Under 5 U.S.C. 3301 and 7301, Congress authorizes the President to prescribe regulations to govern the admission into the civil service in the executive branch. The regulations must “best promote the efficiency” of the executive branch civil service, “ascertain the fitness of applicants with respect to character, and prescribe rules for the conduct of executive branch employees. In addition to the President's authority to prescribe standards for suitability and fitness for civil service appointments based on character and conduct, 5 U.S.C. 3301 recognizes the President's authority to prescribe qualification standards based on applicants' education and experience and to assess their relative knowledge, skill, and ability.

OPM, as delegated by the President, has the authority to prescribe qualification standards and to conduct examinations of applicants' qualifications. OPM also has the authority to prescribe suitability standards and to conduct investigations of suitability for appointment and continuing employment. ( See 5 U.S.C. 1104(a)(1).) Amendments to the Civil Service Rules made by Executive Order (E.O.) 13764 of January 17, 2017, Amending the Civil Service Rules, Executive Order 13488, and Executive Order 13467 to Modernize the Executive Branch-Wide Governance Structure and Processes for Security Clearances, Suitability and Fitness for Employment, and Credentialing and Related Matters, directed OPM to establish minimum standards of fitness based on character and conduct for appointment to positions in the excepted service of the executive branch. (82 FR 8115.) E.O. 13764 required the OPM Director to establish mutually consistent standards and procedures to determine the reliability, trustworthiness, and good character and conduct of those working for the Government in the executive branch regardless of appointment type. Additionally, E.O. 13764 expanded OPM's responsibilities by making OPM responsible for establishing investigative standards, risk designation procedures, and reciprocity rules for positions in the excepted service beyond those that could be noncompetitively converted to the competitive service.

As amended by E.O. 13764, E.O. 13488 of January 16, 2009, Granting Reciprocity on Excepted Service and Federal Contractor Employee Fitness and Reinvestigating Individuals in Positions of Public Trust, establishes that contractor employee fitness or nonappropriated fund employee fitness is subject to the same position designation requirements and investigative standards, policies, and procedures as fitness determinations for civil service employees as prescribed by OPM under the Civil Service Rules. (74 FR 41111.) As amended by E.O. 13764, E.O. 13467 of June 30, 2008, Reforming Processes Related to Suitability for Government Employment, Fitness for Contractor Employees, and Eligibility for Classified National Security Information, establishes a requirement for continuous vetting for persons who perform, or who seek to perform, work for the executive branch in competitive service, excepted service, career Senior Executive Service, contractor employee, and nonappropriated fund positions that are included in covered positions as defined in the E.O. 73 FR 38103. Furthermore, E.O. 13467 (section 2.1(c)), as amended by E.O. 13764, requires that, to the extent practicable, the investigative and adjudicative standards for fitness be consistent with the suitability standards.

In May 2018, the OPM Director and the Director of National Intelligence, in their respective roles as Suitability and Credentialing Executive Agent and Security Executive Agent, launched an effort consistent with this direction, “ Trusted Workforce 2.0 ” ( see https://www.performance.gov/trusted-workforce/ ), to transform workforce vetting by employing a modernized and more efficient process for ensuring that only trusted individuals enter and remain in the Federal workforce. Key goals of the initiative are to capitalize on information technology capabilities that allow for the integration of automation and take advantage of a wider spectrum of data, reduce time-intensive manual processing, and promote greater mobility of the workforce by providing vetting processes that enable each individual's vetting status to be continuously up to date. This final rule helps advance the goals of the Trusted Workforce 2.0 initiative.

OPM is issuing revised suitability criteria at 5 CFR 731.202. The basis for the specific revisions to several of the existing suitability factors is explained in the section discussing § 731.202. Additionally, OPM is revising § 731.202 so that these criteria will be used for making both suitability and fitness determinations except as otherwise noted in the regulation. Establishing the criteria as the minimum standards of fitness for much of the excepted service is done per the amended Civil Service Rule II (5 CFR 2.1(a)(iii) and (iv), making OPM responsible for setting standards of suitability for most Federal appointments and for setting minimum standards of fitness for positions in the excepted service, with certain exceptions.) Additionally, the aligned factors are consistent with E.O. 13467, as amended by E.O. 13764, which requires standards for suitability for appointment in the competitive service and standards for fitness for appointment in the excepted service be aligned “to the extent possible.” OPM is also revising 5 CFR 731.104 to specify the circumstances under which either a suitability or fitness determination is required. These changes are described in detail in the sections discussing §§ 731.104 and 731.202.

This final rule also implements several changes to improve consistency in the vetting process and to enhance mobility of the civil service, contractor employee, and nonappropriated fund workforces. Specifically, the rule aligns the requirements for position designation, investigations, and reciprocal acceptance of investigations and suitability or fitness determinations amongst these populations. Agencies will use the same system for designating position risk ( i.e., low, moderate, and high) for civil service, contractor employee and nonappropriated fund positions to determine the commensurate level of background investigation. Background investigations conducted for these positions will be done using the same investigative standards, which prescribe the investigative checks to be conducted at low, moderate, and high tiers that correlate to position risk. Finally, agencies will apply the same rules for determining whether reciprocal acceptance of prior background investigations and suitability or fitness determinations are required, promoting efficient transfer of trust determinations.

Civil Service Rule V (5 CFR 5.2(a)), as amended by E.O. 13764, section 1, establishes that, for positions in the excepted service for which the OPM Director has standard-setting responsibility under 5 CFR part 2, the Director may require agencies to designate positions based on risk in accordance with OPM guidance to determine the appropriate level of investigation, and may prescribe investigative standards, policies, and procedures, and reciprocity standards for investigations and adjudications of suitability and fitness, except to the extent statute vests authority to apply additional fitness standards in an agency. Civil Service Rule VI (5 CFR 6.3(b)), as amended by E.O. 13764, section 1, likewise provides that appointments and position changes in the excepted service are “subject to the suitability and fitness requirements of the applicable Civil Service Rules and Regulations” as prescribed by the Director.

Policies and procedures for suitability and fitness are required to be “aligned using consistent standards to the extent possible” and to “provide for reciprocal recognition.” (E.O. 13467, as amended, section 1.1.) Further, agencies are required to accept background investigations and adjudications conducted by other agencies except when an agency determines the prior investigation or adjudication does not meet its standards. (E.O. 13467, as amended, section 2.2.) The Director of OPM, as the Suitability and Credentialing Executive Agent, is responsible for establishing these requirements through regulations, guidance, and standards. (E.O. 13467, as amended, section 2.5.)

E.O. 13488, as amended by E.O. 13764, establishes that the same position designation requirements and investigative standards, policies, and procedures used for fitness determinations for civil service employees apply to contractor employee fitness and nonappropriated fund employee fitness. (E.O. 13488, as amended, section 3(b).) Likewise, section 3(c) of E.O. 13488, as amended, provides that fitness determinations for contractor employees and nonappropriated fund employees and their underlying investigations are subject to the same reciprocity requirements as those prescribed by OPM under the Civil Service Rules for employment in the civil service. Therefore, contractor employees, except those for which OPM is statutorily precluded from prescribing standards, and nonappropriated fund populations are subject to the same position designation, investigative, and reciprocity requirements as positions in the competitive service, the excepted service (including positions where the incumbent can noncompetitively convert to the competitive service), and for career appointments to the Senior Executive Service.

The position designation, reciprocity, and investigation requirements for contractor employees that OPM is codifying in part 731 are not new. Since 2009, E.O. 13488 has covered contractor employee fitness, giving agency heads discretion on fitness criteria, but requiring them to take into account OPM guidance when determining if the criteria was equivalent for the purpose of making a reciprocally acceptable determination. Per E.O. 13488, reciprocity for fitness and suitability determinations applied to contractor employees, and agencies have been required to report the nature and results of background investigations and fitness determinations to the government-wide investigations and adjudications index (Central Verification System or successor). Likewise, the requirement that contractor employees be subject to the same investigative requirements as apply to Federal employees has been in place since 2012. In a December 6, 2012, memorandum issued by the Security, Suitability, and Credentialing Performance Accountability Council (PAC) titled Assignment of Functions Relating to Coverage of Contractor Employee Fitness in the Federal Investigative Standards, the PAC determined, after consulting with the Department of Defense and other affected agencies, that contractor employees should be subject to the same Federal Investigative Standards as apply to Federal employees. Consistent with E.O. 13467, which authorized the PAC to assign functions related to matters such as alignment and improvement of investigations and contractor employee fitness, the PAC via this memorandum assigned the Director of OPM the function of prescribing investigative standards for “contractor employee fitness,” which at that time was defined in section 1.3(f) of E.O. 13467 as “fitness based on character and conduct for work for or on behalf of the Government as a contractor employee.”

The Federal Investigative Standards, which were issued by the Executive Agents in December 2012, applied “to all individuals working for or on behalf of the executive branch and individuals with access to federally controlled facilities and information systems.” The Standards were established for investigations to determine eligibility for logical and physical access, suitability for Government employment, eligibility for access to classified information, eligibility to hold a sensitive position, and fitness to perform work for or on behalf of the Government as a contractor employee.

This rule does not specifically address investigative requirements for eligibility for access to classified information or for employment in sensitive (national security) positions. Those matters are addressed in 5 CFR part 1400 and in issuances by the Director of National Intelligence acting as the Security Executive Agent under E.O. 13467. However, this rule continues the existing requirement (5 CFR 731.106(a) and (c)(2)) that a position must be designated based both on its public trust risk and its national security sensitivity so that the appropriate level of investigation is conducted to address both suitability and national security concerns. Complementary language appears in 5 CFR 1400.201.

Continuous vetting refers to the process of “reviewing the background of a covered individual at any time to determine whether that individual continues to meet applicable requirements.” (E.O. 13467, as amended, section 1.3.) In the context of suitability and fitness for employment, continuous vetting is used to determine if an individual remains suitable or fit for a position over time. A covered individual is, with limited exceptions, “a person who performs, or who seeks to perform, work for or on behalf of the executive branch ( e.g., Federal employee, military member, or contractor), or otherwise interacts with the executive branch such that the individual must undergo vetting.” (Id.) In accordance with section 2.1 of E.O. 13467, as amended, all covered individuals are to be subject to continuous vetting under standards to be established by the Security Executive Agent or the Suitability and Credentialing Executive Agent exercising its Suitability Executive Agent functions, as applicable. Further, the Director of OPM as the Suitability Executive Agent is responsible for prescribing applicable investigative standards, policies, and procedures. With this final rule, any individual occupying a position that is subject to investigation, as described in revised § 731.104(a), including both public trust positions and low risk positions, is subject to continuous vetting. The nature and specificity of continuous vetting checks will be further defined in supplemental issuances, and requirements will account for position risk and sensitivity designations.

With this final rule and OPM's implementation of the continuous vetting requirement set forth in E.O. 13467, as amended, section 2.1, OPM has eliminated the fixed, five-year periodic reinvestigation requirement for public trust positions.

In response to the proposed rule (88 FR 6192, January 31, 2023), OPM received 3,587 comments via the eRulemaking portal, one comment via email, and one comment by phone. All comments were received during the 60-day comment period. Comments received were from individuals, organizations, a labor union, and a Federal agency. Approximately 3,500 identical form comments were submitted by about 3,400 commenters.

In general, the comments ranged from categorical rejection of the proposed regulations to strong support. OPM carefully considered comments and arguments made in support of and in opposition to the proposed amendments. The comments are summarized and discussed in the subsequent sections. Comments are organized by general comments followed by comments specific to each section. A discussion of the suggested revisions that were considered and either adopted, adopted in part, or declined, and the rationale therefore is included. Comments beyond the scope of the proposed changes or which were vague or incomplete are not addressed.

Some commenters offered support for the regulatory changes, believing that the changes to the regulation would serve to improve the Government's ability to assess the integrity and efficiency of the service and streamline the process, while others suggested that the current process is sufficient and that changes are unnecessary.

Several commenters took issue with the relevant terminology, suggesting that the terms “character,” “suitability and fitness,” and “conduct necessary” are vague and could allow for discrimination, including against individuals who do not have the same educational or cultural background as other job applicants. Others commented more generally that the rule would allow for discrimination without regard to an individual's qualifications, asserting that hiring managers could determine the level of character required and reject candidates based on their own ideology. Other commenters called the rule unconstitutional and illegal, suggesting it may allow for discrimination based upon political beliefs or protected speech.

In response to these comments, OPM agrees that this final rule advances important goals to strengthen and streamline personnel vetting. This rule implements vetting reform requirements and initiatives that span three Administrations and were first initiated in 2017 and distilled into the transformational Trusted Workforce 2.0 framework beginning in 2018 with a focus on revamping the fundamental approach and supporting policy framework, overhauling business processes, and modernizing the information technology architecture. Effective Government operations require that the Government's workforce be trusted to deliver on mission, provide excellent service, and demonstrate effective stewardship of taxpayer funds. Establishing and maintaining trust is a core goal of the Federal personnel vetting program. Further, as addressed in the previous sections (Background and Explanation of OPM's Final Rule), the rule implements requirements established by the President via Executive orders. Therefore, the scope of the regulations with respect to the populations covered, including the excepted service, adheres to the direction of the Executive orders. As such, OPM will not make any revisions to the rule regarding the scope.

OPM disagrees with comments suggesting the language in the regulation may allow for discrimination. The terms called out by the commenters are well-established and their application to personnel vetting is not changing through this rule. As outlined in the regulation and elaborated upon in a body of guidance, such as the Suitability Processing Handbook, the Trusted Workforce 2.0 policy, and the Investigative Standards, OPM and agencies must base suitability determinations on the presence or absence of one or more of the specific factors in 5 CFR 731.202(b) while considering the additional considerations in § 731.202(c) to the extent they are deemed pertinent. OPM also disagrees that agencies, when acting in accordance with the rule, are at liberty to determine the level of character that applicants must possess arbitrarily, nor do the requirements allow for suitability or fitness decisions that are based upon the decision-maker's personal ideology.

With respect to the concerns raised that some of the proposed changes are vague and may be illegal or unconstitutional, OPM disagrees that the proposed changes are illegal and unconstitutional. OPM acknowledges the concerns regarding clarity and is not moving forward with some of the proposed changes. This is discussed in subsequent sections.

The final rule adds as an authority E.O. 13764, which amended the Civil Service Rules to extend authority by the OPM Director to establish the minimum standards of fitness for the excepted service, and amends the existing authority citations to comply with 1 CFR part 21, subpart B. This final rule adds § 302.108 to refer readers to part 731 for requirements on fitness determinations for excepted positions. Additionally, the section establishes that an agency must record its reason(s) for making fitness determinations under part 731 and must furnish a copy of those reasons to an applicant upon their request. Section 302.203 is revised to direct readers to part 731 for the minimum standards and criteria for determining fitness for employment based on character and conduct, allowing agencies to prescribe additional factors to protect the integrity and promote the efficiency of the service when job-related and consistent with business necessity.

One commenter wrote that the disqualifying factors in the existing part 302, which the commenter opines address an applicant's ability to effectively work for the Government, their ability to faithfully service the Federal Government, and other possible statutory concerns, are far different from the new factors OPM proposed in part 731. According to the commenter, the new factors in part 731 consider behavior that is entirely unrelated to the applicant's proven history with the law and the Federal Government and the applicant's capacity to perform the job.

OPM agrees that the disqualifying factors in part 302, although similar, were not entirely consistent with those in § 731.202. OPM disagrees with the commenter's notion that the intent of the disqualifying factors was far different than consideration of behavior as specified in part 731. As was explained in the notice of proposed rulemaking, the inconsistency is, in part, a basis for making the change in this rulemaking, as the President has called for an executive branch-wide vetting enterprise to use, to the greatest extent practicable, aligned and consistent vetting policies, procedures, and standards for determining suitability or fitness for Government employment. ( See E.O. 13467, as amended.) Specifically, the President directed that the investigative and adjudicative standards for fitness must, to the extent practicable, be consistent with the standards for suitability. (E.O. 13467, sec. 2.1(c).) Therefore, OPM is necessarily changing the way in which fitness is determined by aligning the factors and additional considerations used for fitness determinations with those used for suitability. OPM agrees that the President intended for the OPM Director to establish the minimum standards of fitness based upon character or conduct ( see E.O. 13764, sec. 1(a)(iii), revising 5 CFR 2.1(a)(vi).); however, OPM disagrees with the suggestion that the fitness factors as aligned with the suitability factors evaluate fitness based on something other than an assessment of an individual's character or conduct. Each of the factors is designed to allow agencies to consider different aspects of an individual's past conduct, as identified during the vetting process, and how that conduct illustrates the individual's character. See discussion of § 731.202 for more information about the factors.

This same commenter suggested that permitting agencies to prescribe additional fitness factors is an extreme change that grants agencies near limitless power. The commenter suggested that this delegation to agencies is inconsistent with the direction of E.O. 13764 to promote consistency between agencies. The commenter suggested the terms “job-related” and “business necessity” must be defined very clearly, agencies must be required to publicly post and explain potential factors, and OPM must oversee and assess these factors.

OPM agrees that E.O. 13764 seeks to promote consistency between agencies. By aligning the minimum fitness factors with the suitability standards, application of reciprocity between agencies based on fitness determination should increase. Under the existing regulations, an agency has latitude for establishing reasons to deem an applicant unfit for an excepted service appointment. OPM regulations have provided a list of potential disqualifying reasons (which are referenced by the commenter) but have not required the use of any particular factors. This final rule, in establishing a specific list of factors that can be supplemented by an agency in making a fitness determination, is not a vast expansion of authority for agencies. Commenter's suggestion to the contrary is simply incorrect.

Nonetheless, the President amended the Civil Service Rules to make OPM responsible for the minimum standards of fitness based on character and conduct, and thus allowed agencies to supplement the fitness standards, where appropriate. ( See E.O. 13764, amending 5 CFR 2.1(a)(i) and (ii) to state that OPM is responsible for “Standards of suitability” for the competitive service but is responsible for “Minimum standards of fitness” for the excepted service.) The President also made clear that each agency is authorized to “determine[ ] that a particular background investigation or adjudication does not sufficiently address the standards used by that agency in determining the fitness” of its excepted service employees. (E.O. 13467, sec. 2.2, as amended (emphasis added).) Accordingly, OPM is not responsible for, nor is it required to approve or oversee, the establishment of additional fitness factors used by an agency in determining fitness for its excepted service positions. 1 OPM agrees, however, that additional fitness factors should be made known to applicants when such factors are used in making an unfavorable fitness determination, and therefore has included a requirement in § 302.108(b) for agencies to make additional factors a matter of record and furnish them to an applicant, upon request, in such circumstances.

OPM is not accepting the request to define what job-related and consistent with business necessity means because we do not agree it is needed in this context. This terminology is not unique to personnel vetting and is generally understood as the standard that agencies must meet to justify unique hiring requirements. These concepts appear in civil service hiring policy at least as early as the Uniform Guidelines on Employee Selection Procedures (1978), which the Civil Service Commission, the Equal Employment Opportunity Commission, the U.S. Department of Justice, and the U.S. Department of Labor helped develop. ( See sec. 60-3, Uniform Guidelines on Employee Selection Procedure (1978); 43 FR 38295 (Aug. 25, 1978).) OPM and agencies are well-versed in applying these concepts. ( See, e.g., OPM's Delegated Examining Operations Handbook, available at https://www.opm.gov/policy-data-oversight/hiring-information/competitive-hiring/deo_handbook.pdf. ) Agencies also apply these concepts in administering Section 501 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 791), which prohibits selection criteria and standards that tend to screen out people with disabilities unless the procedures have been determined through a job analysis to be job-related and consistent with business necessity.

This final rule revises the authorities by adding E.O. 13764, Civil Service Rule 6, and Presidential Memorandum—Enhancing Safeguards to Prevent the Undue Denial of Federal Employment Opportunities to the Unemployed and Those Facing Financial Difficulties Through no Fault of Their Own, January 31, 2014. This rule also revises the formatting of existing authorities to comply with 1 CFR part 21, subpart B.

This section describes the purposes for this regulation, which are to establish investigation, continuous vetting, and reciprocity requirements; suitability requirements and the minimum standards of fitness; and the procedures for taking suitability actions. This section also provides definitions necessary for administration. Notably, OPM is adopting its proposed definition for the term “employment subject to investigation,” which is used throughout the revisions to part 731. This term captures the range of individuals subject to investigation by virtue of their appointment to the competitive service or career Senior Executive Service, an appointment to the excepted service, employment as a contractor employee, or employment as a nonappropriated fund employee.

OPM received no comments on this section; however, OPM is making several changes in the final rule to improve clarity and readability. For example, OPM has made minor wording changes to the definition of excepted service ( e.g., moving the clause “of the executive branch” to follow the word “position,” which is the noun that the clause modifies). OPM is also revising the definition of suitability action, which referenced the list of actions in § 731.203. OPM has moved that list into the definition. Conversely, the definition of a suitability action included regulatory information of relevance in Subpart B and included information that was redundant with § 731.203(a); therefore, OPM has deleted the redundant information from the definition and moved the remaining language to § 731.203(b). OPM is adopting minor clarifying edits to the proposed definitions of appointee, contractor employee, and employee.

OPM also is correcting a numbering error from the proposed rule. Proposed paragraph (b)(4) is not part of the “purpose” sentence in paragraph (b) and is renumbered as paragraph (c). Proposed paragraph (c) is codified at paragraph (d) in this final rule.

This section addresses the requirement to use investigations conducted under part 731 only in accordance with the Privacy Act and section 1.1(e) of E.O. 13467, as amended, and it establishes that OPM may issue requirements for implementing the rule. OPM received no comments on this section and is adopting the language as proposed.

This section describes the limited delegation and related requirements that OPM makes to agency heads for adjudicating the suitability of applicants or appointees for competitive service and career Senior Executive Service positions (as defined in § 731.101) within the agency.

A commenter suggested OPM revise the rule to allow an agency head with delegated suitability authority to redelegate or convey outside of their agency the authority for making suitability adjudicative determinations for positions within their agency. OPM is not accepting this change. For the reasons described in the following paragraphs, OPM delegates limited authority for adjudicating suitability to agency heads. Agency heads may redelegate the function within their own agency, and agency records must show any redelegation.

Congress and the President have assigned to OPM the responsibility for adjudicating the suitability of certain individuals applying to or holding positions in the competitive service. ( See 5 CFR parts 2 and 5; see generally 5 U.S.C. 3301 and 7301 and the Civil Service Rules established in E.O. 10577, as amended by E.O.s 12107 and 13764.) Congress has authorized the OPM Director to delegate any function vested in or delegated to the Director to heads of executive branch agencies and other agencies employing persons in the competitive service. (5 U.S.C. 1104(a)(2).) When OPM delegates functions, it must establish standards that apply to OPM as well as to any agency under delegated authority, and OPM must oversee the performance of those delegated functions. And, when an agency does not wish to perform the function(s) delegated, the head of the agency may ask OPM to assist in performing the function on a reimbursable basis. ( See 5 U.S.C. 1104(b)(4).) Additionally, section 2.5(b)(v) of E.O. 13467, as amended, requires the OPM Director, as the Suitability Executive Agent, to review agency suitability and fitness vetting programs on a continuous basis to determine whether they are meeting the executive order's requirements.

Suitability determinations are case-by-case decisions based upon the nature of the conduct, as applicable, and the functions and responsibilities of the position. In making the delegation for suitability adjudications to agency heads, OPM recognized the important role an agency plays in comparing the nature of the position against the issues in an individual's background. The agency, armed with the understanding of the job duties and agency mission, is best positioned to determine when conduct warrants a finding of unsuitability and, in that instance, determine the best course of action—whether it be taking suitability action in accordance with the agency's delegated authority or looking to another authority more appropriate or applicable to the situation.

OPM retained the authority to adjudicate suitability in cases where the nature of the conduct causes the individual to be unsuitable for any position. Through suitability reviews, agency officials may identify cases that warrant referral to OPM for suitability review and action and can make those referrals as is required by the regulation. OPM proposed to retain authority to adjudicate suitability where there was evidence of conduct that fell within several proposed, new suitability factors. As addressed further in the pertinent section of this final rule, OPM is not proceeding with the four distinct factors that would have comprised § 731.202(b)(7) through (10) and is instead retaining the current factor at § 731.202(b)(7). Accordingly, OPM is modifying its proposed language at § 731.103(f) to specify that OPM has sole jurisdiction to adjudicate cases involving evidence of conduct that falls within § 731.202(b)(7).

This section establishes investigation requirements and reciprocity requirements for investigations and for suitability and fitness determinations. As an initial matter, a Federal agency recommended reorganizing the paragraphs in § 731.104(b) for clarity. OPM agrees and has made the following adjustments from the notice of proposed rulemaking:

• Section 731.104(b)(1) is now § 731.104(b).

• Section 731.104(b)(2) is now § 731.104(c).

• Section 731.104(b)(2)(i) is now § 731.104(c)(1).

• Section 731.104(b)(2)(ii) is now § 731.104(c)(2).

• Section 731.104(b)(2)(ii)(C) is now § 731.104(d).

In addition, OPM has edited the proposed regulatory language to improve clarity and readability. For example, OPM modified paragraphs (a)(1) and (2) from the proposal to use more consistent terminology throughout the section. Specifically, paragraphs (c)(1) and (2) (as renumbered) referred to a prior investigation being reciprocally accepted. In contrast, paragraphs (a)(1) and (2) discussed the concept of reciprocal acceptance of a prior investigation but did not use that phrasing. In rephrasing paragraphs (a)(1) and (2) to use more consistent language, OPM has also restated the requirement in terms of providing direction to the employing agency. OPM also revised paragraph (c)(2)(ii) (as renumbered) to make clear that the additional factors are permitted, but not required, by § 731.202(b). Finally, OPM revised paragraph (d) (as renumbered) to remove an inadvertent reference to reinvestigation. (See prior discussion in the Elimination of Fixed, Five-Year Periodic Reinvestigation Requirement for Public-Trust Positions section.)

Section 731.104 explains the requirements for employment subject to investigation (see § 731.101 discussion of definitions) and reciprocity requirements for populations covered. OPM's proposed revisions, which are adopted in this final rule, extend these requirements to include the “excepted service,” “contractor employees,” and “nonappropriated fund employees” in addition to appointments in the competitive service, appointments to the excepted service that can noncompetitively convert to the competitive service, and career appointments to the career Senior Executive Service. In general, these types of employment are subject to background investigations for suitability or fitness. However, as described in the new § 731.104(a)(3), certain short-term positions are not subject to background investigations for suitability and fitness but checks to ensure suitability or fitness are still required.

Per revised 5 CFR 731.104(c), suitability determinations must be made for all appointments in the competitive service, excepted service when the position can noncompetitively convert to the competitive service, or career Senior Executive Service; and fitness determinations must be made for all appointments to excepted service positions, except under specified circumstances. Under § 731.104(c)(2), however, an agency is generally required to reciprocally accept a prior favorable determination, except under certain circumstances. The conditions under which an agency is not required to reciprocally accept a prior favorable suitability or fitness determination are addressed in the new § 731.104(c)(2)(i) and (ii). Additionally, OPM clarifies that agencies may reciprocally accept a prior investigation that is at or above the appropriate tier but for which a new suitability or fitness determination is needed. Prior to this change, the regulation could be misread to require a new investigation in this scenario.

The following are examples where an agency will reciprocally accept an existing background investigation while making a new suitability or fitness determination.

Example 1: An individual is employed with Agency A in a position that required a Tier 5 level background investigation. Agency A reported a favorable national security determination for the Tier 5 investigation and did not report a suitability determination. The individual is transferring to a position with Agency B which also requires a Tier 5 level background investigation. The new position is in the competitive service, so the agency is also required to make a suitability determination. Because there is no record of a favorable suitability or fitness determination, Agency B will request a copy of the existing Tier 5 background investigation and will review it to make a suitability determination.

Example 2: An individual works for Agency A as a Program Analyst. The individual had a Tier 4 level background investigation for which Agency A made a favorable suitability determination. The individual has now been given a conditional offer for employment with Agency B in a Fiduciary Service Representative position. Agency B sees that the individual has a Tier 4 level background investigation, which is sufficient for the new position. Agency B also sees that Agency A made a favorable suitability determination; however, the background investigation record in the government-wide repository reflects the individual had financial issues. Given the financial duties of the new position, Agency B determines that a core duty determination  2 is warranted. Agency B must reciprocally accept the existing Tier 4 background investigation but will request a copy of it for review to determine whether the individual is suitable for the position with their agency.

With respect to break-in-service requirements, OPM is removing the 24-month break-in-service provision that applied to reciprocity (see current §§ 731.104(a)(5) and 731.202(d)). This requirement is replaced with a new process, established in the Federal Personnel Vetting Investigative Standards issued by the Suitability, Credentialing, and Security Executive Agents, which expands this window of time up to sixty months using a tiered, risk-based approach of graduated levels of investigation. Upon reentry, individuals will be enrolled into continuous vetting consistent with new requirements in § 731.106(d).

Finally, OPM updates requirements for “seasonal” positions to require a background investigation as addressed in § 731.106(c)(1). Seasonal employees, in accordance with 5 CFR 340.401(a), are permanent employees who are placed in a nonduty/nonpay status and recalled to duty in accordance with preestablished conditions of employment. Because of the permanent characteristics of the positions, they implicate different risks than temporary appointments.

An individual commented on the option for agencies to make a core duty determination, rather than reciprocally accept a prior favorable suitability or equivalent fitness determination. The commenter believes this option will require agencies to review the prior investigative record each time an individual changes positions and suggested instead that OPM consider stipulating a time period after which agencies would no longer need to consider the impact of past conduct, as indicated in a prior investigation, against the core duties of the new position. OPM does not agree with the commenter's interpretation. Agencies are not required to make a core duty determination each time an individual changes positions. Core duty determinations are only required when there is information in the individual's investigative record as reflected in the government-wide repository that shows the individual has engaged in conduct that may be incompatible with the core duties of the position to which the person is applying or transferring into. That prior conduct may make that person unsuitable or unfit for the new position, though they were suitable or fit for the current position. It would be inconsistent with the manner in which suitability should be assessed if OPM were to establish deadlines after which an agency may not consider how conduct may impact suitability or fitness for a new position. Take for example an individual moving into a law enforcement position where conduct of a criminal nature, even if dated, may be incompatible. While OPM is not making a change as a result of this comment, we acknowledge that enhancements to information technology systems allowing agencies more clarity regarding the nature of conduct contained within the investigation record would streamline and reduce processing times for agencies. Additionally, future system enhancements could avoid the need for agencies to request copies of prior files as is often required currently to make a new determination.

A labor union expressed support for the change to remove the 24-month break in service provision citing that investigations can be onerous and time-consuming for employees. The organization agreed that the change is a reasonable step towards minimizing that burden.

A Federal agency recommended that, as written, the proposed regulatory text requiring agencies to enroll individuals into continuous vetting when reentering service may not align with implementation guidance. Implementation guidance has not yet been made available for the full scope of this rule. OPM is revising the regulatory text in § 731.104(a)(2) for clarity by adding that agencies must request such checks as may be specified in implementing guidance and must enroll individuals re-entering service after a break in service into continuous vetting, consistent with the requirements in § 731.106(d). Additionally, OPM will continue to issue updated implementation guidance as continuous vetting is expanded to more populations.

This section specifies OPM and agency authorities with respect to taking suitability actions. Changes from the current rule are for clarity and to address the additional circumstances under which OPM retains jurisdiction when the nature of the conduct would make an individual unsuitable to hold any covered position.

One commenter believed that, because the language in § 731.105(a)(1) was new (clarifying that suitability actions can be taken if an application is withdrawn, if an offer of employment is withdrawn, and if an appointed individual separates from employment), the authority to take suitability actions in these instances is also new. It is not. The authority to take suitability actions in these circumstances exists currently and updates to the regulation simply provide clarity and greater transparency on the situations when suitability actions can be taken. In regulatory changes made in 2008 ( see 73 FR 20149), OPM revised the definition of “applicant” from “[a] person being considered for employment” to “a person who is being considered or has been considered for employment.” In a notice explaining the regulatory changes, OPM stated “[s]uitability actions may be warranted for individuals who are not currently, but were previously, under consideration. For instance, if an individual provided fraudulent information in an attempt to obtain a Federal job, he or she might no longer be actively under consideration because the qualification requirements were not met. In such a case, it is in the best interests of the Government to refer the case to OPM for suitability adjudication.” ( See Federal Investigations Notice No. 09-06, available at https://www.dcsa.mil/Portals/128/Documents/pv/GovHRSec/FINs/FY09/fin-09-06.pdf. ) The commenter also suggested that, by resigning from a position, the individual should be protected from a suitability action. However, if an individual who is undergoing a suitability review and whose suitability is in question has the job application or offer withdrawn or resigns or is terminated for reasons other than suitability, this will not prevent an agency or OPM from taking a suitability action, including the potential to impose a debarment so that the individual cannot serve in a position for a period of time. Imposing a debarment through the suitability action process not only stops an individual from holding a covered position, it also offers a period of time for the individual to potentially rehabilitate from the concerning conduct that caused them to be deemed unsuitable, raising the possibility that they could be found suitable for a future position after the period of debarment has concluded. To improve clarity, OPM is adopting revised text at § 731.105(a)(1) to reflect the intent of the rule, which is to allow OPM or an agency to continue with an action that is in process. Specifically, we are revising “take” in the proposed rule to “complete” in this final rule.

At § 731.105(d), in addition to OPM having jurisdiction over material intentional falsification, OPM has added that only OPM is able to take a suitability action under part 731 against an employee in the competitive service or career Senior Executive Service based on the criteria of § 731.202(b)(3), (7), or (8). As addressed further in the pertinent section of this final rule, OPM is not proceeding with the four distinct factors that would have comprised § 731.202(b)(7), (8), (9), or (10) and is instead retaining the current factors at § 731.202(b)(7) and (8). An individual commented that the proposed change to also retain jurisdiction over the (previously proposed) four distinct additional factors is unjustified as it seems to exist for the exclusive purpose of targeting ideological enemies. The commenter's concerns with the factors are moot now that OPM has decided not to proceed with those factors; but, with respect to the commenter's objection to OPM retaining suitability jurisdiction, OPM does not agree with the commenter's contention. OPM is assigned the authority to adjudicate suitability on behalf of the executive branch. Where OPM has determined that individual agencies are better positioned to make the suitability determination, OPM has delegated the responsibility to the respective agency head. However, where there is evidence of conduct that would make an individual unsuitable for any covered position, OPM retains jurisdiction as only OPM can impose a government-wide debarment.

This section addresses requirements for agencies to designate position risk and sensitivity. OPM is adding a reference to 5 CFR part 1400, which is the complementary regulation, issued jointly by OPM and the Office of the Director of National Intelligence (ODNI), addressing position sensitivity designations. Additionally, OPM clarifies the timing of initiating background investigations, which should occur prior to appointment. This is consistent with OPM's prior guidance for issuing personal identity verification credentials and with what is required for positions with a sensitivity designation, as specified in 5 CFR part 1400.

OPM is also moving the requirements regarding the timing of criminal and credit history collection from § 731.103 to this section by including the language that was published in the final rule to implement the Fair Chance to Compete for Jobs Act of 2019 ( see 88 FR 60317). Finally, this section adds the requirement for continuous vetting for the low risk population and replaces periodic reinvestigations for the public trust population.

One commenter recommended that OPM should enhance training on position designation and provide additional guidance to agencies. The comment is outside the scope of the rule changes, but OPM will take the commenter's suggestion under consideration.

OPM received comments in support of and in opposition to continuous vetting. A labor union, in support of the change, acknowledged the importance of ensuring that the integrity and efficiency of the civil service is upheld but expressed concern with the current reinvestigation process, which they described as unnecessarily rigid and burdensome for employees.

The same labor union and another commenter urged OPM to consider the burden on employees, while two commenters opined that the nature and periodicity of the continuous vetting checks needs to be specified. One commenter expressed concern that the investigative service provider could determine the scope of the checks, causing the checks to be too intrusive. OPM acknowledges that, even with the shift to continuous vetting, individuals will be required to provide self-reported information and may be subject to interviews or inquiries as a result of information revealed via checks. OPM recognizes that the Privacy Act of 1974 requires collecting information, to the greatest extent practicable, from the individual and, accordingly, that there is a need to provide the individual with an opportunity to address issues an agency may determine to be adjudicatively relevant. OPM also agrees that the process should be designed in a way such that individuals undergoing vetting are not required to provide information or respond to requests unnecessarily. These individuals deserve transparency into the vetting process in a way that will not jeopardize the nation's security. OPM and ODNI, in their respective roles as the Suitability and Security Executive Agents, establish the continuous vetting checks that are required, considering the positions' risk and sensitivity levels. The requirements specify the types of checks conducted along with the periodicity. Heads of agencies must follow policies and issuances by the Executive Agents, including investigative standards ( see E.O. 13467, sec. 2.7, as amended) and all Federal personnel vetting conducted by the executive branch must comply with the standards established by the Executive Agents. Therefore, the mechanisms will be better understood and widely followed, resulting in consistent and standardized checks across the covered populations.

One commenter opined that, if periodic reinvestigations are replaced by continuous vetting, the initial check should only go back one year, while two commenters opined that individuals in positions designated as low risk should not be subject to continuous vetting or personnel vetting standards because they do not require security clearances, making it unfair for them to fall under the same scrutiny. Various commenters also expressed concern that the requirement is contrary to the Administration's position on second chance hiring, will result in less talent competing for Government positions, could cause difficulty keeping jobs, and is too invasive. An organization objected to the reduction in suitability and fitness review from an objective, five-year reassessment to a continuous review process on the basis that the current rule already permits this and that doing away with the five-year requirement could weaken agency security.

OPM agrees that the current rule permits checks for the public trust population at a higher periodicity if they take place at least once every five years but otherwise disagrees with these points. The requirement that individuals working for or on behalf of the Government be subject to some level of vetting dates back several decades. More recently, since 2008, under the Final Credentialing Standards for Issuing Personal Identity Verification Cards under Homeland Security Presidential Directive 12, a Tier 1 or equivalent investigation has been required to be granted a personal identity verification (PIV) credential. Investigative source and coverage requirements for full background investigations are established commensurate with the position risk and sensitivity designations and the same will be true with continuous vetting requirements. The President, by Executive order, established the requirement for continuous vetting for covered individuals, and therefore, OPM is implementing that requirement via this rule. OPM has revised the regulatory text to state that checks must be conducted at regular intervals based on the type of check and with consideration of position risk and sensitivity. These provisions were in the proposed regulatory text but are reorganized to clarify the agency requirements. Similarly, OPM has made minor changes to the examples of public trust positions in the regulatory text to improve readability.

Another commenter raised questions about the authorities that agencies may consider when actionable information is returned as the result of continuous vetting checks. As has been the case with periodic reinvestigations, agencies will consider the substantive standards in § 731.202 when evaluating the results. A person's employment status, however, will determine the applicable agency authority and procedures to be followed in any action taken based upon the results. In many instances, based upon the time on the job and/or the conduct occurring post appointment, a suitability action under part 731 will not be applicable. Nonetheless, conduct that surfaces could be the basis for an adverse action under 5 CFR part 752. Whether to propose or take an adverse action based on results from continuous vetting checks is a matter within the discretion of the employing agency. How the results of continuous vetting may be addressed when a favorable determination cannot be made is not different from how agencies currently manage the results of periodic reinvestigations.

A commenter expressed concern with the language in the revised § 731.106(d)(1) specifying that individuals may only be subject to continuous vetting if they have signed an authorization for release of information permitting a disclosure for continuous vetting purposes. The commenter is concerned the continuous vetting requirement addressed in part 731 might be confused with other processes also referred to as continuous vetting where a release is not required. They asked that OPM replace the word “individual” to state more clearly to whom the continuous vetting requirements apply. Section 731.106(d)(1) addresses the continuous vetting requirements as being applicable to individuals occupying positions of employment subject to investigation and, under § 731.101, “employment subject to investigation” generally includes an appointment to the competitive service or career Senior Executive Service, an appointment to the excepted service, employment as a contractor employee, or employment as a non-appropriated fund employee. Read as a whole, paragraph (d)(1) identifies the population to which continuous vetting and the corresponding requirements apply. In addition, the regulatory text explicitly states that continuous vetting may be conducted only after an individual has signed an authorization for release of information. Therefore, OPM is not making a change in response to this comment.

OPM is making a clarifying edit to § 731.106(g) with respect to the timing of credit history inquiries, consistent with OPM's guidance since December 1, 2016 (81 FR 86555). For competitive service and career Senior Executive Service positions, agencies may not make specific inquiries concerning an applicant's credit background unless the hiring agency has made a conditional offer of employment to the applicant or has been granted an exception by OPM. ( See 5 CFR 330.1300.) The requirement with respect to timing of collection of credit history does not apply to other positions, though agencies may determine it to be a best practice.

Section 731.201 has long provided the standard for protecting the integrity and promoting the efficiency of the service. This final rule extends the standard to fitness determinations.

OPM received comments from two individuals. One interpreted the change making the standard applicable to fitness determinations as suggesting that agencies may use part 752 procedures to take a removal action. The intent of the section, however, is to establish that, like suitability, fitness determinations must be based on the degree of impact an individual's character or conduct may have on the integrity and efficiency of the service. As we explained in the response to comments regarding § 731.106 and also addressed in the regulation at § 731.105(e), an agency has discretion to take adverse actions against individuals under authorities other than part 731, as appropriate and applicable. For populations subject to assessment of fitness, rather than suitability, OPM does not establish in part 731 procedures by which the agency may take an action based upon an unfavorable fitness determination.

The other commenter suggested the standard is subject to interpretation by hiring officials and could lead to prohibited personnel practices, discrimination, civil rights violations, and potential legal action. The commenter asked OPM to develop a specific definition for suitability and fitness that applies to all agencies. OPM agrees that one suitability and fitness standard that applies to all agencies, to the extent feasible, is desirable. To that end, the standard that a suitability action “will protect the integrity or promote the efficiency of the service” has been in place since 2000 when it was last updated to add the phrase “protect the integrity . . . of the service.” In addition to considering the risk to an agency's accomplishment of its duties or responsibilities, or potential interference or prevention of effective service in the position, an important facet of the standard for suitability is the integrity of the merit system and fair and open competitions for positions. The standard, now applicable to fitness determinations, is consistent with the suitability standards to the extent practicable in accordance with E.O. 13467, as amended.

This section establishes the suitability and fitness factors and additional considerations that collectively, and in consideration of the standard set forth in § 731.201, are used by agencies to determine if an individual is suitable or fit.

OPM received comments on this section from one Federal agency, five organizations, one labor union, and numerous individuals. Comments were in support of and in opposition to the proposed changes. Some comments were general to the section while others related to specific factors. The general comments are summarized first. Comments on specific factors are discussed next.

One individual opposed the application of the minimum standards of fitness to contractor employees. The individual stated that, because contractors are owners, members, or non-federal employees conducting their personal matters inside private businesses, the invasion of privacy and other rights is especially damaging and an overreach in comparison to the factors that had existed in part 302. OPM disagrees but offers a clarification. First, Government contractors are not “conducting their personal matters inside private businesses.” The very reason that a contractor employee needs to be vetted is because they are working for or on behalf of the Federal Government. Second, the President directed that contractor employee fitness be subject to the same vetting requirements ( e.g., position designation requirements; investigative standards, policies, and procedures; reciprocity) as civil service employees as prescribed by OPM. ( See E.O. 13488, as amended.) Further, OPM notes that this is not a new requirement—contractors have been covered by E.O. 13488 since it was issued in 2009. Under this Executive Order, agency heads were required to take OPM guidance into account when considering if adjudicative criteria were equivalent for the purposes of making a reciprocally acceptable determination. Contractor employees have also been subject to the same investigative requirements as Federal employees since 2012. This was the result of a decision by Security, Suitability, and Credentialing Performance Accountability Council, as authorized by E.O. 13467. Finally, OPM notes that the additional authority given to OPM by the President to establish the minimum standards of fitness relates to the excepted service. ( See E.O. 13764, sec. 2(c), amending E.O. 13488, sec. 3(a).) As has been the case since 2009, agency heads retain the discretion to establish adjudicative criteria for determining fitness to perform work as a contractor employee but with due regard to the regulations and guidance prescribed by OPM for the civil service and directives of the Office of Management and Budget.

A commenter suggested adding a factor covering emotional, mental, and personality disorders. They suggested that an individual's mental health may have the propensity to affect their conduct and should be a factor for suitability or fitness as is done with national security determinations. Further, they pointed to medical qualification assessments that may be available to agencies for civil service positions, but not for contractors, as a basis for adding mental health concerns as a factor in the fitness determination process. OPM disagrees. Suitability and fitness determinations are decisions on whether an individual's past conduct and actions may introduce risk to an agency's mission or are contrary to the integrity required of individuals working for or on behalf of the Government. Additionally, the medical qualification determination process is addressed in 5 CFR part 339 and, therefore, is outside the scope of this rulemaking.

Multiple individuals asked OPM to reconsider changes to the factors, stating they are inappropriate, vague, overly broad and open to personal interpretation which could lead to bias or discrimination. Several of these commenters suggested the proposed changes are illegal and would violate constitutional rights. A few commenters suggested that individuals should be hired based upon their qualifications without consideration of the types of conduct which the criteria address. OPM generally disagrees that any of the proposed factors give OPM or agencies the ability or authority to consider information in a way that is unconstitutional; however, OPM is not moving forward with some of the proposed changes. These changes are discussed as part of the discussion of each factor in the following sections. Further, OPM agrees that the process for assessing qualifications of applicants is essential, though separate from the process of vetting individuals, such as for suitability or fitness. In 5 U.S.C. chapter 73, Congress authorizes the President to prescribe regulations for the conduct of employees in the executive branch and, in chapter 33, authorizes the President to prescribe regulations for admission into the civil service that will best promote the efficiency of the service and to ascertain the fitness of applicants for employment sought. As such, via the Civil Service Rules, the President has made OPM responsible for establishing qualification standards and, separately, standards of suitability and fitness.

Evaluating whether an individual is suitable or fit to work for the Federal Government (either directly or indirectly as a contractor employee) often occurs after a background investigation. Portions of that investigation are conducted by gathering information directly from the individual via personnel vetting forms and, in some cases, personal interviews. Additional information is gathered from other sources.

Once the background investigation is complete, an adjudicator evaluates the information obtained against the factors. Only conduct falling within a factor may be the basis for finding one unsuitable or unfit. The adjudicator, through application of pertinent additional consideration, will determine whether the individual's character or conduct may have an adverse impact on the integrity or efficiency of the service.

OPM proposed to split the existing factor regarding “criminal and dishonest conduct” into two separate factors to make it clear that dishonest conduct need not be criminal to be relevant to a determination of suitability or fitness. OPM is adopting “dishonest conduct” as Factor 4.

A Federal agency noted that financial concerns can be easily overlooked under the criteria for “dishonest conduct.” That Federal agency acknowledged that financial irresponsibility may be a suitability issue falling under the dishonest conduct factor but suggested adding a factor specifically to address intentional disregard for debt in finances. The agency expressed the view that adding a factor would provide better clarity as the agency recognized that, to be a basis for unsuitability, an agency must establish financial irresponsibility demonstrated by evidence of the individual deliberately accumulating debt of a significant nature and/or intentionally disregarding those debts. OPM agrees that an important aspect of establishing financial irresponsibility as a suitability or fitness concern is the requirement to have evidence of the dishonest actions by the individuals. However, OPM believes that the current factor of “dishonest conduct” sufficiently captures this intentional disregard. Therefore, the suggestion to add another factor, or to elaborate on the existing, is not adopted.

OPM proposed to change “alcohol abuse” to “excessive alcohol use” to capture the intent that the relevance to suitability and fitness is the need to account for an individual's problematic misuse of alcohol over a period of time. As OPM described in the proposed rule, excessive alcohol use may suggest that the individual would be prevented from performing the duties of the position or would constitute a direct threat to the property or safety of themselves or others as a result. OPM also proposed to remove the requirement that rehabilitation be “substantial” to align the suitability and fitness factors.

A labor union agreed with the change to this factor as being more representative of the concern of accounting for an individual's problematic misuse of alcohol, over time. The labor union also agreed with not requiring evidence that rehabilitation be substantial. An individual, who also expressed support for the change, asked OPM to provide additional guidance or examples for identifying and distinguishing conduct that may fall within this factor as well as what constitutes rehabilitation. The individual also asked that OPM emphasize the importance of following other laws which offer protections from discrimination based upon past alcohol use, such as the Americans with Disabilities Act.

OPM agrees and will continue to provide guidance on this factor via supplemental issuances to agencies. Though outside the scope of this rulemaking, OPM also agrees that agency personnel involved in the hiring process must be familiar with and abide by laws and requirements meant to protect the rights of job applicants.

OPM proposed to remove the requirement for evidence of “substantial” rehabilitation to provide consistency between Factors 5 and 6. A labor union and the individual commenting on Factor 5 in support of the change also commented on Factor 6. The labor union commended the changes to strike the requirement for evidence of rehabilitation to be substantial while the individual expressed support but asked OPM to provide additional guidance.

Another individual suggested striking Factor 6, amend it to not apply to marijuana, or modify Factor 5 to focus on excess use of marijuana because of shifts in state laws regarding marijuana usage. OPM is not adopting this change. Factor 6 may be used by agencies to assess an individual's illegal use of several substances, not only marijuana. Also, despite changes to state laws, marijuana continues to be classified as a controlled substance under the Controlled Substances Act (21 U.S.C. 802(16)). But as is the case with any of the suitability factors, agencies and OPM must apply additional considerations, as pertinent, to assess the potential for the individual, based upon their conduct, to negatively impact the integrity and efficiency of the service. Marijuana use, alone, is not a basis for automatically finding one unsuitable or unfit. Instead, the agency or OPM must demonstrate how, considering the nature of the position, the past usage will have negative impact. This is the case with any illegal use of drugs. Recognizing that past marijuana usage may factor into the suitability determination of job applicants who are well qualified, OPM has issued guidance  3 for agencies on how marijuana use may or may not adversely affect the integrity and efficiency of the service, thereby impacting an individual's suitability or fitness for a position. Adjudicators will consider the person holistically, evaluating any impact to the integrity and efficiency of the service on a case-by-case basis.

OPM proposed to replace the existing Factor 7 with four distinct factors. Most of the comments received regarding OPM's proposed changes to the suitability factors were on these proposed changes. Some commenters, including multiple organizations, expressed general opposition to the changes, asking OPM to leave the existing Factor 7 unchanged, while others expressed specific concerns. Several commenters suggested that, without a stricter delineation of allowable or disqualifying conduct, the factors may be misused and could lead to findings of unsuitability for actions such as membership in organizations or movements that peacefully seek changes to our Nation's current laws and policies. The commenters offered other examples of conduct that they posited could lead to findings of unsuitability under the revised factors such as protesting at school board meetings or counseling a pregnant woman on her options. Finally, the commenters suggested the rule does not include any prohibition about applying the factors in a way that circumscribes an individual's personal liberties and recommended that OPM include an assertion that the factors address conduct not protected by the First Amendment. OPM does not agree with the commenters' assessment of how the factors could be applied or with the examples offered. As OPM explained in the proposed rule, the four new factors were intended to address conduct that has a clear nexus to the integrity and efficiency of the civil service, that poses significant insider threat risks to Federal agencies and the public and also is not protected by the First Amendment. (88 FR 6192, 6199.) OPM acknowledges the commenters' concerns regarding clarity. OPM is not proceeding with the four distinct factors that would have comprised § 731.202(b)(7), (8), (9), or (10) and is instead retaining at § 731.202(b)(7) the current factor, Knowing and willful engagement in acts or activities designed to overthrow the U.S. Government by force.

OPM is not moving forward with its proposed changes to Factor 7 and is retaining the existing provision at 5 CFR 731.202(b)(7). Two individuals and two organizations supported this factor as was proposed, but not Factors 8, 9, and 10 as were proposed. A Federal agency asked OPM to strike “knowing” to avoid agencies having to establish evidence of the individual's thoughts and intentions and eliminate the risk of not being able to establish conduct if the individual claims to have not acted knowingly. OPM acknowledges that direct evidence of knowledge may not be readily available thus requiring circumstantial evidence. But requiring evidence that the individual participated in an act or activity with the purpose of overthrowing the Government knowingly is critical if the conduct is to be considered as a basis for finding an individual unsuitable or unfit. Requiring this element to establish the Factor helps demonstrate that the individual understood that the conduct was wrongful and better avoids scenarios where an individual is found unsuitable or unfit solely because they were in the wrong place at the wrong time or were misled about the purpose or intent of an event.

Two organizations and an individual questioned the removal of the words “by force” from § 731.202(b)(7) and recommended re-inserting it for clarity. As discussed, OPM is not moving forward with its proposed changes and will retain the existing factor.

A Federal agency suggested revising the factor to include attempted acts, and two individuals requested that the factor be removed because it could be used to discriminate against people who hold different views than those in government. Another commenter, who suggested the existing provision at 5 CFR 731.202(b)(7) was sufficient, suggested the language in this factor is unclear, overreaches OPM's authority, and could infringe on individuals' rights. The commenter suggested that, with this factor, OPM or an agency could find someone unsuitable due to “praying outside of an abortion clinic or marching in a Black Lives Matter protest march.” An organization suggested the factor parrots the “Klan Act” which would already be covered by the criminal conduct factor.

OPM disagrees that the factor, as was proposed, could be used by an agency to find someone unsuitable for activity protected by the First Amendment. OPM agrees that conduct covered by the proposed factor includes conduct covered by another factor as applicable to the circumstances, such as criminal conduct ( see 5 CFR 731.202(b)(2)). Therefore, OPM is not implementing this proposed factor in this final rule.

One individual requested that OPM remove this proposed factor because of its potential breadth—positing it could result in finding an individual unsuitable who sought to teach or influence another person in any context whatsoever. The individual commented that the language is vague and indoctrination must be defined. The commenter also suggested that this factor may be used to find unsuitable anyone who has ever attempted to persuade another person to lobby legislators to change laws and asked if even home schooling or holding political rights training sessions would be considered indoctrination. Two organizations commented that the factor is ambiguous with one asking if it makes it permissible for an agency to ask about all attempts to indoctrinate which could include serving as a youth group leader or posting about the pandemic on social media and another questioning whether indoctrination, a prolonged process, could lead to conduct in furtherance of an illegal act. OPM does not agree that the language is vague nor that “indoctrinate” needs further definition. Indoctrinate when used as a verb is generally understood to mean teaching another the ideas, opinions, or beliefs of a particular group. Under this factor, the attempt to indoctrinate or incite another must be done in furtherance of an illegal act. It is this latter point regarding illegality that sufficiently narrows the factor to answer commenters' various questions and hypotheticals and would be the relevant inquiry to be addressed in determining an individual's suitability or fitness. As discussed, however, OPM is not implementing this proposed factor in this final rule.

A Federal agency suggested removing the element that the individual have knowledge of a group's unlawful aim. Three individuals suggested that “unlawful aim” will be difficult to prove and therefore, difficult to enforce. Two organizations suggested that the wording of the factor make it open to interpretation.

Similar to OPM's response relating to suggestions about Factor 7, this element helps demonstrate that the individual understood that the aim was wrongful and should be included t to better avoid scenarios where being misled about a group's aim causes an individual to be found unsuitable or unfit.

Further, suitability and fitness determinations are based upon evidence of an individual's character or conduct and when that evidence supports a conclusion that the character or conduct will have an adverse impact on the integrity and efficiency of the service, OPM or the agency must not make a favorable suitability or fitness determination. The point of this factor was not to target individuals for holding views that may be in conflict with those of officials making adjudicative decisions or to find individuals unsuitable or unfit because of affiliations they may have with groups of others who share their opinions, for example. As specified in the text of the proposed factor, the factor required an unlawful aim or participation specifically for the purpose of furthering the unlawful aim. It is the knowing affiliation or intent to further illegal activities that raise the potential suitability or fitness concern. OPM agrees, though, that the nature of character or conduct that this tailored factor addresses, could be better addressed under another factor as applicable to the circumstances, such as criminal conduct ( see 5 CFR 731.202(b)(2)). Therefore, OPM is not implementing this proposed factor in this final rule.

OPM also proposed to add a factor for violent behavior to account for behavior that does not squarely fall under another factor, such as violent behavior that occurs outside of the workplace and may not be considered criminal or dishonest in nature. For the purposes of this regulation, the term “violent” means using or involving physical force intended to hurt, damage, or kill someone or something. (88 FR 6192, 6200.)

For example, in certain jurisdictions, protection orders may be filed against individuals for sexual or physical violence regardless of whether the violent conduct constitutes a criminal act under the law of the relevant jurisdiction. The process for securing the protection order may be a civil matter. The addition of this factor gives agencies and OPM a way to consider, in such a scenario, if the individual's conduct is a basis for finding the individual to be unsuitable or unfit.

One individual expressed support for the factor but asked that the scope be limited to avoid application against, for example, those who participate in competitive boxing or recreational hunting as those activities could arguably fit with the definition of violent conduct, because they involve physical force intended to hurt, damage, or kill someone or something. Two commenters opposed to this factor expressed the same concern that the factor was vague and potentially covered those who use deadly force in self-defense, such as abused spouses or law enforcement officers. OPM appreciates these comments as another opportunity to elaborate on how suitability or fitness determinations are made.

When evaluating information to consider if it may warrant an assessment for suitability or fitness, OPM or the agency must first consider whether the information falls within one of the factors. If so, OPM or the agency will consider the impact on the integrity and efficiency of the service through application of the additional considerations. For example, while the act of hunting wild game could technically fall within the definition of conduct that is “violent” as it involves physical force intended to kill something, lawful hunting would not have an adverse impact on the integrity and the efficiency of the service. First, an individual would not be required to report legal hunting activities during the course of a background investigation. If it were reported, such as by a co-worker, it is unlikely to be identified as a potential issue in the background investigation. Even in the unlikely event an adjudicator were to make the initial consideration that legal hunting could cause the individual to be unsuitable or unfit, the subsequent process of relating the conduct to the factor, assessing the applicable additional considerations under 5 CFR 731.202(c) (such as the nature and seriousness of the conduct and the circumstances surrounding the conduct), and ultimately assessing whether the conduct negatively impacts the integrity and efficiency of the service would yield a favorable determination. In sum, when evaluating the nature of the conduct or the circumstances surrounding it, OPM or the agency would conclude that it is not adjudicatively relevant.

As another example, while deadly force in self-defense could be considered violent conduct, in the scenarios offered by the commenter, the surrounding circumstances would also be considered under § 731.202(c)(3) to determine if the conduct was mitigated, thus not leading to a finding of unsuitability.

As discussed previously, OPM is retaining the existing Factor 7 without change. OPM is also retaining the existing Factor 8 without change. (Although OPM had proposed to renumber the factors, OPM did not propose any substantive changes to the existing Factor 8.) Accordingly, OPM is adopting this proposed Factor 12 as new Factor 9 at § 731.202(b)(9).

OPM proposed to revise § 731.203 to limit the applicability of suitability actions to only individuals in the competitive service, in the excepted service that can noncompetitively convert to the competitive service, or the career Senior Executive Service. The change was necessary due to the implementation of the minimum standards of fitness for the excepted service.

OPM did not receive any comments on this section. OPM is adopting its proposed changes with several modifications as discussed in more detail in the section regarding § 731.101. Specifically, OPM has moved the list of actions from the proposed § 731.203 into the definition of a suitability action in § 731.101. OPM also moved the limitation that a suitability action may be taken only by OPM or an agency with delegated authority under the procedures in subparts C and D of the part from the proposed definition of a suitability action to § 731.203.

This section explains OPM's ability to impose debarment, including concurrent periods of debarment, when new conduct arises while an individual is under debarment. OPM also proposed to revise the text to explain that this provision is limited to individuals in or seeking appointment to the competitive service or the career Senior Executive Service.

OPM received no comments on this section and sees no reason to amend the proposal. OPM is adopting its proposed changes.

OPM proposed to revise the text to explain that this provision is limited to individuals in or seeking appointment to the competitive service or the career Senior Executive Service.

OPM received no comments on this section and sees no reason to amend the proposal. OPM is adopting its proposed changes.

This section specifies reporting requirements for agencies into the government-wide central repository. OPM proposed to revise this section to include references to continuous vetting.

OPM received no comments on this section and sees no reason to amend the proposal. OPM is adopting its proposed changes.

Sections 731.302 and 731.402 govern the issuance of a notice of proposed action in a suitability action by OPM or an agency, respectively. OPM proposed to amend these sections to also permit delivery of correspondence by secure email.

OPM received no comments on these sections and sees no reason to amend the proposal. OPM is adopting its proposed changes.

OPM proposed to revise the headings of several subparts of part 731 to indicate that those provisions only apply to individuals in or applying to the competitive service, the excepted service that may noncompetitively convert to the competitive service, or career Senior Executive Service. OPM received no comments on those amendments, sees no reason to amend the proposal, and is adopting its proposed changes.

OPM proposed to eliminate this subpart as obsolete. OPM received no comments on this subpart, sees no reason to amend the proposal, and is removing the subpart in this final rule.

OPM is issuing this final rule to establish standards and processes by which OPM and agencies efficiently and appropriately vet individuals to assess risk to the integrity and efficiency of the service. It implements several changes required by E.O. 13764. First, per the change to the Civil Service Rules expanding OPM's responsibilities for fitness, it sets the minimum standards of fitness for the excepted service. This change results in the same adjudicative factors and additional considerations being applicable across much of the civil service. Consistent with amendments to E.O.s 13467 and 13488, the changes also align position designation requirements, investigative standards, and reciprocity rules between the civil service, contactor employees, and nonappropriated funds workforces. Now, agencies will use the same system for designating position risk and sensitivity, background investigations will be conducted using the same standards, and the same rules for determining whether reciprocal acceptance of prior background investigations and suitability or fitness determinations will be applied across the workforce.

As required by E.O. 13467, as amended, the rule also implements continuous vetting for the low risk and public trust populations.

OPM must comply with Executive order directions, as previously described, to establish minimum standards of fitness based on character and conduct for appointment to positions in the excepted service of the executive branch that are, to the extent practicable, consistent with the standards for suitability. OPM is likewise responsible for establishing in its regulations that excepted service employee, nonappropriated fund Department of Defense (DoD) employee, and contractor employee fitness is subject to enterprise position designation requirements, investigative standards, and reciprocity requirements. Similarly, continuous vetting for all populations subject to personnel vetting has been directed by Executive order to sustain an enhanced risk-management approach.

