevant compliance date as anticipated. EPA's analysis under the October 2023 Technology Transitions Rule was that substitutes with a GWP below 700 will be available for the components needed for the installation of VRF systems in time for the January 1, 2026, compliance date. One of the primary manufacturers of this equipment has confirmed EPA's assessment about availability in the materials provided to the Agency during the comment period. However, as noted previously, EPA became aware of new information after the issuance of the October 2023 Technology Transitions Rule that indicated the potential for stranded inventory held by some affected entities. As a result, EPA is extending the compliance date for installation by one year and based on the comments received, is finalizing a limited additional extension for projects where abuilding permit approves use of an HFC or blend containing an HFC in a VRF system, and that approved building permit was issued by the relevant permitting authority prior to October 5, 2023. This additional time recognizes that some projects were well underway ahead of the issuance of the October 2023 Technology Transitions Rule. The Agency expects that projects with an approved building permit issued on or after October 5, 2023, will either use VRF systems that meet the 700 GWP threshold, or will use VRF components that are manufactured or imported prior to January 1, 2026, and will be installed by the January 1, 2027, installation deadline.

Comment: Some commenters requested that the installation compliance date be extended by two years, instead of one, and described the several-year construction timeline in support of this request. One commenter stated this extended timeline is necessary to provide projects that have already been designed, permitted, financed, and contracted with enough time to meet the installation compliance date (See Docket ID No. EPA-HQ-OAR-2021-0643-0251). Other commenters stated that more than one year is needed to provide building owners and developers with time to comply without significantly disrupting existing projects, particularly larger, in-process development projects where construction has already started (See Docket ID EPA-HQ-OAR-2021-0643-0256). Two commenters requested a blanket two-year extension to the installation compliance date given the several-year construction timeline. They described this timeline, from initial design to construction completion, for buildings with VRF systems. One of these two commenters stated that it can take six to 18 months to design a building, obtain building permits, and go through the entitlement process. This commenter noted that the HVAC system is incorporated into the initial design of a building based on available equipment. Further, this commenter stated that the construction timeline after the design and permitting stage ranges from 12 months to three years, depending on jurisdiction, construction type, project size, and project complexity. The other commenter indicated the total time between initial design and selection of the project's mechanical systems and the installation of those mechanical systems in large development projects is typically between four and eight years. This commenter further noted that design takes at least two years, and that HVAC systems are selected during the design planning process. This commenter, who is based in New York, stated that the building permit approval process in New York takes six to 12 months, and that construction starts three to six months after building permits are approved. Lastly, this commenter noted that actual construction takes two to six years, and that installation of the HVAC systems, while purchased at the start of the construction period, are installed within the last six months of this schedule.

Response: EPA took into consideration the comments from stakeholders who preferred a blanket two-year extension to the installation compliance date for VRF systems, however we do not agree that a blanket two-year extension to the installation compliance date for VRF systems is warranted.

EPA considered the information on construction timelines that commenters provided. EPA's decision in this final rule to extend the installation compliance date by one year for VRF systems, and by two years for projects that were issued an approved building permit prior to October 5, 2023, and meet the other conditions described in this rule, is informed by these comments. This rule and its extension of the compliance dates for installation of VRF systems is designed to mitigate the narrow issue of stranded inventory without delaying the overall transition to substitutes for VRF systems that are compliant with the GWP thresholds established in the October 2023 Technology Transitions Rule. Regulated parties also have a responsibility to ensure that they are not taking actions, particularly after promulgation of a regulation, that risk creating stranded inventory. Such actions may include, but are not limited to, submitting building permits for approval at such a point that does not give sufficient time for the authority having jurisdiction to issue an approved building permit and allow the project to be constructed, with the relevant equipment installed, by a regulatory deadline. It also includes purchasing equipment that may not be able to be installed by a regulatory deadline.

In establishing the January 1, 2026, deadline in the October 2023 Technology Transitions Rule, EPA provided more than two years between promulgation of that rule and the relevant installation compliance date. In this action, EPA is providing an additional year for all VRF systems that were subject to the January 1, 2026 deadline, or two additional years under a specific set of circumstances. Most affected regulated entities will therefore have more than three years from the time the October 2023 Technology Transitions Rule was published in the Federal Register , and the new installation compliance deadline. For those projects that were issued an approved building permit prior to the finalization of the October 2023 Technology Transitions Rule, and were therefore further along on the construction timeline, we are providing more than four years, until January 1, 2028. Builders, VRF equipment manufacturers, distributors, and installers therefore will have had multiple years to accommodate the restrictions in their planning. Moreover, available information indicates that equipment using compliant lower-GWP substitutes will be available for installation allowing the affected regulated entities to meet the new installation compliance date of January 1, 2027. Those projects that were issued an approved building permit prior to the signature of the October 2023 Technology Transitions Rule, and meet other conditions as described in this rule, are being granted until January 1, 2028, not because of the lack of available equipment for compliance with the restrictions, but because it is more likely that the construction timeline of such projects is further along such that the likelihood of stranding inventory for these projects is greater.

Commenters requesting a blanket two-year extension did not supply sufficient information to support such an extension, or a longer extension, for installation of VRF systems. One commenter's construction timeline of 12 months to three years is fully within the time provided in this rule. The other commenter's construction timeline of two to six years goes beyond the more than four years provided for projects that were issued an approved building permit prior to October 5, 2023. However, this commenter noted just one project that would be adversely affected by a January 1, 2027, compliance date, and the extension to January 1, 2028, for projects that were issued an approved building permit prior to October 5, 2023 and meet the other conditions described in this rule, resolves the commenter's concern with respect to the specified project.

The Agency is also cognizant of the remaining phasedown period for HFCs in declining to adopt commenters' request for additional extensions. Per Congress' phasedown schedule in the AIM Act, by 2029 overall domestic production and consumption of HFCs must be reduced by 70 percent from historic baseline levels and by 85 percent from the baseline by 2036. AIM Act subsection (i)(4)(D) directs EPA to factor in, to the extent practicable, “the remaining phase-down period for regulated substances,” when promulgating restrictions under the Technology Transitions program. 42 U.S.C. 7675(i)(4)(D). EPA explained in the October 2023 Technology Transitions Rule that the fact that most of the AIM Act's phasedown would occur by 2029 was “an important factor” in finalizing the compliance dates and restrictions in the Technology Transitions Rule ( See 88 FR 73140). As the phasedown is implemented, the supply of available HFCs will decrease significantly. Timely restricting the use of HFCs in sectors and subsectors that are well positioned to transition to new substitutes and technologies supports the phasedown and fulfills Congress' direction to the Agency in subsection (i). For VRF systems, the best available information from manufacturers and industry commenters is that substitutes that meet the October 2023 Technology Transitions Rule's restrictions are currently being manufactured and will be commercially available in time to support the transition. We therefore do not agree that extensions beyond those established in this rule are warranted.

Comment: One commenter requested a two-year extension to the installation compliance date for VRF systems in projects that use higher-GWP refrigerants, were permitted prior to October 24, 2023, and where the components for such systems are manufactured or imported prior to January 1, 2026 (See Docket ID No. EPA-HQ-OAR-2021-0643-0251). This commenter described that it is in the process of constructing a building and expects to complete the installation of the VRF system in that building by April 1, 2027. The commenter stated that this project was issued an approved building permit prior to finalization of the October 2023 Technology Transitions Rule and submitted its approved permitting documents and building designs to the docket. These documents indicate R-410A, a refrigerant blend that has a GWP of 2,088 and consists of two HFCs regulated under the AIM Act, is intended to be used in the VRF system in the project.

Response: EPA appreciates the details and documents provided by this stakeholder on this project. EPA notes this stakeholder's concern would not be addressed with a one-year extension to the installation compliance date. Projects that had already been issued an approved building permit prior to October 5, 2023, are more likely than those that were issued an approved building permit on or after this date to be substantially further along in the construction timeline, such that switching the refrigerant to one that complies with the 700 GWP threshold could risk stranding already-manufactured, and already-purchased, VRF equipment inventory, as well as require developers to re-design, re-permit, and in some cases, rebuild ongoing projects to accommodate a different VRF system (See Docket ID No. EPA-HQ-OAR-2021-0643-0242). We are therefore finalizing an extension to January 1, 2028, for installation of VRF systems where the project was issued a building permit prior to October 5, 2023, where the building permit approves the use of an HFC or blend containing an HFC in a VRF system, and where the components of the VRF system were manufactured or imported prior to January 1, 2026.

EPA is finalizing October 5, 2023, instead of October 24, 2023, as the date by which an approved building permit must have been issued to allow projects to install certain VRF systems until January 1, 2028, because this was the signature date of the October 2023 Technology Transitions Rule, it aligns with the flexibility provided to entities in the October 2023 Technology Transitions Rule as described in section III.B. of this rule, and entities could have become aware of the Technology Transitions restrictions on or around this date. In addition, the commenter's project that was issued an approved permit would not be adversely affected by this earlier date than their request.

EPA can reasonably anticipate that there may be a discrete number of projects that may also have been issued building permits ahead of October 5, 2023, that approve the use of an HFC or blend containing an HFC in VRF systems, and thus is providing this additional flexibility where these circumstances exist and the other conditions in this rule are met.

Comment: Several commenters opposed the alternative proposal in the VRF Proposed Rule to limit the one-year extension to only those projects with an approved building permit that specified an HFC or blend containing an HFC and was issued prior to October 5, 2023 (See Docket ID No. EPA-HQ-OAR-2021-0643-0252, Docket ID No. EPA-HQ-OAR-2021-0643-0254, Docket ID No. EPA-HQ-OAR-2021-0643-0255, Docket ID No. EPA-HQ-OAR-2021-0643-0258). They said this alternative proposal is too narrow in comparison to the proposed extension. One commeter noted that it “would fail to resolve the inventory and order fulfillment concerns articulated by industry” (See Docket ID No. EPA-HQ-OAR-2021-0643-0255).

