Pursuant to its authority under ECOA, 15 U.S.C. 1691b(a), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 12 U.S.C. 5512(b), the Bureau is proposing to amend provisions in Regulation B, 12 CFR part 1002, pertaining to: whether disparate impact is cognizable under the Act; under what circumstances a creditor may be deemed to be discouraging an applicant or prospective applicant; and under what conditions may a creditor offer special purpose credit programs.

In 2020, the Bureau issued a Request for Information on ECOA and Regulation B (RFI). 1 The RFI solicited information about disparate impact, prospective applicants, and special purpose credit programs, among other topics. The Bureau reviewed the comments submitted in response to the RFI and obtained other information in the course of carrying out its statutory responsibilities.

In order to carry out the purposes of ECOA, the Bureau proposes changes to Regulation B to provide that ECOA does not authorize disparate-impact liability (effects test), further define discouragement, and add prohibitions and restrictions for special purpose credit programs.

Congress enacted ECOA in 1974 (1974 Act) “to insure that various financial institutions and other firms engaged in the extensions of credit exercise their responsibility to make credit available with fairness, impartiality, and without discrimination on the basis of sex or marital status.” To that end, section 701(a) of ECOA made it “unlawful for any creditor to discriminate against any applicant on the basis of sex or marital status with respect to any aspect of a credit transaction.” The Board of Governors of the Federal Reserve System (Board) promulgated regulations implementing ECOA. In 1976, Congress reenacted ECOA in its entirety, amending ECOA to add additional categories of prohibited discrimination (1976 Act). Since 1976, ECOA makes it unlawful for “any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant's income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under [the Consumer Credit Protection Act]” (prohibited basis). 2 The Board, which at the time had exclusive rulemaking authority under ECOA, promulgated regulations, after notice-and-comment, to implement the 1976 Act.

In 2011, the Dodd-Frank Act transferred responsibility for ECOA from the Board to the Bureau. 3 It granted primary authority to the Bureau to supervise and enforce compliance with ECOA and Regulation B for entities within the Bureau's jurisdiction and to issue regulations and guidance to implement and interpret ECOA. 4 The Bureau's Regulation B substantially duplicates the Board's Regulation B making only certain non-substantive, technical, formatting, and stylistic changes. 5

In 2020, the Bureau published an RFI seeking comments and information to identify opportunities to prevent credit discrimination, encourage responsible innovation, promote fair, equitable, and nondiscriminatory access to credit, address potential regulatory uncertainty, and develop viable solutions to regulatory compliance challenges under ECOA and Regulation B. 6 The RFI requested information related to disparate impact, prospective applicants, and special purpose credit programs (SPCPs), among other issues. In response to the RFI, the Bureau received and reviewed over 35 comment letters. In addition, the Bureau has obtained pertinent information in the course of carrying out its supervisory and enforcement responsibilities.

In 2025, the President issued several Executive Orders relevant to the Bureau's administration of ECOA. Executive Order 14173, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” states in part that “[t]he Federal Government is charged with enforcing our civil-rights laws. The purpose of this order is to ensure that it does so by ending illegal preferences and discrimination.”  7 Executive Order 14281, entitled “Restoring Equality of Opportunity and Meritocracy,” states in part that “[i]t is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.”  8

Consistent with these actions, the Bureau proposes this rule to (i) provide that ECOA does not authorize disparate impact claims; (ii) amend the prohibition on discouraging applicants or prospective applicants to clarify that it prohibits statements of intent to discriminate in violation of ECOA and is not triggered merely by negative consumer impressions, and to clarify that encouraging statements by creditors directed at one group of consumers is not prohibited discouragement as to applicants or prospective applicants who were not the intended recipients of the statements; and (iii) amend the standards for SPCPs offered or participated in by for-profit organizations to include new standards and related restrictions. The proposed rule is discussed further below. The Bureau seeks comments on the entire proposal.

In Griggs v. Duke Power Co. 9 and subsequent cases, the Supreme Court held that certain provisions in antidiscrimination statutes may authorize disparate-impact claims. Under a disparate-impact claim, a plaintiff may challenge as unlawful discrimination facially neutral policies that have a disproportionate effect along prohibited basis lines. The Supreme Court has noted that “[i]n contrast to a disparate-treatment case, . . . a plaintiff bringing a disparate-impact claim challenges practices that have a disproportionately adverse effect on minorities and are otherwise unjustified by a legitimate rationale.”  10

In Griggs, the Supreme Court held that disparate impact claims are cognizable under section 703(a)(2) of Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment practices. In Smith v. City of Jackson, 11 a plurality of the Supreme Court held that the Age Discrimination in Employment Act (ADEA) authorizes disparate-impact claims. Most recently, in Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc., 12 the Supreme Court held that disparate-impact claims are cognizable under the Fair Housing Act (FHA). However, the Supreme Court has not held that disparate-impact claims are necessarily available under all antidiscrimination statutes. Instead, the Court has reviewed each statutory provision, when challenged, to determine whether it authorizes disparate-impact claims, whether disparate-impact claims are consonant with the intended operation of the statute, and in particular whether the statutory provisions have “effects-based” language that indicates that Congress intended for the statutory provision to permit disparate-impact claims.

The Supreme Court has not determined whether a disparate-impact claim is permitted under ECOA. As noted above, section 701(a) of ECOA, as enacted in 1974, made it “unlawful for any creditor to discriminate against any applicant on the basis of sex or marital status with respect to any aspect of a credit transaction.” In the 1976 Act, ECOA makes it unlawful for “any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant's income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under [the Consumer Credit Protection Act].”  13

The text of ECOA does not state that disparate-impact claims are cognizable under ECOA, nor does it contain effects-based language of the type that has been found in other statutes to invoke disparate-impact liability. However, in promulgating Regulation B, the Board relied on legislative history to support authorizing disparate-impact liability. For example, the Senate Report accompanying the 1976 Act stated:

The Board's regulations to implement the 1976 Act explicitly and solely relied on this legislative history to conclude that Congress intended for ECOA to permit an “effects test concept,” i.e., disparate-impact proof of liability. 16 Although there have been minor amendments to the relevant language in Regulation B since 1977, Regulation B has continued to point to the legislative history of ECOA to support the conclusion that disparate-impact claims are cognizable under ECOA. 17

Regulation B currently provides in § 1002.6 that the legislative history of ECOA indicates that the Congress intended an “effects test” concept, as outlined in the employment field by the Supreme Court in the cases of Griggs, 401 U.S. 424, and Albemarle Paper Co., 422 U.S. 405, to be applicable to a creditor's determination of creditworthiness. Comment 6(a)-2 explains the “effects test,” cites to the legislative history of ECOA, and provides an example. Comment 2(p)-4, which relates to the definition of “empirically derived and other credit scoring systems,” refers to the “effects test,” noting that neutral factors used in credit scoring systems could nonetheless be subject to challenge under the effects test and cross-referencing comment 6(a)-2.

Section III.A below discusses the ways in which this proposed rule would change the current rule regarding disparate impact.

Regulation B § 1002.4(b) currently provides that, “[a] creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.”  18 Current comments 4(b)-1 and (b)-2 provide additional details about conduct prohibited or permitted under the provision.

The Board adopted a precursor to current § 1002.4(b) in its 1975 final rule implementing the 1974 Act. 19 The 1974 Act did not specifically mention discouragement of applicants or prospective applicants. To adopt the provision, the Board thus relied on its authority under ECOA section 703(a)—authority that the Dodd-Frank Act subsequently transferred to the Bureau—to make adjustments in Regulation B that, in its judgment, were necessary or proper to effectuate ECOA's purposes. 20 Specifically, ECOA section 703(a) provides that the Bureau (previously the Board) “shall prescribe regulations to carry out the purposes of [ECOA],” and that such regulations:

In 1975, ECOA applied only to discrimination based on sex or marital status, and the discouragement prohibition as initially adopted was limited accordingly. In 1977, consistent with the 1976 Act that expanded ECOA to prohibit discrimination based on protected characteristics beyond sex or marital status, the Board revised the discouragement provision to its current phrasing, prohibiting discouragement “on a prohibited basis.”  22 The Board later added commentary providing examples of prohibited conduct. 23 In 1991, Congress amended ECOA to require enforcing regulatory agencies to refer to the Department of Justice cases that the agencies believed involved a pattern or practice of one or more creditors discouraging or denying applications for credit in violation of ECOA section 701(a). 24

In 2011, the Bureau republished Regulation B's discouragement provision without material change in what is now § 1002.4(b) and the commentary thereto. In 2024, the U.S. Court of Appeals for the Seventh Circuit held that Regulation B's prohibition against discouragement is consistent with the plain text of the ECOA. In so holding, the court observed that the discouragement provision had been adopted pursuant to the Board's (now the Bureau's) broad authority to “prescribe regulations to carry out the purposes of [ECOA],” and to “provide for such adjustments and exceptions” that, in the Bureau's judgment, “are necessary or proper to effectuate the purposes of [ECOA], to prevent circumvention or evasion thereof, or to facilitate or substantiate compliance therewith.”  25

Section III.B below discusses the ways in which this proposed rule would change the current rule regarding discouragement.

As noted above, ECOA prohibits a creditor from discriminating on a prohibited basis regarding any aspect of a credit transaction. At the same time, ECOA section 701(c)(3) (15 U.S.C. 1691(c)(3)) states that it does not constitute discrimination under the Act for a creditor “to refuse to extend credit offered pursuant to” “any special purpose credit program offered by a profit-making organization to meet special social needs which meets standards prescribed in regulations by the [Bureau].”  26

The intent of ECOA section 701(c)(3), as reflected in the legislative history, is as follows:

The Board promulgated regulations implementing the 1976 Act's special purpose credit program (SPCP) provision in what was then § 202.8. 28 As noted above, the Dodd-Frank Act transferred ECOA rulemaking authority to the Bureau, which in 2011 republished Regulation B's SPCP provision without material change in what is now § 1002.8 and the commentary thereto. More recently, the Bureau in January 2021 issued an advisory opinion (AO) addressing SPCPs implemented by for-profit organizations to meet special social needs. 29 The AO clarified the content that a for-profit organization must include in a written plan that establishes and administers an SPCP under Regulation B. 30

Under Regulation B, a for-profit organization that offers or participates in an SPCP to meet special social needs must establish and administer the SPCP pursuant to a written plan that identifies the class of persons the program is designed to benefit and sets forth the procedures and standards for extending credit pursuant to the program. 31 In addition, the for-profit organization must establish and administer the SPCP to extend credit to a class of persons who, under the organization's customary standards of creditworthiness, probably would not receive such credit or would receive it on less favorable terms than are ordinarily available to other applicants applying to the organization for a similar type and amount of credit. 32

A for-profit organization's SPCP qualifies as such only if it was established and is administered so as not to discriminate against an applicant on any prohibited basis. 33 However, the SPCP may require its participants to share one or more common characteristics that would otherwise be ECOA prohibited bases so long as the program does not evade the requirements of ECOA or Regulation B. 34 If the SPCP does require its participants to share one or more common characteristics, and if the program otherwise complies with Regulation B, a creditor may request and consider information regarding the common characteristic(s) in determining the applicant's eligibility for the program. 35

The Bureau discusses the ways in which this NPRM would change the current rule regarding SPCPs provided by for-profit organizations in section III.C below.

Consistent with section 1022(b)(2)(B) of the CFPA, the Bureau offered to consult with the appropriate agencies, including regarding consistency with any prudential, market, or systemic objectives administered by these agencies.

The Bureau is proposing changes to § 1002.6(a) and its accompanying commentary. Consistent with Executive Order 14281, the Bureau has examined Regulation B and considered whether disparate-impact claims may be cognizable under ECOA. The Bureau has preliminarily determined that, under the best reading of the statute, disparate-impact claims are not applicable under ECOA. As a result, the Bureau is proposing to delete language in § 1002.6(a) and its accompanying commentary indicating that disparate-impact liability, which is referred to in the rule as the “effects test,” may be applicable under ECOA, and add language stating that the Act does not recognize the “effects test.” The Bureau is also proposing to delete the language in comment 2(p)-4 referring to the effects test. The Bureau is requesting comment on these proposed changes and on its preliminary determination that disparate-impact claims are not applicable under ECOA.

The Bureau has preliminarily determined that Regulation B's conclusion that disparate-impact claims may be cognizable under ECOA is not the best interpretation of ECOA. In particular, the Bureau has preliminarily determined that the Board (and later the Bureau) relied solely on the legislative history of ECOA to support its conclusion and failed to consider whether ECOA's statutory language authorized disparate-impact liability. The Bureau has preliminarily determined that ECOA's statutory language does not authorize disparate-impact liability and that the application of disparate impact liability in the credit context may undermine ECOA's purposes.

The Board's regulations to implement the 1976 Act relied solely on the legislative history to support its conclusion that Congress intended for ECOA to permit an “effects test concept” ( i.e., disparate-impact) proof of liability. Section 202.6(a), the precursor to § 1002.6(a), provided in a footnote that the legislative history of the Act indicates that the Congress intended an “effects test” concept, as outlined in the employment field by the Supreme Court in the cases of Griggs, 401 U.S. 424, and Albemarle Paper Co., 422 U.S. 405, to be applicable to a creditor's determination of creditworthiness. 36 Further discussion of the effects test was later added to the commentary to what is now § 1002.6(a). 37 Although there have been minor revisions to what is now § 1002.6(a), that provision has continued to provide, based solely on the legislative history, that disparate-impact liability may apply to ECOA.

Since Griggs, the Supreme Court has closely examined the relevant statutory language of other antidiscrimination laws to determine whether disparate-impact liability is authorized by those laws. In particular, the Supreme Court has examined whether the statute in question includes language focused on the effects of the action rather than the motivation for the action. For example, in Smith v. City of Jackson, the Supreme Court emphasized that section 4(a)(2) of the ADEA and section 703(a)(2) of Title VII—which was found to authorize disparate-impact claims in Griggs —both contain language that “prohibit[s] such actions that deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race or age.”  38 In Inclusive Communities, the Supreme Court concluded that “ Griggs holds and the plurality in Smith instructs that antidiscrimination laws must be construed to encompass disparate-impact claims when their text refers to the consequences of actions and not just to the mindset of actors, and where that interpretation is consistent with statutory purpose.”  39 The Supreme Court held in Inclusive Communities that the language “otherwise make unavailable” in section 804(a) of the FHA refers to the consequences of an action rather than the actor's intent and therefore supports recognizing disparate-impact claims. 40

In contrast, the relevant language of ECOA does not include similar effects-based language supporting disparate-impact liability. Section 701(a)(1) of ECOA makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age. 41 ECOA does not contain any language like “otherwise make unavailable” or “otherwise adversely affect” that suggests that disparate impact claims are cognizable.

The Bureau recognizes that in Inclusive Communities, the Supreme Court held that, like section 804(a), section 805(a) of the FHA also authorizes disparate-impact claims, even though section 805(a) does not include effects-based language. Section 805(a) provides that it is unlawful “for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.”  42 The Supreme Court provided limited explanation for concluding that section 805(a) authorizes disparate-impact claims, noting only that it has construed statutory language similar to section 805(a) to include disparate-impact liability, citing Bd. of Educ. of City Sch. Dist. of New York v. Harris, 444 U.S. 130 (1979). 43 Because the Supreme Court provided no meaningful analysis of the statutory language of section 805(a) in Inclusive Communities, it provides little insight into how that holding should apply to ECOA, if at all. In the absence of such guidance, the Bureau relies on the analysis in Harris to inform the interpretation of ECOA, consistent with the Court's approach in Inclusive Communities.

The statute in Harris, section 706(d)(1) of the Emergency School Aid Act (ESAA), made an agency ineligible for assistance if it “had in effect any practice, policy or procedure which results in the disproportionate demotion or dismissal of instructional or other personnel from minority groups in conjunction with desegregation . . . or otherwise engaged in discrimination based upon race, color, or national origin in the hiring, promotion, or assignment of employees.”  44 The Supreme Court noted that the first portion of the statute “clearly speaks in term of effect or impact” but that the second portion (otherwise engaged in discrimination) “might be said to possess an overtone of intent.”  45 The Court noted, however, that the use of the word “otherwise” in the second portion suggests that the disparate-impact standard should also apply to that provision. The Court noted that absent a good reason, “one would expect that for such closely connected statutory phrases, a similar standard” would apply. The Supreme Court noted that ESAA's language “suffers from imprecision of expression and less than careful draftsmanship” and therefore found it necessary to consider other factors to interpret the statutory language. 46 The Court looked to the structure, context and legislative history of the statute to conclude that disparate-impact liability also applied to the second portion of the provision.

In contrast to the statute at issue in Harris, section 701(a) of ECOA does not suffer from ESAA's less than careful draftsmanship that would render it similarly ambiguous and therefore require additional consideration of the structure, history, and purpose to interpret its meaning. ECOA does not include any effects-based language supporting disparate-impact liability, nor any “otherwise” language, as in ESAA, that may cloud the directness of its prohibition. ECOA section 701(a) is a straightforward, plainly stated prohibition against discrimination on the basis of certain characteristics. As a result, the Bureau preliminarily determines that section 701(a) does not authorize disparate-impact claims.