In implementing this requirement, OPM considered the cost to agencies of establishing policies and procedures to conform to OPM's regulation. There will be costs associated with implementing aspects of the policies required by the E.O.s; however, there are also efficiencies resulting from policy implementation. The expected impact of aligned investigative and adjudicative standards is the increased application of reciprocity, which eliminates the need for a new investigation or new adjudication. Similarly, individuals enrolled in continuous vetting will not require periodic reinvestigations, nor will they require a repeat of initial vetting, as they have to date, when moving from one position level to a higher level or when returning to a vetted position after a break in service.

Still, agencies with a greater proportion of individuals in low risk positions will incur costs as a result of the requirement for continuous vetting of this population when periodic reinvestigations were not previously required. As noted in the section 4. of this preamble, these costs may be offset by cost savings realized as agencies implement continuous vetting across all populations, particularly for agencies with large populations of individuals in high risk positions. However, not all agencies will realize cost savings. While there is no alternative to the policy requirement, agencies may realize some cost avoidance in the near term through phased implementation of continuous vetting for low risk populations. As such, implementation of the required continuous vetting checks for enrolled individuals is eased through a phased introduction of the required checks over time.

OPM considered not only the cost to agencies but the burden of preparing for enrollment of the low risk and public trust populations into continuous vetting. Recognizing that agencies must validate the need of their current workforce to be enrolled into continuous vetting in accordance with this new requirement, a process that could be time intensive in particular for the low risk population not previously subject to a reinvestigation requirement, we established a phased approach. Beginning with the public trust population, agencies, working with their investigative service providers, will gradually enroll their workforces into the new continuous vetting service. This iterative approach avoids agency vetting professionals from being faced with enrolling their covered workforce all at the same time and adjudicating any resulting hits from continuous vetting checks. This enables agencies to adopt the necessary policy and procedural infrastructure needed to execute requirements.

The rule promotes a more trusted workforce to serve the American public through an enhanced risk management approach for personnel vetting, one which advances the mobility of the workforce to support agency mission needs. Establishing a continuous vetting approach for all populations subject to personnel vetting provides a framework for modernized investigative and adjudicative processes that leverage available, appropriate technology to replace costly and time-consuming labor-intensive processes that have burdened efforts by agencies to acquire top talent in a timely manner. Further, the new model assists agencies in managing and reducing risk by providing more timely information than was possible under the prior investigative model.

OPM is implementing these requirements in the least burdensome way possible while still effectuating what the President set forth in Executive orders. Individuals subject to continuous vetting are those populations already subject to Federal personnel vetting investigative standards, including contractor employees with long term access to Federal facilities and information systems. Even prior to recent Executive orders and policy requirements requiring personnel vetting investigations and determinations on contractors, the Federal Acquisition Regulation (FAR) Council published a final rule in November 2006, amending the FAR to require contracting officers to incorporate the requirement for contractors to comply with agency verification procedures—implementing HSPD-12, Office of Management and Budget (OMB) guidance M-05-24, and Federal Information Processing Standards Publication (FIPS PUB) number 201 when applicable to be performed under the contract. Aside from the new requirement for individuals in low risk positions to be continuously vetted, agencies and contractor employees requiring long term access to Federal facilities and information systems to support agencies should already be familiar with personnel vetting requirements.

This final rule provides greater consistency in vetting processes and, where possible, saves costs by reducing redundancy and duplication and modernizes processes for collecting information. By establishing minimum standards of fitness for the excepted service that align with OPM's suitability standards, there is a greater likelihood that individuals will be assessed using consistent standards, thus providing a stronger basis for application of reciprocity when moving between positions. The impact to agencies' personnel vetting programs is reduced when they can reciprocally apply prior determinations rather than making new determinations or requesting new investigations.

OPM anticipates this final rule will reduce the burden on agencies as they transition from a full reinvestigation of every public trust employee every five years to reinvestigation only as needed and to continuous vetting that relies extensively on automated sources. Although agencies will also need to enroll their low risk population, which is not currently subject to reinvestigation requirements, into continuous vetting, the cost impacts may be offset by savings associated with the move from periodic reinvestigations to continuous vetting for their sensitive and non-sensitive public trust populations. Enrollment of the non-sensitive public trust population will occur throughout fiscal year 2025. Enrollment of the low risk population is projected to begin in fiscal year 2027. Through a phased process, agencies are initiating their populations into continuous vetting and, eventually, individuals will be enrolled into continuous vetting at the onset of their initial background investigations. Further, since each individual's investigation will always be up to date through the continuous vetting approach, agencies will no longer need to await results of a new background investigation. Instead, agencies will be able to onboard individuals more quickly into new positions, while only having to request investigation necessary to cover any investigative gaps that may be due to breaks in service or changes in position risk and/or sensitivity.

One organization suggested OPM provide data demonstrating the number of Federal civil service employees who were delayed in transferring to another agency and the processing burden to agencies as a result. An individual suggested that more research into the benefit of the scope and frequency of vetting could be beneficial, especially in the case of suitability or fitness vetting, which the commenter opines is less studied and scrutinized than that of security vetting. The individual offered that there is little objective research to support that this degree of vetting is effective and that there is little discussion of the goals and objectives of conducting vetting to this extent. As is outlined at the onset of this rule, OPM is required by Executive order to establish continuous vetting requirements for the non-sensitive public trust and low risk populations to standardize investigative activities across the civil service, contractor employee, and DoD nonappropriated funds populations. OPM is not adopting substantial changes to the applicability of reciprocity requirements that have been in place since 2009. Further, by way of this rule, OPM is not increasing the scope of vetting requirements, though the periodicity of post-appointment checks are changing for the non-sensitive public trust population. The Federal Personnel Vetting Core Doctrine, 4 which defines the personnel vetting mission, its guiding principles, key supporting processes, and policy priorities, provides more explanation in support of the new approaches.

An organization asked for a cost-benefit analysis of the change from periodic reinvestigations to continuous vetting. The organization recognized that the current regulation already authorizes a continuous reassessment so long as it occurs at least every five years. The organization suggested reassessments that decrease in periodicity may result in a cost savings but could weaken agency security. The commenter did not express questions or concerns with the cost analysis that was included in the notice of proposed rulemaking published in January 2023 or with the explanation of anticipated benefits with the changes. Therefore, OPM adopts the economic assessment provided in the proposed rule with only two sets of changes. First, OPM updated pricing of products by the Defense Counterintelligence and Security Agency (DCSA), which was an estimate at the time the proposed rule was issued. Second, OPM also updated the cost analysis to use the 2024 pay rates.

This rule will affect the operations of most Federal agencies in the executive branch—ranging from cabinet-level departments to small independent agencies. To comply with the regulatory changes, affected agencies will need to review the rule and update their policies and procedures. For this cost analysis, the assumed average salary rate of Federal employees performing this work will be the rate in 2024 for GS-14, step 5, from the Washington, DC, locality pay table ($157,982 annual locality rate and $75.70 hourly locality rate). We assume that the total dollar value of labor, which includes wages, benefits, and overhead, is equal to 200 percent of the wage rate, resulting in an assumed labor cost of $151.40 per hour. We estimate that, in the first year following publication of the final rule, the effort to update policies and procedures will require an average of 250 hours of work by employees with an average hourly cost of $151.40. This effort would result in estimated costs in the first year of implementation of about $37,850 per agency, and about $3,028,000 in total government-wide. In subsequent years, the costs of regulatory compliance associated with this rule will be folded into agencies' routine costs.

The ongoing administrative costs to agencies for continuous vetting enrollment of existing and new individuals working for or on behalf of the Government will vary depending on the makeup of each agency's populations with regard to their affected Federal and contract positions and the risk levels of those positions. As noted, agencies' populations of individuals subject to continuous vetting are those already subject to Federal personnel vetting investigative standards as described previously, including contractor employees with long term access to Federal facilities and information systems. The extent to which such individuals have previously been subject to periodic reinvestigation requirements depended on the nature of their access or duties. Those in national security sensitive positions have long been subject to periodic reinvestigation requirements and more recently to continuous vetting requirements. Those in non-sensitive public trust positions have been subject to periodic reinvestigations for suitability, as described previously. Each agency is responsible for assessing the risk level at the low, moderate, or high level for each position within their agency. Each agency is therefore best positioned to know the number of employees in positions at each level and the number of individuals associated with the personnel vetting requirements at each respective investigative tier. Each agency will have different numbers of positions at each risk level and the proportion of low, moderate, and high risk positions will vary. Consequently, the cost of continuous vetting for the low risk and public trust population will vary amongst the Federal agencies. 5 To assist Federal agencies in budget development, DCSA released in August 2024 its 2025 and 2026 products and services billing rates  6 including pricing for the initial continuous vetting capability for non-sensitive public trust positions. For fiscal year 2025, agencies can expect to pay a $3.25 monthly subscription fee for active enrollees in non-sensitive, public trust continuous vetting. By comparison, DCSA's price for a standard service, non-sensitive, high risk public trust reinvestigation (Tier 4) in fiscal year (FY) 2025 is $2,505, which equates to $41.75 monthly over five years. Agencies utilizing continuous vetting in FY 2025 for their non-sensitive, high risk, public trust populations would avoid $2,310 in personnel vetting costs over five years for each such position. The difference between reinvestigation costs and initial continuous vetting checks for nonsensitive moderate risk positions is not as significant; still, agencies would avoid $180 in personnel vetting costs over five years for such positions given the FY 2025 cost of $375 for each non-sensitive moderate risk public trust reinvestigation. While DCSA's pricing for FY 2025 and 2026 does not establish the cost of the continuous vetting product for the low risk population, it will not be more than $39-$40.20 per year which are the FY 2025 and FY 2026 costs for the continuous vetting products for the non-sensitive, public trust populations. 7 Future costs for continuous vetting for the low risk population are not expected to rise to the cost of checks for the national security population, since checks on the low risk population will be much less extensive than those on the national security population.

An additional factor that agencies need to consider when assessing budget impacts of continuous vetting is the cost avoidance realized by the move from periodic reinvestigations to continuous vetting of their sensitive populations. To illustrate how the impacts to agency budgets will vary, the following examples are provided for a department that is comprised mainly of non-sensitive positions, the Department of Veterans Affairs (VA), and a department that is comprised mainly of sensitive positions, DoD. The VA has vastly more non-sensitive positions (approximately 513,400) than sensitive positions (approximately 9,000). The VA's positions are largely non-sensitive, low risk, with approximately 455,000 Federal and contractor personnel in low risk positions; 41,200 in non-sensitive, moderate risk, public trust positions; and 17,200 in non-sensitive, high risk, public trust positions. Under the current requirement to request a reinvestigation for public trust positions every five years and considering FY 2025 DCSA pricing, the VA should anticipate paying $58,536,000 for non-sensitive, public trust reinvestigations over five years. With continuous vetting, the annual cost of enrolling the public trust population for fiscal year 2025 is $2,277,600, or $11,338,000 over five years, equating to $47,198,000 in cost avoidance for the non-sensitive, moderate and high risk positions over the five-year cycle. For continuous vetting of the low risk population, at a cost of $39 per low risk position per year, VA would expect to pay DCSA $17,745,000 annually or $88,725,000 over five years. For any sensitive positions the VA has, they may also recognize the cost savings between the periodic reinvestigation products and continuous vetting product for sensitive positions. The cost implications for enrollment of VA's 9,000 sensitive positions into continuous vetting could range from an additional cost of $810,000 over five years to cost avoidance of $29,286,000 depending on the proportion of noncritical sensitive positions (Tier 3) and critical sensitive/special sensitive positions (Tier 5). Thus, the total cost of the shift to continuous vetting for all of VA's populations subject to this requirement, using VA's anticipated payments to DCSA for these services, will depend on the makeup of VA's population. Compare this to DoD, which has a much higher sensitive population than non-sensitive with approximately 3.5 million individuals in sensitive positions and approximately 283,000 in non-sensitive positions. With approximately 3,000 non-sensitive, moderate risk positions and 560 non-sensitive, high risk positions, the DoD could plan to spend $3,465,440 on periodic reinvestigations over five years for their non-sensitive public trust positions whereas continuous vetting would result in a total cost of $1,602,000 and therefore result in $1,863,440 in cost avoidance over that same period. The cost of enrolling DoD's 280,000 federal and contractor low risk positions at $39 per year subject to the requirement would equate to an annual cost of $11,037,000 or $55,185,000 over five years; however, this cost would be offset not only by the cost avoidance of $1,863,440 for the non-sensitive, public trust population but also by the cost savings associated with the shift to continuous vetting from periodic reinvestigations for the sensitive population. Given that the DoD has approximately 3.5 million individuals in national security positions undergoing continuous vetting in lieu of periodic reinvestigations, the expected cost savings would be expected to offset the cost for enrollment of their low risk populations into continuous vetting.

The standardization in vetting resulting from the changes in this rule will increase efficiency across the executive branch while allowing for faster identification of issues that may adversely affect trust determinations of individuals. Mobility of individuals is enhanced by reciprocal acceptance of investigations and adjudications thus allowing individuals to move more quickly between and within Federal agencies and Government contractors. Additionally, the revised rule enables a more efficient re-entry to Federal service.

With respect to continuous vetting, agencies may recognize a cost savings by using continuous vetting rather than the traditional reinvestigation product that is currently required for public trust positions at a minimum five-year periodicity, and the extent of the cost savings will vary depending on the proportion of their populations with regard to risk and sensitivity levels. Additionally, cost savings may be realized since continuous vetting provides that the vetting of enrolled individuals will always be up to date. This will result in further cost avoidance whenever an individual requires an upgrade of their vetting level or when an individual returns to a vetted position after a break in service. Agencies will be able to onboard individuals more quickly into new positions while requesting only the investigative elements necessary to cover any investigative gaps that may be due to changes in position risk and/or sensitivity. This cost avoidance will be borne out as agencies begin to implement the new Trusted Workforce 2.0 policies that leverage continuous vetting for risk management. On balance, while we anticipate there may be additional costs to agencies with much greater proportions of low risk positions than non-sensitive, public trust or national security positions, we do not believe that this rule will substantially increase the ongoing costs to most agencies, and the benefits outweigh the costs in providing agencies greater opportunities for timely talent acquisition and reduced risk to people, property, information systems, and mission through timely delivery of relevant information.

If any of the provisions of this final rule is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, it shall be severable from its respective section(s) and shall not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other dissimilar circumstances, unless such holding is that the provision is invalid and unenforceable in all circumstances, in which event the provision shall be severable from the remainder of this part and shall not affect the remainder thereof. This final rule revises vetting requirements by broadening their applicability, establishing continuous vetting, and standardizing the way in which suitability and fitness determinations are made. As discussed elsewhere in this rule, there are various authorities for these provisions. The provisions of this final rule apply to different populations such as the competitive service, the excepted service, and contractor employees. Should provisions related to one of these populations be held to be invalid we believe that most of the provisions should be severable and would not be impacted. Similarly, many of the operational requirements have no bearing on other provisions and are severable. For example, a holding that a suitability or fitness factor is invalid should not impact other provisions related to how these decisions are made. In enforcing the provisions of this rule, OPM will comply with all applicable legal requirements.

OPM has examined the impact of this rule as required by Executive Orders 12866, 13563, and 14094, which 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). A regulatory impact analysis must be prepared for major rules with effects of $200 million or more in any one year. This rulemaking does not reach that threshold but has otherwise been designated as a “significant regulatory action” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094.

The Acting Director of the OPM certifies that this rule will not have a significant economic impact on a substantial number of small entities.

This regulation will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant preparation of a Federalism Assessment.

This regulation meets the applicable standard set forth in Executive Order 12988.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits before issuing any rule that would impose spending costs on State, local, or tribal governments in the aggregate, or on the private sector, in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold is currently approximately $183 million. This regulation will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, in excess of the threshold. Thus, no written assessment of unfunded mandates is required.

The Office of Information and Regulatory Affairs in the Office of Management and Budget has determined that this rule does not satisfy the criteria listed in 5 U.S.C. 804(2).

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

Depending on the population, currently suitability and vetting information is collected through the following OMB Control Numbers.

Additional information regarding these collections of information—including all current supporting materials—can be found at https://www.reginfo.gov/public/do/PRAMain by using the search function to enter either the title of the collection or the OMB Control Number. Data gathered through the information collection falls under the systems of record notice Personnel Vetting Records System, DUSDI 02-DOD (83 FR 52420).

In a parallel effort to this rule, and as part of its work with the PAC, OPM proposed a new information collection and renewal cycle, Personnel Vetting Questionnaire (PVQ), to streamline the existing information collections commensurate with on-going efforts to improve personnel vetting processes and the experience of individuals undergoing personnel vetting. OMB approved the PVQ information collection under control number 3206-0279 on November 15, 2023. See https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202302-3206-005. Once the new collection is implemented, OPM plans to discontinue the current information collections.

Some individuals or populations may be required to complete an updated questionnaire in order for continuous vetting to be conducted. In the notice of proposed rulemaking published in January 2023, OPM sought public comment on the cost and burden implications for this potential new population. However, no comments were received other than what has been addressed elsewhere within this rule.

Accordingly, for the reasons stated in the preamble, OPM amends 5 CFR parts 302 and 731 as follows:

The CFC is the world's largest and most successful annual workplace charity campaign, with 35 CFC campaign zones throughout the country and overseas and raising millions of dollars each year. Pledges made by Federal civilian, retiree, postal, and military donors during the campaign season support non-profit organizations that meet CFC regulations and provide health and human welfare benefits throughout the world.

To provide public accountability, OPM generally requires participating charities to undergo a third-party audit of their finances. In a 1995 rulemaking, OPM exempted local charities from the audit requirement if they had annual revenue of less than $100,000. In 2014, OPM eliminated the distinction between “local” and “national” charities and expanded the exemption to all charities with revenue of less than $100,000. See 5 CFR 950.203(a)(2)(i). In that rulemaking, OPM also added a second tier, allowing charities with revenue of $100,000 to under $250,000 to participate without an audit but with a review by an independent certified public accountant instead. See 5 CFR 950.203(a)(2)(ii).

Participation by charities in the CFC dropped precipitously over the last decade, however. Charities have explained that the audit requirement serves as a barrier to participation. Revenue reported by charities has increased, and more than 75 percent of charities now exceed the current audit threshold of $250,000 in reported revenue. At the same time, costs of audits have risen dramatically and now often exceed the value of donations collected through the CFC. Audit services can now range from $15,000-$30,000. Accordingly, a charity cannot justify the expense of the audit, which yield a net loss to the charity.

The mission of the CFC is to promote and support philanthropy through a program that is employee-focused, cost-efficient, and effective in providing all Federal employees the opportunity to donate. The CFC provides employees with an easy way to contribute to their charities of choice; so, when employees no longer find their favorite charity on the CFC list, they may not give as much or as often. Therefore, to attract more donors to the CFC and to retain and attract a more diverse group of charities, OPM is adjusting the audit requirements in an 18-month pilot program.

OPM's CFC regulations authorize the Director of OPM to “waive any of these [public accountability] standards and certifications upon a showing of extenuating circumstances.” 5 CFR 950.203(e). In addition, the Director may “exercise general supervision over all operations of the CFC and take all necessary steps to ensure the achievement of campaign objectives.” 5 CFR 950.102(c). Recognizing that the financial thresholds have not been adjusted in over ten years (and that the $100,000 threshold is almost 20 years old), OPM finds that immediate steps are warranted to facilitate participation by charities in the CFC.

Based on the feedback OPM has received from charities, the Acting Director has found that the current financial thresholds present extenuating circumstances that impair the achievement of campaign objectives as the thresholds have not been adjusted for inflation in over 10 years. Furthermore, the thresholds are inconsistent with the standards applied by other areas of the government. For example, the Office of Management and Budget currently requires audits for organizations that expend $750,000 or more in Federal funds. See 2 CFR part 200, subpart F. Similarly, many similar state programs have raised their audit thresholds to $1,000,000. Because the existing regulatory thresholds are having a negative impact on the effectiveness of the CFC and revised thresholds would provide some necessary financial relief, the Acting Director finds that a limited waiver is appropriate. Specifically, waiving the audit requirement for charities with annual revenue of $1 million or less, and waiving the requirement for an independent review of financial statements for charities with annual revenue above $1 million but that receive less than $750,000 in CFC pledges will help address the extenuating circumstances of the increased revenues received by charities combined with the increased costs of financial auditing and review services without commensurate inflationary adjustments to the regulatory thresholds.

Accordingly, OPM provides notice that, for the 18-month period after December 18, 2024, OPM will waive the regulatory thresholds for audits and/or reviews of financial statements for organizations with annual reported revenue of $1,000,000 or less on its IRS Form 990 or pro forma IRS Form 990 and will waive the regulatory thresholds for audits of financial statements for organizations with annual reported revenue above $1,000,000 and with less than $750,000 coming from CFC. Details are available at https://cfccharities.opm.gov/app/#!/home.

All other organizations ( e.g., an organization with annual reported revenue above $1,000,000 and with $750,000 or more coming from CFC) continue to be required to undergo an annual financial statement audit for CFC purposes. The organization must account for its funds based on generally accepted accounting principles. A copy of the audited financial statements and auditors report must be included with the application. See 5 CFR 950.203(a)(2)).

OPM plans to update its regulations governing the CFC (RIN 3206-AO66). OPM will assess the effectiveness of this waiver in terms of encouraging charity participation in CFC and whether there is a resultant increase in employee participation. OPM will also assess the extent to which these pilot programs affect the number of charities participating in CFC and which charities meet these proposed thresholds. OPM charity application reviewers at the local national, and international levels will study the audits and financial reviews submitted with applications to ensure that these thresholds are providing appropriate levels of accountability.

The 504 Loan Program is an SBA financing program authorized under title V of the Small Business Investment Act of 1958, as amended, 15 U.S.C. 695 et seq. (“Small Business Investment Act”). Under the 504 Loan Program, loans are made to small business applicants by Certified Development Companies (“CDCs”), which are certified and regulated by SBA to promote economic development within their community.

There are three types of CDCs that participate in the 504 Loan Program. This document relates to the temporary increased delegated authorities that were granted, in accordance with section 328(b) of the Economic Aid Act (“EAA”), to CDCs that are approved by SBA to participate in the Accredited Lenders Program (hereafter “ALP CDCs”), which is authorized under section 507(a) of the Small Business Investment Act. Under section 507(c) of the Small Business Investment Act, SBA is authorized to develop an expedited procedure for processing a loan application or servicing action submitted by ALP CDCs. [15 U.S.C. 697d.]

Prior to the Economic Aid Act, ALP CDCs were required to obtain SBA's approval on both the loan's eligibility and creditworthiness determinations. In addition, ALP CDCs only had delegated authority to make certain “No Adverse Change” certifications prior to loan closing without SBA's review and approval and were only authorized to close 504 loans under the expedited loan closing procedures applicable to a Priority CDC. Further, ALP CDCs were required to obtain SBA's approval for most servicing actions. Section 328(b) of the EAA temporarily provided ALP CDCs increased delegated authority to “approve, authorize, close and service covered loans,” for loans of not more than $500,000 and that are not made to a borrower in an industry with a high rate of default as defined by SBA. SBA implemented these increased delegated authorities with the publication of an interim final rule on June 27, 2022. (87 FR 37979). Pursuant to the EAA, these delegated authorities were to expire on September 30, 2023.

In order to evaluate the use of these increased delegated authorities by ALP CDCs and to identify opportunities for further modification, SBA developed the ALP Express Pilot program to provide these increased delegated authorities through September 30, 2025, to ALP CDCs (hereafter referred to as “ALP Express Pilot Loans”). The ALP Express Pilot's delegated authorities in effect represented a continuation of the ALP Express authority provided by the Economic Aid Act. (88 FR 69529 (October 6, 2023)). Pursuant to its authority set forth in section 507(c) of the Small Business Investment Act (15 U.S.C. 697d(c)), which authorizes SBA to develop expedited procedures for processing a loan application or servicing action submitted by ALP CDCs, SBA published a notice of proposed rulemaking on October 24, 2024 (89 FR 84831), proposing to make permanent the increased delegated authorities available under the ALP Express Pilot. With this document SBA also requested public comment to help the Agency identify which parts of the pilot have been successful and which may need further modification.

On November 25, 2024, the notice of proposed rulemaking comment period ended. SBA received 11 comments to the notice of proposed rulemaking of which one was beyond the scope of the NPRM. Of the 10 unique comments received, 2 were from national trade associations, 7 were from Certified Development Companies, and one was from an individual. The one comment that was beyond the scope of the notice of proposed rulemaking was from an individual. Public comments received to further expand the pilot authorities will be addressed in the Section-by-Section Analysis. Of the 10 comments received, 9 supported the changes as set forth in the notice of proposed rulemaking. One comment supported the changes and requested additional modification, and the comment from the individual was nonresponsive as it did not comment on the proposed rule but instead suggested revisions to the ALP Express Guide. SBA did not receive any comments opposing the changes. In addition to comments on these regulations there were also comments requesting that SBA implement policies and procedures on electronic signatures, electronic closings, and digital debentures to improve efficiencies across the 504 loan program for both ALP and non-ALP CDCs.

A. CDC's Authorities. Under the ALP Express Pilot, SBA delegated to ALP CDCs the authority to make the final decision with respect to the applicant's creditworthiness on ALP Express Pilot Loans. SBA continued to be responsible for reviewing each 504 loan to ensure that it meets all loan program requirements for program eligibility, and its risk management enhancement within E-Tran provided a tool to assist with fraud detection and prevention. SBA proposed to make these increased authorities permanent for loans that meet ALP Express eligibility criteria. SBA is not making additional changes to current ALP Express underwriting, servicing or closing authorities beyond those established by the ALP Express Pilot Program. In its public comments the National Association of Development Companies (NADCO), a national trade association, stated that additional delegated authorities cannot be implemented because SBA lacks this authority under the Accredited Lenders Program. Based on the excellent performance of this cohort of the 504 loans portfolio, there has been low risk to the national 504 portfolio due to the implementation of the ALP Express Pilot. SBA expects ALP CDCs to continue to use this delegated authority as prudent lenders and will monitor the national portfolio of ALP Express loans. Of all ALP Express loans approved since inception of the Pilot and through June 30, 2024, none were in default or in liquidation. SBA will monitor the risk of this cohort on a continuous basis going forward.

SBA also delegated to ALP CDCs the authority to approve certain servicing actions after closing on ALP Express Pilot Loans (though ALP CDCs were still required to notify the appropriate SBA servicing center of their approval of any servicing action on ALP Express Pilot Loans). In addition, SBA delegated to ALP CDCs the responsibility to undertake all actions necessary to close the ALP Express Pilot Loan and Debenture in accordance with the expedited loan closing procedures applicable to a Priority CDC and with 13 CFR 120.960. SBA is making these increased authorities permanent for loans that meet ALP Express eligibility criteria (hereafter referred to as “ALP Express Loans”). CDCs would use these delegated authorities to approve certain servicing actions after closing. SBA has not found any issues or concerns with the ALP Express loan cohort that would prompt SBA to reconsider making permanent these increased delegated authorities. SBA will continuously monitor the risk of this cohort due to these permanent servicing and closing delegations going forward.

In their own discretion, ALP CDCs may decide not to exercise their increased delegated authority with respect to an ALP Express Loan and may instead submit the loan to SBA under nondelegated procedures. ALP CDCs may not use their ALP Express authority to service a loan that was approved under non-delegated authority that could have been made as an ALP Express Loan. In addition, Premier Certified Lender Program (PCLP) CDCs may decide to process an ALP Express Loan under their status as an ALP CDC instead of as a PCLP CDC, thereby not requiring the CDC to comply with Loan Loss Reserve Fund requirements for that loan. A PCLP CDC that decides to process a loan as an ALP Express Loan however may only use ALP Express authorities, not PCLP authority, for that loan.

In making, closing, servicing, or liquidating an ALP Express Loan, CDCs are required to follow all Loan Program Requirements. This includes the loan closing and disbursement procedures in SOP 50 10 7.1 and any updates to the servicing and liquidation requirements in 13 CFR 120.535, 120.536, 120.540, 120.842 and 120.960, as well as SOP 50 55. SBA is not further expanding any of these responsibilities in making permanent the increased authorities available to ALP CDCs under the ALP Express delegations of authority.

SBA received public comments recommending a further expansion of ALP Express delegated authorities. The commenters recommended that SBA: (1) Allow full delegated processing, approval, and authorization of ALP Express Loans; (2) Allow ALP CDCs to prepare, finalize, and execute the Loan Terms and Conditions; (3) Allow ALP CDCs to process and approve all loan modifications between loan approval and loan closing and enter changes directly in the Capital Access Financial System (CAFS); (4) Implement a loan scoring model for use by ALP CDCs in approving ALP Express Loans. SBA is not including these recommendations because SBA lacks this authority under the Accredited Lenders Program.

For further guidance on ALP Express authority, please review the ALP Express Pilot Program Guide. This guide will apply to the increased delegated authorities made permanent under this final rule and will be updated as needed.

Finally, in response to public comments, SBA is revising its regulations under 13 CFR 120.953 related to certain responsibilities of Trustee appointed by SBA to facilitate 504 Debenture sales and the related definition of “Debenture” in 13 CFR 120.802. Pursuant to 13 CFR 120.953(c), SBA must appoint a Trustee to maintain physical possession of 504 Debentures for SBA and the Certificate holders. In practice, this requirement limits CDCs, and indirectly SBA borrowers, to executing only physical paper Debentures and prohibits the adoption of electronic Debentures and all their corresponding advantages and efficiencies. SBA is revising the definition of “Debenture” in 13 CFR 120.802 to allow for either paper or electronic Debentures. A revision to the requirements set forth in 13 CFR 120.953(c) will clarify that the SBA shall use a trustee to hold in trust paper Debentures. The consequence of adopting electronic Debentures will be a streamlined loan closing process and modernized documentation retention procedures for these documents, thereby lowering costs for CDCs and SBA borrowers.

B. Application and Reporting Requirements. CDCs are required to comply with the reporting requirements in 13 CFR 120.830, using the application forms for current 504 loan processing, and are required to execute an SBA Terms and Conditions document for each 504 loan, including ALP Express Pilot loans, as set forth in SOP 50 10. ALP CDCs use SBA Form 1244 to document its ALP Express authority when submitting an application for an ALP Express Pilot loan. In doing so, SBA tracks whether the ALP CDC was using its ALP Express increased delegated authority for the loan. In making the increased authorities available to ALP CDCs under the ALP Express Pilot Program permanent, SBA is not changing ALP CDC reporting requirements and related responsibilities. No further changes to Form 1244 are needed.

C. Lender Oversight. ALP CDC oversight procedures shall continue to follow the requirements set forth in 13 CFR part 120, subpart I, SOP 50 53 (Lender Supervision and Enforcement) and SOP 51 00 (On-Site Lender Reviews and Examinations). The SOPs can be found on the SBA website. ALP CDCs will be monitored both for performance and other risk characteristics. The ALP CDC must comply with the requirement that it only make ALP Express Loans in an amount of $500,000 or less, along with all other loan program requirements. ALP CDCs also will be subject to 13 CFR 120.1400 through 120.1600 and the provisions of SOP 50 53 concerning supervision and enforcement. SBA is not changing these responsibilities in making permanent the increased authorities available to ALP CDCs.

Executive Order 12866, “Regulatory Planning and Review,” directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563, “Improving Regulation and Regulatory Review,” emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14094, “Modernizing Regulatory Review,” amends section 3(f) of Executive Order 12866 and supplements and reaffirms the principles, structures and definitions governing contemporary regulatory review established in Executive Order 12866 and Executive Order 13563. The OMB Office of Information and Regulatory Affairs has determined that this rulemaking is not a significant regulatory action. SBA has drafted a cost-benefit analysis for the public's information in the next section.

Access to capital is one of the primary challenges for small businesses to start, grow, and sustain their businesses. The SBA 504 loan program serves an important role in business lending for small businesses that do not have credit available elsewhere from conventional sources on reasonable terms. The Agency believes that a streamlined process for small dollar loans particularly for loans of $500,000 or less will facilitate increased participation by small business owners, especially those in underrepresented communities. SBA observed that upon implementing the increased delegated authorities required by the EAA, SBA was able to reduce the processing and approval time of loan applications of $500,000 or less for small businesses that needed immediate financial assistance.

The ALP Express Pilot increased delegated authorities have proven that ALP CDCs are able to process, approve, and service ALP Express loans within the guidelines issued by the SBA. Due to the success of the Pilot, SBA is now making these delegations permanent. Accordingly, the permanent program change will reduce regulatory burdens, reduce the number of hours spent processing an application to deliver a loan for both SBA and CDCs and increase access to capital for small businesses.

With respect to adopting electronic 504 Debentures, SBA believes this change will streamline the loan closing process and lower costs for CDCs and SBA borrowers.

SBA anticipates that making permanent the ALP Express Pilot Loan authority and providing ALP CDCs with greater authority to approve and service loans will reduce processing time and therefore benefit small businesses, their employees, and the communities they serve.

Indeed, SBA observed that the processing and approval time for ALP Express Pilot loans averaged 2.3 business days whereas the processing time for regular 504 loans using non-delegated authority averaged 5 days. Therefore, small businesses will have access to capital to start, grow, and sustain their businesses in a shorter timeframe. SBA does not anticipate additional costs or impacts on the subsidy once these increased delegated authorities are made permanent.

Finally, adoption of electronic Debentures will expedite the loan closing process and lower documentation storage and transmission costs.

SBA could allow the ALP Express Pilot to expire and resume the level of ALP authorities that were in place prior to the implementation of the Economic Aid Act. Due to the efficiency gains under the ALP Express pilot, SBA considered it more prudent to retain these increased delegated authorities to reduce regulatory burdens for ALP CDCs and to responsibly streamline the processing, approval and closings of 504 loan application under $500,000 without substantially increasing the risk of waste, fraud, or abuse of the programs, or threatening the integrity of the business loan programs or the waste of taxpayer dollars.

SBA reviewed public comments and received recommendations for alternatives that cannot be implemented because SBA does not have this authority under the Accredited Lenders Program. These include: (1) Allowing full delegated processing, approval, and authorization of ALP Express Loans; (2) Allowing ALP CDCs to prepare, finalize, and execute the Loan Terms and Conditions; (3) Allowing ALP CDCs to process and approve all loan modifications between loan approval and loan closing and enter changes directly in the CAFS; (4) Implementing a loan scoring model for use by ALP CDCs in approving ALP Express Loans.

Finally, as an alternative to the changes being contemplated to § 120.953, SBA could maintain its current physical Debenture regime where physical paper is shipped and stored. Due to the efficiency gains afforded by electronic Debentures, SBA considered it more prudent to transition to the use of electronic Debentures.

This action meets applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action would not have preemptive effect or retroactive effect.

This final rule will not have Tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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.

This final rule will not have federalism implications as defined in Executive Order 13132, Federalism. It would not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in the Executive order. As such it does not warrant the preparation of a Federalism Assessment.

This final rule does not impose additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C. chapter 35. In order to implement the Economic Aid Act, SBA determined that it was necessary to temporarily modify SBA Form 1244, which was approved on November 22, 2022, under OMB Control Number 3245-0071, Application for Section 504 Loans, to conform the application with the revised requirements for ALP Express Loan authority. The changes did not add any new burdens for the respondents. SBA made the following technical corrections and clarifying changes to SBA Form 1244 which became effective October 1, 2024: (1) revised question number 4 on page 2 to include the updated language as a result of the Criminal Justice Reviews for the SBA Business Loan Programs, Disaster Loan Programs, and Surety Bond Guaranty Program (89 FR 34094); (2) added a paragraph on page 4 authorizing the SBA to release information regarding existing SBA loan to Lender/CDC; (3) revised the instructions on page 5 ( Purpose of the Form ) to clarify that CDCs with ALP Express Loan authority must use the form; (4) added a new ALP Express checkbox to page 8 in the Submission Method field; (5) added an additional row to the project table on page 9 for Other Secured Debt to be Refinanced; and (6) updated the instructions on pages 11 and 12 ( Required Exhibits ) to identify which exhibits must be completed and uploaded in SBA's E-Tran system for ALP Express Loans and which exhibits non-ASM CDCs must complete and upload into E-Tran. No additional modifications to SBA Form 1244 were necessary for the ALP Express Pilot, and no additional modifications to SBA Form 1244 will be necessary for purposes of making the ALP Express increased authorities permanent through this rulemaking.

The Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601, et seq., requires administrative agencies to consider the effect of their actions on small businesses, small organizations, and small governmental jurisdictions. Pursuant to the RFA, when an agency issues a proposed rulemaking, it must prepare and make available for public comment an initial regulatory flexibility analysis to address the impact of the rule on small entities. SBA published a notice of proposed rulemaking on October 24, 2024, with comments due on or before November 25, 2024, and received 10 supportive comments and no opposing comment. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities. The rulemaking will have a positive impact and will be beneficial for all ALP CDCs. By making permanent the temporary increased delegated authorities available under the ALP Express Pilot program this rulemaking will improve the approval time of 504 loan applications for loans in an amount of $500,000 or less.

Between FY 2022 (June 27, 2022) and FY 2025 (October 31, 2024) SBA approved 4,971 non-ALP Express loans of $500,000 or less, for a total dollar amount of $1,511,075,000. In the same period SBA approved 2,364 ALP Express and ALP Express Pilot loans for a total dollar amount of $1,283,386,000. The total number of approved 504 loans of $500,000 or less over this period was 7,335 loans, in the amount of $2,794,461,000. Based on the total 504 loans of $500,000 or less approved since ALP Express implementation, ALP CDCs have demonstrated success in processing and servicing loans using their increased ALP Express delegated authority. In addition, since ALP Express implementation, there have been no instances of ALP Express loans in default or in liquidation.

SBA estimates the burden for completing SBA Form 1244, “Application For Section 504 Loans”, including time for reviewing instructions, gathering data and documentation needed, and completing and reviewing the form, is 2.5 hours. SBA will not need to change SBA Form 1244 as a result of this rulemaking. SBA anticipates the final rule will increase the number of CDCs making loans of $500,000 or less and increase the number of approved 504 program loans as a whole. The ALP Express Pilot added no additional cost burdens to SBA, CDCs, or small business borrowers and there were minimal changes to SBA forms. SBA used existing staff to implement the Pilot. No further changes to SBA forms or staffing levels are anticipated to make permanent the ALP Express increased delegated authorities. Finally, the ALP Express Pilot cohort of loans had no defaults and no liquidations. SBA will continue to monitor the risk of this cohort to SBA's 504 portfolio going forward.

With respect to the electronic Debenture change, SBA currently must appoint a Trustee to maintain physical possession of 504 Debentures for SBA and the Certificate holders. In practice, this requirement limits CDCs, and indirectly SBA borrowers, to executing only physical paper Debentures and prohibits the adoption of electronic Debentures and all their corresponding advantages and efficiencies. A revision to the requirements set forth in 13 CFR 120.953(c) will authorize SBA to maintain possession of electronic (or digital) versions of 504 Debentures, thereby streamlining the loan closing process and lowering costs for CDCs and SBA borrowers

Based on the foregoing, the Administrator of the SBA hereby certifies that this rulemaking will not have a significant economic impact on a substantial number of small businesses. The SBA invited comments from the public on the certification for the proposed rule. SBA did not receive any objections to its certification.

This rule has been determined not to meet the criteria set forth in 5 U.S.C. 804(2). SBA will submit the rule to Congress and the Government Accountability Office consistent with the Congressional Review Act's requirements.

Accordingly, for the reasons stated in the preamble, SBA amends 13 CFR part 120 as follows:

This rule implements the Helping American Victims Affected by Neurological Attacks (HAVANA) Act of 2021, Public Law 117-46, codified in 22 U.S.C. 2680b(i), which (among other things) required Department heads to prescribe regulations implementing the HAVANA Act for covered individuals. The Department published an interim final rule (IFR) on April 19, 2023 (88 FR 24110), which laid out the process for HAVANA Act claimants to submit claims for payment for a qualifying injury to the brain suffered by current and former employees of the Department, and dependents of current or former employees. Under the IFR, the criteria for a qualifying injury to the brain are based on current medical practices related to brain injuries. Further, the injury must have occurred in connection with certain hostile acts or other incidents designated by the Secretary of State or the Secretary of Commerce. Further background is contained in the preamble to the IFR. The IFR provided for 30 days of public comment, and the Department provides responses to those comments below.

The Department received a total of eight public comment submissions in response to the IFR. Many comments provided input on multiple subjects. The Department received identical comment submissions from four commentors. All comments are addressed below.

Several commentors focused on the Department's definition of “qualifying injury to the brain.” First, numerous commentors urged the Department to adopt a broad definition of a “qualifying injury to the brain.” Under the IFR, individuals may be eligible for a HAVANA Act payment if they meet one of three criteria under the definition of “qualifying injury to the brain”: (1) An acute injury to the brain such as, but not limited to, a concussion, penetrating injury, or as the consequence of an event that leads to permanent alterations in brain function as demonstrated by confirming correlative findings on imaging studies (to include computed tomography scan (CT), or magnetic resonance imaging scan (MRI)), or electroencephalogram (EEG); or (2) A medical diagnosis of a traumatic brain injury (TBI) that required active medical treatment for 12 months or more; or (3) acute onset of new persistent, disabling neurologic symptoms as demonstrated by confirming correlative findings on imaging studies (to include CT or MRI), or EEG, or physical exam, or other appropriate testing, and that required active medical treatment for 12 months or more.

The Department believes that this definition is broad and flexible enough to cover a wide range of brain injuries. The Department also notes that this definition is consistent with regulations issued by the State Department (Jan. 25, 2023, at 88 FR 4722). Therefore, this final rule does not change the IFR definition of “qualifying injury to the brain.”

Multiple comments requested that the Department remove the requirement that an individual receive 12 months of active medical treatment before they are eligible for a HAVANA Act payment. Of the three criteria for a qualifying brain injury, as set forth above, only (2) and (3) require 12 months of treatment. Under (1), 12 months of treatment is not required if an individual demonstrates permanent alterations in brain function with confirming correlative findings on imaging studies. The Department believes that the requirement for 12 months of treatment, which is consistent with State Department regulations (Jan. 25, 2023, at 88 FR 4722), demonstrates that an individual suffers from a chronic condition even if that individual does not demonstrate a permanent condition. Further, even if a covered individual has not yet received 12-months or more of treatment as outlined in (2) or (3), the covered individual may nevertheless qualify at a later time if treatment lasts for twelve months or more.

A number of comments asked that the Department establish an eligibility threshold for benefits that does not rest in whole or in part on the contemporaneous diagnosis of a brain injury. Instead, the commentors urged the Department to allow claimants to establish eligibility based on the presence of one or more of the symptoms that have come to be associated with Anomalous Head Injuries. The Department does not believe that it is appropriate to grant claims without appropriate medical documentation of a qualifying injury to the brain. The Department also notes that the standard that it uses to determine payment eligibility is consistent with the standard used by the Department of State.

One comment asked that the Department recognize a “qualifying brain injury” even when an individual is receiving ongoing treatment; or the treatment was “split up” or the individual was diagnosed years later. Nothing in the IFR prevents the payment of compensation under such circumstances, provided that the definition of a “qualifying brain injury” is otherwise met.

One comment focused on the date of the injury, expressing a belief that the Department should compensate individuals who suffered qualifying injuries prior to January 1, 2016. The Department is unable to accept this suggestion. The HAVANA Act specifies that payments are for injuries occurring on or after January 1, 2016. The Department does not have the authority to provide payments for injuries occurring prior to that date without an amendment to the HAVANA Act or additional legislative action.

In addition to the comments discussed above concerning the Department's definition of a “qualifying brain injury,” multiple comments urged that the final rule incorporate some mechanism to facilitate changes to the Department's framework for determining eligibility for payment based on science or diagnostic breakthroughs. The Department declines to incorporate such a mechanism into this final rule but may conduct rulemaking in the future in accordance with existing laws and regulations, should circumstances so dictate.

One comment urged the Department to provide reasons for a denial of requests for benefits to a claimant and develop a meaningful appeals process that employees can use in the event of a denial of benefits. Under the IFR, the Department already provides claimants who have been denied a payment with the reason for the denial. Additionally, the Department believes that its current appeals process, which provides for higher-level review of any denial, offers adequate and meaningful review of denials.

One comment, seeking to ensure greater transparency about the Department's decision-making process, raised concerns with the use of non-public information maintained by the State Department in the Department's consultation process with the State Department. Consultation with the State Department may assist the Department in determining, in part, a claimant's eligibility for benefits under the HAVANA Act. In particular, because a qualifying injury to the brain must have occurred in connection with war, insurgency, hostile act, terrorist activity, or other incidents designated by the Secretary of State or the Secretary of Commerce, consultation with the State Department may assist in determining whether an injury is connected to an incident designated by the Secretary of State. However, the State Department, not the Department of Commerce, determines whether such information is administratively controlled or made publicly available.

Because this rule is a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, it is exempt from the requirements of 5 U.S.C. 553. See 5 U.S.C. 553(a)(2). Furthermore, because this final rule does not change the regulatory provisions previously implemented by the IFR, a delay in effective date is unnecessary and therefore the Department finds good cause for this rule to take effect immediately. Furthermore, because this final rule does not change the regulatory provisions previously implemented by the IFR, a delay in effective date is unnecessary and therefore the Department finds good cause for this rule to take effect immediately. See 5 U.S.C. 553 (d)(3).

The Chief Counsel for Regulations for the Department certified that this rulemaking does not have a significant impact on a substantial number of small entities. This rule applies only to certain individuals who are current and former Department employees and family members who are eligible for payments as a result of certain injuries. The rule provides for payments to certain individuals and is not expected to impact any small entities. As a result, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act (5 U.S.C. 601, et seq. ), and none has been prepared.

This rule has been determined to be a significant regulatory action under Executive Order 12866, as amended by Executive Order 14094.

The Department has reviewed the rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866 and finds that the benefits of the rule (in providing mechanisms for individuals to obtain compensation for certain injuries) outweigh any costs to the public. The Department has also considered this rulemaking in light of Executive Order 13563 and affirms that this proposed regulation is consistent with the guidance therein.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq. ) (PRA), the information collection associated with this final rule was approved by the Office of Management and Budget (OMB) under OMB Control Number 0690-0037. Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

Accordingly, the Department of Commerce adopts the interim rule published April 19, 2023, at 88 FR 24110, as final without change.

Executive Order 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents,” sought to ensure that when Federal agencies issue guidance documents, the agencies: do not treat those guidance documents alone as imposing binding obligations both in law and in practice, except as incorporated into a contract; take public input into account in formulating significant guidance documents; and make guidance documents readily available to the public. (84 FR 55235, Oct. 15, 2019). On September 28, 2020, the Department issued an interim final rule, “Promoting the Rule of Law Through Improved Agency Guidance Documents” to implement E.O. 13891. (85 FR 60694). The interim final rule established 15 CFR part 29 for guidance document procedures, procedures for withdrawal or modification requests from the public, and procedures for significant guidance documents.

On January 20, 2021, President Biden issued E.O. 13992, “Revocation of Certain Executive Orders Concerning Federal Regulation,” revoking a number of Executive orders including E.O. 13891. (86 FR 7049, Jan. 25, 2021). E.O. 13992 directs agencies “to rescind any orders, rules, regulations, guidelines, or policies, or portions thereof, implementing or enforcing the revoked Executive orders.”

After review and consideration, the Department concluded that its rule on guidance documents deprives the Department of necessary flexibility in determining when and how best to issue guidance based on particular facts and circumstances consistent with the policy directive in E.O. 13992. Therefore, the Department is issuing this final rule to rescind its regulations at 15 CFR part 29. The Department will continue to pursue ways to make its guidance documents more accessible to the public. Additionally, in accordance with M-09-13, “Guidance for Regulatory Review,” the Office of Management and Budget will continue to review the Department's actions and documents subject to the Office of Information and Regulatory Affairs review under E.O. 12866. These reviews include policy and guidance documents that OMB determines are significant.

This final rule is a rule of agency organization, procedure, or practice, codifying in the CFR the Department's existing procedures. Therefore, pursuant to 5 U.S.C. 553(b)(3)(A), notice and public comment are not required. Because a notice and public comment are not required for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

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

This rule does not have any collection of information requirements under the Paperwork Reduction Act.

The FOIA is a Federal statute that allows the public to request records from the Federal government. The FOIA provides that any person has a right, enforceable in court, to obtain access to federal agency records subject to the FOIA, except to the extent that any portions of such records are protected from public disclosure by one of nine exemptions. Under the FOIA, agencies must make records specified in 5 U.S.C. 552(a)(2) ( e.g., instructional manuals issued to our employees, general statements of policy, other materials used in processing claims, etc.) available for public inspection in an electronic format. The FOIA also statutorily requires Federal agencies to annually report on numerous and various metrics to the Department of Justice (DOJ).

Since the time the SSA became an agency independent of the Department of Health and Human Services, Congress enacted two significant laws. These laws, the Openness Promotes Effectiveness in our National Government Act of 2007 (OPEN Government Act of 2007)  1 and the FOIA Improvement Act of 2016, 2 guide how agencies implement the requirements of the FOIA. We are finalizing our proposed updates and revisions to our regulation at 20 CFR part 402 to conform with these laws, as well as the FOIA Improvement Act of 2016's requirement to issue regulations on procedures for disclosure of records in accordance with its amendments.

On June 6, 2023, we published a notice of proposed rulemaking (NPRM) to update, reorganize, and clarify our FOIA processes for the public. 3 In the NPRM, we proposed comprehensive revisions to the entirety of 20 CFR part 402. This reorganization starts with our FOIA policies and procedures for processing FOIA requests and concludes with information on records available for public inspection. Our revisions, finalized here with some modifications from the NPRM, streamline our FOIA regulations at part 402 by creating new sections, consolidating sections based on content, and revising section headings to more clearly capture the information contained therein. We also proposed updates to reflect office name changes, as well as general text changes consistent with the plain language initiative. 4

Our proposed revisions to our FOIA regulation at 20 CFR part 402, which we are finalizing with minor revisions, are supported by the requirements of the OPEN Government Act of 2007 and the FOIA Improvement Act of 2016.

These changes also correlate with the guidelines on the FOIA that Attorney General Merrick Garland issued within his March 2022 Memorandum for Heads of Executive Departments and Agencies. As summarized by DOJ's Office of Information Policy, Attorney General Garland's memorandum “direct[s] the heads of all executive branch departments and agencies to apply a presumption of openness in administering the FOIA and make clear that the Justice Department will not defend nondisclosure decisions that fail to do so.” Attorney General Garland stated that proactive disclosures are “fundamental to the faithful application of FOIA,” and advised agencies of the need “to remove barriers to access and to help requesters understand the FOIA process and the nature and scope of the records the agency maintains.”

In the NPRM, and in this final rule, we explained and justified the rulemaking on the requirements of the OPEN Government Act of 2007  5 and the FOIA Improvement Act of 2016. 6

The changes we are finalizing in this final rule to conform with the requirements of the OPEN Government Act of 2007 are as follows:

• Within revised § 402.60, we are updating and clarifying the following business practices: our acknowledgement of FOIA requests, when a request is considered perfected, our multi-tracking procedures, unusual circumstances, and tolling of the 20 business day statutory time period;

• Within revised §§ 402.70 through 402.80, we are clarifying our rules concerning fees;

• Within revised §§ 402.05 and 402.100, we are introducing and providing information on the services of the FOIA Public Liaison and the Office of Government Information Services (OGIS); and

• Within revised § 402.10, we are defining “representative of the news media,” amending the definition of “record,” and defining new terms (such as the FOIA Public Liaison, OGIS, and Chief FOIA Officer).

The changes we are finalizing in this final rule to conform with the requirements of the FOIA Improvement Act of 2016 are as follows:

• Within revised §§ 402.15(a) and 402.60(k), we are adding the foreseeable harm standard;

• Within revised § 402.105, we are updating the appeal timeframe to 90 days (from 30 days);

• Within revised §§ 402.05 and 402.100, discussed earlier, we are addressing the FOIA Public Liaison and OGIS;

• Within revised §§ 402.70 through 402.80, we are clarifying our fee charging rules, including when unusual circumstances apply;

• Within revised § 402.135(a), we are revising the deliberative process privilege to provide that this privilege cannot be applied to records that are 25 years or older at the time of the FOIA request; and,

• Within revised § 402.155(a), we are addressing our public posting of records requested three or more times.

• In § 402.10, we clarified the definition of “commercial interest” in response to public comment.

• In § 402.10, we added the definition of “commercial use” to differentiate “Commercial interest” from “commercial use.” “Commercial use” is terminology used in our fee waiver provisions and is not intended to impact the “commercial use” FOIA fee category.

• In § 402.10, we clarified the definition of “educational institution.” While we did not receive public comment on this definition, the language we added aligns with DOJ FOIA guidance and case law. The added language specifies that we may seek verification from the requester that the request is in furtherance of scholarly research.

• In § 402.10, we clarified the definition of “fee category.” While we did not receive public comment on this definition, we removed “noncommercial” so the language now states: “The categories are: commercial use requests; scientific or educational institutions and news media requests; and all other requests.” “Commercial use” is its own fee category; therefore, the term “noncommercial” is redundant.

• In § 402.10, we changed the term “reading room” to “FOIA library” to align with DOJ FOIA guidance. We also added the following sentence to further explain what may be maintained in a FOIA library: “Posted records may include those provided under agency discretion and not required pursuant to FOIA.” We changed the term “reading room” to “FOIA library” throughout the regulation.

• In § 402.10, we modified the definition of “representative of the news media.” While we did not receive public comment on this definition, we removed the phrase “based on the requester's intended use of the requested records” to align with the FOIA statute.

• In § 402.10, we clarified the definition of “Trade secrets and commercial or financial information.” While we did not receive public comment on this definition, we adjusted the terminology of the definition to make it easier to understand. The term now reads: “Trade secrets and confidential commercial or financial information.”

• In § 402.20(b), we changed the language from stating the agency “will handle” your request under the Privacy Act to the agency “may handle” your request under the Privacy Act. This change clarifies that not all individuals requesting their own records that are maintained in a system of records, or parents or legal guardians authorized to act under § 401.75 of this chapter who are seeking the records about a minor or individual who has been declared incompetent, would be entitled to access records under the Privacy Act. For instance, SSA maintains systems of records that are exempt from access under § 401.85 and third-party information within a subject's systems of records may not be accessible under the Privacy Act. Further, requesters must verify their identity to make a Privacy Act request. In cases where a requester who filed a FOIA would not be entitled to records under the Privacy Act, we will handle their request under FOIA. We further clarified that “Privacy Act requests are also processed under the FOIA, when appropriate, to give you the benefit of both statutes. You must verify your identity in accordance with our regulations.” Given our central processing of FOIA, it is not feasible for Privacy Act initial denials to be processed under FOIA prior to denial of administrative appeal because OPD, the sole decisionmaker under FOIA, does not process initial denials but does process administrative appeal denials.

• In § 402.25, we modified the language to align more with the FOIA statute by changing “member of the public” to “person.”

• In § 402.30(a)(4), we consolidated two separate sentences into one for clarity and readability. The sentence now reads: “The request must clearly state and reasonably describe what SSA records are being requested in sufficient detail to enable OPD to locate them with a reasonable amount of effort.” We also changed the word “should” to “may” in the following sentence to clarify that providing the information specified therein is not a requirement: “If the request is for electronic communications, such as email records, the request may identify the names, position titles, or other identifying information about the agency employees involved, as well as the applicable timeframe.”

• In § 402.35, we added the National FOIA Portal as an additional resource through which requesters can submit FOIA requests to SSA, and we removed the agency's fax number. This section, however, continues to provide requesters codified directions to our website at https://www.ssa.gov/foia for additional contact information, as well as an email address for inquiries and a physical mailing address.

• In § 402.45, we changed the name of the section heading and revised the content to more clearly describe how we handle certain requests. The “Requests not processed under the FOIA” is now Requests handled outside of the FOIA process. We added a clarifying sentence, “When records (a) through (d) below are requested from OPD, OPD will respond to the requester and provide information for requesting the records sought,” to articulate how we respond outside of the FOIA process.

• In § 402.55, we edited the language to further clarify how we handle consultations and referrals, e.g., we added language to explain referrals of requests in whole or in part. Our practices as described in this section align with DOJ's FOIA guidance and how other agencies similarly handle consults and referrals. While we did not receive public comment on this section, we clarified the language in § 402.55(a) to state that “[w]hen reviewing records located by SSA in response to a request, SSA will determine whether another agency of the Federal Government is better able to determine whether the record is exempt from disclosure under the FOIA.” We further clarify that we may refer records, in whole or in part to an outside agency. Within modified § 402.55(a)(1), finalized in this rule, we now state: “We will notify the requester in writing when we opt to refer records in whole or in part to another agency for direct response from that agency, including the name(s) or the agency(s) to which the record was referred and that agency's FOIA contact information, unless notification would cause harm to an interest protected under the FOIA. In such instances, in order to avoid harm to an interest protected by an applicable exemption, we coordinate to seek the view of the originating agency.”

• We moved § 402.55(b) Referral of requester to another agency, to § 402.60(k) and edited the language to more clearly describe SSA's actions. The sub-heading now reads: Directing a requester to another agency. This subsection describes our practices that are not technically referrals as defined in the FOIA statute. This move provides more clarity on our FOIA process.

• In § 402.60(a)(1), we revised the first sentence concerning our acknowledgement of FOIA requests for consistency with the FOIA statute. The language now reads: “If we receive a FOIA request that will take longer than 10 working days to process, we will provide an acknowledgment.”

• In § 402.60(b) and elsewhere throughout the regulation, we changed the term “business days” to “working days” for consistency with the FOIA statute.

• In § 402.60, we reorganized Expedited processing within 402.60(c) Multi-tracking procedures. Section 402.60(c), clarifies that there are three multi-track types: “FOIA requests are categorized simple, complex, or expedited. Unless granted expedited processing, we process FOIA requests in each track according to a first-in, first-out basis.” We further clarify in § 402.60(c)(2) how long it takes the agency to process requests placed in the complex multi-track: “We will place into a complex processing queue any request that cannot be completed within 20 working days due to the complex nature of the request, including consultation with components that may maintain records subject to the request.”

• In § 402.60(d), we clarify that “[w]hen unusual circumstances exist, we will process the request under the complex track.” We received a public comment concerning SSA's “unusual circumstances” practice. As explained within the “Comments and Responses” portion of this final rule, we modified our final regulation to reflect that “unusual circumstances” exist “[w]hen unusual circumstances exist, we will process the request under the complex track.” This change is a clarifying statement but not a change in practice. We currently use multi-tracks under § 402.140(c) and similarly define longer tracks to include situations where there is a need to consult with other SSA offices and the FOIA defines unusual circumstances under 5 U.S.C. 552(a)(6)(B)(iii) to exist when there is a need to search for and collect the requested records from offices separate from the office processing the FOIA request. Thus, the change to § 402.60(d) is merely a clarifying statement of how our tracks align with the unusual circumstance requirements in FOIA.

• In § 402.60(d)(2), we added language about our “unusual circumstances” notification for consistency with the FOIA statute. We added the following sentence: “We will notify the requester of the date by which we estimate completing the request.”

• In § 402.60(f), we clarified our fees by adding “duplication” among the items subject to a fee. The language now reads: “FOIA requesters are issued a fee notice that informs them of the estimated search, review, and duplication time associated with processing their FOIA request.”

• In § 402.60(g)(2), we clarified language regarding our administrative closing of requests. The language now reads: “The processing time will resume upon our receipt of the requester's response. There may be instances when we require multiple clarifications on a FOIA request. After the first request for clarification, any additional clarifications are performed without tolling the clock. If we do not receive a response to our clarification attempts within 30 calendar days from the date of our first contact to the requester, we will close the FOIA request.”

• In 402.60(i), we renamed the title of the subsection to reflect the content more clearly. The subsection's title changed from “Unproductive searches” to No records determinations.

• In § 402.60(j), we removed the word “only” from the first sentence, so it now reads as follows: “We will furnish copies of records in whole or in-part, unless we reasonably foresee that disclosure would harm an interest protected by a FOIA exemption or if disclosure is prohibited by law.”

• In § 402.65, we modified (a), (a)(2), and (b). Under § 402.65(a), we removed the phrase “such as” before we list the criteria for expedited processing. For § 402.65(a)(2), for clarity and plain language usage, we changed the language from “the request is from the media, or other” to “the requester is.” In response to public comment, we also removed the word “immediate” in describing the urgency to inform the public necessary for expedited processing. Under § 402.65(b), we added language to clarify and more closely align with the FOIA statute  7 to reflect the requester's requirements when submitting a request for expedited processing. Our regulation now clearly states what information the requester must provide when submitting a request for expedited processing, i.e., “A requester who seeks expedited processing must submit a statement, certified to be true and correct, explaining in detail the basis for making the request for expedited processing. We will notify the requester within 10 calendar days of receipt of the request for expedited processing of our decision to grant or deny expedited processing.” We added one more sentence, clarifying our processing of requests for expedited processing: “Requests granted expedited processing will be given priority and processed as soon as practicable.”

• In § 402.85, in response to public comment, we modified the language by further clarifying the public interest criteria and what a requester should provide when submitting a request for a fee waiver citing public interest. We expand on this change within the “Comments and Responses” portion of this final rule.

• In § 402.90(c)(3), to align more with the electronic age and requesters' use of credit card payment forms, we added language clarifying that we will dispose of payment information or return it. For example, if a requester faxed us their credit card payment information and the credit card payment information is no longer needed, rather than returning the completed credit card payment form via postal mail, we may dispose of the payment information.

• In § 402.105(a)(2) and (a)(3), we added language further clarifying the timeframe to submit an appeal and what information a requester should provide when submitting an appeal. While we did not receive public comment on this section, we added the phrase “or in the case of electronic submissions, transmitted” and the word “calendar” to § 402.105(a)(2), so it now reads: “Be received, or in the case of electronic submissions, transmitted within 90 calendar days from the date of the determination the requester is appealing.” Under § 402.105(a)(3), we expand on what the appeal should include by adding two more sentences, so it now reads: “Explain what the requester is appealing and include additional information to support the appeal. The appeal should clearly identify the agency determination that is being appealed and the assigned request's tracking number. To facilitate handling when submitted via mail or fax, the requester should mark the appeal letter, or subject line of the electronic transmission, `Freedom of Information Act Appeal.' ”

• In § 402.105(b), we revised the first sentence concerning our acknowledgement of FOIA appeals for consistency with the FOIA statute. The language now reads: “If we receive an appeal that will take longer than 10 working days to process, we will provide an acknowledgment.”

• In § 402.105(c)(2), we clarify how long it takes the agency to process appeals placed in the complex multi-track: “Appeals of complex requests cannot be completed within 20 working days.”

• In § 402.115 through § 402.145, we revised some of the introductions within the FOIA Exemptions to account that there may be considerations beyond the Exemption itself.