Response: EPA agrees with these commenters. Based on its review of the comments received in total, EPA finds that a limited one-year extension solely for projects that were issued an approved building permit prior to October 5, 2023, will not provide sufficient relief to avoid stranding inventory. Comments from multiple OEMs, distributors, developers, and trade associations provided information that indicated that a broad one-year extension was necessary to provide certainty to those looking to complete construction on projects with long timeframes. We are also cognizant that the compliance date for VRF systems is among the earlier deadlines of all the Technology Transitions program's restrictions for assembled systems. The flexibility of a blanket one-year extension to January 1, 2027, to install components that were manufactured or imported by January 1, 2026, is intended to help smooth the transition. It provides some cushion to OEMs, distributors, and developers if roll-out of the new rule-compliant components are delayed in any way, ensuring that builders and installers will be able to depend on available supply of previously manufactured equipment for these systems to reliably meet the January 1, 2027, installation deadline.

Comment: One commenter supported the alternative approach in the VRF Proposed Rule to limit the one-year installation compliance extension to only those projects that were issued an approved building permit with a specified HFC or blend containing an HFC, prior to October 5, 2023 (See Docket ID No. EPA-HQ-OAR-2021-0643-0260). This commenter questioned how much stranded inventory there would be since no data was provided by OEMs on the volume of potential stranded equipment. This commenter also encouraged the Agency to avoid continued compliance date extensions.

Response: After reviewing the comments, EPA disagrees that it should finalize the alternative approach described in the VRF Proposed Rule since it is likely that far fewer projects would qualify for this one-year extension, which could result in stranding already-purchased VRF equipment. EPA instead agrees with other commenters that a broad one-year extension provides certainty and avoids stranding inventory.

EPA recognizes that finalizing an extension to January 1, 2028, for projects that were issued a building permit prior to October 5, 2023, and where the building permit approves the use of an HFC or blend containing an HFC with a GWP above the threshold, provides one additional year beyond the alternative proposal that this commenter supported. EPA is finalizing this targeted extension to still limit the universe of who may qualify for additional time while addressing the needs of certain affected regulated entities to avoid stranding inventory.

Comment: One commenter requested clarification on whether a VRF-Dedicated Outdoor Air System with a single direct expansion coil connected to a VRF condensing unit meets the definition of VRF systems under the Technology Transition Program and thus would be on the same timeline as other VRF systems. This commenter also asked if outdoor units which are tested in accordance with AHRI 1230 and listed as VRF units, regardless of whether they are installed with one or multiple associated evaporators, would fall under this definition of VRF systems.

Response: Air conditioning systems that have one indoor evaporator instead of two or more as described in the October 2023 Technology Transitions Rule, do not fall under the description of VRF systems in that rule. This rulemaking does not reconsider the description of VRF systems from the October 2023 Technology Transitions Rule. For purposes of the Technology Transitions program, the systems that the commenter described are considered residential and light commercial air conditioning and heat pump systems, and have an installation compliance date of January 1, 2026, when using components that are manufactured or imported prior to January 1, 2025. VRF systems described in this rule, which uses the same description as the one found in the October 2023 Technology Transitions Rule, do not cover all designs using VRF technology. For example, air-source VRF units with capacities below 65,000 BTU/h are not subject to this final rule and instead are regulated with other residential and light commercial air conditioning and heat pump systems.

Comment: One commenter provided their estimate that the costs associated with an installation compliance deadline earlier than January 1, 2028, will be $112 million for a project currently under development (See Docket ID No. EPA-HQ-OAR-2021-0251). This project was issued an approved building permit prior to October 5, 2023. The costs that this commenter highlights stem from real estate taxes, land loan interest, insurance expenses, the equity costs of capital, cost of new VRF equipment, and the cost to re-design the building to accommodate incorporation of additional ventilation into the building to account for the flammability of the new refrigerant.

Response: EPA appreciates comments, including in this case, with detailed information on cost breakdowns. EPA appreciates this commenter's description of the cost impacts associated with a compliance deadline earlier than January 1, 2028. With EPA's decision to extend the installation compliance deadline to January 1, 2028, for projects issued an approved building permit prior to October 5, 2023 and that meet the other conditions described in this rule, the commenters' projected cost estimates, which EPA has not independently evaluated or verified, will in any case be avoided.

Comment: One commenter suggested EPA change the definition of “install” to mean that VRF equipment are mounted in place, regardless of whether the field-installed system is charged (See Docket ID No. EPA-HQ-OAR-2021-0275).

Response: EPA is not adopting a change in the definition of “install” to its regulations. EPA defined that term in the October 2023 Technology Transitions Rule after a notice-and-comment rulemaking and did not reopen that definition in this rulemaking. As such, this request is outside the scope of this narrow rulemaking. Such a change would have far-reaching impacts on existing stakeholder plans to comply with the October 2023 Technology Transitions Rule in numerous subsectors. Other subsectors with an installation compliance deadline include, but are not limited to, chillers, industrial process refrigeration, and several retail food subsectors. Based on the information provided by this commenter, finalizing an additional year to install VRF systems in certain projects that were issued an approved building permit prior to October 5, 2023, beyond the one year as proposed would also alleviate the commenter's concerns and would not affect the broader Technology Transitions program.

Comment: Two commenters stated that EPA did not give the real estate industry sufficient notice about this rule's potential effects on the real estate industry. They note that NAICS codes that correspond to builders and developers were not used in the October 2023 Technology Transitions Rule, the interim final rule issued in December 2023 (88 FR 88825), or the VRF Proposed Rule (See Docket ID No. EPA-HQ-OAR-2021-0643-0273). One commenter called this a “major oversight” (See Docket ID No. EPA-HQ-OAR-2021-0643-0274). This commenter also mentioned that EPA set installation deadlines without engaging developers, and thus failed to meaningfully consider or discuss compliance needs and challenges of commercial and multifamily housing developers. As such, this commenter requested that EPA work with the real estate industry to set compliance deadlines, and the other commenter requested that EPA delay the installation compliance deadline.

Response: EPA acknowledges that the October 2023 Technology Transitions Rule, interim final rule (88 FR 88825), and VRF Proposed Rule did not include NAICS codes for developers and general construction. EPA has included those codes in this final rule and will continue to include them where appropriate in further regulations under the Technology Transitions program. EPA disagrees that this means the Agency provided insufficient notice of the rule. Notice of EPA's intention to regulate is provided through publication in the Federal Register . The list of NAICS codes within that document serves as a guide for readers regarding entities the EPA expects could potentially be affected, but EPA states that the list is not intended to be exhaustive, and that other types of entities not listed could also be affected. EPA received input from multiple developers and real estate-related trade associations during the comment period on this rule and the interim final rule, and has met with real estate developers before finalizing this rule. A record of meetings EPA held with stakeholders after publication of the VRF Proposed Rule on June 26, 2024, is included in the docket for this rule (See attachment 1, Docket ID No. EPA-HQ-2021-0643-0276. EPA intends to continue its engagement with these stakeholders.

Comment: One commenter suggested EPA should not set compliance deadlines until it develops a building code amendment strategy with model code bodies, state legislatures, and the buildings sector (See Docket ID No. EPA-HQ-OAR-2021-0643-0274). This commenter stated further that EPA should clarify the regulatory impacts that will arise on existing buildings' air conditioning and chiller systems when they reach the end of their useful lives. In particular, this commenter noted that existing buildings would need to be retrofitted to accommodate new air conditioning systems using refrigerants with lower GWP but higher flammability ratings. Another commenter noted that the latest building codes, which harmonize requirements for lower-GWP A2L refrigerants, have not been adopted in numerous jurisdictions across the country, which makes it harder to comply with these installation compliance dates. Other commenters also noted that lack of consistent A2L requirements across building codes could result in an inability to complete construction for projects that have already been issued approved building permits.

Response: This rule serves the limited purpose of extending compliance deadlines for the installation of new VRF systems. To the extent that commenters are identifying concerns regarding building codes as an impediment to compliance with the October 2023 Technology Transitions Rule deadline for installation of VRF systems, this rule only alleviates those concerns by extending that deadline by one year, or in specific cases, two years. This rule does not address the retrofit of buildings to accommodate new air conditioning systems with lower GWP and higher flammability ratings but EPA welcomes further discussion on this topic. As discussed in section III.F. of this preamble, in electing to provide additional time for compliance, the Agency is not revisiting or reopening its analysis of the AIM Act subsection (i)(4) factors with respect to VRF systems, as set forth in the October 2023 Technology Transitions Rule preamble (88 FR 73177-73180). In that rule, EPA considered building codes as one factor of its assessment of the availability of substitutes for HFCs used in the VRF systems. As noted in that final preamble, model building codes for this subsector were updated in 2021 to incorporate the use of lower-GWP refrigerants (88 FR 73178). When EPA issued the October 2023 Technology Transitions Rule, it noted that 41 states had either updated state building codes or legislatively ensured that refrigerants classified as A2Ls ( i.e., lower-GWP substitutes that can support compliance with the October 2023 Technology Transitions Rule restrictions) could be used (See attachment 5, p. 5-6, of Docket ID No. EPA-HQ-OAR-2021-0643-0227). At the time of this rulemaking, only Alaska, the District of Columbia, Kentucky, Massachusetts, Michigan, and Nevada have yet to update their codes or legislatively provide for the use of A2Ls in air conditioning (See attachment 2, Docket ID No. EPA-HQ-OAR-2021-0643-0276). 7 Finally, with respect to regulatory impacts of the marginal cost of installing a new rule-compliant system at the end of the useful lives of existing systems, that comment is beyond the scope of this rule, which has the limited effect of extending the deadline for compliance for one air conditioning and heating subsector.

Comment: One commenter, noting its engagement in other EPA partnerships, suggested that the Agency develop partnership programs with the real estate industry to drive the responsible and methodical phasedown of HFCs and appropriate building equipment transitions.

Response: The establishment of potential partnership programs, or expansion of existing ones, is beyond the scope of this rulemaking. EPA welcomes additional opportunities for communication and collaboration with the real estate industry to successfully implement the phasedown of HFCs.

Comment: Some commenters referenced issues outside the scope of this rulemaking or made inaccurate statements about rules promulgated under the AIM Act. One commenter noted concerns about how air conditioning systems used on boats are classified under the Technology Transitions program (See Docket ID No. EPA-HQ-OAR-2021-0643-0257). Two commenters requested EPA extend the installation compliance date for residential and light commercial air conditioning and heat pump systems beyond the time provided in the interim final rule (88 FR 88825) (See Docket ID No. EPA-HQ-OAR-2021-0643-0272 and EPA-HQ-OAR-2021-0643-0273). One commenter noted that this rulemaking “would set the HFC production and consumption baseline levels from which reductions will be made [and] establish an initial methodology for allocating and trading HFC allowances for 2022 and 2023” (See Docket ID No. EPA-HQ-OAR-2021-0643-0267).