Even if it were necessary to resort to other considerations to interpret section 701(a), the wording (discussed above), structure, and context all differ from the statutory provisions at issue in Harris and Inclusive Communities in ways that counsel reaching a different conclusion. (As discussed below, the Bureau does not find the legislative history to be a sufficient basis to override the conclusions drawn from the other factors.) After balancing these factors, giving the most weight to the language of the statute, the Bureau preliminarily determines that the best interpretation of ECOA is that section 701(a) does not authorize disparate-impact claims. In terms of its structure, ECOA differs from both ESAA and FHA. As noted above, the Supreme Court in Inclusive Communities carefully analyzed the statutory language of section 804(a), along with other factors, to determine that section 804(a) authorized disparate-impact liability. However, the Supreme Court provided no meaningful analysis of the statutory language of section 805(a) and cited to Harris to support the principle that the Court had found similar language to support disparate-impact liability. Read together, Harris and Inclusive Communities suggest that a statutory provision without effects-based language may be ambiguous as to whether it authorizes disparate-impact liability when there is closely connected statutory language that provides for disparate-impact liability.

Unlike the statutory provisions at issue in Harris and Inclusive Communities, however, neither section 701(a) of ECOA nor any closely connected statutory provisions include any effects-based language supporting disparate-impact liability. In the absence of such closely connected effects-based language, the best interpretation of the text of section 701(a) is that it does not provide for disparate-impact liability.

The Bureau also preliminarily determines that interpreting ECOA as not authorizing disparate-impact claims is consistent with the statutory purposes of ECOA, suggesting that the credit market context of ECOA also militates against the statute encompassing disparate impact. As noted in part II, ECOA was adopted to ensure that various financial institutions and other firms engaged in the extensions of credit exercise their responsibility to make credit available with fairness, impartiality, and without discrimination on the basis of prohibited characteristics. The Bureau, in exercising its expertise, is concerned that disparate-impact liability may lead some creditors to consider prohibited characteristics in developing policies and procedures, contrary to ECOA's purposes, in order to minimize potential liability. Under a regime with disparate-impact liability, creditors may believe that they are required not only to consider the impact of facially neutral policies and procedures on protected classes, but to adjust those policies with the goal of achieving particular protected class outcomes, in order to avoid potential disparate-impact claims. This may even involve policy changes that disadvantage certain protected classes in an effort to reduce the disadvantages for others. That the application of disparate-impact liability may promote, rather than prohibit, such intentional protected class discrimination further indicates that interpreting ECOA as not permitting disparate-impact claims is the most appropriate reading of the statute. 47 Moreover, the Bureau is concerned that creditors may be deterred from pursuing innovative and/or cost-reducing policies and procedures because they are uncertain about the impact on protected classes. The Bureau requests comment on its preliminary determination that interpreting ECOA as not authorizing disparate-impact liability is consistent with the statutory purpose.

The Bureau recognizes that Regulation B currently relies on the legislative history of ECOA for evidence of congressional intent that disparate-impact claims may be cognizable under ECOA. If ECOA contained effects-based language or if the statutory language were ambiguous—as with the FHA and the since-repealed ESAA—then the legislative history would provide stronger evidence to support an interpretation that disparate-impact liability is permitted under ECOA. However, consistent with Supreme Court precedent, the most important consideration is the statutory language. 48 The Bureau preliminarily determines, therefore, that the evidence from the legislative history is insufficient to support an effects test given the statutory language and the absence of effects-based language in section 701 or anywhere else in ECOA. The Bureau requests comment on this preliminary determination.

The Bureau preliminarily concludes that any reliance interests in the existing regulatory interpretation permitting disparate-impact liability would not outweigh revising Regulation B to bring it into closer alignment with the statutory text. Consumers who may be affected by creditors' facially neutral policies that have disparate effects may have reliance issues in the existing framework. Creditors may have developed compliance systems consistent with the existing framework. However, consumers would remain protected under ECOA from disparate treatment, including facially neutral policies and procedures that creditors adopt as proxies for intentional discrimination. Creditors would have greater flexibility to adopt facially neutral policies and procedures. The Bureau requests comment on this preliminary determination.

Notwithstanding Griggs and its progeny, there may be serious concerns about the constitutionality of disparate-impact liability as to certain ECOA-protected classes. The Supreme Court has recently emphasized that policies and procedures that attempt to achieve certain outcomes for protected classes may run afoul of the Constitution's guarantee of equal protection, noting that “[o]utright racial balancing is patently unconstitutional.”  49 To the extent ECOA, if read as encompassing disparate impact, would functionally require creditors to engage in such deliberate balancing of protected class outcomes (as described above), this recent jurisprudence would cast substantial doubt on its consistency with equal protection. The Bureau makes no conclusion as to these constitutional questions, but notes that its finding that ECOA does not encompass disparate impact liability appropriately avoids such potential constitutional defects.

The Bureau notes that, alternatively, it could remove the provisions relating to disparate impact, given the statutory text and based on the fact that neither the Supreme Court nor any other court has made a specific holding with respect to this theory and ECOA. As the Supreme Court made clear in Loper Bright Enterprises v. Raimondo, 50 courts are the ultimate arbiters of statutory meaning. The Bureau requests comment on this alternative rationale for removing the provisions related to disparate impact.

The specific proposed changes to the rule with respect to disparate-impact liability are discussed below.

Current § 1002.6(a) provides in the first sentence that, except as otherwise provided in the Act and this part, a creditor may consider any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis. The second sentence provides that the legislative history of the Act indicates that the Congress intended an “effects test,” (disparate impact) to apply to a creditor's determination of creditworthiness. For the reasons explained above, the Bureau is proposing to delete the second sentence and add a new sentence stating that the Act does not provide that the “effects test” applies for determining whether there is discrimination in violation of the Act.

Current comment 6(a)-2 explains the effects test and states that the Act and regulation may prohibit a creditor practice that is discriminatory in effect because it has a disproportionately negative impact on a prohibited basis, even though the creditor has no intent to discriminate and the practice appears neutral on its face, unless the creditor practice meets a legitimate business need that cannot reasonably be achieved as well by means that are less disparate in their impact. The comment also provides an example. The Bureau is proposing to delete the current text of comment 6(a)-2 for the reasons explained above and to add a new title “Disparate treatment” and new language providing as follows: The Act prohibits practices that discriminate on a prohibited basis regarding any aspect of a credit transaction. The Act does not provide for the prohibition of practices that are facially neutral as to prohibited bases, except to the extent that facially neutral criteria function as proxies for protected characteristics designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.

Current comment 2(p)-4 to the definition of empirically derived and other credit scoring system is entitled “Effects test and disparate treatment.” The comment states that neutral factors used in credit scoring systems could nonetheless be subject to challenge under the effects test and refers to comment 6(a)-2 for a discussion of the effects test. The Bureau is proposing to delete “effects test” from the title and delete the sentence discussing the effects test and the reference to comment 6(a)-2.

The Bureau is proposing changes to § 1002.4(b) and its accompanying commentary. These Regulation B provisions prohibit creditors from making oral or written statements to applicants or prospective applicants that would discourage a reasonable person from applying for credit. As noted in part II, the Board first adopted a precursor to current § 1002.4(b) in its 1975 final rule implementing ECOA, as an exercise of its adjustment authority under ECOA section 703(a).

In its 1975 final rule, the Board determined that prohibiting discouragement was “necessary to protect applicants against discriminatory acts occurring before an application is initiated.”  51 Indeed, ECOA section 701(a) prohibits creditors from discriminating on a prohibited basis against applicants for credit, 52 a term the statute defines as a “person who applies to a creditor” for credit. 53 In the absence of a discouragement provision, creditors could sidestep this prohibition entirely by discouraging prospective applicants from applying for credit in the first place. For example, in the absence of a discouragement provision, a creditor could post a sign outside its office stating, “Credit available only to applicants under age 65,” arguably without violating ECOA as to individuals who choose not to apply for credit because of the sign. A well-tailored discouragement provision that prohibits such practices protects ECOA's purpose of making credit available on a non-discriminatory basis.

However, the Bureau has preliminarily determined in its expertise that, in the years since the Board first adopted the discouragement provision, the provision has been interpreted to prohibit conduct that it is not necessary or proper to prohibit to prevent the circumvention or evasion of ECOA's purposes. The Bureau is concerned that this, in turn, has had an unnecessarily chilling effect on creditors' business practices and exercise of their rights to speak about matters of public interest. Pursuant to its authority under ECOA section 703(a), and in consideration of what it preliminarily finds is necessary and proper given the purposes of ECOA and facilitating compliance therewith, the Bureau therefore proposes to revise § 1002.4(b) and its commentary as described below. 54

Furthermore, and independent of the above, the Bureau is concerned that the overbroad coverage of the regulation and its potential interpretations may constrain free speech and commercial activity in ways that are unwarranted. The Bureau preliminarily determines that, given this potential impact, and in consideration of its expertise as a regulator in the marketplace, the proposed revisions would continue to prohibit illegal discouragement of potential applicants without exceeding that purpose in ways that may impose unnecessary constraints in the marketplace. The Bureau requests comment on its preliminary determinations.

The proposed revisions would address several different aspects of § 1002.4(b): (1) what constitutes an oral or written statement, (2) what constitutes a statement to an applicant or prospective applicant, and (3) the standard for showing prohibited discouragement. As described below, the Bureau proposes to revise all these aspects of § 1002.4(b) together. The Bureau requests comment, however, on the merits of an alternative approach in which the Bureau would revise only one or two of these three aspects of § 1002.4(b) and, if such an approach were adopted, which aspects of § 1002.4(b) should be revised.

Current § 1002.4(b) prohibits creditors from making “any oral or written statement” to applicants or prospective applicants that would discourage a reasonable person from making or pursuing an application for credit. The regulation text itself does not define “oral or written statement.” Comment 4(b)-1, which the Board added to Regulation B in 1985 without substantive explanation, states, in part, that § 1002.4(b) covers “acts or practices” by creditors that could discourage on a prohibited basis a reasonable person from applying for credit.

The Bureau preliminarily determines that the inclusion of the phrase “acts or practices” in comment 4(b)-1 has resulted in § 1002.4(b) being interpreted overly broadly to apply to business practices that, though they may have some communicative effect, do not reflect the circumvention or evasion of ECOA's prohibition against discrimination that the discouragement provision was designed to address. Such practices include, for example, business decisions about where to locate branch offices, where to advertise, or where to engage with the community through open houses or similar events. In the Bureau's view, such practices do not constitute “oral or written statements” to applicants or prospective applicants within the meaning of § 1002.4(b) and do not, in and of themselves, demonstrate prohibited discouragement. The Bureau proposes to revise § 1002.4(b) to reflect this interpretation.

Specifically, the Bureau proposes to add language to § 1002.4(b) clarifying that “oral or written statement” means spoken or written words, or visual images such as symbols, photographs, or videos. This would include any visual images used in advertising or marketing campaigns. The Bureau also proposes to align the text of comment 4(b)-1 with the text of current § 1002.4(b) by replacing current references in the comment to “acts or practices” or “practices” with references to “oral or written statements” or “statements,” respectively.

Under the proposed revisions, the business practices noted above would not constitute prohibited discouragement even if they had some communicative effect that some consumers could arguably find discouraging. Instead, the discouragement provision would cover only actual oral or written statements by creditors to applicants or prospective applicants. The Bureau has preliminarily determined that clarifying the discouragement provision as described would facilitate compliance with ECOA and Regulation B and result in more targeted and effective enforcement of conduct designed to circumvent the statute's prohibition against discrimination. The Bureau requests comment on the proposed revisions.

As noted, § 1002.4(b) prohibits creditors from making any oral or written statement to applicants or prospective applicants that would discourage a reasonable person from making or pursuing an application for credit. Section 1002.4(b) has been interpreted to prohibit the selective encouragement of certain applicants or prospective applicants (for example, geographically targeted advertising) on the basis that such encouragement could discourage applicants or prospective applicants who did not receive it.

The Bureau has preliminarily determined that this interpretation is overbroad relative to the intended purposes of the discouragement prohibition. The purpose of ECOA is to make credit available to all applicants on a non-discriminatory basis, and § 1002.4(b) helps to achieve that purpose by prohibiting creditors from discouraging applicants or prospective applicants. The Bureau proposes that, when a creditor directs encouraging statements to certain applicants or prospective applicants, this is not an action intended to (or even likely to) discourage other applicants or prospective applicants, who did not receive the statements and might, in fact, have been entirely unaware of them, from applying for credit. Such conduct is not typically an evasion of ECOA's prohibitions, nor is prohibiting it necessary or proper to achieve the purposes of ECOA. As such, the Bureau preliminarily determines that encouraging statements by creditors directed at one group of consumers is not prohibited discouragement as to applicants or prospective applicants who were not the intended recipients of the statements.

Under this interpretation, any person whom a creditor could reasonably expect to receive a particular statement would be an intended recipient of the statement. Factors that could help determine a statement's intended recipients include the method or mechanism used to communicate it. For example, the intended recipients of a statement made by a creditor on a public television or radio broadcast would be anyone within the area of that broadcast. The intended recipients of a mailer would be those to whom the mailer is sent.

The Bureau proposes to revise § 1002.4(b) and its accompanying commentary in several ways to reflect the suggested limitation. First, § 1002.4(b) would provide that prohibited discouragement occurs when a creditor makes any oral or written statement “directed at” applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from applying for credit.

Comment 4(b)-1 would be revised to provide that encouraging statements directed at one group of consumers cannot discourage applicants or prospective applicants who were not the intended recipients of the statements. In addition, the example in current comment 4(b)-1.ii (which would be redesignated as comment 4(b)-1.i.B under the proposed rule)  55 would be narrowed to provide an example of a statement that would constitute prohibited discouragement under the proposed limitation. The revised example would provide that prohibited discouragement includes statements directed at the public that express a discriminatory preference or policy of exclusion against consumers based on one or more prohibited basis characteristics.

Finally, comment 4(b)-1.ii.A would be added to provide an example of a statement that would not constitute prohibited discouragement under the proposed rule. The example would provide that statements directed at a particular group of consumers, encouraging that group of consumers to apply for credit, do not constitute prohibited discouragement. The Bureau requests comment on the proposed revisions, including on whether additional or different regulatory language or commentary examples would facilitate compliance with the proposed interpretation.

As noted, the prohibition against discouragement was adopted to prevent creditors from circumventing ECOA's prohibition against discrimination by deterring prospective applicants from even applying for credit. While this is an appropriate goal, the Bureau preliminarily concludes that § 1002.4(b) has been interpreted to apply to scenarios that should not be characterized as prohibited discouragement under ECOA. These are scenarios that—though they may involve potentially controversial statements by creditors—do not involve statements that an objective creditor would know, or should know, would cause a reasonable person to believe that the creditor would deny them credit or offer them credit on less favorable terms than other borrowers. That is, the Bureau believes that there is a difference between a statement by a creditor that an applicant or potential applicant may not like or may disagree with, and a statement that would cause a reasonable person to be discouraged from applying for credit with that creditor. The Bureau believes that difference should be better reflected in Regulation B and accordingly proposes the following revisions.

First, the Bureau proposes to revise § 1002.4(b) and its accompanying commentary to provide that a statement is prohibited discouragement only if a creditor “knows or should know” that the statement would cause a reasonable person to be discouraged.

Second, the Bureau proposes to revise § 1002.4(b) and its accompanying commentary to clarify that the standard is not whether a creditor's statement “would discourage on a prohibited basis a reasonable person,” but rather that discouragement occurs only if the creditor's statement “would cause a reasonable person to believe that the creditor would deny, or would grant on less favorable terms, a credit application by the applicant or prospective applicant because of the applicant or prospective applicant's prohibited basis characteristic(s).” Under this revision, prohibited discouragement would occur only when the creditor's statement was the proximate cause of the applicant's or prospective applicant's belief about their ability to obtain credit on non-discriminatory terms. The revision thus would narrow the prohibition to cover only statements that themselves would cause a reasonable person to believe that the creditor would make a different decision about credit terms or availability based on the applicant or prospective applicant's prohibited basis characteristic(s).

Consistent with the proposed revision, the Bureau would narrow current comment 4(b)-1.ii (proposed comment 4(b)-1.i.A). The comment currently provides that prohibited discouraging statements include those that “express, imply, or suggest” a discriminatory preference or policy of exclusion in violation of ECOA. The Bureau proposes to narrow the comment to refer only to statements that express a discriminatory preference or policy of exclusion. 56

To facilitate compliance, the Bureau also proposes to add three examples to the commentary of the types of statements that a creditor would not (or should not) know would cause a reasonable person to believe that the creditor would deny (or would grant on less favorable terms) credit to an applicant or prospective applicant based on their prohibited basis characteristic(s). These are illustrative examples of non-prohibited statements that a creditor may make, directed at an applicant or prospective applicant: (1) in support of local law enforcement, (2) recommending that, before buying a home in a particular neighborhood, consumers investigate, for example, the neighborhood's schools, its proximity to grocery stores, and its crime statistics, and (3) encouraging consumers to seek out resources to develop their financial literacy. The Bureau requests comment on the proposed revisions, including on whether additional or different examples would be helpful in clarifying the types of statements that would be permissible if the proposed rule were adopted.

Current comment 4(b)-2 provides that creditors may affirmatively solicit or encourage members of traditionally disadvantaged groups to apply for credit, especially groups that might not normally seek credit from that creditor. The Bureau proposes to strike this comment as unnecessary; no substantive change is intended. The Bureau requests comment on the proposed revision.