• In § 402.130, we clarified Exemption 4 regarding the Submitter's Notice to make clear how we may handle transmission of submitter notices in cases involving many submitters. We also clarified some of the language to make it consistent throughout the regulation.

• In § 402.135, Exemption 5, we added “may” to the following sentence to clarify that these records are examples: “Such internal government communications may include an agency's communications with an outside consultant or other outside person, with a court, or with Congress, when those communications are for a purpose similar to the purpose of privileged intra-agency communications.”

• In § 402.145(e), we modified the language to mirror the FOIA statute concerning Exemption 7(E).

• In § 402.155, we added the phrase, “SSA's public” in front of “Hearings, Appeals, and Litigation Law Manual.” We received public comment regarding the agency's proactive disclosures; therefore, our addition of the phrase “SSA's public” clarifies that the agency posts a public version of the Hearings, Appeals, and Litigation Law Manual.

• In § 402.160(a), we added “(a)(5) By posting in the FOIA Library,” to the list of places where the agency publishes records.

To visualize our reorganization of part 402, we provided a table that identifies the old (existing) regulatory sections, the sections to which the content moved, and the names of the new sections, which we are also including for ease-of-use and transparency in this final rule. 8

We received five public comments on our NPRM from June 6 through August 7, 2023. All the comments are available for public viewing at https://www.regulations.gov/document/SSA-2021-0049-0001. These comments were from:

• Two individuals; and

• Three advocacy groups, Public Citizen, Community Legal Services of Philadelphia, and Justice in Aging.

We carefully considered the public comments we received. Comments from individuals and advocacy provided a mix of support for the revisions and reorganization as well as recommended revisions.

We received some comments that were outside the scope of this rulemaking because they did not relate to our proposals. Even though outside the scope, we address some of these other comments where they related to the FOIA more generally because a response might help the public understand our program better.

The next section summarizes and responds to the public comments.

Comment: Two commenters requested that we ensure the application of the fee waiver provision is consistent with the FOIA statute within the introductory language of 20 CFR 402.85. The commenters urged us to ensure that our application of the new fee waiver regulation is “more consistent with the FOIA statute.” The commenters explained that we deny fee waiver requests made in the public interest.

Response: We understand the commenters' concern; however, we consistently follow the statutory and our regulatory requirements to disclose records at no fee or a reduced fee. Because SSA charges fees when the request is not directly related to the administration of the Social Security Act based on our authority in section 1106(c) of the Social Security Act, which applies notwithstanding the FOIA provisions in 5 U.S.C. 552 and 552a, the FOIA statutory fee provisions would not apply. 9 When a public interest fee waiver is sought, we will approve waiver when the criteria in our regulation at 20 CFR 402.85 (formerly 20 CFR 402.185) have been met; this aspect of our fee charging and waiver procedures has not changed in this final rule from our current regulations. In seeking waiver requests, the requester should explain with reasonable specificity why their request meets the “public interest” criteria for a fee waiver under 20 CFR 402.85. Our regulation at § 402.85, explains the factors we consider when determining whether a request meets the “public interest” criteria necessary to reduce or waive the fee. The modifications we made to this section of our final regulation further clarify what a requester should provide when submitting a request for a fee waiver citing public interest. Under § 402.85(b)(1), we added the phrase “in writing” to the following sentence: “A requester must make the request for a fee waiver or reduction in writing at the same time they make their request for records.” In describing the public interest criteria under § 402.85(b)(2), we modified § 402.85(b)(2)(iii) and added § 402.85(b)(2)(iv). Within § 402.85(b)(2)(iii), we added the phrase “of those operations or activities” so the sentence now reads: “Whether the contribution to public understanding of those operations or activities would be significant.” Newly added § 402.85(b)(2)(iv) further clarifies that specificity is necessary when requesting a fee waiver in the public interest, i.e.: the requester “must be reasonably specific in your waiver request as to the specific Government operation or activity and provide direct, clear (not remote or attenuated) connections to the meaningful information you seek. Generalized interest in government programs is not reasonably specific to grant waiver.”

Comment: Several commenters requested that we change our proposed definition of “commercial interest” in 20 CFR 402.10. They asserted that our proposed definition of “commercial interest” suggests that interests related to non-profit corporations, such as the work performed by claimant advocacy entities, are commercial. These commenters suggested that our proposed definition does not accurately reflect the standard for a finding of a noncommercial use in the FOIA statute.

Response: We disagree that our proposed definition, finalized here, is inconsistent with the FOIA statute. Similar to our response regarding “public interest” above, commercial interests could be present regardless of the identity of the requester (individual, non-profit corporation, for-profit corporation). In response to the comment, we revised the definition of “commercial interest” to clarify that the interests could exist regardless of the requester's identity. We also added the definition of “commercial use” to address the FOIA fee category.

Comment: Several commenters agreed with our proposed revisions to 20 CFR 402.155 to provide responsive FOIA records in electronic format, particularly those documents related to statements of policy and interpretation, consistent with 5 U.S.C. 552(a)(2)(B). The commenters further advocated that our Program Operations Manual System (POMS) be proactively disclosed in its entirety and indexed, as well as all Emergency Messages (EM) and Administrative Messages (AM).

Response: POMS and EMs are not categorically subject to the proactive disclosure requirements of the FOIA. Nonetheless, in the interest of transparency, SSA now publishes indexes of POMS and EM titles, which are updated quarterly, on our public-facing website. 10 SSA has a longstanding practice of making agency non-sensitive POMS and EMs public, even when the policies are not subject to the FOIA's proactive disclosure requirements. Our current policy publication process directs authoring components to flag sensitive POMS and EMs that should be proactively disclosed under FOIA. 11 Any such flagged policies then undergo a FOIA review and are published with appropriate redactions if they contain non-exempt content.

AMs, which are informational or staff reminders and do not contain new instructions or policy, are also not categorially subject to proactive disclosure requirements. Our regulations and policy publication practices reflect these distinctions.

Comment: Commenters requested that when requesting electronic communications, they do not need to provide identifying information about the agency employees involved and that a request can be reasonably described even if it seeks a large number of documents. They requested that we revise the scope of proposed § 402.30, which described the requirements of a FOIA request, without necessarily providing detailed information regarding the individual(s) from whom the records are sought.

Response: SSA processes the FOIA centrally within the Office of Privacy and Disclosure (OPD); therefore, we need the requester to clearly state and reasonably describe what SSA records are being requested so that we can properly determine the scope of the FOIA request. When seeking emailed communications, we understand that requesters may not know the name of specific employees whose records they want to be searched; therefore, we do not require such information. As stated in our proposed regulation, “When known, requests should identify the records sought by providing the name/title of the record, applicable date range, subject matter, offices or employees involved, and record type. If the request is for electronic communications, such as email records, the request may identify the names, position titles, or other identifying information about the agency employees involved, as well as the applicable timeframe.”  12 While we are clarifying the above examples are not required, technology limitations may prevent the agency from conducting searches without this information. Absent sufficient details, the agency may be unable to search for or locate the records sought.

Comment: One commenter requested that we modify the final rule to specify that the agency will respond to initial requests within 20 working days, unless we provide written notice to the requester “setting forth the unusual circumstances for [an] extension and the date on which a determination is expected to be dispatched,” as articulated in the FOIA statute at 5 U.S.C. 552(a)(6)(B)(i). The commenter acknowledged, however, that the agency may extend its response time beyond 20 business days only if it provides written notice to the requester. Further, the commenter stated that the proposed rule, in contrast, makes no mention of notifying the requester if the agency is going to take more than 20 working days to respond to an appeal.

Response: SSA processes the FOIA centrally within the Office of Privacy and Disclosure (OPD) and we frequently search, collect, and consult with components outside of OPD to process complex requests and appeals. We place requests and appeals in the complex multitrack type because they will generally take more than 20 working days to process due to the complex nature of the request, including consultation with components that may maintain records subject to the request. We modified our final regulation to reflect that “[w]hen unusual circumstances exist, we will process the request under the complex track.” This change is merely a clarifying statement of how our complex multi-track aligns with the unusual circumstances requirements in FOIA. “Unusual circumstances” exist when requests or appeals require OPD to: search for and collect records from SSA components or field locations that are separate from OPD; search for, collect, and review a voluminous number of records that are part of a single request; or consult with two or more SSA components or another agency having substantial interest in the request before releasing the records. We acknowledge the FOIA's requirements at 5 U.S.C. 552(a)(6)(B) to provide notice to the requester when unusual circumstances exist. Within the agency's acknowledgement letters and emails, we advise requesters that requests and appeals placed in a complex processing track meet unusual circumstances.

Comment: One commenter requested that we modify the final rule by deleting language in proposed tolling § 402.60(h)(2) stating that the agency reserves the right to administratively close a request within 10 business days if we do not receive a response to our request for clarification from the FOIA requester.

Response: The agency makes every reasonable effort to secure clarification from requesters before we administratively close a request. We contact requesters via email, phone, and or postal mail in our attempt to gain the clarification necessary to process FOIA requests. To avoid confusion, we clarified the language in § 402.60(g)(2) by removing the 10-business day language. The language now reads: “The processing time will resume upon our receipt of the requester's response. There may be instances when we require multiple clarifications on a FOIA request. After the first request for clarification, any additional clarifications are performed without tolling the clock. If we do not receive a response to our clarification attempts within 30 calendar days from the date of our first contact to the requester, we will close the FOIA request.” Our authority, finalized in § 402.60(g)(2) is an administrative discretion that we will use in instances where a FOIA requester never responds to our requests for clarification. If our only course of communication with a requester is postal mail, we understand that delays may occur, and are mindful to allow additional time to accommodate postal mail delivery. We cannot process requests that are not reasonably described; therefore, when a requester does not respond to any correspondence wherein we request clarification, or should the correspondence be returned as undeliverable, we reserve the right to administratively close the FOIA request.

Comment: One commenter requested that we modify the proposed rule in § 402.65(a) to remove the word “immediate” in describing the urgency to inform the public necessary for expedited processing. The commenter stated that our proposed language closely aligns with the statutory language in 5 U.S.C. 552(a)(6)(E)(v)(II) of the FOIA statute, but the word “immediate” before “urgency” is not in the statute.

Response: We agreed with the commenters' suggestion and adopted this change in order to more closely align with the statute.

We consulted with the Office of Management and Budget (OMB) and they determined that this rule does not meet the criteria for a significant regulatory action under E.O. 12866, as supplemented by E.O. 13563. Therefore, OMB did not formally review it.

The Office of the Chief Actuary estimates that there are no direct effects on scheduled Old-Age, Survivors, and Disability Insurance benefit payments and Federal Supplemental Security Income payments.

The Office of Budget, Finance, and Management estimates an administrative effect of less than 15 work years and $2 million annually.

We anticipate qualitative benefits from the revisions to the FOIA regulation from streamlined and clarified FOIA policies and procedures. We expect the clarified regulations will benefit both SSA and the public because the administration of the FOIA for SSA and our public customers would be better organized and easier to follow. The purpose of the FOIA is to provide the public with access to government records, and administrative transparency is paramount to a successful FOIA program. Since the FOIA is processed centrally at SSA, our regulation must be easy for agency employees to understand so components outside of OPD understand the importance of the FOIA and their roles in the agency's administration of the FOIA. When our policies are clear for agency employees, we are able to process FOIA requests in a more efficient manner, which benefits both the agency and the public.

Our revised regulation at part 402 provides information in a cascading fashion that is easier to follow than our existing regulation, and accurately reflects amendments implemented by the FOIA Improvement Act of 2016. Our revisions account for the roles of the FOIA Public Liaison and OGIS, which is useful for correct points of contact internally and for the public, increasing efficiency and lowering confusion. The revisions also update inaccurate information, such as the timeframe for the public to appeal adverse decisions, which presently state 30 days, but is 90 days under the FOIA Improvement Act of 2016.

The FOIA is designed to build trust between the public and Federal agencies. SSA's revised regulation at 20 CFR part 402 strengthens this trust with transparency by explaining in plain language how SSA processes FOIA requests and appeals, and further describes our proactive posting of agency records. Clear communication with the public is paramount to our administration of the FOIA. Updating and revising our FOIA regulation serves to enhance our communication with the public, making it easier for the public to know how to submit FOIA requests and where to review proactively posted records.

We analyzed this final rule in accordance with the principles and criteria established by E.O. 13132 and determined that the rule will not have sufficient federalism implications to warrant the preparation of a federalism assessment. We also determined that this rule will not preempt any State law or State regulation or affect the States' abilities to discharge traditional State governmental functions.

We certify that this rule will not have a significant economic impact on a substantial number of small entities because they affect individuals only. Therefore, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act, as amended.

While this final rule mentions the public reporting requirements for the public to submit FOIA requests to the agency, we already obtained OMB approval for these public reporting requirements under the current OMB approved information collections for 0960-0566 (SSA 3288) and 0960-0665 (SSA-711 and Online FOIA Request). As we already cover these requirements under OMB-approved information collections, and these revised rules merely move those requirements to new CFR citations but do not change them, these revised rules will not require Office of Management and Budget approval under the Paperwork Reduction Act. Rather, upon publication of the final rule, we will submit Change Requests to update the CFR citations for OMB No. 0960-0566 and 0960-0665.

This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 36B of the Internal Revenue Code (Code). 1 Section 36B(h) provides an express delegation of authority for the Secretary of the Treasury or her delegate (Secretary) to prescribe such regulations as may be necessary to carry out section 36B, including regulations that provide for the coordination of the premium tax credit (PTC) allowed under 36B with the program for advance payments of the PTC (APTC) under section 1412 of the Affordable Care Act. 2 The final regulations are also issued under the express delegation of authority under section 7805(a), which authorizes the Secretary to “prescribe all needful rules and regulations for the enforcement of [the Code], including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.”

Section 36B provides a PTC for applicable taxpayers who meet certain eligibility requirements, including that a member of the taxpayer's family enrolls in a qualified health plan (QHP) through a Health Insurance Exchange (Exchange) for one or more “coverage months.”

Section 1.36B-3(c)(1) provides that a month is a coverage month for an individual if (i) as of the first day of the month, the individual is enrolled in a QHP through an Exchange; (ii) the taxpayer pays the taxpayer's share of the premium for the individual's coverage under the plan for the month by the unextended due date for filing the taxpayer's income tax return for that taxable year, or the full premium for the month is paid by APTC; and (iii) the individual is not eligible for the full calendar month for minimum essential coverage (within the meaning of § 1.36B-2(c)) other than coverage described in section 5000A(f)(1)(C) of the Code (relating to coverage in the individual market).

Section 1.36B-3(d)(1) provides that the PTC (also called the premium assistance amount) for a coverage month is the lesser of (i) the premiums for the month, reduced by any amounts that were refunded, for one or more QHPs in which a taxpayer or a member of the taxpayer's family enrolls (enrollment premiums); or (ii) the excess of the adjusted monthly premium for the applicable benchmark plan over 1/12 of the product of a taxpayer's household income and the applicable percentage for the taxable year. The term “family” is defined in § 1.36B-1(d), and the applicable percentage is defined in § 1.36B-3(g).

Section 1.36B-2(c)(2)(i) provides that, for purposes of determining whether a given month is a coverage month for an individual, an individual generally is considered eligible for government-sponsored minimum essential coverage if the individual meets the criteria for coverage under a government-sponsored program described in section 5000A(f)(1)(A) as of the first day of the first full month the individual may receive benefits under the program.

Section 1.36B-2(c)(2)(v) provides that an individual is treated as not eligible for Medicaid, CHIP, or a similar program for a period of coverage under a QHP if, when the individual enrolls in the QHP, an Exchange determines or considers (within the meaning of 45 CFR 155.302(b)) the individual to be not eligible for Medicaid or CHIP.

Section 36B(f)(3) and § 1.36B-5 require Exchanges to report to QHP enrollees and the IRS certain information, including monthly enrollment premiums, needed to compute the PTC allowed for the enrollee. This information is reported to enrollees on IRS Form 1095-A, Health Insurance Marketplace Statement. The Centers for Medicare & Medicaid Services (CMS), part of the Department of Health and Human Services (HHS), is responsible for the Form 1095-A reporting for Exchanges that use the Federal eligibility and enrollment platform (Federally-facilitated Exchanges, or FFEs, and State-based Exchanges on the Federal platform, or SBE-FPs). State Exchanges with their own platforms (State Exchanges) are responsible for the Form 1095-A reporting for individuals who enroll in a QHP through their State Exchange.

HHS regulations at 45 CFR 156.270(d) implement section 1412(c)(2)(B)(iv)(II) of the Affordable Care Act to require issuers of QHPs to allow a “grace period” for enrollees for whom the APTC is paid but who fail to timely pay their share of the premium for the coverage. In general, a QHP issuer must provide a grace period of 3 consecutive months for such an enrollee before the issuer may terminate the enrollee's coverage. During the first month of the grace period, the QHP issuer must pay all appropriate claims for services rendered, and, during the second and third months of the grace period, the QHP issuer may pend claims.

HHS regulations at 45 CFR 155.400(g) allow issuers to implement a premium payment threshold policy under which issuers can consider enrollees to have paid all amounts due if the enrollees pay an amount sufficient to maintain a percentage of total premium paid out of the total premium owed equal to or greater than a level prescribed by the issuer, provided that the level and the policy are applied in a uniform manner to all enrollees. If an enrollee satisfies these conditions, the issuer may provide coverage even though the full enrollment premium is not paid.

In certain States, issuers also may provide coverage without payment of the full enrollment premium if a State department of insurance prohibits an issuer from terminating QHP coverage during a declared emergency.

On September 17, 2024, the Department of the Treasury (Treasury Department) and the IRS published a notice of proposed rulemaking (REG-116787-23) in the Federal Register (89 FR 75984) under section 36B (proposed regulations). The proposed regulations would have changed the definition of “coverage month” in § 1.36B-3(c)(1) for some scenarios for which the full premium for the month is unpaid by the unextended due date of the taxpayer's return for the year of coverage, provided the amount of the premium paid for the month, including by APTC, is sufficient to avoid termination of the individual's coverage for that month. The proposed regulations would have provided that a month for which the enrollment premium is not fully paid may be a coverage month in the following scenarios: (i) the first month of a grace period described in 45 CFR 156.270(d); (ii) a month for which a premium payment threshold under 45 CFR 155.400(g) has been met and for which month the issuer of the individual's qualified health plan provides coverage; and (iii) a month for which a State department of insurance has, during a declared emergency, issued an order prohibiting the issuer of the individual's qualified health plan from terminating the individual's coverage for the month irrespective of whether the full premium for the month is paid.

The proposed amendment to the definition of “coverage month” would have required a conforming change to the calculation of the monthly PTC amount under § 1.36B-3(d)(1)(i) so that the premium for a month to be considered in determining the monthly PTC for an individual's coverage would be reduced by any portion of the premium that is unpaid as of the unextended due date for filing the taxpayer's income tax return for the taxable year that includes the month.

Finally, the proposed regulations would have clarified § 1.36B-2(c)(2)(v) to provide that an individual is treated as not eligible for Medicaid, CHIP, or a similar program such as a State's Basic Health Program (BHP), for a period of coverage under a QHP if, when the individual enrolls in the QHP, an Exchange conducts an eligibility determination or, if applicable, eligibility assessment (within the meaning of 45 CFR 155.302(b)) for Medicaid, CHIP, or a similar program and determines or assesses the individual to be not eligible for coverage under the program.

The Treasury Department and the IRS received nine public comments in response to the notice of proposed rulemaking. Copies of the comments are available for public inspection at https://www.regulations.gov or upon request. A public hearing on the proposed regulations was scheduled for December 13, 2024. There were no requests to speak at the scheduled public hearing. Consequently, the public hearing was cancelled. After considering all the comments received, the Treasury Department and the IRS adopt the proposed regulations without modifications.

All nine public comments on the proposed regulations were in support of the rules in the proposed regulations. One commenter requested that the final regulations include detailed requirements, expectations, and examples relating to reporting by Exchanges of enrollment premiums and second lowest cost silver plan (SLCSP) premiums on Form 1095-A for a month for which a taxpayer's share of the enrollment premium is not paid in full (non-payment month) that may be a coverage month. Another commenter requested that all non-payment months for which coverage is provided be considered coverage months. Finally, several commenters requested flexibility for Exchanges to comply with the new coverage month rule. The comments are addressed in more detail in Parts II through IV of this Summary of Comments and Explanation of Revisions.

As discussed in Part I of the Background section of this preamble, section 36B(f)(3) and § 1.36B-5 require Exchanges to report to QHP enrollees and the IRS certain information needed to compute the PTC allowed for the enrollee. This information is reported to enrollees on IRS Form 1095-A. The enrollee's monthly enrollment premiums are reported in column A of Part III of Form 1095-A and the enrollee's monthly second lowest cost silver plan (SLCSP) premiums are reported in column B of the form.

The current instructions for Form 1095-A require Exchanges to report $0 in column A of Form 1095-A as the enrollment premium for a non-payment month. The instructions also require Exchanges to report $0 for a non-payment month in column B of Form 1095-A as the amount of the taxpayer's SLCSP premium for the month. Reporting $0 as the monthly amount in either column A or column B signals to the taxpayer and the IRS that this is not a coverage month and, thus, no PTC is allowed for the month.

One commenter requested that the final regulations include detailed requirements, expectations, and examples relating to how Exchanges should report enrollment premiums and SLCSP premiums on Form 1095-A for non-payment months that may be coverage months. The commenter asked that the examples demonstrate how Exchanges should report multiple grace periods in a calendar year, mid-month changes, and partial payments.

The commenter's request for detailed guidance on how Exchanges should report amounts on Form 1095-A is best addressed in the Instructions for Form 1095-A, rather than in regulatory text. The IRS intends to revise the 2025 Instructions for Form 1095-A to reflect the coverage month changes in these final regulations. Specifically, the revised instructions will require Exchanges to report in column A of Part III of Form 1095-A the full enrollment premium for any month that is a coverage month if such month is (i) the first month of a grace period described in 45 CFR 156.270(d) for the plan enrollees; (ii) a month for which a premium payment threshold under 45 CFR 155.400(g) has been met and for which month the issuer of the individual's qualified health plan provides coverage; or (iii) a month for which a State department of insurance has, during a declared emergency, issued an order prohibiting the issuer of the individual's qualified health plan from terminating the individual's coverage for the month (the three scenarios described in § 1.36B-3(c)(4)). The instructions will continue to provide that Exchanges must report $0 in column A for any other months for which the full enrollment premium for the month is not paid, and that the amount reported in column A should be reduced by any enrollment premium refunds or credits.

Similarly, the instructions for column B of Part III of Form 1095-A will be amended to provide that Exchanges should not report $0 as the SLCSP premium for any months for which the full enrollment premium is not paid, if the month is a coverage month under one of the three scenarios described in § 1.36B-3(c)(4). Instead, Exchanges should report the SLCSP premium that would apply if the enrollment premium had been paid in full.

With regard to the commenter's request for examples demonstrating how to report amounts on Form 1095-A under the final regulations, the Treasury Department and the IRS understand that State Exchanges may need additional guidance as they proceed with implementation of these final regulations. The Treasury Department and the IRS welcome additional input and will continue to work with State Exchanges to ensure that the Instructions for Form 1095-A adequately address how Exchanges should report non-payment months as coverage months under one of the three scenarios described in § 1.36B-3(c)(4).

The proposed regulations included a request for comments on whether the final regulations should include scenarios in addition to those provided in the proposed regulations regarding non-payment months that may be coverage months. One commenter suggested that the final regulations should permit all non-payment months to be coverage months as long as the amount of the premium paid for the month, including by APTC, is sufficient to avoid termination of the individual's coverage for that month.

In drafting the proposed regulations, the Treasury Department and the IRS considered but rejected a rule that would allow all non-payment months to be coverage months if the amount of the premium paid for the month, including by APTC, is sufficient to avoid termination of the individual's coverage for the month. As stated in the preamble to the proposed regulations, a main reason for amending the coverage month definition is to promote reporting consistency among Exchanges regarding the reporting of enrollment premiums for non-payment months. The Treasury Department and the IRS worked closely with HHS staff to identify the three scenarios described in § 1.36B-3(c)(4) as scenarios for which there is inconsistent reporting among Exchanges. In addition, the Treasury Department and the IRS have determined that an open-ended rule that could be interpreted differently by different Exchanges, based on their particular State law or practices, would not achieve more consistent reporting among Exchanges. Exchanges, as well as taxpayers and the IRS, need clarity on the definition of a coverage month, and that definition needs to apply uniformly to all taxpayers under the Federal tax law. Consequently, the Treasury Department and the IRS do not adopt this comment, and the change to the coverage month rule in the final regulations applies only for the three scenarios described in § 1.36B-3(c)(4).

The proposed regulations provided that the changes under §§ 1.36B-2 and 1.36B-3 were proposed to apply for taxable years beginning on or after the first date of the calendar year that begins after the date these regulations are published as final regulations in the Federal Register . Several commenters noted that State Exchanges will need to make extensive changes to their platform architecture to report for non-payment months that are coverage months under one of the three scenarios described in § 1.36B-3(c)(4) and, thus, requested that the final regulations provide adequate time for states to make the necessary changes to ensure accurate reporting. One commenter stated that a 9-12-month period is generally needed to implement IT changes. Another commenter requested that the final rule include detailed scenarios addressing the applicability date. One commenter supported the proposed applicability date of the next calendar year following the date of publication.

Consistent with the proposed applicability date, the rules in these final regulations apply to taxable years beginning on or after January 1, 2025. Thus, a taxpayer may be allowed a PTC for 2025 for a non-payment month that is a coverage month as described in these final regulations. However, the Treasury Department and the IRS understand that Exchanges need time to implement their reporting for the coverage month rule in the final regulations, and some Forms 1095-A filed by State Exchanges for the 2025 coverage year may not reflect that non-payment months described in § 1.36B-3(c)(4) are coverage months for which a PTC is allowed. Exchanges should do the best they can to timely implement the coverage month rule in these final regulations. Exchanges are reminded that, because section 36B(f)(3) imposes the requirement on Exchanges to report QHP enrollment information to the IRS and to Enrollees on Form 1095-A, Form 1095-A is not an information return within the meaning of section 6721, and there is no penalty imposed on an Exchange for filing a Form 1095-A that does not include all of the information required to be shown on the return or that includes incorrect information. The Treasury Department and the IRS will continue to consult with State Exchanges to assist with their implementation of the coverage month rule under these final regulations.

Finally, the proposed regulations included various applicability dates to incorporate existing applicability dates for prior amendments to the regulations under section 36B, but all of the amendments under §§ 1.36B-2 and 1.36B-3 in the proposed regulations were proposed to apply on the same date. Those amendments to proposed §§ 1.36B-2 and 1.36B-3, as finalized in these regulations, all apply to taxable years beginning on or after January 1, 2025. Thus, the Treasury Department and the IRS do not believe detailed scenarios are needed to address the final regulation's applicability date as requested by one of the commenters.

As noted in Part III of the Background section of this preamble, the proposed regulations addressed two items in addition to the change to the coverage month definition. First, the proposed regulations included a proposed change that would have conformed the calculation of the monthly PTC amount under § 1.36B-3(d)(1)(i) with the proposed rule allowing certain non-payment months to be coverage months. Under the proposed rule, taxpayers would have reduced the amount of the enrollment premiums used to compute their monthly PTC by any portion of the premium that is unpaid as of the unextended due date of the taxpayer's income tax return for the taxable year that includes the month. Second, the proposed regulations would have clarified § 1.36B-2(c)(2)(v) to provide that an individual is treated as not eligible for Medicaid, CHIP, or a similar program such as a State BHP, for a period of coverage under a QHP if, when the individual enrolls in the QHP, an Exchange conducts an eligibility determination or, if applicable, eligibility assessment (within the meaning of 45 CFR 155.302(b)) for Medicaid, CHIP, or a similar program and determines or assesses the individual to be not eligible for coverage under the program. Because no negative comments or suggested changes were received with respect to these two items, this Treasury decision adopts these amendments without change.

If any provision in this rulemaking is held to be invalid or unenforceable facially, or as applied to any person or circumstance, it shall be severable from the remainder of this rulemaking, and shall not affect the remainder thereof, or the application of the provision to other persons not similarly situated or to other dissimilar circumstances.

Pursuant to the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the IRS are not subject to the requirements of section 6 of Executive Order 12866, as amended. Therefore, a regulatory impact assessment is not required.

These final regulations do not impose any additional information collection requirements in the form of reporting, recordkeeping requirements, or third-party disclosure statements. Taxpayers who claim PTC on their income tax returns are required to file Form 8962, Premium Tax Credit (PTC), which is the sole collection of information requirement imposed on individuals by section 36B and the regulations under section 36B. The rules in these final regulations will require the IRS to revise the instructions for Form 8962. For purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(c)), the reporting burden associated with the collection of information for Form 8962 will be reflected in the PRA submission associated with income tax returns under the OMB control number 1545-0074. To the extent there is a change in burden because of these final regulations, the change in burden will be reflected in the updated burden estimates for Form 8962.

In addition, Exchanges are required to report to QHP enrollees on Form 1095-A certain information the enrollees need to compute the PTC allowed for the enrollee and to reconcile the PTC with any APTC paid for their coverage. Exchanges must also report this information to the IRS. The rules in these final regulations will require the IRS to revise the instructions for recipients of Form 1095-A and the instructions for Exchanges completing Form 1095-A. For purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(c)), the reporting burden associated with the collection of information for Form 1095-A will be reflected in the PRA submission associated with Form 1095-A under the OMB control number 1545-2232. To the extent there is a change in burden because of these final regulations, the change in burden will be reflected in the updated burden estimates for Form 1095-A.

The Treasury Department and the IRS hereby certify that these final regulations will not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6). This certification is based on the fact that the majority of the effect of the final regulations falls on individual taxpayers, and entities will experience only small changes.

Pursuant to section 7805(f), the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on their impact on small business, and no comments were received.

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Tribal government, in the aggregate, or by the private sector, of $100 million (updated annually for inflation). This final rule does not include any Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of that threshold.

E.O. 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the E.O. This rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the E.O.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2).

Guidance cited in this preamble is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.

The principal author of these final regulations is Clara L. Raymond of the Office of Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the Treasury Department and the IRS participated in the development of the regulations.

Accordingly, the Treasury Department and the IRS amend 26 CFR part 1 as follows:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers regulations regarding the labeling of distilled spirits, which include those setting forth “standards of identity.” The authority to establish these standards is based on section 105(e) of the Federal Alcohol Administration Act (FAA Act), 1 codified in the United States Code at 27 U.S.C. 205(e). That section authorizes the Secretary of the Treasury (the Secretary) to prescribe regulations relating to the “packaging, marking, branding, and labeling” of alcohol beverage containers “as will prohibit deception of the consumer with respect to such products” and “as will provide consumers with adequate information as to the identity and quality of the products.” Section 105(e) of the FAA Act also generally requires bottlers and importers of alcohol beverages to obtain approval of the product labels through certificates of label approval (COLAs) prior to bottling or importing alcohol beverages for sale in interstate commerce.

TTB administers these FAA Act provisions pursuant to section 1111(d) of the Homeland Security Act of 2002, as codified at 6 U.S.C. 531(d). In addition, the Secretary has delegated certain administrative and enforcement authorities to TTB through Treasury Department Order 120-01.

Part 5 of title 27 of the Code of Federal Regulations (27 CFR part 5) sets forth the regulations implementing those provisions of section 105(e) of the FAA Act as they pertain to distilled spirits.

The TTB regulations establish standards of identity for distilled spirits products and categorize these products according to various classes and types. See 27 CFR part 5, subpart I. As used in 27 CFR 5.141(a), the term “class” refers to a general category of spirits. Subpart I sets forth the various classes of distilled spirits and their characteristics. Examples of classes of distilled spirits include “whisky,” “rum,” “gin,” and “brandy.” As used in § 5.141(a), the term “type” refers to a subcategory within a class of spirits. These types generally have additional or more specific characteristics than the class. For example, “Cognac” is a type within the class of brandy, specifically grape brandy distilled exclusively in the Cognac region of France and meeting the laws and regulations of the French government for designation as Cognac. See 27 CFR 5.145(c)(2).

The TTB labeling regulations at 27 CFR 5.63(a)(2) require that the class and type of distilled spirits appear on the product's label. These regulations provide that the class and type must be stated in conformity with 27 CFR part 5, subpart I, of the TTB regulations.

Current TTB regulations at 27 CFR 5.143(a) set forth the standard of identity for the class whisky. In § 5.143, paragraphs (c)(2) through (18) categorize the specific types of whisky, such as “Bourbon whisky” and “malt whisky.” The current regulations provide standards for identifying whisky as “malt whisky,” at paragraph (c)(2), and “whisky distilled from malt mash,” at paragraph (c)(7), but do not further specify standards for “single malt whisky.” Malt whisky is described as whisky produced at not more than 160° proof from a fermented mash of not less than 51 percent malted barley and stored at not more than 125° proof in charred new oak barrels. Such whisky stored in charred new oak barrels for a period of 2 years or more may optionally be further designated as “straight” malt whisky. See 27 CFR 5.143(c)(5). A “whisky distilled from malt mash” is whisky produced in the United States at not more than 160° proof from a fermented mash of not less than 51 percent malted barley and stored in used oak barrels.

With respect to geographical designators such as “American,” § 5.154(a)(3) provides that geographical names that are not names for distinctive types of distilled spirits, and that have not become generic, may not be used unless the product is produced in the particular place or region indicated in the name. Accordingly, a product currently designated as “American whisky” must be produced in the United States. Additionally, §§ 5.143(b) and 5.154(b)(1) provide that a product designated as “malt whisky” or “American malt whisky” must be produced in the United States.

Products may currently bear the designation “American Single Malt Whisky,” and TTB has approved COLAs with that term, without any additional parameters other than those described above.

In October 2017, TTB received three petitions with similar content from XO Alambic, Remy Cointreau, and Westland Distillery. Each of these petitioners noted that they were filing their petition on behalf of, or with, the American Single Malt Whiskey Commission (ASMWC), an association of at least seventy-five producers of whisky in the United States. In their petitions, the distillers requested the establishment of a standard of identity to define the “American single malt whisky” category for producers and consumers alike. They noted that the American whisky category has been growing over the past decade and continues to expand, and that recognition of American single malt whisky is at an all-time high, with U.S. distillers winning international competitions with products in these categories. They stated that establishment of a standard of identity would benefit consumers, as it would provide a definition for the product, establish trust in the category, clarify label declarations, and equip consumers with the necessary information to make informed decisions so they can have confidence in the products they are choosing to buy in a similar way that Scotch whisky standards provide such information to American consumers. They also believe establishment of a standard of identity would strengthen the U.S. economy by increasing tax revenue related to the sale of American single malt whiskey, and by creating jobs related to producing, distributing, and selling such a product and the ingredients used in this product.

In their petitions, the distillers requested the establishment of a standard of identity for American single malt whisky, defined as a type of whisky that is mashed, matured, and distilled at a single United States distillery, distilled to a proof not exceeding 160° proof from a fermented mash of 100 percent malted barley, stored in oak containers not exceeding a capacity of 700 liters, and bottled at not less than 80° proof.

In 2018, TTB published in the Federal Register a notice of proposed rulemaking (Notice No. 176, 83 FR 60562) proposing to amend its regulations governing the labeling and advertising of wine, distilled spirits, and malt beverages. Although TTB did not include a proposal for an American single malt whisky standard of identity in Notice No. 176, TTB received over 200 comments in support of such a standard. One of these comments was from the ASMWC, who proposed a slightly different standard of identity from the one submitted in the three 2017 petitions. ASMWC's comment to Notice No. 176 proposed that American single malt whisky should be distilled, mashed, and matured in the United States, but only distillation should be required to take place at a single United States distillery. All other aspects of the standard remained the same as those previously proposed in the petitions from XO Alambic, Remy Cointreau, and Westland Distillery. ASMWC's comment stated that this standard of identity was supported by more than 130 producers of single malt whisky. In this document, this ASMWC proposal is referred to as the “2018 ASMWC petition.”

On July 29, 2022, TTB published in the Federal Register Notice No. 213 (87 FR 45727), “Proposed Addition of American Single Malt Whisky to the Standards of Identity for Distilled Spirits,” which provided notice and the opportunity to comment on the proposed addition of a standard of identity for American single malt whisky to the TTB regulations. Notice No. 213 generally incorporated the standard of identity proposed in the petitions submitted to TTB and comments received on Notice No. 176. Specifically, TTB proposed to define American single malt whisky as a type of whisky that is mashed, distilled, and aged in the United States; is distilled entirely at one U.S. distillery; is distilled to a proof of 160° or less; is distilled from a fermented mash of 100 percent malted barley; is stored in oak barrels (used, uncharred new, or charred new) not exceeding 700 liters; and is bottled at not less than 80° proof.

The comment period for Notice No. 213 closed on September 27, 2022. TTB received 158 comments in response to Notice No. 213. Commenters included 16 U.S. and foreign trade associations, 44 industry members and related companies, and 98 individual members of the public (many of these individuals are part of the distilled spirits industry but submitted their comments only under their own name). Of the comments received, 73 were submitted separately to TTB but had identical or nearly identical content and are labeled as mass comments as posted on the rulemaking docket. These mass comments stated support for the creation of a standard of identity for American single malt whisky in line with the ASMWC petition.

The vast majority of the comments received supported establishing a standard of identity for American single malt whisky. In addition to the mass comments, 41 commenters expressed support for establishing the standard of identity as proposed in the NPRM, while twenty-five commenters supported establishing a standard of identity for American single malt whisky but with modifications to the proposed criteria. Three commenters did not support establishing a standard of identity. Those in support stated that establishing a standard of identity for American single malt whisky is beneficial for producers and consumers. Specifically, commenters stated that it will increase opportunities for American producers, allow for more innovation in this product category, and create trust in this category for consumers. Those opposed to establishing the proposed standard of identity for American single malt whisky generally did so in response to the proposed criteria and stated that the definition was too narrow, should allow grains other than barley, or that the definition was not restrictive enough. These comments are addressed in the discussion for each criterion below.

Below, TTB summarizes and responds to the comments received relating to the proposed criteria for American single malt whisky. TTB notes that many commenters compared the criteria for American single malt whisky to other whiskies frequently described as “single malt,” such as Scotch whisky or Irish whisky. While recognizing the well-established reputation of such whiskies, TTB is also taking into consideration how best to reflect input from commenters that identified processes unique to the U.S. industry. In certain instances, TTB finds reason not to merely adopt the criteria applied elsewhere, but to recognize practices that may vary from those criteria, particularly where adhering to longstanding U.S. practices that would have shaped U.S. consumer expectations in identifying a U.S. product.

The proposed standard set forth in Notice No. 213 included a criterion that the whisky must be mashed (which would include fermentation of the mash), distilled, and aged in the United States, and it must be distilled entirely at one U.S. distillery. No commenters opposed requiring mashing, distillation, and aging to occur in the United States. Commenters also broadly supported further requiring distillation to occur at a single United States distillery but differed as to whether mashing and (to a lesser extent) aging should also be required to occur at a single distillery. While the 2017 petitions for the American single malt whisky standard would have required mashing, distilling, and aging to take place at a single U.S. distillery, the standard proposed in Notice No. 213 reflected the later 2018 ASMWC petition in allowing mashing and aging to take place at U.S. facilities other than the place of distillation.

All commenters discussing the requirement that distillation occur at a single U.S. distillery supported such a requirement. In its comment supporting the proposed criterion, the ASMWC stated that the term “single” in “single malt whisky” has been understood globally for generations to mean that the whisky was distilled at a single distillery. Two associated online whisky enthusiast communities that submitted a joint comment—the Whiskey Lodge and Reddit community “/r/AmericanSMW” (Whiskey Lodge)—stated that the requirement to distill at a single distillery was “[g]reat” and the “[b]are minimum for `single malt.'” The American Craft Spirits Association (ACSA) explained, “[o]ther than the distillation taking place at a single distillery, the rest of the production process should take place in the United States for the whiskey to be called American Single Malt Whiskey.” Similarly, the Distilled Spirits Counsel of the United States (DISCUS), the Kentucky Distillers Association, the Irish Whisky Association, the Japan Spirits and Liqueurs Makers Association, the National Association of Beverage Importers (NABI), the Scotch Whisky Association, SpiritsEUROPE, Sazerac, and Grand Teton Distillery all expressed support for requiring distillation in a single U.S. distillery.

Thirteen commenters also supported a standard more restrictive than the one proposed in Notice No. 213, requiring that mashing and fermentation in addition to distillation take place at a single distillery. These commenters included Sazerac, the Kentucky Distillers' Association, DISCUS, the Scotch Whisky Association, the Irish Whisky Association, spiritsEUROPE, the Japan Spirits & Liqueurs Makers Association, and NABI. The Irish Whisky Association and Scotch Whisky Association stated that not requiring mashing, fermentation, and distillation to take place at the same distillery would be inconsistent with international practice and would undermine and devalue the “single malt whisky” category. DISCUS contended that requiring the mashing to take place at the same facility as the distillation would align with consumer understanding and place American single malt whisky on equal footing as other products in the global market, while allowing mashing to occur elsewhere would lose the connection between the use of the term “single malt” and its place of production. NABI added that without a requirement for mashing and distillation to occur at a single facility, “a significant link is lost in the connection of the single malt whiskies representing the single efforts and quality controls of the same distillery.”

Some commenters expressed that malting and fermentation should not be required to occur at the same single distillery required for distillation. Copperworks Distilling Co. and the ASMWC noted that many American whisky producers purchase their mash from domestic breweries, and allowing American single malt whisky to be produced with mash made at domestic facilities other than the distillery producing the final product recognizes this practice. The ASMWC noted that, while United Kingdom regulations require mashing and fermentation to happen at the same facility, no such requirement applies in European Union regulations nor in regulations of many other single malt whisky producing regions.

Only a small number of commenters directly discussed location requirements for aging. Those that did (ACSA, NABI, Sazerac, and others) generally supported requiring aging to occur in the United States, but no commenter specifically expressed the view that it should also be required to take place at a single U.S. distillery. One individual commenter suggested requiring disclosure on the label if the whisky is distilled at one distillery but aged or bottled at a different distillery.

The American Distilled Spirits Alliance (ADSA) requested that TTB clarify the definition of “distillery” in the context of distillation occurring at “one U.S. distillery,” suggesting two possible approaches. First, ADSA suggested the term could apply to the “DSP” which TTB understands to mean the distilled spirits plant under the IRC and TTB regulations, reflected in the permit under those provisions. ADSA stated that an alternative option may be to follow the criteria for use of the term “bottled-in-bond,” which are set forth at 27 CFR 5.88 and require that a distilled spirit labeled as “bottled-in-bond” comply with certain standards, including that the spirits are distilled by the same distiller and, relevant here, at the same distillery.

TTB agrees with the consensus view of the commenters that the standard of identity should require that American Single Malt Whisky be mashed, fermented, distilled, and aged in the United States and that distillation take place at a single U.S. distillery. However, TTB is not incorporating the additional restrictions requiring mashing and fermentation to occur at a single distillery. TTB notes that these additional restrictions were requested by some commenters and opposed by others, and that such restrictions were not proposed in the 2018 ASMWC petition or in Notice No. 213.

As noted in the comments, TTB understands that it is common for U.S. distillers to partner with breweries to produce their mash and believes that the criterion should take into account and reflect the processes that have evolved in the American context as they reflect the expectations of American consumers and businesses for such domestic products. Moreover, this practice allows for innovation in this category by continuing partnerships with breweries. TTB believes this decision will not devalue the single malt whisky category more broadly, as some commenters suggest, because it is reasonable to expect that consumers will continue to have different expectations for products labeled as “American single malt whisky” compared with products labeled as single malt whisky from different countries with different standards.

Regarding the concept of a single distillery or references to the “same distillery,” TTB is amending the regulatory text to clarify that this term will be administered similarly to the “same distillery” requirement for the bottled-in-bond designation at 27 CFR 5.88(a)(2), which generally means the area identified as the location of the bonded area on a distilled spirits plant's TTB permit or registration.

TTB is not incorporating the requirement suggested by one commenter that the label disclose where aging and bottling occur if different than the distillery where distillation occurred. As noted above, no commenters expressed a view that the American single malt whisky standard of identity should require aging or bottling to take place at the same distillery as distillation. Accordingly, TTB does not believe the fact that aging or bottling occurs at a different distillery is sufficiently critical to the consumer to require that it be disclosed on the label. TTB notes that the information may be provided voluntarily.

In Notice No. 210, the proposal included a criterion that, to meet the standard of identity for American single malt whisky, the alcohol content of the liquor must not exceed 160° proof during distillation consistent with petitions TTB had received. It is also consistent with the current standards for many whisky type standards, including “malt whisky” and “whisky distilled from malt mash.”

Five commenters opposed a maximum 160° distilling proof, including Loon Liquors LLC, Brother Justus Whisky Co., and Little Round Still. Loon Liquors LLC stated that consumer expectations have been shaped by single malt whiskies distilled in Scotland and elsewhere, which allow distillation at less than 190° proof, and limiting distillation proof to 160° could confuse consumers. Further, the commenter states that distilling at high proof (between 160° and 190° proof) provides for precision in creating their signature flavor profiles, and limiting proof to no higher than 160° proof prevents American distillers from innovating and competing with distilleries in other countries that do not have such a limitation. Brother Justus Whisky Co. similarly pointed out that other international single malt whisky standards allow distillation at up to 190° proof and stated that a lower limit would stifle innovation and market access by smaller producers. Little Round Still stated that American single malt whisky should have the same distillation proof limit as single malt whiskies elsewhere, that is, less than 190° proof.

However, the majority of commenters specifically discussing this criterion supported it. For example, the ASMWC supports a distillation proof not exceeding 160° proof, stating that this is an important provision designed to ensure the flavor and character of the grain remains after distillation. The ASMWC points out that, while the Scotch whisky regulations for single malt allow for distillation of up to 190° proof, they also require the use of pot stills, which according to ASMWC, are intended to ensure that more grain flavor is retained in the final distillate. ASMWC asserts that the same result is achieved by providing a lower maximum distillation strength of up to 160° proof. The Scotch Whisky Association similarly expressed support for the 160° proof distillation limit for American single malt whisky, stating it is consistent with single malt whiskies produced elsewhere. Other commenters, such as the Whiskey Lodge expressed support for a distillation proof not exceeding 160° noting that the limit was in line with other American whiskies.

With this final rule, TTB is incorporating a distillation proof of 160° or less for American single malt whisky, consistent with the proposal.

As the Whiskey Lodge suggested above, the proposed criterion is consistent with the current standard for “malt whisky” under TTB regulations, as well as most other types of whisky. As with other criteria, one goal in setting forth a standard of identity for American single malt whisky is to recognize the importance of existing standards for single malt whiskies internationally while also reflecting unique aspects distinctive to American production. Except for light whisky and certain blended whiskies, all subcategories ( i.e., types) of domestically-produced whisky recognized in the standards of identity have a maximum distillation proof of 160°. See 27 CFR 5.143(c). As noted by some commenters, this maximum has deep historical roots. President Taft, in a presidential memorandum, noted the distinction between whisky made from distilling a product at a proof of from 140° to 160° [proof] known as `high wines,' ” and that made from what was then referred to as “neutral spirits” distilled at a proof “varying from 160° to 188°.”  2 This delineation was carried forward following the repeal of prohibition into some of the earliest standards of identity for whisky published by TTB's predecessor agency, the Federal Alcohol Control Administration, which differentiated between “neutral whisky . . . distilled at more than 160° proof and less than 190° proof” and “straight whisky . . . distilled at not exceeding 160° proof.”  3 This distinction has persisted in regulations issued under the FAA Act since then. See 27 CFR 5.21(b) (1938 ed.). Maintaining this standard for American single malt whisky therefore reflects the American style of production that consumers and businesses have operated under since before prohibition.

Additionally, international standards allowing for certain single malt whiskies to be distilled up to 190° proof exist within the context of other standards. The ASMWC points out in its comment that, while for example Scotch whisky standards allow for distillation up to 190° proof, those standards also require the use of pot stills. TTB also notes the ASMWC's assertion that the 160° distillation proof maximum accomplishes the same goal as the Scotch whisky pot still requirement in retaining the grain flavor in the distillate, which may be significant to consumers.

In Notice No. 213, the proposal included a criterion that, to meet the standard of identity for American single malt whisky, the product must be produced from a fermented mash of only malted barley.

A majority of the commenters specifically addressing this issue expressed support for this criterion. The ASMWC (which the mass comments generally support) stated that the industry and consumers understand that “malt” specified on its own refers to malted barley exclusively, and that this meaning is consistent with longstanding TTB regulations. The Scotch Whisky Association noted “[t]he use of malted barley only in “Single Malt Whisky” is tightly bound up in its reputation as a whisky category globally.” Canyon Diablo Distillery explained, “using less than 100% malted barley and mixing in addition[al] different grains changes the character of the whisky and should change its identity,” and the American Distilled Spirits Alliance added, “[f]or [American single malt whisky] to maintain the characteristics consumers expect with the term “single malt,” it must be made from 100% malted barley.”

However, not all commenters agreed with the criterion as proposed and suggested different alternatives. Some commenters expressed that the term “malt” should not be limited to malted barley, but instead reflect a broader view of the term since other grains, such as rye and wheat, can also be malted. For example, Chattanooga Whiskey suggested that only 51 percent malted barley be required in order to reflect a broader understanding of the term malt and allow for innovation explaining that, “nearly every grain can now be malted, in our modern era . . . [m]any [mistakenly] believe that malt is always barley, and that barley is the only grain that contains the requisite enzymes.” Similarly, Bainbridge Organic Distillers stated that this aspect of the definition limited single malt whisky to the concept as it is understood within the United Kingdom, and that prohibiting American distillers from using the term “single malt” when distilling other malted grains would limit innovation.

Other commenters suggested adopting additional standards of identity that would specify the different grains. Canyon Diablo noted on this point that, “[w]hile other grains can be malted and used they should have a different standard of identity and classification and be labeled as such.” Similarly, the ADSA commented that, “While some distillers will argue for the use of alternative grains as innovative or uniquely American, the use of a commonly accepted term—single malt—in naming of the product category requires preserving the base characteristics, which the consumer has already come to expect.” “Single malt” they explained is “an indicator of 100% malted barley” and “an example of such a characteristic, because it forms the base flavor profile for the product.” They concluded that, “[s]ome commenters may propose for the allowance of using rye or wheat, and that's fine if they are also asking for the creation of an additional category. . . .” Sazerac suggested that allowances for the use of other grains could be incorporated into the terms of the proposed standard for American Single Malt Whisky, providing the example of “a single malt rye made with 100 percent rye.”

TTB agrees with the commenters that state that the term “malt” on its own refers to malted barley exclusively. This meaning is well established and reflects current regulations at 27 CFR 5.143(c)(2) providing that “malt whisky” refers to whisky made from at least 51 percent “malted barley,” while whiskies made with 51 percent of other malted grains must name the grain. Changing this approach would require a more significant change beyond the scope of this rulemaking. Moreover, TTB agrees with the ADSA and other similar comments that allowing the use of other grains in addition to barley in “American single malt whisky” may cause consumer confusion.

Although some commenters suggested that including other types of grain would foster innovation, TTB notes that whisky producers would still be able to innovate with other grains as long as the final product is appropriately labeled. For example, rye malt whisky (with a fermented mash of not less than 51 percent malted rye grain) would be allowed, provided it met the other relevant requirements.

TTB would consider any future petitions from interested parties for the creation of additional standards of identity for other products made primarily or entirely from other malted grains, but TTB is not finalizing any such standards in the context of this rulemaking without an opportunity for public notice and comment to better understand consumer expectations and industry practices surrounding such products.

The proposed standard set forth in Notice No. 213 included a criterion that American single malt whisky be stored in oak barrels no larger than 700 liters during aging. Twenty commentors specifically expressed support for the 700-liter limit. In explaining their support for this criterion, commenters such as the Scotch Whisky Association, ASMWC, and an individual commenter indicated that it is necessary for the appropriate level of interaction between the whisky and wood of the barrel, and that the limitation would ensure larger barrels that would dilute the effect of the wood contact are not used.

Nine commenters did not support the 700-liter size limit, including Sazerac, the Kentucky Distillers Association, and several individual commenters. Commenters generally highlighted that this limit is not in place for other types of whisky. One commenter, Brandy Library Lounge, LLC, also stated any limit would be more appropriately expressed in gallons for an American product. Also, one commenter stated a more restrictive limit might be needed but did not specify such a limit. Sazerac suggested a 60-gallon limit instead of a 700-liter limit, stating that a 53-gallon barrel is the industry standard. Two other commenters, an individual commenter and Canyon Diablo Distillery, generally opposed barrels size limitations but similarly suggested that, if such a limitation is imposed, a size closer to the industry standard 53-gallon barrel would be more appropriate.

In this final rule, TTB is finalizing the proposed 700-liter size limit on barrels used for storage of American single malt whisky during aging. TTB is persuaded by the significant majority of commenters in favor of this criterion, in particular by those who raised the point that establishing a barrel size maximum would indicate characteristics related to interaction between the product and the wood in connection with any statements regarding aging. At the same time, TTB acknowledges the concerns raised by certain commenters about establishing a standard not required for or perhaps followed in the production of other whisky types. By establishing a 700-liter size limit, TTB believes consumers will have greater certainty of the degree to which the age of the product represents interaction with the barrel, but producers will still have flexibility to use most barrels typically used for the production of American whiskies. TTB is not finalizing a more restrictive standard, such as the 60-gallon limit suggested by one commenter, because TTB believes it would prevent the use of some barrels commonly used in American whisky production.

In response to commenters who asked for the criterion to be expressed in gallons instead of liters, TTB will consider issuing public guidance clarifying the gallon equivalent to the 700-liter maximum included in the final rule.

The proposed standard set forth in Notice No. 213 included a criterion that allows producers to use oak barrels that are used, uncharred new, or charred new for the storage of American single malt whisky during aging. Twenty-two commenters specifically stated support for allowing the use of used, uncharred new, or charred new oak barrels. These commenters stated that this would allow for creativity, innovation, and variety in the finished products. Commenters also stated that allowing used barrels would help address a potential low supply of new oak barrels.

One commenter, Canyon Diablo Distillery, expressed the view that the use of non-American wood barrels or used barrels that contained non-American whisky would result in a non-American product. Two commenters suggested allowing storage in non-oak wood casks. Additionally, one commenter opposed the use of used barrels, suggesting that American single malt whisky should be stored only in new oak barrels to be consistent with the definition of malt whisky.

TTB is incorporating this criterion as proposed and will allow American single malt whisky to be stored for aging in oak barrels that are used, uncharred new, or charred new.

Currently, TTB regulations state that one criterion of all whisky is storage in oak barrels. This criterion is already widely accepted in the industry. Allowing storage in barrels made from wood other than oak would be a significant departure from all other types of whisky and could lead to consumer confusion about the characteristics of American single malt whisky. Additionally, finalizing a type standard that contradicts the class standard would have a broader impact than the proposal TTB initially notified. As such, the finalized standard of identity allows for storage only in oak barrels.

While some commenters opposed allowing used oak barrels for storage, TTB believes that allowing American single malt whisky to be stored in used oak barrels recognizes the realities of American whisky-making. As cited by commenters who supported this criterion as proposed, allowing used barrels will help alleviate the possible shortage of oak barrels and is consistent with single malt whiskies produced elsewhere. Moreover, different whisky types permit the use of different types of oak barrels, for example, light whisky and corn whisky can be aged in used or uncharred new oak barrels (27 CFR 5.143(c)(3) and (5)), while bourbon can only be aged in charred new oak barrels (27 CFR 5.143(c)(2)). Allowing multiple barrel types is consistent with those standards.

Finally, TTB believes that storage in a barrel that is not made of American wood, or that previously contained non-American whisky, does not make whisky produced in the United States “non-American.” Since mashing, distilling, and aging all occur in the United States, the product is an American product regardless of the source of the wood for the barrel.

The proposed standard set forth in Notice No. 213 included a criterion requiring American single malt whisky to be bottled with an alcohol by volume content of not less than 40 percent (or 80° proof). TTB did not specifically include this criterion as part of the proposed American single malt whisky standard of identity in § 5.143(c)(15), as it flows directly from the general definition of the class “whisky” under current regulations. TTB received six comments supporting this criterion and is merely noting for clarity that American single malt whisky must be bottled at not less than 80° proof, consistent with the class requirements.

The proposal set forth in Notice No. 213 is unique among American whiskies in that the geographical designation “American” is expressly included in the type designation. This is different, for example, from the type designation “bourbon whisky” that must be made in the United States, but does not include the “American” reference in the type designation. The petition that provided the basis for Notice No. 213, and consequently the proposal in that notice, did not set forth a standard of identity for “single malt whisky” but rather a standard for a specific product to be identified as “American single malt whisky.” As a result, commenters requested clarification of the rules for including State and other geographic designations for such a standard.

The ADSA asked that TTB clarify whether the regulations for American single malt whisky would “preclude the usage of the name of the specific U.S. State or U.S. City of production in lieu of ‘American,' ” further proposing that “[s]o long as the product being made complies with the Class and Type for [American single malt whisky] it should be allowed to use a furthering descriptor.” ADSA provides the example of an industry member making a product in Montana that would comply with the American single malt whisky standard of identity, and asserts that they should be allowed to either include Montana as a geographic descriptor or to replace the word “American” with “Montana” and use the term “Montana single malt whisky” because the “clear implication” is that the product is not only an American single malt whisky but one from Montana. ADSA further states that at no time should such a product be allowed to be labeled with the State or similar descriptor without the term “American,” if it does not meet the American single malt whisky criteria.

Whiskey Lodge similarly suggested that if a State or any designation more specific than “American” appeared in the designation, TTB allow the term “American” to not appear, for example, “Texas single malt [w]hiskey” and “Rocky Mountain single malt whiskey.” Relatedly, an individual commenter suggested that TTB also add American single malt whisky standards of identity for particular regions within the United States noting, “A malt whiskey from the Pacific Northwest is very different from a whiskey made in the southern states and very different from a whiskey made in the Midwest.”

The standard of identity TTB proposed in Notice No. 213 generally incorporated the proposal it had received from ASMWC, and TTB stated in that notice that, as proposed, the amendment to the regulations would affect any COLA that uses the term “American single malt whisky” as a designation, as products with those labels would be required to meet any new standard of identity. The proposal did not contemplate applying the standards more broadly to products labeled as “single malt whisky” with other place names. Additionally, the ASMWC stated in its comment that it was not aware of more than a handful of whiskies bottled, labeled, and sold as “American single malt whisky” that would not meet the requirements for the proposed American single malt whisky standard of identity, and so conveyed its understanding that the proposal was limited in scope to such products. Applying the criteria of the standard of identity beyond use of the term “American single malt whisky” would significantly expand the scope of what was originally proposed, potentially affecting labels for any malt whisky domestically produced and currently labeled with “single malt whisky,” not just those labeled using the term “American single malt whisky.” TTB would not be able to finalize such an expanded application without considering the effect on all stakeholders and providing additional notice and opportunity to comment. As a result, TTB is finalizing the standard of identity with the scope that was proposed, and only labels bearing the term “American single malt whisky” would be held to the criteria for that standard. Products produced in the United States that do not bear the full term would not be required to meet the criteria for use of the term “American single malt whisky.” TTB would consider proposing such a broader scope should it receive a petition to do so.

In addition to the above criteria for American single malt whisky, TTB posed eight questions in Notice No. 213 that relate to the addition of American single malt whisky as a type of whisky and its implementation. The comment summary above includes responses to comments regarding two of the eight questions, related to size restrictions for barrels used to store American single malt whisky and the use of used and new oak barrels in the production of American single malt whisky. Below is a summary of the comments and TTB's responses on the remaining six questions.

TTB solicited feedback on whether to allow the use of coloring, flavoring, or blending materials in the production of American single malt whisky. The majority of commenters opposed their use, and thirty-eight commenters noted that doing so could be misleading for consumers. Many commenters were concerned that the use of additives would undermine this category of spirits, which is currently considered prestigious.

However, while many commenters expressed a general opposition to the use of coloring, flavoring, or blending materials in American single malt whisky, several of those in opposition made an exception for the use of caramel color. For example, DISCUS generally opposed allowing coloring, flavoring, or blending materials but expressed openness to the use of caramel color if disclosed on the label. Similarly, the ASMWC suggested prohibiting all coloring, flavoring, or blending materials but recognized that the addition of caramel color is “customarily employed” in the production of American single malt whisky and other single malt whiskies. The Irish Whisky Association and Scotch Whisky Association both expressed support for the addition of caramel coloring, consistent with the respective standards of their country's single malt whiskies.

Overall, 18 commenters supported some allowance for coloring materials, with the majority of those supporting only the use of caramel coloring. In general, commenters who supported the use of coloring materials also stated that there should be a requirement to disclose the use of coloring materials on the label. Additionally, two commenters stated they may possibly support coloring, flavoring, or blending materials if they were more clearly defined. No commenters specifically supported allowing the use of flavoring materials in American single malt whisky.

In response to comments received, TTB is finalizing a standard of identity for American single malt whisky that allows the use of caramel coloring, provided that the use of such coloring material is disclosed on the label. Allowing caramel coloring aligns American single malt whisky with many other types of whisky, including other single malt whiskies produced internationally. Prohibiting all other coloring, flavoring, and blending materials would narrow the allowed additives as supported by commenters. While TTB's current regulations at 27 CFR 5.72(c) generally do not require a statement of any type when caramel coloring is used in the types of whiskies that allow such coloring material (if used at not more than 2.5 percent by volume of the finished product), TTB agrees with commenters that any added caramel coloring should be disclosed on the label of American single malt whisky to ensure transparency regarding the product's readily-observable characteristics.

Notice No. 213 included a question on whether to allow the designation “straight” to be used with American single malt whisky. Under current regulations, the “straight” designation generally refers to an aging requirement of at least two years, which is the period of time the whisky has been stored in an oak barrel of the type otherwise required for the underlying standard of identity. For example, “bourbon whisky” may only be stored in charred new oak barrels, and “straight bourbon whisky” must be stored in a charred new oak barrel for a minimum of two years. 4 See 27 CFR 5.143(c)(2) and (5).

Ten commenters were in support of allowing the designation “straight” to be used with American single malt whisky, including ACSA, ADSA, Whiskey Lodge, and several individual commenters and distilleries. These commenters were in general agreement that the term “straight” should be allowed as long as the whisky has been aged for at least two years.