Response: These comments are outside the scope of this rulemaking, which is solely related to an extension of the installation compliance date for VRF systems.

EPA is narrowly tailoring this action to respond to stakeholder concerns about stranded inventory and longer construction timelines for projects that incorporate VRF systems while maintaining the human health and environmental benefits of the October 2023 Technology Transitions Rule. To do so, EPA is granting the extension for installation of a VRF system only if all “specified components” of that system are manufactured or imported prior to January 1, 2026. The term “specified component” is defined in the October 2023 Technology Transitions Rule as “condensing units, condensers, compressors, evaporator units, and evaporators” (88 FR 73112). 8 As a result, the total number of VRF systems using HFCs, or blends containing HFCs, with a GWP above 700 installed in 2025, 2026, and 2027 for projects that were issued an approved building permit prior to October 5, 2023, would match what the Agency modeled for installation before the January 1, 2026, deadline. The extra year that is being provided for installation of new VRF systems, and two years for certain installations, would not increase total demand for HFCs in VRF systems, but rather shift some of the modeled demand from 2025 into 2026 and 2027.

Specified components manufactured or imported on or after January 1, 2026, remain subject to the restrictions of the October 2023 Technology Transitions Rule. Specifically, if they use or are intended for use with an HFC or a blend containing an HFC with a GWP of 700 or greater, their use is limited to servicing previously installed systems. All the labeling, reporting, and recordkeeping requirements, as delineated in the October 2023 Technology Transitions Rule, also continue to apply to components using, or intended to use, any regulated substance.

EPA finds that providing additional time for installation effectively responds to stakeholder concerns about stranded inventory while remaining protective of the environmental benefits of the restrictions in the October 2023 Technology Transitions Rule. This approach was suggested by industry stakeholders in their letter dated November 13, 2023, and it aligns with industry's plans to transition VRF systems to use lower-GWP substitutes.

The October 2023 Technology Transitions Rule requires labels on products and specified components that use regulated substances. The labeling requirement takes effect at the time of the manufacture and import prohibition for products and specified components. This timing reflects the primary purpose of the labels, which is for assessing compliance of products and systems in sectors and subsectors with active HFC restrictions.

Consistent with the October 2023 Technology Transitions Rule, this action does not require any new labeling for specified components intended for use in VRF systems that are manufactured in the United States or imported into the United States prior to January 1, 2026 ( i.e., existing inventory). This action also does not change the labeling requirements for specified components used in VRF systems that are manufactured or imported after January 1, 2026. As such, they must be labeled with the following: (1) the statement “For servicing existing equipment only,” (2) the HFC or blend containing an HFC that is used or intended for use, and (3) the date of manufacture.

This labeling is particularly important to distinguish between components manufactured or imported before January 1, 2026, which are not subject to restrictions, from those that are manufactured or imported on or after January 1, 2026, which may be subject to the GWP limit depending on whether it is new or intended for servicing existing equipment. For a complete description of the Technology Transitions program labeling requirements, including formatting requirements, please refer to the October 2023 Technology Transitions Rule, or 40 CFR 84.58.

The October 2023 Technology Transitions Rule established recordkeeping and reporting requirements for any entity that manufactures or imports products or specified components that use or are intended to use HFCs in the sectors and subsectors covered in that rule. The reporting period for all sectors and subsectors starts on January 1, 2025, and the first reports covering the 2025 calendar year must be submitted to the Agency by March 31, 2026. This action does not add to nor modify the existing reporting and recordkeeping requirements for specified components. This rule does not establish new reporting and recordkeeping requirements related to the sale or installation of components manufactured or imported prior to January 1, 2025. However, EPA notes that entities that intend to rely on the flexibility associated with the date of their approved building permit should maintain that approved building permit as a record and have it available for inspection, if requested. Reporting and recordkeeping requirements finalized in the October 2023 Technology Transitions Rule are still applicable for specified VRF components that are manufactured in the United States or imported into the United States on or after January 1, 2025.

Subsection (i)(4) of the AIM Act directs EPA to factor in, to the extent practicable and using best available data, various considerations when carrying out a rulemaking under subsection (i). As discussed in detail in the preamble to the October 2023 Technology Transitions Rule, EPA views subsection (i)(4)(A) through (D) as providing overarching direction for setting restrictions under subsection (i) (88 FR 73129-73141). In this action, EPA did not reconsider the interpretations provided in the October 2023 Technology Transitions Rule regarding how it considers the factors laid out in subsection (i)(4). Nor did the Agency revisit or reopen its analysis of the (i)(4) factors with respect to VRF systems as set forth in the October 2023 Technology Transitions Rule preamble (88 FR 73177-73180). However, in finalizing this narrow adjustment to the installation compliance date for VRF systems, EPA considered the (i)(4) factors to the extent practicable, as applicable to the Agency's adjustment of that compliance date.

The issue being addressed by this final rule was brought to the Agency's attention by stakeholders impacted by the October 2023 Technology Transitions Rule after the issuance of that rule. As noted in EPA's discussion of subsection (i)(4)(A), in addition to information generated by other governing bodies and agencies, the Agency considered information provided by industry, environmental non-governmental organizations, trade associations, academia, standard-setting bodies, and more (88 FR 73129). EPA acknowledges that in some cases, regulated entities may be best situated to identify best available information, particularly regarding implementation challenges.

With respect to the Agency's evaluation of the availability of substitutes under subsection (i)(4)(B), EPA previously determined that substitutes with a GWP less than 700 are available effective January 1, 2026, for VRF systems. EPA did not change that determination and continues to find that substitutes with a GWP less than 700 will be available January 1, 2026, for these systems. Manufacturers and importers in this subsector are currently making or importing VRF systems and components with lower-GWP refrigerants for other markets and are prepared to meet the January 1, 2026, manufacture and import compliance date for such systems. This action did not reconsider the Agency's prior evaluation of the availability of substitutes for meeting the use restrictions issued in the October 2023 Technology Transitions Rule for VRF systems; rather, this action addresses the disposition of components manufactured in the United States or imported into the United States before January 1, 2026.

This rule to adjust the installation compliance date for VRF systems was motivated by the policy goal of avoiding the negative environmental and economic impacts of stranding inventory where possible, while recognizing that the AIM Act authorizes the Agency to establish use restrictions where appropriate for sectors and subsectors to move away from the use of high-GWP HFCs. These goals are consistent with the direction in subsection (i)(4)(C), which instructs the Agency to factor in, to the extent practicable, overall economic costs and environmental impacts, as compared to historical trends. As discussed in the October 2023 Technology Transitions Rule, EPA interprets (i)(4)(C) as purposefully accommodating different types and degrees of analysis of economic costs and environmental impacts, including costs and impacts that may be difficult to quantify (88 FR 73138). The narrow adjustment in this final rule reduces the potential to unintentionally strand equipment used in VRF systems, while still achieving a prompt transition for this equipment. Specifically, even with the adjustments in this final rule, manufacturers and importers of components for new VRF systems will be required in the near term ( i.e., before January 1, 2026) to transition away from using HFCs or blends containing HFCs with a GWP above 700 in those components, and developers and builders will not be allowed to install new systems that use non-compliant regulated substances beginning January 1, 2027 (or January 1, 2028, in limited circumstances). This action does not affect the overall consumption of HFCs because EPA does not anticipate a change in the amount of new VRF equipment that will be manufactured or imported prior to January 1, 2026. Further discussion of environmental impacts can be found in section III.D.

Finally, subsection (i)(4)(D) directs the Agency to factor in, to the extent practicable, the remaining phasedown period for regulated substances under the allowance allocation program. The reduction in the supply of HFCs is an important factor supporting compliance dates and GWP limits that are as stringent as feasible under the analysis of all the (i)(4) factors. This rule will not materially affect the demand for HFCs because it limits installations to components that are manufactured or imported before January 1, 2026. The effect of this rule is to extend the installations that EPA modeled to occur in 2025 over the two-year period of 2025 and 2026, with further limited installations extending into 2027 for projects issued an approved building permit prior to October 5, 2023, providing the other criteria established in this rule are met.

Prior to proposing a rule, subsection (i)(2)(A) of the AIM Act directs EPA to consider negotiating with stakeholders in the sector or subsector subject to the potential rule in accordance with negotiated rulemaking procedures established under subchapter III of chapter 5 of title 5, United States Code (commonly known as the “Negotiated Rulemaking Act of 1990”). If EPA makes a determination to use the negotiated rulemaking procedures, subsection (i)(2)(B) requires that EPA, to the extent practicable, give priority to completing that rulemaking over completing rulemakings under subsection (i) that are not using that procedure. If EPA does not use the negotiated rulemaking process, subsection (i)(2)(C) requires the Agency to publish an explanation of the decision not to use that procedure before commencement of the rulemaking process. A discussion on EPA's consideration of using negotiated rulemaking procedures and its decision not to use such procedures prior to proposal can be found in section II.G. of the VRF Proposed Rule (89 FR 53378-53380; June 26, 2024).

The AIM Act regulations promulgated herein may be challenged in the United States Court of Appeals for the District of Columbia Circuit. Pursuant to section 307(b)(1) of the CAA, petitions for judicial review of the AIM Act regulations must be filed in that court within 60 days after the date notice of this final action is published in the Federal Register .

The AIM Act provides that certain sections of the CAA “shall apply” to the AIM Act and actions “promulgated by the Administrator of [EPA] pursuant to [the AIM Act] as though [the AIM Act] were expressly included in title VI of [the CAA].” 42 U.S.C. 7675(k)(1)(C). Among the applicable sections of the CAA is section 307, which includes provisions on judicial review. Section 307(b)(1) provides, in part, that petitions for review must only be filed in the United States Court of Appeals for the District of Columbia Circuit: (i) when the agency action consists of “nationally applicable regulations promulgated, or final actions taken, by the Administrator,” or (ii) when such action is locally or regionally applicable, but “such action is based on a determination of nationwide scope or effect.”