Consistent with ECOA section 704A, Regulation B § 1002.15 sets forth incentives for creditors to self-test for compliance with ECOA and Regulation B and to correct any issues found. 57 Section 1002.15(d)(1)(ii) currently states that the report or results of a privileged self-test may not be obtained or used “[b]y a government agency or an applicant (including a prospective applicant who alleges a violation of § 1002.4(b)) in any proceeding or civil action in which a violation of the Act or this part is alleged.” The Bureau proposes to strike from § 1002.15(d)(1)(ii) the current reference to prospective applicants. This revision would conform the language of § 1002.15(d)(1)(ii) with the statutory language of ECOA sections 704A(a)(2) and 706. 58 No substantive change is intended. The Bureau requests comment on the proposed revision.

Pursuant to its authority under 15 U.S.C. 1691(c)(3) and 15 U.S.C. 1691b(a), the Bureau proposes changes to the Regulation B provisions governing SPCPs offered by for-profit organizations. As noted above, that statutory provision permits “any special purpose credit program offered by a profit-making organization to meet special social needs which meets standards prescribed in regulations by the Bureau .” (emphasis added). Further, as noted above, ECOA authorizes the Bureau to write regulations to carry out ECOA's purposes and also provides the Bureau with adjustment authority to effectuate those purposes. 59 ECOA's purpose is to require that firms engaged in the extension of credit make that credit equally available to all credit-worthy customers without regard to prohibited bases. 60 In sum, just as ECOA authorized the Board's initial regulatory promulgation setting the standards for permissible SPCPs offered or participated in by for-profit organizations, the Bureau has preliminarily determined that it also authorizes the revision of those standards to carry out and more closely align them with the statutory purpose, including appropriate, necessary, or proper additional prohibitions and restrictions in the standards for such SPCPs to prevent unlawful discrimination, as the Bureau now proposes.

More specifically, the Bureau proposes to prohibit an SPCP offered or participated in by a for-profit organization from using the prohibited basis of race, color, national origin, or sex, or any combination thereof, of the applicant, as the common characteristic in determining eligibility for the SPCP. See proposed § 1002.8(b)(3). In addition, the Bureau also proposes in § 1002.8(a) and (b) several new restrictions (discussed in more detail below) on such an SPCP that uses any permissible common characteristic that would otherwise be a prohibited basis as eligibility criteria. Under the Bureau's proposal, these prohibitions and restrictions would become effective if and when a Bureau rule finalizing the proposal were to become effective. Thus, at that time, an SPCP offered or participated in by a for-profit organization would be (1) prohibited from using race, color, national origin, or sex as eligibility criteria and (2) restricted, as discussed below, in using religion, marital status, age, or income derived from a public assistance program as eligibility criteria. The Bureau proposes the restrictions independently of and in addition to the prohibitions. That is, under the Bureau's proposal, if the Bureau's proposed prohibitions were to not be finalized or to otherwise become inoperative, the proposed restrictions would then be operative with respect to an SPCP offered or participated in by a for-profit organization that uses race, color, national origin, or sex as eligibility criteria, and would continue to be operative with respect to such an SPCP that uses religion, marital status, age, or income derived from a public assistance program as eligibility criteria. In other words, the Bureau independently proposes both the prohibitions and the restrictions such that, were the prohibitions to become inoperative, any SPCP offered or participated in by a for-profit organization that uses any otherwise prohibited basis (as defined in § 1002.2(z)) as eligibility criteria would be subject to the restrictions the Bureau now proposes. The Bureau is proposing the above-described prohibitions and restrictions at the present time for the following reasons.

While the Bureau declines in this proposal to reach a conclusion about whether ECOA's SPCP provision permitting discrimination in favor of groups with special social needs—typically minority groups—is unconstitutional, the Bureau is mindful of recent Supreme Court decisions highlighting the legal infirmity under the Fifth and Fourteenth Amendments of laws that enable such discrimination. 61 The constitutional guarantee of equal protection generally prohibits the government from discriminatory treatment on the bases of race, color, national origin, or sex; where those categories are implicated, it requires a thorough examination of the purported need for such discrimination and whether it is appropriately limited. Consistent with that precedent and the purposes of ECOA, and pursuant to its authority provided by 15 U.S.C. 1691(c)(3) to set standards for SPCPs offered or participated in by for-profit organizations to meet special social needs, the Bureau has reexamined the provisions of Regulation B that allow such SPCPs to use a prohibited basis—including but not limited to race, color, national origin, or sex—as common characteristics.

Additionally, the Bureau preliminarily concludes that significant changes in the legal landscape and in credit markets mean that such SPCPs based on certain prohibited bases no longer serve the particular social needs envisioned in the 1976 Act. When Congress enacted ECOA, the legal framework and the market environment as to credit discrimination were rapidly evolving. The FHA was enacted in 1968. The Home Mortgage Disclosure Act (HMDA) was enacted in 1975 to enable data collection on mortgage lending in order to address ongoing concerns about redlining and credit shortages in certain neighborhoods. The Community Reinvestment Act (CRA), intended to promote the availability of financial services in areas that had been underserved, had not yet been enacted, but was enacted in 1977. State laws addressing credit discrimination, for the limited number of states that had enacted them, were typically only a few years old. 62 In general, the legal framework was in the course of transforming from one in which credit discrimination was condoned, and was sometimes official policy, to one in which it was—and remains—prohibited.

Robust data regarding the nature and extent of credit discrimination at the time of ECOA's passage are sparse. HMDA data were not yet available. Assessing the prevalence and effect of credit discrimination was typically done through individual academic, government, or nonprofit research projects, or personal narratives, all with limited scope. Nonetheless, it is clear that at that time market-wide intentional credit discrimination was a fact of the then-recent past and a matter of ongoing concern. 63

Further, the congressional record accompanying ECOA's adoption reflects the problems Congress sought to address. A National Commission's report on credit availability that informed ECOA's drafting found widespread sex discrimination in credit. 64 The Senate Committee Report accompanying the 1976 Act noted that the legislative record included “instances of discrimination against racial minorities” and that “studies conducted by federal agencies have indicated the strong probability of race discrimination in mortgage credit.”  65 Another report at the time recounts the experiences of black businessmen being effectively shut out from small business lending. 66 ECOA's purpose was to prevent and prohibit such discrimination.

But also at that time, some organizations sought to fill the gap by making credit available especially to individuals who had been otherwise excluded from the credit marketplace. 67 Through ECOA's provision for SPCPs (15 U.S.C. 1691(c)), Congress sought to enable these programs that served then-extant special social needs to continue. 68 To accomplish this objective, at the same time that Congress broadly prohibited credit discrimination, Congress added provisions allowing the continued operation of credit assistance programs “expressly authorized by law for an economically disadvantaged class of persons”  69 or “administered by a nonprofit organization for its members or an economically disadvantaged class of persons.”  70 Congress additionally “authorize[d] the Board to prescribe standards [by which] profit-making organizations (commercial creditors)” could offer programs, with the expectation that they be “designed to increase access to the credit market by persons previously foreclosed from it”  71 and that, “without such exemption the consumers involved would effectively be denied credit.”  72

In its reexamination of the use of race, color, national origin, and sex as participant eligibility criteria for SPCPs offered or participated in by for-profit organizations, the Bureau has preliminarily determined that, to the extent the current Regulation B standards for such SPCPs authorize credit programs beyond what is necessary to meet the expressly limited congressional intent for such SPCPs, the standards are working counter to ECOA's purpose of preventing discrimination and are potentially inconsistent with constitutional guarantees of equal protection. The Bureau preliminarily finds that fifty years of legal prohibitions against credit discrimination—at the Federal and State level and across multiple laws working in concert—have substantially reshaped credit markets relative to what Congress, the Board, and consumers would have encountered in 1976. Regardless of whether instances of credit discrimination continue to occur in the marketplace, the Bureau is not aware of any credit markets in which consumers would be “effectively denied credit” because of their race, color, national origin, or sex in the absence of SPCPs offered or participated in by for-profit organizations. The Bureau requests comment on whether and the extent to which there may remain any such credit markets. For comparison purposes, the Bureau also requests comment on the nature and extent of credit discrimination at the time of ECOA's passage. The Bureau particularly requests quantitative data in these respects.

For these reasons, the Bureau has preliminarily determined that it is no longer appropriate (in light of ECOA's purpose of preventing discrimination) or that it is no longer necessary or proper (in light of changed circumstances and ECOA's purposes) for the SPCP standards in Regulation B to permit such SPCPs to use the common characteristics of race, color, national origin, or sex as eligibility criteria. Accordingly, pursuant to the Bureau's authority provided by ECOA, including its authority to set standards, and as applicable its “adjustment and exception” authority, the Bureau proposes to prohibit them from doing so. As noted, the Bureau sets forth this prohibition in proposed § 1002.8(b)(3), which is discussed in the section-by-section analysis below. The Bureau seeks comment on this proposed prohibition and on whether the proposed SPCP restrictions would, if finalized in the absence of the prohibition, better serve ECOA's purposes and the purposes of ECOA's SPCP provision.

Independent from and in addition to the above-described prohibitions, the Bureau has also preliminarily determined that additional restrictions in the Regulation B standards for SPCPs offered or participated in by for-profit organizations are necessary and appropriate; these restrictions are also discussed in the section-by-section analysis below. As part of its basis for the proposed restrictions, the Bureau incorporates by reference here the justifications set forth above in this section III.C, including but not limited to the Bureau's concerns regarding recent Supreme Court decisions highlighting the constitutional infirmity of laws that enable discrimination and, independently, the Bureau's finding that fifty years of legal prohibitions against credit discrimination have reshaped credit markets relative to 1976.

More specifically, the Bureau preliminarily determines as a matter of its policy discretion provided by 15 U.S.C. 1693b(a) to adopt regulations proper to effectuate the purposes of ECOA that the proposed additional restrictions—independent of the proposed prohibitions described above—would appropriately bring the regulation's standards for such SPCPs—as expressly authorized by 15 U.S.C. 1691(c)(3)—into closer alignment with congressional intent, as indicated in the legislative history (quoted above). That is, the Bureau preliminarily determines that the proposed additional restrictions would appropriately increase the likelihood that such SPCPs provide credit to consumers who would otherwise be denied the credit and that the for-profit organizations that offer or participate in such SPCPs will have and provide evidence that supports the need for the SPCPs. The Bureau also preliminarily determines that this increase in likelihood would appropriately help ensure that such SPCPs are not inconsistent with ECOA's purpose of preventing credit discrimination. The Bureau's reasoning follows.

In light of changed circumstances (discussed in more detail above), the Bureau preliminarily finds that the current Regulation B SPCP standards applicable to for-profit organizations have become inappropriately permissive. The current standards permit for-profit organizations to offer or participate in SPCPs even when there has been no showing that discrimination based on protected class membership is what is causing program participants to be unable to obtain credit. That is, the regulation's SPCP standards may have been appropriate when the Board promulgated them, given societal circumstances at that time. But in light of changed circumstances, and because an SPCP that bases eligibility on protected class membership inherently discriminates against excluded individuals, the Bureau has preliminarily determined that the regulation's standards should be amended to require any such SPCP to be predicated on formal (and regulatorily required) evidence and documentation by the creditor that it is the fact of protected class membership that is causing program participants to be unable to obtain credit. If considerations other than that fact are what is causing the inability to obtain credit, then an SPCP based on protected class membership is not necessary to address the inability. Further, the Bureau preliminarily finds that in such cases it also is not appropriate to use an SPCP to address the inability. Any protected-class SPCP that is not necessary—and which unavoidably discriminates against ineligible individuals—is inconsistent with ECOA's purpose of making credit equally available to all without regard to prohibited bases. The Bureau requests comment on whether there are existing SPCPs that would no longer qualify for SPCP status under the Bureau's proposed additional restrictions, and on what new credit programs could qualify for SPCP status, if any.

The following section-by-section analysis discusses in more detail the Bureau's proposed prohibitions and restrictions in the Regulation B standards for SPCPs in § 1002.8. 73

Section 1002.8(a)(3) governs any SPCP offered by a for-profit organization, or in which such an organization participates, to meet special social needs. 74 The Bureau observes, as an initial matter, that the provisions of § 1002.8(a)— i.e., the provisions discussed immediately below—are subordinate to the provisions of § 1002.8(b) (discussed farther below). 75 As noted, the prohibitions described above are set forth in proposed § 1002.8(b)(3). Thus, all of the following proposed restrictions in § 1002.8(a)(3) are subordinate to the proposed prohibitions in § 1002.8(b)(3).

Under current § 1002.8(a)(3)(i), a for-profit organization must establish and administer an SPCP pursuant to a written plan that identifies the class of persons that the program is designed to benefit and sets forth the procedures and standards for extending credit pursuant to the program. 76 The Bureau proposes to separate this current provision into § 1002.8(a)(3)(i)(A) and (B). Proposed § 1002.8(a)(3)(i)(A) would retain the current requirement that the written plan identify the class of persons that the program is designed to benefit; proposed § 1002.8(a)(3)(i)(B) would retain the current requirement that the written plan set forth the procedures and standards for extending credit pursuant to the program. The Bureau also proposes to add new requirements for the written plan in § 1002.8(a)(3)(i)(C), (D), and (E) as follows.

In new § 1002.8(a)(3)(i)(C) the Bureau proposes to require the SPCP's written plan to provide evidence of the need for the SPCP. The Bureau preliminarily determines that this proposed new restriction would more closely align the regulation's written-plan standard with ECOA's purposes and the congressional intent expressed in the legislative history. Although, as noted above, legislative history is limited in its value when statutory text, context, and purpose provide sufficient meaning, the SPCP provision in ECOA as to for-profit entities is deliberately open-ended, referring to “special social needs” and expressly granting the Bureau discretion to set relevant standards. The Bureau therefore finds it appropriate to look to Congress's stated goals, as a means of ensuring that this exercise of discretion is appropriately cabined and directionally consistent with the statute. In enacting the SPCP provision, Congress indicated its expectation that the exemption for SPCPs by for-profit organizations would allow for lending where “it has been clearly demonstrated on the public record that without such exemption the consumers involved would effectively be denied credit.”  77 The Bureau preliminarily interprets effectively in the legislative history to mean “in effect.”  78 Pursuant to that interpretation, the Bureau preliminarily finds that the consumers involved would effectively be denied credit if in the absence of the SPCP they “would not receive” such or similar credit, irrespective of whether the consumers had actually applied for such credit or actually been denied such credit by a creditor. The Bureau requests comment on this interpretation.

In new § 1002.8(a)(3)(i)(D) the Bureau proposes to require the SPCP's written plan to explain why, under the for-profit organization's standards of creditworthiness, the class of persons would not receive such credit in the absence of the program. As with (a)(3)(i)(C), this new proposed restriction for the written plan would apply irrespective of whether the SPCP requires its participants to share a common characteristic that would otherwise be a prohibited basis. The Bureau preliminarily determines that this proposed new restriction would more closely align the regulation's written-plan standard with ECOA's purposes and the congressional intent expressed in the legislative history.

Proposed new § 1002.8(a)(3)(i)(E) would apply, in addition to § 1002.8(a)(3)(i)(A), (B), (C), and (D), to SPCPs that require the persons in the class served by the program to share one or more common characteristics that would otherwise be a prohibited basis. The provision's proposed new restrictions would require the written plan of such an SPCP to explain why meeting the special social needs addressed by the program necessitates that its participants share the specific common characteristic that would otherwise be a prohibited basis and cannot be accomplished through a program that does not use otherwise prohibited bases as participant eligibility criteria. As is discussed in more detail above, the Bureau has preliminarily determined that these proposed new restrictions in the standards for SPCPs would more closely align the regulation with the statutory purpose of “mak[ing] . . . credit equally available to all credit-worthy customers without regard to [prohibited bases].” Specifically, the Bureau has preliminarily determined that it is inconsistent with ECOA's purpose—preventing discrimination—for an SPCP that uses an otherwise prohibited basis to discriminate against ineligible individuals, unless the SPCP's use of the otherwise prohibited basis is necessary to overcome an inability to access credit that is specifically based on those same characteristics.

Current § 1002.8(a)(3)(ii) requires that a for-profit organization offering an SPCP establish and administer the program to extend credit to a class of persons who, under the organization's customary standards of creditworthiness, probably would not receive such credit or would receive it on less favorable terms than are ordinarily available to other applicants applying to the organization for a similar type and amount of credit. This provision applies irrespective of whether the SPCP requires its participants to share a common characteristic that would otherwise be a prohibited basis. The Bureau proposes three changes to this standard, as follows.

First, the Bureau proposes to strike the clause that begins with “or would receive it on less favorable terms . . . .” This change would restrict permissible SPCPs offered by a for-profit organization to those that are established and administered to extend credit to a class of persons who would otherwise not receive the type and amount of credit, as opposed to those who would receive it on less favorable terms. Second, the Bureau proposes to strike the term “customary;” and, third, the Bureau proposes to strike the term “probably.” These latter two changes would restrict permissible SPCPs offered by a for-profit organization to those that are established and administered to extend credit to a class of persons who actually (in lieu of “probably”) would not receive such credit under the organization's actual (in lieu of “customary”) credit standards. In sum, the three proposed changes would restrict a for-profit organization to offering an SPCP to a class of persons to whom, under the organization's actual credit standards, the organization would actually deny credit in the absence of the SPCP. 79 The Bureau requests comment on this standard of “actual” for establishing and administering an SPCP offered or participated in by a for-profit organization and, in particular, on whether there might be an another standard that would better facilitate compliance while achieving the Bureau's objective of a standard that is more than a mere probability.