Eight commenters opposed the use of the designation “straight” with American single malt whisky, including the National Association of Beverage Importers, Scotch Whisky Association, Irish Whisky Association, spiritsEUROPE, and several individual commenters and distilleries. These commenters indicated that the term “straight” would cause confusion in the global marketplace because the term is unique to American whisky. In general, these commenters suggested a minimum age requirement or including the product's age on the label instead of using the term “straight.” One commenter, New Riff Distilling LLC, stated the term “straight” should only be allowed to indicate the use of new charred oak barrels.

TTB will allow the use of the designation “straight” with American single malt whisky as long as the two-year aging requirement is met. Allowing for this designation would be consistent with other product designations for whisky under TTB's regulations, where the “straight” whisky must be stored for two years in the type of barrel associated with the underlying type of whisky. In other words, for American single malt whisky to be designated as “straight American single malt whisky,” the whisky must be stored for a minimum of two years in used, uncharred new, or charred new oak barrels. While commenters in opposition to the use of the term “straight” suggested that the term is not well-understood in the global market because it is only used on American whiskies, TTB agrees with an individual commenter in support who suggests that “straight” is a term that is unique to American whiskies, so it is therefore appropriate for use with American single malt whisky as an additional distinguishing factor.

TTB is incorporating a new paragraph (c)(16) in table 1 of 27 CFR 5.143 to account for “straight American single malt whisky” as described above. TTB is not incorporating any other minimum age requirement(s) in the American single malt whisky standard of identity. Commenters, including NABI, the Scotch Whisky Association, Sazerac, Japan Spirits and Liqueurs Makers Associations, spiritsEUROPE, the Irish Whisky Association, NIST on behalf of the UK, and the Kentucky Distillers' Association, suggested that American single malt whisky should have a minimum age requirement ranging from two to four years. However, TTB believes this would unduly hinder innovation and notes that no other types within the class “whisky” have a minimum age requirement (other than the age requirement associated with the “straight” designator). Further, because TTB's regulations generally require that whiskies aged less than four years bear an age statement (see 27 CFR 5.74(b)), TTB believes there is sufficient transparency within the class regarding age.

TTB requested and received input on whether to allow for mixtures of American single malt whisky to be labeled as “blended American single malt whisky,” similar to how TTB regulations allow for blended Scotch whisky and blended Canadian whisky to be labeled, respectively, “blended Scotch whisky” and “blended Canadian whisky.” Eight commenters support the use of the term “blended American single malt whisky.” These commenters, which include individuals and distilleries, noted that producers and consumers desire products composed of whisky from more than one distillery.

Thirteen commenters oppose use of the term “blended American single malt whisky”, asserting use of the term “blended” may cause consumer confusion because the term “blended” is typically not associated with the term “single.” These commenters included ACSA, DISCUS, Kentucky Distillers Association, Scotch Whisky Association, Irish Whisky Association, spiritsEUROPE, Japan Spirits and Liqueurs Makers Association, and individual commenters and distilleries. Some commenters (for example, ACSA, DISCUS) suggested modifying the name of this product category to replace the term “single” with “blended,” such as “American Blended Malt Whisky.”

TTB's finalized regulations for the American single malt whisky standard of identity do not allow blends of whiskies from multiple distilleries that would otherwise meet the American single malt whisky criteria to be labeled “blended American single malt whisky.” TTB agrees with the commenters in opposition that blending whiskies from multiple distilleries is fundamentally contradictory to the meaning of “single” in the American single malt whisky standard of identity, even if the “blended” modifier is included. As such, producers blending whiskies from different distilleries may not classify them as American single malt whisky. With respect to commenters' suggestion to modify the name of the standard of identity to “American Blended Malt Whisky” for blends, TTB notes that a blend of whiskies produced in the United States and meeting the current standard of identity for “malt whisky” could already be labeled “American Blended Malt Whisky.”

In Notice No. 213, TTB sought comments on the impact that adding a standard of identity for American single malt whisky may have on owners of U.S. trademarks and current producers of malt whisky. In general, commenters who support establishing this standard of identity stated that the definition of American single malt whisky in the standard of identity would be beneficial to producers and trademark owners, as it would lend credibility to their operations, bring potential for increased recognition globally, and foster innovation. They assert that it would help ensure a level playing field for producers of American single malt whisky and maintain the premium reputation of the category. Additionally, the ASMWC stated they are not aware of more than a handful of whiskies bottled, labeled, and sold as “American single malt whisky” that would not meet the requirements for the proposed American single malt whisky standard of identity.

One commenter suggested that current producers who may face an economic hardship due to the new standard of identity should be able to continue to use their current products or processes. Another commenter asserted that its labels and trademarks would be negatively impacted by the rulemaking unless the standard of identity is modified to allow distillation at up to 190° proof. The commenter further stated that, along with adversely impacting their business, requiring American single malt whisky distillers to limit their distillation proof to 160° or less would inhibit market access and create a competitive disadvantage for American single malt whisky distillers vis-à-vis those producing outside of the United States, would be anti-competitive, and would exclude innovative whiskies.

As illustrated above, most commenters emphasized how establishing a standard of identity for American single malt whisky would benefit U.S. producers. However, as also noted above, one commenter specifically stated that they, and the industry, would be negatively affected by the proposed standard of identity. Given that the current standard for production proof of malt whisky is consistent with the production proof of the standard of identity proposed for American single malt whisky, TTB is not aware of any widespread expectation in the industry that products meeting only the class standard of identity “whisky,” along with the other proposed criteria, would or should qualify for an American single malt whisky standard of identity. As discussed in the explanation of the maximum distillation proof criterion, the standards of identity for malt whisky and most other American whisky types within the general class (all except for light whisky and certain blended whiskies) allow distillation only up to a maximum of 160° proof.

In the event that there are current producers with approved labels that designate a product as “American single malt whisky,” producers may continue to use those labels but only on products that comply with the new requirements of TTB's regulations in 27 CFR part 5, subject to the transition period discussed below in this document. Producers of products that do not comply with the new standard of identity could continue to produce such products but would need to obtain approval of new labels indicating the applicable class and/or type.

Commenters also provided feedback on whether, after establishment of the “American single malt whisky” standard of identity, TTB should allow producers to use up previously approved labels that do not comply with this standard, and for how long TTB should allow the use of these previously-approved labels before such labels would be revoked by operation of regulation. Commenters provided a wide range of answers, stating that after the establishment of the American single malt whisky standard of identity, producers should be afforded anywhere from 60 days to 20 years to use up previously approved labels that do not comply with this standard. One commenter recommended that TTB allow producers to revise their current label instead of requiring the application for a new one. Additionally, another commenter implied that if obtaining a new label would pose an economic hardship, that TTB allow the continued use of already approved labels on products not meeting the criteria.

TTB is providing a five-year transition period, as discussed below in this document. This amount of time should allow any affected industry members to make label changes in conjunction with any routine label updates or change their processes to ensure their product conforms to the new standard of identity described in this rule.

Finally, commenters provided feedback on how the addition of a standard of identity for American single malt whisky would affect competition in the alcohol beverage market (see “Effect on Currently-Approved Labels”). Commenters generally provided feedback that the addition of this standard of identity would increase the competitiveness of American distillers and level the playing field among producers of American single malt whisky. As noted above, one commenter asserted that a standard that requires a distillation proof of 160° is anti-competitive.

TTB notes positively the feedback from commenters that the addition of this standard of identity would increase the competitiveness of American distillers and level the playing field among producers of American single malt whisky. TTB addresses these comments as well as the comment on the maximum distillation proof of 160° further below in the sections “Effect on Currently-Approved Labels” and “Impact on Trademark Owners and Producers of Malt Whisky.”

After careful consideration of the petitions received in response to this issue in Notice No. 176 and the comments received in response to Notice No. 213, TTB is finalizing a standard of identity for “American single malt whisky,” with two changes from the standard proposed in Notice No. 213. As originally proposed, TTB is defining American single malt whisky as a type of whisky that is mashed, distilled, and aged in the United States; is distilled entirely at one U.S. distillery; is distilled to a proof of 160 or less; is distilled from a fermented mash of 100 percent malted barley; is stored in oak barrels (used, uncharred new, or charred new) with a maximum capacity of 700 liters; and is bottled at not less than 80° proof.

In the first change from the proposal in Notice No. 213, TTB is providing for the use of the designation “straight” with American single malt whisky that is aged for two years. The second change allows for the use of caramel coloring as long as it is disclosed on the label.

This new standard of identity will be added to 27 CFR 5.143. TTB is also revising certain other sections in part 5 to include cross references to American single malt whisky.

TTB will allow a five-year transition period, as this amount of time should allow any affected industry members to make label changes in conjunction with any routine label updates, to use up existing labels, or to change their processes to ensure their product conforms to the new standard of identity. A label with the designation “American single malt whisky” may be used for whisky that does not meet the new standard of identity if it is bottled within five years from the effective date of this final rule, provided that such label was approved before the effective date of this final rule and the whisky conforms to the standards set forth in 27 CFR 5.143 in effect prior to this final rule. All products bottled after this five-year transition period bearing an “American single malt whisky” designation must meet the standards for such designation. TTB may act to revoke COLAs covering non-compliant products and/or take other enforcement action against bottlers using such COLAs.

Pursuant to the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6), TTB certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The final rule amends the standards of identity for whisky in TTB's regulations at 27 CFR 5.143(c) and makes conforming edits in other sections of part 5. It does not impose or otherwise cause any new reporting, recordkeeping, or other administrative requirements. TTB does not believe this rulemaking will affect a significant number of existing labels for distilled spirits products but is providing a five-year transition period to mitigate the effects on any affected industry member. (TTB specifically solicited comments on potential impacts on current producers and received only one comment from a producer indicating that their label(s) would be affected by the proposed regulations.) Therefore, no regulatory flexibility analysis is required.

The collection of information in this rule has been previously approved by the Office of Management and Budget (OMB) under the title “Labeling and Advertising Requirements Under the Federal Alcohol Administration Act,” and assigned control number 1513-0087. This regulation would not result in a substantive or material change in the previously approved collection action, since the nature of the mandatory information that must appear on labels affixed to the container remains unchanged. An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a valid control number.

This final rule is not a significant regulatory action as defined in Executive Order 12866, as amended. Therefore, a regulatory assessment is not required.

For the reasons discussed in the preamble, TTB amends 27 CFR part 5 as follows:

The U.S. Department of the Treasury has issued savings bonds since 1935 on the credit of the United States to raise funds for Federal programs and operations. Article 8, Section 8, Clause 2 of the Constitution authorizes the Federal Government to “borrow money on the credit of the United States.” Under this grant of power, “Congress authorized the Secretary of the Treasury, with the approval of the President, to issue savings bonds in such form and under such conditions as he may from time to time prescribe.” Free v. Bland, 369 U.S. 663, 667 (1962) (citing the predecessor to 31 U.S.C. 3105). Congress provided that the proceeds of savings bonds may be used by the Federal Government for any expenditures authorized by law. See 31 U.S.C. 3105(a).

Congress expressly authorized the Secretary of the Treasury to establish the terms and conditions that govern the savings bond program. 31 U.S.C. 3105(c). Treasury's implementing regulations set forth “a contract between the United States and savings bond purchasers,” giving “purchasers confidence that the United States will honor its debts when a purchaser surrenders a savings bond for payment” and protecting “the public fisc by ensuring that Treasury does not face multiple claims for payment on a single savings bond.” 80 FR 80258 (Dec. 24, 2015). In general, savings bonds are not transferrable and are payable only to the registered owner, except as described in Treasury regulations detailing when payment will be made to a person or entity that is not the registered owner. See 31 CFR 315.15, 353.15, and 360.15.

To redeem a paper savings bond, the registered owner or a successor specified in the regulations must surrender the physical bond. See 31 CFR 353.35. Although there are exceptions to this surrender requirement, the exceptions are “carefully drawn to protect the owner's rights and to protect Treasury against competing claims.” 80 FR 80258. For example, if a claimant cannot surrender the bond, the claimant must provide satisfactory evidence of the loss, theft, or destruction of the bond, or a satisfactory explanation of the mutilation or defacement, as well as sufficient information to identify the bond by serial number. See, e.g., 31 CFR parts 315 and 353, subpart F. Pursuant to express statutory authority, Treasury regulations allow owners to keep their bonds indefinitely and to surrender them for payment at any time after the bonds mature. See 31 U.S.C. 3105(b) and 31 CFR parts 315 and 353, subpart H.

Many State escheat laws allow States to take custody of unclaimed or abandoned property. Treasury discussed the effect of escheat on the rights of savings bond owners in a 1952 bulletin to the Federal Reserve Banks addressing a State claim to the custody of four savings bonds in the State's possession, which had belonged to a ward of the State who died without heirs. In this context, where the State had possession of the bonds it sought to redeem, Treasury stated that it will not recognize a State claim to the custody of savings bonds, but will recognize an escheat judgment that confers title on a State because “in escheat the state is ‘the ultimate heir.' ” 80 FR 80258 (quoting Public Debt Bulletin No. 111, Subject: State Statutes Concerning Abandoned Property (Feb. 27, 1952) at 3). It was unnecessary for the 1952 bulletin to provide further detail about State escheat claims because in that case the State did not claim title over the bonds. Id.

Treasury addressed a new, broader custody escheat claim in 2004 and 2006, when several States attempted to claim the proceeds of all matured, unredeemed bonds registered to residents in their State. Unlike the claim addressed by the 1952 bulletin, these States did not possess the bonds they sought to redeem, which presumably were still held by their owners. Treasury informed the States that they “must possess the bonds they seek to redeem.” 80 FR 20259 & n.3 (citing 2004 and 2006 letters to various States). In the ensuing litigation, the U.S. Court of Appeals for the Third Circuit concluded that the State unclaimed property statutes conflicted with Federal law. See New Jersey v. U.S. Dep't of the Treasury, 684 F.3d 382, 407-09 (3d Cir. 2012), cert. denied, 569 U.S. 1004 (2013). The States' “efforts to impose the status of `abandoned' or `unclaimed' on the Federal Government's obligations” could not be reconciled with the fact that the bond proceeds are not `abandoned' or `unclaimed' under Federal law because the owners of the bonds may redeem them at any time after they mature.” Id. at 409.

Subsequent litigation was prompted by certain States enacting title escheat laws specifically for savings bonds that the States deemed to be “unclaimed” or “abandoned.” In 2000 and 2015, respectively, Kansas and Arkansas enacted statutes providing that a U.S. savings bond is presumed to be abandoned if it has not been redeemed by a certain time and further providing that such bonds escheat to the State a certain time after the bonds are presumed abandoned. See 80 FR 80259. Pursuant to those laws, Kansas and Arkansas initiated escheat proceedings to claim title to bonds in their possession, as well as to a broad class of bonds the States did not possess. With respect to the bonds not in their possession, Kansas and Arkansas published statements in local newspapers of their intention to claim title to bonds of a particular description. Although bond owners were not parties to the escheat proceeding, and may never have learned that the State was attempting to claim title over their bonds, they were obligated to respond to the escheat proceeding in order to protect their ownership of the bonds. Id. After obtaining ex parte escheat judgments, Kansas and Arkansas sought to redeem the savings bonds not in their possession. Treasury denied those requests.

The U.S. Court of Appeals for the Federal Circuit upheld Treasury's decision for two independent reasons. First, the Court of Appeals held that “federal law preempts the States' escheat laws.” LaTurner v. United States, 933 F.3d 1354, 1357 (Fed. Cir. 2019), cert. denied, 141 S. Ct. 239 (2020). The court explained that, whereas “Treasury regulations impose no time limit on the redemption of savings bonds,” the State laws provide that, “if bond holders do not redeem their bonds promptly enough (as decided by the States), they lose ownership and the bonds will transfer to the state.” Id. at 1361. The court determined that, because “federal law takes precedence,” id. (quoting Murphy v. National Collegiate Athletic Ass'n, 584 U.S. 453, 477 (2018)), “the bonds belong to the original bond owners, not the States, and thus the States cannot redeem the bonds,” id. at 1357.

Second, the Court of Appeals held that, “even if the States owned the bonds, they could not obtain any greater rights than the original bond owners,” and Treasury's regulations make clear that “a bond owner must provide the serial number to redeem” the specific bonds at issue. LaTurner, 933 F.3d at 1357. The court observed that “the States do not have the physical bonds or the bond serial numbers.” Id. The court therefore determined that, “even if the bonds here are considered lost,” id. at 1364, “Treasury properly denied [the States'] request for redemption,” id. at 1357. The court also concluded that the States could not “circumvent the [regulatory] requirement” to “provide the serial number” of the bonds by asking “the government to disclose the bond serial numbers as a matter of discovery.” Id. at 1366. The Court of Appeals denied the States' petitions for rehearing en banc, and the Supreme Court denied the States' petitions for writs of certiorari. LaTurner v. United States, 141 S. Ct. 239 (2020); Lea v. United States, 141 S. Ct. 240 (2020).

While that litigation was ongoing, Treasury amended its regulations in 2015 through notice-and-comment rulemaking to clarify that it “will not recognize an escheat judgment that purports to vest a State with title to a bond that the State does not possess.” 31 CFR 315.88(a); see also 31 CFR 315.20(b) (“Escheat proceedings will not be recognized under this subpart.”), 80 FR 80264-65. In a separate suit filed in Federal district court, Kansas and four other States challenged the amended regulations as an allegedly unjustified departure from Treasury's past practice. The district court rejected that challenge, concluding that the regulations clarified rather than changed Treasury's practice. See Estes v. U.S. Dep't of the Treasury, 219 F. Supp. 3d 17, 22 (D.D.C. 2016). The States appealed but voluntarily dismissed the appeal. See Order, LaTurner v. U.S. Dep't of the Treasury, No. 17-5015 (D.C. Cir. Nov. 21, 2017).

Thus, under 31 U.S.C. 3105 and Treasury's implementing regulations, U.S. savings bond owners are entitled to redeem their bonds at any time after maturity without penalty; the United States honors those debts in perpetuity. See 31 CFR 353.35. State laws that treat matured but not yet redeemed U.S. savings bonds that are not in a State's possession as “abandoned” property subject to escheatment undermine the rights of registered owners or their heirs to redeem matured bonds whenever they choose through the simple act of turning in the physical bonds to a designated payor such as a local bank. Treasury's existing regulations preempt any State law that deems U.S. savings bonds “abandoned” because they are not yet redeemed or otherwise interferes with the Federal-law rights of the registered owners or their heirs to redeem them.

Against that backdrop, Congress considered legislation to amend 31 U.S.C. 3105. As discussed further below, Congress declined to enact a 2021 legislative proposal that would have allowed States to escheat matured, unredeemed savings bonds that are not in their possession. Instead, Congress enacted the SECURE 2.0 Act of 2022  1 (Secure 2.0 Act), which was signed into law on December 29, 2022.

The Secure 2.0 Act added subsection (f) to 31 U.S.C. 3105, requiring Treasury to share certain U.S. savings bond information with States for the purpose of locating savings bond owners. Under new subsection (f), Treasury “shall provide each State, in digital or other electronic form, with information describing any applicable savings bond which has an applicable address that is within such State, including (i) the name and applicable address of the registered owner; and (ii) the name and applicable address of any registered co-owner or beneficiary.”  2 “Applicable address” is defined as the registered address for the registered owner (or co-owner or beneficiary) of the savings bond or the last-known address for the registered owner (or co-owner or beneficiary) available to the Secretary. 3 “Applicable savings bond” is defined as a savings bond (1) which is more than three years past its final maturity date, (2) is in paper form, or is in paperless or electronic form and there is no designated bank account or routing information or the designated bank account or routing information is incorrect; and (3) has not been redeemed. 4

The new subsection (f) expressly limits the purpose for which a State may use the information shared by Treasury to locating the registered savings bond owner. The statute provides: “Any State that receives information described in paragraph (1)(A) with respect to an applicable savings bond may use such information to locate the owner of such bond pursuant to the same standards and requirements as are applicable under” State abandoned property rules and any regulations or guidance promulgated by Treasury pursuant to the Secure 2.0 Act. 31 U.S.C. 3105(f)(4). The Secure 2.0 Act does not override the Treasury regulations described above, which do not allow States to escheat savings bonds that are not in their possession.

The Secure 2.0 Act directs Treasury to prescribe regulations or guidance as may be necessary to carry out the purposes of subsection (f), including rules to protect the privacy of the owners of applicable savings bonds, prevent fraud, and ensure that any information provided to a State is used solely for the purposes of the new subsection (f). 5 Under the Secure 2.0 Act, regulations or guidance issued by Treasury must not have the effect of prohibiting, restricting, or otherwise preventing a State from obtaining the information described above, except as deemed necessary to protect privacy or prevent fraud or misuse of savings bond information. 6

On October 31, 2023, Fiscal Service published a notice of proposed rulemaking (NPRM) to carry out the purposes of the Secure 2.0 Act. 7 Fiscal Service received 14 substantive comment letters in response to the NPRM. Twelve comments were from State treasurers' offices or their legal representatives, one was a joint comment from the National Association of Unclaimed Property Administrators (NAUPA) and the National Association of State Treasurers (NAST), and one comment was from a private individual. The comments largely fell into four general categories: (1) the restriction on using shared information about savings bonds to escheat those bonds, (2) the lack of Congressional appropriations for States to use in attempting to locate savings bond owners, (3) the lack of a claims servicing role for the States after locating savings bond owners, and (4) the prohibition on publicly releasing savings bond information without the express consent of Treasury. There were also comments on certain other topics, which we also address below.

Eight commenters objected to the proposed regulation's restriction on using the information shared by Treasury under the Secure 2.0 Act to escheat the applicable savings bonds. According to those commenters, escheat would be more efficient and cost effective to unite the bond owners with their property than the process outlined in the proposed regulation. One commenter also asserted that (1) the regulations exceed Treasury's statutory authority by prohibiting escheat, (2) denying escheatment to the States is arbitrary and capricious, and (3) prohibiting escheatment using information obtained under the Secure 2.0 Act is a departure from Treasury's existing possession escheat policy.

These objections disregard the express limitations that the Secure 2.0 Act imposes on a State's use of the information shared pursuant to the Secure 2.0 Act. As described above, the Secure 2.0 Act only authorizes a State to use the shared information for the purpose of locating the bond owners. Under the Secure 2.0 Act, “any State that receives information [from Treasury] with respect to an applicable savings bond may use such information to locate the owner of such bond.”  8 The statute also requires Treasury to prescribe regulations or guidance as may be necessary to “ensure that any information provided to a State under [new subsection (f)] shall be used solely to carry out the purposes of” that subsection. 9 By restricting the use of information provided to a State under these regulations, Treasury is implementing the statute in accordance with its express terms.

Further, the Secure 2.0 Act does not override existing Treasury regulations that prohibit a State from escheating a bond that the State does not have in its possession. Under regulations that predate the Secure 2.0 Act, a matured U.S. savings bond does not expire and may be redeemed by the registered owner (or heir) at any time. As the Federal Circuit explained in LaTurner, those Federal regulations preempt inconsistent State law.

To the extent that commenters suggest that the Secure 2.0 Act was intended to override the LaTurner decision and Treasury's regulations by allowing States to escheat matured, unredeemed savings bonds that are not in their possession, Treasury disagrees. In 2021, proposed legislation that would have had that effect was introduced in Congress but never passed. 10 The 2021 proposed legislation's language specifically would have allowed not only for the transfer of applicable savings bond information to the States but would have allowed the States to obtain title to the applicable savings bond through a valid judgment of escheatment. The 2021 proposed legislation stated that “[n]otwithstanding any other Federal law, the ownership of an applicable savings bond may be transferred pursuant to a valid judgment of escheatment vesting a State with title to the bond,” and that “[n]othing in this section, or in any regulation promulgated by the Secretary to implement this section, may be construed to preempt State law providing for, or governing the escheatment of, applicable savings bonds.”  11 The 2021 proposed legislation further stated that “[t]he Secretary may not prescribe any regulation which prevents or prohibits a State from obtaining title to an applicable savings bond or redeeming such bond” under the act. 12 However, the 2021 proposed legislation failed to move past the House Ways and Means Committee and the Senate Finance Committee. Instead, when a version of the proposed legislation reemerged in 2022 as part of the Secure 2.0 Act, the title-escheat language had been removed along with the language prohibiting Treasury from promulgating regulations that would preempt State law on escheatment.

Because U.S. savings bonds do not expire and Treasury has imposed no time limit for savings bond owners to redeem them, savings bond information shared with States under the Secure 2.0 Act does not pertain to savings bonds that are abandoned or lost, but simply unredeemed. The restriction in this final rule on using information shared under the Secure 2.0 Act to escheat savings bonds serves to protect the bond owner's rights and to prevent future double payments from Treasury when the rightful owner presents the savings bond for redemption. As Treasury has previously explained, “[t]he potential for competing claims exposes Treasury to the risk of double-payment and costly litigation, as well as threatens the vested rights of bond owners.” 80 FR 80259. Under State escheatment laws, a State could attempt to claim savings bonds that are still in the possession of registered owners, who can submit them for payment at any time. A State could also attempt to claim bonds that are in the possession of another State, where both States have a claim to title under their own State laws. Allowing States to escheat unredeemed savings bonds that are not in the States' possession would be contrary to existing Treasury regulations, as well as the agreement made between Treasury and a bond owner when the bond is purchased.

In providing that States may use the information shared by Treasury to “locate the owner” of savings bonds pursuant to the States' abandoned property rules and Treasury regulations and guidance, the Secure 2.0 Act leaves in place the balance Treasury has struck to protect bond owners' rights and the public fisc. As discussed above, the Secure 2.0 Act did not override the LaTurner decision or override existing Treasury regulations by allowing States to escheat matured, unredeemed savings bonds that are not in their possession.

Although several commenters expressed a concern that the proposed regulation could interfere with States' ability to redeem bonds that are in their possession, the Secure 2.0 Act and this final rule address only bonds that are not in a State's physical possession. Where a State has the physical bond, the State has the serial number and other information needed to ask Treasury—under existing regulations unchanged here—to redeem that bond. For similar reasons, prohibiting title escheat using information obtained under the Secure 2.0 Act is not a departure from Treasury's possession escheat policy, which has long recognized that States may be able to redeem bonds that are in their physical possession under circumstances that provide evidence that the bonds were, in fact, abandoned property. 13 Under existing Treasury regulations, States may request payment on an escheat judgment purporting to vest a State with title to a matured savings bond in the State's possession. 14 Those existing regulations are not affected by this final rule. This final rule continues to support Treasury's policy requiring States to be in possession of any savings bond they are purporting to escheat. States may still pursue title escheat for savings bonds in their possession, as they would be using the information found on the savings bond itself to complete the escheatment process, rather than using any information provided to them by Treasury under the Secure 2.0 Act.

Some commenters expressed concern about the lack of Federal funding available to assist the States in locating savings bond owners. For example, one commenter suggested that a lack of funds will “hinder the resources States have available to provide enhanced outreach efforts beyond currently established efforts.” Another noted that “certain challenges are created for participating States by not actually receiving the funds that are associated with the bond records,” leaving the States to bear the financial burden of locator services.

However, the Secure 2.0 Act does not grant funding to assist the States in providing optional locator services. The Secure 2.0 Act only directs Treasury to make applicable savings bond information available to the States for the purpose of locating the owner or owner's representatives. In prior litigation and in their comments on the NPRM, multiple States have claimed that they “have both the dedicated resources and the solemn responsibility to locate the missing property owners and reunite them with their property,” Arkansas Brief at 6-7, LaTurner v. United States, 933 F.3d 1354 (Fed. Cir. 2019) (No. 18-1509), ECF No. 37, and have proclaimed that their ultimate goal is to “help the original owners learn of, and be paid on, th[eir] bonds,” Kansas Brief at 14, LaTurner v. United States, 933 F.3d 1354 (Fed. Cir. 2019) (No. 18-1509), ECF No. 36. States are free to use their resources for such efforts, but nothing in the Secure 2.0 Act requires the States to undertake these administrative efforts to locate bond owners if a State chooses not to do so.

A number of commenters expressed a concern regarding the lack of a “claims servicing” role for States in the proposed regulations. These comments appear to propose that States—not Treasury—should accept State-specific property claim forms and require that savings bond owners redeem their bonds through the State's unclaimed property procedures rather than Treasury's savings bond redemption procedures. Commenters raised concerns about the efficiency and effectiveness of the overall Secure 2.0 Act framework, stating that a streamlined process to locate and pay bond owners is essential. These commenters indicated that Treasury should rely upon the States' experience in reuniting their respective citizens with unclaimed funds, rather than asking States to refer savings bond owners to Treasury for redemption. Another commenter noted that a State's role in the program is unclear if the States do not provide the proceeds of the savings bonds to their owners.

However, the Secure 2.0 Act does not contemplate overriding the longstanding Federal regulations, procedures, and agreements under which individuals redeem their U.S. savings bonds for payment by the Federal Government. Under existing Treasury regulations, there is a well-established framework for savings bond owners to redeem their bonds. 15 Any savings bond owner may redeem a savings bond directly from Fiscal Service, whether they have physical possession of the bond or need to declare the bond lost, stolen, or destroyed. Fiscal Service also has dedicated customer service staff trained to process complex redemption requests, which may include decedents' estates, trusts, and attorneys-in-fact. All necessary forms for redemption are available to the public through the TreasuryDirect.gov website. Additionally, any bond owner who has physical possession of a Series EE or Series I savings bond, which is in a single owner, co-ownership, or beneficiary ownership registration, is permitted to redeem the savings bond at any financial institution designated by Treasury as a paying agent. These two methods of redemption, through Fiscal Service and through designated paying agents, promote efficient, consistent, and reliable pathways to redemption for savings bond owners. Under this final rule, Treasury will continue to process redemptions through established methods.

Twelve commenters expressed concern over the NPRM's proposed restriction of a State's public release of the applicable savings bond information without Treasury's express consent. Commenters stated that this restriction would place an increased administrative burden on State agencies by preventing them from using their current reunification methods to reunite bond owners with their bonds. The Secure 2.0 Act requires Treasury to issue regulations or guidance as may be necessary to “protect the privacy of the owners of applicable savings bonds” and to “prevent fraud.”  16 In order to balance the competing interests, rather than adopting a blanket prohibition on public release of relevant information, the NPRM and the final rules permit the public release of information by States if they first obtain Treasury's consent. In determining whether to grant such consent, Treasury will consider the risks to savings bond owners' privacy and the risk of fraud. In recent years, as printing technologies have advanced, it has become easier for criminals to create fraudulent paper savings bonds using publicly available information. Since 2021, there have been over $40 million in redemptions of counterfeit savings bonds. Fiscal Service has responded by taking certain steps that have reduced the opportunities for fraud. By reducing publicly available information and taking other precautionary steps, Treasury has significantly reduced the number of counterfeit savings bonds presented for redemption. Based on its experience addressing fraud, Fiscal Service believes that making records of matured, unredeemed savings bonds available to the public creates substantial risks of fraud.

A few commenters stated that they believe that some savings bond information is already publicly available; however, savings bond records are not currently available to the public. Moreover, savings bond information is subject to the Privacy Act of 1974, which generally prohibits the release of such information to the public. Fiscal Service further protects this information in its Privacy Act regulations, 17 as well its Privacy Act System of Records Notice Treasury/Fiscal Service .014—United States Securities and Access. 18 Consistent with Treasury's obligation to protect savings bond owners' personal information, the Treasury Hunt website restricts the disclosure of savings bond information and only suggests that a requestor contact Fiscal Service to inquire further about their Treasury securities; it does not provide any specific information regarding any securities that may be held. Only after Fiscal Service verifies the requestor's identity will it release any information to the owner as permitted under the law and its regulations.

Treasury received comments regarding what information will be made available to the States under the final rule. One commenter requested additional information on whether Social Security numbers, savings bond denominations, and serial numbers will be released to the States. Another commenter suggested that the release of savings bond serial numbers is mandatory under the Secure 2.0 Act.

Under the Secure 2.0 Act, Treasury is required to provide each State, in digital or other electronic form, with information describing the name and applicable address of a registered owner, co-owner, or beneficiary of an applicable savings bond with an applicable address within that State. 19 Accordingly, Treasury will release the name and applicable address of such registered owners, co-owners, and beneficiaries to the States, pursuant to the statute.

The final rule does not include provisions for releasing Social Security numbers, saving bond denominations, or bond serial numbers. Based on Treasury's experience, the serial number and Social Security number are the two items of information most likely to facilitate fraud. Further, the Secure 2.0 Act provides that the information Treasury shares “may include the serial number of any applicable savings bond,” not that serial numbers must be shared. 20 In addition, in Treasury's long experience administering the savings bond program, bond denominations have marginal or no utility in locating bond owners. Denominations and bond serial numbers are important in the redemption of a savings bond, but do not offer Treasury or a participating State information regarding the location or identity of the savings bond owner.

One commentor submitted questions regarding the contracting and enforcement of information sharing with the States. At this time, Fiscal Service is working to develop a technical solution for sharing the mandated information with the States. Any mandatory security requirements for accessing the information will be included in the information-sharing contracts with the States. Fiscal Service intends to work closely with the States to ensure compliance with our security requirements, monitoring the use of the information in accordance with the information-sharing contract.

Fiscal Service is adding these Secure 2.0 Act regulations to 31 CFR part 323, which includes regulations adopted under the Freedom of Information Act (FOIA) regarding the disclosure of records. 21 Fiscal Service is maintaining the current FOIA regulations found in part 323 by moving the existing provisions in §§ 323.1 through 323.5 into a new subpart A. A new subpart B contains the regulations to implement the Secure 2.0 Act requirements to provide information and records containing applicable savings bond information to States. Subpart B includes definitions necessary to implement the regulations, requirements for a State to receive applicable savings bond information, conditions regarding the use of the information, and liability terms. Separating the regulations implementing the two different statutory authorities, FOIA and the Secure 2.0 Act, by subpart is intended to assist the public in identifying the two separate authorities under which an individual or a State may request information.

Treasury believes the new disclosure of applicable savings bond information requirements is closely associated with the purpose of FOIA and its existing disclosure regulations. While the Secure 2.0 Act only allows for disclosure of certain information to States, rather than to the public at large, a savings bond owner could look to a single regulation, part 323, to determine the various ways in which their savings bond information could be disclosed.

As noted above, subpart A as amended contains regulations that implement FOIA for Fiscal Service, previously found at part 323. Accordingly, the final rule makes a technical modification to the first sentence of § 323.1 to identify “this subpart” rather than “this part.”

Following are summaries of the provisions in the new subpart B, all of which are being added in this final rule.

This section briefly describes the purpose of the new regulatory provisions, namely to implement the Secure 2.0 Act.

Section 323.11 includes the definitions and terms necessary to provide States the information required by the Secure 2.0 Act. In addition, the amendments add new provisions to help protect the privacy of the owners of applicable savings bonds, prevent fraud, and ensure that shared information is used only for permissible purposes under the Secure 2.0 Act.

The Secure 2.0 Act requires Treasury to provide, in digital or other electronic form, each State with information describing any “applicable savings bond” that has an “applicable address” within such State. The statute requires this information to include the name and applicable address for each registered owner, co-owner, or beneficiary. “Applicable address” is defined in the statute as the registered address for the registered owner, co-owner, or beneficiary of the savings bond or the last-known address for the foregoing if it is available to Treasury. 22 The final rule defines “last-known address” to mean an address available to Fiscal Service after a reasonable search of its records.

While the level of effort dedicated to the search could be expressed in various degrees, a “reasonable” search balances the goals of efficiency and effectiveness. An exhaustive search, for example, would be unduly costly and burdensome on Fiscal Service, given the breadth of our systems of records, and unlikely to significantly change the results of the search. “Record” is broadly defined to include any data or documentation containing or composed of information describing relevant applicable savings bonds, including the applicable addresses of the owners. This definition allows Fiscal Service to protect savings bond owners from unauthorized disclosure of their information, as any information received from Treasury will remain a record subsequent to disclosure.

The term “State” is also broadly defined in the final rule to mean U.S. territories, possessions, and the District of Columbia, as well as the 50 States. This definition is consistent with available registered addresses over the lifetime of the savings bond program.

Section 323.11(b) provides that each State may request applicable savings bond records from Fiscal Service. Upon request, the State must enter into an information-sharing agreement with Fiscal Service to receive the requested records. Fiscal Service expects that this agreement will require a State to make representations regarding protecting the savings bond records from unauthorized disclosure, including security requirements for receiving and storing the records. These security requirements are appropriate to minimize the risk of fraud or misuse or misappropriation of information.

Section 323.11(c) specifies how the records or information contained therein may be used by States, in compliance with the Secure 2.0 Act. As stated at 31 U.S.C. 3105(f), Treasury's regulations are required to ensure that applicable savings bond information provided to a State will be used solely to carry out the purpose of locating the owner of the savings bond. 23 In accordance with this statutory requirement, the regulation provides that the applicable savings bond information cannot be used to escheat savings bond ownership to a State. The purpose of the Secure 2.0 Act is for Treasury to provide information regarding applicable savings bonds to States to assist in locating the owner of the bonds. The Secure 2.0 Act does not allow States to use the provided records and information to escheat the bonds, which would conflict with the rights of savings bond owners to redeem matured savings bonds whenever they choose.

Under the regulation, in order to protect the savings bond owner's privacy, any applicable savings bond information provided to States cannot be released to the public or any third party without Treasury's express written approval. This requirement is also expected to be incorporated into the information-sharing agreement described above. The requirement to obtain such approval from Treasury is also intended to ensure that the release of savings bond records or the information therein does not subject Fiscal Service customers to fraud risk. In recent years, Fiscal Service has taken steps that have reduced the opportunities for fraud, and making records of matured, unredeemed savings bonds available to the public would create an unacceptable risk of fraud. Fiscal Service will continue to monitor savings bond fraud and consider implementing further risk-mitigation strategies, which may eventually allow for certain savings bond records to be distributed publicly.

Under § 323.11(d), Treasury will not be responsible for any loss, liability, cost, or expense that results from a State's receipt, use, or distribution of records regarding applicable savings bonds or any information contained therein. Any misuse of savings bond records or information provided to a State under the regulations could result in fraudulent activity, breach of privacy for a savings bond owner, and financial loss for bond owners. Under the regulations, a State that receives information under the regulations bears the responsibility for, and indemnifies Treasury against, any loss or other costs associated with the State's receipt, use, distribution of, or failure to adequately protect, any records or information.

This provision clarifies Treasury's intent with respect to the severability of provisions of this rule. In the event any section, subsection, clause, paragraph, or phrase of this subpart is deemed invalid or unconstitutional by a court of competent jurisdiction, all remaining provisions shall continue in effect.

This rule is not a significant regulatory action as defined in E.O. 12866, dated September 30, 1993, as amended, and is not a major rule under 5 U.S.C. 804.

Because this rule relates to United States securities, which are contracts between Treasury and the owner of the security, this rule falls within the contract exception to the APA, 5 U.S.C. 553(a)(2). Treasury voluntarily sought public comment to assist the agency in assessing the impact of the rule.

This rule relates to matters of public contract and procedures for United States securities. Since a notice of proposed rulemaking is not required, the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., do not apply. In any event, Treasury certifies that this rule, which implements the Secure 2.0 Act's requirements that Treasury provide certain U.S. savings bond information to States, will not have a significant economic impact on a substantial number of small entities. 24

The provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., and its implementing regulations, 5 CFR part 1320, do not apply to this rule because there are no new or revised recordkeeping or reporting requirements.

Accordingly, for the reasons set forth in the preamble, Treasury amends 31 CFR part 323, as follows:

This document and additional information concerning OFAC are available on OFAC's website: https://ofac.treasury.gov/.

On November 21, 2024, OFAC issued GLs 53A, 55C, 113, and 114 to authorize certain transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587. Each GL was made available on OFAC's website ( https://ofac.treasury.gov ) when it was issued. GL 53A replaced and superseded GL 53. GL 55C replaced and superseded GL 55B. GL 55C has an expiration date of June 28, 2025; GLs 113 and 114 each have an expiration date of December 20, 2024. The text of these GL is provided below.

(a) Except as provided in paragraph (c) of this general license, U.S. persons are authorized to engage in all transactions ordinarily incident and necessary to the official business of diplomatic or consular missions of the Government of the Russian Federation (“Russian missions”) that are prohibited by Executive Order (E.O.) 14024 and involve Gazprombank Joint Stock Company (Gazprombank), or any entity in which Gazprombank owns, directly or indirectly, a 50 percent or greater interest, or are prohibited by Directive 4 under E.O. 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation.

(b) Except as provided in paragraph (c) of this general license, U.S. persons are authorized to engage in all transactions ordinarily incident and necessary to the compensation of employees of Russian missions, including payment of salaries and reimbursement of expenses, that are prohibited by E.O. 14024 and involve Gazprombank, or any entity in which Gazprombank owns, directly or indirectly, a 50 percent or greater interest, or are prohibited by Directive 4 under E.O. 14024.

(c) This general license does not authorize:

(1) Any transactions prohibited by Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation; or

(3) Any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including transactions involving any person blocked pursuant to the RuHSR, other than blocked persons described in paragraph (a) of this general license, unless separately authorized.

(c) Effective November 21, 2024, General License No. 53, dated November 10, 2022, is replaced and superseded in its entirety by this General License No. 53A.

(a) Except as provided in paragraph (c) of this general license, all transactions prohibited by the determination of November 21, 2022 made pursuant to section 1(a)(ii) of Executive Order (E.O.) 14071 (“Prohibitions on Certain Services as They Relate to the Maritime Transport of Crude Oil of Russian Federation Origin”) related to the maritime transport of crude oil originating from the Sakhalin-2 project (“Sakhalin-2 byproduct”) are authorized through 12:01 a.m. eastern daylight time, June 28, 2025, provided that the Sakalin-2 byproduct is solely for importation into Japan.

(b) Except as provided in paragraph (c) of this general license, all transactions prohibited by E.O. 14024 involving Gazprombank Joint Stock Company (Gazprombank) or any entity in which Gazprombank owns, directly or indirectly, a 50 percent or greater interest, that are related to the Sakhalin-2 project, including such transactions involving Sakhalin Energy LLC, are authorized through 12:01 a.m. eastern daylight time, June 28, 2025.

(c) This general license does not authorize:

(1) Any transactions prohibited by Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any transactions prohibited by Directive 4 under E.O. 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation; or

(3) Any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including transactions involving any person blocked pursuant to the RuHSR, other than the blocked persons described in paragraph (b), unless separately authorized.

(d) Effective November 21, 2024, General License No. 55B, dated June 26, 2024, is replaced and superseded in its entirety by this General License No. 55C.

(a) Except as provided in paragraph (b) of this general license, all transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the wind down of transactions involving the blocked persons listed in the Annex to this general license, and any entity in which those blocked persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest, are authorized through 12:01 a.m. eastern standard time, December 20, 2024, provided that any payment to a blocked person is made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).

(b) This general license does not authorize:

(1) Any transactions prohibited by Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation; or

(3) Any transactions otherwise prohibited by the RuHSR, including transactions involving any person blocked pursuant to the RuHSR other than the blocked persons described in paragraph (a) of this general license, unless separately authorized.

List of Blocked Persons Described in Paragraph (a) of General License 113 as of November 21, 2024:

(a) Except as provided in paragraphs (d) and (e) of this general license, all transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity issued or guaranteed by the following blocked entities (“Covered Debt or Equity”) to a non-U.S. person are authorized through 12:01 a.m. eastern standard time, December 20, 2024:

(1) Gazprombank Joint Stock Company;

(2) Interstate Bank; or

(3) Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest.

(b) Except as provided in paragraph (e) of this general license, all transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to facilitating, clearing, and settling trades of Covered Debt or Equity that were placed prior to 4:00 p.m. eastern standard time, November 21, 2024 are authorized through 12:01 a.m. eastern standard time, December 20, 2024.

(c) Except as provided in paragraph (e) of this general license, all transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to the wind down of derivative contracts entered into prior to 4:00 p.m. eastern standard time, November 21, 2024 that (i) include a blocked person described in paragraph (a) of this general license as a counterparty or (ii) are linked to Covered Debt or Equity are authorized through 12:01 a.m. eastern standard time, December 20, 2024, provided that any payments to a blocked person are made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).

(d) Paragraph (a) of this general license does not authorize:

(1) U.S. persons to sell, or to facilitate the sale of, Covered Debt or Equity to, directly or indirectly, any person whose property and interests in property are blocked; or

(2) U.S. persons to purchase or invest in, or to facilitate the purchase of or investment in, directly or indirectly, Covered Debt or Equity, other than purchases of or investments in Covered Debt or Equity ordinarily incident and necessary to the divestment or transfer of Covered Debt or Equity as described in paragraph (a) of this general license.

(e) This general license does not authorize:

(1) Any transactions prohibited by Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any transactions prohibited by Directive 4 under E.O. 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation; or

(3) Any transactions otherwise prohibited by the RuHSR, including transactions involving any person blocked pursuant to the RuHSR other than the blocked persons described in paragraph (a) of this general license, unless separately authorized.

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

On August 15, 2022, 1 the Arizona Department of Environmental Quality (ADEQ) submitted the 2022 Arizona Regional Haze Plan. ADEQ supplemented its SIP revision on August 25, 2023, with nonpoint source rules (“2023 Arizona Regional Haze Rules Supplement”). 2 ADEQ made these SIP submissions to address requirements of the CAA's regional haze program pursuant to CAA sections 169A and 169B and 40 CFR 51.308.

On May 31, 2024, the EPA published a notice of proposed rulemaking proposing partial approval and partial disapproval of the 2022 Arizona Regional Haze Plan SIP submission as partially satisfying the regional haze requirements for the second implementation period contained in the CAA and 40 CFR 51.308. 3 We did not propose to act on the 2023 Arizona Regional Haze Rules Supplement.

The EPA is now approving the elements of the 2022 Arizona Regional Haze Plan related to requirements contained in 40 CFR 51.308(f)(1), (f)(4)-(6), and (g)(1)-(5). The EPA is disapproving the elements of the 2022 Arizona Regional Haze Plan related to requirements contained in 40 CFR 51.308(f)(2), (f)(3), and (i)(2)-(4). Our proposed action and our responses to comments in section II of this document contain more information on the basis for this rulemaking and on our evaluation of the submittal.

Arizona submitted its infrastructure SIP submission for the 2012 PM 2.5 NAAQS on December 11, 2015 (“2015 PM 2.5 I-SIP submittal”). 4 Arizona also submitted its infrastructure SIP submission for the 2015 ozone NAAQS on September 24, 2018 (“2018 Ozone I-SIP submittal”). 5

Our May 31, 2024 proposed rulemaking action proposed to disapprove the prong 4 portions of Arizona's 2018 Ozone I-SIP submittal and 2015 PM 2.5 I-SIP submittal. The EPA is now disapproving the Prong 4 elements of Arizona's 2018 Ozone I-SIP submittal and 2015 PM 2.5 I-SIP submittal. Our proposed action contains more information on the basis for this rulemaking and on our evaluation of the submittals.

The EPA's May 31, 2024 proposed rulemaking action provided a 30-day public comment period that would have ended on July 1, 2024. We received four comments requesting an extension of the comment period. On June 26, 2024, 6 the EPA extended the comment period for the proposed rulemaking action by 14 days in response to requests from commenters. This action extended the close of the comment period to July 15, 2024.

The EPA received an additional ten unique comments, including one anonymous comment, 7 two comments from private individuals, 8 and comment letters from Tri-State Generation and Transmission Association, Inc. (“Tri-State”), 9 ADEQ, 10 the Arizona Chamber of Commerce and Industry and the Arizona Manufacturers Council (“the Chamber and AMC”), 11 Tuscon Electric Power (TEP), 12 the Salt River Agricultural Improvement and Power District (SRP), 13 12 community organizations (“Community Sign-on Letter”), 14 and Earthjustice on behalf of the National Parks Conservation Association, Sierra Club, and the Coalition to Protect America's National Parks (“NPCA et al.”). 15 The anonymous comment and the comments from the private individuals were unrelated to our proposed rulemaking. These three comments do not require a response. We respond to the issues raised in the seven remaining comment letters received on our proposed rulemaking in this action.

Sections I (“Introduction”), II (“Background Information on Tri-State”), and III (“Tri-State Supports the Provisions of the Arizona Department of Environmental Quality's State Implementation Plan Submittal for which EPA has Proposed Approval”) of Tri-State's comment letter either provide background information or are supportive of the EPA's proposal and therefore do not require a response in our final action. We respond to sections IV (“The Partial Disapproval is Overly Vague and Should Be Reproposed with a Fulsome and Specific Explanation of What EPA Finds Inconsistent with the Clean Air Act and the Implementing Regulations”), V (“Additional Emission Reductions Are Inappropriate for Springerville Unit 3”), and VI (“EPA's Reliance on the July 8, 2021, Clarifications Memorandum Is Inappropriate Because It Was Issued Only Days Prior to the Regional Haze State Implementation Plans Being Due”) of Tri-State's comment letter below.

Comment A.1. Tri-State comments that the proposed rule, specifically the partial disapproval, is overly vague and does not lend itself to the general public being able to adequately understand what the EPA finds objectionable regarding the SIP submission. Tri-State asserts that the EPA made broad statements about divergences from the Control Cost Manual and inadequacies in four-factor analyses and that “it [is] impossible to understand with certainty the sources to which these overly broad statements apply.” The commenter also notes that the proposed rulemaking action only gives limited examples of what the EPA is referring to and asserts that the EPA needs to clearly provide where it has issues with the SIP revision as it was submitted not just examples of what it is concerned about. Specifically, Tri-State states that the proposed rulemaking action makes general comments about ADEQ conducting analyses for well-controlled sources to further reduce emissions but makes no reference to which sources that the EPA finds to be lacking in this area. Tri-State also comments that the vagueness of the proposal is not consistent with the cooperative nature of the CAA in the EPA working with states.

Response A.1. We do not agree that the proposal was overly vague or that the basis for our proposed partial disapproval was unclear. The proposal provided a detailed summary of the 2022 Arizona Regional Haze Plan and the EPA's evaluation of the Plan with regard to each of the applicable requirements of the CAA and the RHR. With respect to the EPA's partial disapproval specifically, the proposal laid out multiple reasons for the EPA's determination that the long-term strategy did not fully meet the requirements of 40 CFR 51.308(f)(2), related to source selection, four-factor analyses (specifically, controlled emissions rates and deviations from the Control Cost Manual), and control determinations (specifically, the application of cost thresholds, the use of visibility as a factor to avoid controls, and the mass-based emissions caps at Springerville Generating Station (SGS)). 16 In each instance, we provided at least one example of a unit to which this reason applied. 17 We also explained why the disapproval of the long-term strategy also necessitated disapproval of the RPG and FLM consultation elements. 18

We disagree with the commenter's suggestion that it was necessary for the EPA to specify the extent to which each of the flaws identified by the EPA applied to each unit considered by ADEQ. The EPA's role in reviewing SIPs is to determine whether they meet all of the applicable CAA requirements. 19 In evaluating whether a SIP revision (or a portion thereof) meets all of the applicable requirements, the EPA is not required to separately evaluate and discuss each of the thousands of pieces of information, analyses and determinations comprising the SIP submission. Rather, the EPA may focus on those specific elements of the SIP revision that form the basis for our determination that certain applicable requirements are met and certain applicable requirements are not met. Therefore, in this instance, it was reasonable for the EPA to summarize our evaluation and cite to examples of where the State's documentation, analyses, and determinations did not meet CAA requirements, rather than separately evaluating and discussing every such instance throughout the SIP revision.

For example, regarding source selection, our proposal stated that:

We then provided examples of specific sources to which these concerns applied. In addition, table 3 of the proposal listed all of the units that ADEQ screened out as “effectively controlled” and includes the entirety of ADEQ's rationale for each unit. 20 This table clearly shows that for many of the units, ADEQ did not list controls for one or more of the three relevant pollutants (NO X , SO 2 , and PM). Moreover, even for those units where ADEQ did list this information, it did not explain why it is reasonable to assume, without conducting a four-factor analysis, that no additional controls would be reasonable. Furthermore, our proposed rulemaking action clearly stated that ADEQ did not adequately explain whether any of the existing controls for facilities evaluated within the SIP submittal were necessary for reasonable progress and therefore a part of the state's long-term strategy. Therefore, it was not necessary to specifically identify each source that was deficient in this respect because the deficiency applied to every source determined to be effectively controlled.

Finally, regarding the cooperative nature of the CAA, we note that the EPA worked extensively with ADEQ during SIP development. EPA and ADEQ staff met on a monthly basis beginning in 2019 and continuing through 2021 to discuss the development of the Plan. The EPA also provided informal written feedback on various elements of the Plan between 2019 and 2022. In these communications, the EPA identified many of the flaws that are the basis for the partial disapproval, so ADEQ was aware of the EPA's concerns prior to the EPA's proposal.

In conclusion, based on the findings discussed in our proposal and elsewhere in this document, we find that the long-term strategy in the 2022 Arizona Regional Haze Plan does not meet the requirements of 51.308(f)(2) and we are disapproving the Plan with respect to this requirement. Therefore, pursuant to CAA section 110(c), the EPA will be required to develop a new long-term strategy as part of a FIP, unless the EPA approves a subsequent SIP submission that fully meets these requirements. That long-term strategy would necessarily include updated source selection, four factor analyses, and control determinations that address the deficiencies we identified in the Plan. We are available to work with ADEQ following this final action to develop a SIP revision, including these elements.

Comment A.2. Tri-State asserted that additional emissions reductions are “inappropriate” for Springerville Generating Station (SGS) Unit 3. Tri-State made a few arguments in support of this contention.

First, Tri-State noted that ADEQ evaluated the currently installed NO X emissions controls against technically feasible emissions controls and concluded that the current NO X emissions controls constitutes best available control technology (BACT) for coal-fired electric generating units (EGUs). For SO 2 , Tri-State indicated that ADEQ's analysis for SGS Unit 3 clearly demonstrates that Unit 3's emissions ranged from 0.069 to 0.090 lb/MMBtu on an annual basis and has continuously complied with the Mercury and Air Toxics Standard (MATS) SO 2 emissions standard of 0.20 lb/MMBtu, and therefore does not warrant further emissions controls. Tri-State also noted language in the EPA's “Guidance on Regional Haze State Implementation Plans for the Second Implementation Period” (“2019 Guidance”)  21 that describes scenarios in which the EPA believes it may be reasonable for a state not to select a particular source for further analysis for EGUs that have add-on flue gas desulfurization (FGD) and that meets the applicable alternative SO 2 emissions limit of the MATS rule for power plants.

Second, Tri-State noted the visibility improvement at the Mount Baldy Wilderness Area in the first planning period, and that Arizona will have four additional 10-year planning periods to achieve the 1.3 deciview improvement needed to achieve natural conditions.

Finally, Tri-State stated that its intent is to retire SGS Unit 3 by September 15, 2031, and requested that the EPA include in the final rule a provision to allow sources to work with their state regulatory agencies to adopt an enforceable commitment to retire a unit, such as through a permit condition, to allow the source to forego any further emissions control or reduction requirements if a unit is retiring within ten years of the Regional Haze SIP approval.

Response A.2. We partially agree with this comment. First, with respect to NO X emissions at SGS Unit 3, ADEQ noted in the Plan “[t]he current controls ([low-NO X burners (LNB), overfire air (OFA) with selective catalytic reduction (SCR)] represent the most effective NO X control technologies for coal fired EGUs and are estimated to achieve 85-95% removal efficiency.”  22 We agree that the existing LNB, OFA and SCR constitute effective controls for NO X at SGS Unit 3. As described in our proposal and in response B.1 of this document, existing effective controls are generally necessary to make reasonable progress and must be included in the SIP, unless the state provides a weight-of-evidence demonstration to justify that the existing effective controls are not necessary to make reasonable progress. Because the Arizona SIP does not include a NO X emissions limit corresponding to these controls for SGS Unit 3, the State should have provided such demonstration. Specifically, the State should have considered whether SGS Unit 3 is subject to an enforceable NO X emissions limit that ensures its NO X emissions rate will not increase. Without proper justification that emissions of visibility impairing pollutants will not increase, it is unclear how reasonable progress is being made within the State's long-term strategy for the second planning period. 23

Similarly, with respect to SO 2 emissions at SGS Unit 3, we agree that, as described in the 2019 Guidance, an add-on FGD meeting the appliable alternative SO 2 emissions standard under MATS may constitute an effective control for SO 2 . However, as noted in the previous paragraph, existing effective controls are generally necessary to make reasonable progress and must be included in the SIP, unless the state provides a weight-of-evidence demonstration to justify that the existing effective controls are not necessary to make reasonable progress. Because the Arizona SIP does not include a SO 2 emissions limit corresponding to the existing SO 2 controls at SGS Unit 3, the State should have provided such a demonstration, including consideration of whether SGS Unit 3 is subject to an enforceable SO 2 emissions limit that ensures its SO 2 emissions rate will not increase.

Second, regarding the Mount Baldy Wilderness Area, although we commend the efforts in Arizona that contributed to the noted visibility improvement at the Mount Baldy Wilderness Area in the first planning period, previous and ongoing measures are not automatically sufficient to ensure ongoing reasonable progress. The regional haze requirements of CAA sections 169A and 169B and 40 CFR 51.308 need to be satisfied. 24 In particular, the increment of progress that is “reasonable progress” for a given implementation period is determined through the four statutory factors. 25 While progress made in the first implementation period, ongoing emissions trends, and anticipated changes in emissions may inform a state's regional haze planning process, these circumstances alone do not satisfy a state's obligation to determine and include in its SIP the measures that are necessary to make reasonable progress in the second planning period. We also note that, while Mount Baldy is the closest Class I area to SGS and therefore has the highest Q/d (emissions in tons per year divided by distance to an affected Class I area in kilometers) value (339) with respect to SGS, 26 this does not mean that Mount Baldy is the only Class I area affected by emissions from SGS. ADEQ did not specifically identify all the Class I areas that may be affected by emissions from each of the sources it evaluated. Nonetheless, given that SGS had a 2018 Q of 17,044 tons per year (tpy)  27 and is located within 300 km of 15 different Class I areas, 28 it is likely to contribute to visibility impairment at a number of Class I areas.

Finally, with respect to Tri-State's request regarding enforceable shutdowns, we note that the EPA's role in acting on SIP submittals is to evaluate whether they meet applicable CAA requirement, not to establish new requirements. Tri-State may choose to work with ADEQ to establish enforceable shutdowns as part of a subsequent SIP revision. However, we note that even if there were an enforceable shutdown in 2031, this would not automatically preclude the unit from consideration under a four-factor analysis. 29

Comment A.3. Tri-State comments that it was unreasonable for the EPA to use the July 8, 2021 “Clarifications Regarding Regional Haze State Implementation Plans for the Second Implementation Period” (“2021 Clarifications Memo”) as a basis for disapproval of the 2022 Arizona Regional Haze Plan. Tri-State indicated that although ADEQ submitted its plan over a year late on August 22, 2022, ADEQ was over three years into the process of developing the plan, working with the Western Regional Air Partnership, the EPA, other states, Federal Land Managers (FLMs) and members of the public, was nearly complete and ready to go through the Arizona rulemaking process when the EPA published the 2021 Clarifications Memo. Tri-State also noted that the rulemaking process can take over a year due to various tasks required.

Response A.3. The EPA disagrees that it used the 2021 Clarifications Memo as a basis for disapproving portions of the 2022 Arizona Regional Haze Plan. Contrary to the commenter's suggestion, the EPA's guidance, including the 2021 Clarifications Memo, is not the basis for our disapproval. Rather, the partial disapproval is based on the Plan's failure to satisfy the requirements of the relevant portions of the RHR and CAA sections 169A and 169B. We did cite the guidance documents because these documents provide helpful context explaining the EPA's interpretations of the applicable statutory and regulatory requirements against which we are required to evaluate SIP submittals. Commenters are free to disagree and raise concerns with those interpretations as part of the notice and comment process on individual SIP actions. However, in this instance, the commenter does not appear to object to any of the interpretations in the 2021 Clarifications Memo, only to the fact that they were provided shortly before the due date for the plans.

With regard to timing, we note that the 2021 Clarifications Memo was developed in response to issues that EPA regions and other stakeholders had raised regarding draft regional haze SIP revisions that were already under development by states. 30 The 2021 Clarifications Memo therefore necessarily came during the SIP development process and, in comparison to the SIP-specific feedback previously provided by the EPA prior to its issuance, was intended to “offer feedback more broadly to help support SIP development, submittal, review, and action for the second planning period.”  31 With regard to Arizona's Plan specifically, throughout the EPA's collaboration with ADEQ during early engagement, EPA staff advised ADEQ of many of the interpretations that would be expressed in the 2021 Clarifications Memo. Therefore, we do not agree that it was improper for the EPA to cite to the 2021 Clarifications Memo as further explanation for why portions of the 2022 Arizona Regional Haze Plan did not comply with the applicable statutory and regulatory requirements.

Sections I (“Background”) and XI (“Conclusion”) of ADEQ's comment letter are informational and therefore do not require a response. We respond to sections II-X of ADEQ's comment letter below.

Comment B.1. ADEQ asserts that the EPA's changing guidance increased the burden of ADEQ's planning efforts by introducing uncertainty and rework. ADEQ noted delays between final publication of the 2017 RHR and the 2019 Guidance, as well as later changes to the EPA's interpretation of the RHR that came close to the plan submittal deadline, including the 2021 Clarifications Memo. ADEQ asserts that the state did not have the resources to undertake the evaluation of existing control measures, as noted in the 2021 Clarifications Memo, a process that ADEQ states was unreasonably broad-reaching and duplicative.

Response B.1. We disagree with ADEQ's assertions about the EPA's additional guidance increasing the burden of ADEQ's planning efforts by introducing uncertainty and rework. First and foremost, as stated previously and throughout this notice, the EPA did not rely on guidance as the basis for its partial disapprovals. Rather, the 2019 Guidance and the 2021 Clarifications Memo merely provide additional context to the EPA's interpretations of the statutory and regulatory requirements. Both the 2019 Guidance and the 2021 Clarifications Memo were drafted to be used as tools by States in the development of their second planning period regional haze plans. However, neither of these documents were necessary for States to develop and submit their SIP revisions.

Regarding the contents of the guidance, we do not agree that the EPA significantly changed its interpretations in either the 2019 Guidance or the 2021 Clarifications Memo. The commenter has not provided any examples of interpretations that it believes were changed under the 2019 Guidance and provided only a single example from the 2021 Clarifications Memo, relating to the section entitled, “Determining When Existing Measures are Necessary for Reasonable Progress.” We do not agree that interpretations set forth in this section of the 2021 Clarifications Memo represented a significant change in interpretation. Rather, they were intended to clarify the following statement in the 2019 Guidance:

Many states and other stakeholders raised questions about this statement. In response, as part of the 2021 Clarifications Memo, the EPA laid out in further detail our interpretation of the CAA and RHR regarding how to make such a determination.