The AIM Act regulations promulgated herein are “nationally applicable regulations” within the meaning of CAA section 307(b)(1). These regulations establish regulatory requirements applicable across the entire United States to implement restrictions under subsection (i) of the AIM Act. The regulations promulgated herein amend an existing nationally applicable regulation by adjusting a compliance deadline for certain systems. The deadlines in the amended regulation and the conditions required to qualify for those extended deadlines are nationally applicable to all affected entities. Accordingly, under section 307(b)(1) of the CAA, petitions for judicial review of these AIM Act regulations must be filed in the United States Court of Appeals for the District of Columbia Circuit by February 10, 2025.

Additional information about these statutes and Executive Orders can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is not a significant regulatory action as defined in Executive Order 12866, as amended by Executive Order 14094, and was therefore not subject to a requirement for Executive Order 12866 review.

This action does not impose an information collection burden under the PRA because it does not contain any information collection activities.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, EPA concludes that the impact of concern for this rule is any significant adverse economic impact on small entities and that the Agency is certifying that this rule would not have a significant economic impact on a substantial number of small entities because the rule would relieve regulatory burden on the small entities subject to the rule. This rule will prevent the stranding of components used to install VRF systems. EPA therefore concluded that this action will relieve regulatory burden for all directly regulated small entities.

This action does not contain an unfunded mandate of $100 million (adjusted annually for inflation) or more (in 1995 dollars) as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.

EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is narrowly tailored to prevent the stranding of certain air conditioning and heat pump equipment using VRF technology while not affecting the demand for HFCs. Therefore, this action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk. Since this action does not concern human health, EPA's Policy on Children's Health also does not apply.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

EPA believes that this type of action does not concern human health or environmental conditions and therefore cannot be evaluated with respect to potentially disproportionate and adverse effects on communities with environmental justice concerns. This action is narrowly tailored to prevent the stranding of inventory of air conditioning and heat pump equipment using VRF technology while not affecting the demand for HFCs.

Although this action does not concern human health or environmental conditions, EPA identified and addressed environmental justice concerns within the October 2023 Technology Transitions Rule (88 FR 73098; October 24, 2023).

This action is subject to the CRA, 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).

For the reasons set forth in the preamble, the EPA amends 40 CFR part 84 as follows:

The proposed rule was published at 89 FR 64851 on August 8, 2024. The Petitioners filed comments in support of the petition reaffirming their commitment to apply for channels 11 and 35.

The Bureau believes the public interest would be served by substituting channel 11 for channel 35 for KJTV-TV and channel 35 for channel 36 for KCBD. Gray previously requested the substitution of channel 36 for channels 11 and the Bureau granted the request. Accordingly, channel 11 is no longer allotted to Lubbock in the Table. Gray was also granted a construction permit to construct a facility on channel 36 at Lubbock, but was unable complete construction of the channel facility by the expiration date. According to the Petitioners, KJTV-TV's channel 35 tube transmitter is failing, replacement parts are not available, and the cost for SagamoreHill to replace the transmitter for KJTV-TV's 1000 kW facility is prohibitively expensive. The Petitioners' proposal will allow SagamoreHill to replace KJTV-TV's failing equipment with the equipment ( i.e., antenna, transmitter, etc.) currently used by KCBD on channel 11, which is in good operating condition. Because Gray had already planned to invest in a new 1000 kW transmitter for KCBD on channel 36, it has the funds necessary to replace KJTV-TV's failing channel 35 transmitter and operate KCBD on channel 35. There would be no predicted loss area on channel 35 when compared to KCBD's previously-authorized channel 36 facility and the proposed channel 11 facility for KJTV-TV would result in no loss and instead provide additional service to approximately 8,000 persons. The Bureau finds that channel 11 can be substituted for channel 35 at Lubbock as proposed, in compliance with the principal community coverage requirements of section 73.618(a) of the rules, 1 at coordinates 33°-32′-29.9″ N and 101°-50′-13.6″ W, and also meets the technical requirements set forth in section 73.622(a) of the rules. We also find that channel 35 can be substituted for channel 36 at Lubbock as proposed, in compliance with the principal community coverage requirements of section 73.618(a) of the rules, at coordinates 33°-30′-08.3″ N and 101°-52′-21.3″ W, and also meets the technical requirements set forth in section 73.622(a) of the rules.

This is a synopsis of the Commission's Report and Order, MB Docket No. 24-224; RM-11988; DA 24-1188, adopted and released on November 26, 2024. The full text of this document is available for download at https://www.fcc.gov/edocs. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to this proceeding. The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:

Under section 104 of the MMPA (16 U.S.C. 1374), NMFS may issue permits for the take or importation of marine mammals for:

• Scientific research (section 104 (c)(3));

• Enhancing the survival or recovery of the species or stock (section 104 (c)(4));

• Public display (section 104 (c)(2));

• Commercial or educational photography (section 104(c)(6)); and

• Scientific research that may result only in taking by Level B harassment, via LOCs issued under the MMPA's General Authorization (GA) provisions (section 104 (c)(3)). Level B harassment refers to activities that have the potential to disturb but not injure a marine mammal.

The implementing regulations for scientific research, enhancement, public display, and photography permits can be found at 50 CFR 216.31-216.41. The implementing regulations for issuing LOCs under the GA can be found at 50 CFR 216.45. Applying for an LOC is a simpler and more expedited process than applying for a scientific research permit, and it does not require a public comment period. An LOC confirms that an applicant's proposed research activities will only result in Level B harassment ( i.e., activities with the potential to disturb but not injure) and will only target marine mammals that are not endangered or threatened under the Endangered Species Act (ESA). A scientific research permit is required for research that will result in take of ESA-listed species or for research that involves more than Level B harassment of marine mammals.

Section 2 of the MMPA, 16 U.S.C. 1361, provides that it is the sense of Congress that marine mammals “should be protected and encouraged to develop to the greatest extent feasible commensurate with sound policies of resource management and that the primary objective of their management should be to maintain the health and stability of the marine ecosystem.” Section 2 also includes Congress' finding that there is inadequate knowledge of the ecology and population dynamics of marine mammals. Since the MMPA was enacted in 1972, NMFS has issued permits to allow research on marine mammals as well as other permits and LOCs allowing take of marine mammals as specified in section 104.

Take, as defined in section 3 of the MMPA, 16 U.S.C. 1362, and in § 216.3, means to harass, hunt, capture, collect, and kill marine mammals, or any attempt to do so. While all permits that are the subject of this rule authorize take of marine mammals, the majority of the take authorized under these permits is for low-level harassment of marine mammals or collection of biological samples rather than lethal take.

Section 104 permits like those described below authorize activities that promote the goals set out in section 2 of the MMPA. The vast majority of permits issued under section 104 (93 percent of current permits) authorize scientific research on marine mammals. Research permits cover a wide variety of projects, such as capturing, sampling, tagging, and releasing seals to find out how deep they dive, remotely biopsy sampling and tagging large whales to study their migrations, or conducting physiology studies on permanently captive marine mammals in academic facilities. In addition to fieldwork activities, some research permits authorize scientists to import and export marine mammal parts ( i.e., biological samples) to study topics such as disease, genetics, prey species, and hormones; and for curation in scientific collections. Some scientists have permits for both research and enhancement activities, such as vaccinating a wild endangered population against disease or maintaining endangered animals that cannot be released to the wild to contribute to the survival or recovery of the species. LOCs may be issued to researchers who study non-listed marine mammals and whose research methods may only result in low-level ( i.e., Level B) harassment. An example would be photographing bottlenose dolphins ( Tursiops truncatus ) to identify individuals and study distribution and social patterns. As scientists conduct permitted research, they expand our knowledge of the abundance, distribution, and health of these animals. Resource managers then use the best available science to inform their decisions.

Under section 104, NMFS also issues permits for commercial and educational photography of non-listed marine mammals. For example, a typical photography permit authorizes filming of marine mammals by underwater divers or from a vessel or drone to collect footage for a documentary. Filmmakers working under a commercial photography permit are restricted to activities that only have the potential to disturb (not physically contact, injure, or kill) marine mammals. Often the final product of these permits is a documentary television series or similar project that may inspire awe and educate the public about marine mammals.

Additionally, NMFS also issues section 104 permits for the import of non-depleted and non-listed marine mammals for the purpose of public display. For example, a public display permit may authorize the import of dolphins from a foreign facility for public exhibition at a U.S. zoo or aquarium. These permits mandate a conservation or education program, as well as provide opportunities for the public to view marine mammals.

Section 104(b) of the MMPA requires that all permits specify “the period during which the permit is valid.” The MMPA does not limit how long section 104 permits or LOCs can be valid. Currently, there are regulatory limitations that prevent section 104 permits and LOCs from being valid longer than 5 years (§§ 216.35 and 216.45, respectively), with the provision for 1-year extensions (§§ 216.39 and 216.45, respectively). This rule removes the 5-year regulatory limitation on the duration of section 104 permits and LOCs. This will allow NMFS to issue section 104 permits and LOCs for longer than 5 years, as appropriate. Each permit will have an expiration date, tailored to the specific activities proposed by the applicant, which will be subject to public comment.

NMFS has been issuing marine mammal permits under section 104 for almost 50 years, and NMFS' implementing regulations have not been updated since 1996. Having issued MMPA permits since 1972, NMFS has a better understanding of marine mammal research and the effects of that research than when the 5-year restriction was promulgated in 1996. Based on decades of experience with the issuance of these permits and the activities conducted pursuant to them, NMFS believes a change is warranted to allow section 104 permits with durations greater than 5 years, in certain circumstances, as discussed below. As described in our comment responses below, NMFS routinely receives feedback from permit holders about the burden of the permit application process. Seventy-five percent of comments received in support of NMFS' proposed rule referenced the burden of the permit application process.

An important benefit of removing the 5-year restriction on permits is to make the MMPA permitting regulations consistent with those of the ESA. Many permits are issued under both the MMPA and ESA because the target species are marine mammals that are listed as threatened or endangered, and thus protected under both statutes. Unlike the current MMPA regulations, the ESA section 10 permit regulations do not limit the number of years an ESA section 10(a)(1)(A) scientific research and enhancement permit may be valid (50 CFR part 222). Consistency between the MMPA and ESA permitting regulations with respect to permit duration will allow NMFS to issue joint MMPA-ESA permits with terms of longer than 5 years, if warranted. Since 2017, NMFS has been issuing 10-year ESA permits for scientific research and enhancement on species such as sawfish, sea turtles, and sturgeon, when such duration is warranted. NMFS will now be able to issue longer duration permits, if warranted, involving marine mammals, improving consistency and efficiency.