The Bureau has preliminarily determined that each of the three proposed restrictions, and the three proposed restrictions in combination, would more closely align the regulatory standards for an SPCP offered by a for-profit organization with ECOA's purposes and with the congressional intent expressed in the legislative history: that without the SPCP “the consumers involved would effectively be denied credit.”  80 Furthermore these proposed restrictions, as a preliminary matter, are appropriate, necessary, and proper to carry out the purposes of ECOA, for the reasons above.

Current comment 8(a)-5 addresses SPCPs offered by for-profit organizations. Under the Bureau's proposal, the comment would continue to clarify that a for-profit organization's determination of the need for an SPCP “can be based on a broad analysis using the organization's own research or data from outside sources, including governmental reports and studies.”  81

For the reasons set forth above, the Bureau proposes changes to comment 8(a)-5 that would conform the comment's text to the proposed changes to the regulatory text of § 1002.8(a)(3), as follows. For precision, and because the comment addresses only SPCPs provided by for-profit organizations, the Bureau proposes to change the comment's citation to the regulatory text from “§ 1002.8(a)” to “§ 1002.8(a)(3),” which is the paragraph that addresses such SPCPs. The Bureau also proposes to strike the phrase “or would receive it [credit] on less favorable terms,” for the same reasons that the Bureau is proposing to strike the corresponding phrase from the regulatory text of § 1002.8(a)(3)(ii), discussed above.

The third and fourth sentences of comment 8(a)-5 set forth two examples of the types of research or data that a for-profit organization may use for the analysis on which it bases its determination of the need for the SPCP. The Bureau proposes edits to the examples' text to conform to the proposed regulatory changes discussed above. The proposed edits would neither intend nor effect any change to the types of research or data that a for-profit organization may use.

The Bureau requests comment on the restrictions that the Bureau proposes in § 1002.8(a)(3) and, in particular, on the proposed evidentiary requirements and on whether there might be another standard(s) that would better facilitate compliance while achieving the Bureau's objective of ensuring that any SPCP offered or participated in by a for-profit organization provides credit only to participants who would not receive such credit in the absence of the SPCP.

Current § 1002.8(b)(2) provides that a credit program qualifies as an SPCP only if the program was established and is administered so as not to discriminate against an applicant on any prohibited basis. It also provides that all program participants may be required to share one or more common characteristics (for example, race, national origin, or sex) so long as the program is not established and is not administered with the purpose of evading the requirements of ECOA or Regulation B. The Bureau proposes to amend the section to make it subordinate to the new proposed prohibitions and restrictions in § 1002.8(b)(3) and (4), which are discussed below.

For clarity, the Bureau proposes to strike the parenthetical in § 1002.8(b)(2)—“(for example, race, national origin, or sex)”—and replace it with the text “that would otherwise be a prohibited basis.” The Bureau would neither intend nor effect any change in substance with this proposed change, because § 1002.2(z) defines “prohibited basis” to include race, national origin, and sex. Also for clarity, the Bureau also proposes to add new comment 8(b)-2 to explain the § 1002.8(b)(2) regulatory text. In 1977, when the Board promulgated what was then § 202.8(b)(2) to implement the 1976 Act, the Board's section-by-section analysis of the regulatory text stated:

The Bureau proposes to incorporate the substance of the Board's section-by-section analysis in new comment 8(b)-2. Specifically, the proposed comment would clarify that § 1002.8(b)(2)—subject to the prohibitions and restrictions in § 1002.8(b)(3) and (4), as well as the other requirements of 12 CFR part 1002—permits a creditor to determine eligibility for an SPCP using one or more common characteristics that would otherwise be a prohibited basis. The proposed comment would also clarify that under § 1002.8(b)(2), once the characteristics of the program's class of participants are established, the creditor is prohibited from discriminating among potential participants on a prohibited basis.

The Bureau proposes to add to the regulation new § 1002.8(b)(3), which would prohibit an SPCP offered or participated in by a for-profit organization from using the common characteristic of race, color, national origin, or sex, or any combination thereof, as a factor in determining eligibility for the program. For the reasons discussed above, the Bureau has preliminarily determined that it is no longer necessary (in light of changed circumstances) or appropriate (in light of ECOA's purpose of preventing discrimination) for the SPCP standards in Regulation B to permit such SPCPs to use the common characteristics of race, color, national origin, or sex as eligibility criteria.

The Bureau requests comment on the prohibitions that the Bureau proposes in § 1002.8(b)(3).

The Bureau proposes to add to the regulation new § 1002.8(b)(4), which, for characteristics not prohibited under proposed § 1002.8(b)(3), would apply when an SPCP offered or participated in by a for-profit organization requires its participants to share one or more common characteristics that would otherwise be a prohibited basis. The new proposed section (subject to § 1002.8(b)(3)) would require the organization to provide evidence for each participant who receives credit through the program that, in the absence of the program, the participant would not receive such credit as a result of those specific characteristics.

As is discussed in more detail above, the Bureau has preliminarily determined that these proposed new restrictions in the standards for SPCPs would more closely align the regulation with the statutory purpose of “mak[ing] . . . credit equally available to all credit-worthy customers without regard to [prohibited bases].” Specifically, because an SPCP that bases eligibility on protected class membership inherently discriminates against ineligible individuals, the Bureau has preliminarily determined that it is inconsistent with ECOA's purpose (preventing discrimination) for an SPCP to use an otherwise prohibited basis (and thereby discriminate against ineligible individuals) unless the SPCP's use of the otherwise prohibited basis is necessary to overcome an inability to access credit that is specifically based on those same characteristics.

The Bureau requests comment on the restrictions that the Bureau proposes in § 1002.8(b)(4) and, in particular, on the standard of requiring a for-profit organization to provide evidence for each participant; and, on whether there might be an another standard that would better facilitate compliance while achieving the Bureau's objective of ensuring that any SPCP offered or participated in by a for-profit organization that uses one or more prohibited-basis common characteristics provides credit only to participants who in the absence of the SPCP would not receive such credit as a result of the participants' specific characteristics.

In § 1002.8(c) and the commentary thereto the Bureau proposes nonsubstantive changes for clarity. The Bureau proposes to strike the section's parenthetical—“(for example, race, national origin, or sex)”—and replace it with the text “that would otherwise be a prohibited basis.” This proposed change would neither intend nor effect any change in substance, because § 1002.2(z) defines “prohibited basis” to include race, national origin, and sex. The Bureau also proposes to make explicit that § 1002.8(c) is subordinate to § 1002.8(b), including its newly proposed prohibitions and restrictions, discussed above. This proposed change would neither intend nor effect any change in substance because current § 1002.8(c) is expressly subordinate to § 1002.8(a) and current § 1002.8(a) is expressly subordinate to § 1002.8(b); thus, § 1002.8(c) is subordinate to § 1002.8(b). Finally, the Bureau proposes to delete one of the examples from comment 8(c)-2 regarding programs under a Minority Enterprise Small Business Investment Corporation. This proposed deletion would neither intend nor effect any change in substance because as a general matter examples do not carry legal force.

The Bureau requests comment on the changes that the Bureau proposes in § 1002.8(c) and its commentary.

The Bureau proposes that a final rule relating to this proposal would have an effective date of [90 days after publication in the Federal Register ]. This would provide creditors sufficient time to evaluate existing SPCPs to ensure compliance with the final rule for extensions of credit on or after the effective date. Where creditors have already extended credit prior to the effective date under existing SPCPs, those credit extensions would be grandfathered and their programs must qualify as SPCPs under the rule in effect at the time of the credit extensions. The Bureau does not anticipate as much time, if any, would be needed for creditors to comply with a final rule relating to disparate impact and discouragement. The Bureau seeks comment on the proposed effective date, including whether it should be at a different time, and if so, when and why.

The Bureau is considering the potential benefits, costs, and impacts of the proposed rule. 83 The Bureau requests comments on the preliminary discussion presented below, as well as submissions of additional information and data that could inform the Bureau's consideration of the benefits, costs, and impacts of the proposed rule. As discussed in greater detail elsewhere in this NPRM, the Bureau is proposing to amend provisions related to disparate impact, discouragement, and SPCPs under Regulation B, which implements ECOA.

The Bureau believes that the amendment to the provisions related to disparate impact and discouragement are largely deregulatory in nature and therefore are expected to reduce burden for the covered persons. The Bureau also has reason to believe that the current number of SPCPs is small and therefore proposed changes to SPCPs as part of this proposed rule would have limited impacts. The discussion below further considers the benefits, costs, and impacts of the proposed provisions to consumers and covered persons in detail.

The purpose of Regulation B is to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant's income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. 84 The Bureau is proposing to amend the regulation as follows: (1) provide that ECOA does not authorize disparate impact claims; (2) amend the prohibition on discouraging applicants or prospective applications to clarify that it prohibits statements of intent to discriminate in violation of ECOA and is not triggered merely by negative consumer impressions, and to clarify that encouraging statements by creditors directed at one group of consumers is not prohibited discouragement as to applicants or prospective applicants who were not the intended recipients of the statements; and (3) amend the standards for SPCPs offered or participated in by for-profit organizations to include new standards and related restrictions.

The Bureau has discretion in any rulemaking to choose an appropriate scope of consideration with respect to potential benefits and costs and an appropriate baseline. Accordingly, this analysis considers the benefits, costs, and impacts of the proposed provisions against Regulation B prior to its amendment as a baseline, i.e., the current state of the world before the Bureau's proposed provisions are implemented. Under this baseline, the Bureau assumes that institutions are complying with regulations that they are currently subject to. The Bureau believes that such a baseline will provide the public with better information about the benefits and costs of the proposed amendment.

The discussion below relies on data that the Bureau has obtained from publicly available sources. However, limitations on what data are available restrict the Bureau's ability to quantify the potential costs, benefits, and impacts of the proposed rule. Therefore, the discussion below generally provides a qualitative consideration of the benefits, costs, and impacts of the proposed rule. General economic principles, together with the limited data available, provide insights into these benefits, costs, and impacts. Where possible, the Bureau has made quantitative estimates based on these principles and the available data. The Bureau seeks comments on the appropriateness of the approach described below, including submissions of additional data relevant to the benefits and costs to consumers and covered persons.

As discussed further below, most provisions of the proposal would benefit covered persons. Quantifying and monetizing the benefits to covered institutions would require identifying costs of compliance under the baseline and quantifying the magnitude of the covered persons' cost savings arising from the proposed provisions. For example, the Bureau believes that the proposed provisions are deregulatory in nature and hence would benefit covered persons in the long run by reducing compliance burden. The Bureau anticipates these cost savings to vary with the covered person's size and the complexity of operations. However, the Bureau is unaware of any data that would enable reliable quantitative estimation of these benefits. Therefore, the Bureau seeks comment and data regarding the benefits to covered persons of the proposed provision. The Bureau is particularly interested in the number of employee hours, or estimates of total costs that covered persons anticipate saving as a result of the proposed rule.

Certain costs to covered persons are difficult to quantify. For example, the Bureau anticipates that covered persons would incur costs associated with implementing changes to their internal processes that result from the proposed provisions. The Bureau categorizes costs required to comply with the proposed provision into “one-time” and “ongoing” costs. “One-time” costs refer to expenses that the covered persons would incur only once to implement operational changes arising from the proposal. On the other hand, “ongoing” costs refer to expenses incurred as a result of the ongoing compliance of the rule. The Bureau also expects both of these types of costs to vary with a covered person's size and complexity of operations. The Bureau is unaware of any data that would help to quantify such costs and seeks data from available sources to quantify the costs to covered persons and seeks comment or data that may help quantify these types of costs.

Due to the deregulatory nature of the proposed provisions, covered persons can potentially pass on the saved compliance costs to consumers by offering lower prices or better products. However, the Bureau is unable to quantify these potential benefits because it lacks relevant data. The Bureau seeks additional comments, including submissions of relevant data, that would help quantify the benefits of the proposed provisions to consumers.

According to economic theory, in a perfectly competitive market where covered persons are profit maximizers, reductions in the marginal cost of operation would be passed on to consumers, and firms would absorb one-time fixed costs of compliance. However, covered persons' response likely varies with supply, demand, and competitive conditions. Moreover, in addition to any costs that covered persons may pass onto consumers, the proposed provisions concerning disparate impact and discouragement may potentially limit legal protections for consumers and affect consumers' access to credit. Because of the lack of data to quantify such costs, the Bureau seeks information on the number of consumers potentially affected by the proposed rules as well as the data that would allow quantification of costs to consumers.

The three categories of proposed changes to Regulation B would apply to all covered persons that meet the definition of creditor under Regulation B. To estimate the total number of persons covered by the proposed changes, the Bureau relies on the total number of entities subject to Regulation B as estimated in the approved Paperwork Reduction Act supporting statement (OMB Control Number 3170-0013) last updated in 2024. 85 The Bureau estimates that there are about 12,000 depository institutions and 482,000 non-depository institutions that are subject to Regulation B.

The proposed provisions would likely allow covered persons to save on ongoing compliance costs. For example, covered persons may save time and resources presently spent on creating, testing, validating, and auditing models for potential disparate impact risks in their lending strategy or portfolio. Resources dedicated to statistical testing, documenting business necessities of policies and evaluating alternative lending strategies may be saved or redirected to other uses. Covered persons may also save costs by reducing spending associated with fair lending exams and training loan officers, compliance staff, contractors, and modelers of disparate impact risks. Lastly, the proposed change can reduce the potential litigation risks to the extent lenders would have otherwise had to defend against lawsuits under a disparate impact theory of discrimination. Fewer enforcement actions and private claims premised on disparate impact theories as a result of the proposed provisions would reduce defense burden and any financial costs related to remediation. The compliance cost saving from the proposed provisions likely varies by the size and complexity of the operational structure of the institutions.

Covered persons' profitability could increase as a result of the proposed provisions by improving operational flexibility and spurring innovation in the credit application process. For example, covered persons could more freely experiment with risk-based pricing and automated underwriting with reduced risk of facially neutral policies with disproportionate effects triggering liability without intent. The proposed provisions may result in an adoption of new modeling techniques that use additional data sources. These benefits, however, may be limited by the ongoing need to comply with other State and Federal fair lending laws. Due to lack of available data, the Bureau cannot provide quantitative estimates of potential cost savings and increased profits by covered persons and seeks comment and data that would allow quantification of these cost savings.

Covered persons may incur one-time adjustment costs resulting from these proposed provisions. These one-time costs include updating policies, practices, procedures, and control systems; verifying, updating and reviewing compliance; and training staff and third parties. In addition, covered persons already incur ongoing compliance costs associated with the current Regulation B. Therefore, the Bureau expects the one-time cost and any ongoing costs that may arise from the proposed provisions to be small.

The Bureau does not have the data to provide quantitative estimates of the one-time costs that covered persons may incur but can propose a rough estimate based on one-time costs estimated for other rules. For example, the Bureau recently estimated a one-time cost of each covered small non-depository entity for implementing the Automated Valuation Models (AVM) Rule to be $23,000: $7,000 for drafting and developing policies, practices, procedures, and control systems, $10,000 for verifying compliance, and $6,000 for training. 86 Furthermore, the Bureau estimated the ongoing costs to be one-third of the one-time costs ( i.e., $7,667). Since the proposed provisions involves updating existing policies rather than implementing new policies, the Bureau expects the cost of the proposed provisions to be closer to the AVM Rule's total ongoing cost of $7,667.

The one-time costs of updating policies and procedures and training personnel likely vary with the size and the type of covered person. For example, the Bureau recently in the Small Business Lending (1071) Rule estimated that the one-time cost of developing policies and procedures to range between $2,500 and $4,300 while the cost of training staff and third parties to range between $3,100 and $5,300 depending on the size and the type of institutions. 87 Given that these estimates are for implementing a new rule, whereas the proposed provisions only updates an existing rule, the Bureau expects the total one-time cost associated with the proposed provisions to be smaller than the estimated one-time costs for implementing the 1071 Rule. In other words, the Bureau expects the upper bound of the cost to vary between $5,600 and $9,600, which is consistent with what was estimated from the AVM Rule.

The Bureau emphasizes that it lacks data with which to estimate implementation costs for the proposed provisions concerning disparate impact, and that the cost estimates above are based on costs that were estimated for other rules. As such, these estimates may not be close to the actual costs that covered persons would incur as a result of the proposed provisions. The Bureau seeks comments and data related to the one-time costs that covered persons would incur to implement the proposed provisions.

Covered persons may pass on compliance cost savings to consumers, who may benefit as a result. According to standard economic theory, the degree to which consumers would benefit from lower prices would depend on competitive market conditions and the shapes of market demand and supply, as well as firm characteristics. In addition, some consumers may experience a faster credit application process and greater product variety as some covered persons would reallocate cost savings arising from proposed provisions to improving operational efficiency and developing new products and services. The Bureau lacks data with which to estimate these benefits to consumers and seeks comments and data that would allow quantifying these benefits.

To the extent that legal liability discourages covered persons from implementing policies that lead to disparate impact, removing such liability could potentially have a negative impact on some consumers. Consumers who are adversely affected by neutral policies would lose legal options and opportunities for redress. Some consumers may be more likely to be denied credit or to pay higher prices without effects-based legal protection. However, such costs to consumers may be limited; covered persons are still liable under other antidiscrimination statutes such as the FHA and state laws similar to ECOA, so the incentives for covered persons to implement policies or engage in practices that lead to disparate impact may be limited.

The Bureau has also considered the possibility of one-time costs that covered persons incur because of the proposed provisions being passed on to consumers in the form of higher prices. The Bureau believes that this is unlikely to occur since economic theory generally views changes in fixed costs as unrelated, all other things equal, to changes in price.