We also disagree, on multiple grounds, with the commenter's assertion that the “EPA's revised guidance requires an unreasonably broad-reaching review of all existing control measures that are not separately included in the regional haze plan to evaluate whether those same measures should be duplicated in the regional plan to support reasonable visibility progress.”

First, the 2021 Clarifications Memo did not establish any new requirements. On the contrary, it clearly states that “[t]his memorandum does not change or substitute for provisions or requirements of the CAA or RHR, nor does it create any new requirements. Rather, this memorandum clarifies and provides further information on the existing statutory and regulatory requirements.”  33 One of the key requirements of the CAA and RHR is that all measures that are necessary to make reasonable progress must be included the SIP. 34 However, neither the CAA, the RHR, or the 2019 Guidance explain how to determine whether an existing measure that results from a four-factor analysis (or is used as the basis to avoid such an analysis) is necessary to make reasonable progress. Based on questions received on this subject during SIP development, it was clear that further guidance on this question would be helpful. Accordingly, the EPA provided this guidance in the 2021 Clarifications Memo. 35

Regarding “existing measures,” the Memo explains:

Similarly, with regard to existing “effective controls” used to screen out sources from a four-factor analysis:

Thus, the 2021 Clarifications Memo clarifies that, under the CAA and the RHR, there is a general presumption that existing measures resulting from a four-factor analysis (or relied upon to avoid such an analysis) are necessary to prevent future visibility impairment and therefore necessary to make reasonable progress. Accordingly, states have the option to submit all such measures into the SIP (to the extent they are not already approved into the SIP) without further evaluation of whether the measures are necessary to make reasonable progress. Alternatively, states may choose to provide a weight-of-evidence demonstration that such measures are not necessary to make reasonable progress. Importantly, however, such a demonstration is needed only where an enforceable emissions limitation corresponding to an existing measure has not already been approved into the SIP and is not being submitted for SIP approval as part of the regional haze plan. Therefore, we do not agree that a review of “all existing control measures that are not separately included in the regional haze plan” is required.

Third, to the extent that a state chooses to undertake such a demonstration that existing measures are not necessary to make reasonable progress, we do not agree that it would be duplicative. On the contrary, because such a demonstration is necessary only for measures for which emissions limitations are not submitted into the SIP, the state and the EPA need to evaluate relevant evidence concerning whether the source will continue to implement its existing measures and maintain its emissions rate in the absence of SIP-approved requirements to do so, to ensure that visibility impairment does not increase.

In sum, we disagree with ADEQ's characterization of the contents of the 2021 Clarifications Memo and its role in our partial approval and partial disapproval of the Plan.

Comment B.2. ADEQ comments that the EPA should not issue binding decisions based on guidance alone where the bases for disapproval are not in the rule or statute. ADEQ cites to statements in the 2019 Guidance and 2021 Clarifications Memo regarding screening out of effectively controlled sources and determinations of whether existing controls are necessary to make reasonable progress, as the examples of guidance. Specifically, ADEQ asserts that “[i]t was unreasonable for the EPA's clarification memo to issue these additional specific barriers to a determination that existing measures were effective at a given source late in the development of second round regional haze plans through guidance, and without additional notice and comment.”

Response B.2. We disagree that we issued our proposed decision based on guidance. Rather, the proposal action clearly indicates that the partial disapproval was based on failing to satisfy the requirements of the relevant portions of the RHR and CAA sections 169A and 169B, with citations to our guidance as further explanation. See Response A.3 for more explanation.

We also note that ADEQ's comment appears to conflate two separate questions: first, whether its justification for screening out a unit based on existing effective emissions controls was sufficient, and second, whether such existing effective control measures are necessary to make reasonable progress. In our proposal, we discussed each of these issues as two separate grounds for our proposed partial disapproval with respect to 40 CFR 51.308(f)(2). 36 While both questions apply to sources that are screened out from a four-factor analysis based on existing effective controls, they are distinct. The first issue is further addressed in Response B.3 of this document, while the second is addressed in Response B.1. Therefore, we do not agree that the 2021 Clarifications Memo created any additional barriers to a determination that existing measures were effective at a given source.

Comment B.3. ADEQ disagreed with the EPA's proposed determination that Arizona failed to provide adequate justification for deferring certain emissions units from consideration. ADEQ indicated that the state has the flexibility to reasonably select a set of sources for an analysis of control measures, and that it did not exclude entire facilities from consideration or exempt sources that had previously adopted BART or reasonable progress controls, but rather excluded just the emissions processes or units that recently installed highly effective controls from the calculation of the Q/d value for that facility. ADEQ also provided additional information regarding effective controls in Attachment A of its letter.

Response B.3. We agree that states have flexibility to reasonably select a set of sources for analysis of controls measures. However, as described in our proposal, we find that ADEQ's approach to screening out units from conducting a four-factor analysis on the basis that they are “effectively controlled” was not adequately documented. 37 Specifically, in some cases, ADEQ did not identify the controls for each pollutant at each unit or process, the associated limits, or where the controls and/or limits currently exist in the Arizona SIP. In other cases, ADEQ listed the controls, but did not clearly explain why it is reasonable to assume, without conducting a four-factor analysis, that no additional controls would be reasonable. 38 Accordingly, ADEQ should have identified where the existing limits are found in the SIP or FIP and clearly explained why no additional controls would likely be reasonable under a four-factor reasonable progress analysis for the second planning period. Without this analysis and explanation, it is not clear what is a part of Arizona's long-term strategy for the second planning period.

As noted in its comment, ADEQ conducted its effective controls screening on a unit-specific basis. However, it did not do so on a pollutant-specific basis. Rather, ADEQ screened out entire units from further evaluation for NO X , SO 2 , or PM 10 if the units met ADEQ's screening criteria for any one of these pollutants. We find that this approach was unreasonable because it resulted in the screening out of entire units without consideration of whether the unit had effective controls for all three of the pollutants covered in ADEQ's long-term strategy. For example, ADEQ screened out AEPCO Apache Unit 3 and TEP Irvington Generating Station (IGS) Unit 4 from any further analysis because these units were converted from coal to natural gas under better-than-BART alternatives during the first planning period. 39 The EPA acknowledges that fuel combustion units that are required to combust pipeline-quality natural gas are generally considered to be effectively controlled for SO 2 and PM. 40 However, they are not necessarily effectively controlled for NO X , based on burning natural gas alone. Therefore, we find that ADEQ has not provided adequate justification for screening these units out from an analysis of NO X controls.

Additionally, we appreciate the documentation in Attachment A that ADEQ provided in its attachment letter. However, this information would need to be part of a SIP revision subject to review by the public and FLMs in order for the EPA to consider it as part of the long-term strategy. If ADEQ develops a new SIP revision intended to remedy the deficiencies discussed in our proposed and final actions on the Plan, it may be appropriate to include this information in that SIP revision.

Comment B.4. ADEQ asserts that, despite indicating that flawed emissions rates were used for some of ADEQ's analyses, the proposed action identified one example of differing achievable emissions rates for selective catalytic reduction (SCR) and selective non-catalytic reduction (SNCR) controls for SGS Units 1 and 2's four factor analyses. In this example, ADEQ used 0.060 lb/MMBtu and 0.15 lb/MMBtu as reasonable estimates of the achievable rates at TEP SGS Units 1 and 2 for SCR and SNCR, respectively.

For SCR, ADEQ additionally states the study that the EPA cited for its justification that SCR has been demonstrated to achieve 0.05 lb/MMBtu (or up to 90 percent reduction) was published in 2005 and found that the 20 SCR systems examined in 2003 achieved NO X emissions rates between 0.04 and 0.07 lb/MMBtu. 41 In addition, ADEQ noted that EPA found 0.065 lb/MMBtu as a “reasonable estimate of average SCR performance” in its 2016 Regional Haze FIP action for the Salt River Project Coronado Generating Station Unit 1.

For SNCR, ADEQ additionally states that the EPA did not provide a technical citation for disagreeing with ADEQ's use of 0.15 lb/MMBtu for SNCR. ADEQ noted that the proposed rule indicated that ADEQ did not demonstrate why source specific conditions would cause SNCR on these units to achieve as little as a 15 percent reduction. ADEQ noted that Srivastava et al. found that while smaller boilers ( e.g., 76-78 MW units) were able to achieve greater than 60 percent NO X reductions, larger boilers ( e.g., 500 MW units) “may be capable of achieving reductions of only ~30%.” ADEQ indicates that SGS Units 1 and 2 units have nameplate ratings of 425 MW and would be expected to achieve less reductions than smaller units. ADEQ also points to the inlet concentration as another consideration for achievable emissions rates with post combustion emissions control. Citing Srivastava et al., ADEQ notes that the study found that “in the absence of reliable SCR inlet NO X data, the SCR efficiencies are estimated using an inlet NO X level of 0.5 lb/10 6 Btu.” However, in the case of SGS Units 1 and 2, the NO X concentration in the exhaust from these units is less than 100 parts per million by volume (ppmv) with an assumed rate of 0.174 lb/MMBtu and 0.178 lb/MMBtu being used in ADEQ's four factor analysis cost calculations for Unit 1 and Unit 2, respectively. Given the already low NO X inlet concentration, an achievable emissions rate of 0.15 lb/MMBtu was determined to be reasonable. ADEQ further noted that additional information related to achievable emissions rates for SNCR for SGS Unit 1 and Unit 2 can be found in Appendix K, Section II(J), Comment 10 of the 2022 Arizona Regional Haze Plan.

Response B.4. We acknowledge that we only highlighted a single example of flawed emissions rates in our proposal—for NO X at SGS Units 1 and 2. However, as explained in response A.1, in evaluating whether a SIP revision (or a portion thereof) meets each of these CAA requirements, the EPA is not required to separately evaluate and discuss each of the thousands of pieces of information, analyses and determinations comprising the SIP submission. Rather, the EPA may focus on those specific elements of the SIP revision that form the basis for our determination that certain applicable requirements are met and certain applicable requirements are not met. In this instance, we focused on these units because they are expected to have the highest NO X emissions of any units in the State (2,099 and 2,283 tpy respectively) by 2028, so it is important to carefully examine whether additional NO X reductions from these units are necessary to make reasonable progress. Given this context, and for the reasons outlined below, we do not agree with ADEQ that it has adequately documented the emissions rates assumed in this analysis, which are a critical component of a four-factor analysis.

The emissions rate achievable by a unit equipped with SCR is determined by several parameters and technological limitations. There are periods of operation in which the SCR is not able to operate, particularly during periods of startup and shutdown. 42 The SCR emissions rate (lb/MMBtu) achievable by a particular unit represents the combination of two primary elements: (1) the controlled NO X emissions rate during periods of normal unit operation when the SCR is able to operate, and (2) the uncontrolled NO X emissions rate during periods of startup and shutdown when the SCR system cannot operate, and result in unit emissions higher than the SCR controlled emissions rate that increase the unit's overall emissions rate.

With regard to the first element, the 2005 study is not the sole basis for our finding that an overall emissions rate of 0.050 lb/MMBtu is achievable with SCR on an annual average basis. There are multiple instances of coal-fired units installing SCR on a retrofit basis and achieving 0.050 lb/MMBtu in practice on an annual average basis. 43 These units are typically able to achieve this overall level of control by being able to operate at NO X annual emissions rates at or below 0.050 lb/MMBtu based upon periods of normal operation. Even several of the units identified by ADEQ operating in the annual average emissions rate range of 0.055 to 0.065 lb/MMBtu are still achieving emissions rates of 0.050 lb/MMBtu and lower based upon periods of normal operation. 44 We consider this information sufficient to establish that an 0.050 lb/MMBtu emissions rate warrants consideration as technically feasible for coal fired units generally during periods of normal operation, absent source specific factors affecting feasibility. We are not aware of assertions by either ADEQ or TEP that the Springerville units specifically cannot achieve 0.050 lb/MMBtu when operating with SCR during periods of normal operation. 45 Therefore, we find that ADEQ should have considered a controlled NO X emissions rate of 0.050 lb/MMBtu for SGS Units 1 and 2 when operating with SCR during periods of normal operation.

The majority of analysis performed by ADEQ is relevant to the second element and is intended to support a position that, when the annual emissions rate achievable during normal operations is combined with emissions from the number of startup/shutdown cycles exhibited by SGS Units 1 and 2, an annual average emissions rate of 0.06 lb/MMBtu is what is reasonably achievable for these units. We consider it appropriate to account for the effect of startup/shutdown emissions on the emissions rate achievable by the unit, but disagree that the analysis provided by ADEQ supports an annual average emissions rate of 0.060 lb/MMBtu. TEP's four factor analysis and ADEQ's SIP submittal did not include startup/shutdown history to support the assertion that Springerville has more startup/shutdown events than comparable tangentially-fired coal fired boilers. A review of Clean Air Markets Program Data (CAMPD) emissions and operating data over a 2021-2023 timeframe indicate that SGS Units 1 and 2 each experienced approximately 9 to 14 startup events per year. While we acknowledge that some portion of SGS baseline emissions consist of startup/shutdown emissions that cannot be controlled by an SCR system, the substantial majority of baseline emissions are attributable to emissions during normal operation. We estimate that approximately 97-98% of baseline emissions are attributable to normal operations that could be controlled by SCR. 46 Given that the majority of unit emissions can be controlled by SCR to 0.050 lb/MMBtu or lower and that the remaining 2-3 percent of operations are characterized by low inlet SCR emissions rates, we do not consider the historical startup/shutdown operating profile to support deviating to an 0.06 lb/MMBtu emissions rate on an annual average basis.

ADEQ cites a limit of 0.065 lb/MMBtu established for SRP Coronado Unit 1 in a 2016 Regional Haze FIP action as support for the use of an annual average emissions rate of 0.060 lb/MMBtu. We wish to clarify that the 0.065 lb/MMBtu value was not the annual average emissions rate used in cost calculations, but was the emissions limit established on a rolling 30-boiler operating day (BOD) average, for Coronado Unit 1. We relied upon an 0.050 lb/MMBtu annual average emissions rate in developing cost calculations for SCR, 47 which is consistent with our action here. In establishing a rolling 30-BOD limit for Coronado Unit 1 in that action, we acknowledged that upward revisions to the SCR design rate achievable on an annual average basis would be appropriate in order to accommodate the effect that multiple startup/shutdown events would have to overall unit emissions rates on an averaging period that could be as short as 30 days. Based upon startup/shutdown frequency and projected controlled emissions rate information provided by SRP, we finalized 0.065 lb/MMBtu as an appropriate emissions limit and reasonable estimate of SCR performance over a short-term period. 48 Given that the 0.065 lb/MMBtu limit reference here corresponds to a different, shorter averaging period, and was itself based on an 0.05 lb/MMBtu annual average emissions rate, we do not consider it supportive of an 0.060 lb/MMBtu annual average emissions rate.

For SNCR, we appreciate the additional analysis provided in the comment and citation to Appendix K summarizing ADEQ's responses to public comments. We acknowledge that low inlet NO X concentrations are a general consideration in evaluating NO X controls that can negatively impact control efficiencies and achievable controlled emissions rates. Therefore, in order to further evaluate whether a rate lower than 0.15 lb/MMBtu may be achievable with SNCR at SGS Units 1 and 2 on an annual basis, we examined CAMPD emissions data over a 2019-2023 time period for SNCR-equipped units comparable to SGS Units 1 and 2, specifically filtering for tangentially-fired coal units operating with SNCR on a retrofit basis. 49 We identified four currently operating SNCR-equipped units achieving NO X emissions rates below 0.15 lb/MMBtu, ranging between 0.10 to 0.12 lb/MMBtu. 50 These values represent the highest performing SNCR-equipped units, with the next best performing units operating at emissions rates of 0.15 lb/MMBtu and higher. At least one of the four units we identified has the capability to use natural gas, which could have the effect of lowering emissions rates relative to units that do not have this capability, such as SGS Units 1 and 2. 51 Based on the three remaining units, each unit had relatively low pre-SNCR emissions rates that are comparable to SGS Unit 1 and 2, and each unit is able to achieve SNCR emissions rates below 0.15 lb/MMBtu and control efficiencies better than 15 percent. Neither ADEQ or TEP has provided documentation to support a claim that SGS Units 1 and 2 specifically cannot achieve an annual emissions rate lower than 0.15 lb/MMBtu with SNCR. Therefore, we find that ADEQ should have considered a NO X emissions rate of lower than 0.15 lb/MMBtu for SNCR at SGS Units 1 and 2.

We also note that this was one of multiple flaws that formed the basis of our determination that the State's long-term strategy did not satisfy the requirements of 40 CFR 51.308(f)(2), including reasons related to source selection and control determinations, as detailed in our proposal and elsewhere in this document. Therefore, even assuming that a control efficiency of 15 percent for SNCR at SGS Units 1 and 2 was reasonable, it would not have changed our determination that the 2022 Arizona Regional Haze Plan did not satisfy the requirements of 40 CFR 51.308(f)(2).

Comment B.5. ADEQ disagrees with the EPA's determination that Arizona deviated from the Control Cost Manual without documentation as part of its four factor analyses with regards to remaining useful life calculations for the El Paso Natural Gas (EPNG) Williams facility and the use of source specific interest rates without providing adequate documentation in the control measure analyses for the EPNG Williams and Willcox facilities.

ADEQ indicates that the EPA Control Cost Manual Section 4, Chapter 2, states that “. . . a representative value of the equipment life for SCR at power plants can be considered as 30 years . . . [f]or other sources, the equipment life can be between 20 and 30 years.” ADEQ noted that while it erroneously omitted this citation from the EPNG Williams Turbine analysis, the Control Cost Manual citation and justification for use of 25 years is the midpoint between the 20-30 year range for non-EGU SCR systems and was included in the EPNG Willcox SCR analysis for Turbines 1 and 2. 52 ADEQ also noted that it received cost calculation spreadsheets utilizing a 25-year useful life for SCR for the EPNG Williams Turbine 1 from the US Forest Service. 53

ADEQ also explains that in its analysis of remaining useful life for compressor engines at the EPNG Williams facility, ADEQ documented the assumptions and basis for using 20 years to amortize NO X controls in Appendix C, Section C3.7.6.5, which includes citations to the Control Cost Manual and the EPA's 2016 technical support document for the Cross State Air Pollution Rule for the 2008 Ozone NAAQS.

Response B.5. We appreciate the clarification regarding ADEQ's reasoning for use of a 25-year remaining useful life for the EPNG Williams turbines and 20 years for the EPNG Williams engines. While there are instances of combustion turbines with operating lifetimes beyond 25 years (with or without retrofit controls), we acknowledge that EPA guidance such as the Control Cost Manual has not recommended a value beyond the 20-30 year range. ADEQ's use of a 25-year useful life represents the midpoint of Control Cost Manual recommendations, and therefore we agree that it is consistent with the Control Cost Manual. However, we note that the lack of documentation of remaining useful life for the units at Williams Compressor Station was one of the many flaws that we identified in the state's long-term strategy including reasons related to source selection and control determinations, as detailed in our proposal and elsewhere in this document. Therefore, this clarification does not change our determination that the 2022 Arizona Regional Haze Plan did not satisfy the requirements of 40 CFR 51.308(f)(2).

Comment B.6. ADEQ disagrees with the EPA's determination that ADEQ did not reasonably weigh the statutory factors in reaching its control determinations with regards to application of cost thresholds. ADEQ disagrees that Arizona's consideration of incremental cost effectiveness in its four factor analyses were done in an unreasonable manner. ADEQ cites to its explanation that the incremental cost of requiring low-emission combustion 2 (LEC 2) as opposed to Air-Fuel ratio adjustments is $5,034/ton, which ADEQ considered reasonable, and therefore ADEQ found that LEC 2 is a more appropriate control for Williams Reciprocating Engine 1 (RECIP-1). 54

ADEQ also asserts that it also analyzed other determinations from the regional haze first implementation period besides the incremental cost effectiveness value for the Nelson Lime Plant action, and ADEQ provides this information in Table 1 of its comment letter.

Response B.6. We appreciate ADEQ's explanation about LEC 2 on RECIP-1, but we note that ADEQ also rejected LEC 3 on Williams RECIP-1, on the grounds that the incremental costs of these controls, relative to less stringent controls, were excessive. In addition, ADEQ did not provide or consider incremental cost effectiveness values for the same controls for the other units at the same source (RECIP-2 or RECIP-5). Although states may choose to consider incremental costs in a reasonable manner, 55 we find it was unreasonable for ADEQ to do so only for specific units and controls, rather than in a consistent manner across all units and controls. Such inconsistent treatment of sources without explanation is the “the hallmark of arbitrary action.”  56

We also appreciate the addition of Table 1 identifying other first implementation period incremental cost effectiveness decisions. However, this information was not included in the Plan and therefore not subject to review by the public or FLMs. Accordingly, it cannot be relied upon to meet the requirement of 40 CFR 51.308(f)(2)(iii) for States to document the technical basis for their long-term strategy. Moreover, even if the information had been included in the Plan, it would not have justified ADEQ's inconsistent consideration of incremental cost effectiveness, for the reasons described in our proposal and the preceding paragraph.

Comment B.7. ADEQ states that, contrary to the EPA's contention, ADEQ did not rely upon visibility benefits for its control determinations, but rather visibility impacts were reported for some sources to give reference to the reader as to the relative impact of these sources or controls on visibility. ADEQ also asserts that nothing in the CAA, RHR, or 2019 Guidance prevents the department from considering visibility benefits as part of its analysis and stated that “the ADEQ's labeling of the visibility benefits associated with specific control scenarios as `small' comports with similar language used by the EPA in their regional haze actions.”  57

Response B.7. We agree with ADEQ that in its Response to Comments, ADEQ stated that “[v]isibility impacts were reported for some sources to give reference to the reader as to the relative impact of these sources or controls considered on visibility. However, this information was not considered in the Department's emissions control measure determinations.”  58 However, this assertion is contradicted by the language of some of the control determinations in the Plan. For example, in the NO X four-factor analysis for SGS, ADEQ stated that:

Similar language appears following the SO 2 four factor analysis for SGS  60 and in the summary of ADEQ's NO X reasonable progress determination for IGS Unit 3. 61 This language indicates that ADEQ did consider visibility for these units, and specifically, that it weighed the “small modeled benefits” of controls in determining that no additional NO X controls were warranted at SGS Units 1 and 2 and IGS Unit 3, and no more stringent SO 2 controls were warranted at SGS Units 1 and 2.

While states have the option to consider visibility benefits, along with the four statutory factors, in making control determinations, if they choose to do so, they must do so “in a reasonable way that does not undermine or nullify the role of the four statutory factors in determining what controls are necessary to make reasonable progress.”  62 In this case, we find it was not reasonable for ADEQ to consider visibility benefits only for specific sources and without any explanation of what would constitute a significant visibility benefit.

In the action cited by ADEQ where the EPA considered “relatively small visibility benefits,”  63 we were comparing the relatively small benefits of a control at one source to the relatively larger visibility benefits expected to result from controls at other sources. 64 In contrast, in the 2022 Arizona Regional Haze Plan, ADEQ did not find any visibility benefits at any source to be anything other than small. Thus, as explained in our proposal regarding SGS Units 1 and 2, “[i]n the absence of any opportunities for larger emissions reductions and corresponding visibility benefits, we find that ADEQ's reliance on `small' visibility benefits as an additional justification for not adopting more stringent controls at these units is not persuasive.”  65

Finally, we note that, even assuming that ADEQ did not consider visibility benefits as part of its control determinations for SGS Units 1 and 2, we would still conclude that the determinations were flawed for other reasons. In particular, for NO X , ADEQ did not adequately justify the control efficiency used for SCR and SNCR, as discussed in the proposal and response B.4. 66 For SO 2 , ADEQ unreasonably rejected wet FGD on the basis of incremental cost, and set mass-based caps that will not ensure implementation of the emissions reduction measures that are necessary to make reasonable progress at these units, as discussed in the proposal and response B.8. Furthermore, the lack of clarity in the Plan regarding whether or not ADEQ considered visibility benefits in making its control determinations for SGS Units 3 and 4 and IGS Unit 3, indicates a lack of reasoned decision making that also supports our disapproval of the Plan's long-term strategy.

Comment B.8. ADEQ disagrees with the EPA's determination that ADEQ did not reasonably weigh the statutory factors in reaching its control determinations with regards to three issues noted in the proposed rule concerning the mass-based emissions caps at SGS and IGS.

First, ADEQ asserts that the EPA's rationale is arbitrary and capricious in regard to the rejection of wet FGD for SGS Units 1 and 2. ADEQ states that the use of emissions limits in lieu of codifying specific control technologies is a flexibility that the EPA itself used in its reasonable progress determination for Phoenix Cement Clarkdale (PCC). 67 ADEQ asserts that the EPA established an emissions limit for PCC that did not require the installation of a particular control technology but rather compliance through other means of meeting the limit.

Second, regarding the EPA's contention that spray dry absorber (SDA) upgrades may still be cost effective after the establishment of the mass-based emissions caps, ADEQ comments that this manner of analysis is not contemplated in the four-factor analysis as outlined in the RHR or the 2019 Guidance. ADEQ asserts that the EPA has never applied this standard whereby after the establishment of an emissions limit based on the reductions achievable from a considered control technology that a State must revisit and update the baseline emissions of its four-factor analysis to reflect the new emissions limit. ADEQ claims that for its analysis of SGS, ADEQ did not select a control scenario in its four-factor analysis that included the imposition of both emissions limits and the installation of SDA upgrades, and therefore, the EPA should not substitute its judgment for ADEQ's selection of SDA upgrades as the evaluated control measure for SGS Units 1 and 2 or reject ADEQ's determination based on an arbitrary and circular four factor analysis standard.

Third, ADEQ further disagrees with the EPA's assertion that the mass-based emissions caps at SGS and IGS would not meaningfully constrain the emissions from one unit during periods when the other unit is not operating and argues that the rationale is arbitrary and capricious. ADEQ notes that the EPA referenced TEP's 2023 Integrated Resources Plan (IRP) and highlighted TEP's plans to retire SGS Unit 1 in 2027, but states that as the operating scenarios outlined in the IRP are not federally enforceable conditions, ADEQ has no basis for the consideration of these future scenarios as part of its control measure analysis and the establishment of the mass-based emissions limits. ADEQ states that the EPA should not rely upon unenforceable and hypothetical operating scenarios to reject ADEQ's reasonable progress determinations.

Lastly, ADEQ disagrees with the EPA's rationale that IGS Unit 3's mass- based emissions limits are not yet enforceable and therefore are not an appropriate basis for modifying the baseline control scenario for a four-factor analysis. ADEQ cites that for the EPA's BART determination for Arizona Public Service (APS) Cholla generating station, the EPA accepted a source specific permit revision for APS Cholla Unit 2 that included a trigger that was conditional on the EPA's approval of the SIP revision that altered the remaining useful life of the unit in ADEQ's four factor analysis. 68 Therefore, ADEQ concludes that the EPA should approve ADEQ's reasonable progress determination for IGS Unit 3.

Response B.8. We disagree with ADEQ's comments arguing that the EPA's justification for disapproving the reasonable progress determinations for SGS and IGS as it relates to the mass-based emissions caps at SGS and IGS was improper.

First, we wish to clarify that we do not object to the use of numeric emissions limitations as a means to implement control determinations. Indeed, CAA section 169A(b)(2) specifically requires the long-term strategy to include “enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress.” As explained in our proposal:

We find that the mass-based emissions caps set for SGS do not represent the emissions reduction measures that were the outcome of the state's four-factor analysis for the reasons described in our proposal  70 and herein. Therefore, these caps do not meet the requirements of 169A(b)(2) and (g)(1), or the corresponding provisions of the RHR.

Regarding PCC, we agree that in the EPA's reasonable progress determination for PCC in the first implementation period, the EPA established a mass-based emissions limitation for NO X . However, the circumstances between PCC and SGS Units 1 and 2 differ in important ways. The limit for PCC was set pursuant to 40 CFR 51.308(d)(3), which required the long-term strategy for the first implementation period to “include enforceable emissions limitations, compliance schedules, and other measures as necessary to achieve the reasonable progress goals established by States having mandatory Class I Federal areas.”  71 In this instance, the Class I areas primarily affected by emissions from PCC were in Arizona, 72 and the emissions reductions from PCC were reflected in the applicable RPGs for these areas by scaling of visibility extinction components in proportion to changes in total annual emissions. 73 Under these circumstances, an annual mass-based emissions limit corresponding to the level of annual emissions reductions assumed in the RPG calculations was sufficient to meet the applicable requirement for an emissions limit “as necessary to achieve” the relevant RPGs.

In contrast, for the second planning period, the EPA clarified in 40 CFR 51.308(f)(2) that “the long-term strategy must include the enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress, as determined pursuant to (f)(2)(i) through (iv).” 40 CFR 51.308(f)(i) in turn requires the state to “evaluate and determine the emission reduction measures that are necessary to make reasonable progress by considering” the four statutory factors. Thus, the revised rule clarifies that the long-term strategy must include emissions limitations, compliance schedules, and other measures representing the emissions reduction measures that the state determined to be necessary to make reasonable progress, considering the four statutory factors.

The EPA provided recommendations on the appropriate form of such emissions limitations and other measures in the 2019 Guidance and the Clarifications Memo. Specifically, the 2019 Guidance recommends the use of throughput-based limits, rather than mass-based limits ( i.e., “caps”) for emissions limitations to implement measures necessary for reasonable progress in most instances. 74 The Guidance notes that mass-based limits are allowed under the RHR, but explains that, “[i]f the state has determined, independent of the forecasted operating level, that operation of the emission control equipment . . . is necessary to make reasonable progress, a mass-based emission limit may not be appropriate.”  75 The Clarifications Memo also reaffirms that “whether for new or existing measures . . . an emission limit . . . should be in the form of the emission rate achieved when implementing those measures ( e.g., pounds per million British thermal units or lbs/MMBtu, pounds per hour or lbs/hr, or pounds per ton or lbs/ton of produced material).”  76

With regard to SGS 1 and 2, ADEQ concluded, based on a four-factor analysis that, “it is reasonable to require TEP to upgrade the current SDA systems”  77 and did not indicate that this determination was conditioned on a particular level of operation. Therefore, ADEQ should have set limits in the form of the emissions rates achieved when implementing SDA upgrades, e.g., lb/MMBtu limits, or should have provided a rationale for why the mass-based limits, which could be met without any control upgrades, nonetheless represent SDA upgrades.

We also note that the mass-based limit at PCC was for a single unit, meaning that it necessarily constrained the emissions from that unit on an annual basis. In contrast, the mass-based limit at SGS Units 1 and 2 were set across two units. Accordingly, if one unit ceases to operate, the limits would not meaningfully constrain emissions from the other unit. In addition, ADEQ rejected more stringent controls at SGS Units 1 and 2 based on its “determination that another viable reasonable control exists to reduce SO 2 emissions from Units 1 & 2 (upgraded SDA).” In contrast, the EPA did not reject any more stringent controls for PCC based on incremental cost effectiveness. Furthermore, the cap at PCC was intended, in part, to address concerns raised during consultation with the facility's owner, the Salt River Pima Maricopa Indian Community (SRPMIC). 78 No similar considerations exist with respect to SGS Units 1 and 2. Therefore, we find that the circumstances concerning the PCC mass-based cap are distinguishable from those concerning SGS Units 1 and 2.

Second, regarding our finding that SDA upgrades would be cost effective after the establishment of the mass-based emissions caps, we disagree that we substituted our judgment for ADEQ's by arbitrarily rejecting ADEQ's determination based on a circular four-factor analysis standard. Contrary to ADEQ's suggestion, we did not state that ADEQ was required to revisit and update the baseline emissions of its four-factor analysis to reflect the new emissions limitation. However, we note that ADEQ did use this approach for IGS Unit 3 and determined that with the emissions reductions associated with the new Unit 3 emissions caps, no additional controls are necessary to make reasonable progress. ADEQ did not provide any rationale for why it used this approach for IGS Unit 3, but not for SGS Units 1 and 2.

Furthermore, the fact that the SDA upgrades would still be cost effective following implementation of the mass-based caps at SGS Units 1 and 2 is relevant to whether the use of caps (in lieu of throughput-based limits) is reasonable and appropriate in this particular case. The fact that throughput-based ( e.g., lb/MMBtu) limits equivalent to SDA would still be cost-effective following implementation of the caps ( i.e., if TEP complies with the caps by lowering its operating level) indicates that throughput limits based on the emissions rates achievable with SDA upgrades may be necessary to make reasonable progress, regardless of the future operating level. As previously noted, the 2019 Guidance explains that, under such circumstances, mass-based caps are generally not appropriate. Therefore, we believe this consideration is relevant to the evaluation of whether mass-based caps were reasonable and consistent with the requirements of the RHR in this case.

Third, we agree with ADEQ's statement that the operating scenarios outlined in the IRP are not federally enforceable conditions. However, ADEQ's statement in its comment letter that it has “no basis for the consideration of these future scenarios as part of its control measure analysis and the establishment of the mass-based emission limits” is inconsistent with its stated rationale in the Plan for establishing caps instead of mass-based limits. Specifically, ADEQ stated that:

In other words, ADEQ elected to establish caps specifically because it anticipated that TEP could comply with these caps by reducing its operating level consistent with its then-current IRP. Therefore, we do not agree that it was inappropriate for the EPA to consider information contained in TEP's most recent (2023) IRP in evaluating whether the mass-based caps were reasonable and consistent with the RHR.

Lastly, we agree that for APS Cholla Unit 2, the EPA accepted a source-specific permit revision that included a trigger that was conditional on the EPA's approval of the SIP revision that altered the remaining useful life of the unit in ADEQ's four factor analysis. However, the APS Cholla scenario was distinguishable because, as explained in the proposed rule, 80 the SIP revision for APS Cholla replaced the FIP that was applicable to these units. 81 Therefore, it would not have been reasonable to subject them to two inconsistent requirements, one State and one Federal, under the RHR at the same time. Thus, under these circumstances it was appropriate for ADEQ to make the effectiveness of the permit conditions contingent on EPA SIP approval. In the current case, there is no existing FIP in place applicable to IGS Unit 3, so no similar rationale exists for making the cap contingent upon approval by the EPA.

Comment B.9. ADEQ asserts that the EPA should approve ADEQ's reasonable progress goal (RPG) for the Sycamore Canyon Wilderness Area. The state indicates that it provided the required “robust demonstration” by including a detailed analysis of visibility data at the Sycamore site to demonstrate that its slower rate of progress results from significant increases in light extinction from coarse mass.

Response B.9. As ADEQ notes in its comment, its analysis regarding Sycamore Canyon focused on the substantial increase in coarse mass and soil impairment at the Sycamore Canyon site. However, as explained in our proposal, the rule requires a state with a Class I area whose RPG is above the glidepath to demonstrate, based on the source selection and four factor analyses required under 40 CFR 51.308(f)(2)(i), that there are no additional emissions reduction measures for sources that may reasonably be anticipated to contribute to visibility impairment in the Class I area that would be reasonable to include in the long-term strategy. 82 Although ADEQ provided a detailed analysis of monitoring data concerning Sycamore Canyon, it did not provide “a robust demonstration, including documenting the criteria used to determine which sources or groups or sources were evaluated and how the four factors required by paragraph (f)(2)(i) were taken into consideration in selecting the measures for inclusion in its long-term strategy.”  83 Instead, it relied solely on monitoring data and the source selection and four-factor analyses contained elsewhere in the Plan. 84 For the reasons described in our proposal and elsewhere in this document, we find that these analyses were inadequate to meet the requirements of 40 CFR 51.308(f)(2). Therefore, the Plan also did not meet the requirements of 40 CFR 51.308(f)(3)(ii)(A) with respect to Sycamore Canyon.

Comment B.10. ADEQ indicates that the State intends to coordinate with EPNG to provide supporting documentation for the interest rate. ADEQ indicates that it intends to provide the interest rate documentation as confidential business information (CBI) to the EPA for review prior to publication of the final rule and requests that the EPA approve the cost calculation for EPNG Willcox and Williams based on the site-specific interest rate and supporting documentation.

Response B.10. Although ADEQ referenced the existence of documentation and the possibility of sharing it with the EPA in its response to comments in the Plan, 85 no supporting documentation for the interest rate was submitted as part of the Plan or prior to the close the public comment period on the EPA's proposed partial approval and partial disapproval. Therefore, the EPA is unable consider the interest rate information as part of this action.

Additionally, we note that the lack of documentation of EPNG's firm-specific interest rate was one of several flaws that we identified in the state's long-term strategy. Therefore, even if the appropriate documentation had been submitted and within the proper time frame, that alone would not have changed our determination that the 2022 Arizona Regional Haze Plan did not satisfy the long-term strategy requirements of 40 CFR 51.308(f)(2).

Comment B.11. ADEQ voiced procedural concerns with the lack of specificity in the EPA's proposed disapproval of the 2022 Arizona Regional Haze Plan. ADEQ cites CAA 307(d)(3) as requiring a detailed notice of rulemaking and cites Small Ref. Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 518-19 (D.C. Cir. 1983), for the proposition that the notice provided in the proposal may be too general to be adequate and that “[a]gency notice must describe the range of alternatives being considered with reasonable specificity.” The commenter asserts that the EPA's proposed rule does not provide “detailed notice” of certain specific issues that form the basis for disapproval of entire sections of the 2022 Arizona Regional Haze Plan, denying ADEQ the opportunity to specifically address those bases for disapproval during the comment period.

Response B.11. We disagree that the EPA's proposal provided inadequate notice. The EPA's action on the 2022 Arizona Regional Haze Plan is not subject to the requirements of CAA section 307(d). Those requirements apply only to specific enumerated types of actions under the CAA and to “such other actions as the Administrator may determine.”  86 Actions on SIPs are not one of the enumerated actions, and the Administrator had not determined that this action is subject to 307(d) pursuant to Section 307(d)(1)(V). Therefore, this action is subject to the procedural requirements of the Administrative Procedure Act (APA).

Accordingly, pursuant to 5 U.S.C. 553(b)(2) and (3), the EPA's notice of proposed rulemaking regarding the Plan was required to include “reference to the legal authority under which the rule is proposed” and “either the terms or substance of the proposed rule or a description of the subjects and issues involved.” The proposal clearly met these requirements, as it stated the applicable legal authorities and provided the EPA's review of the Plan in relation to those requirements. The comment provides no basis to conclude that the proposal failed to meet these requirements. Indeed, the opinion cited by the commenter contrasts these more general APA requirements to the more exacting requirements of CAA section 307(d) concerning the contents of proposed rulemaking. 87 While we agree with the commenter that “[a]gency notice must describe the range of alternatives being considered with reasonable specificity,”  88 we find that our proposal met this requirement, as it plainly stated that the EPA was considering partially approving and partially disapproving the 2022 Arizona Regional Haze Plan and detailed the reason for this proposed action. Please also see Responses A.1.

Comment B.12. ADEQ acknowledges that further FLM consultation is required for a plan revision that will correct the deficiencies identified in the proposed rulemaking action, but contends that the inclusion of the nonpoint source selection analysis and selected controls for nonpoint sources in the FLM review draft of the plan provided FLMs adequate notice and review of Arizona's nonpoint source rules that were codified after plan submission and submitted in the 2023 Arizona Regional Haze Rules Supplement. 89

Response B.12. The EPA disagrees with ADEQ's contention that it provided the FLMs with adequate notice and review of Arizona's nonpoint source rules. The information about FLM consultation regarding the rules specifically is not detailed in either the 2023 Arizona Regional Haze Rules Supplement, or the 2022 Arizona Regional Haze Plan. The 2023 Arizona Regional Haze Rules Supplement indicated that further information on how this SIP revision complied with 40 CFR 51.308(i) requirements for federal land manager consultation is section 2.4 of the 2022 Arizona Regional Haze Plan. 90 However, section 2.4 of the plan only describes the FLM review of the 2022 Arizona Regional Haze Plan, and does not specify if ADEQ provided a draft of the three nonpoint source rules to the FLMs for review. The rules were not included in the 2022 Arizona Regional Haze Plan. Should Arizona choose to submit a SIP revision, clarification of the FLM review process of the nonpoint source rules that are listed in Table 1-1 of the 2023 Arizona Regional Haze Rules Supplement would be helpful for EPA review.

Parts I (“The Chamber and AMC are supportive of the goals of the Regional Haze Rule”) and III (“Conclusion”) of the Chamber and AMC's comment letter are informational and therefore do not require a response. We respond to part II, sections A-E of the Chamber and AMC's comment letter below.

Comment C.1. The Chamber and AMC note that the EPA's delayed action and partial disapproval of Arizona's Regional Haze Plan is an example of erosion of cooperative federalism. The commenter contends that the timeline of events leading up to the EPA's partial disapproval of Arizona's Regional Haze Plan is problematic and that the EPA seems to routinely miss statutory deadlines, only to get sued by third-party entities for failure to act, resulting in agreements to deadline extensions that delay action for years. In the meantime, the resources and analysis invested by states depreciate in value, often requiring states to reinvest in efforts to update an analysis with new information. The commenter also asserted that “[r]egularly, an even worse scenario plays out in which EPA denies a SIP because the information submitted in good faith by a state has since become dated and stale.”

Response C.1. We do not agree that either the timing or substance of the EPA's partial disapproval of Arizona's Regional Haze Plan is an example of the erosion of cooperative federalism. We acknowledge that the EPA did not act on the 2022 Arizona Regional Haze Plan within the statutory deadline under CAA section 110(k)(3), and that we were subsequently sued for failing to meet that deadline. This resulted in a court-ordered deadline for the EPA to take action on the Plan by March 30, 2025. 91 However, we do not agree that this resulted in a “deadline extension” of any sort, or an erosion of cooperative federalism. On the contrary, in issuing a partial approval and partial disapproval of the Plan, the EPA is fulfilling our statutorily-mandated role to review SIPs for compliance with the requirements of the CAA and the RHR, as further described in Response D.3.

We also disagree with the suggestion that the EPA is disapproving the 2022 Arizona Regional Haze Plan, partially or entirely because information became “dated or stale.” The comment did not provide examples of information becoming dated, resulting in disapproval; thus, we cannot comment on any specific concerns the commenter has with the information within the 2022 Arizona Regional Haze Plan.

Further, as explained in Responses A.1 EPA staff also discussed with ADEQ many of the concerns that became bases for our disapproval during the SIP development process.

Comment C.2. The Chamber and AMC state that guidance should not be cited as grounds to disapprove the 2022 Arizona Regional Haze Plan. The commenter asserts that guidance should be viewed only as a reference and not a legal requirement to be used to approve or disapprove a state's plan. The Chamber and AMC also claim that the EPA published final guidance for Regional Haze Plans three weeks before the plans were due, making compliance with the guidance practically impossible before the deadline. The commenter concludes that relying on the guidance to partially disapprove the Plan was therefore arbitrary and capricious, and the EPA should withdraw all of the proposed disapprovals based upon the 2021 Clarifications Memo.

Response C.2. The EPA disagrees that it relied on guidance, including the 2021 Clarifications Memo, as the basis for our partial disapproval. See responses A.5, B.1, and B.2.

Comment C.3. The Chamber and AMC assert that Arizona's source selection methodology was reasonable and that the EPA should give deference to the State on this matter. The commenter indicates that sources that applied controls in the first round of Regional Haze had recently made significant investments in the design, engineering, procurement, construction and operation of those air pollution control devices. They note that forcing facilities to consider improvement or replacement of these air pollution control devices long before they have depreciated is an unnecessary economic burden for the source and the State. The Chamber and AMC note that ADEQ chose not to force additional analysis from these sources and reasonably relied upon reductions from other emissions sources for visibility improvement, a method that resulted in all but one of Arizona's Class I areas either meeting or exceeding the uniform rate of progress (URP) toward natural conditions.

Response C.3. We disagree that it was reasonable for Arizona to screen out sources solely because they applied controls during the first planning period, for the reasons described in section IV.E.2.a. of our proposal and in response B.3 of this document.

We also disagree that our disapproval will automatically force sources to consider improving or replacing any recently installed air pollution devices. Rather, ADEQ has the option to provide additional documentation and justification for its effective control determinations in a responsive SIP revision. We anticipate that for many units that recently installed controls, ADEQ will be able to provide an adequate demonstration of effective controls on a unit-specific and pollutant-specific basis, if it chooses to do so, which would preclude the need for a four-factor analysis for those units and pollutants. Any affected units and pollutants for which ADEQ is unable to make such demonstration would be subject to the four-factor analysis requirement as required by 40 CFR 51.308(f)(2).

Finally, we note that all states are subject to the requirements at 40 CFR 51.308(f)(2) and (3) regardless of whether the 2028 RPGs for Class I Areas they affect are above or below URP.

Comment C.4. The Chamber and AMC assert that the EPA should give deference to Arizona's deviation from the EPA Control Cost Manual in developing cost estimates. The commenter notes that the Cost Control Manual is not accurate for all sources and cites examples such as variable interest and emissions rates. They conclude that the use of different interest rates and different control efficiencies for different projects should be viewed as reasonable.

Response C.4. We do not agree that we should have deferred to Arizona's deviation from the EPA Control Cost Manual in the absence of adequate justification. As discussed in Response D.3, Congress charged the EPA with independently evaluating and reviewing SIP submissions for compliance with the applicable requirements under the CAA. 40 CFR 51.308(f)(2)(iii) requires states to “document the technical basis, including modeling, monitoring, cost, engineering, and emissions information, on which the State is relying to determine the emission reduction measures that are necessary to make reasonable progress in each mandatory Class I Federal area it affects.” The technical documentation must include the modeling, monitoring, cost, engineering, and emissions information on which the state relied to determine the measures necessary to make reasonable progress. For the reasons noted in section IV.E.2.b.ii (“Deviations from Cost Control Manual”) of our proposed rule, we found that Arizona failed to adequately document the technical basis that it relied upon to determine emissions reduction measures, as required by 40 CFR 51.308(f)(2)(iii). Specifically, as explained in our proposal, it is important to use consistent methods in order to allow for reasoned comparisons between different sources within a state, and cost analyses in other states. 92 Therefore, while our regulations allow for flexibility among various methodologies, where a state deviates from these methods, it should explain how its alternative approach is reasonable, appropriate, and consistent with the regulations and the statutory requirement to make reasonable progress towards the national goal. Arizona did not do so. We therefore disagree that the EPA should give deference to Arizona's approach in the Plan.

Comment C.5. The Chamber and AMC indicate that Arizona's plan should be viewed in the context that it results in all but one monitor having an RPG that provides for a greater rate of visibility improvement than the adjusted URP. The commenter asserts that Arizona has created a plan that meets or exceeds the URP at all monitors except for Sycamore Canyon, which was moved to an intersection of two dirt roads in 2014. The commenter concludes that the fact that visibility at Arizona's Class I areas is improving at a pace to reach natural conditions prior to the RHR goal of 2064 is important context in evaluating the source selection methodology and other decisions made by Arizona.

Response C.5. We do not agree with the commenter's characterization of the role of the URP. As explained in our proposal:

Moreover, being on or below the URP does not exempt a state from any of the requirements of the CAA or the Regional Haze Rule. 94

It should also be noted that the URP represents the amount of visibility improvement that would need to be achieved during each implementation period to achieve natural visibility conditions by the end of 2064. However, the 2064 date is used solely to calculate the URP as a tracking metric. The CAA and RHR do not contain any end dates for the regional haze program and do not have a “goal” or requirement to achieve natural conditions by 2064 specifically.

Please also see Response B.9 for more information on the robust demonstration required for Sycamore Canyon under 40 CFR 51.308(f)(3)(ii), which is missing from Arizona's submission.

The “Background” section of TEP's comment letter is informational and therefore does not require a response. We respond to the “Comments of Proposed Disapproval” section of TEP's comment letter below.

Comment D.1. TEP claims that ADEQ's source selection methodology was reasonable and the EPA should approve the determination. First, TEP cites to the 2019 Guidance and 2021 Clarifications Memo as providing states discretion for source selection and notes that ADEQ applied a Q/d screening threshold of 10 for each process at a source. TEP further describes ADEQ's screening out processes where the facility recently adopted “effective controls,” which the Agency defined as controls installed to meet the requirements of the PSD program (BACT), the first regional haze planning period (BART), or other NAAQS requirements. Second, TEP further suggests that the EPA is proposing to approve “many aspects of ADEQ's source selection process,” including ADEQ's choice of screening threshold and focus on NO X, SO 2 , and PM 10 in evaluating visibility impacts, but simultaneously proposing to find that the State did not adequately justify its determination of effective emissions reduction measures.

Response D.1. First, we disagree with the commenter that ADEQ applied a Q/d screening threshold of 10 for each process at a source. As noted in the 2022 Arizona Regional Haze Plan, the Q value was calculated from facility-wide PM 10, NO X , and SO 2 annual emissions, not process-specific emissions. 95

Second, we clarify that the EPA did not propose to approve “many aspects of ADEQ's source selection process.” We found that ADEQ reasonably and adequately explained and documented many aspects of its source selection process, such as its focus on sulfate, nitrate, and coarse mass and its use of a Q/d value of 10 for point sources. However, we are not separately approving or disapproving specific elements of ADEQ's long-term strategy, including any elements of the source-selection process. Rather, we are disapproving the long-term strategy as a whole under 40 CFR 51.308(f)(2), for the reasons described in our proposal and in this document.

Comment D.2. TEP asserts that ADEQ reasonably evaluated existing controls at IGS Unit 4 and SGS Units 3 and 4.

First, the commenter states that ADEQ did not determine that sources were effectively controlled based on BART controls alone, but also evaluated additional emissions reduction measures at several units that were controlled during the first regional haze planning period, citing Table 8-2 in the 2022 Arizona Regional Haze Plan. For IGS Unit 4 specifically, the commenter states that ADEQ evaluated existing emissions reduction measures at IGS Unit 4 from a source-specific perspective, and determined that further analysis would be futile. TEP cites to statements regarding post-combustion controls in the 2019 Guidance and states that, in a recent FIP action for Arizona, the EPA determined that eliminating coal combustion at Unit 4 would control emissions beyond the best available NO X and SO 2 controls. 96 TEP concludes that these emissions reduction measures remain the best available controls at this unit in the second planning period. TEP further notes that ADEQ's determination that IGS Unit 4 is well-controlled is also consistent with recent decreasing emissions trends across BART-eligible EGUs, including IGS Unit 4, and between 2014 and 2019. TEP points to the recent proposed rule for Georgia's Regional Haze SIP, 97 and comments that the EPA cited to similar visibility-impairing emissions trends as support for Georgia's source-selection methodology. Citing to the 2021 Clarifications Memo, 98 TEP also indicates that ADEQ was not required to consider emissions trends and that the State has discretion to emphasize other considerations, such as the EPA's prior FIP evaluation.

Second, TEP states that the EPA's proposed disapproval fails to engage with ADEQ's analysis for SGS Unit 3 and 4. TEP notes that ADEQ considered potential additional control measures that could be used to achieve emissions reductions at SGS Units 3 and 4 based on an initial control analysis submitted by TEP. 99 In this analysis, TEP provided information on technically feasible control measures, as well as the actual and projected emissions rates at each unit.

Response D.2. We disagree that ADEQ's evaluations regarding effective controls at IGS Unit 4 and SGS Units 3 and 4 were reasonable and justified. Contrary to TEP's claim, ADEQ did not evaluate additional emissions reduction measures at several units that were controlled during the first regional haze planning period. Table 8-2 cited by TEP to support its claim that ADEQ evaluated additional emissions reduction measures at units that were controlled during the first regional haze planning period only depicts annual, source-level total emissions of NO X, SO 2 and PM 10 and does not include any information regarding unit-specific or pollutant specific emissions rates or controls. The commenter also provides no citation for its assertion that ADEQ evaluated existing emissions reduction measures at IGS Unit 4 from a source-specific perspective. Therefore, based on the contents of the 2022 Arizona Regional Haze Plan, it was reasonable for the EPA to determine that ADEQ did not evaluate additional emissions reduction measures at units that were controlled during the first regional haze planning period.

Similarly, the commenter's citation to the discussion of post-combustion controls in the 2019 Guidance is misleading because no such controls were installed at IGS Unit 4. Rather, the unit was converted from coal to gas as part of a “better-than-BART” determination pursuant to 40 CFR 51.308(e)(2). 100 Therefore, the actual relevant effective controls discussion in the 2019 Guidance is the discussion of fuel combustion units that are required to burn pipeline quality natural gas. Such units are generally considered to be effectively controlled for SO 2 and PM. 101 However, they are not necessarily effectively controlled for NO X . Therefore, we disagree with the commenter that, given TEP's recent conversion of IGS Unit 4 from coal to natural gas, ADEQ's conclusion that further analysis was not required was reasonable. As stated in the proposed rule, 102 ADEQ should have explained why it is reasonable to assume, without conducting a four-factor analysis, that no additional NO X controls would be reasonable. 103

I. Executive Summary A. Does this action apply to me?

You may be potentially affected by this action if you intend to manufacture a new chemical substance, or manufacture or process a chemical substance for a significant new use. 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:

• Chemical Manufacturers (NAICS code 325).

• Petroleum and Coal Products (NAICS code 324).

• Merchant Wholesalers, Nondurable Goods (NAICS code 424).

This list details the types of entities that EPA is aware could potentially be regulated by this action. Other types of entities not listed could also be regulated. To determine whether your entity is regulated by this action, you should carefully examine the applicability criteria found in 40 CFR 720.22, 721.5, 723.50, and 725.1. If you have questions regarding the applicability of this action, please consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

EPA is promulgating this rule pursuant to its authority in TSCA section 5 (15 U.S.C. 2604). Section 5(a)(1) of the Toxic Substances Control Act (TSCA), 15 U.S.C. 2604(a)(1), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act of 2016 (Pub. L. 114-182) (herein referred to as the “2016 Lautenberg Amendments”), provides that no person, as defined at 40 CFR 720.3, may manufacture (which includes import under TSCA) a new chemical substance or manufacture or process a chemical substance for a use which EPA has determined is a significant new use, unless at least 90 days prior to such manufacture or processing that person submits a notice to EPA containing the information required by TSCA section 5(d). EPA must conduct a review of the notice, make one of five possible determinations pertaining to the likelihood of unreasonable risk of injury to health or the environment, and take any actions required as a result of that determination, all within the applicable review period. The submitted notice must include the information described in TSCA section 5(d)(1): insofar as known to the submitter or reasonably ascertainable, information described in certain provisions of TSCA section 8(a)(2) ( e.g., chemical identity, use, and exposure information); in the form and manner prescribed by EPA, information in the possession or control of the submitter related to the health or environmental effects of the chemical substance; and a description of any other information concerning the environmental and health effects of the chemical substance, insofar as known to the submitter or reasonably ascertainable.

EPA is promulgating amendments to the procedural regulations at 40 CFR parts 720, 721, and 725 to align with the requirements in TSCA section 5, as amended by the 2016 Lautenberg Amendments, and to make additional updates. EPA is amending the regulations to specify that EPA must make a determination on each Pre-Manufacture Notice (PMN), Significant New Use Notice (SNUN), and Microbial Commercial Activity Notice (MCAN) received before the submitter may commence manufacturing or processing of the chemical substance that is the subject of the notice, and to list the five possible determinations and the actions required in association with those determinations. In addition, EPA is finalizing amendments that will clarify the level of detail expected for the information that a submitter is required to include in a PMN, SNUN, or exemption notice in order for the notice to be considered complete. EPA is also finalizing amendments to the procedures for reviewing PMNs and SNUNs; specifically, procedures for addressing PMNs and SNUNs that have errors or are incomplete or that are amended during the applicable review period. Additionally, EPA is finalizing several amendments to the regulations at 40 CFR 723.50 for LVEs and LoREXs. These amendments would require EPA approval of an exemption notice before the submitter may commence manufacture, allow EPA to inform an LVE or LoREX holder when the chemical substance that is the subject of the exemption becomes subject to a significant new use rule (SNUR) under TSCA and the chemical identity is confidential, make PFAS categorically ineligible for these exemptions, and make certain PBTs ineligible for these exemptions. Finally, EPA is amending the regulations pertaining to suspensions for all TSCA section 5 notices to allow submitters to request suspensions for up to 30 days via oral or e-mail request. This final rule takes into consideration comments received on the proposed rule (88 FR 34100, May 26, 2023 (FRL-7906-01-OCSPP)). Details on the final rule requirements, including modifications from the proposal, are explained in Unit III.

Under amended TSCA, EPA must review all notices submitted under TSCA section 5(a)(1) and make a determination pertaining to the risks of new chemical substances or significant new uses of chemical substances described in such notices before they can proceed to the marketplace. Before the 2016 Lautenberg Amendments, TSCA allowed the PMN or SNUN submitter to commence manufacturing or processing upon expiration of the review period unless EPA made an affirmative finding of unreasonable risk. Under amended TSCA, EPA must review all notices submitted under TSCA section 5(a)(1) and make a determination pertaining to the risks of every new chemical substance or significant new use of a chemical substance described in such notices before they can proceed to the marketplace. To reflect and better meet these requirements, EPA is amending the procedural regulations codified at 40 CFR parts 720, 721, and 725 and making additional updates based on existing policies or lessons learned from administering the New Chemicals Program since TSCA was amended in 2016.

EPA is also finalizing amendments that will clarify the information that is required to be included in PMNs, SNUNs, and exemption notices to reduce the need to redo all or part of the risk assessment (“rework”) due to late submissions of information. This action is expected to reduce rework of risk assessments by minimizing requests from submitters to amend their PMNs, SNUNs, or exemption notices with additional information after the review period has commenced. The Agency is also finalizing amendments to make clear the procedures that will be employed if submitters amend their PMNs or SNUNs during the applicable review period.

EPA is amending the regulations for LVEs and LoREXs so that submitters may not commence manufacture until EPA has issued a decision for the exemption notice, to better ensure that manufacture under LVEs and LoREXs will not present an unreasonable risk. Additionally, EPA is promulgating amendments that allow the Agency to notify submitters if a chemical substance for which they hold an LVE or LoREX is or becomes subject to a proposed or final SNUR and the chemical identity is confidential, so that chemical manufacturers are made aware that they may be subject to additional TSCA requirements. EPA is also finalizing amendments to make PFAS categorically ineligible for an LVE or LoREX, which would ensure that all new PFAS are reviewed through the full PMN process. In addition, EPA is making certain PBTs ineligible for these exemptions, to better manage risks associated with PBT chemical substances that have anticipated environmental releases and potentially unreasonable exposures to humans or environmental organisms.

Lastly, EPA is promulgating amendments that will allow informal (oral or e-mail) requests for review period suspensions of up to 30 days to reduce the number of repeated requests for 15-day suspensions, because EPA believes that e-mail may be more expedient than oral communication for many submitters.

EPA has evaluated the costs and benefits of this rulemaking and provided an Economic Analysis (EA) of the potential impacts associated with this rule, titled “Economic Analysis for the Final Rule: Updates to New Chemicals Regulations under the Toxic Substances Control Act” (Ref. 1), which is available in the docket and briefly summarized here. The benefits of the rule include increased efficiency in both the submission and review processes for notices submitted through the PMN form. The changes under this rule would clarify the information requirements on the PMN form in the Agency's Central Data Exchange (CDX) to make more transparent the level of detail that EPA needs in order to make a reasoned evaluation. As submitters provide more complete information in their initial submissions, the changes under this rule are expected to reduce the frequency with which PMNs, SNUNs, and exemption notices are amended with additional information and the amount of rework of risk assessments that the Agency conducts following such amendments.

In addition, the more detailed and comprehensive 90-day review afforded to PMNs allows EPA to make a more informed hazard determination for PFAS, leading to improvement in the expected outcome of these decisions. More informed decision making about a PFAS's potential risks is likely to result in a reduction in the cost of risk-based decision making about the PFAS, and an improvement in the expected outcome of the decisions.

As a result of the changes presented in this rule, the total annual burden to industry is expected to decrease by approximately 4,528 hours, while total annual costs to industry submitters are expected to have a net increase of approximately $203,150. The Agency is expected to experience an annual cost savings of approximately $1,117,132.

On May 26, 2023 (88 FR 34100; FRL-7906-01-OCSPP), EPA proposed amendments intended to align the regulatory text with the amendments to TSCA's new chemicals review provisions contained in the 2016 Lautenberg Amendments, to improve the efficiency of EPA's review processes, and update the regulations based on existing policies and experience implementing the New Chemicals Program. Additionally, the proposal included amendments that would reduce the need to redo all or part of a risk assessment by improving information initially submitted in new chemicals notices, which should also help reduce the length of time that new chemicals notices are under review. EPA also proposed several amendments to the regulations for LVEs and LoREXs, which included requiring EPA approval of an exemption notice prior to commencement of manufacture, making PFAS categorically ineligible for these exemptions, and providing that certain PBT chemical substances would be made ineligible for these exemptions, consistent with EPA's 1999 PBT policy. Lastly, the proposal included amendments related to the suspension of the review period.

As enacted in 1976, TSCA provided EPA with authority to require reporting, recordkeeping, and testing, and to issue restrictions relating to chemical substances and/or mixtures. TSCA section 5(a)(1) required that a person submit to EPA a notice at least 90 days before commencing manufacture of a new chemical substance or manufacture or processing of a chemical substance for a use which EPA determined to be a significant new use. Under the 1976 law, EPA was not obligated to make a determination or finding regarding unreasonable risk for each notice submitted under TSCA section 5(a)(1). EPA's obligations with respect to making determinations on notices submitted under TSCA section 5(a)(1) fundamentally changed with the passage of the 2016 Lautenberg Amendments. The 2016 Lautenberg Amendments added a new paragraph to TSCA at section 5(a)(3) titled “Review and Determination,” under which EPA must review and make one of five determinations pertaining to the likelihood of risk on all notices received under TSCA section 5(a)(1), which include PMNs, SNUNs and MCANs, within the applicable review period. EPA's obligation to take action after making a determination on a notice submitted under TSCA section 5(a)(1) also changed with the passage of the 2016 Lautenberg Amendments.

The 2016 Lautenberg Amendments require EPA to review each notice submitted under TSCA section 5(a)(1), make a determination on that notice, and take the action required in association with that determination within the applicable review period. Under TSCA section 5(i)(3), the “applicable review period” means 90 days from the date EPA receives a notice under TSCA section 5(a)(1), or up to 180 days from that date if EPA extends the applicable review period according to the provisions in TSCA section 5(c). The 2016 Lautenberg Amendments also added a new paragraph at TSCA section 5(a)(4) explaining that a failure by EPA to render a determination within the applicable review period would not relieve EPA of any requirement to make such determination, but would, with certain exceptions, result in a fee refund to the notice submitter.