This rule provides greater flexibility and efficiency to permit and LOC applicants and the agency. Removing the limit on section 104 permit durations decreases how often researchers need to apply for a permit, thus decreasing the amount of time and effort required in reapplying to continue their research. As shown below, decades of permit data show that researchers tend to apply for multiple permits throughout their career. Lengthening permit duration where appropriate promotes efficiency and lessens the burden on our permit holders, while still providing the protections for marine mammals mandated by the MMPA.

As noted above, most section 104 permits are permits for scientific research, which results in data that informs management and conservation of marine mammal species. Rigorous studies of these long-lived species often require years, even decades, of data collection. Sixty percent of the current scientific research permit holders have had a permit for 20 or more years, meaning four or more permit cycles. Seventeen permit holders have held a permit for more than 40 years. Many researchers have dedicated their careers to conducting longitudinal studies. For example, one research group has been studying the population dynamics of Weddell seals ( Leptonychotes weddellii ) since 1968, while another scientist has been studying dolphins in Florida for over 50 years. NMFS science centers have held MMPA research permits since the enactment of the MMPA and continue to hold 13 permits today. The MMPA requires NMFS to conduct research to assess marine mammal populations, which typically requires scientific research permits. NMFS is also required to compile abundance and distribution data on marine mammals and publish the findings as Stock Assessment Reports. These long-term research efforts, some of which are mandated by the MMPA, are examples of ongoing projects where a longer duration permit may be warranted.

Another example of a permit that may merit a longer time period is for permanently captive marine mammals maintained for the duration of their lives in academic facilities, zoos, and aquariums for research or enhancement purposes. Under this change in regulations, these permit holders might request a permit for longer than 5 years, and the agency may, in certain circumstances, depending on the specifics of the research or enhancement, issue a permit for a longer term. However, if an applicant proposes activities that are considered novel or are likely to be controversial, a shorter permit duration may be warranted.

The need for long-term research activities is expected to continue into the foreseeable future and permits or LOCs of longer than 5 years in duration may be appropriate in some instances. Regardless of the requested duration of research, all applications for permits or LOCs will include a proposed duration as well as a justification for this duration. All permits and LOCs issued will have definitive expiration dates.

Because NMFS has been issuing permits for decades, the effects of specific permitted activities on marine mammals, including particular research techniques, are well known and documented. Most research methodologies have become standardized over time. Permit holders tend to request and use the same techniques year after year because they are effective and create continuity across their long-term data sets. As a result, the impacts of their activities conducted under consecutive permits are often expected to be the same or similar. Historically, these section 104 permits have not raised significant public concern, as described below.

As required by statute, NMFS gives the public the opportunity to comment on all scientific research, enhancement, photography, and public display permit applications it processes, via notice in the Federal Register . Although NMFS receives infrequent input from the public, the agency takes all substantive public comments into consideration when making a decision on whether to grant a requested permit. All applications are evaluated to ensure the proposed activities are humane and that other required issuance criteria are met (see Implementation and Oversight section).

On May 2, 2024, NMFS published a proposed rule in the Federal Register and requested comments from the public (89 FR 35769). On May 3, 2024, NMFS received a request for a 60-day extension of the public comment period from the Animal Welfare Institute (AWI). On June 3, 2024, NMFS announced a 15-day extension of the public comment period (89 FR 47508). During the 45 days of public comment, NMFS received 23 comment submissions, including comments from the Marine Mammal Commission (MMC), state, academic, and non-profit researchers, non-governmental organizations, and private citizens. All comments can be found at: https://www.regulations.gov/document/NOAA-NMFS-2024-0054-0001.

Twenty of the comments received expressed support for NMFS' proposed action. Commenters stated that the proposed change is positive and will improve efficiency in the permitting process. The majority of commenters said that the changes will decrease the burden on researchers, who must take time away from their research to reapply for a permit every 5 years. Some commenters, including permit holders with long-term experience applying for permits, used words such as “cumbersome” when describing the permit application process. Multiple researchers stated that the permit application process interferes with their ability to conduct field research or to apply for the grants that fund their research. One researcher said that allowing longer duration permits will save their program many weeks or months of time.

Multiple letters included comments on the expertise of the NMFS staff who review and process section 104 permits and LOCs, including several mentions of a thorough and organized application review process. Commenters expressed confidence in NMFS' ability to make decisions about the appropriateness of a particular permit duration, saying that NMFS staff have the necessary experience and perspective to do so. Multiple comments stated that annual reports will continue to hold permit holders accountable and be a useful tool to track compliance and indicate if any changes are needed.

Three commenters discussed the potential benefits of the proposed rule changes for permanently captive marine mammals held under scientific research or enhancement permits. These commenters mentioned that the current 5-year permit limit is a “regulatory burden” that does not comport with the potential lifespan of marine mammals. The Alliance for Marine Mammal Parks and Aquariums (AMMPA) recommended that NMFS consider a permit duration that lasts for the life of permanently captive animals and pointed out that the facilities conducting captive research or enhancement activities on non-releasable marine mammals have agreed to cover potentially long-term, expensive medical care for the animals. The AMMPA and Association of Zoos and Aquariums supported NMFS' effort for increased consistency between MMPA and ESA permits, but the AMMPA cautioned against assigning arbitrary time limits to permit durations.

A comment submitted jointly from the Natural Science Collections Alliance and the Society for the Preservation of Natural History represents another type of permit holder, those curating scientific collections of marine mammal specimens. Their letter points out that, currently, natural history collections must re-apply every 5 years for a new permit to import, export, or receive parts even though, typically, there are no changes to research techniques, impacts to live animals, or activities that could negatively affect wild populations. The comment states that a longer permit duration could “support the longstanding role of collections as stable repositories and save scientific and administrative effort both for museum collections staff and for NOAA, without negatively impacting the important function that these permits serve in marine mammal protection.”

Four commenters stated they support changing the MMPA permit durations to be in alignment with the ESA permit durations. As noted above, marine mammals listed under the ESA may also require permitting under ESA section 10(a)(1)(A) for scientific research or enhancement activities. The ESA and its applicable regulations do not limit the duration of such permits.

The MMC comment letter expressed general support of NMFS' proposed action but provided several comments about the implementation of the rule, which are addressed below.

Three comment letters explicitly disagreed with NMFS' proposal to remove the duration limit on section 104 permits and LOCs. Two of these comments did not contain substantive information and expressed general opposition to NMFS' proposed rule. The third comment letter, from AWI, contained substantive comments; summaries of the MMC and AWI's comments and NMFS' responses are provided below.

Comment 1: The MMC recommended that NMFS develop and consistently apply objective criteria for determining whether a longer duration permit or LOC is “justified and appropriate” and clearly communicate those criteria to permit holders and applicants. The MMC commented that clear criteria specifying when permit holders are eligible for a longer duration permit will (1) ensure consistency in duration determinations, (2) allow researchers to know whether their experience and proposed methods meet the criteria for a longer duration, and (3) improve reviewers' ability to assess whether a longer duration is warranted.

Response 1: As stated in the preamble to the proposed rule, in addition to consideration of the permit issuance criteria at § 216.34, NMFS will also consider whether the applicant has previously held a permit, and if so, whether they have successfully achieved their objectives. If an applicant proposes activities that are considered novel or are likely to be controversial, a shorter permit duration may be warranted. Regardless of the requested duration, every application for a permit or LOC will be required to include justification for the requested duration. NMFS will update the permit and LOC application instructions to include this requirement. NMFS will take into consideration the requested duration of the permit when determining if the applicant has met the applicable statutory and regulatory issuance criteria and restrictions (see Implementation and Oversight section). NMFS will further consider all comments received on a proposed permit application, including the proposed duration, prior to making a decision about permit issuance (except LOCs, which do not require a public comment period).

Comment 2: The MMC recommended that before this rule is finalized, NMFS should prioritize finalizing its draft of standard methods for marine mammal research (in the context of scientific research permits). The MMC also requested that NMFS provide the MMC with a timeline for when the standard methods will be available for review.

Response 2: At this time, NMFS has prioritized finalizing this rule because a proposed rule has already been published. There is greater potential for permitting efficiencies from finalizing this rule than halting the rulemaking to pursue standard methods. The standard methods framework is in a preliminary drafting phase and is not yet ready for public review and comment. While NMFS will continue to develop standard methods, the standard methods initiative is not linked to the implementation of permit duration regulation changes. NMFS will keep the MMC, marine mammal researchers ( i.e., permit holders), and the public apprised of the status of the marine mammal standard methods.

Comment 3: The MMC emphasized that an accurate and complete application is essential for reviewers to determine whether the proposed duration is appropriate and justified. The MMC recommended that prior to publication of any application in the Federal Register , NMFS staff review each application in light of the applicable application instructions to ensure that all required information has been included, is consistent with NMFS's policies, and has been reviewed and deemed sufficient by relevant internal experts.

Response 3: NMFS reviews applications to ensure they meet the requirements of our application instructions, derived from the regulations for section 104 permit applications at 50 CFR 216.33 and the issuance criteria at § 216.34. NMFS' process follows a protocol whereby, prior to sending an application to the MMC, external reviewers, or the public, NMFS conducts a comprehensive review involving our relevant internal experts. This process will remain the same when reviewing applications for longer duration permits.

Comment 4: In anticipation of future changes to NMFS' acoustic thresholds for marine mammals, the MMC recommended that NMFS include a general condition in all permits or permit amendments involving active acoustics requiring permit holders to base their estimation of Level A and B harassment zones on NMFS's current thresholds at the time field work occurs rather than the thresholds in place when the permit was issued. More broadly, the MMC recommended that NMFS develop a plan to ensure that all future changes affecting research activities are communicated to longer duration permit holders and incorporated as permit conditions or through permit modifications. The MMC also recommended that NMFS should consider establishing new general conditions for all longer duration permits to address this issue and adopt outreach strategies to inform permit holders whenever relevant changes occur.

Response 4: As any changes to NMFS' acoustic thresholds have not been finalized, NMFS cannot speak to how any such changes to research permits would be implemented. Changes, such as new conditions, will be applicable to all section 104 permits authorizing active acoustics, regardless of their duration.