The proposed provisions would limit legal liability for covered persons and can reduce compliance burden as a result. For example, covered persons may reduce spending related to limiting liability as to prospective applicants by decreasing the amount of time and resources spent monitoring marketing strategies and materials, and by adjusting marketing to focus on areas where they expect the greatest return on investment. In addition, covered persons may spend less on training loan officers, compliance staff, contractors, and other employees on legal and compliance risks related to prospective applicants. Lastly, the proposed change would limit potential litigation risks from enforcement actions based on allegations of discouragement of prospective applicants. The proposed change would reduce legal exposure to the extent lenders would have had to defend against lawsuits under broader legal liability in the baseline. As a result, covered persons may save costs related to legal counsel.

The proposed provisions would potentially increase covered persons' profitability by allowing additional operational flexibility. For example, lenders who under the baseline choose not to focus on offering certain products to certain groups of consumers would be able to potentially increase their revenues by offering products that are better tailored to the demands of different groups of consumers. In other words, under this proposal, some covered persons would be able to conduct more targeted advertising campaigns and offer certain products to subsets of consumers (when they otherwise would not have been able to under the baseline). Covered persons may choose to relocate branch locations that are less profitable and reallocate resources that were previously spent on oversight of marketing materials and interactions with prospective applicants at call centers and branches to other uses. On the other hand, requirements to serve community credit needs under the CRA would still be in effect and could mitigate such business decisions. The benefits to covered persons that arise as a result of these proposed provisions likely vary with the size and type of each covered person. However, the Bureau lacks data with which to reliably estimate these benefits, and seeks comment and data that may help quantify these benefits to covered persons.

Covered persons may incur adjustment costs associated with the proposed change in liability for discrimination against prospective applicants. Covered persons may need to update their policies, procedures, and systems to accommodate changes resulting from the proposed provisions. However, these adjustment costs would be incurred only once and are unlikely to have a significant long-term impact on covered entities. The one-time costs associated with these proposed provisions would be similar in scope to the one-time costs associated with the change to the disparate impact provisions above. The Bureau lacks data with which to reliably estimate the potential cost to covered persons arising from these proposed provisions and seeks comments and data that would help quantify these costs.

The proposed provisions on discouragement limits may result in ongoing cost savings for covered entities, which could be passed on to consumers through lower prices. The rate of pass through generally varies with demand and supply conditions, as well as firm characteristics. The Bureau lacks data with which to reliably estimate the benefits to consumers arising from the proposed provisions and seeks comments and data that would help quantify these benefits.

The proposed provisions may result in consumers not applying for credit and facing greater barriers to accessing credit than they otherwise would have under the existing rule. For example, covered persons may exclude certain groups of consumers from advertising campaigns or may choose to engage less with certain groups of consumers. As a result, some consumers may not be aware of credit products from all available covered persons. Moreover, some consumers may lose convenient access to financial services if covered persons alter their branch location decisions as a result of these proposed provisions. In particular, elderly, minority, and low-income consumers are more likely to rely on brick-and-mortar branch services instead of online or mobile banking. If covered persons alter their branch location decisions, then these customers may no longer be able to easily access financial services and products. As before though, requirements to serve community credit needs under the CRA could mitigate such impacts.

Consumers would have less protection against discouragement at a pre-application stage under the proposed provisions compared to the baseline. Under a narrower standard of liability, lenders may be more likely to discourage or informally reject certain consumers, among other things, before credit is formally sought. 88 The proposed provisions could lead to some consumers being discouraged in ways not captured by the proposed prohibition, constituting a cost to these consumers. The Bureau lacks data with which to reliably estimate such costs to consumers arising from the proposed provisions and seeks comments and data that would help quantify these costs.

While the proposed provisions limit covered persons' liability on discouragement, it does not eliminate it. Covered persons will remain prohibited by the proposed discouragement prohibition from expressing to applicants or prospective applicants an intention to discriminate against them on a prohibited basis. Moreover, covered persons would still be subject to other statutes such as the FHA and state laws similar to ECOA. While the proposed provisions reduce legal liability for covered persons under ECOA, the legal risk under other statutes remains unchanged and therefore the incentives for covered persons to significantly change their policies as a result from the proposed provisions may be limited. Thus, the costs to consumers may be limited. The Bureau seeks comments on the potential costs of the proposed provisions to consumers.

The Bureau also proposes changes to Regulation B's provisions regarding SPCPs. The proposed changes can be grouped into two categories for the purposes of discussing their potential impacts. First, the Bureau proposes to prohibit an SPCP offered or participated in by a for-profit organization from using a common characteristic of race, color, national origin, or sex, or any combination thereof, as a factor in determining eligibility for the SPCP. Second, the Bureau also proposes several new restrictions on such SPCPs that use any prohibited basis common characteristic as eligibility criteria. Among these new restrictions are additional requirements that a for-profit organization establish the fact that applicants with common characteristics that would otherwise be a prohibited basis would not receive credit under the organization's current standards due to the common characteristic and that providing credit of the type and amount sought could not be accomplished through a program that does not use an otherwise prohibited basis as eligibility criteria.

Compared to the baseline, the overall effect of these two categories of proposed changes is to place additional restrictions on the design of lenders' existing SPCPs and the development of new SPCPs. The Bureau considers the costs and benefits of these restrictions below.

At baseline, Regulation B permits creditors to create SPCPs and prescribes the procedures for doing so but does not require any creditor to create an SPCP. The Bureau, consistent with standard economic theory, assumes that creditors only decide to create SPCPs if the incremental benefits from doing so outweigh the incremental costs from creating and administering the SPCP. Since the proposed changes to Regulation B may make it more difficult or costly to create an SPCP, the Bureau does not expect the proposed changes to the SPCP provisions to generate benefits to covered persons from credit provided or not provided under the revised SPCP provisions.

At baseline, Regulation B permits creditors to create SPCPs and prescribes the procedures for doing so but does not require any creditor to create an SPCP. Under standard economic theory, a creditor would only create an SPCP if the expected benefit of doing so is greater than the costs of creating and administering the program. Creditors may benefit, for example, from the public relations value that such a program may provide. Owners of a for-profit credit provider may also derive some non-monetary benefit from the creation of an SPCP. Setting up an SPCP involves “significant effort” in following the proper procedures for doing so. 89 Many existing SPCPs also involve the creditor taking on additional risk because they may involve providing credit to applicants the creditor would have otherwise denied or providing credit at terms that would have otherwise been more favorable to the creditor. The Bureau assumes that, if a creditor implements an SPCP, they do so because the benefits outweigh the costs.

The effects of the proposed Regulation B provisions affecting SPCPs are to impose restrictions on creditors' ability to create an SPCP and, therefore, reduce the expected net benefit of the programs relative to the baseline. In some cases, the proposed changes would prohibit some types of SPCPs. For example, an SPCP that currently uses race as a common characteristic would be prohibited under the proposed changes. In other cases, the proposed changes would impose additional costs on creditors' who attempt to develop an SPCP. Such would be the case when a creditor must establish the fact that members of a protected class would otherwise be unable to receive credit in the absence of an SPCP. Imposing such restrictions could make it difficult to achieve the intended effect of an SPCP or otherwise reduce the net benefit of doing so. This change imposes a cost on affected creditors who either have an SPCP or would otherwise create an SPCP in the absence of the proposed changes to Regulation B. As a result, fewer SPCPs may exist under the NPRM relative to the baseline.

However, such costs could be mitigated to the extent that creditors could redesign programs to use criteria that are not prohibited under the proposed changes to Regulation B. For example, if a creditor has an existing SPCP that uses race as a common characteristic determining eligibility to reach a certain segment of socioeconomically disadvantaged borrowers, it may be able to preserve much of its program in a form that is open to such socioeconomically disadvantaged borrowers without regard to prohibited basis characteristics. In this case, the creditor would incur both the one-time cost of the program redesign and any costs arising if the redesigned program is unable to achieve the intended results as effectively.

While the Bureau is unaware of data that could be used to comprehensively measure the scale of existing SPCPs, the Bureau does have reason to believe that the overall market effect of these proposed limits is likely to be small. Historically, few SPCPs existed prior to the Bureau's advisory opinion in January 2021, when the Bureau last assessed the market. 90 In August 2020, the Bureau issued a Request for Information on the Equal Credit Opportunity Act and Regulation B. 91 Multiple commenters noted that, despite a long history of being allowed under Regulation B, most lenders have not used SPCPs. 92 In 2021, the U.S. Department of Housing and Urban Development noted in its statement on SPCPs that “very few of these Programs have been established to create homeownership opportunities for affected communities.”  93

Since 2021, there has been growth in the number of SPCPs, with prominent examples from large banks, large non-depository institutions, and several non-profit organizations. 94 However, available information suggests that the use of SPCPs is likely still limited. The Federal Housing Finance Agency (FHFA) released a report in 2024 showing that government-sponsored enterprises (GSEs) acquired almost 15,000 mortgages originated through SPCPs in 2023, or 0.8 percent of the total mortgages GSEs acquired that year. 95 With respect to small business lending, the American Bankers Association (ABA), as of 2025, also notes that few lenders have implemented SPCPs for small business lending. 96

The Bureau also expects that SPCPs are even less likely to be provided by small lenders, compared to larger ones. In a 2022 comment letter, J.P. Morgan Chase Bank (JPMC) described that launching an SPCP required “significant effort” because they “often necessitate modifications to existing processes, close monitoring of execution and results, engagement with community leaders, adjustments to the program over time, updates to documentation, and consistent engagement with the relevant supervisory agency.”  97

While certain government agencies have sought to encourage SPCPs in recent years, the information available to the Bureau indicates that the actual prevalence of SPCPs, is quite low. Therefore, while the Bureau cannot quantify with any precision the number of potentially affected lenders, it has documented reasons to believe that the number is small.

The Bureau also does not have detailed information on the amount of lending that SPCPs represent as a fraction of a creditor's portfolio. However, some individual lenders have made available information on their existing SPCPs. As one case study stated, “Wells Fargo [in the spring of 2022] set aside $150 million to lower interest rates on mortgages for Black customers”  98 under SPCPs. However, this amount only constituted a small percentage of Wells Fargo's overall lending business. 99 Large lenders such as Wells Fargo (one of the largest in the country) are best positioned to create and benefit from SPCPs. Given research showing that net interest margins increase with bank size, and the fixed administrative costs and credit risks of operating a SPCP, it seems likely that SPCP lending would represent an even smaller fraction of lending for smaller lenders. 100

Since, based on the limited information available, few lenders appear to have developed SPCPs and, for an individual lender, it seems to represent a small fraction of existing lending, the Bureau expects the total cost to covered persons by the proposed changes to Regulation B to be small relative to the total dollar amount of lending. The Bureau requests comment on the size and extent of existing SPCPs and the costs to covered persons described in this section.

Some consumers may benefit from the proposed changes in the form of additional credit availability. Designing and operating SPCPs involves meaningful administrative costs as well as, in many cases, accepting higher levels of risk from program participants. It is possible that creditors decide to provide fewer loans outside of the SPCP in response to these costs. Thus, consumers who do not qualify for an existing SPCP may see additional credit availability if the proposed changes cause creditors to discontinue their SPCPs and make those funds available to borrowers at large, or else to broaden the eligibility criteria for existing SPCPs previously limited to certain prohibited basis groups. For reasons explained above, the Bureau has reason to believe that SPCPs currently account for an insignificant portion of consumer lending. The Bureau therefore believes that the extent to which consumers will benefit from additional credit availability as a result of this regulatory change is likely insignificant.

The Bureau lacks sufficient data to quantify these potential benefits and seeks comments on the extent to which consumers may benefit in this way from the proposed changes.

Consumers who could have expected to benefit from an SPCP under the baseline could see this benefit reduced or removed under the proposed changes. This includes consumers who receive credit from an SPCP when they otherwise would not have, as well as consumers who receive more favorable credit terms under an SPCP than they otherwise would have in the absence of the SPCP. To the extent that the proposed changes cause lenders to remove SPCPs or redesign programs such that these consumers no longer benefit, customers would incur a cost.

The Bureau lacks the necessary data to estimate the total cost of the proposed regulations to consumers. However, as described in the previous section, the Bureau has reason to believe that the prevalence of SPCPs is quite low and, at a market level, the total number of consumers receiving benefits under SPCPs likely represents a small portion of total credit. Therefore, the Bureau expects the costs to consumers to be small from the proposed changes to Regulation B related to SPCPs. The Bureau requests comment on the overall cost to consumers from the proposed changes to SPCP provisions in Regulation B.

The Bureau believes that nearly all depository institutions and credit unions with $10 billion or less in total assets would be subject to Regulation B and therefore subject to the proposals described above. To estimate the number of covered depository institutions with $10 billion or less in total assets, the Bureau uses data collected by the Federal Financial Institutions Examination Council's (FFIEC's) Reports of Condition and Income (Call Reports). To estimate the number of credit unions with $10 billion or less in total assets, the Bureau uses data collected by the National Credit Union Administration's (NCUA) Call Reports. Based on the 2024Q4 FFIEC Call Reports, there are 4,328 banks with $10 billion or less in total assets. Based on 2025Q2 NCUA Call Report data, there are 4,348 credit unions with $10 billion or less in total assets.

The Bureau believes that the proposed changes to disparate impact liability and liability for discouragement will likely lead institutions with $10 billion or less in total assets to save on ongoing compliance costs. As described above, financial institutions may save time and resources creating, testing, validating, and auditing models for potential disparate impact risks in their lending strategy or portfolio, although the need to comply with other fair lending laws may limit this benefit. The institutions may also reduce spending associated with compliance activities and training relevant staff, contractors, and modelers on disparate impact risks. Institutions may also reduce the time and resources associated with monitoring marketing, pre-application conversations, and preliminary inquiries. Both proposed changes also reduce potential litigation risk from enforcement actions or private claims based on disparate impact theories or allegations of discouragement or discrimination prior to applying for credit. The Bureau lacks the necessary data to quantify the extent of these benefits.

With respect to the proposed changes regarding disparate impact or discouragement, the Bureau expects depository institutions or credit unions with $10 billion or less in total assets to incur one-time costs associated with updating policies, practices, procedures, and control systems; verifying, updating and reviewing compliance; and training staff and third parties on changed policies. As described above, the Bureau has reason to believe that institutions are likely to incur one-time costs similar to that of the Bureau's previous AVM Rule. As discussed above, the Bureau expects, as an upper bound, each institution with $10 billion or less in total assets to incur a cost of between $5,600 to $9,600 in one-time costs associated with each of the two categories of proposals. The Bureau seeks comment on the one-time cost of the proposed rule on depository institutions with $10 billion or less in total assets.

The Bureau also expects that the proposed revisions regarding SPCPs will impose additional restrictions on any depository institution with $10 billion or less in total assets who either has or would have had an SPCP. As described above, the new restrictions may reduce the net benefit that a depository institution derives from implementing an SPCP. However, for the reasons described above, the Bureau expects that few depository institutions with $10 billion or less in total assets have or would be expected to create an SPCP and that it represents a small part of any individual institution's lending. For this reason, the Bureau expects the proposed SPCP changes to have a small impact on depository institutions with $10 billion or less.

This section assesses the potential impact of the proposed amendments to Regulation B on rural consumers. The Bureau evaluates the proposed provisions jointly given their overall implications on fair lending protections and credit access for rural consumers.

Consumers in rural areas may experience greater impact from fewer protections against disparate impact because of the proposed changes to Regulation B. Without disparate impact liability, covered persons may curtail their efforts in reviewing and mitigating neutral policies that could disproportionately exclude rural borrowers. One potential reason for this exclusion is that the loan application process in rural areas often involve consideration of informal or soft information, given the small-dollar or agricultural nature typical of such rural loans.

The Bureau expects that rural consumers would face many of the same costs and benefits from the proposed changes to discouragement provisions as described above in Section E. It is possible that rural consumers could be excluded from advertising about products from which they may have benefitted, relative to the baseline. They also may experience fewer protections from discouraging behavior by lenders made at the pre-application stage, relative to the baseline.

Restriction of SPCP eligibility criteria would curtail programs designed to increase lending to consumers of prohibited basis groups in rural areas. Consumers who benefit from targeted mortgages and small business SPCPs could face higher barriers to credit access and fewer opportunities for entrepreneurship. However, as described in the previous section, the Bureau believes that the prevalence of SPCPs is quite low and the total number of consumers receiving benefits under SPCPs represent a small portion of any credit market. Therefore, the proposed changes to SPCPs will likely have a small impact on rural consumers. The Bureau seeks comment as to the proposed rule's effect on rural consumers.

The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires each agency to consider the potential impact of its regulations on small entities, including small businesses, small governmental units, and small not-for-profit organizations. 101 The RFA defines a “small business” as a business that meets the size standard developed by the Small Business Administration pursuant to the Small Business Act. 102 Potentially affected small entities include depository and non-depository providers of credit.

The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. 103 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required. 104

An IRFA is not required for this proposal because the proposal, if adopted, would not have a significant economic impact on a substantial number of small entities. The Bureau does not expect the rule to impose significant economic impacts on small entities relative to the baseline. Any effects, including one-time costs, would be expected to be small for each entity. In part V.E.x, the Bureau described how the size of SPCPs as a share of a lender's overall portfolio is expected to be small based on existing evidence. In part V.E.x, the Bureau also described how the prevalence of SPCPs is low and the Bureau expects this would also be true of (and especially for) small entities. Therefore, the Bureau does not expect the SPCPs provisions to affect a substantial number of small entities.