TSCA section 5(h) was not significantly amended by the 2016 Lautenberg Amendments. TSCA section 5(h) provides EPA the authority to exempt a person from certain TSCA section 5 requirements under certain situations. EPA developed the current LVE and LoREX regulations in 1995 pursuant to TSCA section 5(h)(4) (60 FR 16336, March 29, 1995). See Unit II. of the May 26, 2023, proposed rule (88 FR 34100) for further discussion of the 2016 Lautenberg Amendments.

EPA's regulations related to TSCA section 5 are codified in Title 40, Chapter I, Subchapter R of the Code of Federal Regulations (CFR). They include:

• Regulations pertaining to PMNs, which are codified at 40 CFR part 720;

• Regulations pertaining to SNUNs, which are codified at 40 CFR part 721;

• Regulations pertaining to certain exemptions, which are codified at 40 CFR part 723; and

• Regulations pertaining to MCANs and microorganism-related exemptions, which are codified at 40 CFR part 725.

The information requirements codified for PMNs in 40 CFR 720.45 generally also apply to SNUNs under 40 CFR part 721 (see 40 CFR 721.1(c) and 721.25(a), which cross-reference 40 CFR part 720) and to LVEs and LoREXs submitted under 40 CFR 723.50 (see 40 CFR 723.50(e)(2), which cross-references 40 CFR 720.45). As a result, the amendments to the requirements in 40 CFR 720.45 apply to PMNs and also to SNUNs, LVEs, and LoREXs. The review procedures for PMNs codified in 40 CFR part 720 generally also apply to SNUNs under 40 CFR part 721 (see 40 CFR 721.25(c)) but not to exemptions under 40 CFR part 723, so the amendments to the part 720 review procedures promulgated by this action apply to PMNs and SNUNs but not to such exemptions. Neither the information requirements nor the review procedures in 40 CFR part 720 apply to MCANs or microorganism-related exemptions under 40 CFR part 725, so EPA is also finalizing certain amendments to the MCAN and microorganism-related exemption regulations at 40 CFR part 725.

EPA received 51 public comments on the proposed rule. Commenters included potentially affected businesses, trade associations, environmental and public health advocacy groups, unions, and other Federal agencies. In this preamble, EPA has responded to many of the significant comments on the proposed rule; however, the more comprehensive version of EPA's response to comments for this rulemaking can be found in the Response to Comments document (Ref. 2). The Response to Comments document summarizes all the comments relevant to the proposal and EPA's response to those comments. In the Response to Comments document, EPA also discusses any changes to and clarifications from the proposed rule made in this final rule.

This final rule is based on the May 26, 2023, proposed rule (88 FR 34100) and in consideration of the public comments received on the proposed rule.

EPA is amending the PMN procedural regulations at 40 CFR part 720 to align them with the notice review and determination requirements in TSCA section 5, as amended by the 2016 Lautenberg Amendments. These procedural regulations also generally apply to SNUNs under 40 CFR part 721 (see 40 CFR 721.1(c) and 721.25(c)). EPA is also promulgating similar changes to the MCAN procedural regulations at 40 CFR part 725 to align them with the same notice review and determination requirements added by the 2016 Lautenberg Amendments. EPA has been implementing the amended statutory requirements but, prior to this rulemaking, had not yet codified these updates into the new chemicals procedural regulations. The amendments specify that EPA must make a determination on each PMN, SNUN, and MCAN received before the submitter may commence manufacturing (which includes importing) or processing and lists the five possible determinations and the actions required in association with those determinations. EPA is also adding definitions for new terms and to update existing terminology introduced by the 2016 Lautenberg Amendments.

As proposed, EPA is finalizing amendments at 40 CFR 720.75(d) by removing outdated language allowing the submitter to commence manufacture of a chemical substance when the review period expires and adding new language specifying that EPA must issue a determination and take any required action on each PMN before manufacture may commence. EPA is also finalizing an amendment to 40 CFR 721.25(d) to state that any person submitting a SNUN shall not manufacture or process a chemical substance for a significant new use until EPA has issued a determination with respect to the significant new use and taken the actions required in association with that determination. Likewise, EPA is finalizing an amendment at 40 CFR 725.170(b) and (c) by removing similar outdated language allowing the submitter to commence manufacture of a new microorganism or manufacture or processing of a microorganism for a significant new use when the review period expires and adding new language specifying that EPA must issue a determination and take any required action on each MCAN before manufacture or processing may commence.

Some comments on the proposal challenged the EPA's description of how the New Chemicals Program operated prior to the passage of the 2016 Lautenberg Amendments and suggested that the 2016 Lautenberg Amendments had only minor impacts on the Program. EPA disagrees with these comments, as prior to the 2016 Lautenberg Amendments, EPA was not required to conduct a review of and issue a determination for every notice. Following the 2016 Lautenberg Amendments, EPA must review all notices submitted under TSCA section 5(a)(1) and make a determination pertaining to the risks of a new chemical or significant new use of an existing chemical before it is allowed into the marketplace. For a detailed response to these and other comments, please see the Response to Comments document (Ref. 2).

As proposed, EPA is finalizing amendments at 40 CFR 720.75(d) and 725.170 by listing the five possible determinations that EPA must make for each PMN, SNUN, or MCAN it receives. EPA is also finalizing amendments to 40 CFR 720.75(d) and 725.170(b) to describe the actions that EPA must take in association with its determination for a PMN, SNUN, or MCAN. EPA is codifying those actions, which EPA has been implementing, as applicable, for every PMN, SNUN, and MCAN since the 2016 Lautenberg Amendments, to be clear about EPA's review process to the public.

After EPA issues an order under TSCA section 5(e) or (f) and the applicable review period concludes, the submitter may submit studies, tests, reports, or other additional information. If EPA concludes from an assessment of the additional information that one or more of the prohibitions or limitations contained in the order are no longer necessary to protect against an unreasonable risk of injury to health or the environment, EPA may modify or revoke the prohibitions or limitations of the order. If EPA determines that none of the order terms are warranted after assessment of the additional information, EPA may revoke all the requirements of the order.

Several comments on the proposed rule asserted that EPA not only has the authority to revoke or lessen restrictions in an order after it has been issued, but also can and must strengthen protections in an order based on new information received on a chemical substance that demonstrates the order is insufficient to protect against unreasonable risk. The commenters further urged EPA to clarify that an order may be modified based on new information obtained from any source, not solely the submitter. EPA agrees with these commenters and a detailed response is available in the Response to Comments document (Ref. 2). Upon consideration of these comments, EPA is modifying the proposed amendments at 40 CFR 720.75(d)(3) and 725.170(b)(3) to clarify that new information may be received from any source, and to add that where such information demonstrates that the prohibitions or limitations of the order are not sufficient to protect against an unreasonable risk of injury to health or the environment, EPA may modify the order or take other action, as appropriate, to the extent necessary to protect against such risk.

As proposed, EPA is finalizing amendments to the regulation that will replace the undefined terms “notice period,” “notification period,” “statutory review period,” and “notice review period” with the term “applicable review period” throughout 40 CFR part 720 to conform to the new terminology in TSCA section 5 added by the 2016 Lautenberg Amendments. EPA is also finalizing an amendment to add, as proposed, a definition for “applicable review period” to 40 CFR 720.3, which EPA would define as the period starting on the date EPA receives a complete notice under section 5(a)(1) of the Act and ending 90 days after that date or on such date as is provided for in sections 5(b)(1) or 5(c) of the Act. In response to the proposed amendment adding a definition for “applicable review period,” commenters expressed difficulty in determining what EPA considers to be a complete notice and requested that the Agency clearly define what constitutes a notice that is “complete.” EPA considers a complete notice to be a notice that meets all the procedural requirements indicated in 720.65(c)(1) ( e.g. a notice that includes a company signature, is submitted via CDX, includes a second copy of the submission with all confidential information deleted, includes the payment identity number, etc.) and includes all required information that is known to or reasonably ascertainable by the submitter, as described in 720.45 and 720.50. A submission that fails to meet the statutory information requirements is incomplete, and EPA is justified in refusing to review the notice until the information is received. In the Response to Comments document (Ref. 2), EPA discusses in more detail the longstanding definition of “known to or reasonably ascertainable by” and its application in specific contexts.

After considering the comments, EPA is finalizing an amendment to add a definition for “potentially exposed or susceptible subpopulation” (PESS) to 40 CFR 720.3. For this rule, EPA is defining “potentially exposed or susceptible subpopulation” as proposed and using the same definition that was proposed and finalized as part of the rulemaking entitled “Procedures for Chemical Risk Evaluation under the Toxic Substances Control Act (TSCA)” (89 FR 37028, May 3, 2024 (FRL-8529-02-OCSPP)).

As a primary matter, the inclusion of “overburdened communities” in the list of example subpopulations in this definition is not itself a determination. Rather, it is an example of a subpopulation that EPA may identify as a PESS in future risk assessments, and it is reflective of the reality that, in addition to groups like children and pregnant women, there are communities of people that may experience disproportionate environmental risks from chemicals due to greater exposure or susceptibility to environmental and health harms.

EPA proposed to add a regulatory definition of PESS that includes the term “overburdened communities” in the list of example subpopulations. This term, which is an addition to the examples provided in the statutory definition of PESS at TSCA section 3(12), reflects the Agency's understanding and acknowledgment that a chemical substance may disproportionately expose and/or may disproportionately impact communities already experiencing disproportionate and adverse human health or environmental burdens. Such disproportionality can be as a result of greater exposure or vulnerability to environmental hazards, lack of opportunity for public participation, or other factors. Increased exposure or vulnerability may be attributable to an accumulation of negative or lack of positive environmental, health, economic, or social conditions within these populations or places. The term describes situations where multiple factors, including both environmental and socio-economic stressors, may act cumulatively to impact health and the environment and contribute to persistent environmental health disparities. These situations may apply to communities with environmental justice concerns.

While some commenters on the proposed rule objected to the inclusion of “overburdened communities,” EPA believes that it is appropriate to include “overburdened communities” as an example subpopulation in the definition of PESS. Congress' inclusion of “such as” in the statutory definition provides EPA with clear discretion to go beyond the statute's list of examples. EPA further disagrees that this addition is substantively changing the criteria for identification of PESS (i.e., greater exposure or susceptibility and greater risk than general population).

EPA does not believe it is necessary to define “overburdened communities” as part of this rule. In the same way that EPA considers whether children or workers or the elderly are a PESS in the context of a specific risk assessment, EPA will look to whether “overburdened communities” may become subject to exposure or could be more susceptible than the general population. EPA does not intend for this term to be confined to a location or geographic proximity but would use reasonably available information for each new chemical substance or significant new use to determine the inclusion of specific communities. Those who could potentially experience “greater exposure” could include individuals or communities that would experience higher levels of exposure to a chemical substance due to geography (e.g., fenceline communities in close proximity to facilities that could emit air pollutants or living near potential effluent releases to water), unique exposure pathways that differ from those of the general population (e.g., Tribal communities where reliance on subsistence fishing may result in increased exposure via ingestion), and/or aggregate exposure via multiple conditions of use (e.g., a worker potentially exposed to the chemical substance who also lives in close proximity to the facility that may also release the chemical substance through air emissions).

In making these additions to 40 CFR 720.3, EPA is also revising the overall format used to list the definitions in 40 CFR 720.3, by removing the designations for each definition and adopting the alphabetical listing approach consistent with the recommendation of the Office of the Federal Register (OFR). See page 2-27 of the OFR's Document Drafting Handbook, August 2018 Edition (Revision 2.1, dated October 2023), https://www.archives.gov/federal-register/write/ddh/ . Specifically, EPA is using the revise and republish instructions in the regulatory text of this final rule to reflect the addition of the two definitions and the adoption of the recommended undesignated alphabetical listing format for this definition section. This change also requires corresponding technical corrections to the citation in several other regulations. The existing definitions and these other regulations are otherwise unchanged. Conforming edits to remove the designations for the definitions in 40 CFR 720.3 are being made to 40 CFR 68.115, 372.38, 703.3, and 761.3.

EPA is also promulgating an update to 40 CFR 720.70(b) by revising paragraph (b)(3). Some commenters opposed EPA's proposal to remove the regulatory-only requirement in 40 CFR 720.70(b)(3) to publish a list of test data submitted in accordance with 40 CFR 720.50(a) in the TSCA section 5(d)(2) notice of receipt. EPA disagrees with these comments. As EPA explained in the preamble to the proposed rule (88 FR 34100, May 26, 2023), the Agency believes that its objective of providing such information to the public is now better achieved through ChemView than through publication in the Federal Register. Through ChemView, the Agency currently makes the section 5 notice, including test data submitted with it, publicly available generally within 5 business days of receipt, subject to confidentiality protections. EPA is finalizing the change to 720.70(b)(3) as proposed. For additional response to the comments received on the amendments to 40 CFR 720.70(b)(3), see the Response to Comments document (Ref. 2).

EPA is promulgating amendments to the notice information requirements at 40 CFR 720.45, as well as corresponding changes to the PMN form in CDX, to clarify the level of detail expected for information that must be submitted to EPA in PMN, SNUN, and certain exemption notices. EPA is finalizing these amendments largely as proposed, with most changes representing minor clarifications to the proposed regulatory text in response to the comments.

A notice submitted under TSCA section 5(a)(1) must include the information described in TSCA section 5(d)(1): (1) insofar as known to the submitter or reasonably ascertainable, information described in certain provisions of TSCA section 8(a)(2); (2) in the form and manner prescribed by EPA, information in the possession or control of the submitter related to the health or environmental effects of any manufacture, processing, distribution in commerce, use, or disposal of the chemical substance or any article containing such substance; and (3) a description of any other information concerning the environmental and health effects of the chemical substance, insofar as known to the submitter or reasonably ascertainable. EPA has promulgated regulations detailing these information requirements in 40 CFR 720.45 and 720.50.

EPA has developed an application form in CDX to collect such information from submitters. The user guide for CDX is listed in the references section of this final rule and can be found in the docket (Ref. 3). This form is prescribed by EPA for submission of PMNs, SNUNs, LVEs, LoREXs, and test marketing exemption (TME) applications. In this preamble, EPA refers to the form as the “PMN form” for simplicity, but the changes outlined in this section would impact the other types of notices that use the same form ( i.e., PMNs, SNUNs, LVEs, LoREXs, and TMEs).

EPA has observed that most section 5 notices do not contain all required information at the level of detail that EPA needs to perform refined risk assessments. As described in the preamble of the proposed rule, these deficiencies frequently result in EPA using conservative assumptions in its risk assessments due to lack of available data, which can create delays in the timeline for case completion, particularly when submitters provide information to EPA late in a case's review in response to risk estimates stemming from the lack of available data. In recent years, EPA has issued guidance documents (Ref. 3 and 4), established pre-screen processes for incoming cases, and conducted outreach efforts (Ref. 5) to make clearer to submitters the level of detail necessary for timely review of their chemicals, as well as to minimize the need for costly rework of case assessment materials. EPA believes that amending the notice information requirements at 40 CFR 720.45 to specify the level of detail needed, as well as building that additional detail into the CDX user interface, will help submitters provide more detailed section 5 notices and help to minimize the need for EPA to use default values and conservative assumptions in its risk assessments due to the lack of available data. Therefore, EPA is finalizing the amendments to the notice information requirements at 40 CFR 720.45 as well as the corresponding changes to the PMN form in CDX largely as described in the proposed rule.

EPA is amending 40 CFR 720.45 and the PMN form in CDX to clarify the information requirements for a notice. Specifically, EPA is adding details to certain information requirements already contained in 40 CFR 720.45. EPA is also adding additional reporting fields to the PMN form to reflect these details. In this action, EPA is adding these details as separate, unique information requirements in 40 CFR 720.45 and making corresponding changes to the PMN form to clarify the level of detail needed for EPA's review of section 5 notices and to ensure that the fields in the PMN form are consistent with the regulations. In some cases, information requested in the PMN form is not clearly required in the 720.45 regulations, so EPA is adding those details to 40 CFR 720.45 to ensure that the regulations and PMN form are as consistent as possible. Although EPA is finalizing these amendments largely as they were described in the proposed rule, changes, mostly to improve clarity, have been made to some amendments in response to comments received by EPA. In response to comments, EPA is also finalizing additional amendments to the regulations at 720.45 and 720.50, as well as to the PMN form in CDX, that further add clarity and better align the PMN form with the regulations. See Ref. 6, which includes tables that detail the changes that are being made to 40 CFR 720.45, 720.50, and the CDX interface per this final rule. Additionally, EPA has amended 40 CFR 723.50(e) to update a cross-reference to 40 CFR 720.45 based on the amendments made in this rule.

Consistent with TSCA section 5(d)(1), for all information requirements under 40 CFR 720.45, submitters are only required to provide information to the extent that it is known to or reasonably ascertainable by the submitter, as defined at 40 CFR 720.3. Under the amendments to 40 CFR 720.45, a submitter is required to include in the PMN form the detailed information finalized in this action, along with all other information already required, to the extent the information is known to or reasonably ascertainable by the submitter. This is an important point because a submitter may not know or be able to reasonably ascertain certain details about the chemical substance that is the subject of the notice, such as details about manufacturing, processing, or use sites not controlled by the submitter. In those situations, EPA will make conservative assumptions and use default values for any information that is not known to or reasonably ascertainable by the submitter and therefore not provided in the PMN form.

Based on a public comment, EPA is adding language to 720.50(c) to clarify that submitters can submit additional information not otherwise required by 720.50(a)-(b) to facilitate EPA's review of the notice.

The first set of detailed information requirements that EPA is adding to 40 CFR 720.45 concerns the physical and chemical properties and environmental fate characteristics of the chemical substance (see Table 1 in Ref. 6). Currently, if submitters have physical-chemical or environmental fate test data, they must provide the test data or a standard literature citation in accordance with 720.50(a)(2)-(3). EPA collects physical and chemical properties test data required by 40 CFR 720.50, “Submission of test data and other data concerning the health and environmental effects of a substance,” in two ways. First, the CDX user interface prompts the submitter to attach relevant documents, such as test data, to the PMN form using an attachment function. Second, the PMN form includes a CDX user interface screen with form fields for physical and chemical properties available for completion via a pick list. Data provided in the PMN form via CDX may be pulled from the test data provided by submitters per 720.50(a)(2)-(3), or the data can be submitted as standalone information for which submitters do not have underlying test data. EPA believes that the information requirements in 40 CFR 720.45 should reflect the PMN form fields. EPA is therefore adding relevant physical and chemical properties information requirements in a new provision at 40 CFR 720.45(j)(1) that are already specified within the PMN form. Submitters must submit physical-chemical and environmental fate information in the corresponding PMN form fields in accordance with new paragraph 720.45(j), which is added as described in the proposed rule.

EPA is also adding several information requirements to 40 CFR 720.45(j)(1) that are not already specified within the PMN form for physical and chemical properties. Specifically, EPA is requiring that data on surface tension and ultraviolet-visible (UV-VIS) absorption, as well as any particle size distribution analysis, be submitted as part of the PMN form, to the extent it is known to or reasonably ascertainable by the submitter. One commenter requested that EPA clarify the language outlined in the proposed rule for the particle size distribution analysis data requirement to make it clear that it includes both the analysis method as well as any data used to develop the particle size distribution value, a suggestion that EPA is incorporating in this final rule. Two commenters requested that EPA include several amendments to the nanomaterial morphology requirements outlined in the proposed rule, recommendations that EPA considers to be overly prescriptive and as such is declining to finalize. Additionally, after considering these comments, EPA anticipates that the proposed requirements at 40 CFR 720.45(j)(1) for information on aspect ratio, thickness, and number of layers or walls for nanomaterials are likely to be applicable only to a narrow subset of nanomaterials. Because this information would not be relevant to most nanomaterials, EPA will not include the proposed nanomaterial data requirements in the final regulations. For all other amendments to 40 CFR 720.45(j), as was proposed in the May 2023 proposed rule, EPA will also add fields for attaching associated data on the physical and chemical properties screen of the PMN form.

As proposed, EPA is also adding information requirements for the environmental fate characteristics of the chemical substance (see Table 1 in Ref. 6) to 40 CFR 720.45(j)(2). Environmental fate characteristics test data are already required by 40 CFR 720.50; however, this provision does not describe in detail what these relevant characteristics include. In addition, this information is already collected by EPA as attachments to the PMN form; however, fields for environmental fate characteristics are not yet included on the CDX user interface screen pick list. EPA is thus adding the relevant environmental fate characteristics to the information requirements at 40 CFR 720.45(j)(2) and form fields to the PMN form by expanding the pick list.

The next set of changes that EPA is finalizing at 40 CFR 720.45 relates to the categories of use of the chemical substance (see Table 2 in Ref. 6). The requirements being finalized include detailed information on commercial and consumer uses, which already have form fields in the PMN form in CDX. Although the regulations at 40 CFR 720.45(f) previously required a description of intended categories of use by function and application, the estimated percent of production volume devoted to each category of use, and the percent of the new substance in the formulation for each commercial or consumer use, certain details on commercial and consumer uses were not specified. The added information requirements include the types of products or articles that would incorporate the new chemical substance ( e.g., household cleaners, plastic articles), how and where a product or article incorporating the new chemical substance would be used ( e.g., spray applied indoors, brushed on outdoor surfaces), consumption rates and frequency and duration of use for products or articles containing the new chemical substance, and information related to the use of products or articles containing the new chemical substance by potentially exposed or susceptible subpopulations. Additionally, EPA is finalizing at 40 CFR 720.45(f) a requirement to designate applicable consumer and commercial product categories using Organization for Economic Co-operation and Development (OECD)-based functional use codes, which would create consistency with TSCA section 8(a) Chemical Data Reporting (CDR) requirements in 40 CFR part 711. EPA is finalizing corresponding changes to the PMN form fields in CDX for this data element. EPA is also finalizing amendments to 40 CFR 721.25 to ensure that submitters of SNUNs include in their notice both a description of the intended categories of use, as required by 40 CFR 720.45(f)(1), and of all known categories of use, to the extent known to or reasonably ascertainable by the submitter. Such categories of use may include uses that are ongoing and not subject to a significant new use rule (SNUR). Such information is valuable for EPA in determining necessary regulatory action should potential risks be identified during review of a SNUN. In the final rule, this provision appears in a new paragraph (e) of 40 CFR 721.25 rather than as an addition to paragraph (c), and the text was rephrased slightly for clarification. One commenter requested that EPA include a provision at 40 CFR 720.45(f) that would require submitters with chemicals having more than 10 intended uses to designate codes only for the 10 uses that represent the largest proportion of the anticipated production volume of the chemical, a suggestion that EPA is finalizing. EPA, however, will still require submitters to identify in the free form text field of the PMN form all intended or known uses of the chemical substance.

The third set of information requirements that EPA is finalizing at 40 CFR 720.45 is information related to where and how the chemical substance will be manufactured, processed, or used. These requirements apply to sites controlled by submitters as well as sites controlled by others, and although the information requirements that EPA is finalizing are similar for both, different types of activities often occur at submitter-controlled sites versus those at sites controlled by others ( e.g., manufacturing versus processing). Moreover, activities at sites controlled by others are typically not as well characterized by submitters compared to descriptions of the submitters' own activities, since in many cases the identity and number of sites controlled by others is unknown to and not reasonably ascertainable by the submitters when a notice is submitted. As such, some slight differences exist in the requirements EPA is finalizing for information related to sites controlled by submitters versus sites controlled by others. See Ref. 6 for more details.

Both for sites controlled by submitters and for sites controlled by others, EPA is adding information requirements for site addresses (see Table 3 and Table 5 in Ref. 6). For submitter-controlled sites, EPA is also adding requirements for a description of whether a particular chemical substance is manufactured or processed via batch or continuous production, as well as the amount of the chemical substance manufactured or processed in each batch and/or timeframe (see Tables 3, 4, and 5 in Ref. 6). These information requirements already have a corresponding form field in the PMN form in CDX because they are each covered by the existing information requirements in 40 CFR 720.45(g)(1) and (2) and (h) for a process description of operations at such sites. Since these information requirements were not specified in the regulations, EPA is finalizing them at 40 CFR 720.45(g)(1) and (2) for sites controlled by the submitter and 40 CFR 720.45(h)(1) and (2) for sites not controlled by the submitter.

EPA is also adding requirements for detailed information about the process diagram or description for each site controlled by the submitter (see Table 4 in Ref. 6) and for each site not controlled by the submitter (see Table 5 in Ref. 6). These data elements were previously required but not expressly included in the list of required data elements in 40 CFR 720.45. They include descriptions of the identity, approximate weight per batch or per day for continuous production, and entry point of all starting materials and feedstocks; the identity, approximate weight per batch or per day for continuous production, and entry point of all products, recycle streams, and wastes, including frequency of any equipment cleaning; the type of containers used for interim storage and transport of the chemical substance; and identification, by number, of any points of release. EPA is finalizing requirements for this information at 40 CFR 720.45(g)(2) and (h)(2) and in new fields in the PMN form to clarify the level of detail needed and to ensure that the regulations and PMN form are consistent.

One commenter noted that an existing data requirement related to manufacturing, processing, use, and disposal of chemical substances subject to section 5 notification is ambiguous in its scope. 40 CFR 720.45(d) requires submitters to describe any byproducts resulting from the manufacture, processing, use, and disposal of a chemical substance, and the commenter requested that EPA clarify whether its definition of byproduct includes “degradation products”. In the Response to Comments document (Ref. 2), EPA notes that byproducts are distinct from degradants and that information on degradants is required under the information requirements outlined in 720.45(j)(2).

EPA is also finalizing requirements for details about the possible worker exposures at each site controlled by the submitter (see Table 6 in Ref. 6), and at each site not controlled by the submitter (see Table 7 in Ref. 6). These requirements include types of potential worker exposure ( e.g., dermal, inhalation), descriptions of any protective equipment and engineering controls in place, the moisture content of the chemical substance (if a solid), and the percentage of the chemical substance in the formulation at the time of exposure. In addition, for sites controlled by others, these requirements also include worker activities and descriptions of the physical form of the chemical substance (consistent with information requirements for sites controlled by the submitter). Although these details are already covered by the existing information requirements in 40 CFR 720.45(g)(3) and (h) regarding worker exposure information, and some already have a corresponding form field in the PMN form in CDX, EPA is finalizing them as separate, unique information requirements at 40 CFR 720.45(g)(3) and (h)(3) and in new fields in the PMN form to clarify the level of detail needed and to ensure that the regulations and PMN form are consistent. One commenter requested that EPA revise the proposed text at 40 CFR 720.45(g)(3) and (h)(3) to clarify that the worker exposure information required in 40 CFR 720.45(g)(3)(ii)-(viii) and (h)(3)(ii)-(viii) pertains to each worker activity occurring during the manufacturing, processing, and use of the chemical substance, as identified pursuant to 720.45(g)(3)(i) and 720.45(h)(3)(i). EPA has incorporated this suggestion in the final rule because it provides additional clarity to submitters.

Several commenters made requests related to worker exposure that, if accepted by EPA, would affect the structure of and level of detail contained in the PMN form in CDX. For example, one commenter requested that EPA allow submitters to assign a “Letter of Activity” (a field in CDX to link specific worker activities to operations described in the corresponding manufacturing diagram) to activities at submitter-controlled sites; the option to assign a Letter of Activity already exists for activities at sites controlled by others. Another commenter requested that EPA include in the PMN form dropdown options for “Worker Activity” and “Worker Category” for sites controlled by others—dropdown options that currently exist for submitter-controlled sites in the PMN form. EPA is finalizing all of the aforementioned suggestions by making corresponding changes to the CDX interface. EPA, however, also received several additional suggestions related to worker exposures that EPA is choosing not to adopt. More information on the comments received relating to worker exposure and EPA's responses can be found in the Response to Comments document (Ref. 2).

Additionally, EPA is finalizing proposed amendments to 40 CFR 720.45(g)(3) and (h)(3) to ensure that submitters include worker exposure information from exempt manufacture or related use of the chemical substance under 40 CFR 720.30 ( e.g., manufacture of the chemical substance under the byproduct or impurity exemptions) at each site where the chemical substance will be manufactured, processed, or used, if known or reasonably ascertainable. However, to avoid any confusion occasioned by the abbreviated, non-exhaustive list of exemption examples that appeared in a parenthetical in the proposed regulatory text, the final rule does not include the proposed parenthetical and streamlines the text by simply cross-referencing 40 CFR 720.30.

EPA is finalizing information requirements concerning the potential environmental releases at each site controlled by the submitter (see Table 8 in Ref. 6) and at each site not controlled by the submitter (see Table 9 in Ref. 6). EPA is requiring descriptions of the type of release ( e.g., transport, interim storage, disposal, equipment cleaning), as well as the amount of the chemical substance released directly to the environment or into a control technology. EPA is finalizing an amendment to require a description of the amount of the chemical substance released to the environment after use of a control technology. EPA is also requiring for equipment cleaning releases a description of the frequency of equipment cleaning and what is used to clean equipment. EPA is also requiring for transport and storage releases a description of how the chemical substance or the product containing the chemical substance is transported from the site and stored, as well as information about the containers used. For releases into air, EPA is requiring Clean Air Act operating permit numbers and a description of any Leak Detection and Repair program the site has implemented; one commenter requested that EPA amend the language for this data element to require a description of the type of control technology used to treat stack air releases, which EPA is finalizing. For releases into water, EPA is requiring National Pollutant Discharge Elimination System (NPDES) permit numbers and information on the waterbodies and other destinations into which the release occurs; one commenter requested that EPA also require a description of any outfall numbers associated with the known points of release associated with the NPDES permit number(s), a suggestion that EPA is finalizing. For releases into wastewater treatment plants, EPA is requiring information on the publicly owned treatment works (POTW) into which the release occurs. For the requirement concerning information on POTW, one commenter requested that EPA amend this data requirement to also specifically request information concerning privately owned treatment works to which releases might occur, the type of wastewater technology employed at any treatment facilities, and the known or estimated treatment efficiency at these facilities—all of which are suggestions that EPA is finalizing. In addition, for sites controlled by others, these requirements also include a description of the media of release consistent with the requirement for sites controlled by the submitter.

Although each of these detailed data elements are already covered by the existing information requirements in 40 CFR 720.45(g)(4) and (h) regarding environmental releases, and some already have a corresponding form field in the PMN form in CDX, EPA is finalizing them as separate, unique information requirements at 40 CFR 720.45(g)(4) and (h)(4) and in new fields in the PMN form to clarify the level of detail needed and to ensure that the regulations and PMN form are consistent.

EPA is finalizing amendments to 40 CFR 720.45(g) and (h) to make their formatting and the information required in both consistent. EPA recognizes that a submitter may not possess such information about sites not controlled by the submitter. As mentioned elsewhere in this preamble and in the Response to Comments document (Ref. 2), submitters are only required to supply information that is known to or reasonably ascertainable by them, as defined at 40 CFR 720.3.

Additionally, EPA is finalizing amendments to 40 CFR 720.45(g)(4) and 720.45(h)(4) to ensure that submitters include environmental release information from exempt manufacture or related use of the chemical substances under 40 CFR 720.30 ( e.g., manufacture of the chemical substance under the byproduct or impurity exemptions) at each site where the chemical substance will be manufactured, processed, or used, if known or reasonably ascertainable. However, to avoid any confusion occasioned by the abbreviated, non-exhaustive list of exemption examples that appeared in a parenthetical in the proposed regulatory text, the final rule does not include the proposed parenthetical and streamlines the text by simply cross-referencing 40 CFR 720.30.

Lastly, EPA is adding optional pollution prevention information at 40 CFR 720.45(k) as proposed. The PMN form in CDX currently includes an optional text field and attachment function for submitters who wish to provide pollution prevention information about the chemical substance, such as information about using alternative fuel sources, reducing the use of water and chemical inputs, modifying a production process to produce less waste, implementing water and energy conservation practices, or substituting for riskier existing products.

In addition to the amendments intended to clarify the information requirements for a notice and the corresponding changes to the PMN form in CDX outlined in Unit III.B.1. and 2., EPA is also adding statements with accompanying check boxes to certain screens of the PMN form (such as when transitioning between the various worksheets completed by the submitter) that indicate that information fields can only be left blank if such information is not known to or reasonably ascertainable by the submitter. Additionally, a statement would warn the submitter of the potential consequences of leaving the field blank and later amending the field. If a field is left blank, EPA generally follows the scientifically informed approach to make conservative assumptions and use appropriate default values when assessing risk, which could result in more stringent risk management requirements than might be directed if data were provided showing such assumptions or default values were not necessary to use. If a field that has been left blank is later amended during the review process, EPA may declare the original submission incomplete (see Unit III.C.3. for a more detailed discussion on notice amendments indicating that the original submission was incomplete). Several commenters expressed concerns about the potential burden posed by the inclusion of these check boxes in the CDX workflow, concerns with which EPA disagrees. While the inclusion of check boxes might require submitters to spend slightly more time preparing the PMN form for their section 5 notices, EPA believes that the improved quality of submissions resulting from this, and the other changes being finalized to the CDX environment, will save submitters, as well as EPA, more time, and resources in the long run. This check box approach does not have a corresponding regulatory change, as it is consistent with the existing requirements to provide all information that is known to or reasonably ascertainable by the submitter and EPA's longstanding practice to use conservative assumptions and default values in the absence of information. The ICR document accompanying this final rule describes the potential modifications to each screen of the PMN form (Ref. 7).

Some commenters made requests related to the CDX enhancements outlined in the proposed rule that EPA is addressing in this final rule. First, two commenters requested that EPA include in the enhancements to the CDX interface an option for submitters to, if data are not provided for a particular data element, explain why this information is not known or reasonably ascertainable, a suggestion that EPA will incorporate. Another commenter requested that EPA allow submitters to access a “beta version” of the enhanced CDX environment before rolling out the changes to the broader CDX environment. EPA will make efforts to do so and plans to share more information with stakeholders via outreach once this final rule is published. The CDX enhancements described in this rulemaking will not be finalized upon publication or effective date of the final rule. The enhancements will take time to develop, and EPA will make the updated CDX interface reflecting these changes publicly available as soon as resources allow. However, submitters are currently able to include all information for the newly specified data elements described in this preamble and the amended regulatory text as generic attachments in the current CDX workflow. EPA will share additional guidance and conduct outreach with stakeholders prior to the rollout of the changes to CDX and will work to extend flexibility to submitters in the event that issues arise related to discrepancies between the regulations and the PMN form before the CDX enhancements can be implemented.

EPA is finalizing amendments to the regulations regarding how EPA acknowledges the receipt of a notice to account for EPA's pre-screen process and to clarify the start of the applicable review period, particularly when a notice contains errors or is incomplete. EPA is also finalizing amendments to align the process for correcting errors in the notice with the existing process for incomplete submissions. EPA is further clarifying that an initial notice submission may later be deemed incomplete if the submitter submits additional information at any time during the review period that was known to or reasonably ascertainable by the submitter at the time of initial notice submission. Finally, EPA is promulgating amendments that clarify that new information about a chemical substance under EPA review must be submitted electronically via CDX and that certain notification to EPA of new information may be made by e-mail.

EPA is finalizing amendments to 40 CFR 720.65(a) to codify the pre-screen process that EPA conducts prior to moving forward to the risk assessment process. The new language would clarify, for purposes of transparency, EPA's current pre-screen practice as described in Unit III.C.1 of the proposed rule preamble. EPA is also finalizing an amendment to 40 CFR 720.70 to clarify that a notice of receipt will be published in the Federal Register after EPA receives a complete notice, rather than merely receiving the notice, to accommodate the pre-screening procedures. Additionally, based on public comments, EPA is amending 40 CFR 723.50(e)(3) to add a description of current pre-screen procedures and update/clarify the process for completing an incomplete LVE or LoREX notice, which will better align with similar changes made to 40 CFR 720.65 and with existing electronic submission requirements.

One comment on the proposal asserted that EPA should include in section 5 prescreen a review of all CBI claims for consistency with sections 14(b) and (c) of TSCA and treat any submission that includes a CBI claim that appears to be inconsistent with the requirements of these sections as “erroneous or incomplete.” EPA disagrees with these comments as assuring that every CBI claim is consistent with section 14(b) and (c) of TSCA would require a substantive review of each claim, which is well beyond the CBI review requirements described in TSCA section 14(g). For a more detailed response regarding CBI review during pre-screen, please see the Response to Comments document (Ref. 2).

As proposed, EPA is finalizing amendments at 40 CFR 720.65(a) and (b) to state that if EPA receives a notice with errors and EPA requests (as part of the pre-screen process or, at latest, within 30 days of receipt of the notice) that the submitter remedy such errors, the applicable review period will not begin until EPA receives a corrected notice. This will align the process for correcting errors with the current process in 40 CFR 720.65 for correcting an incomplete notice.

EPA is finalizing amendments at 40 CFR 720.65(c)(2) and to 40 CFR 720.65(c)(5)(iii) (moved to 720.65(d)(5)(iii)), to clearly communicate and clarify that EPA may deem an original notice incomplete, and restart the review period at Day 1, if a submitter provides required information during the applicable review period without demonstrating that it was not known to or reasonably ascertainable by the submitter at the time of the initial notice submission. Additionally, EPA is updating the reference to 40 CFR 720.80(b)(2) at 40 CFR 720.65(c)(vii) to instead point to 40 CFR 703.5(c) because the 2023 CBI rule (88 FR 37155, June 7, 2023) moved the language that was previously at 720.80(b)(2) to a new section at 40 CFR 703.5.

As stated in the proposal for this rule (88 FR 34100, May 26, 2023), EPA is changing the longstanding practice of accepting amendments that contain required information that was known or reasonably ascertainable at the time of the original submission and then accepting a request to suspend the review period under 40 CFR 720.75(b).

As explained in Unit II.B., the 2016 Lautenberg Amendments impose additional obligations on EPA. EPA believes that exercising its discretionary authority under the existing regulations to declare an original submission incomplete and restart the applicable review period upon submission of the complete notice (e.g., when an amendment is submitted that makes a notice complete) is appropriate in order for EPA to efficiently meet current statutory requirements. Several comments on the proposed rule objected to these amendments, stating that submitters often are prompted to generate new or additional information during the review period to rebut unforeseen or conservative assumptions made by EPA. To address this comment and assist with efficient review, EPA is also amending the notice information requirements at 40 CFR 720.45 to specify the level of detail needed to perform refined risk assessments, as well as building that additional detail into the CDX user interface, which is detailed in Unit III.B of both the proposed rule (88 FR 34100, May 26, 2023) and this final rule. By specifying more detailed information requirements in 40 CFR 720.45 and data fields in the CDX user interface, EPA should receive more complete submissions upfront and help to minimize the need for EPA to use default values and conservative assumptions in its risk assessment due to a lack of available data. The Agency, however, reiterates that the submitter is required to provide all required information that is known or reasonably ascertainable at the time of the initial submission and not in reaction to risk assessment findings. Submitters must provide all information required by 40 CFR 720.45 and 720.50 upfront to satisfy the requirement of submitting a complete notice.

In response to the proposal, EPA received a comment asking that the Agency provide submitters with an opportunity to explain why information submitted as part of an amendment should not result in restarting the applicable review period. Under the amendment to 40 CFR 720.65(c)(2) being finalized in this action, the submitter of additional or revised information during the review period must demonstrate to EPA's satisfaction that the information was not known to or reasonably ascertainable by the submitter at the time of the original submission to preclude an EPA determination that the original notice was incomplete. Amendments to a notice that will not be considered as amendments indicating that the original notice was incomplete are: (1) Amendments based on new data (as described at 40 CFR 720.40(f) and 720.50(a)(4)); (2) Administrative, non-substantive amendments ( e.g., submitter contact information); and (3) Amendments made at the request of EPA. EPA, however, will take case-by-case facts into consideration when determining whether a late submission of information indicates that a notice was incomplete when originally submitted. If a submitter disagrees with EPA's determination that the original notice submission was incomplete, the submitter may object according to the existing procedures at 40 CFR 720.65(c)(4) and (5), as amended in this final rule, which updates and moves these provisions to 40 CFR 720.65(d)(4) and (5).

As explained in the proposed rule, a notice submitted under TSCA section 5(a)(1) is statutorily required to include the information described in TSCA section 5(d)(1) insofar as it is known to the submitter or reasonably ascertainable. In response to various procedural amendments proposed in this rulemaking, EPA received comments asking the Agency to further define “known to or reasonably ascertainable by” beyond the current definition at 40 CFR 720.3. While EPA understands and recognizes the desire to have a more explicitly defined list of criteria or more detailed definition of “known to or reasonably ascertainable by,” EPA believes that it is not possible to define “known to or reasonably ascertainable by” more explicitly—as was stated in the 1983 final rule entitled “Premanufacture Notification; Premanufacture Notice Requirements and Review Procedures” (Ref. 8) and restated in the May 2023 proposed rule (88 FR 34100). EPA has not, in this rulemaking, proposed or finalized any amendment to or undertaken any substantive reconsideration, reexamination, or reinterpretation of the existing definition at 40 CFR 720.3. That said, to assist submitters, EPA has provided additional discussion and examples as to what is meant by “known to or reasonably ascertainable by” in the Response to Comments document (Ref. 2).

EPA is finalizing amendments to 40 CFR 720.40(f), 40 CFR 720.50(a)(4)(ii), and 40 CFR 723.50(i) to clarify that new information about a chemical substance under EPA review must be submitted electronically via CDX, consistent with the general electronic submission requirements in 40 CFR 720.40(a). In addition, when submitters receive new information within five days of the end of the review period, EPA is amending the regulations to allow submitters to notify EPA by e-mail of the receipt of new information. Although the regulatory text in 40 CFR 720.40(f) and 40 CFR 723.50(i) are similar, the regulatory text provided along with the proposed rule erroneously showed only the proposed changes to 40 CFR 720.40(f) and did not show proposed changes to 40 CFR 723.50(i). This was an oversight and the regulatory text accompanying this final rule consistently amends both 40 CFR 720.40(f) and 40 CFR 723.50(i).

EPA is promulgating several amendments to the current LVE and LoREX regulations. Specifically, EPA is finalizing amendments so that: (1) submitters may not commence manufacture until EPA has approved the LVE or LoREX notice; (2) EPA may proactively inform LVE and LoREX holders if the chemical substance that is the subject of the LVE or LoREX becomes subject to a SNUR and the chemical identity is CBI, or if it is listed on the confidential portion of the TSCA Inventory; (3) PFAS are categorically ineligible for these exemptions; and (4) certain PBT chemical substances are ineligible for these exemptions.

LVE and LoREX regulations are promulgated under the statutory authority of TSCA section 5(h)(4), 15 U.S.C. 2604(h)(4), which provides that EPA may, upon application and by rule, exempt the manufacturer of any new chemical substance from all or part of the requirements of TSCA section 5 if EPA determines that the manufacture, processing, distribution in commerce, use, or disposal of such chemical substance, or that any combination of such activities, “will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified by [EPA] under the conditions of use.”

EPA is finalizing, as proposed, amendments to the LVE and LoREX regulations at 40 CFR 723.50(g) to require a notification of approval of an LVE or LoREX from EPA prior to commencement of manufacture of the chemical substance under the exemption. Prior to the promulgation of this amendment, 40 CFR 723.50(g)(2) provided that the submitter may begin manufacture of a chemical substance under an LVE or LoREX upon expiration of the 30-day review period if EPA had taken no action. As described in Unit III.A., EPA is also amending the regulations that allow submitters to begin manufacture or processing of chemical substances for which a PMN, MCAN, or SNUN was submitted upon expiration of the review period, so that those regulations would require a determination from EPA prior to commencement of manufacture or processing of such substances. As discussed in Unit III.A., these changes to 40 CFR 720.75, 721.25(d), and 725.170 are being made to conform those regulations to the 2016 Lautenberg Amendments. EPA is finalizing similar amendments to the LVE and LoREX regulations at 40 CFR 723.50 to align with the amendments to the PMN, SNUN, and MCAN regulations and with the statutory framework and to better ensure that chemical substances manufactured under LVEs and LoREXs will not present an unreasonable risk.

EPA is finalizing amendments to 40 CFR 723.50 to allow EPA to inform an LVE or LoREX holder whenever the chemical substance that is the subject of that LVE or LoREX becomes subject to a proposed or final SNUR that describes the chemical substance by a generic chemical name due to a confidentiality claim for its specific chemical identity. This amendment would, as a courtesy, help inform LVE and LoREX holders of regulatory requirements that they may have otherwise been unable to determine on their own without submitting an inquiry to EPA (also known as a bona fide notice) pursuant to 40 CFR 721.11. In the proposed rule (88 FR 34100, May 26, 2023), EPA stated that the Agency did not intend to proactively inform current LVE and LoREX holders about SNURs that predate this rule and that EPA would only start the practice of notifying LVE and LoREX holders subject to this amendment after the date of the final rule. However, upon consideration of public comments in support of notifying current exemption holders of preexisting SNURs, EPA intends, subject to availability of resources, to notify current LVE and LoREX holders about preexisting SNURs that describe the chemical substance by a generic chemical name. Given current resource constraints, however, EPA is unable to provide a timeline for when it will begin and complete this notification effort. A lack of receipt of this courtesy notice that a chemical substance is subject to a SNUR does not excuse chemical manufactures and processors from complying with any existing regulations. LVE and LoREX holders who wish to determine whether their chemical substance is subject to a SNUR may always submit an inquiry to EPA (also known as a bona fide notice) pursuant to 40 CFR 721.11.

In response to public comments, in addition to notifying LVE and LoREX holders when they are subject to a SNUR, EPA also intends, subject to availability of resources, to begin notifying LVE or LoREX submitters if a substance is added to the confidential portion of the TSCA Inventory as a result of filings by a different submitter that claimed the specific chemical identity of the substance as confidential. As of February 7, 2024, more than 460 LVEs and LoREXs that were granted by EPA pertain to chemical substances that are now listed on the TSCA Inventory. Once on the Inventory, a chemical substance may be subject to additional requirements under TSCA. Of the more than 390 chemical substances covered by these LVE and LoREX, approximately 125 are on the confidential portion of the TSCA Inventory. Without notice by EPA or by submitting a bona fide notice, a submitter is unlikely to know their substance is listed on the confidential portion of the Inventory, unless they also submitted the PMN and subsequent Notice of Commencement that led to the Inventory listing of the substance. While EPA intends to begin providing notice to exemption holders whose chemical substance now appears on the confidential portion of the TSCA Inventory, EPA does not intend to provide notice to those who hold granted LVEs or LoREXs pertaining to chemical substances whose specific chemical identities are added to the public portion of the TSCA Inventory due to the additional resources this would require and to the fact this information is publicly available.

In response to public comment, EPA affirms that once a chemical substance is added to the Inventory, an LVE or LoREX (or any other exemption from PMN requirements) is no longer necessary to manufacture the chemical substance and thus any approved LVE or LoREX is no longer binding on the manufacturer. The premanufacture notice requirements of TSCA section 5(a)(1), the relevant statutory exemption authority at TSCA section 5(h)(4), and the LVE/LoREX regulations at 40 CFR 723.50 all apply to manufacturers of new chemical substances, yet a chemical substance is no longer a “new chemical substance” as defined in TSCA section 3(11) once it is added to the Inventory. While EPA intends to begin providing notice to LVE and LoREX submitters once their substance is listed on the confidential portion of the Inventory, EPA does not intend to formally revoke these exemptions under the process described in 40 CFR 723.50(h)(2), as that process pertains to new chemical substances for which manufacture is not otherwise permitted in the absence of a PMN or applicable exemption.

The amendments to the regulations at 40 CFR 723.50 establish that a granted LVE or LoREX notice demonstrates a bona fide intent to manufacture the substance, such that a disclosure to an LVE or LoREX holder that the substance is the subject of a proposed or final rule under Part 721 or similarly that the substance is on the confidential portion of the TSCA Inventory will not be considered public disclosure of confidential business information under section 14 of the Act. EPA is not amending the procedures in 40 CFR 723.50(l) for asserting and protecting confidential business information.

EPA is finalizing amendments to limit the scope of the LVE and LoREX exemptions that were first promulgated in accordance with TSCA 5(h)(4) in 1985 and 1995 respectively (50 FR 16477 (April 26, 1985) and 60 FR 16346 (March 29, 1995)). TSCA 5(h)(4) allows, but does not require, the Administrator to exempt the manufacturer of any new chemical substance from all or part of the requirements of TSCA section 5 in certain circumstances. The statute does not specify any circumstances under which the Administrator would be required to provide an exemption and EPA's action here is consistent with its authority under 5(h)(4) to create and/or define the scope of exemptions. These amendments make PFAS categorically ineligible for LVEs and LoREXs going forward, using a structural definition of PFAS for purposes of the LVE and LoREX regulations. Upon the effective date of this rule, any LVE or LoREX notice for a PFAS that is submitted to the Agency will be denied upon receipt without substantive review. This includes any chemical substance where any of the reasonably anticipated metabolites, environmental transformation products, byproducts, or reasonably anticipated impurities are a PFAS. Persons who wish to manufacture a PFAS not on the TSCA Inventory will be required to submit a PMN at least 90 days prior to commencing manufacture for a non-exempt commercial purpose. The definition for PFAS that EPA is finalizing is aligned with the recently finalized TSCA section 8(a)(7) rule (88 FR 70516, October 11, 2023) and the Inactive PFAS SNUR (89 FR 1822, January 11, 2024). Although PFAS would no longer be eligible for LVE or LoREX, there may be case-specific circumstances where a use of a new PFAS or a new use of an existing PFAS may be needed by a federal agency to meet its mission or is required in order to meet another critical need. EPA will work with other federal agencies to expedite review of such cases. Furthermore, EPA recognizes the critical role that many new chemicals play, including some PFAS, in the manufacture of semiconductors. The new chemicals program now prioritizes notices for chemicals used in sectors supported by the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act and the Inflation Reduction Act's (IRA) climate goals. Since beginning the process of prioritizing CHIPS and Science Act and IRA related chemicals, EPA now reviews these new chemicals in a third of the time compared to other sectors. The Agency believes these key sectors are important to growing new jobs as part of the Biden-Harris Administration's domestic manufacturing initiatives. For some new chemicals needed by the semiconductor sector, such as photo-acid generators, EPA's multi-year collaborative effort with the sector has resulted in a regulatory pathway for dozens of these chemicals, and recent submittals have had review timeframes of under 90 days.

As noted in the proposed rule, EPA's New Chemicals Program began implementing a new policy for reviewing and managing LVE notices for PFAS in April 2021. In an April 27, 2021, press release announcing the new PFAS LVE policy (Ref. 9), the Agency stated that “[g]iven the complexity of PFAS chemistry, potential health effects, and their longevity and persistence in the environment, an LVE notice for a PFAS is unlikely to be eligible for this kind of exemption under the regulations.” Since 2021, EPA has reviewed 8 LVE notices for PFAS, which were each reviewed on a case-by-case basis. Each of the 8 PFAS were determined to be ineligible for an LVE due to the risks identified and/or an inability to complete the review in 30 days as a result of the complexities of the review or uncertainties in the assessment. EPA has never received or approved any PFAS LoREX notices.

Each of the 8 PFAS that were the subject of LVE notices reviewed since 2021, or the reasonably anticipated metabolites and environmental transformation products of those PFAS, was determined to be a PBT chemical substance. In 5 of the 8 cases, however, the PBT designation included noted uncertainties for each of the substances reviewed. If EPA is unable to score a characteristic ( e.g., B “unknown” for bioaccumulation), the characteristic is still considered to be potentially a 2 or higher for the purposes of identifying potential PBTs (Ref. 10). In many cases, additional uncertainties were identified for the potential routes of exposure, which included exposures to workers, the general population, a potentially exposed or susceptible subpopulation ( e.g., consumers, infants), or the environment. PFAS present a challenge for EPA to evaluate because there is often insufficient information to quantify the risk they may pose and consequently make effective decisions about how to regulate them (Ref. 11). As currently described in the regulations, EPA may determine that a new chemical substance is ineligible for an LVE or LoREX if there are issues concerning toxicity or exposure that require further review which cannot be accomplished within the 30-day review period. EPA notes that the shortened 30-day review period for LVEs and LoREX is one of the major benefits of these exemptions as it allows companies to introduce new chemical substances more quickly into commerce. The 30-day review period provides a screen for EPA to identify any new chemical substances with issues that require more detailed and comprehensive review and analysis, such as that available in a full PMN review. See 60 FR 16336. Given the shortened 30-day review of an LVE along with the inability to require testing or impose additional restrictions under a section 5(e) or 5(f) order, EPA was unable to address those uncertainties which would be necessary to conclude that the substance would not present an unreasonable risk. Since all of the 8 PFAS that were the subject of LVE notices were deemed ineligible for the exemption, the submitters were required to submit a PMN if they wanted to move forward with the manufacture of the new chemical substances.

For the purpose of making PFAS ineligible for LVEs and LoREXs, EPA is defining “PFAS” using a structural definition. In this rule, EPA defines PFAS to mean a chemical substance that contains at least one of these three structures:

(1) R-(CF2)-CF(R′)R″, where both the CF2 and CF moieties are saturated carbons;

(2) R-CF2OCF2-R′, where R and R′ can either be F, O, or saturated carbons; or

(3) CF3C(CF3)R′R″, where R′ and R″ can either be F or saturated carbons.

Manufacturers of substances that do not meet this structural definition and of substances where any of the reasonably anticipated metabolites, environmental transformation products, byproducts, or reasonably anticipated impurities do not meet this structural definition remain eligible to submit an LVE or LoREX notice.

In opposition to these amendments, EPA received comments asserting that because PFAS are a broad category of chemicals, any proposed regulatory action on PFAS should not group PFAS into a single category. Comments also asserted that there was no scientific basis or risk-based evidence for making PFAS ineligible for LVEs and LoREXs. EPA agrees with the comments that PFAS are a broad category of chemical substances with common toxicological properties, exposures, or uses, and notes that the assessment and management of these substances for regulatory purposes should generally be done on a case-by-case basis or as groups of substances with common toxicological properties, exposures, or uses. Furthermore, EPA believes that any assessment of PFAS should be done in line with the scientific standards, weight of scientific evidence, and consideration of any reasonably available information as outlined in section 26 of TSCA. The amendment to make PFAS ineligible for LVEs and LoREXs, however, is not based on an assessment of all PFAS or any PFAS and does not impose risk management restrictions on any PFAS substance. The decision to make PFAS ineligible for LVEs and LoREXs is not a determination of risk for all or any PFAS. While the current state of science and EPA's understanding of PFAS has motivated the decision to make all PFAS ineligible for LVEs and LoREXs, these amendments are not based on EPA findings that particular PFAS chemicals, or all chemicals qualifying as PFAS under this rule, may present unreasonable risks of injury to human health or the environment under the conditions of use due to levels of hazards and exposures identified and evaluated by EPA. Rather, due to the scientific complexities or uncertainties associated with assessing PFAS and the lack of data on most PFAS with regards to toxicity and exposure to human health and the environment, EPA expects in most cases to be unable to determine pursuant to TSCA section 5(h)(4) that a PFAS “will not present an unreasonable risk” under the conditions of use within the 30-day review period provided for LVE and LoREX notices. This action is a procedural action based on EPA's experience administering TSCA and reviewing LVEs for PFAS.

Additionally, making PFAS ineligible for the LVE and LoREX exemptions may in fact reduce burden in many instances by avoiding the submission and review of LVEs that are ultimately denied and required to be resubmitted and reviewed anew through the PMN review process. Furthermore, the New Chemicals Program developed the PFAS Framework to help ensure that the Program effectively and efficiently reviews and makes appropriate decisions on new PFAS or significant new uses of existing PFAS reviewed through PMNs and SNUNs. The PFAS Framework will guide EPA's review of PFAS under TSCA section 5, ensuring consistency and efficiency in its review of incoming submissions while advancing the Agency's goals to ensure protection of public health and the environment. Please see the Response to Comments document that accompanies this rule for a more detailed discussion of and response to the comments received on the amendments to make PFAS categorically ineligible for LVEs and LoREXs (Ref. 2).

The definition for PFAS promulgated at 40 CFR 723.50 does not include substances that only have a single fluorinated carbon or unsaturated fluorinated moieties ( e.g., fluorinated aromatic rings and olefins), which are more susceptible to chemical transformation than their saturated counterparts, and therefore less likely to persist in the environment. These potentially degradable substances, if submitted to EPA in a LVE or LoREX notice, would still be evaluated by EPA and a decision made to either deny or grant the exemption.

The three-part structural definition for PFAS includes fluoropolymers. Fluoropolymers are made using fluorinated monomers, and often fluorinated processing aides, which contributes to the release of PFAS. In addition, the disposal of fluoropolymers may also result in PFAS releases. EPA has been concerned about potential risks of fluoropolymers for more than a decade. On January 27, 2010 (75 FR 4295, 1/27/2010), EPA amended the `polymer exemption rule,' to exclude from eligibility polymers containing as an integral part of their composition, except as impurities, certain perfluoroalkyl moieties consisting of a CF3- or longer chain length. EPA issued this amendment because, based on information at the time, EPA could no longer conclude that these polymers will not present an unreasonable risk to human health or the environment under the terms of the polymer exemption rule, which is the determination necessary to support an exemption under section 5(h)(4) of TSCA. While some comments stated that fluoropolymers are safe, there remains debate on the toxicity of fluoropolymers especially when considering their entire life cycle (Ref. 12). EPA's decision to include fluoropolymers as part of the amendment to make PFAS ineligible for LVEs and LoREXs, however, was not based on hazard, exposure, or risk. Fluoropolymers are no less complicated to review than nonpolymeric PFAS, and the Agency expects it would need the longer 90-day review for a PMN.

At the time of finalizing this rulemaking, EPA is not revoking previously granted LVEs for PFAS. EPA, however, may take future action on a case-by-case basis to revoke previously granted LVEs for PFAS, which would be done in accordance with the existing regulations at 40 CFR 723.50(h)(2). EPA believes that the revocation of any existing LVE should be done on a case-by-case basis. While there are well identified hazards for many PFAS and PFAS studies have repeatedly found harm to human health, EPA has not determined that PFAS as an entire category of chemical substances do not meet the “will not present unreasonable risk of injury to health or the environment” standard of TSCA section 5(h)(4). As noted previously, EPA's decision to make future PFAS ineligible for LVEs is not based on hazard or risk but is instead based on EPA's experience administering TSCA and reviewing LVEs for PFAS (please see the Response to Comments document for a more detailed discussion (Ref. 2)).

As EPA continues to consider previously granted PFAS LVEs, EPA will take into consideration the concerns raised about the potential impacts to domestic semiconductor and electric vehicle industry, national defense, or other critical applications. The Biden-Harris Administration is committed to restoring U.S. leadership in semiconductor and electric vehicle manufacturing, supporting good-paying jobs across those supply chains, and advancing U.S. economic and national security. EPA's Framework for Addressing New PFAS and New Uses of PFAS (PFAS Framework) (Ref. 10) outlines EPA's planned approach when reviewing new PFAS and new uses of existing PFAS. The application of the PFAS Framework will help ensure that new PFAS won't harm human health and the environment and allows that certain PFAS be used when exposures and releases can be mitigated, which is critical for important sectors like semiconductors. Under the framework, EPA expects that some PBT PFAS will not result in worker, general population or consumer exposure and are not expected to result in releases to the environment, such as when PFAS are used in a closed system with occupational protections as is generally the practice in the manufacture of some semiconductors and other electronic components. Additionally, EPA continues to work cooperatively with companies who wish to voluntarily withdraw previously granted LVEs for PFAS. As of April 1, 2024, 56 LVEs have been withdrawn through EPA's PFAS Low Volume Exemption Stewardship Program.

EPA is finalizing amendments to 40 CFR 723.50(d) that would codify EPA's long-standing practice that, whenever EPA identifies a chemical substance under LVE or LoREX review (or any reasonably anticipated metabolites, environmental transformation products, or byproducts of the substance, or any reasonably anticipated impurities in the substance) as PBT with anticipated environmental releases and potentially unreasonable exposures to humans or environmental organisms, that substance would be ineligible for the LVE or LoREX. As noted in Unit III.D.3., the LVE and LoREX exemptions were first promulgated in accordance with TSCA section 5(h)(4) in 1985 and 1995 respectively (50 FR 16477, April 26, 1985 (FRL-2742-1) and 60 FR 16346, March 29, 1995 (FRL-4923-1)). TSCA section 5(h)(4) allows, but does not require, the Administrator to exempt the manufacturer of any new chemical substance from all or part of the requirements of TSCA section 5 in certain circumstances. The statute does not specify any circumstances under which the Administrator would be required to provide an exemption and EPA's action here is consistent with both its long-standing practice and with its authority under TSCA section 5(h)(4) to create and/or define the scope of exemptions.

On November 4, 1999, EPA issued its policy statement identifying a category for PBT new chemical substances (Ref. 13). The 1999 policy statement formally acknowledged PBT chemical substances as a category based on shared characteristics to facilitate premanufacture assessment and regulation. In response to the proposed amendment to the LVE and LoREX regulations, EPA received comment asserting that the Agency cannot categorically make all PBT chemicals ineligible for LVEs and LoREXs. EPA did not propose to categorically make all PBT chemicals ineligible for LVEs and LoREXs and is not doing so in this final rule. Rather, EPA proposed and is finalizing amendments to 40 CFR 723.50(d) to codify that whenever EPA identifies a chemical substance under LVE or LoREX review (or any reasonably anticipated metabolites, environmental transformation products, or byproducts of the substance, or any reasonably anticipated impurities in the substance) as PBT with anticipated environmental releases and potentially unreasonable exposures to humans or environmental organisms, that substance would be ineligible for the LVE or LoREX. In order to effectuate these amendments for individual exemption notices, EPA would first need to review the exemption notice to determine if the substance is a PBT and then review the environmental releases and exposures to humans or environmental organisms to determine if releases and exposures are expected. Only after EPA has reviewed the hazards and exposures, will EPA make a decision to either grant or deny an LVE or LoREX for a PBT chemical substance.

Based on EPA's experience administering LVEs and LoREXs, EPA expects that most exemptions for PBT chemical substances will not be granted. However, EPA agrees that there are instances where PBT chemical substances can be managed under an exemption. EPA may receive an exemption notice for a PBT chemical substance that will not result in worker, general population, or consumer exposure and that is not expected to result in releases to the environment, such as chemical substances used in a closed system to make semiconductors or other electronic components. In such a negligible exposure and environmental release scenario where worker exposure is fully mitigated and general population exposures are not expected, if EPA has sufficient information on the substance and the conditions of use to ensure that such PBT chemical substances can be disposed of properly and no consumer exposure is expected, EPA generally expects to grant the exemption.