NMFS already has mechanisms in place, such as permit contact emails, our online application system, and web pages, to disseminate relevant information to permit holders. Through NMFS' experience issuing permits for greater than 5 years for non-mammal ESA species, NMFS has found that the mechanisms currently in place are sufficient to manage longer duration permits and communicate necessary changes or updates to permit holders. NMFS will continue these efforts and consider additional outreach strategies for longer permits if the need arises.

Comment 5: AWI disagreed with the assertion that NMFS' prior experience issuing section 104 permits and LOCs justifies allowing permit durations of greater than 5 years.

Response 5: Because NMFS has been issuing section 104 permits and LOCs for decades, the effects of specific permitted activities on marine mammals, including particular research techniques, are well known and documented in the record. This allows NMFS to meaningfully assess whether a permit application, regardless of the applicant's requested duration, meets the necessary issuance criteria under the MMPA, and whether the requested duration is appropriate for the activity proposed. This record is coupled with NMFS' experience in issuing approximately 45 permits for greater than 5 years for non-mammal ESA-listed species since 2017. This history of ESA permit issuance for durations greater than 5 years demonstrates NMFS' ability to manage issuance and oversight of longer term permits. NMFS' review of incident and annual reports and use of adaptive management, for example through permit amendments, has ensured appropriate mitigation is incorporated into permits as warranted (see Agency Oversight section below).

Comment 6: AWI does not view reapplying for permits every 5 years, even for established research projects, to be overly burdensome for permit holders or the agency.

Response 6: As stated in the preamble to the proposed rule, the Paperwork Reduction Act (PRA) estimated number of burden hours to complete a scientific research permit application is 50 hours, with an estimated average hourly rate of $32.58. Thus, an applicant for a scientific research permit will spend approximately $3,258 and 100 hours to apply for two consecutive 5-year research permits. By removing the duration limit for section 104 permits, the number of burden hours and costs to apply for a scientific research permit could be reduced, for example, to approximately $1,629 and 50 hours for a 10-year permit, if a permit of such duration were to be deemed appropriate. Additionally, 15 comments received on the proposed rule, including from permit holders experienced with the application process, referenced the significant burden of applying for section 104 permits and LOCs. This is further reinforced by feedback received by NMFS during the course of permit processing as well as through the PRA process.

The applications submitted by recurrent researchers every 5 years also creates a burden for the agency. Processing a section 104 permit takes approximately 6 months. NMFS processed an average of 40 section 104 permits and LOCs annually over the last 5 years. As NMFS has found with the issuance of longer duration ESA section 10(a)(1)(A) permits, processing fewer permits annually allows additional focus on conservation and recovery, including compiling and summarizing information from permit annual reports for use by ESA section 7 biologists, ESA recovery coordinators, and managers.

Comment 7: AWI commented that the 5-year duration limit was established with a precautionary principle in mind, and with a primary goal of protecting marine mammal populations, which can decline precipitously without scientific detection.

Response 7: The 1993 proposed rule stated that periodic review is needed and that there should not be indefinite permits for captive marine mammals. As AWI stated later in their letter, the goal of the MMPA is to protect marine mammals such that they can be maintained at optimum sustainable population (OSP). To determine if a population is at OSP and detect potentially precipitous declines, NMFS must periodically assess the status of the population, which is typically achieved through long-term population monitoring under research permits or LOCs. Permits with durations of longer than 5 years may facilitate this long-term population monitoring research and inform management decisions to achieve healthy marine mammal populations.

The issuance of permits for longer than 5 years does not negate the ability to take a precautionary approach to permitting scientific research. Because NMFS has been issuing section 104 permits and LOCs for decades, the effects of specific permitted activities on marine mammals, including particular research techniques, are well known and documented in the record. The effects of permitted marine mammal research are continually monitored by NMFS through management mechanisms built into the permit process, such as submission of annual reports and incident reports, which are available to the public through the Freedom of Information Act (FOIA). If, for example, there were sudden declines in marine mammal populations, NMFS retains the ability to modify permits to add conditions or otherwise amend a permit, as well as suspend or revoke permits. These actions can be taken at any time during a permit's duration.

Comment 8: AWI commented that a 5-year permit duration allows timely oversight of permit applicants who may be acting in bad faith, who violate permit conditions, or who provide misinformation on permit applications. AWI believes that all permit holders should be monitored closely and be required to reapply for permits on a reasonable schedule, where permit holders must clarify discrepancies between permit conditions and actual outcomes. AWI also commented that annual reports, which are not published in the Federal Register and require public initiative to review, are insufficient to ensure adequate transparency. If NMFS proceeds with the proposed rule, AWI commented that it will likely become more difficult for NMFS to meaningfully assess whether applicants are applying in good faith and ensure that the criteria continue to be satisfied throughout the duration of the permit.

Response 8: NMFS will make its determination on permit issuance based on whether an application includes all of the required information and meets NMFS' issuance criteria for conducting activities over the proposed duration of the permit. If a permit applicant requests a permit duration longer than 5 years, NMFS will determine if the applicant has demonstrated they meet all of the issuance requirements for that proposed duration. Once a permit is issued, permit noncompliance constitutes a violation and is grounds for permit modification, suspension, or revocation, and for enforcement action. All instances of permit noncompliance are required to be reported to our office, which allows NMFS' to continually track permit compliance. NMFS reviews annual and incident reports to ensure compliance with the permit as issued. Additionally, reports from cooperating Federal partners may be used to evaluate permit compliance. For example, in the case of permitted captive research and enhancement, NMFS requires facilities to be compliant with the Animal Welfare Act and its regulations. Thus, the U.S. Department of Agriculture's Animal and Plant Health Inspection Service's reports may be evaluated to assess permit compliance.

The frequency of reporting ( e.g., annually) and the types of reports required will not change regardless of permit duration. AWI did not provide evidence to support the statement that annual reports are insufficient to ensure transparency; however, as stated above in Response 5, since 2017, NMFS has issued approximately 45 permits with durations greater than 5 years for non-mammal ESA-listed species. This demonstrates NMFS' ability to manage issuance of longer-term permits. NMFS' review of incident and annual reports and use of adaptive management, for example through permit amendments, has ensured appropriate mitigation is incorporated into permits as warranted (see Agency Oversight section below). These reports also allow NMFS to assess if permit holders are making results available to the scientific community in a timely manner, increasing transparency in research and enhancement activities.

Comment 9: AWI is concerned about the agency potentially setting negative regulatory precedent, as NMFS stated in its 1993 proposed rule “an indefinite valid period for a permit authorizing the captive holding of marine mammals is unacceptable for a number of reasons” including the need for public review and comment. The 1993 proposed rule further detailed that periodic review of permits is necessary to ensure permit compliance and address any changing circumstances associated with the captive holding of marine mammals. AWI claimed that it is arbitrary and capricious for the agency to reverse course on its longstanding policy.

Response 9: NMFS is not proposing indefinite periods for permits. As NMFS stated in the 2024 proposed rule, “each permit would have an expiration date, tailored to the specific activities proposed by the applicant, which would be subject to public comment. . . Regardless of the requested duration of research, every application for a permit or authorization would include justification for the requested duration and all permits and authorizations issued would have expiration dates.” MMPA section 104 (a)(2)(C) requires that permits specify “the period during which the permit is valid,” and 50 CFR 216.33(d) requires that an application provides “the requested period of the permit,” which will include a specified expiration date.

NMFS considers the process of evaluating permit compliance to be continuous, beginning with assessing the standing of an applicant when a permit application is submitted and continuing through processing of annual reports and incident reports when submitted. Since the 1993 proposed rule, NMFS has taken a more systematic approach to reporting, ensuring all applicants are required to provide answers to certain key questions. Permit holders can now submit annual reports online, making the process easier for them and also making it easier for NMFS to track timeliness of required reports. NMFS monitors active permits via reports to make sure permit holders are in compliance with permit terms and conditions and that the effects of the permitted activities are consistent with those described in NMFS' analysis conducted for permit issuance. In addition to annual reports, permit holders are required to contact NMFS and submit incident reports within 2 weeks if serious injury or mortality of protected species occurs (if not authorized) or reaches that specified in the permit; or, if authorized take is exceeded in any of the following ways: more animals are taken than allowed in the permit; animals are taken in a manner not authorized by this permit; or protected species other than those authorized by a permit are taken. In such cases, permit holders must stop permitted activities and request permission from NMFS to resume. Both annual reports and incident reports are available to the public through FOIA.

As to AWI's concerns about periodic public review, the public will continue to have an opportunity to comment on section 104 permit applications when a Notice of Receipt is published in the Federal Register . The public is notified of permit issuance via the Federal Register as well. Once a permit is issued, the reports submitted by permit holders are available to the public through FOIA. In addition to public review and comments when an application is in progress, the following will still constitute a major amendment according to 50 CFR 216.39(a)(1) and will be subject to the public comment process: any changes to (1) number and species of marine mammals; (2) the manner of taking, import, or export if it may result in an increased level of take or risk of adverse impact; (3) the location; and (4) the duration, if extending a permit for more than 12 months.

Comment 10: AWI commented that captures from the wild or import for public display are not always conducted immediately after the permit is issued, in some cases not for years after a permit has been issued. AWI commented that a duration of 5 years is most appropriate, as conditions in the wild and at a captive facility may change in that time period. AWI believes a new permit application and review are the most precautionary way to account for any such changes.

Response 10: NMFS has not issued a permit for the direct capture of marine mammals from the wild for public display since 1988. Across 15 import permits for public display since 2010, the average time to import was 2.7 years. Some permit holders cannot conduct their requested activity in any given year for various reasons ( e.g., pandemic, logistics, funding). Authorized activities can only be conducted during the term of validity of a permit, which means the necessary analyses are conducted to meet the required issuance criteria for the requested time period. If, during the term of permit validity, circumstances change such that NMFS decides that action is warranted ( e.g., if there is a sharp decline in the abundance of a population of wild marine mammals, or if a facility is no longer in compliance with the Animal Welfare Act), NMFS retains the ability to modify permits to add conditions or otherwise amend a permit, as well as suspend or revoke permits. Further, as described above in Response 9, the following will still constitute a major amendment according to 50 CFR 216.39(a)(1) and will be subject to the public comment process: any changes to (1) number and species of marine mammals; (2) the manner of taking, import, or export if it may result in an increased level of take or risk of adverse impact; (3) the location; and (4) the duration, if extending a permit for more than 12 months. As NMFS stated in our proposed rule (89 FR 35769, May 2, 2024), “each permit would have an expiration date, tailored to the specific activities proposed by the applicant, which would be subject to public comment.” NMFS would consider public comments on the proposed duration prior to issuing any permit, including permits for public display.