Accordingly, the Acting Director certifies that this proposal, if adopted, would not have a significant economic impact on a substantial number of small entities. The Bureau requests comment on its analysis of the impact of the proposed rule on small entities and requests any relevant data.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ), Federal agencies are generally required to seek the Office of Management and Budget (OMB)'s approval for information collection requirements prior to implementation. The collections of information related to Regulation B have been previously reviewed and approved by OMB and assigned OMB Control Number 3170-0013 (Regulation B). Under the PRA, the Bureau may not conduct or sponsor and, notwithstanding any other provision of law, a person is not required to respond to an information collection unless the information collection displays a valid control number assigned by OMB.

The Bureau has determined that this proposed rule would not impose any new or revised information collection requirements (recordkeeping, reporting or disclosure requirements) on covered entities or members of the public that would constitute collections of information requiring OMB approval under the PRA.

The Bureau welcomes comments on this determination, which may be submitted to the Bureau at the Consumer Financial Protection Bureau (Attention: PRA Office), 1700 G Street NW, Washington, DC 20552, or by email to CFPB_PRA@cfpb.gov. All Comments are matters of Public Record.

The Bureau preliminarily intends that the provisions of the rule are separate and severable from one another. If any provision of the final rule, or any application of a provision, is stayed or determined to be invalid, the remaining provisions or applications are severable and shall continue to be in effect. The Bureau has designed each provision to operate independently so that the effect of each provision will continue regardless of whether one or another provision is not effectuated. Therefore, proposed provisions related to disparate impact, discouragement, and special purpose credit programs are intended to be separate and severable. Moreover, aspects of these provisions are also intended to be severable, if any portion is not effectuated, including the changes proposed to the discouragement provision and the prohibitions and restrictions proposed for special purpose credit programs.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select those regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; and distributive impacts). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as any regulatory action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, or the President's priorities. The Office of Information and Regulatory Affairs within the Office of Management and Budget (OMB) has determined that this action is a “significant regulatory action” under Executive Order 12866. Accordingly, OMB has reviewed this action.

For the reasons set forth in the preamble, the Bureau proposes to amend Regulation B, 12 CFR part 1002, as set forth below:

3. Amend § 1002.6 by revising paragraph (a) to read as follows:

This action may apply to you if you have manufactured (defined by statute at 15 U.S.C. 2602(9) to include import) PFAS for a commercial purpose at any time from January 1, 2011, through December 31, 2022. The following list of North American Industry 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:

• Utilities (NAICS code 22);

• Manufacturing (NAICS codes 31 through 33);

• Wholesale trade (NAICS code 42); and

• Waste management and remediation services (NAICS code 562).

This list details the types of entities EPA is currently aware could potentially be impacted by this action. Other types of entities could also be impacted. To determine whether your entity is impacted by this action, please examine the applicability criteria found in 40 CFR 705.10 and 705.12. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

Any use of the term “PFAS” or “perfluoroalkyl or polyfluoroalkyl substance” refers to chemical substances that meet the structural definition of PFAS codified at 40 CFR 705.3. PFAS is defined as including at least one of these three structures:

• R-(CF 2 )-CF(R′ )R″, where both the CF 2 and CF moieties are saturated carbons;

• R-CF 2 OCF 2 -R′, where R and R′ can either be F, O, or saturated carbons; and

• CF 3 C(CF 3 )R′-R″, where R′ and R″ can either be F or saturated carbons.

For a more thorough discussion of the chemical substances included in this rule, please see Unit III.A of the final rule (88 FR 70516, October 11, 2023) (FRL-7902-02-OCSPP).

This rule does not require reporting on substances that are excluded from the definition of “chemical substance” in TSCA section 3(2)(B). Those exclusions include, but are not limited to: any pesticide (as defined by the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)) when manufactured, processed, or distributed in commerce for use as a pesticide; any food, food additive, drug, cosmetic, or device, as defined by the Federal Food, Drug, and Cosmetic Act (FFDCA), when manufactured, processed, or distributed in commerce for use as a food, food additive, drug, cosmetic or device; tobacco or any tobacco product; any source material, special nuclear material, or byproduct material as such terms are defined in the Atomic Energy Act of 1954 (AEA); or, any article the sale of which is subject to the tax imposed by section 4181 of the Internal Revenue Code of 1954. A PFAS may be considered a “chemical substance” as defined under TSCA for some, but not all, uses of the PFAS. Some uses may be excluded from the definition of “chemical substance,” as outlined under TSCA section 3(2)(B). PFAS considered to be a “chemical substance” pursuant to the TSCA definition may require reporting for such uses.

As with the final rule published in the Federal Register on October 11, 2023 (88 FR 70516) (FRL-7902-02-OCSPP), and direct final amendment published on September 5, 2024 (89 FR 72336) (FRL-7902.1-02-OCSPP), EPA is proposing this rule pursuant to its authority in TSCA section 8(a)(7) (15 U.S.C. 2607(a)(7)). The National Defense Authorization Act for Fiscal Year 2020 (NDAA) (Pub. L. 116-92, section 7351) amended TSCA section 8(a) in December 2019, adding TSCA section 8(a)(7), titled “PFAS Data.” TSCA section 8(a)(7) requires EPA to promulgate a rule “requiring each person who has manufactured a chemical substance that is a [PFAS] in any year since January 1, 2011” to report information described in TSCA section 8(a)(2)(A) through (G). TSCA section 8(a)(2)(A) through (G) includes a broad range of information, such as information related to chemical identity and structure, production, use, byproducts, exposure, disposal, and health and environmental effects.

EPA has authority to reconsider and revise previous decisions and to revise, replace, or repeal a decision to the extent permitted by law and supported by reasoned explanation. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009); see also Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42 (1983); see also FDA v. Wages and White Lion Investments, LLC, 145 S. Ct. 898 (2025). In other words, unless provided otherwise by statute, an agency may revise or rescind prior actions so long as it acknowledges the change in position, provides a reasonable explanation for the new position, and considers legitimate reliance interests in the prior position.

EPA is proposing to amend the one-time PFAS reporting and recordkeeping regulation finalized on October 11, 2023 (88 FR 70516) (FRL-7902-02-OCSPP) to incorporate the following exemptions to the scope of reportable manufacturing activities: a de minimis exemption of 0.1%; imported articles; byproducts; impurities; research and development (R&D); and non-isolated intermediates. The Agency is further proposing technical corrections to the reporting requirements for the purpose of clarifying what must be reported in certain data fields and to adjust the data submission period of the reporting regulation. While EPA is proposing no other amendments to the scope of the regulation, including to the period for which reporting is required, the Agency is also seeking comment on certain other aspects of the regulation.

In a series of Executive Orders, President Trump has directed agency heads to review regulations under their jurisdiction for consistency with law and Administration policy and to identify inconsistent regulations for potential recission or modification. For example, Executive Order 14219, “Ensuring Lawful Governance and Implementing the President's `Department of Government Efficiency' Deregulatory Initiative,” directs agencies to initiate a process to review existing rules for consistency with the best reading of the governing statute, Administration policy, cost-benefit balancing principles, and to rescind or revise regulations as appropriate (90 FR 10583, February 19, 2025). Among the categories of regulations to be identified are those that significantly and unjustifiably impede technological innovation, infrastructure development, disaster response, inflation reduction, R&D, economic development, energy production, land use, and foreign policy objectives and those that impose undue burdens on small business and impede private enterprise and entrepreneurship.

Consistent with Executive Order 14219 and the Administration's priorities, EPA identified the TSCA section 8(a)(7) PFAS reporting regulation for reconsideration. The Agency is reconsidering exempting certain reportable activities. The Agency has identified several aspects of the TSCA section 8(a)(7) PFAS reporting regulation for potential revision in light of TSCA section 8(a)(5):

• TSCA section 8(a)(5)(A) directs the Agency, to the extent feasible, to not require unnecessary or duplicative reporting. After reconsidering its earlier position in the 2023 final rule, EPA believes reporting on certain activities may be unnecessary for the reasons articulated in this preamble. In addition, EPA believes some byproduct reporting may be duplicative. See the relevant discussions in Unit III for more detail.

• TSCA section 8(a)(5)(B) directs the Agency, to the extent feasible, to minimize cost of compliance on small manufacturers. Under TSCA section 8(a), a “small manufacturer” is a manufacturer that either has revenues less than $120 million and manufactures less than 100,000 pounds in production volume for a chemical substance or has revenues less than $12 million regardless of production volume annually.

• TSCA section 8(a)(5)(C) directs the Agency, to the extent feasible, to apply reporting obligations to only those persons likely to have information relevant to the effective implementation of TSCA.

EPA has also reconsidered the scope of the reporting requirements in light of TSCA section 2(c), which directs the Agency to carry out TSCA “in a reasonable and prudent manner” and to “consider the environmental, economic, and social impact of any action.” See Chem. Mfrs. Ass'n v. EPA, 899 F.2d 344, 347-48 (5th Cir. 1990) (“Congress [ ] plainly intended the EPA to consider the economic impact of any actions taken by it under the TSCA”) (citing 15 U.S.C. 2601(c); emphasis in original); see also Nat'l Ass'n of Home Builders v. EPA, 682 F.3d 1032, 1039 (D.C. Cir. 2012); Ausimont U.S.A. Inc. v. EPA, 838 F.2d 93, 95 (3d Cir. 1988). Unlike certain other TSCA provisions, section 8(a)(7) does not direct EPA how to use the information collected under the PFAS reporting rule. In contrast, for example, TSCA section 8(b)(10) directs EPA to promulgate a rule “to assist in the preparation of” an inventory of mercury supply, use, and trade in the United States.” The stated purpose of TSCA section 8(b)(10) data collection is to create a mercury inventory and to recommend actions to achieve mercury use reduction. See NRDC, Inc. v. EPA, 961 F.3d 160, 175 (2d Cir. 2020) (“Congress's instruction to EPA to create and publish `an inventory of mercury supply, use, and trade, in the United States,' evinces its affirmative interest in cataloguing both the nature and extent of mercury use in the United States economy. Congress made clear that it intends EPA to collect and publish information on mercury use.”). TSCA section 8(a)(7) does not specify any such use for the data collection. EPA also notes that commenters on the TSCA section 8(a)(7) proposed rule stated that its associated burden was disproportionate to the benefits that would be derived from the data collected under the rule. EPA has reconsidered its position and, consistent with TSCA sections 2(c) and 8(a)(5), proposes to exempt certain activities from the rule given the lack of express statutory directive to create a full inventory of all PFAS manufacturing activities.

Although EPA now believes information on certain reportable activities is not necessary at this time, the Agency may in the future determine that such information is necessary to support particular regulatory actions. Courts have supported such a sequenced process to addressing an Agency's statutory obligations. See S. Coast Air Qual. Mgmt. Dist. v. EPA, 554 F.3d 1076, 1080 (D.C. Cir. 2009); Bluewater Network v. EPA, 372 F.3d 404, 411 (D.C. Cir. 2004). Here, it is reasonable to defer the collection of certain information until there is a clear role that such information could play to support a program mission of the Agency. TSCA grants EPA adequate authority to secure such information as needed, including under TSCA section 8, should the information collected sunder TSCA section 8(a)(7) prove insufficient or outdated for a particular action.

EPA has prepared an Economic Analysis of the potential impacts associated with this proposed rule (Ref. 1). The primary purpose of this proposed rule is to incorporate certain exemptions to the scope of reportable manufacturing activities for PFAS manufactured from 2011 to 2022, as required under TSCA section 8(a)(7).

This proposed action would reduce the burden on entities least likely to know and report relevant information without sacrificing the known and reasonably ascertainable data related to historically manufactured PFAS. Through the proposed exemptions and other clarifications to the regulation, this action is expected to provide both regulatory relief and greater regulatory certainty to regulated parties, resulting in a net reduction in cost while retaining the majority of PFAS manufacture reporting requirements.

The reporting community is expected to receive burden reductions from the proposed amendments to the PFAS reporting rule associated with rule familiarization, compliance determination, form completion, and recordkeeping activities. EPA is also accounting for the sunk costs of companies that have undertaken some level of rule familiarization and compliance determination when estimating the expected reduction in costs. EPA estimates that approximately 6-12 percent of the expected costs of the October 11, 2023, TSCA section 8(a)(7) final rule (88 FR 70516) (FRL-7902-02-OCSPP) have already accrued. This estimate is based on best professional judgment; see Unit IV.B for additional discussion and requests for public comments on this estimate. Under the proposed rule, EPA estimates a total industry burden reduction of 10-11. million fewer total hours, or a cost savings of $786-$843 million compared to the October 11, 2023, TSCA section 8(a)(7) final rule (88 FR 70516) (FRL-7902-02-OCSPP) requirements. Affected small businesses are expected to be relieved of 9.3-9.9 million total hours, or $703-$761 million in costs. The Agency is not expected to incur incremental costs. The total incremental social cost savings of the proposed rule compared to the October 11, 2023, TSCA section 8(a)(7) final rule (88 FR 70516) (FRL-7902-02-OCSPP) is therefore estimated to be approximately $786-$843 million.

EPA intends that the provisions of this proposed rulemaking would, if finalized, be severable from one another. In the event that any individual provision or part of this rulemaking is invalidated, EPA intends that this would not render the entire rulemaking invalid, and that any individual provisions that are finalized would continue to be followed.

President Trump signed into law the National Defense Authorization Act for Fiscal Year 2020 (NDAA) on December 20, 2019 (Pub. L. 116-92). Among other provisions, section 7321 of the NDAA created TSCA section 8(a)(7). TSCA section 8(a)(7) states that the Administrator “shall promulgate a rule in accordance with this subsection requiring each person who has manufactured a chemical substance that is a [PFAS] in any year since January 1, 2011, to submit to the Administrator a report that includes, for each year since January 1, 2011, the information described in subparagraphs (A) through (G) of paragraph (2).” The categories of information described in sections 8(a)(2)(A) through (G) are:

• The common or trade name, chemical identity and molecular structure of each chemical substance or mixture for which a report is required;

• Categories or proposed categories of use for each substance or mixture;

• Total amount of each substance or mixture manufactured or processed, the amounts manufactured or processed for each category of use, and reasonable estimates of the respective proposed amounts;

• Descriptions of byproducts resulting from the manufacture, processing, use, or disposal of each substance or mixture;

• All existing information concerning the environmental and health effects of each substance or mixture;

• The number of individuals exposed, and reasonable estimates on the number of individuals who will be exposed, to each substance or mixture in their places of work and the duration of their exposure; and

• The manner or method of disposal of each substance or mixture, and any change in such manner or method.

On June 28, 2021, EPA proposed the TSCA section 8(a)(7) PFAS reporting rule (86 FR 33926) (FRL-10017-78). This rule proposed to require any person who had manufactured (including imported) a PFAS (including as a mixture or an article containing a PFAS) as defined by a structural definition to report the required information for each year from 2011 to 2022 (86 FR 33926, June 28, 2021) (FRL-10017-78), to the extent such information is known to or reasonably ascertainable by the manufacturer. EPA did not propose any reporting exemptions or thresholds that other TSCA reporting rules have used, such as for chemical substances in imported articles, R&D chemicals, impurities, and certain byproducts. Additionally, EPA proposed no flexibilities for small manufacturers.

After a 90-day public comment period and additional information gathering on the proposed rule's burden and cost estimates, EPA could not support a certification under the Regulatory Flexibility Act (RFA) that the rule would impose no significant economic impact on a substantial number of small entities. EPA thus convened a Small Business Advocacy Review (SBAR) Panel in April 2022. The Panel used feedback from small entity representatives to develop a Panel Report (Ref. 2) and Initial Regulatory Flexibility Analysis (IRFA) (Ref. 3). EPA opened a second public comment period (87 FR 72439) (FRL-7902-04-OCSPP) on November 25, 2022, to solicit comment on the proposed rule's IRFA, SBAR Panel Report, and other aspects of the proposed rule that may have been impacted by EPA actions or proposed actions after the proposed rule's publication in June 2021.

EPA considered comments and other stakeholder input, including from the SBAR Panel, in developing the final rule, which was published on October 11, 2023 (88 FR 70516) (FRL-7902-02-OCSPP). Public input informed changes from the 2021 proposed rule, including the scope of the PFAS structural definition, the duration of the data submission period, and the inclusion of shorter reporting forms for certain PFAS manufacturing scenarios. However, EPA did not add any exemptions as requested by commenters and as recommended by the SBAR Panel.

The final rule established a 12-month data collection period for manufacturers following the effective date of the rule, followed by a six-month data submission period, with information from most PFAS manufacturers due to EPA by May 8, 2025. Small manufacturers reporting exclusively as article importers had a 12-month submission period, with a reporting deadline of November 10, 2025.

Data have not yet been submitted under the PFAS reporting rule. Since promulgating the final rule on October 11, 2023, the Agency has moved the reporting deadline twice. EPA needed to move the submission period due to the delay in the development of the reporting application on EPA's Central Data Exchange (CDX, the Agency's electronic reporting site), related information technology (IT) infrastructure challenges, and the ability to conduct user testing data needed for IT reporting application development. On September 5, 2024, EPA promulgated a direct final rule (89 FR 72336) (FRL-7902.1-02-OCSPP) to move the start of the data submission period from November 12, 2024, to July 11, 2025. EPA subsequently published an interim final rule on May 13, 2025 (90 FR 20236) (FRL-7902.2-01-OCSPP) to move the start of the data submission period from July 11, 2025, to April 13, 2026. EPA noted the need for such amendments due to further delays in developing the CDX infrastructure and conducting industry beta testing to ensure the reporting application collects and stores data as intended.