EPA is defining “PBT chemical substance” for purposes of 40 CFR 723.50 as “a chemical substance possessing characteristics of persistence (P) in the environment, accumulation in biological organisms (bioaccumulation (B)), and toxicity (T) resulting in potential risks to humans and ecosystems. For more information on EPA's Policy on new chemical substances that are PBT, see EPA's 1999 policy statement (64 FR 60194; November 4, 1999).”

As proposed, EPA is finalizing amendments to 40 CFR 720.75(b)(2) to allow PMN, SNUN, LVE, and LoREX submitters to request a suspension of the notice review period for up to 30 days orally or in writing, including by e-mail, without the need for a formal, written request submitted to EPA via CDX using e-PMN software. EPA is similarly finalizing amendments to 40 CFR 725.54(c) to permit MCAN submitters to request suspensions for up to 30 days orally or in writing, including by e-mail, without the need for a formal, written request submitted to EPA via CDX using e-PMN software. Some comments to the proposal took issue with increasing the number of suspension days made through oral or e-mail communication from 15 to 30 days. These comments suggested such an amendment would result in less frequent communication from EPA regarding the status of a new chemical review. EPA disagrees with these comments, as the amendments would allow the submitter to request up to a 30-day suspension through oral or e-mail communication; however, submitters will still be allowed to suspend the review period for a shorter amount of time if preferred. For a more detailed response to the comments regarding the amendments relating to suspensions of the review period, please see the Response to Comments document (Ref. 2).

As explained in this preamble, EPA is finalizing several different types of amendments in this rule, including amendments related to: commencement of manufacture or processing; required determinations and associated actions; terminology and definitions; notice information requirements; pre-screening procedures; correcting errors in notices; incomplete notices; notification of the receipt of new information; expiration of the LVE and LoREX review period; notification of LVE and LoREX holders regarding certain other actions involving their chemical substance; PFAS ineligibility for LVE and LoREX exemptions; certain PBT ineligibility for LVE and LoREX exemptions; and suspensions of the review period. Each type of amendment functions independently, serves a discrete purpose, and is intended to be severable from the other amendments. In the event of litigation staying, remanding, or invalidating a portion of EPA's amendments in this rule, EPA intends to preserve all other amendments in this rule to the fullest extent possible. For example, the amendment to the LVE and LoREX regulations making PFAS ineligible for such exemptions functions independently from the amendment to those regulations making certain PBTs ineligible for the exemptions, such that if either ineligibility provision were stayed or invalidated, it would have no effect on the other, and EPA intends that the other would remain effective. Similarly, any stay or invalidation of the amendment making PFAS ineligible for the LVE and LoREX exemptions would have no effect on amendments related to incomplete notices, and vice versa. These specific examples are not intended to be exhaustive, but rather illustrative of scenarios that reflect EPA's overarching intent that each type of amendment be severable.

Furthermore, within the broader category of amendments to notice information requirements, the rule includes a number of discrete amendments pertaining to different types of information. Each of these specific amendments to notice information requirements functions independently and is intended to be severable from the others. As an example, if amended information requirements regarding the categories of use of the chemical substance were to be stayed or invalidated, it would have no effect on amended information requirements regarding worker exposure, and vice versa.

The limited circumstance in which severability is not intended is where a single type of amendment involved changes to multiple paragraphs or sections of the regulations. For example, in cases where EPA is finalizing the same or similar amendment in multiple parts of the CFR for conformity (e.g., where an amendment to part 721, 723, or 725 is intended merely to conform to the same or similar amendment in part 720), severability is not intended between those provisions. In addition, were the amendment making PFAS ineligible for LVE and LoREX exemptions to be invalidated, the related amendment defining PFAS for purposes of that ineligibility provision would no longer be necessary or helpful. However, EPA does intend severability in the inverse scenario: if the definition of PFAS were stayed or invalidated, EPA intends severability of all other amendments, including the amendment making PFAS ineligible for LVEs and LoREX.

The following is a listing of the documents that are specifically referenced in this Federal Register notice. The docket includes these documents and other information considered by EPA, including documents that are referenced within the documents that are included in the docket, even if the referenced document is not physically located in the docket. For assistance in locating these other documents, please consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

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 a “significant regulatory action” as defined in Executive Order 12866, as amended by Executive Order 14094 (88 FR 21879, April 11, 2023). Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for Executive Order 12866 review. Documentation of any changes made in response to the Executive Order 12866 review is available in the docket. The EPA prepared an economic analysis of the potential impacts associated with this action. This analysis, “Economic Analysis for the Final Rule: Updates to New Chemicals Regulations under the Toxic Substances Control Act” (Ref. 1), is also available in the docket.

The information collection activities in this rule have been submitted to OMB for review and approval under the PRA (44 U.S.C. 3501 et seq. ). The Information Collection Request (ICR) document that EPA prepared has been assigned EPA ICR No. 1188.15 (Ref. 7). This ICR represents a revision to the currently approved ICR that covers the information collection activities contained in the existing regulations. The Economic Analysis covers the incremental changes from this action. You can find copies of the Economic Analysis and ICR in the docket, and the ICR is briefly summarized here.

Respondents/affected entities: Certain chemical manufacturers (including importers) and processors (see Unit I.A.).

Respondent's obligation to respond: Mandatory under TSCA section 5.

Estimated number of respondents: 560.

Frequency of response: On occasion.

Total estimated incremental burden: Estimates show that this rule will decrease existing approved ICR burden by 4,528 hours per year. Burden is defined at 5 CFR 1320.3(b).

Total estimated incremental cost: Estimates show that this rule will increase existing approved ICR costs by $203,150 per year. This includes $0 annualized capital or operation and maintenance costs.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR are listed in 40 CFR part 9. When OMB approves this ICR, the Agency will announce that approval in the Federal Register and publish a technical amendment to 40 CFR part 9 to display the OMB control number for the approved information collection activities contained in this final rule.

EPA did not receive any comments on the ICR revision that was posted with the proposed rule. EPA prepared a Response to Comments document (Ref. 2) that summarizes all the comments relevant to the proposal, including comments affecting the Agency's burden estimates related to the rule.

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 Agency's basis is briefly summarized here and is detailed in the Economic Analysis (Ref. 1).

The majority of firms that submit a TSCA section 5 notice will realize either no change or a decrease in costs associated with form submission. However, EPA expects that firms that submit LVE notices for PFAS will incur an estimated cost of approximately $61,049 per notice due to the greater burden and non-labor costs associated with submitting a PMN form. EPA estimates that 98 percent of small firms (184 firms) will have cost impacts of less than 1 percent of revenues, less than 1 percent (1 firm) will have cost impacts between 1 and 3 percent of revenues, and 1 percent (2 firms) will have cost impacts greater than 3 percent of revenues.

This action does not contain an unfunded mandate of $100 million (adjusted annually for inflation) or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. EPA has concluded that this action imposes no enforceable duty on any state, local or Tribal governments because, based on EPA's experience with reviewing TSCA section 5 actions, state, local and Tribal governments have not been impacted and EPA does not have any reasons to believe that any state, local, or Tribal government would engage in the activities such that they would be impacted by this rulemaking.

In addition, given that the estimated incremental cost on the private sector is expected to be less than $50,000 (Ref. 1), EPA has concluded that this rulemaking is not expected to result in expenditures by the private sector of $183 million or more in any one year ($100 million in 1995$ adjusted for inflation using the CDP implicit price deflator).

This action does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because 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 (65 FR 67249, November 9, 2000), because it will not have substantial direct effects on Tribal governments, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-201 of the Executive Order. 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 risks, EPA's Policy on Children's Health also does not apply. This procedural rule would align the implementing regulations codified at 40 CFR parts 720, 721, and 725 with amended TSCA and make additional updates based on existing policies or lessons learned from administering the New Chemicals Program since TSCA was amended in 2016.

Although this procedural rule itself would not directly affect the level of protection provided to human health or the environment, EPA expects that the rule would improve the Agency's consideration of risks to children—in furtherance of EPA's Policy on Children's Health—and other PESS. In turn, EPA anticipates that the amendments would help better inform the Agency's determinations for each new chemical substance or significant new use for which it received a notice under TSCA section 5(a)(1), pertaining to the likelihood of unreasonable risk to human health or the environment under known, intended or reasonably foreseen conditions of use. EPA uses an integrated approach that draws on knowledge and experience across disciplinary and organizational lines to identify and evaluate concerns regarding health and environmental effects, and exposure and release.

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 rulemaking does not involve technical standards under the NTTAA section 12(d), 15 U.S.C. 272.

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). This action is procedural in nature. Therefore, EPA believes that it is not practicable to assess whether the human health or environmental conditions that exist prior to this action result in disproportionate and adverse effects on communities with environmental justice concerns. Although this action does not concern human health or environmental conditions, EPA identifies and addresses environmental justice concerns by finalizing, among other things, the regulatory definition of PESS to include overburdened communities, the Agency believes that this action would assist EPA and others in determining the potential exposures, hazards and risks to overburdened communities associated with the manufacture, processing, distribution in commerce, use, or disposal of the new chemical substances and significant new uses of chemical substances subject to this rulemaking. EPA anticipates that the inclusion of overburdened communities among the PESS considered in the Agency's review of a TSCA section 5 submission would also enable the Agency, if necessary, to design appropriate future risk management actions to address an unreasonable risk that the Agency may determine is presented by that chemical substance and to consider how such risk management actions would affect communities with environmental justice concerns.

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

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

The Americans with Disabilities Act (ADA) directs the Architectural and Transportation Barriers Compliance Board (U.S. Access Board, or the Board) to issue minimum guidelines for accessible design to guide the U.S. Department of Justice (DOJ) and the U.S. Department of Transportation (DOT) in the development of ADA accessibility standards. See 42 U.S.C. 12204(a). On August 8, 2023, the Board issued its final rule on Public Rights-of-Way Accessibility Guidelines (PROWAG). (88 FR 53604).

Title II of the ADA sets forth accessibility requirements applicable to public entities. Under Title II, Part B, DOT is authorized to implement the ADA relating to nondiscrimination in the provision of public transportation services. See 42 U.S.C. 12149(a). The ADA directs DOT to adopt standards for accessible public transportation facilities that are “consistent with” final minimum accessibility guidelines issued by the Board. Id. at section 12149(b). Similarly, Title III of the ADA directs DOT to adopt regulations implementing the transportation provisions of Title III, applicable to private entities that provide specified public transportation services and provides that any standards adopted under such regulations must be “consistent with” final minimum accessibility guidelines adopted by the Access Board. Id. at sections 12186(a), (c).

Under these authorities, DOT issued a notice of proposed rulemaking (NPRM) to adopt the PROWAG into DOT's ADA regulations on August 22, 2024 (89 FR 67922). The NPRM proposed to adopt the entirety of the PROWAG into DOT's ADA regulations but noted that DOT's independent regulatory authority under the ADA extends only to the accessibility of public transportation facilities. See 42 U.S.C. 12149(a), 12186(a), (c). As a result, the NPRM proposed that in adopting the PROWAG into DOT's ADA regulations, DOT will apply only those provisions applicable to new construction and alterations of transit stops in the public right-of-way. PROWAG R210 requires transit stops and transit shelters to comply with technical requirements set forth in PROWAG R309. Elements required to be accessible under PROWAG R309 include the boarding and alighting area at a sidewalk or street-level transit stop or the boarding platform, pedestrian access routes (PARs) that connect altered boarding and alighting areas or altered boarding platforms with existing pedestrian circulation paths, and, if provided, transit shelters and PARs connecting transit shelters with boarding and alighting areas or boarding platforms. Other PROWAG provisions applicable to transit stops in the public right-of-way include: fare vending machines (R210); operable parts of other fixed elements (R210); detectable warnings for boarding platforms (R205.5) and sidewalk and street-level rail boarding and alighting areas (R205.6); pedestrian signs (R208); PARs between newly constructed transit stops and accessible elements, spaces, and pedestrian facilities required to be accessible (R203.2.1); alternate transit stops (R204.2); and benches (R209.6.1).

Because DOT's independent regulatory authority under the ADA extends only to the accessibility of public transportation facilities, DOT's authority does not extend to regulating the accessibility of other separate elements of the public right-of-way, such as on-street parking spaces, crosswalks, or sidewalks, with the exception of the elements mentioned above, as applied to transit stops. Such other elements in the public right-of-way fall under the jurisdiction of the Department of Justice under Title II, Part A, of the ADA.

In addition to seeking comments on DOT's proposal to adopt PROWAG into its ADA regulations, DOT also requested comments on specific issues. First, noting that DOT's ADA standards must be “consistent with” the Access Board's PROWAG, the Department asked whether its accessibility standards should differ from the Access Board's PROWAG by adopting modifications that provide greater accessibility than the PROWAG or that clarify application of certain PROWAG provisions. Specifically, DOT requested comments on whether it should add restrictions on certain transit stop designs that locate the transit boarding and alighting area so that it coincides with vehicular lanes, including bicycle facilities. The Department expressed concern that these types of transit stop designs may impede accessibility for individuals with disabilities.

The NPRM proposed, as well, to add definitions of “transit stop,” “public right-of-way,” and “alteration of a transit stop” to 49 CFR 37.3. The Department also proposed that a transit stop project located in the public right-of-way on which construction has begun, or for which all approvals for final design have been received, before the effective date of the final rule, would not be required to comply with DOT's PROWAG standards, but would otherwise be required to be readily accessible to and usable by individuals with disabilities. The Department also proposed an effective date of the final rule of 30 days after publication of the final rule.

As discussed in further detail below, DOT is proceeding with adopting the PROWAG into DOT's ADA regulations at 49 CFR part 37, without modification, as standards applicable to transit stops in the public right-of-way. In order to avoid duplication, since the entire text of the PROWAG is available in materials published by the Access Board, the Department is adopting the PROWAG into § 37.9 of the Department's ADA regulations at 49 CFR part 37 by cross-reference to 36 CFR part 1190.

DOT published its NPRM proposing to adopt the PROWAG into DOT's ADA regulations at 49 CFR part 37 on August 22, 2024. The comment period ended on September 23, 2024.

DOT received 88 comments in response to the NPRM. Out of the 88 comments considered, 61 commenters expressed general support for the proposed rule, while 27 commenters did not provide a general opinion but rather focused their comments on specific issues. No commenters expressed general opposition to the proposed rule.

The greatest number of comments on the NPRM concerned DOT's request for comments on whether DOT should consider adding restrictions on certain transit stop designs that locate the transit boarding and alighting area so that it coincides with vehicular lanes, including bicycle facilities. The PROWAG does not currently address such designs, and DOT expressed concern that co-location of the boarding area with a vehicular lane, including a bicycle lane, may put a transit user with disabilities at risk of being struck while waiting to board or while alighting from a transit vehicle. The Department sought comment on whether allowing boarding and alighting areas to overlap vehicular lanes presents accessibility concerns, and whether it should consider adding a provision to R309.1 when it adopts the PROWAG into its standards restricting such co-location. DOT also sought comment on whether there are solutions short of prohibiting co-location that would address accessibility concerns, such as alternative designs that prevent vehicular passage when riders are boarding or alighting from a transit vehicle.

DOT received comments from forty-four entities opposed to adding restrictions on transit stop designs that provide for overlap between boarding and alighting areas and bicycle lanes. Those entities included ten State departments of transportation (State DOTs), fourteen local public entities, four public transit providers, three disability advocacy groups, eight transportation-related organizations, two consultant groups, and three individuals. Arguments against adding restrictions on these types of transit stop designs included the following: (1) several entities that have used such designs reported no or minor instances of conflicts between cyclists or micromobility users ( e.g., scooters) and transit users; (2) even if such conflict does exist, numerous design guidelines have been developed that minimize the potential for conflicts between transit riders and vehicles while retaining the key design features of multimodal transit boarding and alighting areas; (3) such designs are an emerging area of practice that would benefit from increased coordination and research; (4) the addition of restrictions would impact the scope of currently active bike lane projects and create additional barriers to their completion; and (5) prohibition of co-location would add more complexity to future active transportation projects, especially in constrained environments, and negatively impact the ability of entities to meet environmental and Vision Zero goals. Commenters also expressed opposition to DOT taking any action in this area in the absence of proposing specific regulatory language.

More specifically, several entities, acknowledging the potential for transit user—vehicular conflicts where transit stop designs provide overlap between vehicle lanes and the boarding and alighting area, argued that restricting such designs would deprive entities of necessary flexibility to accommodate all users of limited right-of-way and pointed to existing design guidelines from around the country that they contend effectively mitigate conflict concerns. One transit agency commented that it undertook its own design process for transit stops that could safely accommodate pedestrians, transit users, and cyclists and that, working alongside accessibility advocates, transit experts, and active transportation advocates, arrived at a design that has been implemented in thirty locations. The entity reported few incidents between cyclists, micromobility users, and transit riders at these locations.

One local public entity reported using an overlapping transit stop/bike lane design at over forty locations with no record of reported pedestrian-cyclist accidents at such locations. The entity noted that through monitoring and evaluation, as well as consultation with the local disability community, it has continued to refine shared stop designs to promote safe and predictable interactions between bicyclists and bus customers. Other entities commented that research should continue to better inform the conversation before any regulatory action might be taken. The three disability advocacy groups that opposed regulatory restrictions at this time encouraged DOT to monitor ongoing research.

DOT received comments from fifteen entities in favor of adding restrictions on the co-location of boarding and alighting areas with vehicular lanes. These entities include ten disability advocacy groups, one State DOT, three local public entities, and one public transit provider. These entities generally contended that designs that allow overlap of boarding areas with vehicular lanes ( e.g., bike lanes) present significant accessibility and safety concerns for people with disabilities, including those who are blind or have low vision, warranting restrictions through this rulemaking.

One disability advocacy group shared the concerns that DOT had noted about co-located boarding and alighting areas and bicycle lanes and noted that there was at least one instance in their community of a cyclist colliding with and injuring a transit rider alighting from a bus. This commenter emphasized that shared transit stop areas are becoming increasingly dangerous as bike lanes are used more frequently by individuals using electric bikes, electric scooters, and motor scooters, which can travel at much greater speeds. Another disability advocacy group added that although many cyclists and micromobility users act responsibly at conflict points, the personal experiences of members is that many cyclists and micromobility users do not reliably yield to pedestrians or transit riders at shared transit stop locations. Another commenter noted that shared transit stop designs can cause confusion for individuals with vision disabilities and increase safety concerns which may encourage some individuals with disabilities to avoid certain transit stops or shift their mode of travel to curb-to-curb service.

Many of the same commenters who encouraged DOT to add regulatory restrictions on shared or overlapping transit stops also encouraged DOT to restrict or provide further guidance on “floating” transit stop islands, a design in which the transit stop is set away from the sidewalk with a bike lane channel in between the sidewalk and the transit stop island. Commenters noted that in addition to transit stops that overlap with vehicular lanes, transit stop islands also present challenges and safety concerns for individuals with disabilities, particularly those who are blind or have low vision, who must cross the bicycle lane to reach the transit stop. Commenters stated that individuals with vision disabilities struggle to detect approaching cyclists at such locations and lack customary physical cues signaling the presence of a bus stop.

DOT continues to have concerns, as expressed in the NPRM, about the accessibility of transit stop designs that locate the transit boarding and alighting area so that it coincides with vehicular lanes, including bicycle facilities. These concerns were echoed primarily by disability advocacy groups, but also by commenters that opposed DOT taking any regulatory action at this time. In fact, most commenters who opposed regulatory restrictions recognize the inherent conflict that exists by allowing vehicular lanes to overlap with boarding and alighting areas but argue that allowance of design flexibility, particularly in constrained right-of-way environments common predominantly to dense urban areas, is vital to allow safe accommodation of travelers as a whole. They note that there is little data showing that the use of overlapping transit stop designs has led to major conflicts between transit riders and cyclists or micromobility users and point to existing design guides that have been developed to minimize the potential for major conflicts at such locations.

Despite DOT's ongoing concerns about transit stop designs that locate the transit boarding and alighting area so that it coincides with vehicular lanes, DOT will not add any regulatory restrictions on such designs at this time. DOT recognizes the relatively recent development of these types of designs and the ongoing research taking place to identify the impact of such designs on transportation in general, including efforts to develop safe multimodal networks, but also more specifically on individuals with disabilities. DOT is encouraged by the number of comments that reflected public entities working with individuals with disabilities to address safety and accessibility concerns in the design of transit stops and encourages continued coordination among all transportation stakeholders on these issues.

DOT also recognizes the concerns expressed by many commenters about the accessibility and safety of floating transit stop islands, including comments that urged further research on the use of wayfinding aids, such as tactile warning surface indicators, tactile directional indicators, and tactile warning delineators. DOT declines to take any action in this final rule with respect to floating transit stop islands but encourages further research on the accessibility of such designs.

DOT received seven comments regarding the proposed definition of transit stop. Three disability advocacy groups commented that DOT should remove the language in the definition limiting its application to stops used by transportation vehicles that operate on a fixed route or scheduled route. These groups argued that by focusing only on stops used by vehicles that operate on a fixed or scheduled route, the definition does not account for pick-up and drop-off locations used by demand responsive public transportation services. These commenters noted that many public transportation providers have begun and are likely to continue to deploy a wide range of demand-responsive transit models beyond paratransit service that should be addressed by DOT's rule. Two transportation organizations commented that the definition of transit stop should expressly include the need for a pedestrian access route connecting to existing pedestrian circulation paths. One State DOT supported the proposed definition of transit stop, and one local public entity suggested that the definition of transit stop should include all elements required to be accessible at a transit stop.

As DOT explained in the NPRM, the ADA directs DOT to adopt standards for accessible public transportation facilities that are “consistent with” final minimum accessibility guidelines issued by the Board. Id. at section 12149(b). Similarly, Title III of the ADA directs DOT to adopt regulations implementing the transportation provisions of Title III, applicable to private entities that provide specified public transportation services and provides that any standards adopted under such regulations must be “consistent with” final minimum accessibility guidelines adopted by the Access Board. Id. at sections 12186(a), (c).

Public transportation facilities subject to Title II of the ADA and DOT's ADA regulations at 49 CFR part 37 are those facilities used in the provision of designated public transportation, which is defined in DOT's ADA regulations as “transportation provided by a public entity (other than public school transportation) by bus, rail, or other conveyance (other than transportation by aircraft or intercity or commuter rail transportation) that provides the general public with general or special service, including charter service, on a regular and continuing basis.” 49 CFR 37.3. These facilities include bus and other transit stops in the public right-of-way operated by public transit agencies.

Public transportation facilities subject to Title III of the ADA and DOT's ADA regulations at 49 CFR part 37 include those facilities located in the public right-of-way used in the provision of specified public transportation, which is defined in DOT's ADA regulations as “transportation by bus, rail, or any other conveyance (other than aircraft) provided by a private entity to the general public, with general or special service (including charter service) on a regular and continuing basis.” 49 CFR 37.3.

DOT's intent in the NPRM was to bridge the gap between the language used in its current regulations at 49 CFR part 37 regarding designated and specified public transportation and the language in the PROWAG, which does not refer to designated and specified public transportation but contains provisions specific to transit stops. To bridge this gap, DOT proposed adopting a definition of “transit stop” that mirrors the definition of transit stop in the PROWAG but also seeks to clarify that a transit stop is a transportation facility used in the provision of designated or specified public transportation.

The PROWAG defines “transit stop” as: “An area that is designated for passengers to board or alight from buses, rail cars, and other transportation vehicles that operate on a fixed route or scheduled route, including bus stops and boarding platforms. This definition does not include intercity rail except where a stop is located in the public right-of-way.” PROWAG R104. DOT proposed adding a sentence to the end of this definition as follows: “A facility used in the provision of designated or specified public transportation in the public right-of-way is a transit stop.”

As noted above, three disability advocacy groups commented that DOT's proposed definition of “transit stop,” by focusing only on stops used by transportation vehicles that operate on a fixed route or schedule route, does not address stops in the public right-of-way that may be used by providers of demand responsive designated or specified public transportation. In response, DOT notes that the definition of “transit stop” in the PROWAG is intended only to cover those stops used by public transportation vehicles that serve fixed or scheduled routes. The bus boarding and alighting area dimensions, boarding platform requirements, and other elements included at R309 of the PROWAG were all developed to address the accessibility of stops used by public transportation vehicles that serve fixed or scheduled routes. Those specific requirements are not intended to apply to other locations in the public right-of-way that may be used by demand responsive designated or specified public transportation vehicles.

The PROWAG, however, includes provisions for other pick-up and drop-off locations in the public right-of-way. The PROWAG defines a “passenger loading zone” as “[a]n area that is specifically designed or designated for loading and unloading passengers, but that does not primarily serve vehicles on a fixed or scheduled route.” By noting that a passenger loading zone does not primarily serve vehicles on a fixed or scheduled route, the PROWAG distinguishes a passenger loading zone from a transit stop. The PROWAG further provides that “permanently designated passenger loading zones” other than transit stops, must comply with accessibility requirements. PROWAG at R212. The Access Board described the application of section R212 in further detail in the preamble to its final PROWAG rule: “Often, permanent passenger loading zones in the public right-of-way are comprised of a sidewalk cut out so that vehicles can pull out of the traveled way to unload passengers. However, a permanently affixed sign designating a passenger loading zone is sufficient to bring the loading zone under coverage of this rule. Passenger loading zones that vary with the time of day or the occupancy of a particular retail space, such as valet stands that are provided only during certain hours, are not considered permanently designated and are therefore not subject to PROWAG.”

DOT acknowledges that demand responsive designated or specified public transportation vehicles may use passenger loading zones in the public right-of-way, but such loading zones are not necessarily exclusively designed for use by such vehicles; rather, they may often be used by individual, private vehicles. In developing its NPRM to adopt PROWAG into its ADA regulations, DOT viewed the scope of “passenger loading zones” as falling under DOJ's ADA jurisdiction over all other pedestrian facilities in the public right-of-way, and, thus, DOT did not propose covering such facilities under its ADA rule. While DOT declines to finalize standards at this time concerning coverage of passenger loading zones applicable to providers of designated or specified transportation, DOT recognizes that this is an area of overlapping jurisdiction with DOJ and may consider proposing standards in this area in a future rulemaking. Even in the absence of enforceable standards, the ADA requires new and altered facilities, including facilities used in the provision of public transportation, to be accessible to and usable by individuals with disabilities. See 42 U.S.C. 12146, 12147. DOT encourages entities to follow the PROWAG guidelines applicable to passenger loading zones.

In response to these comments, however, DOT also acknowledges that a portion of its proposed definition of “transit stop” should be removed. The sentence reading “[a] facility used in the provision of designated or specified public transportation in the public right-of-way is a transit stop” is overbroad and unnecessary. A transit stop is a facility used in the provision of designated or specified public transportation, but not all facilities used in the provision of designated or specified public transportation are transit stops. As discussed above, a passenger loading zone may be used in the provision of designated or specified public transportation. As a result, DOT will remove this sentence from its definition of “transit stop.”

Regarding other aspects of the proposed definition of transit stop, two transportation organizations commented that the definition of transit stop should expressly include the need for a pedestrian access route connecting to existing pedestrian circulation paths, and one local public entity suggested that the definition of transit stop should include all elements required to be accessible at a transit stop. Both of these concerns derive from DOT's proposed definition of transit stop identifying some but not all elements of transit stops for which PROWAG accessibility requirements would apply under DOT's final rule. As noted previously, the PROWAG defines “transit stop” as “[a]n area that is designated for passengers to board or alight from buses, rail cars, and other transportation vehicles that operate on a fixed route or scheduled route, including bus stops and boarding platforms. This definition does not include intercity rail except where a stop is located in the public right-of-way.” DOT proposed adopting a definition of “transit stop” into its regulations mirroring the PROWAG definition but adding that “[t]ransit stops include, if provided, transit shelters and pedestrian circulation connections between transit shelters and bus boarding and alighting areas or boarding platforms they serve.” The local public entity commenter expressed that by adding a sentence that includes transit shelters and pedestrian circulation connections in the definition of transit stop but excludes other elements that must be accessible if provided at transit stops, such as fare vending machines and benches, may confuse the public. Similarly, the two transportation organizations that commented on this aspect of the definition of transit stop felt that the definition should make clear the need for a pedestrian access route connecting to existing pedestrian circulation paths.

Upon consideration of these comments, DOT has decided to remove the additional sentence about transit shelters and pedestrian circulation connections from the definition of “transit stop” in DOT's final rule. In this way, the definition of “transit stop” in DOT's final rule tracks more closely with the definition of “transit stop” in the PROWAG. Other elements required to be accessible if provided at a transit stop are set forth clearly in the PROWAG itself, which is adopted into DOT's regulation by reference. As set forth in the NPRM, elements required to be accessible at a transit stop in the public right-of-way under PROWAG R309 include the boarding and alighting area at a sidewalk or street-level transit stop or the boarding platform, pedestrian access routes (PARs) that connect altered boarding and alighting areas or altered boarding platforms with existing pedestrian circulation paths, and, if provided, transit shelters and PARs connecting transit shelters with boarding and alighting areas or boarding platforms. The PROWAG contains other provisions applicable to transit stops in the public right-of-way that would be subject to DOT enforcement under this rule: fare vending machines (R210); operable parts of other fixed elements (R210); detectable warnings for boarding platforms (R205.5) and sidewalk and street-level rail boarding and alighting areas (R205.6); pedestrian signs (R208); PARs between newly constructed transit stops and accessible elements, spaces, and pedestrian facilities required to be accessible (R203.2.1); alternate transit stops (R204.2); and benches (R209.6.1).

DOT proposed to adopt a definition of “alteration of a transit stop” providing: “ Alteration of a transit stop means a change to or an addition of a transit stop in an existing, developed public right-of-way that affects or could affect pedestrian access, circulation, or usability.” DOT received eight comments regarding the proposed definition. Four State DOTs and one local public entity commented that DOT should further clarify specific activities that would constitute an “alteration of a transit stop.” One public transit provider commented that DOT should clarify that an “alteration of a transit stop” only includes activity that involves concrete work. One disability advocacy group commented that the definition of “alteration of a transit stop” should be consistent with the existing definition of “alteration” in DOT's regulations at 49 CFR part 37. And, last, one local public entity commented that the definition of “alteration of a transit stop” should be revised to read “alteration or addition of a transit stop” to ensure that practitioners understand that an addition of a transit stop to existing developed right-of-way is considered an alteration under PROWAG and not new construction.

More specifically, with respect to the types of activities that would be considered an alteration of a transit stop under the rule, one commenter asked whether resurfacing a road adjacent to a transit stop would be considered an alteration of the transit stop requiring the entire transit stop to be brought into compliance, to the maximum extent feasible, with PROWAG transit stop requirements. Similarly, another commenter asked if activities such as repairing a broken post, or fixing or replacing a sign, would trigger an obligation to bring the entire transit stop into compliance with PROWAG requirements. Commenters expressed concern that if small changes to individual elements at a transit stop triggered an obligation to ensure that the entire transit stop meets PROWAG standards, entities may choose to remove particular stops altogether rather than improve them.

DOT agrees with the commenters that the public needs clarification on what activities explicitly constitute an “alteration” under the proposed definition of “alteration of a transit stop” and the scope of improvements that would be required when a transit stop or part of a transit stop is altered. DOT specifically proposed a definition of “alteration of a transit stop” to distinguish alterations of such facilities from the definition of “alteration” in DOT's current ADA regulations at 49 CFR 37.3, which applies to alterations of facilities that are buildings or on sites. Thus, to the extent that one commenter suggested that the definition of “alteration of a transit stop” should be harmonized with the existing definition of “alteration,” DOT declines to take that step because the definition of “alteration” that applies to buildings or sites contains language that is specific to those types of facilities. A separate definition of “alteration of a transit stop” is necessary.

DOT notes that the existing definition of “alteration” at 49 CFR 37.3 contains much more detail about the types of activities considered to be alterations of buildings or sites than DOT proposed for the definition of “alteration of a transit stop.” Specifically, the existing definition of alteration is: “Alteration means a change to an existing facility, including, but not limited to, remodeling, renovation, rehabilitation, reconstruction, historic restoration, changes or rearrangement in structural parts or elements, and changes or rearrangement in the plan configuration of walls and full-height partitions. Normal maintenance, reroofing, painting or wallpapering, asbestos removal, or changes to mechanical or electrical systems are not alterations unless they affect the usability of the building or facility.” This definition is a modification of the definition of “alteration” in the Access Board's 2004 ADA Accessibility Guidelines, which provided examples of the types of modifications to a facility that would constitute an alteration.

Similarly, DOT adopted its proposed definition of “alteration of a transit stop” from the PROWAG's definition of “alteration,” which provides that an alteration or the term altered means: “A change to or an addition of a pedestrian facility in an existing, developed public right-of-way that affects or could affect pedestrian access, circulation, or usability.” In adopting the PROWAG, the Access Board deliberately chose to omit detailed examples of the types of activities that would be considered alterations, choosing instead to allow DOT and DOJ, the ADA enforcement agencies, to provide necessary clarification. See Accessibility Guidelines for Pedestrian Facilities in the Public Right-of-Way, 88 FR 53604, 53608 (Aug. 8, 2023). Because the term “alteration of a transit stop” narrows the scope of the types of activities that could be covered as compared with the general definition of “alteration” in the PROWAG, DOT believes it is appropriate to provide clarification of the scope of covered alterations and more detailed examples of “alteration of a transit stop” in the regulatory text as opposed to relying on the issuance of guidance statements at some future date, while not precluding the possibility of issuing further clarifying guidance.

Accordingly, DOT is adopting the following definition of “alteration of a transit stop” in this final rule: “ Alteration of a transit stop means a change to or an addition of a transit stop, or a part thereof, in an existing, developed public right-of-way that affects or could affect pedestrian access, circulation, or usability. Alterations include, but are not limited to, the reconstruction of an existing transit stop, the addition of a new transit shelter, the addition of a new bench, fare vending machine, or transit sign that identifies a stop or route, reconfiguring the interface of a transit stop with the street or sidewalk network, such as adding floating bus stops, adding a prepared surface for boarding and alighting, and rearrangement of transit stop elements, such as benches or fare vending machines. Normal maintenance such as painting transit shelters, replacing damaged transit shelter windows or screens, repairing a fare vending machine, replacing damaged sign posts, repairing existing curb, or repairing damaged benches or trash cans, are not alterations unless they affect the usability of the transit stop. Permanent closure of a transit stop due to service changes is also not an alteration of a transit stop.”

It is not possible to provide examples of all potential modifications to a transit stop in the regulatory definition of “alteration of a transit stop,” but DOT believes that the examples provided in this final rule illustrate the way particular modifications should be addressed. In addition, in response to comments regarding whether an alteration of an element of a transit stop necessarily triggers the need to bring the entire transit stop into compliance with PROWAG standards at the same time, DOT is modifying the definition of “alteration to a transit stop” to mean “a change to or an addition of a transit stop, or a part thereof ” (emphasis added). In making this revision, DOT intends to focus compliance efforts in the first instance on the part of the transit stop that is being altered. This phrasing is consistent with language in the ADA statute, which provides that alterations to an existing facility, or part thereof, must be made in such a manner that to the maximum extent feasible, the altered portions of the facility are readily accessible to and usable by individuals with disabilities. 42 U.S.C. 12147(a). For example, should a public entity add a new bench at a transit stop, which is included as an example of an “alteration of a transit stop,” only those provisions of PROWAG applicable to benches added to an existing right-of-way would be required to be made accessible at the transit stop to the maximum extent feasible where existing physical constraints make compliance with applicable requirements technically infeasible. This would include the requirements for benches at transit stops set forth at R209.6.1 but would also include the provisions at R202.2 which require pedestrian access routes to connect altered pedestrian facilities to an existing pedestrian circulation path (a transitional segment may be used in the connection). Addition of a new bench at a bus stop would require the bench to be connected by a PAR to an existing pedestrian circulation path but would not trigger the requirement to bring the bus boarding and alighting area into compliance with PROWAG standards.

Similar approaches would be taken to other alterations of elements of a transit stop. If an entity adds a bus boarding and alighting area with a prepared surface to a bus stop that previously did not include a prepared surface ( e.g., a stop identified only by a sign in the ground), the bus boarding and alighting area would be required to be made accessible to the maximum extent feasible where existing physical constraints make compliance with applicable requirements technically infeasible. The entity adding the new bus boarding and alighting area would be required to provide necessary PARs connecting the new bus boarding and alighting area to existing pedestrian circulation paths under PROWAG R309.1.3.2, which provides that “[i]n alterations, boarding and alighting areas and boarding platforms shall be connected to existing pedestrian circulation paths by pedestrian access routes complying with R302.”

DOT proposed to include an exception in the regulation that would exempt from compliance with the final rule those transit stop projects located in the public right-of-way on which construction has begun or for which all approvals for final design have been received before the effective date of the final rule. DOT received two comments from State DOTs and one comment from a local public entity that urged DOT to exempt from compliance with the final rule all transit projects in the planning stage at the time the final rule becomes effective. One of the State DOTs commented that projects in the planning and design stages, but which have not yet completed final design, may have already completed right-of-way acquisition or signed contracts with utility companies and that the requirement to comply with newly adopted standards could result in delays to such projects.

DOT disagrees with the commenters' recommendation to exempt transit projects in the planning and design stages from compliance with the newly adopted PROWAG standards at the time of the effective date of the final rule. The exemption for projects on which construction has begun or for which final design has been completed before the effective date of the rule strikes an appropriate balance for entities affected by the rule by recognizing the investment of resources in projects that have advanced to final design or construction versus ensuring that the benefits of the newly adopted standards are realized for projects that remain only in the planning or design phase. DOT followed this same approach with respect to compliance with the revised ADA Accessibility Guidelines that DOT adopted in 2006. DOT will adopt the exemption as proposed in the NPRM. DOT notes, however, that projects for which all final design approvals have been received or for which construction has begun at the time of the effective date of the final rule still must ensure that the elements of the transit stop affected by the transit project (either new construction or alteration) are accessible to and usable by individuals with disabilities even if they are not required to comply with the specific standards adopted by DOT in this final rule. See, e.g., 42 U.S.C. 12147(a).

DOT proposed in the NPRM that its final rule adopting PROWAG into its ADA regulations at 49 CFR part 37 would become effective 30 days after issuance of the final rule. In support of this proposal, DOT noted the public and regulated entities have been aware of the proposed PROWAG's provisions related to transit stops since 2011, which are generally unchanged in the PROWAG, and that many entities have relied on the Department of Justice's similar 2010 ADA Standards and DOT's 2006 ADA Standards for boarding and alighting areas or boarding platforms as references for transit stops in the public right-of-way. As a result, DOT stated that it did not anticipate entities requiring additional time to become familiar with the Department's ADA public right-of-way standards before compliance is required for new construction and alterations.

DOT received twelve comments in favor of its proposed 30-day effective date. Five of those commenters favored the 30-day effective date outright, including one disability advocacy group, three local public entities, and one transportation organization. Seven other commenters endorsed the 30-day effective date provided that DOT did not adopt any modifications to the PROWAG, particularly with respect to placing restrictions on the use of transit stop designs that place the bus boarding and alighting area so that it overlaps with vehicular lanes, including bicycle lanes.

DOT received six comments opposed to the 30-day effective date. One State DOT proposed setting a 90-day effective date. One State DOT, one local public entity, one transportation organization, and one public transit provider proposed a 12-month effective date. Last, one State DOT expressed opposition to the 30-day effective date but did not propose an alternative. The commenters opposed to the 30-day effective date generally expressed that although the Access Board's PROWAG NPRM was issued in 2011 and similar standards for transit stops at sites under the ADA Accessibility Guidelines (ADAAG) have been in place since 1991, the length of time since the 2011 PROWAG NPRM to the present has created ambiguity over how entities should approach the accessibility of transit stops in the public right-of-way.

DOT disagrees with commenters who proposed a later effective date than the 30-day effective date in the proposed rule. The Access Board issued its final PROWAG rule in August 2023, setting minimum guidelines for the accessibility of pedestrian facilities in the public right-of-way, including transit stops, and the ADA requires DOT to adopt standards for accessible public transportation facilities that are “consistent with” the Access Board's minimum guidelines. So, covered entities have been aware for more than a year that DOT's accessibility standards for transit stops would provide accessibility requirements no less than the guidelines in PROWAG. Moreover, as reflected in the Regulatory Impact Analysis accompanying this final rule, even in the absence of enforceable standards before issuance of this final rule, public entities have had a general obligation to ensure that their facilities are readily accessible to and usable by individuals with disabilities, and to otherwise not discriminate against individuals on the basis of disability. As such, covered entities have generally looked to the Department of Justice's 2010 ADA Standards, 1 the Federal Transit Administration's ADA Circular, 2 or other references for guidance on how to meet that general accessibility requirement. A review of these sources shows that they provide specifications substantially similar to the final PROWAG rule. In addition, guidance from some of the largest transit agencies indicated that these transit agencies either cite DOT's or DOJ's existing ADA standards applicable to facilities on sites (2004 ADAAG) with regard to accessibility of transit stops or otherwise refer to ADA accessibility requirements in their publications. For more information and analysis on the current state of industry practice, please see the Regulatory Impact Analysis, which is available in the docket for this rulemaking.

Entities have had sufficient time to anticipate the standards that DOT is adopting in the final rule. This is especially the case as DOT is not proposing any modifications to PROWAG in adopting PROWAG in this final rule. The majority of entities that commented on this issue support this approach, and the rule retains an exception from compliance with the PROWAG standards for those projects on which construction has begun, or all approvals for final design have been received before the effective date. DOT is adopting a 30-day effective date from the date of publication of this rule.

DOT received several comments requesting that DOT make revisions to various PROWAG provisions that are unrelated to the accessibility of transit stops in the public right-of-way. For instance, one individual and one consulting firm requested clarification about the change of grade requirements at PROWAG R304.5.2 for curb ramps and blended transitions at gutters or streets. Another individual commented on the pedestrian signal phase timing requirements at PROWAG R306.2. Two disability advocacy groups and one State DOT commented on PROWAG provisions related to roundabouts. These and other similar comments pertain to provisions of PROWAG that fall within DOJ's ADA jurisdiction and fall outside of DOT's limited ADA jurisdiction over facilities related to the delivery of designated or specified public transportation. These PROWAG provisions will become enforceable once they are adopted, with or without modifications, as mandatory standards under the ADA by DOJ.

The Office of Management and Budget (OMB) has determined that this rulemaking is not a significant regulatory action within the meaning of E.O. 12866, as amended by E.O. 14094 (“Modernizing Regulatory Review”). The rule will not have an annual effect on the economy of $200 million or more. The rule will not adversely affect in a material way the economy, any sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or Tribal governments or communities. In addition, the changes will not interfere with any action taken or planned by another agency and would not materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs.

DOT estimates that this rulemaking will have minimal implementation costs, due to the close alignment between the requirements of the rule and existing guidance and industry practices for transit stops in the public right-of-way. This is presented in further detail in the accompanying Regulatory Impact Analysis (RIA) document.

The rule benefits pedestrians with disabilities by establishing a clear set of accessible design and construction standards for transit stops in the public right-of-way with which public entities would be required to comply. The rule will ensure a more uniformly accessible public transportation system, which facilitates independent living and economic self-sufficiency. Other pedestrians may experience ancillary benefits as well if facilities are easier to use. These benefits are unlikely to be quantified or monetized. The full RIA is available in the docket.

In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601-612), DOT has reviewed the analysis conducted by the Access Board and published with the final rule (88 FR 53604, August 8, 2023), and evaluated the effects of this rule on small entities and has determined that it is not anticipated to have a significant economic impact on a substantial number of small entities. DOT estimates that this rulemaking will have minimal implementation costs, due to the close alignment between the requirements of the rule and existing guidance and industry practices for transit stops in the public right-of-way. In addition, many small governmental jurisdictions are located in rural areas and do not have transit facilities that will be impacted by this rulemaking. This is presented in further detail in the accompanying RIA document. Therefore, the Department certifies that the rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act does not apply to proposed or final rules that enforce constitutional rights of individuals or enforce statutory rights that prohibit discrimination on the basis of race, color, sex, national origin, age, handicap, or disability. Since DOT's adoption of the 2023 Accessibility Guidelines for Pedestrian Facilities in the Public Right-of-Way Guidelines is done pursuant to the ADA, which prohibits discrimination on the basis of disability, an assessment of the rule's effect on State, local, and Tribal governments, and the private sector is not required.

DOT's rule will be applicable to public entities, including State and local governments, but any federalism implications are not significant. Public entities have been subject to the ADA since 1991, and the many public entities that receive Federal financial assistance have also been required to comply with the requirements of section 504 of the Rehabilitation Act of 1973. Both statutes have required accessibility of transit stops, even in the absence of enforceable standards. Many public entities, in fact, have independently applied the proposed 2011 PROWAG or similar transit stop provisions in DOT's 2006 ADA Standards or DOJ's 2010 ADA Standards. Thus, the adoption of PROWAG into DOT's ADA regulations, enforceable only with respect to transit stops, will not significantly alter existing practice. In addition, public entities previously had the opportunity to provide input and feedback during the development of the Access Board's PROWAG rule. As a result, DOT has determined that this rule will not have sufficient federalism implications to warrant the preparation of a federalism assessment. This final rule will not have a substantial effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among various levels of government.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq. ), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct, sponsor, or require through regulations. DOT has determined that this final rule does not contain collection of information requirements for the purposes of the PRA.

The Department has analyzed the environmental impacts of this action pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq. ) and has determined that it is categorically excluded pursuant to DOT Order 5610.1C, Procedures for Considering Environmental Impacts (44 FR 56420, Oct. 1, 1979). Categorical exclusions are actions identified in an agency's NEPA implementing procedures that do not normally have a significant impact on the environment and therefore do not require either an environmental assessment (EA) or environmental impact statement (EIS). See 40 CFR 1501.4(a). Paragraph 4(c)(5) of DOT Order 5610.1C adopts by reference the categorical exclusions for all DOT Operating Administrations. This action is covered by the categorical exclusion listed in the Federal Transit Administration's implementing procedures, “[p]lanning and administrative activities that do not involve or lead directly to construction, such as: . . . promulgation of rules, regulations, directives . . .” 23 CFR 771.118(c)(4) and Federal Highway Administration's implementing procedures, “[p]romulgation of rules, regulations, and directives.” 23 CFR 771.117(c)(20).

In analyzing the applicability of a categorical exclusion, the agency must also consider whether extraordinary circumstances are present that would warrant the preparation of an EA or EIS. 40 CFR 1501.4(b). This rulemaking concerns civil rights protection for individuals with disabilities. The Department does not anticipate any environmental impacts, and there are no extraordinary circumstances present in connection with this rulemaking.

DOT has analyzed this rule in accordance with the principles and criteria contained in E.O. 13175, “Consultation and Coordination with Indian Tribal Governments.” The rule establishes a regulation on the accessibility of transit stops in the public right-of-way.

This measure applies to public entities, as defined under the ADA, which does not include Tribal governments or other Tribal entities, and it will not have substantial direct effects on one or more Indian Tribes, will not impose substantial direct compliance costs on Indian Tribal governments, and will not preempt Tribal laws. Accordingly, the funding and consultation requirements of E.O. 13175 do not apply and a Tribal summary impact statement is not required.

E.O. 12898 requires that each Federal agency make achieving environmental justice part of its mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minorities and low-income populations. DOT has determined that this rule does not raise any environmental justice issues.

A RIN is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross reference this action with the Unified Agenda.

For the reasons set forth in the preamble, DOT amends 49 CFR part 37, as follows:

NHTSA established 49 CFR part 563 (part 563) in 2006, setting forth requirements for data elements, data capture and format, data retrieval, and data crash survivability of EDRs. 1 Part 563 does not mandate EDRs on vehicles, but is instead an “if equipped” standard applying only to light vehicles required to have frontal air bags that a manufacturer chooses to voluntarily equip with EDRs. 2 Part 563 ensures all EDRs subject to the regulation capture the same core set of data elements in a crash, standardizes the parameters (format, duration, etc.) of captured data elements, and sets minimum requirements for data survivability. 3 Part 563 further requires that manufacturers of vehicles with EDRs subject to part 563 make commercially available a tool for the purpose of downloading  4 the data collected by the EDR.

This rulemaking amends current NHTSA regulations regarding EDRs under part 563 by extending the capture and recording period for timed data metrics from 5 seconds of pre-crash data at a sample rate of 2 Hz to 20 seconds of pre-crash data at a sample rate of 10 Hz ( i.e., an increase from 2 samples per second to 10 samples per second). The objective of this amendment is to capture and record the appropriate amount of data to provide sufficient vehicle-related data to assist investigations of the cause of motor vehicle crashes. This rulemaking is issued in response to a statutory mandate under section 24303 of the Fixing America's Surface Transportation Act (FAST Act), Pub. L. 119-14 (Dec. 4, 2015).

The increased sample rate required by this final rule will provide crash investigators a better understanding of the sequence of pre-crash actions, and the increased recording duration will provide more details on actions taken prior to crashes. Specifically, with the implementation of this final rule's increased recording duration, actions such as running a stop sign or red light could be captured in full and included in crash reconstruction when supplemented with roadway and traffic control information. The increased recorded duration could also help capture any corrective maneuvers taken by a vehicle prior to an initial road departure. The increased data recording frequency required by this final rule will help clarify the interpretation of recorded pre-crash information, including braking and steering actions taken by a vehicle. It will also help reduce potential uncertainty related to the relative timing of recorded data elements, and assist with the identification of potential pedal misapplication.

Event data recorders are devices installed in a vehicle to capture and record technical information immediately before and during a crash on the status and operation of vehicle systems. An EDR reserves a random access memory (RAM) buffer the size of one EDR record to locally store data before the data are written to memory. The data are typically stored using Electrically Erasable Programmable Read-Only Memory (EEPROM) or data flash memory, 5 both of which are types of non-volatile memory. The RAM buffer is typically embedded in the microprocessor, a component of the EDR that may require an upgrade if the processing capabilities are insufficient to meet the new EDR data capture requirements. During a crash, one or more capacitors are used as backup power (energy reserve) to power the EDR, as the main battery is assumed to be cut off. The capacitor(s) must have sufficient energy to power the entire transfer of data. These components are housed in packaging and manufacturer development and validation stages are aimed at ensuring the EDR functions as intended.

EDR event data are permanently recorded at the end of a specified event. In most cases, data are captured during events meeting a pre-determined threshold of severity or in events severe enough to cause air bag deployment. This information can aid crash investigators in assessing the performance of specific safety equipment, including event air bag deployment strategies, air bag operation, and event severity. Captured information can also help NHTSA and others identify potential opportunities for safety improvements in current and future vehicles and implement more effective safety regulations. It may also help first responders assess the severity of a crash, estimate the probability of serious injury in vehicles equipped with Advanced Automatic Crash Notification (AACN) systems, and improve defect investigations and crash data collection quality.

NHTSA established 49 CFR part 563 (part 563) on August 28, 2006, setting forth requirements for the accuracy, collection, storage, survivability, and retrievability of data in vehicles equipped with EDRs. 6 Tables I and II of part 563 detail the various data elements covered under the standard. Table I lists 15 data elements all EDRs subject to part 563 are required to record, along with the recording interval (duration) and sampling frequency. Table II lists data elements that EDRs subject to part 563 are not required to record, but that are subject to part 563 if they are recorded. Two data elements in Table II are listed as “if equipped,” meaning if a vehicle has the specified equipment, the specified information must be recorded. Table II also provides the recording interval (duration) and sampling frequency for each listed data element. In addition, all data elements in Tables I and II must be reported according to the range, accuracy, and resolution in Table III of part 563. Relevant to this final rule, there are currently seven data elements in Table I and Table II that must be captured for a duration of 5 seconds prior to the crash (speed, engine throttle, service brake, engine RPM, ABS activity, stability control, and steering input). NHTSA established this 5-second duration after concluding this length would ensure the usefulness of the data in crash reconstruction while minimizing the risk of overtaxing an EDR's microprocessor during the data capture process, which could cause a malfunction resulting in data loss. 7

Part 563 became fully effective on September 1, 2012. Since this time, the adoption of EDRs has been nearly universal, as NHTSA's internal analysis estimates 99.5 percent of model year 2021 passenger cars and other vehicles with a gross vehicle weight rating (GVWR) of 3,855 kilograms (kg) (8,500 pounds) or less are equipped with part 563 compliant EDRs. 8

This rulemaking addresses a statutory mandate under section 24303 of the FAST Act, which requires NHTSA to “submit to Congress a report that contains the results of a study conducted by the Administrator to determine the amount of time event data recorders installed in passenger motor vehicles should capture and record for retrieval vehicle-related data in conjunction with an event in order to provide sufficient information to investigate the cause of motor vehicle crashes.”  9 The FAST Act further provides that, within two years of submitting this report to Congress, NHTSA “shall promulgate regulations to establish the appropriate period during which event data recorders installed in passenger motor vehicles may capture and record for retrieval vehicle-related data to the time necessary to provide accident investigators with vehicle-related information pertinent to crashes involving such motor vehicles.”  10 This final rule promulgates regulations to establish appropriate EDR data recording durations as mandated under the FAST Act.

To meet the agency's initial obligation under section 24303 of the FAST Act, NHTSA contracted with researchers at Virginia Polytechnic Institute and State University (Virginia Tech) to conduct a study (the “EDR Duration Study”) to determine the amount of time EDRs should capture and record information to provide sufficient vehicle-related data to support investigation of the cause of motor vehicle crashes. The study focused on three crash types that could potentially benefit from more than the currently required 5 seconds of pre-crash data: rear-end, intersection, and roadway departure crashes. These three crash modes were selected because they comprised approximately 70 percent of all passenger vehicle crashes annually, 11 require relatively longer maneuvering times, and represent the most prevalent and relatively severe crashes based on fatalities.

The EDR Duration Study  12 took place in two phases. Phase I sought to estimate how frequently EDRs fail to record sufficient pre-crash data. Phase I did not analyze the amount of pre-crash data required to capture crash causation beyond the 5 seconds currently required under part 563. Analyzing cases in the National Automotive Sampling System-Crashworthiness Data System (NASS-CDS) database, Phase I determined part 563's current recording duration of 5 seconds failed to capture the initiation of all driver crash avoidance maneuvers for each of the three crash types studied. Evasive steering initiation represented the largest percentage of avoidance maneuvers not captured by the 5 second recording duration in all three crash types. 13 The study concluded the 5-second recording duration may be insufficient in many cases to determine the factors leading to a crash or to capture the pre-crash actions taken by a driver to avoid collision, potentially resulting in crash investigators having insufficient crash-related EDR information to determine crash causation.

Phase II of the EDR Duration Study sought to determine what recording duration would provide crash investigators with sufficient data to determine crash causation. The study analyzed data from naturalistic driving studies (NDS)  14 to understand the complete duration (5 seconds or greater) of driver pre-crash actions in the following three types of crashes: rear-end, intersection, and road departure. Phase II found that 20 seconds of pre-crash data would encompass the 90th percentile recording duration required for the three crash modes and crash avoidance maneuvers analyzed. This conclusion means that, based on the cumulative distributions for all three crash modes and crash avoidance maneuvers analyzed, 20 seconds of pre-crash data recording captures the driver pre-crash actions in 90 percent of the dataset. 15 Table 1 summarizes the relevant Phase II findings. A more detailed summary of the EDR Duration Study can be found in the NPRM associated with this rulemaking.

On September 28, 2018, following completion of the EDR Duration Study, NHTSA submitted a Report to Congress summarizing the study results to the House Committee on Energy and Commerce and the Senate Committee on Commerce, Science, and Transportation, as required by section 24303 of the FAST Act. 17

On June 22, 2022, pursuant to section 24303 of the FAST Act, NHTSA issued a notice of proposed rulemaking (NPRM) to amend part 563. 18 The NPRM relied on the findings of the EDR Duration Study and information gathered from NHTSA's defects investigation experience, which has demonstrated EDR data can be used to assist the agency in assessing whether a vehicle operated properly at the time of an event can help detect undesirable operations. 19 Based on these findings and information, the NPRM proposed extending the recording interval and data sample rate of pre-crash data elements under part 563 from 5 seconds of pre-crash data at a frequency of 2 Hz to 20 seconds of pre-crash data at a frequency of 10 Hz ( i.e., an increase from 2 samples per second to 10 samples per second). The seven frequency-based pre-crash data elements affected by the proposed amendments are:

• Three required data elements in Table I of part 563: “Speed, Vehicle Indicated,” “Engine throttle, % full (or accelerator pedal, % full),” and “Service brake, on/off,”

• Four “if recorded” data elements in Table II of part 563: “Engine RPM,” “ABS activity (engaged, non-engaged),” “Stability control (on, off, engaged),” and “Steering input.”

In support of the proposal, the NPRM explained that the EDR Duration Study concluded extending part 563's recording duration from 5 to 20 seconds would help capture critical pre-crash data. The NPRM also proposed increasing the EDR sampling frequency of pre-crash data from 2 Hz to 10 Hz, 20 explaining that an increased sampling rate, in addition to an increased pre-crash recording duration, is critical in determining crash causation. In support of the proposal, the NPRM explained that in some crash circumstances ( e.g., brake application and release or rapid reversals in steering input of less than 0.5 seconds), 2 Hz may be insufficient to identify crash causation factors, as it is possible for an EDR recording at 2 Hz to miss rapid vehicle control inputs. Thus, although more crash causation information would be captured with the proposed 20 second time duration, this data could be misinterpreted without a refinement and increase in the EDR sampling acquisition frequency.

The NPRM further explained an improved data sampling rate is needed because of how fast the sequence of events leading to crashes can happen and how fast the vehicle's systems need to activate in response to such events, such as crash avoidance technologies activation ( e.g., antilock braking system and electronic stability control). In support of increasing the EDR sampling frequency of pre-crash data from 2 Hz to 10 Hz, the NPRM noted the current sampling rate of 2 Hz is well below the timing necessary to understand the performance and effectiveness of such systems. Additionally, it explained the EDR output for the pre-crash data elements is not synchronized, 21 even at the sampling rate of 2 Hz, which could result in uncertainty when comparing data at specific points in time with precision. Finally, the NPRM pointed out a greater sampling rate for the pre-crash data elements would reduce potential uncertainty related to the relative timing of data elements, specifically for correlating the driver's commands and the vehicle's performance.

In discussing the benefits of the proposal, the NPRM stated increasing the recording time for the pre-crash data would help ensure that data on the initiation of pre-crash actions and maneuvers is captured for most crashes. The NPRM further explained that increased data will enhance the usefulness of the recorded information and potentially lead to further improvements in the safety of current and future vehicles. The NPRM acknowledged the proposed changes could add additional costs, as increased EDR memory may be required in some cases. However, the agency explained it believed needed memory changes could be incorporated into the existing or planned memory design in vehicles, based on how slight any increased memory requirements needed to accommodate the added EDR data storage would be. The agency further explained its belief that in most cases the amount of additional memory necessary to comply with the proposed requirements would be less than the unused memory on a vehicle's airbag control module (ACM) chip. Finally, the agency stated it anticipated the proposal would require no additional processor speed or backup power needs, despite the proposed increases in recording duration and frequency.

The NPRM proposed an effective date of the first September 1 one year after the publication of the final rule. The agency explained that a one-year lead time was appropriate because increasing the required pre-crash data recording time should not require any additional hardware or substantial redesign of either the EDR or the vehicle and would likely require only minimal software changes.

NHTSA sought comments on several aspects of the NPRM, including:

1. The need and practicability of increasing the pre-crash recording duration.

2. The need and practicability of increasing the sampling rate.

3. Whether current EDRs will need to increase their memory capacity or change the memory implementation strategy ( i.e., short term memory buffer verse long-term storage) to meet the new requirements.

4. Whether the NPRM's cost estimates and assumptions are accurate, including comments on whether there are other costs ( e.g., redesign for a larger unit, additional capacity for Random-Access Memory (RAM), etc.), or other factors the agency needs to consider.

5. Any potential impact of the NPRM's proposal on the ACM processor and associated cost.

6. Comments on the proposed lead time.

7. Comments on the DOT's Office of the Secretary's Privacy Office (DOT Privacy Office) tentative determination that the proposed rulemaking does not create privacy risk, as no new or substantially changed technology would collect, maintain, or disseminate information in an identifiable form because of the proposed rule.

The agency received responses from a wide variety of stakeholders and interested persons in response to the NPRM's request for comments. These comments are available in the docket for the NPRM  22 and are discussed in detail in the response to comments section below.

After careful consideration of comments received and the requirements of the FAST Act, NHTSA is promulgating this final rule to amend regulations regarding EDRs. Under this final rule, the recording duration and data sample rate of 7 data elements in Tables I and II under part 563 will increase to 20 seconds at 10 Hz from the previous requirements of 5 seconds at 2 Hz, as proposed by the NPRM and shown in Table 2.

The approach of this final rule is generally consistent with that of the NPRM. Minor non-substantive changes have been made to the final rule's regulatory text in the interest of simplification and organizational purposes, including by maintaining the current language of § 563.3. Additionally, based on comments received we have adjusted estimated costs and modified the lead time to provide manufacturers the time necessary to make any software, testing, and development changes required to ensure the EDR captures and records pre-crash data without affecting air bag deployment, while still fulfilling the agency's statuary mandate in a reasonable amount of time.

The NPRM sought to provide adequate lead time to manufacturers to allow them to incorporate necessary changes as part of their routine production cycles while also limiting the transition costs associated with the standardization of EDR data. To that end, the NPRM proposed an effective date of the first September 1 one year after the publication of the final rule. The NPRM estimated that 99.5 percent of model year 2021 passenger cars and other vehicles with a GVWR of 3,855 kg or less had part 563-compliant EDRs. As discussed in the cost section of the NPRM, the agency believed that increasing the required pre-crash data recording duration and data sample rate would not require additional hardware or substantial redesign of the EDR or vehicle and would likely require only minimal software changes and testing for validation.

NHTSA received several comments criticizing the agency's proposed one-year lead time, with commenters stating it did not consider the complexity of EDR implementation, along with the time needed for testing and validation to ensure the primary and secondary functionalities of the EDR. Commenters expressed that a lead time of one year could compromise safety and suggested alternative lead times ranging around 3 to 4 years. Several commenters also suggested a phase-in schedule extending out several years following publication of the final rule to allow manufacturers more time to significantly redesign the current software and hardware on their EDRs. The Motor & Equipment Manufacturers Association (MEMA) stated that software for a new vehicle is typically completed 18 months prior to the start of production, and that suppliers also require 18 months to deliver a validated update to manufacturers, along with an additional 18 months to test and certify the new system. Commenters also sought exemptions for vehicle platforms nearing the end of their lifecycle within 1-2 years of the Final Rule.