Comment 11: AWI questioned why NMFS is proposing to change the duration of all section 104 permits and LOCs when 93 percent of NMFS' current permits are scientific research permits. The other types of permits tend to be for singular or discrete activities, and a 5 year-duration limitation is more appropriate.

Response 11: Removing the 5-year limitation on permit durations does not mean that all permits will be issued for more than 5 years. Regardless of the requested duration, every application for a permit or LOC will be required to include justification for the requested duration. NMFS will update the permit and LOC application instructions to include this requirement. NMFS will take into consideration the requested duration of the permit when determining if the applicant has met the applicable statutory and regulatory issuance criteria and restrictions (see Implementation and Oversight section). NMFS will further consider all comments received on a proposed permit application, including the proposed duration, prior to a decision about permit issuance (except the LOCs, which do not require a public comment period).

Comment 12: AWI commented that the proposed rule leaves too much to the discretion of the agency, stating that the duration of a permit should not be left to the discretion of individuals who may not know the history of a permit applicant.

Response 12: Over the years, NMFS has created numerous internal resources to make the processing of permits and LOCs as objective as possible, as well as maintained the Federal records, which allow all analysts to access relevant past permit information. All issued permits are required to have a clear expiration date. Regardless of the requested duration, every application for a permit or LOC will be required to include justification for the requested duration. NMFS will update the permit and LOC application instructions to include this requirement. NMFS will consider all comments received on a proposed permit application including the proposed duration, prior to a decision about permit issuance (except LOCs, which do not require a public comment period). The duration will be proposed by the applicant, reviewed by NMFS, and provided to the public and expert reviewers for their review; it is not at the discretion of individual analysts but rather the product of a series of rigorous reviews and analyses to determine if the applicant has demonstrated they meet the applicable statutory and regulatory issuance criteria and restrictions for the duration proposed. NMFS' Response 1 above provides additional detail about the criteria that may be considered when evaluating an application's requested duration in addition to the applicant's justification. Additionally, analysts review the annual and incident reports of the most recent prior permit held by an applicant. Collectively, this information provides a history of the applicant for analysts, regardless of their tenure within the agency. The annual and incident reports are also available to the public through FOIA, which provides additional opportunity for public review of permitted and reported activities.

Comment 13: AWI stated that with a 5-year permit duration, the disposition of captive animals can be reassessed in a transparent manner within a time frame relevant to the lifespan of the species. AWI further stated that extending a permit ad infinitum could be used as a “cover” for public display of animals imported for research and/or improper post-research disposition of animals, and that a 5-year permit duration allows the issue to be periodically reviewed by the public and the scientific community.

Response 13: As stated in Response 1 above, if an applicant proposes activities that are considered novel or are likely to be controversial, which captive marine mammal permits can be, a shorter permit duration may be warranted. As stated in Response 9, NMFS is not proposing indefinite periods for any permits. As NMFS stated in the proposed rule, “each permit would have an expiration date, tailored to the specific activities proposed by the applicant, which would be subject to public comment . . . Regardless of the requested duration of the proposed activity, every application for a permit or authorization would include justification for the requested duration and all permits and authorizations issued would have expiration dates.” MMPA section 104(a)(2)(C) requires that permits specify “the period during which the permit is valid,” and 50 CFR 216.33(d) requires that an application provides “the requested period of the permit,” which will include a specified expiration date. Further, as stated in Response 11, NMFS will take into consideration the requested duration of the permit when determining if the applicant has met the applicable statutory and regulatory issuance criteria and restrictions (see Implementation and Oversight section). NMFS will further consider all comments received on a proposed permit application, including the proposed duration, prior to a decision about permit issuance.

Comment 14: AWI commented that NMFS should periodically examine whether scientific research conducted under a research permit remains bona fide. NMFS shouldn't assume that all longitudinal studies are bona fide. Long-term research projects have the potential to become duplicative or to produce results that are no longer likely to be accepted for publication in a refereed scientific journal.

Response 14: NMFS does not assume longitudinal studies are bona fide. Bona fide scientific research is defined at 50 CFR 216.3 as research on marine mammals by qualified personnel, the results of which are likely to be accepted for publication in a scientific journal, are likely to contribute to basic knowledge of marine mammal biology or ecology, or are likely to identify, evaluate, or resolve conservation problems. Bona fide determinations are supported by a number of factors, including but not limited to: (1) a permit applicant's previously published research and history as a permitted researcher; (2) whether the proposed research is appropriately designed to meet the objectives; (3) whether the results of the proposed research are likely to qualify for publication; and (4) whether the proposed research will contribute to our knowledge of the species, or address conservation problems over a given time period. Evaluation of annual reports informs NMFS if the research conducted under the permit remains bona fide. Annual reports allow NMFS to assess if permit holders are making results available to the scientific community in a timely manner, such as journal publications and presentations. NMFS' application instructions ask researchers to describe how their study is different from, builds upon, or duplicates past research. Duplicative research may be warranted, for example, when validating previous study results. Applicants are required to describe how they coordinate with other researchers to effectively manage research efforts and any potential impacts to the marine mammals in the area.

Comment 15: AWI provided a hypothetical scenario in which a zoo bred a non-releasable animal that was precluded from breeding, resulting in a permit violation. AWI commented that requiring the permit holder to reapply for a new permit after 5 years will ensure the permit holder offers a justification—which will be assessed by the agency and outside reviewers, including outside scientists and members of the public—for the violation.

Response 15: Permit holders are required to report all instances of permit noncompliance, as part of NMFS' continual evaluation of permit compliance. Permit holders are required to contact NMFS and submit incident reports within 2 weeks if serious injury or mortality of protected species occurs (if not authorized) or reaches that specified in the permit; or, if authorized take is exceeded in any of the following ways: more animals are taken than allowed in the permit; animals are taken in a manner not authorized by this permit; or protected species other than those authorized by a permit are taken. In such cases, permit holders must stop permitted activities, describe the incident and any future mitigation measures to prevent the incident from happening again, and request permission from NMFS to resume. NMFS can take action including modifying, suspending, or revoking the permit. In addition, the annual report requires permit holders to discuss any incidents, problems, or unexpected effects of their activities.

Comment 16: AWI commented that most photography permits are issued for singular or discrete actions so no need seems to exist for altering the current regulations to allow permits greater than 5 years in duration. AWI commented that if a permit holder for photography is unable to complete a permitted action before the 5-year permit duration expires, it is appropriate for the permit holder to reapply for a permit, as circumstances outlined in the original permit application may have changed.

Response 16: Most photography permits are for periods of less than 5 years, but there are instances where a project of greater than 5 years could be requested and justified. Whether a permit is ultimately issued for longer than 5 years will depend on the permit application, including the requested duration, and whether the applicant is able to meet the required issuance criteria for the proposed action. Removing the 5-year restriction does not prohibit NMFS from issuing permits for less than 5 years.

Comment 17: AWI commented that if the process for applying for an LOC is already streamlined, it does not seem justifiable to remove the 5-year duration limitation as well.

Response 17: The statute does not prohibit NMFS from implementing additional streamlining measures, provided the relevant issuance criteria are met. See also Response 16 above.

Comment 18: AWI commented that they see no reason for consistency between the MMPA and ESA with regard to permit duration as they are different statutes with different standards and different goals. They commented that the MMPA seeks to maintain species at an ecologically relevant level, while the ESA seeks to recover species that have already declined to a dangerously low level. AWI commented that the existing regulations as described in NMFS's final rule on 50 CFR parts 216 (MMPA) and 222 (ESA) (61 FR 21926, May 10, 1996) are already consistent for marine mammals. Given the different purposes of the MMPA and the ESA, AWI does not believe further consistency is needed.

Response 18: NMFS issues permits jointly under both statutes in the cases of marine mammals that are listed as endangered or threatened. Both statutes provide for the issuance of permits for the purposes of scientific research and enhancement; neither the ESA nor the agency's implementing regulations limit the duration of those permits, even though they focus exclusively on species that are endangered or threatened and thus require heightened protection. Since 2017, NMFS has issued permits for scientific research of non-marine mammal ESA-listed species ( e.g., sea turtles, sturgeon) for durations greater than 5 years.

Comment 19: AWI commented that both the individual and cumulative effects of climate change—and the difficulty researchers face in monitoring marine mammals, which Congress explicitly recognized in the MMPA—mean that takes such as those authorized by section 104 should be reconsidered regularly enough for NMFS to recognize and respond to problematic trends in marine mammal populations.

Response 19: NMFS acknowledges that climate change may have unanticipated effects on marine mammals and that long-term research is required to assess the effects to marine mammal populations (Gulland et al., 2022; Orgeret et al., 2021; Sanderson & Alexander, 2020). The ability to issue permits for longer than 5 years does not negate NMFS' ability to monitor the effects of the permitted activity and take action as warranted. As stated in Response 7, the effects of permitted marine mammal research are continually monitored by NMFS through management mechanisms built into the permit process, such as submission of annual reports and incident reports, which are available to the public through FOIA.

If, for example, there are climate-driven changes to marine mammal populations that cause concern, NMFS retains the ability to modify permits to add conditions or otherwise amend a permit, as well as suspend or revoke permits. These actions can be taken at any time during a permit's duration.

Comment 20: AWI commented that if the agency does away with mandatory time limits for section 104 permits, those seeking to exploit marine mammals in other ways may push for adjustments to duration requirements for other types of permits. AWI also commented that even for purposes of national defense, a 7-year consecutive time limit cannot be exceeded when it comes to the permitted take of marine mammals, as outlined in MMPA section 101(a)(5).

Response 20: As noted above, NMFS is not “doing away” with time limits on permits. Every permit will have an expiration date. Furthermore, section 104 is a distinct section of the MMPA with its own requirements, which do not include a specific maximum duration. As noted above, section 104(a)(2)(C) requires only that permits specify “the period during which the permit is valid;” the statute does not specify a limit to permit duration for permits and LOCs issued under section 104.