EPA is proposing to add certain exemptions to the scope of reportable PFAS manufacturing activities under 40 CFR 705. EPA intends these exemptions to be similar to the TSCA Chemical Data Reporting (CDR) rule (40 CFR 711) and, in addition, proposes to include the de minimis exemption described in Unit III.A.1. In some scenarios, more than one of these proposed exemptions may provide the same regulatory relief from reporting. For example, an importer of articles which contain low levels of PFAS may be exempt from reporting by virtue of both the imported articles and de minimis exemptions. EPA is interested in public comments on potential means to consolidate the proposed exemptions, while providing the same regulatory relief and in public comments on the potential benefits and drawbacks of finalizing all proposed exemptions or a subset of proposed exemptions when viewed in combination.

The purpose of this rule is to better understand the PFAS manufactured (including imported) in the United States for commercial purposes, to the extent the information is known to or reasonably ascertainable by regulated entities. EPA recognizes that the number of entities that will need to search their records to identify the information is greater than the number of entities that will ultimately report. In EPA's 2023 Economic Analysis (Ref. 4) and FRFA (Ref. 5), the Agency assumed that, of all small article importers conducting due diligence to identify any reportable PFAS, only 10% would ultimately determine that they had known or reasonably ascertainable information to report on PFAS imported in articles. That is, 90% of the small article importers would be burdened by compliance determination activities only to then determine that they do not need to report because the information is not known or reasonably ascertainable.

After further consideration of the Agency's obligations under TSCA sections 8(a)(7), 8(a)(5), and 2(c), EPA is reassessing whether the volume of potential data collected justifies the total burden of implementing that collection and what result Congress intended when it added TSCA section 8(a)(7) within the broader structure of section 8. Therefore, EPA is proposing these exemptions to maintain meaningful reporting on PFAS while exempting regulated entities that are least likely to have relevant information, alleviating some compliance burden ( e.g., rule familiarization, recordkeeping), and eliminating some reporting where EPA has now determined that the reportable information is unnecessary to fulfill statutory obligations. These proposed exemptions also aim to minimize, to the extent feasible, the burden of regulatory compliance on small manufacturers, pursuant to TSCA section 8(a)(5)(B). These proposed exemptions are responsive to the agency's obligations under the Regulatory Flexibility Act and are consistent with several of the recommendations that were made in the 2022 SBAR Panel Report (Ref. 2). EPA estimates that with these proposed exemptions, small businesses subject to the October 11, 2023, final rule (88 FR 70516) (FRL-7902-02-OCSPP) would be relieved of over $703-$761 million in net regulatory compliance burden.

EPA is proposing a de minimis concentration exemption for reportable PFAS in mixtures or articles under which PFAS concentrations below 0.1% would be exempt from reporting. This low-concentration exemption would apply regardless of total production volume of the mixture or article. Implicit in most statutes is the authority for an implementing agency to exempt de minimis concentrations from the scope of general rules. “[T]he venerable maxim de minimis non curat lex (“the law cares not for trifles”) as part of the established background of legal principles against which all enactments are adopted, and which all enactments (absent contrary indication) are deemed to accept.” Wis. Dep't of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214, 231 (1992); Citadel Sec. v. SEC, 45 F.4th 27, 36 (D.C. Cir. 2022) (explaining that an agency decision was reasonable and supported by the maxim); Shays v. Federal Election Commission, 414 F.3d 76, 113-14 (D.C. Cir. 2005) (“Predicated on the notion that the Congress is always presumed to intend that pointless expenditures of effort be avoided, such authority is inherent in most statutory schemes, by implication.”) (internal quotation marks omitted); Ober v. Whitman, 243 F.3d 1190, 1194 (9th Cir. 2001); EDF, Inc. v. EPA, 82 F.3d 451, 466-467 (D.C. Cir. 1996). This principle only covers situations where “the burdens of regulation yield a gain of trivial or no value.” EDF, 82 F.3d at 466.

EPA proposes to apply the de minimis principle here because nothing in TSCA section 8 suggests an intent to depart from this background rule of construction. Nor is the statutory language in TSCA section 8(a)(7) so uncompromisingly rigid as to preclude a de minimis exemption. Under TSCA section 8(a)(7), EPA must gather information from manufacturers of PFAS, but TSCA section 8(a)(5) grants EPA broad authority to reduce the burdens of such reporting to the extent feasible by placing the “PFAS Data” paragraph within TSCA section 8, Congress intended this authority to apply. Also, as noted above in Unit I.D., Congress indicated a practical intent for implementation of TSCA—the statute shall be carried out “in a reasonable and prudent manner.” 15 U.S.C. 2601(c). A de minimis exemption is a reasonable and familiar means to achieve such ends.

The proposed de minimis level of 0.1% is appropriate because of the retrospective nature of the reporting and contemporary recordkeeping practices. During the lookback period for reporting, reporters are unlikely to have records of PFAS amounts below 0.1% due to U.S. and international requirements at the time, e.g., for labeling and recordkeeping. During the development of the 2023 final rule, several commenters and small entity representatives described the challenges of determining the presence of a PFAS in past imports when the concentration would have been below the Safety Data Sheet (SDS) or the European Union's Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) notification levels ( see docket comments EPA-HQ-OPPT-2020-0549-0054, 0105, 0107, 0139, 0163, and 0165). Suppliers covered under SDS and REACH notification requirements need not provide notification of PFAS levels below 0.1% under the most stringent chemical hazard classifications. Without REACH notifications having required notice for PFAS below 0.1% of a mixture or an article during the retroactive reporting time frame, companies would not have known that they have manufactured (including imported) PFAS below that de minimis concentration. See 15 U.S.C. 2607(a)(5)(C). Additionally, the Occupational Safety and Health Administration's (OSHA) Hazard Communication Standard (29 CFR 1910.1200) sets cut-offs for the minimum concentration of a chemical that triggers requirements for an SDS. The cut-off level of 0.1% is generally applied to chemicals classified as “health hazards” and a chemical is classified as a health hazard if it poses certain hazardous effects. Health hazards include, among others, chemicals that are carcinogens, reproductive toxins, irritants, and sensitizers (29 CFR 1910.1200(c) and Appendix A). Some evidence suggests that exposure to certain PFAS may lead to adverse health effects, including an increased risk of some cancers, as identified in the EPA's National PFAS Testing Strategy (Ref. 6). Identifying whether a mixture or article contains PFAS below 0.1% would be time consuming and complicated because PFAS were not required to be reported on an SDS during the relevant lookback period.

EPA also considered potential impacts of other statutory or regulatory requirements pertaining to de minimis levels of PFAS that were in effect during the 2011-2022 reporting period, to the extent those requirements may impact manufacturers' knowledge of and ability to report on manufacturing of de minimis concentrations in mixtures and articles. During most of the lookback period, there were few international labeling or notification requirements for small concentrations of PFAS. As public commenters previously noted, the REACH regulation in the European Union only placed certain groups of PFAS on their Substances of Very High Concern (SVHC) Candidate List beginning in 2019, with HFPO-DA and its salts (Ref. 7). These listings triggered additional legal obligations, including safety communication to customers, when articles contain an SVHC at concentrations above 0.1% (Ref. 8). Thus, it is unlikely that manufacturers would have been able to identify such small concentrations of PFAS in mixtures and articles during this rule's reporting period. As suppliers were not obligated to disclose de minimis levels of PFAS, those manufacturers likely would not know of the existence of such PFAS and render those mixtures and articles not known or reasonably ascertainable under TSCA Section 8(a)(5).

Moreover, a uniform 0.1% de minimis threshold would relieve manufacturers of burden related to investigating the relevant exemption level and applying different concentrations to different PFAS. The OSHA Hazard Communication Standard for chemicals not classified as a “health hazard” uses a cut-off concentration of 1.0% by weight, and the extent to which many PFAS present health concerns similar to those relatively few PFAS known to be “health hazards” is unclear. Although most PFAS are not classified as health hazards under 29 CFR 1910.1200, EPA is proposing a universal de minimis concentration exemption of 0.1% for all PFAS to reduce the burden of determining which concentration is applicable to each reportable PFAS. Further, PFAS are typically present at low concentrations in mixtures, so a 1% de minimis threshold may remove otherwise reportable information from the scope of the rule. In part, this rulemaking is designed to identify and address available information gaps involving PFAS, so EPA believes that applying a lower, uniform 0.1% de minimis concentration threshold for all reportable PFAS helps address information gaps where information exists and still alleviates burden by providing a de minimis threshold.

EPA also considered establishing de minimis levels based on detection limits in validated analytical methods developed by EPA. As of August 2025, EPA has developed analytical methods for the detection of dozens of PFAS in various environmental media (see https://www.epa.gov/water-research/pfas-analytical-methods-development-and-sampling-research ). However, EPA identified several limitations to this potential approach to such an exemption. First, the number of PFAS that have at least one analytical method is a small portion of the broader universe of known PFAS. The detection limits associated with those PFAS with analytical methods are also at different levels, varying by orders of magnitude. Further, some of the lowest detection limits (in parts per trillion) would render any exemption based on concentrations below such limits ineffectual. EPA ultimately determined that basing a proposed de minimis exemption level on these analytical methods would be inappropriate. As noted in Unit IV, EPA seeks comment on the proposed 0.1% de minimis level, including information on what concentration level other than 0.1% might be appropriate for an exemption.

EPA also proposes to exempt these de minimis concentrations of PFAS in mixtures and articles (see Unit III.A.2.) from the scope of the rule based on the Agency's information needs under TSCA section 8(a)(5)(A). The Agency has determined that information about such PFAS in mixtures is unnecessary, in part because EPA does not anticipate publishing an “inventory” of all PFAS manufactured since 2011 such that EPA would need a complete reporting of all PFAS in U.S. markets. Compare 15 U.S.C. 2607(a)(7) with 15 U.S.C. 2607(b)(10). Additionally, EPA does not anticipate evaluating PFAS that may only be manufactured in de minimis levels in the near future under TSCA (see 2024 TSCA section 8(d) rule ((89 FR 100756, 100758, December 13, 2024) (FRL-11164-02-OCSPP). Manufacturers that report pursuant to this rule are required to provide downstream processing and use information about the use of PFAS in consumer and commercial products, including articles. Thus, despite the provision of de minimis and imported article exemptions (discussed below), EPA anticipates it will receive information on low concentrations and articles from original manufacturers of PFAS who are most likely to have such information and who are likely to report pursuant to this rule should the proposed exemptions be finalized. Such information from these manufacturers will help the Agency identify situations in which more information about PFAS in articles may be necessary, and EPA will address such needs when they are identified.

EPA is proposing to exempt PFAS imported as part of an article from the scope of reportable activities (see proposed 40 CFR 705.5, 705.12, 705.18, and 705.30). An “article” is defined in 40 CFR 704.3 as “a manufactured item (1) which is formed to a specific shape or design during manufacture, (2) which has end-use function(s) dependent in whole or in part upon its shape or design during end use, and (3) which has either no change of chemical composition during its end use or only those changes of composition which have no commercial purpose separate from that of the article, and that result from a chemical reaction that occurs upon end use of other chemical substances, mixtures, or articles; except that fluids and particles are not considered articles regardless of shape or design.”

EPA recognizes that importing PFAS in articles between 2011-2022 is an activity about which manufacturers are unlikely to have known or reasonably ascertainable information. As discussed above, SDS and REACH notification requirements are not likely to have revealed the content of PFAS in imported articles during the time span covered by this retroactive reporting rule, which is a perspective shared widely by commenters and the small entity representatives to the SBAR Panel (87 FR 72439, November 25, 2022) (FRL-7902-04-OCSPP). Thus, importers of articles across many industries have the burden of reviewing any past SDSs or other records, such as REACH notifications, for confirmation that PFAS has been imported in those articles. EPA has now reconsidered the weight of that input and now proposes to exempt importing articles in an effort to apply reporting obligations, to the extent feasible, to those persons likely to have information (TSCA section 8(a)(5)(C)).

Should EPA finalize this proposal by exempting the reporting on PFAS in imported articles, the Agency will nevertheless receive information on the incorporation of PFAS in articles. The rule requires manufacturers to report on processing and use (both industrial and consumer/commercial) for their manufactured PFAS, such as any incorporation in articles (40 CFR 705.15(c)). The processing and use reporting requirements will inform the Agency's understanding of which PFAS are used in various types of industrial processes or consumer and commercial products, which will be instructive to future TSCA actions.

EPA is also proposing this imported articles exemption under TSCA section 8(a)(5)(A), as the Agency finds that requiring retroactive reporting on importing articles with PFAS is unnecessary (in addition to EPA finding that requiring reporting from importers of articles containing PFAS exceeds EPA's authority under TSCA Section 8(a)(7), see the below paragraph). On balance, EPA finds it unnecessary to require reporting for this activity and impose related non-reporting burden activities such as rule compliance determination and due diligence record searches when such importers are unlikely to have relevant information.

In addition, EPA proposes that requiring reporting from importers of articles containing PFAS exceeded EPA's authority under TSCA section 8(a)(7). In the NDAA, Congress directed the EPA to require reporting from “each person who has manufactured a chemical substance that is a [PFAS]. ” 15 U.S.C. 2607(a)(7) (emphasis added). As a general matter, TSCA section 3(2)(A) defines “chemical substance” as “any organic or inorganic substance of a particular molecular identity,” including natural combinations, elements, and uncombined radicals. TSCA section 3(9) defines “manufacture” to include production, manufacture, and imports. By specifying “a chemical substance that is a [PFAS],” in TSCA section 8(a)(7), however, Congress provided that the reporting requirement would apply to a narrower universe than TSCA would generally cover.

Specifically, EPA proposes to conclude that the NDAA is best read as excluding articles and targeting the reporting requirement to manufacturers of the PFAS themselves. Had Congress intended the legislation to include articles that contain a PFAS substance, it could have said so. Here, Congress chose to target manufacturers (including importers) of the PFAS themselves, as indicated by the specific phrase “that is a” (instead of a more inclusive term such as “contains”). Where Congress omits expansive modifiers, they should not be inferred. EPA is soliciting feedback on this argument, which was raised by commenters on the June 2021 proposed rule (86 FR 33926) (FRL-10017-78). Since EPA is proposing to exempt article importers under TSCA section 8(a)(5) as discussed above, this rationale would lead to the same outcome in terms of regulatory requirements.

EPA is proposing to exempt the manufacture of PFAS as byproducts, impurities, non-isolated intermediates, or upon incidental exposure, or end use of another substance or mixture from the scope of reportable activities when such substances are manufactured under conditions described in 40 CFR 720.30(h). These proposed exemptions align with existing exemptions under TSCA for substances not manufactured and used for a separate commercial purpose and is consistent with the approach taken in EPA's CDR rule (see 40 CFR 711.10(c)).

EPA describes the byproduct, impurity, and non-isolated intermediate activity exemptions below. Overall, the exemptions reflect a practical application of TSCA section 8(a)(5)(C), under which EPA shall, to the extent feasible, apply reporting obligations only to those persons likely to have relevant information. EPA has historically exempted such manufacturing activities ( i.e., impurities, non-isolated intermediates, and certain byproducts; manufacturing low quantities solely for R&D purposes) from the scope of reporting obligations under TSCA sections 5 and 8. EPA is not proposing to exempt other types of manufacturing activities, including for byproducts subsequently used for a commercial purpose listed in 40 CFR 720.30(g), as the Agency believes PFAS manufacturers are more likely to have relevant information on those manufacturing activities. As proposed, these exemptions would ensure that manufacturers remain focused on reporting PFAS with greater commercial relevance and potential exposure pathways while relieving industry of disproportionately burdensome reporting. By eliminating the need to search for and report on data related to these manufacturing activities that have been traditionally exempt from other TSCA reporting requirements, manufacturers would avoid resource-intensive record reviews and unnecessary administrative burden for reporting activities unlikely to provide relevant information.

Byproducts. The regulation currently requires a manufacturer of PFAS to report in separate chemical reports each PFAS that is manufactured, without exception. EPA is proposing to exempt from the requirement to report PFAS that are solely manufactured as a byproduct in a manner described in 40 CFR 720.30(h) (see proposed 40 CFR 705.12). Specifically, EPA is proposing to exempt any byproduct not used for commercial purposes. “Byproduct” is defined in 40 CFR 704.3 to mean “a chemical substance produced without a separate commercial intent during the manufacture, processing, use, or disposal of another chemical substance(s) or mixture(s).”

EPA is proposing this exemption because it now believes this information is unnecessary to implement its statutory obligations and potentially duplicative. Consistent with TSCA section 8(a)(5)(A), EPA believes it is appropriate to exempt manufacturers of PFAS as a byproduct when they are not used for a commercial purpose. EPA does not find that the reportable information on PFAS manufactured as byproducts and without subsequent commercial use is necessary, considering the Agency's ongoing obligations under TSCA are limited to specific PFAS, not the entire class, and because of the expected low exposure potential to such non-commercial PFAS. However, EPA is interested in learning about the intended commercial uses of PFAS, including PFAS when manufactured as a byproduct, and thus is not proposing to exempt manufacture of PFAS as a byproduct if it is used for a commercial purpose. Further, this proposed byproduct exemption would apply only to the byproduct. The exemption does not apply to component substances extracted from a byproduct, when the extracted substances are reportable PFAS.