The Alliance for Automotive Innovation (Auto Innovators) expressed concern that the short lead time, additional memory requirements, and other system resources necessary to meet the proposed increase in pre-crash recording duration and frequency could result in some manufacturers being forced to deactivate the EDR function entirely, or to shift EDR resources by choosing not to record Table II or ADAS system status data elements.

Though supportive of the proposal, the Insurance Institute for Highway Safety and Highway Loss Data Institute (IIHS-HLDI) commented that if manufacturers were not able to meet the new requirements given the one-year lead time, they may instead choose to disable EDR functionality. IIHS-HLDI indicated support of a longer lead time to avoid the loss of any EDR data before the new requirements can be met.

The National Transportation Safety Board (NTSB) indicated the proposed lead time was reasonable and that the proposed changes from 5 seconds of pre-crash data at 2 Hz to 20 seconds of pre-crash data at 10 Hz should be practical to implement.

NHTSA acknowledges comments from vehicle manufacturers and others stating that the NPRM's proposed lead time would not allow manufacturers to incorporate the proposed changes as part of their regular production cycle. NHTSA agrees with comments received stating that a longer lead time is needed to allow manufacturers the flexibility to better manage the implementation of the final rule and alleviate unnecessary redesign costs for EDRs. Following review of comments received and further analysis, this final rule doubles the proposed lead time to accommodate manufacturer concerns, while also fulfilling the agency's statuary mandate under the FAST Act in a reasonable amount of time. As a result, the revised requirements will be implemented beginning with vehicles manufactured on or after September 1, 2027. Limited line  23 and small-volume manufacturers  24 will only need to produce compliant EDRs on or after September 1, 2029. Manufacturers producing altered vehicles or vehicles in two or more stages will have one additional year, until September 1, 2030, for compliance.

Extending the lead time beyond 2 years is not necessary. NHTSA understands that some vehicle models already have sufficient hardware to meet the requirements of this final rule, with one manufacturer indicating that a majority of its vehicle models are already equipped with sufficient hardware. NHTSA acknowledges that those EDRs would still potentially require up to 2 years of software development and testing to ensure their quality meets this final rule's part 563 requirements and that air bag deployment, if the EDR function shares resources with the restraint systems, is not affected by the extended duration and sampling rate of the EDR pre-crash data. Based on NHTSA's internal analysis of EDR records in the Crash Investigation Sampling System (CISS), other manufacturers also have some EDR modules that could meet the requirements of this final rule without hardware changes.

The agency did consider a phase-in period in response to timing concerns raised by manufacturers, but ultimately did not find that compelling reasons were presented to justify a phase-in period. However, in acknowledgment that some EDRs will require changes to meet the requirements of this final rule, the agency is doubling the initially proposed lead time to provide manufacturers with sufficient time to make the minor modifications adopted in this final rule. In support of this decision, NHTSA is aware that manufacturers across the globe can meet much shorter EDR lead times in other markets, such as Europe and Japan. NHTSA is not aware of any peculiarities of the U.S. market that would necessitate lead times double, triple, or quadruple the lead times in other markets.

NHTSA also acknowledges the concern raised by some commenters that manufacturers may choose to deactivate EDRs because of their inability to meet the requirements within the proposed 1-year lead time. NHTSA does not share that concern, and in any event, this final rule's extended lead time, which provides additional flexibility to manufacturers, should mitigate this concern. However, this final rule does not change the voluntary nature of part 563, and manufacturers remain free to decide if their vehicle will have EDR functionality based on their own considerations. Although the system that activates air bags in a vehicle may share resources with the EDR functionality, we emphasize that the performance of systems that deploy air bags ( e.g., supplemental restraint system) to mitigate injuries in a crash should not be negatively affected in order to develop an EDR that meets today's new requirements.

NHTSA received 21 comments on the proposed rule from a wide variety of commenters, including: advocacy groups, supplier and trade associations, vehicle manufacturers, manufacturer associations, insurance institutes, industry association consultants, engineer organizations, and members of the public.

The safety advocacy groups included the Advocates for Highway & Auto Safety (Advocates) and the Center for Auto Safety (CAS). The supplier and trade associations included Robert Bosch LLC and Bosch Automotive Service Solutions (Bosch) and MEMA. Manufacturers and manufacturer associations included Nissan Motor Co., LTD. (Nissan), Ford Motor Company (Ford), American Honda Motor Co. (Honda), General Motors Company (GM), and Auto Innovators. Insurance institutes and industry associations commenting on the NPRM included the National Association of Mutual Insurance Companies (NAMIC), State Farm Insurance Companies (State Farm), and joint comments from the Insurance Institute for Highway Safety (IIHS) and Highway Loss Data Institute (HLDI). The consultants and engineering organizations included the Event Data Recorder Committee of SAE International (SAE), the Collision Safety Institute (CSI), and QuantivRisk, Inc. NHTSA also received comment from the NTSB, and four comments from members of the public.

Overall, safety advocates (CAS and Advocates), insurance institutes and industry associations (NAMIC, IIHS-HLDI, and State Farm), NTSB, and three public commentors generally supported the proposed amendment. However, they recommended NHTSA consider expanding part 563 requirements through such additions as new data elements for emerging safety systems like advanced driver-assistance systems (ADAS) and automated driving systems (ADS), increased vehicle weight limits applicable to all newly manufactured passenger vehicles, and a revised trigger threshold to include crashes involving vulnerable road users. These commenters also expressed support for the agency's work with international organizations to harmonize EDR requirements, including groups like the United Nations Economic Commission for Europe (UN ECE), the World Forum for Harmonization of Vehicle Regulations (WP.29), and EDR technical working groups ( e.g., SAE International).

Other commenters questioned and criticized some aspects of the NPRM, including the proposed lead time and estimated costs. Commenters in this group included vehicle manufacturers and manufacturer associations, industry suppliers and trade associations (including MEMA), industry experts and engineering organizations (SAE, CSI, and QRI), and one individual member of the public. Several commenters indicated the NPRM's proposed lead time was insufficient and suggested longer lead times.

The following sections address the key issues raised by commenters in response to the NPRM, including concerns related to the recording duration and frequency (or sample rate), the EDR duration study, EDR components, additional data elements, privacy, benefits, costs, and other expressed concerns.

The agency sought comment on the NPRM's proposal to increase the EDR pre-crash recording duration and sample rates under part 563. Comments received expressed mixed views, with many comments critical of the proposal and expressing strong concerns with the EDR Duration study, suggesting that the NPRM's extended duration proposal should not have relied upon the study's findings.

Several commenters did not support the NPRM's proposal to extend part 563's recording duration requirements, expressing skepticism that recording data beyond current part 563 requirements would improve crash causation investigations. SAE, referencing the agency's technical report on “Characteristics of Fatal Rollover Crashes,”  25 acknowledged that rollover crashes generally require a longer amount of recorded data but stated they do not justify the added duration of pre-crash data. SAE explained that increasing recording duration will, in almost all cases, merely represent static operating conditions. Ford stated that additional studies on vehicles with active safety features and EDRs compliant with part 563 are necessary to more accurately determine any anticipated safety benefit of extending the pre-crash recording duration at a higher sampling rate.

GM, commenting that it already voluntarily added 3 seconds of pre-crash data to its latest Generation EDR, stated eight seconds of pre-crash data is more than sufficient to understand crash dynamics and vehicle performance based on its experience working with accident reconstructionists, police, and other authorities.

CSI stated there is no need to increase EDR recording duration, but suggested the sample rate could be phased in over a longer lead time to allow for other revisions to part 563. Bosch indicated the current data sample rate of 2 Hz may not capture all data when a multi-impact crash occurs but emphasized that an increased sample rate would require significant changes in EDR hardware and software. Bosch agreed that increased pre-crash data frequency could capture additional events, such as braking interventions, lane change maneuvers, and steering maneuvers.

Ford, seeking to clarify information cited by the agency in the proposal, also stated that although the EDR in the referenced 2007 Ford  26 was capable of recording more than 20 seconds of pre-crash data, it did not meet the crash test performance and survivability requirements of part 563. Ford explained that the pre-crash data in the 2007 Ford was stored in the Powertrain Control Module (PCM), which served as a diagnostics tool not equipped with a power energy reserve. Ford stated it later replaced the PCM recording capability with a part 563-compliant EDR that uses the Restraint Control Module (RCM) to record PCM data for 5 seconds prior to a crash event.

Several commenters supported some or all aspects of the proposal, stating it would provide more information for crash investigations and safety data. IIHS-HLDI stated it would provide researchers with a greater understanding of the role different factors like vehicle, driver, and roadway/environment play leading up to a crash. NAMIC agreed more pre-crash data would help insurers, researchers, manufacturers, and regulators understand and determine crash causation, while also helping crash avoidance research. NAMIC also stated that the benefits of more pre-crash data on vehicle dynamics and system status, driver inputs, vehicle crash signatures, restraint usage/deployment status, and post-crash data, such as the activation of an automatic collision notification system, would provide greater safety value than any associated costs with increased memory capacity and potential EDR unit redesigns. State Farm supported the proposed duration and frequency changes to EDRs, and suggested vehicles should at minimum record all available information relevant to the crash.

Many commenters supported extending recorded categories rather than extending the duration and/or sampling rate of existing part 563 data retention requirements to improve crash analysis. The NTSB stated although the proposed rule addresses data elements currently in part 563, a complete understanding of crashes involving vehicles with ADAS would necessitate more pre-crash data than is currently required. CAS stated that even longer durations and higher sample frequencies could be beneficial for data not currently included in part 563, such as progressive sensor degradation, object event detection, response processing, and performance of sensor and data processing components.

Many commenters criticized the NPRM's reliance on the EDR Duration Study's finding that 20 seconds of pre-crash data encompasses the 90th percentile recording duration necessary to capture the initiation of driver actions. SAE stated the study failed to demonstrate that the recommended 20-second recording duration would improve crash causation investigations. SAE further stated that the study focused on determining the duration necessary to assess driver behavior, rather than crash causation, and reiterated its previous comments critiquing the study. 27

Specifically, SAE stated the study should have assessed more than the speed, braking, and steering actions of the vehicle, noting that engine throttle percentage, accelerator pedal percentage, engine RPM, cruise control status, anti-lock braking system (ABS) activity, lateral acceleration, and yaw rate are all useful data elements when studying the cause of a crash event. SAE also stated the vehicles in the study lacked modern safety features, such as pre-collision braking and electronic stability control, which could have prevented some of the accidents or provided intervention within the current recording duration of 5 seconds.

SAE asserted the study contained flawed assumptions about current automotive braking system architectures. SAE also stated there were two false assumptions concerning steering input. First, SAE explained the EDR Duration Study concluded that the availability of steering angle data, an optional data element, was very limited, thus reducing its significance in Phase I of the study. Second, SAE stated the study assigned steering angle data the same importance as the other data elements, and that the study's authors erroneously assumed a weighted distribution would compensate for the small number of cases with steering input. In response to this assumption, SAE stated actual field-related data from more recent part 563 compliant vehicles covering a wider range of manufacturers should have been used, and that the study's analysis should have been updated with current systems data. SAE also discussed the resolution of the steering input data, explaining that some pre-part 563 EDRs reported steering input data with a range of +/− 16 degrees, meaning a steering maneuver beyond 16 degrees would need to be made to be detected and recorded in the EDR. SAE stated that depending on vehicle speed, a steering input of less than 16 degrees could have significance in relation to vehicle dynamics; however, if no such recorded input occurred, the study concluded the driver was not moving the steering wheel.

SAE also critiqued the study's lack of distinction between accelerator pedal position and engine throttle position, stating it purposely ignored EDR data recorded more than 5 seconds before a crash, and further stated that if all 8 seconds of pre-crash data, where available, were reviewed, the study could have confirmed whether the service brake was on at 5 seconds prior to a crash event. SAE explained this information could demonstrate whether pre-crash data beyond 5 seconds would change overall reconstruction results. Finally, in relation to the study's 1-Hz recording frequency in older vehicles, SAE and Auto Innovators stated brake pedal application can occur multiple times within one second, and state changes could be missed in the sample period. Several commenters expressed support for SAE's comments on the study.

This final rule adopts the NPRM's proposed part 563 EDR pre-crash data recording and frequency durations. This final rule's implementation will fulfill the FAST Act mandate and provide additional information on the status of vehicle systems and the actions taken prior to a crash.

The agency acknowledges criticisms raised by several commenters, including suggestions that further studies are needed to determine the safety benefits of additional EDR pre-crash data. However, NHTSA is confident the EDR Duration Study provides a solid basis for this final rule's increase to 20 seconds of pre-crash data based on the study's findings on the amount of pre-crash actions missed in the 5 seconds prior to a recorded event by the EDR, particularly for in-road departure and intersection crashes. The EDR Duration Study found part-563's 5-second recording duration insufficient to record important information in a substantial percentage of crashes in which the EDR is triggered. This information, including the initiation of crash avoidance driving maneuvers, e.g., pre-crash braking, would assist investigators with crash reconstruction. The study also found that 20 seconds of pre-crash data would encompass the 90th percentile recording duration required for the three crash modes and the crash avoidance maneuvers analyzed.

In support of the increased frequency requirement of this final rule, NHTSA understands some manufacturers already equip vehicles with EDRs that record data at 5 or 10 Hz, and in some cases multiple rates. NHTSA agrees with commenters who expressed support for the proposed increase by stating the increased frequency could capture events like braking interventions, lane change maneuvers, and steering maneuvers that may be missed at 2 Hz.

In response to Ford's comment regarding the 2007 Ford vehicle included in the EDR Technology Study  28 and referenced in the NPRM, the agency is aware that the EDR in question was manufactured prior to the implementation of part 563. The agency did not reference it in the NPRM as a basis to state that all current EDRs are capable of recording 20 seconds of data. Instead, it serves as an example to show that manufacturers have already developed systems that record more than 5 seconds of pre-crash data. Finally, in response to comments encouraging the recording of additional data elements, this topic falls outside the scope of the NPRM and will not be addressed in this rulemaking. The agency may address the recording of additional data elements, including ADAS system status and performance parameters, in future rulemaking. Additional details on the estimated benefits of this final rule are discussed in section V.

Many comments received criticized certain aspects of the EDR Duration Study and the NPRM's reliance on it in extending the recording duration of part 563. The agency does not find these arguments compelling. The study adequately met the FAST Act's mandate to conduct a study to determine the amount of time event data recorders installed in passenger motor vehicles should capture and record for retrieval vehicle-related data in conjunction with an event to provide sufficient information to investigate the cause of motor vehicle crashes.

Specifically, as required by the FAST Act, the study presented the durations necessary to provide sufficient information to investigate the cause of motor vehicle crashes. The agency does not agree with comments stating that the study incorrectly focused on driver actions rather than crash causation. The FAST Act required the agency to address data needed to assess crash causation. As such, vehicle dynamics were not the focus of the EDR Duration Study. Crash causation is crucial for effective crash investigation. Because many studies, some using police-accident reports  29 or EDR data, have shown that driver error is often the cause of crashes, 30 an understanding of pre-crash vehicle actions is critical to determining an appropriate recording duration. One study used the crashes in the Naturalistic Driving Study (NDS) to determine that driver error contributed to 93% of observed crashes. 31 In the EDR Duration Study, “behavior” is used synonymously with “action.” Therefore, the study's objective in Phase II was to determine a recording duration that provides more certainty of capturing the complete duration of pre-crash actions.

In response to SAE's critique that speed, braking, and steering were studied exclusive to each other in Phase 1 of the EDR Duration Study and not with the rest of the EDR data, NHTSA acknowledges SAE's comment that crash reconstructionists analyze vehicle speed in conjunction with brake status. However, these two factors were not combined in Phase 1 because the study successfully addressed the research questions without studying whether enough brake pedal pressure was being applied to decelerate the vehicle. The study analyzed each pre-crash action individually because the study's objective focused on whether any braking input, steering input, or accelerator release occurred.

NHTSA also acknowledges SAE's statement that the study assumed the Service Brake On indicator signified driver intent to actively brake the vehicle, when it could instead be related to disengaging cruise control status or a slightly engaged brake pedal ( e.g., resting a foot on the pedal). In response to this comment, NHTSA states the EDR Duration Study solely focused on the pre-crash action itself, regardless of whether that action resulted in decreased vehicle speed. As such, any braking action can still be considered a valid pre-crash action of the driver.

In response to SAE's comment that weighted distributions were incorrectly used to compensate for the small number of cases with steering input in Phase I, NHTSA disagrees. Weighted distributions were used as the standard result format for all the data elements in the study, regardless of the sample size. Additionally, NASS-CDS data are designed for use in a weighted fashion because of its nationally representative structure.

In criticizing the study, SAE and Auto Innovators commented that the EDR Duration Study assumed that no recorded steering input meant the driver was not moving the steering wheel, but that pre-part 563 EDRs required a steering input change of more than 16 degrees to be captured by the EDR so active steering maneuvers in the dataset may not have been captured. The EDR Duration Study could only use the EDR data available (which included pre-part 563 EDRs) to evaluate what pre-crash actions were captured. The study assumed that if a non-zero steering angle was recorded at −5 s, the initiation of a pre-crash steering maneuver was not captured. NHTSA does not believe that the current resolution for steering input (5 degrees) would change the results of Phase 1 of the EDR Duration Study since the authors defined the steering input time as the time between the event and the earliest non-zero steering angle recorded. NHTSA agrees that, based on vehicle speed, a change in steering input less than the 16-degree resolution could be significant.

In response to comments on the issue of whether the accelerator pedal position or engine throttle position was used to assess driver action, the EDR Duration Study used the accelerator pedal position to indicate a depressed pedal, as the objective of the study was driver action prior to crash. NHTSA acknowledges that accelerator pedal position and engine throttle position do not always correspond (especially given modern vehicles with drive-by-wire technology). The study used accelerator pedal position as it is related to the driver's input, whereas the engine throttle position can lag behind that input. NHTSA also acknowledges SAE's comment that the EDR Duration Study ignored data extending beyond 5 seconds. Specifically, where EDRs recorded 8 seconds of pre-crash data in the study, the results were truncated to 5 seconds to combine them with the remainder of the dataset that only had 5 seconds of pre-crash data to make the brake pedal, accelerator pedal, and steering input data consistent. Doing so is consistent with the 5 seconds of pre-crash data required by part 563 prior to this final rule. This was done in Phase 1, as this part of the study evaluated whether 5 seconds of data was sufficient for capturing the initiation of pre-crash maneuvers in rear-end, road departure and intersection crashes. The authors of the EDR Duration Study could not use EDR data to determine the duration beyond 5 seconds needed to capture crash causation, because most EDR data only records 5 seconds of pre-crash data per the minimum requirements in part 563. Therefore, as required by the FAST Act, to determine the amount of time event data recorders installed in passenger motor vehicles should capture and record for retrieval vehicle-related data in conjunction with an event to provide sufficient information to investigate the cause of motor vehicle crashes, Phase 2 of the study used two naturalistic driving studies (NDS) (100-Car NDS and SHRP-2 NDS). These studies were used because they include more than 5 seconds of data prior to an event. 32

Further, although some commenters stated that older vehicles used in the study had EDR data recorded at a sample rate less than the part 563 requirements (2 Hz), the EDR Duration Study acknowledged the uncertainties of the sample rate (1 Hz vs. 2 Hz) of data numerous times throughout the report. The study's results were presented in terms of the observed EDR data, the “Lower Bound,” and “Upper Bound,” which assumed the actual pre-crash action for EDRs recording at 1 Hz was one time step earlier than the reported time ( e.g., if an initial braking action occurred at −4 s the action was assumed to occur at −5 s). NHTSA believes that presenting the results in this corridor fashion was appropriate and provided a fair and transparent representation of the range of times the driver action may have occurred. In response to SAE and Auto Innovators' comments that a pre-crash braking action can occur multiple times within the time span of 1 second (1 Hz) or 0.5 seconds (2 Hz), NHTSA notes that this fact supports increasing the recording frequency of pre-crash data, as required by this final rule, so that multiple pre-crash actions are captured by the EDR.

NHTSA also acknowledges comments received stating that the vehicles used in the study lacked modern safety features that could have prevented some crashes and provided intervention within 5 seconds of the crash event. However, NHTSA observes the available EDR data used in the study did not generally include any details on active safety features, as part 563 does not require the capturing of those elements, which are at times voluntarily recorded by manufacturers. Therefore, any pre-crash data related to modern safety features could not be included as part of the research in Phase 1 of the study.

NHTSA does not know if active safety features will be universally adopted in future vehicles or recorded for the purposes of crash reconstruction. However, NHTSA points out that ABS and electronic stability control (ESC) were studied in Phase 2 of the EDR Duration Study, which used naturalistic driving data from newer vehicles. The ABS activation times in that data ranged from 2-9 seconds prior to the crash, further demonstrating that a 5-second duration is not always sufficient to capture all the pre-crash actions of the vehicle. Finally, some comments criticizing the EDR Duration study addressed areas outside the scope of this rulemaking and the research questions and conclusions made by the study, such as how beneficial the additional data will be when used with vehicle dynamics for crash reconstruction and that pre-crash data would benefit more from additional data elements rather than extending the time capture pre-crash. As such, the agency is not addressing these comments in this final rule.

The agency sought comment on whether the NPRM's proposed changes would affect current EDRs, including in terms of creating any increased memory needs, processor speed burdens, or other issues not considered by the proposal. Many commenters, including OEMs, manufacturers' associations, industry suppliers, trade associations, industry experts, and engineer organizations generally agreed that while the proposed 20 seconds of pre-crash data could be recorded by EDRs, some EDRs may require significant hardware and software changes to meet these demands. Commenters stated the memory (RAM and read-only Memory (ROM)), energy reserve, and microprocessor (or microcontroller) of EDRs may all need to be upgraded or expanded. Bosch stated that some manufacturers may have EDRs capable of accommodating the new requirements using current hardware. Nissan suggested that some of its EDR modules could record for 20 seconds without requiring hardware changes, given enough time for testing and development.

Following careful consideration of comments received, this final rule is extending the EDR recording period for timed data metrics from 5 seconds of pre-crash data at a frequency of 2 Hz to 20 seconds of pre-crash data at a frequency of 10 Hz. NHTSA acknowledges some current EDRs may require significant hardware and software changes to meet this final rule's recording requirements. However, the changes made by this final rule are necessary to fulfill the Fast Act's requirement that the agency “shall promulgate regulations to establish the appropriate period during which event data recorders installed in passenger motor vehicles may capture and record for retrieval vehicle-related data to the time necessary to provide accident investigators with vehicle-related information pertinent to crashes involving such motor vehicles.”  33

Based on the data submitted to NHTSA by vehicle manufacturers and EDR records available from CISS, many newer EDRs already have sufficient memory, processing performance, and reserve energy capacity to capture and record 20 seconds of pre-crash data at 10 Hz. If necessary, manufacturers could potentially reconfigure these EDRs by reallocating memory to meet the new recording requirements for pre-crash data in this final rule, as the reallocation of memory would not entail any additional energy or processor capability. NHTSA acknowledges the subject systems would still need to undergo development and testing to ensure they function as intended with no adverse effect on the activation of air bags in a crash event with air bag deployment.

The agency is aware that memory is not solely used to record EDR data, as it is shared by other functions of the ACM. However, many modern EDRs, particularly those updated to meet UN ECE Regulation No. 160, 34 likely already have sufficient capability to meet the pre-crash recording duration and sample rate requirements of this final rule without disrupting how EDR data are currently recorded. Based on the CISS EDR data available, NHTSA is aware of at least one manufacturer that has made such EDR upgrades to a large portion of its newer models, such that only software changes would be needed to comply with the final rule. 35 Further, EDRs that currently capture and record more than 1600 bytes of pre-crash data could allocate resources to, at minimum, record the three required Table I data elements for 20 seconds at 10 Hz.

Additional analysis on comments received and the agency's response in the areas of EDR memory, data processing, energy reserve, design, and the development process is provided below.

Many commenters indicated the current amount of non-volatile memory in EDRs may not be sufficient to record 20 seconds of pre-crash data captured at 10 Hz. The NPRM indicated an increase in pre-crash recording duration from 5 seconds to 20 seconds with an accompanying increase in recording frequency from 2 Hz to 10 Hz, would require 1.33 kilobytes (kB) of additional memory (a factor of 2.43 increase from the baseline) if all 7 pre-crash data elements were recorded. However, SAE stated some suppliers estimated the memory would increase by a factor of 8.5. SAE explained that adding more memory to meet the new data capture requirements would involve a complex process, as reallocating memory from other data elements would require an entire development process for each type of EDR. 36

GM stated that to meet the proposed requirements in the NPRM, the memory for its latest generation EDR would have to increase from approximately 720 bytes per recorded event to 8260 bytes, or an increase by a factor of approximately 11.5 based on 46 pre-crash data elements. GM explained this estimate must be multiplied by 3 to account for 3 separate EDR-recorded event buffers. GM further stated it is desirable to have a consistent sampling rate for all pre-crash data elements to reduce software complexity, and that it does not have a design in production that can simply incorporate the requirements in spare memory.

GM explained memory allocation is one of the first steps of new product development, used to determine the specifications for the microprocessor, memory storage size and type, energy reserve, and power supply, and that changes to the type of memory required would have a significant impact on the design specifications for EDRs. Honda, Nissan, and Ford also stated that meeting the requirements proposed in the NPRM would require additional non-volatile memory. CSI and MEMA stated memory estimates should consider that the ACM and any other system housing the EDR shares processor power and memory with the EDR, and that additional memory is rarely available in existing systems. QuantivRisk, Inc. and CSI also stated that adding memory would require additional development and testing costs.

NHTSA acknowledges comments received from industry, OEMs, and trade associations suggesting that EDRs would require more memory than that estimated by the NPRM (for both data capture and recording) to meet the NPRM's proposed requirements. Necessary memory upgrades could include both non-volatile memory for storing the recorded crash data, and volatile memory (or RAM) for data processing (read into and write over). Currently, part 563's specified recording duration of 5 seconds at 2 samples per second generates a total of 11 samples for each pre-crash data element (2 samples per second × 5 seconds + 1 initial sample).

The EDR Technology Study, reporting on information provided by EDR subject experts from OEMs and ACM/EDR suppliers, found a typical recorded crash event requires approximately 929 bytes (77 bytes for pre-crash data elements) to record all of the Table I and Table II data elements for a single event. 37 Depending on the redundancy strategy for data quality control, a typical recorded EDR requires approximately 1.86 kB per event. To record data for 20 seconds at 10 Hz, 201 samples (10 × 20 + 1) would be captured, or an additional 190 samples per pre-crash data element over the previous requirements of 5 seconds at 2 Hz. In total, an additional 1,330 (190 × 7) data points must be captured, processed, and recorded per crash event if all 7 pre-crash data elements are recorded (Table II lists optional data elements if they are recorded by the EDR). An EDR is required to record these elements for up to two events in a multi-event crash. 38 To capture two events, the EDR would require an additional 2,660 bytes of memory for the additional data, as required by this final rule. Similarly, an equal amount of RAM would be needed for data processing.

Memory reallocation may be necessary for older generation EDRs to meet this final rule's required Table I elements. Additionally, manufacturers with EDRs that voluntarily record data elements not listed in Tables I and II  39 of part 563 may need to reallocate memory if memory allocation is nearing capacity or there is insufficient memory to meet the requirements of this final rule. However, NHTSA accepts this potential as Congress unambiguously signaled its desire for the agency to prioritize the time necessary to provide accident investigators vehicle-related information pertinent to crashes through the FAST Act statutory mandate. This final rule's additional lead time should considerably minimize any required memory reallocation. Further, any memory reallocation needed to meet the requirements of this final rule could potentially be carried out by only capturing those elements required by Table I, as only Table I elements must be recorded if an EDR is installed.

In relation to recording requirements, GM suggested that it is preferable to record all pre-crash data elements captured by its latest generation EDR, including those required by part 563 and those voluntarily captured, at the same sample rate to not increase software complexity. However, EDRs that record data elements at different recording intervals and data sample rates already exist ( e.g., some EDRs capture and record data at both 5 s/10 Hz and 5 s/2 Hz). Further, although manufacturers may choose to do so, NHTSA is not requiring manufacturers to record all pre-crash data at 20 seconds and 10 Hz; rather they must only apply that standard to those elements listed in Table I and, if recorded, Table II of part 563.

If an EDR does record numerous data elements not listed in part 563 at 20 seconds and 10 Hz, NHTSA agrees that the amount of extra memory needed to record that data could significantly increase. However, the recording of additional elements outside of Table I is not required by this final rule, and the minimum amount of extra memory needed to record the three pre-crash Table I elements is only approximately 570 bytes (1,040 bytes if considering two events). The estimate provided by the agency for the additional memory needed (2,660 bytes) is for all 7 mandatory and optional pre-crash data elements captured at 20 s and 10 Hz, and for the recording of multiple events. The decision to install additional memory necessary for data buffering and redundancy is a voluntary decision by a manufacturer and is not required by part 563. As discussed in the NPRM, many manufacturers already have EDRs with sufficient hardware capabilities to capture and record more pre-crash data, or will have the time to develop such EDRs given this final rule's additional lead time allowing for EDR development and testing/validation. For example, vehicle models equipped with EDRs containing 32 kB of flash data storage (memory) or greater should already have sufficient capacity to capture the increased amount of pre-crash data required by this final rule.

For EDRs containing insufficient memory to record the data elements in Table I and II at this final rule's required recording interval/data sample rate, manufacturers may be able meet the new requirements through various means. For example, if EDR memory is currently used to record other data elements not required in part 563, OEMs could reallocate the available memory to record the mandatory data elements at 20 seconds and 10 Hz. If no excess memory is available because a portion of the memory is used for purposes outside of capturing and recording EDR data, modification should not be overly burdensome, as only 1.33 kB of additional memory is needed under this final rule to record the seven pre-crash data elements. Further, if an OEM solely recorded the data elements required by Table I, only approximately 0.57 kB of additional memory would be needed to meet the requirements of this final rule (an increase from 33 samples to 603 samples for Table I pre-crash data elements).

Where memory reallocation is not possible or preferred and additional memory is necessary, manufacturers could increase the memory capacity of the EEPROM, or embed higher capacity flash memory chips with similar costs, since flash memory typically costs less than EEPROM. 40 For example, information from manufacturers in the EDR Technology Study indicated a typical 2013 microprocessor used in vehicle applications had 32 kB or 64 kB of flash data as part of the ACM, and that most companies are replacing the older memory technology (EEPROM) with flash memory located on the microprocessor. As previously stated, EDRs containing 32 kB of flash data storage (memory) or greater should have sufficient capacity to capture the increased amount of pre-crash data required by this final rule.

Finally, in response to comments expressing concern that the NPRM failed to capture all costs associated with any EDR memory increases needed to meet the requirements of this final rule, NHTSA acknowledges these concerns and, following careful consideration, has adjusted estimated costs accordingly in the Final Regulatory Evaluation (FRE) accompanying this final rule. Additional details on the updated cost estimates of this final rule are discussed in section V.

Several commenters expressed concern that the proposal would create increased data processing needs. SAE and Auto Innovators stated that, depending on current microprocessor capacity, the proposed data requirements would necessitate additional energy capacity, speed, and memory upgrades, which would also require a new microprocessor and circuit board. SAE and Auto Innovators indicated these modifications would require a complete redesign of the EDR from both a hardware and software perspective. GM stated none of its current EDR designs can support the 20 second requirement without changes to the microprocessor. Honda commented that the NPRM's proposed increases in recording duration and frequency will increase the amount of RAM in the microcontroller unit (MCU) required to record the data, necessitating a physically larger and higher performance MCU. Honda explained that the proposed changes would also require the MCU ROM and processor performance ( e.g., clock frequency) to increase.

NHTSA acknowledges the concerns raised by several commenters, including Honda, GM, SAE, and Auto Innovators, that the proposed requirements may necessitate microprocessors with higher clock speeds and an increased amount of ROM depending on the performance specifications of the current microprocessor used to capture and record EDR data. NHTSA also acknowledges comments stating that the NPRM's proposed increase in RAM would necessitate a physically larger and higher performance microprocessor. However, these changes may only be necessary in older generation EDRs or EDRs that are recording data at or near the memory capacity. Further, although some older generation EDRs may lack the performance specifications needed to capture and record the increased duration and frequency of pre-crash data required by this final rule (including clock speed of the microprocessor, available ROM, RAM, and flash memory), many newer EDRs have the necessary MCU specifications to record for 20 seconds. NHTSA acknowledges these newer versions would require a period of software development to change how data are buffered, written to memory, and tested to validate the EDR and ensure that all systems interacting with the EDR perform as intended. However, these concerns should be alleviated through the additional lead time provided by this final rule, which should allow manufacturers to make any EDR design changes needed to meet the requirements of this final rule.

Several comments stated that the proposal would require increased energy reserve. Auto Innovators explained the EDR function is typically integrated into a vehicle's ACU or ACM and includes reserve energy to successfully deploy the restraint systems, facilitate high voltage shutoffs for electric vehicles, and record EDR data into non-volatile memory if vehicle power is lost early in the crash event. GM stated the increased write time duration would require more energy reserve, and that a microprocessor with a higher current draw could affect the energy reserve. For many existing units to meet the new requirements, Auto Innovators stated that the amount of additional, voluntary data elements recorded by the EDR would need to be reduced, or that the air bag control/EDR module would require redesign to accommodate the additional reserve power capacity. Both Auto Innovators and SAE stated that many current EDRs record more than the minimum part 563 requirements, and that these additional data elements would also have to be recorded for 20 seconds.

Several commenters stated the proposed changes would require larger and, in some cases, multiple capacitors to meet the extended pre-crash recording period, as the EDR module operates under its own power supply during a crash. Commenters indicated larger capacitors pose engineering challenges in terms of lifespan, durability, and ability to charge during normal operation. Auto Innovators stated the additional energy capacity required to meet the new requirements would considerably increase the footprint of the ACU/EDR, and that enough physical space may not exist in optimum locations for current vehicles (selected for crash sensing and durability) to accommodate increases in ACU/EDR size. Commenters explained needed changes to the size of the module could require redesign and affect placement in the vehicle, increasing design complexity and increasing costs for both consumers and manufacturers.

The ACU requires reserve energy (provided by capacitors) in the event of a loss of battery power in the vehicle. This reserve energy exists for the EDR to capture and record data, while also ensuring the vehicle's air bags can properly deploy. NHTSA acknowledges several comments received from industry stating that meeting the proposed EDR requirements may necessitate capacitors with increased capacitance, which may in turn require overall hardware changes and potential design changes to the EDR. However, none of the comments received stated that additional power was necessary across all EDR modules, instead only suggesting that more power may be required.

Based on comments received, NHTSA understands that some manufacturers equip EDRs that voluntarily record pre-crash data elements not listed as part of the minimum requirements in part 563. Any data elements not listed in part 563 that a manufacturer may choose to capture are not required to be recorded for 20 seconds at 10 Hz. A large amount of voluntarily recorded pre-crash data all recorded at 20 seconds could increase the amount of reserve energy required to write to memory and provide backup power, which could necessitate redesign of the EDR packaging. However, as previously stated, NHTSA is only requiring EDRs to record the three pre-crash data elements in Table I and the four pre-crash data elements in Table II (if they are recorded by the EDR) for 20 seconds. Although manufacturers may prefer to record all data at the same duration and sample rate, there are examples of EDRs in CISS that record data at different durations and sample rates. Manufacturers are of course free to record voluntarily captured elements as they prefer.

Based on NHTSA's analysis, the costs of capacitors, especially in large quantities, is relatively low. For example, an EDR capacitator upgrade from 3.3 μF to 10.0 μF would cost approximately $0.02 per unit, based on market research. 41 Further, EDRs with sufficient memory capacity to allow for some memory reallocation would not require an increase in reserve energy. The physical size of capacitors can vary according to many different constraints such as: manufacturer, dielectric type, target application, mounting style, capacitance, voltage rating. Based on NHTSA's research, there are 6.8 μF capacitors and a 10.0 μF capacitors with similar specifications beside capacitance that have the same physical dimensions in terms of diameter and surface mount area. Varying other parameters ( e.g., voltage rating) only changes the physical dimensions of these capacitors by 1 mm or less. Ultimately, the manufacturer chooses where to place the EDR housing within its vehicles. NHTSA has included cost estimates that cover software development and design validation but does not believe such small hardware components will significantly affect the size of the physical casing that holds the electronic components of the EDR.

Therefore, this final rule adopts the NPRM's proposal to extend the EDR recording period for timed data metrics from 5 seconds of pre-crash data to 20 seconds of pre-crash data at a frequency of 10 Hz. Manufacturers should be able to meet these requirements given the lead time and relatively low cost of capacitors to implement any required upgrades.

SAE and Auto Innovators stated that in addition to costs incurred from the proposed EDR component upgrades, the proposal would also require associated development and integration costs, including validation and testing at component, sub-system, and vehicle levels. These commenters stated that costs and associated lead times are further amplified because the EDR application is most often coupled with a safety restraint management system requiring rigorous safety system validation and verification. Nissan, explaining it confirms the functionality of the EDR in coordination with other compliance crash tests completed in less than 20 seconds, commented that the proposal would require additional or new crash test procedures to retrieve data from a vehicle. SAE commented that capturing 20 seconds of data would require a crash test facility over 985 feet long, and that no such test facility currently exists. GM also expressed concerns in relation to vehicle level validation, asking if the proposal would require a crash of sufficient length to encompass the entire 20 seconds of pre-crash data. GM explained that such a requirement would impact vehicle barrier facilities and testing protocol, resulting in additional costs.

Several commenters expressed concerns that the proposed rule would incur new costs, including for a new crash test facility and additional or new crash test procedures to record and retrieve the appropriate amount of data. In response, the agency points out that vehicles do not have to operate at the speeds specified for crash testing under such scenarios as FMVSS No. 208 or FMVSS No. 214 to meet the new EDR recording requirements of this final rule. New or altered test procedures may be needed to validate the EDR, but manufacturers should not need new crash test facilities to meet the new data capture requirements. Manufacturers may instead use other means that do not require the vehicle to travel at crash test speeds ( i.e., 56 kph or 35 mph) for 20 seconds to capture pre-crash data as testing validation for this final rule's data capture requirements. For example, tests may be conducted by initially operating the vehicle at a minimum speed before acceleration or by idling the vehicle prior to accelerating to the speeds necessary for other crash tests. The availability of these alternative options and the extended lead time provided by this final rule will help mitigate any potential incurred costs.

Many commenters stated that part 563 should include the recording of additional ADAS/ADS data elements to improve EDR data effectiveness. Commenters stated the incorporation of new crash avoidance, pre-crash, and post-crash data elements would provide a greater safety value to improve driver-assistive safety technologies compared with increased recording duration and frequency. Several commenters recommended that a standard format for capturing and reporting data related to advanced safety systems should be defined and included as part of the EDR requirements. Some commenters encouraged NHTSA to follow a similar path to the European Union's (EU) recent mandate requiring the equipping of new vehicles with EDRs that record ADAS elements. Bosch recommended the use of other recorders to record information like driver and ADS state to determine the control of the vehicle before an event triggering EDR recording, such as the Data Storage System for Automated Driving (DSSAD) recommended by the UN ECE, or the SAE ADS data logger (SAE J3197).

While NHTSA agrees with commenters that additional data elements may be beneficial for collision reconstruction, this topic falls outside the scope of this rulemaking. The NPRM did not address the addition of any new data elements, and the rulemaking responds to the FAST Act's instruction to promulgate regulations establishing the appropriate amount of time that EDRs should capture and record data.

The agency may address the recording of additional data elements, including ADAS system status and performance parameters, in future rulemaking. Manufacturers may of course continue to include or add pre-crash data elements outside of those listed in part 563  42 to EDRs but must also comply with this final rule. Manufacturers may also continue to log data from modern safety features in other vehicle systems.

As explained in the NPRM, the DOT Privacy Office has determined that this rulemaking does not create privacy risk because no new or substantially changed technology will collect, maintain, or disseminate information in an identifiable form. NHTSA requested comment on this determination.

In response to this request, SAE stated that when part 563 was initially proposed it specified a recording duration of 8 seconds, which the agency reduced to 5 seconds to apply prudent judgment in balancing securing data with the privacy rights of an individual vehicle operator. 43 SAE cited the comment submitted by the Electronic Privacy Information Center (EPIC) in response to the initial proposal of establishing part 563, in which EPIC cited several Fair Information Practices (FIPs) limiting data collection based on purpose-specific principles and cautioned NHTSA against an incremental expansion of EDR data records as mandated policy. SAE stated NHTSA should demonstrate a clear public benefit for the proposed increased data capture duration, contrasted with a balance of personal privacy. Auto Innovators stated that expanding the pre-crash recording time to 20 seconds will capture a significant amount of driver behavior, much of which will not have any significant impact on the determination of crash causation factors that cannot currently be obtained by other crash reconstruction methods.

The agency emphasizes that EDRs do not record personally identifiable data, and captured data are regularly overwritten, except for specified crash events meeting the trigger threshold to retain data. Increasing the pre-crash recording duration from 5 seconds to 20 seconds should not increase privacy concerns, as no new or substantially changed technology will collect, maintain, or disseminate information in an identifiable form. Further, the Driver Privacy Act of 2015, part of the FAST Act  44 and implemented after the establishment of part 563, states that the owner or lessee of a motor vehicle is the owner of the data collected by an EDR. Recorded EDR data may only be retrieved for the purpose of improving motor vehicle safety and vehicle safety research (provided the data are not personally identifiable), or through the vehicle owners' consent or a court or administrative order. These privacy protections should alleviate expressed privacy concerns while allowing the agency to fulfill the FAST Act's mandate to establish the appropriate recording period in NHTSA's EDR regulation.

Several commenters expressed support for international harmonization of EDR functions. Specifically, SAE, Honda, Auto Innovators, MEMA, and Bosch stated they support a harmonized approach with UN ECE Regulation No. 160. 45 Commenters noted that UN Regulation No. 160-01, which went into effect in July 2024, has adopted additional data elements for modern safety technologies. SAE recommended maintaining a mandated EDR practice consistent with global EDR regulations to ease manufacturers' financial burden and avoid penalizing US vehicle buyers. In support of this approach, SAE discussed other global requirements, including those of Korea (KMVSS 56-2), Japan (J-EDR 2015), China (GB 39732-2020), EU (2022/545 based on UN R160), and Russia (Fed article 26 162-03), which all require a minimum of 5 seconds of pre-crash data captured at 2 Hz. Honda stated it has developed its EDRs to accommodate not only part 563 requirements, but also the various EDR regulations for China and UN R160 (00 and 01 Series).

NHTSA acknowledges that some other international EDR regulations specify a 5 second pre-crash data recording duration at 2 Hz. However, the agency has decided to proceed with the extended EDR data recording and frequency requirements proposed in the NPRM based on the requirements of the FAST Act and the findings of the EDR Duration Study, which found that capturing data at an increased recording duration and sample rate will enhance certainty when interpreting pre-crash data, resulting in improved crash investigations. In response to comments encouraging international harmonization in such areas as additional data elements for modern safety technologies, this topic falls outside the scope of the NPRM and will not be addressed in this rulemaking. However, the agency may address such topics in future EDR rulemakings, following review of the results of ongoing international efforts related to EDRs.

NHTSA received several other comments generally related to part 563. One individual supported an increased EDR duration but stated there is a need to update part 563's trigger threshold definition. This commenter stated that the current trigger threshold, which specifies an 8 km/h change in vehicle velocity within a 150 ms interval, may not capture non-air bag deployment events, such as collisions involving a vulnerable road user and a vehicle. IIHS-HLDI provided similar comments and suggested modifying part 563 to include automatic emergency braking (AEB) activation status as a trigger threshold, as many vehicles are equipped with AEB systems. The Institute also stated that adding data on vehicle-to-pedestrian collisions would improve roadway design and help refine vehicle structures and crash avoidance systems to mitigate the severity of those collisions.

One individual commenter stated part 563 should apply to all newly manufactured vehicles, regardless of weight. The commenter explained that some newer electric vehicles may weigh more than the applicability requirement of an unloaded vehicle weight of 5,500 lb. and would therefore be exempt from complying with part 563.

Although multiple commenters encouraged additional amendments to part 563, these suggestions fall outside the scope of the proposed rulemaking and are thus not included in this final rule. However, NHTSA may consider additional amendments to part 563 as part of a future rulemaking.

The requirements specified in this final rule affect vehicle manufacturers that produce light vehicles with a GVWR not greater than 3,855 kg (8,500 pounds) and voluntarily install EDRs in their vehicles. This rule also applies to final-stage manufacturers and alterers. Both the agency and the public have historically benefited from incorporating EDR information into crash and defects investigations, as the inclusion of EDR data leads to improved investigations and better understanding of injury causes and mechanisms.

The NPRM stated the proposed increased recording time for the pre-crash data would provide benefits by helping to ensure that data on the initiation of pre-crash actions and maneuvers are captured for most crashes. The agency explained this increased data would enhance the usefulness of the recorded information, potentially leading to further improvements in the safety of current and future vehicles. The agency also stated the proposed increase in data recording frequency would clarify the interpretation of recorded pre-crash information for crash investigators and researchers.

In relation to costs, the NPRM acknowledged that increasing the recording time of the pre-crash data could add additional costs for increased memory if an EDR had little or no excess memory in the module. In the NPRM, the agency stated it understood that about 99.5 percent of model year 2021 passenger cars and other vehicles with a GVWR of 3,855 kg or less are already equipped with part 563-compliant EDRs, that no additional hardware would be required by the proposed amendment, and that compliance costs would be negligible. The agency sought comment on potential costs and benefits associated with the NPRM's proposals.

Most commenters stated the proposal to increase the amount of pre-crash data captured and recorded would result in significant costs, including because of the need to upgrade and validate EDRs in vehicles. Many OEMs stated that costs would hinder the implementation of the proposed final rule, with some citing concerns over whether a real-world safety gap exists to justify costs incurred. Commenters stated the proposed changes would increase memory requirements, resulting in an increased overall EDR price. Commenters also stated software and hardware changes would be needed to meet the 20-second pre-crash capture requirements, including, where necessary, increased capacitance to provide power to the EDR and to make necessary changes to the printed circuit board.

Specifically, SAE pointed to a study done by the Federal Motor Carrier Safety Administration (FMCSA) on heavy-duty and commercial data recorders, referenced in the NPRM, stating it raised questions concerning the applicability of the cost estimates for flash memory. SAE also listed the following component changes and costs that must be considered for multiple module designs: microprocessor upgrade, additional memory (both RAM and nonvolatile memory), energy reserve increase, PCB design changes, module housing changes, potential mounting changes in vehicle software and hardware engineering design and development cost, component validation cost, vehicle validation cost for new module designs, and vehicle level recertification.

GM expressed concerns over the burdens associated with increased EDR complexity and the inability of different regions to arrive at a more common technical solution, pointing to recently implemented worldwide EDR regulations that maintain the 5-second pre-crash recording interval and sample rates historically required by part 563. GM further stated the cost estimate in the NPRM is not negligible and does not fully encompass all the required changes proposed by the NPRM, which could include component validation, full vehicle validation, and vehicle recertification of the EDR and the Sensing and Diagnostic Module.

Auto Innovators submitted additional comments related to costs following the closing of the NPRM comment period. 46 These comments stated that, based on member responses, the estimated average cost of development and testing to meet the proposed rule would be $8.4 million dollars per manufacturer, with an average estimated cost increase of $5.40 per vehicle to develop an EDR meeting the proposed rule. Given those estimates, Auto Innovators stated that, assuming an average annual light duty vehicle production of 16.4 million vehicles for 17 OEMs, the cost burden for the first year would be $231.36 million. Auto Innovators explained this is the sum of each OEM's development/test costs and that, assuming the same annual production took place, the annual cost burden following the first year of implementation of the final rule would be $88.56 million, based on the annual affected vehicle production times the incremental EDR module cost.

Commenters also stated manufacturers may require vehicle crash tests to ensure the data transferred from sensors in the vehicle to the EDR are not affected by hardware updates. Commenters stated costs to consumers and lead-time implications are especially important because of such issues as supply chain disruptions, microchip shortages, high inflation, and economic uncertainty. Auto Innovators also stated NHTSA should consider equity issues given the average new car price of vehicles.

In support of the proposal, NAMIC commented that the costs to increase the recording duration are warranted by the benefits of more and better pre-crash data, even if costs in addition to memory are required ( e.g., redesign for a larger unit, additional RAM, etc.). NAMIC stated the proposed changes provide greater safety value than any additional costs to the vehicle. CAS stated the price of flash memory used to estimate costs in the NPRM was overestimated and that OEMs may receive discounts for bulk memory purchases. CAS further stated the incremental cost associated with upgrading the memory would not prevent the expansion of EDR data storage.

The agency does not agree with comments expressing skepticism over the benefits of the NPRM's proposed increased recording duration and frequency requirements. This final rule's requirements will improve crash investigations and crash data collection quality, ultimately assisting the agency and others in identifying potential opportunities for safety improvement in vehicles already on the road, improving future vehicle designs, and creating more effective safety regulations. The increased information captured by the requirements of this final rule will aid not only the agency, but also crash investigators, first responders, and others.

However, following review the agency does find certain comments received stating that the NPRM did not consider additional costs associated with the NPRM's proposal compelling. As such, NHTSA has revised the cost estimates originally provided in the NPRM to include two different EDR versions: those solely requiring software changes to meet the proposed rule and those requiring both hardware and software changes. The updated estimated benefits and costs associated with this final rule are detailed below.

EDR data are invaluable for improving system performance. EDR data improve crash investigations and crash data collection quality, which assists safety researchers, vehicle manufacturers, and the agency to better understand vehicle crashes and help determine crash causation. 47 Similarly, vehicle manufacturers can use EDR data to improve vehicle designs and develop more effective vehicle safety countermeasures. For example, as mentioned in the NPRM, the Toyota unintended acceleration study  48 confirmed the significant value of EDR pre-crash data. 49 The agency successfully used this EDR data to assist in determining the root cause of the events and to support the safety recalls. Further, in 2016, the agency used EDR data to establish crash scenarios and vehicle dynamics when evaluating the efficacy of vehicle-to-vehicle (V2V) communication technologies in an NPRM for V2V. 50

The requirements of this final rule will fulfill the outstanding need of adequate recording of pre-crash actions for investigation and reconstruction without overtasking the vehicle's power and memory needs for capturing EDR data. The amendments may also result in foundational upgrades to the hardware and software for a modernized EDR, which could in turn support the capture and recording of other data elements. This final rule's increased recording duration and refined resolution may also provide OEMs with more granular pre-crash information that manufacturers can use to evaluate and develop improvements for vehicle systems. NHTSA acknowledges that, similar to the establishment of part 563, it is difficult to estimate the exact portion of benefits creditable to an increased amount of EDR data after a standard is implemented or a safety countermeasure is developed. While stored data are valuable in terms of safety research and emergency response, it is not easy to quantify how they translate to the improvement of vehicle safety. However, increased recording duration and frequency will provide many overall benefits to the public, as described below.

Per the findings of the EDR Duration Study, the current part 563 EDR pre-crash recording duration of 5 seconds does not capture the initiation of pre-crash braking and steering maneuvers in a substantial percentage of cases. Based on the findings of the study a recording duration of 20 seconds is required to ensure that the initiation of pre-crash actions and maneuvers can be captured for most crashes. The three crash modes examined in the EDR Duration Study—rear-end, intersection, and roadway departure—comprised about 70 percent of all passenger vehicle crashes, annually. 51 Separately, these crashes represent the most prevalent, relatively longer maneuvered times required, and relatively severe crashes (based on fatalities). Therefore, the newly required 20 second recording time is adequate to record the pre-crash actions for almost all crashes given the collective frequency of these three crash types and what they represent.

Increasing the recording duration of pre-crash data will help ensure that data on the initiation of crash avoidance driving maneuvers are captured for most crashes. This increased recording duration will enhance the usefulness of the recorded information, potentially leading to further improvements in the safety of current and future vehicles. The study also found that a better understanding of pre-crash actions will assist in the evaluation of emerging crash avoidance systems ( e.g., lane departure warning, lane keeping assist, forward collision avoidance, automatic emergency braking, and intersection safety assistance systems).

The 20 second extended recording duration will be particularly useful in intersection crashes, which have an approach stage as the vehicle comes to the intersection and a traversal stage in which the vehicle is exposed in the intersection. Based on the EDR Duration Study, the currently required 5-second recording duration captures less than 1 percent of the total intersection event time, which includes the approach and traversal stage. The study found that 15 seconds would capture 50 percent of the total intersection event time, and 20 seconds would capture 95 percent of the total intersection event time. With this final rule's increased recording duration, actions such as running a stop sign, rolling stops, or running a red light could be captured in full and included in the crash reconstruction when supplemented with roadway and traffic control information. In road departure crashes, longer durations could also capture any corrective maneuvers by the vehicle before the initial road departure.

Currently most EDRs capture pre-crash data at a frequency of 2 Hz. However, based on EDR records in the NASS-CDS and CISS (Crash Investigation Sampling System) databases, some manufacturers already use models that voluntarily capture pre-crash data at 5 Hz or 10 Hz. Further, some vehicle manufacturers and suppliers have indicated their support for an increased frequency rate. When manufacturers and suppliers were asked about near-term plans for EDRs in the EDR Technology Study, some respondents expressed interest in adding, “higher sampling frequency and longer recording interval for pre-crash data, i.e., sampling interval better than 1/10 of a second.”  52

In support of the benefits of this final rule's amendments to part 563, an increase in data recording frequency will help clarify the interpretation of recorded pre-crash information. For example, rapid vehicle control inputs ( e.g., brake application and release or rapid reversals in steering input of less than 0.5 seconds) may not be logged by an EDR that records data at 2 Hz. Although 20 seconds of pre-crash data will capture more crash causation information, a refinement in acquisition frequency is also needed to assuage data misinterpretation concerns. An improved data sampling rate is also needed due to the nature of crashes, which can include a quick sequence of events prior to a crash that require a vehicle's crash avoidance technologies, such as Anti-lock Braking System and Electronic Stability Control, to activate quickly. To understand the performance and effectiveness of such systems, the sample rate of pre-crash data elements should be increased. In addition, as EDR output for pre-crash data elements is not synchronized, 53 including at the previously required sample rate of 2 Hz, uncertainty could exist when an investigator is attempting to compare data at specific points in time with precision. The higher sample rate required by this final rule will reduce this potential uncertainty in relation to the relative timing of recorded data elements, to better correlate a driver's commands and a vehicle's performance.

This final rule's increased sample rate will also benefit crash causation analysis and pre-crash behavior. For example, additional events like momentary highly dynamic steering inputs, ABS, or ESC activation that are not recorded at the 2-Hz sample rate could be captured at 10 Hz. For multi-impact crash events, a sample rate of 10 Hz will allow the EDR to better capture the actions that occur when a vehicle undergoes a series of events ( e.g., lane departure resulting in striking an object followed by striking another object in immediate succession).

Further, an increase in recording frequency could help investigators better identify where vehicle dynamics prior to a crash event relate to pedal misapplication. Pedal misapplication crashes occur when a driver presses one pedal while intending to press another pedal. In an emergency braking situation, pedal misapplication would result in the driver pressing the accelerator pedal hard. Identifying and decreasing pedal misapplication events is important, as a recent study observed pedal misapplication rates involved a much higher percentage of events than previously estimated. 54 While data points can be estimated to account for data gaps when recorded at 2 Hz, driver actions may not be captured by the EDR at the time they occur. This informational gap may result in underestimations of the accelerator application rate, resulting in a failure to identify pedal misapplication entirely, if, for example, the driver fully presses the accelerator pedal to 100 percent for a quarter of a second. An increased recording frequency of 10 Hz will help identify events involving pedal misapplication, potentially providing additional information on how to mitigate these events and improve vehicular safety.

Finally, in addition to the many benefits provided by this final rule's requirement to increase part 563's data recording frequency requirements to 10 Hz, manufacturers' voluntary integration of ADAS data elements recorded at a sample rate of 10 Hz could provide valuable insights on the performance of new technologies. For example, some vehicle manufacturers already voluntarily collect EDR data on the status and operation of ADAS technologies ( e.g., activation of forward crash warning alerts, automatic emergency braking activations, and lane keeping assist technologies). In voluntarily collecting this information, manufacturers have generally adopted the sample rate used for pre-crash data elements voluntarily recorded by the EDR (2 Hz), but some current EDRs capture data at 10 Hz. Evidence has shown that an increased sample rate of 10 Hz will help provide the resolution needed to understand the real-world performance and effectiveness of these advanced crash avoidance systems and better estimate the actions of the vehicle prior to a crash, such as the traveling trajectory. 55 This information will in turn allow researchers to better determine the timing of the sequence of pre-crash actions.

The Preliminary Regulatory Evaluation (PRE) the NPRM relied on to estimate costs considered only vehicles equipped with EDRs containing sufficient memory, microprocessor specifications, and reserve energy to record 20 seconds of data at 10 Hz. NHTSA acknowledges comments criticizing the NPRM's cost estimates for not adequately accounting for any changes needed to meet the proposed amendments.

For example, the NPRM estimated additional memory costs by multiplying the additional 1,330 bytes to record for 20 seconds at 10 Hz by the cost of flash memory (0.072 cents/megabyte) reported in the EDR Technology Study. This calculation resulted in a cost estimate of $0.003 for additional memory per event. However, in response to comments received, the agency reviewed online estimates, which indicate that the unit cost for a 16 kB, 32 kB, and 64 kB EEPROM is $0.41, $0.46, and $0.56, respectively. 56 This pricing results in an additional cost of $0.15 to increase memory from 16 kB to 64 kB. 57 As such, this final rule is updating the estimated unit cost for memory upgrade (if all seven pre-crash data elements are recorded) to be $0.13 per vehicle. The $0.13 per vehicle includes $0.06 per vehicle to upgrade the storage memory and $0.07 per vehicle to upgrade the RAM, both based on two events being recorded.

Although the PRE still applies to EDRs with sufficient memory, microprocessor specifications, and reserve energy to meet this final rule's requirements, NHTSA acknowledges it did not comprehensively consider costs associated with older EDR technologies and the corresponding level of upgrades potentially required in vehicles equipped with them, including costs for redesign and validation. Per comments received, NHTSA understands not all vehicles are equipped with EDRs containing sufficient memory/processor capability/reserve energy to require only software changes. 58 Based on feedback from commenters and in acknowledgement of this issue, NHTSA has revisited the cost estimates presented in the NPRM to determine the costs associated with meeting the requirements of this final rule given the wide variety of EDRs currently available.

Unlike the PRE, this final rule includes estimated costs for EDRs currently compliant with part 563 that need upgrades to meet this final rule's new recording duration and frequency requirements. These updated cost estimates are presented via a “lower bound” and “upper bound” to capture the potential range for the total cost of the final rule. These bounds are in place to avoid speculating on how many vehicles and EDR platforms would only require software changes to meet the new data capture requirements versus those that would require hardware and software changes.

The cost estimates presented in the Final Regulatory Evaluation (FRE) now represent a “lower bound” reflecting the incremental costs of “upgraded EDRs” that already have the capacity to comply with this final rule. 59 The “upper bound” represents all the potential components of an EDR that may require upgrades to transition from a “base EDR” to an “upgraded EDR” to meet the requirements of this final rule. For this category of EDRs, the estimated costs encompass more than the incremental costs required to meet this final rule. As EDRs currently vary in hardware capabilities, the actual cost of the final rule should fall somewhere between the lower bound and upper bound of the cost estimates laid out below.

Every part 563 pre-crash data element will require the capturing of an additional 190 data points to meet the 20 second recording duration and 10 Hz frequency requirement of this final rule. Specifically, for the 3 required data elements in Table I, the total number of additional data points is 570. For all 7 pre-crash data elements in Table I and II, the total number of additional data points is 1,330. The NPRM explained that manufacturers could accommodate this needed increase in memory by using the existing memory already available for capturing and recording EDR data (typically in the ACM). The NPRM estimated associated costs for these additional memory needs (1.33 kB for all 7 pre-crash elements) would be $0.003 per vehicle based on a conservative estimate of $0.002/kB. However, as previously acknowledged, these estimated costs did not account for EDRs requiring hardware upgrades based on insufficient reserve energy or microprocessors.

While many newer generation EDRs record at rates between 5 Hz to 10 Hz, most EDRs still record 5 seconds of pre-crash data. Although the agency has a large pool of EDR data, ascertaining the exact hardware specifications among various EDRs for the purposes of this rulemaking is not practical, as EDR modules come with a variety of chip designs capable of accomplishing similar functionality with similar costs, and this information is proprietary. The varied and proprietary nature of EDR designs thus makes defining a representative “base EDR” challenging. Further, EDR designs vary not only by manufacturer, but also often by vehicle model, and EDR capabilities are not standardized. Indeed, they must only meet the minimum requirements in part 563. For example, some EDRs record more than 5 seconds of pre-crash data, some record more than two events, and some voluntarily record more optional data elements than those specified in Table I or Table II of part 563. Further, some EDRs record the required and optional pre-crash data at different sample rates.

Despite the lack of available data needed to perform a comprehensive assessment of EDR design specifications and corresponding functionalities, the agency used its best knowledge to adequately describe a representative base EDR representing the upper bound for the cost estimates based on the specifications in Table 3. We assumed that a base EDR does not have sufficient excess memory to record pre-crash data for 20 seconds at 10 Hz, requiring the microcontroller and reserve energy to be upgraded or increased to meet the requirements of this final rule. We also assumed that a base level EDR must be fully upgraded/modernized, meaning its associated costs are well in excess of the incremental costs associated with making an already updated EDR compliant with the final rule. This cost is more representative of a vehicle manufacturer updating its EDR capability with an eye towards recording additional data elements, such as data elements required by UN R160. If a manufacturer chooses to capture and record ADAS-related pre-crash data elements not listed in part 563, then hardware components may need to be upgraded well beyond what is required by this final rule. However, as mandated by the FAST Act, NHTSA is only changing the duration and sample rate of part 563 pre-crash data elements.

For the lower bound of cost estimates, we assumed a vehicle is already equipped with an EDR capable of capturing pre-crash data for 20 seconds at 10 Hz, as well as additional unrequired data ( i.e., it has already been upgraded by the vehicle manufacturer from the base level previously discussed to the fully modernized level). In this scenario, the “upgraded EDR” would not require hardware changes but may still require development time for software changes, testing, and validation. As a result, the estimated cost for this scenario would only include software redesign and EDR validation. An upgraded EDR representing the lower bound is described by the specifications in Table 3.

As shown in Table 3, the estimated cost to upgrade only the hardware of the base EDR to that of the upgraded EDR is $1.33 per EDR. This cost estimate includes an increase in the non-volatile memory capacity, a higher-performance MCU, and more reserve energy to capture and record the data and backup power to the system.