Incidental take authorizations under MMPA section 101(a)(5) (16 U.S.C. 1371(a)(5)), as cited by AWI, are distinct from section 104 permits, and contain a duration limit explicitly imposed by the statute. In fact, the plain language of the MMPA demonstrates that where Congress intended there to be a defined period, it explicitly provided one ( e.g., MMPA sections 101(a)(5)(A) and (D)). These types of authorizations are not a part of this rulemaking. The 5-year limitation on section 104 permits, by contrast, was established by NMFS 30 years ago via a rulemaking process. For the reasons provided in this final rule, the blanket 5-year limit is no longer an effective or efficient method of managing section 104 permits and LOCs.

Once this rule becomes effective, NMFS will begin accepting new applications for permits and LOCs that may propose durations of longer than 5 years. Requiring new permit applications, rather than amendment requests, will allow the public to review the entirety of the proposed activity. This will also allow the agency to manage its workload and continue processing new permit applications as anticipated based on current permit expirations.

Applications for section 104 permits and LOCs will be evaluated and processed in the same manner as they are now in accordance with 50 CFR part 216. Applicants will still have to follow the Office of Management and Budget (OMB)-approved permit and LOC application instructions and include their proposed start and end dates, as well as a description of the frequency and seasonality of their proposed activities in their application. Currently, applicants for section 104 permits and LOCs can request a time period of 5 years or less. Under the changed regulations, applicants may request a permit duration longer than 5 years, which may be more appropriately aligned with a project's goals rather than an arbitrary 5-year duration. Regardless of the requested duration, every application for a permit or LOC will be required to include justification for the requested duration. NMFS will update the permit and LOC application instructions to include this requirement.

This regulatory change will not remove the public's opportunity to comment on permit applications and any major permit amendments. NMFS will continue to publish notices in the Federal Register for a 30-day public comment period when complete permit applications and requests for major amendments are received consistent with statutory and regulatory requirements (16 U.S.C. 1374(d) and 50 CFR 216.33(d), respectively). These notices provide the public an opportunity to comment on the proposed permit duration for each application. NMFS will also continue to solicit comments from the MMC consistent with § 216.33(d)(2), and other relevant Federal and State agencies in accordance with § 216.33(d)(3), typically concurrent with the public comment period. NMFS will continue to consider all public and expert comments on a proposed permit application, including the proposed duration, prior to permit issuance. LOCs do not currently require a public comment period and that will not change.

When this final rule becomes effective, NMFS will begin implementing the duration changes upon the receipt of new permit and LOC applications. Applicants must provide a justification for the proposed duration when they apply for a new permit or LOC. This process will ensure that the public is able to review and comment on permit applications with durations longer than 5 years. Currently active permits with durations of 5 years or less will not automatically be changed to longer durations; we will not be amending those permits to extend their duration other than issuance of minor amendments for extensions of 12 months or less if justified ( e.g., to allow activities to continue uninterrupted prior to obtaining a new permit). As stated above, we will consider permit durations of more than 5 years in new permit applications. See Amendments to Extend the Permit or LOC Duration below for additional information.

Issuing a longer term permit will require that the duration as proposed in a permit or LOC application is justified and appropriate for the applicant's project and objectives, is supported by the applicant's history with previous MMPA permits, has undergone public comment (except for LOCs, which do not require public comment), and meets all statutory and regulatory issuance criteria. All permits and LOCs issued will have expiration dates printed on the permit documentation. Despite removing the 5-year regulatory maximum duration, NMFS expects that there will continue to be projects for which a permit for a term of 5 years or less will be appropriate. For example, permits such as those for commercial or educational photography are issued for discrete projects that take place at specific times, rarely requiring more than a year or two. Similarly, permits for importation of marine mammals for public display are issued for a singular or discrete action, which typically warrant a permit of short duration. Thus, the duration of the permit will be determined based on the specific project proposed and the justified duration of that project.

To obtain a section 104 permit for scientific research or enhancement, applicants must meet certain statutory and regulatory issuance criteria. This includes, among other things, the regulatory issuance criteria at § 216.34, which require applicants to demonstrate, for the time period proposed, that the activity is:

• Humane and with no unnecessary risks;

• Consistent with regulatory restrictions;

• Consistent with the purposes and policies of the ESA (if threatened or endangered species are involved);

• Not likely to have a significant adverse impact on the species or stock;

• Conducted by personnel with expertise and adequate facilities and resources;

• Conducted by personnel with adequate resources for marine mammals held captive or transported; and

• That any requested import or export will not likely result in additional taking.

Additional criteria apply for depleted, threatened, and endangered marine mammals. These criteria will still apply regardless of permit duration.

In addition to the regulatory criteria above, NMFS will also consider whether the applicant has previously held a permit or LOC, and if so, whether they have successfully carried out the permitted objectives. For example, for research permits, this may include whether the permit holder obtained funding, collected data, and made the results available to the scientific community in a reasonable period. As explained above (see Need for the Action ), most permits issued under section 104 have not raised substantial public concern, and the impacts of most activities conducted under section 104 permits are well known. If an applicant proposes activities that are considered novel or are likely to be controversial, a shorter permit duration may be warranted.

Under the regulation change, permit and LOC holders will still be subject to agency oversight. For example, permit and LOC holders must submit annual reports as required by the regulations at §§ 216.38 and 216.45(d)(2), respectively. This requirement is universal, regardless of how long their permit or LOC is valid. Further, permit holders are required to stop permitted activities and submit incident reports for incidents such as mortalities, exceeding authorized take, and taking protected species that were not authorized. LOC and photography permit holders must temporarily stop authorized research if they exceed Level B harassment. Annual and incident reports allow NMFS to monitor permit and LOC compliance and impacts to protected species and are available to the public. NMFS maintains its authority for permit or LOC modification, suspension, or revocation. For example, NMFS may determine a permit modification is warranted to add permit conditions in response to information provided in annual or incident reports.

The agency will continue to publish in the Federal Register notices of receipt of requests for major amendments to increase the number of animals, add species, add methods that will increase adverse impacts, and change locations, for a 30-day public comment period, and notices of issuance of all major amendments and minor amendments extending a permit or LOC up to 1 year.

For any amendment to a permit or LOC, the agency will also reexamine the National Environmental Policy Act analysis based on information provided in the amendment request, taking into consideration information in annual and incident reports and in published literature. Likewise, if ESA-listed species are involved and the action is covered under an ESA section 7 consultation and, for example, a new species is listed or critical habitat is designated, NMFS will review the new information to determine if consultation needs to be reinitiated in accordance with 50 CFR 402.16. If these analyses produce new information that warrants a change to a permit or permits, NMFS retains the ability to amend permits to add conditions, such as mitigation measures to minimize impacts to protected species, as described in § 216.36(b).

As mentioned above (see Opportunity for Public Comment ) and consistent with current practice, permit and LOC holders may request a minor amendment to extend the duration of their permit up to 1 year, if justified. The regulations at 50 CFR 216.39 state that a major amendment may include an extension of a permit beyond 12 months; however, NMFS typically issues extensions for 12 months or less.

Pursuant to the procedures established to implement E.O. 12866, the Office of Management and Budget has determined that this rule is not significant.

Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA), the Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this rule will not have a significant economic impact on a substantial number of small entities. Permit and LOC applicants including individuals, academic institutions, business or other for-profit organizations, not-for-profit institutions, and government organizations are the only entities that are subject to the requirements in these regulations. The number of small governmental jurisdictions, small organizations, or small businesses affected is approximately less than 150 entities total, and less than 35 applicants annually (some of which submit multiple applications). The change in duration of permits will not affect the cost to these small entities, as it will require the same amount of time and resources to apply for a 5-year permit as it will to apply for a permit of a longer duration. Overall, this rule may reduce the costs to these entities by potentially spending less time applying for permits. For example, the estimated number of burden hours to complete a scientific research permit application is 50 hours, with an estimated average hourly rate of $32.58. Thus, an applicant for a scientific research permit will spend approximately $3,258 and 100 hours to apply for two consecutive 5-year research permits. By removing the duration limit for section 104 permits, the number of burden hours and costs to apply for a scientific research permit could potentially be reduced to approximately $1,629 and 50 hours for a 10-year permit, if issued. An applicant for an LOC will spend approximately 10 hours and $325.80 to complete a 5-year LOC application, which if issued for a longer period, will reduce that cost. Because of this, a regulatory flexibility analysis is not required, and none has been prepared.

A person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with an information collection subject to the requirements of the Paperwork Reduction Act (PRA) of 1995 unless the information collection has a currently valid OMB Control Number. This rule contains collection-of-information requirements subject to the provisions of the PRA. 1 No changes to the reporting requirements or to the information collection instrument is required as a result of this regulatory change, other than removing the 5-year duration restriction and requesting justification for an applicant's proposed permit duration.

For reasons set forth in the preamble, NMFS amends 50 CFR part 216 as follows:

Regulations governing the Atlantic bluefish fishery are found in 50 CFR 648.160 through 648.167. These regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through Florida. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.162, and the final 2024 allocations were published on January 2, 2024 (89 FR 34).

The final rule implementing amendment 1 to the FMP, as published in the Federal Register on July 26, 2000 (65 FR 45844), provided a mechanism for transferring bluefish commercial quota from one state to another. Two or more states, under mutual agreement and with the concurrence of the NMFS Greater Atlantic Regional Administrator, can request approval to transfer or combine bluefish commercial quota under § 648.162(e). The Regional Administrator is required to consider three criteria in the evaluation of requests for quota transfers or combinations: (1) the transfers would not preclude the overall annual quota from being fully harvested; (2) the transfers address an unforeseen variation or contingency in the fishery; and (3) the transfers are consistent with the objectives of the FMP and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The Regional Administrator has determined these criteria have been met for the transfers approved in this notification.

New Jersey is transferring 40,000 pounds (lb) (18,144 kilograms (kg)) to North Carolina through mutual agreement of the states. This transfer was requested to ensure North Carolina would not exceed its 2024 state quota. The revised bluefish quotas for 2024 are: New Jersey, 108,898 lb (49,395 kg) and North Carolina, 1,170,996 lb (531,155 kg).

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 648.162(e)(1)(i) through (iii), which was issued pursuant to section 304(b), and is exempted from review under Executive Order 12866.