For certain reporting requirements ( e.g., CDR), EPA has exempted manufacture of byproducts for specific types of commercial purposes (see proposed 40 CFR 720.30(g)). For this rule, EPA is not proposing to exempt PFAS manufactured as byproducts that are used for a commercial purpose as listed at 40 CFR 720.30(g). These types of commercial purposes may provide relevant information on exposure pathways of interest to EPA, such as applying PFAS-containing wastes to land for soil enrichment or when burned as a fuel (Ref. 9).

This proposed exemption does not impact the need to report information about any byproducts resulting from the manufacture, processing, use, or disposal of each reportable PFAS under 40 CFR 705.15(e), consistent with the requirement under TSCA section 8(a)(2)(D). If you are reporting the manufacture of a PFAS with byproducts produced during the manufacture, processing, use, or disposal of that PFAS, you must report basic information ( e.g., chemical identity, related PFAS activity, volume, and environmental releases) about the byproducts. That is, a manufacturer of a non-byproduct PFAS will provide information on all byproducts produced while manufacturing, processing, using, or disposing of the given PFAS ( e.g., polytetrafluoroethylene (PTFE) is a reportable PFAS and reporting on PTFE where “GenX chemicals” were created as a byproduct in the production of PTFE would result in reporting on PTFE including information on the manufacture of GenX chemicals as PTFE's byproduct (see Ref. 10 for more information on GenX chemicals)).

EPA notes that pursuant to this proposed exemption, the Agency will not receive reporting on PFAS manufactured as byproducts of a non-PFAS. In addition, under the 2023 final rule, a processor would need to report as a manufacturer for any PFAS-containing byproducts; with this proposed exemption, such reporting would not occur unless the byproducts have a separate commercial use.

EPA further believes reporting on PFAS manufactured as byproducts in the manner described at 40 CFR 720.30(h) may be duplicative of the requirements to report on any byproduct produced during the manufacture, processing, use, or disposal of a reportable PFAS. As described above, if a PFAS is manufactured as a byproduct during the manufacture, processing, use, or disposal of a reportable PFAS, EPA would receive information that is known or reasonably ascertainable on that byproduct, including the chemical identity and the amounts released to different environmental media. Given the scope of the definition of PFAS under 40 CFR 705.3, many fluorinated substances (including their potential byproducts) are captured such that reporting on those fluorinated byproducts would be identified and reported on in the precursor PFAS's report.

EPA has determined that information related to PFAS manufactured as byproducts without separate commercial uses, under the same conditions that are exempt from CDR, is unnecessary and potentially duplicative. Accordingly, EPA is proposing this activity exemption under section 8(a)(5)(A).

Impurities. EPA is proposing to exempt the manufacture of PFAS as impurities from the scope of reportable activities, as described in 40 CFR 720.30(h)(1) (see proposed 40 CFR 705.12). This exemption is also incorporated in the CDR regulation (see 40 CFR 711.10(c)). As defined at 40 CFR 704.3, an impurity is a chemical substance unintentionally present with another chemical substance. Impurities are not manufactured for distribution in commerce as chemical substances per se, and they have no distinct commercial purpose apart from the substance, mixture, or article in which they are contained.

EPA proposes that, consistent with TSCA section 8(a)(5)(A), requiring this information is unnecessary. As explained in CDR guidance ( see Ref. 11), in evaluating whether a PFAS is an impurity, EPA considers the source of the substance in the manufacturing process. A substance that arises unintentionally in a final product because it was introduced unintentionally as a component of a raw material, it may be considered an impurity. This is distinguishable from a byproduct, which is a substance formed as part of the intended chemical reaction or byproduct stream and intentionally retained would not meet the definition of an impurity and may be subject to reporting. EPA understands there are likely no PFAS manufactured as impurities domestically, as PFAS are not likely to be unintentionally present in raw materials introduced into a process. Thus, the manufacturing of PFAS as impurities would only derive from the import of materials with PFAS as impurities. Such importers are not likely to know about the presence of PFAS, let alone any reportable information under section 8(a)(7). Therefore, exempting manufacturers (including importers) of impurities would not meaningfully impact the scope of the universe of manufacturers of PFAS impurities who would have relevant information to report under this rule. Such an exemption would therefore be consistent with TSCA section 8(a)(5)(C), which requires EPA to, to the extent feasible, extend reporting obligations to those likely to have relevant information. Without relevant information to report under this rule, EPA has determined that exempting the manufacture of PFAS as impurities is appropriate. EPA is seeking public comment on this proposed exemption to ensure that the definitions and exemption conditions of byproducts and impurities are consistently and appropriately applied to PFAS manufacturing activities.

Non-isolated intermediates. Consistent with the proposed exemptions to align with 40 CFR 720.30(h), EPA is proposing to exempt otherwise-reportable PFAS that are non-isolated intermediates (see proposed 40 CFR 705.12). Non-isolated intermediates, as defined at 40 CFR 704.3, are substances manufactured and consumed within a closed system during the production of another chemical substance. These intermediates are not intentionally removed from process equipment, such as reaction vessels or continuous flow systems, and are not stored, packaged, or transported. Because these substances remain confined within closed systems and are not expected to be released in the environment or handled by workers, EPA has determined that reporting on non-isolated intermediates is unnecessary because these intermediates do not result in meaningful human or environmental exposure. EPA is proposing this exemption consistent with TSCA section 8(a)(5)(A). Additionally, as described earlier in Unit III.A.3., manufacturers have generally not been required to submit reports related to the manufacture of non-isolated intermediates under TSCA. The Agency has exempted non-isolated intermediates in the past, in part, because such substances often are extremely difficult to identify. See 15 U.S.C. 2607(a)(5)(C).

EPA is proposing to exempt PFAS manufactured (including imported) in small quantities for R&D purposes (see proposed 40 CFR 705.12). The proposed exemption, while limited to PFAS manufactured solely for R&D purposes, has no threshold limit. EPA notes that such quantities manufactured solely for R&D purposes are quantities no greater than reasonably necessary for those R&D activities (see 40 CFR 704.3, which defines small quantities for research and development as “quantities of a chemical substance manufactured, imported, or processed or proposed to be manufactured, imported, or processed solely for research and development that are not greater than reasonably necessary for such purposes”).

Based on stakeholder input, EPA understands that information on PFAS manufactured solely for R&D purposes would be limited and would provide minimal information regarding PFAS exposures and quantities in commerce, which were the focuses of TSCA section 8(a)(7). EPA does not see such information as improving the Agency's understanding of the exposures and potential risks of such PFAS under TSCA. Pursuant to TSCA section 8(a)(5)(A), EPA has determined information about such chemicals is unnecessary. EPA may consider future data calls for R&D chemicals if the Agency determines a need to do so.

Further, other TSCA reporting requirements have incorporated exemptions of small quantities of R&D chemicals consistent with the definition at 40 CFR 704.3 (for example, TSCA section 5 new chemicals reporting (see 40 CFR 720.30(c)), inventory reporting (see TSCA section 8(b)(1)), and CDR reporting (see 40 CFR 711.10(a)). Without a historical need to provide reporting on PFAS manufactured in small quantities solely for R&D purposes under both TSCA section 5 and other section 8 actions, EPA believes manufacturers of such R&D PFAS will be unlikely to have information responsive to the data request under TSCA section 8(a)(7). Therefore, exempting such manufacturers is consistent with EPA's obligations under TSCA section 8(a)(5)(C) to apply reporting requirements to only those persons likely to have such relevant information.

Exempting PFAS manufactured solely for R&D purposes is also consistent with EPA's obligations under TSCA section 8(a)(5)(B), to minimize, to the extent feasible, the cost of compliance with TSCA section 8 rules on small manufacturers. In the SBAR Panel conducted for this rule in 2022 (see Unit II.B.), EPA learned from a small entity representative that their small business manufactured PFAS for laboratory and analytical purposes and is not generally subject to TSCA reporting requirements. Under this proposed exemption, EPA will minimize compliance costs on such small manufacturers pursuant to TSCA section 8(a)(5)(B).

This exemption is also being proposed pursuant to the Administration's priorities as outlined in Executive Order 14219, which seeks to reduce regulations that impose costs that “impede” R&D and economic development activities. Based on input from manufacturers (for example, comments EPA-HQ-OPPT-2020-0549-0069, 0084, and 0143), the requirement to report on typically exempt R&D substances, even in a streamlined reporting form with fewer required data fields, would impose significant burden on manufacturers who may have up to thousands of small quantity R&D substances, whose R&D staff would need to assist with the efforts to respond to this rule, including by searching through “potentially hundreds of lab notebooks” (comment EPA-HQ-OPPT-2020-0549-0143). Exempting PFAS manufactured in small quantities solely for R&D activities alleviates the compliance burden on those stakeholders conducting commercial R&D and other economic development activities and provides more resources to carry out such activities.

EPA is proposing to amend the data submission period to accommodate the changes to the reporting scope in this proposal. EPA believes a shift to the data submission period is appropriate when the reporting regulation has changed. This allows reporters to familiarize themselves with the amended rule and ensure their data are responsive to the amended rule and EPA to modify the reporting application as needed, such as removing the option of streamlined reporting forms for article importers and R&D manufacturers.

EPA proposes to alter the submission period as follows: the submission period will begin 60 days after the effective date of the final rule and will last for three months (see proposed 40 CFR 705.20). The time EPA took to develop the 2023 final rule and engage with stakeholders on the content of the rule, as well as the time that has passed since promulgation of the 2023 final rule, suggests to the Agency that reporters have had adequate time to consider how they intend to comply with the rule. Because no reporting will be required from article importers due to the proposed exemption (see Unit III.A.2.), EPA proposes to remove the reporting deadline for small manufacturers who would report under this rule exclusively as article importers.

The current rule requires the submission of exposure-related information and “all existing information concerning the environmental and health effects” of the chemical substances covered by this rule. “All existing information concerning environmental and health effects” is defined as “any information of any effect of a chemical substance or mixture on health or the environment or both” (40 CFR 705.3) and is intended to be interpreted broadly. In addition, certain information is required to be reported using the OECD-harmonized template (OHT) format. EPA proposes to clarify the requirements related to reporting using the OHT format, including to propose a regulatory change to confirm that OHTs are required for unpublished study reports on the environmental and health effects of the reportable PFAS, except for exposure information provided in the fielded data elements throughout the reporting application.

In Unit III.E of the 2023 final rule, EPA described the need to submit all existing information concerning health and environmental effects in the OHT format, where such templates exist for the type of data reported (40 CFR 705.15(f)). To avoid duplicative reporting, EPA proposes to clarify that the use of OHTs is not required for exposure-related information otherwise reported in the fielded data elements (40 CFR 705.15(b)-(e) and (g)-(h)). See proposed amendments to 40 CFR 705.15(f)(1). EPA did not quantify the burden associated with this proposed regulatory text change. EPA is seeking public comment on the OHT requirement for environmental and health effect information and associated burden.

EPA is proposing to update the names used for specific consumer and commercial product categories as required under 40 CFR 705.15(c)(4). Like the clarification above, this proposed change would not alter any reporting requirements or introduce new burden but rather aims to clarify existing requirements. EPA has received requests for clarification from data submitters under the CDR regulation, which uses the same product category names, so EPA proposes to clarify the names and descriptions for the same consumer and commercial article-related codes in the PFAS Data Reporting Rule (see Table 5 at 40 CFR 705.15(c)(4)). For example, under CC303, EPA proposes to add “Articles without routine direct contact, such as” to the associated name to better define the difference between CC303 and CC304, which has been confusing for some CDR data submitters. In addition, EPA is proposing to revise the product category code names associated with CC217 through CC221 and CC305 to more clearly identify the types of articles and materials covered within those categories. See Table 1 below for a comparison between the proposed and existing impacted product category codes and names. Table 1. also includes descriptions for each code, which EPA provides in reporting guidance. The proposed changes eliminate the overlap between the categories and reduce reporter uncertainty regarding the correct category to report.

EPA requests comment on the content of this proposed rule and the Economic Analysis prepared in support of this proposed rule (Ref. 1). In addition, EPA is providing a list of issues on which the Agency is specifically requesting public comment. EPA encourages all interested persons to submit comments on the topics raised in this proposal. This input will assist the Agency in developing a final rule that successfully addresses information needs while minimizing potential reporting burdens associated with the regulation. EPA requests that commenters include materials supporting their rationale to the extent possible.

1. As described in Unit III.A.1., EPA is soliciting comment on the proposed 0.1% de minimis exemption for PFAS in mixtures and articles. EPA is also interested in comments on a 1.0% de minimis exemption for PFAS in mixtures and articles instead of the proposed 0.1% de minimis exemption, or another appropriate de minimis level.

2. As described in Unit III.A.2, EPA is soliciting comment on an imported articles exemption. EPA is also interested in comments on the Agency's reconsidered interpretation of the statutory language of the NDAA and whether the NDAA is best read as excluding articles from the scope of reporting.

3. As described in Unit III.A.3, EPA is soliciting comment on exempting certain byproducts, impurities, and non-isolated intermediates by incorporating the exemptions at 40 CFR 720.30(h). This exemption would extend to PFAS that are manufactured upon incidental exposure or end use of another substance or mixture based on conditions described in 40 CFR 720.30(h)(3)-(7).

4. As described in Unit III.A.4, EPA is soliciting comment on an exemption for manufacturing PFAS in small quantities for R&D activities.

5. As described in Unit III.B, EPA is soliciting comment on whether the Agency's proposed amendment to the data submission period is appropriate to accommodate the proposed changes to the PFAS Data Reporting Rule.

6. As described in Unit III.C.1, EPA is soliciting comment on the requirements related to reporting using the OHT format, including to propose a regulatory change to confirm that OHTs are required for unpublished study reports on the environmental and health effects of the reportable PFAS, except for exposure information provided in the fielded data elements throughout the reporting application. EPA has not quantified and is also soliciting comment on the potential burden with the OHT requirement for unpublished study reports under 40 CFR 705.15(f). Additionally, in response to stakeholder requests that EPA has received, EPA is soliciting comment on whether to maintain the requirement for full study reports under 40 CFR 705.15(f) or to provide an option for a submitter to provide a robust study summary in lieu of the full study report, with the submitter to provide the full study report upon reasonable EPA request, such as when technical concerns about the data or methodology as described in the summary are identified or the Agency deems that the summary is not robust. EPA continues to maintain its position that full study reports are necessary; however, the Agency is amenable to receiving further perspectives on this topic to further inform its understanding of stakeholder concerns.

7. EPA is soliciting comment on the nature and extent of any reliance interests that may have arisen from the October 11, 2023, TSCA section 8(a)(7) final rule.

In addition to the topics listed above and proposed in this action, EPA is also soliciting comment on specific questions discussed below in this Unit.

EPA is not proposing changes to the scope of reportable chemical substances but is soliciting comment on this topic. EPA is receptive to feedback on a possible means to lower burden by modifying the scope of reportable substances, such as by limiting reporting to those PFAS with a Chemical Abstracts Service Registry Number (CASRN), or, in the case of a PFAS listed as confidential on the TSCA Inventory, a TSCA Accession Number or Low-Volume Exemption Number. EPA received comments on the 2021 proposed rule and input during the SBAR Panel related to the scope of reportable PFAS, including some requests to codify a discrete list of covered PFAS rather than a structural definition; see, for example, docket comments EPA-HQ-OPPT-2020-0549-0063, 0122, 0165, and 0168, and SBAR Panel Report (Ref. 2). In the final rule published on October 11, 2023 (88 FR 70516) (FRL-7902-02-OCSPP), EPA determined that a structural definition of PFAS was appropriate for this rule. Further, EPA was unable to publicly identify all PFAS on the TSCA Inventory, as some identities have confidentiality claims and currently lack a generic name to indicate that chemical substance is a PFAS. The inclusion of those chemicals on a discrete list for reporting under this rule would not be permitted because that would divulge CBI. Additionally, as chemical innovation has led to new PFAS compounds, limiting the scope of the regulation to certain existing compounds on the TSCA Inventory would create aa gap in the regulation regarding any chemical substances not already on the Inventory. In light of the proposed exemptions outlined in Unit III.A, however, EPA is interested in comments on the scope of reportable substances in this regulation.

Further, EPA has received stakeholder comment recommending a production-volume threshold below which reporting on a given PFAS would not be required. EPA has received feedback from certain stakeholders that a 2,500 lbs. threshold would be appropriate for this rule, as the Chemical Data Reporting Rule provides a 2,500 lbs. threshold for chemical substances subject to specific TSCA activities (see 40 CFR 711.8). However, EPA is not proposing to provide a production-volume threshold. Because this rule aims to provide an understanding of which PFAS have been commercially manufactured in the United States since 2011, and for which uses, EPA does not believe that incorporating a minimum threshold would enable the Agency to meet its information needs. EPA understands that some PFAS that were manufactured in lower quantities may still persist in the environment, and the Agency is interested in understanding the extent of environmental exposure. EPA also notes that there is precedent for promulgating a TSCA rule without a minimum threshold where the regulated chemical(s) are of significant interest to EPA, including due to potential health or environmental concerns.

EPA is amenable to comments regarding the benefits and/or drawbacks of providing such a threshold and what would be an appropriate threshold. EPA would also be interested in comments on whether such a threshold would either make other proposed exemptions unnecessary or impact their scope, e.g., the de minimis threshold.

EPA is specifically seeking comments and data to consider in developing an Economic Analysis for a final rule. In this proposed rule's Economic Analysis (Ref. 1), EPA assumes that 255 manufacturing firms have undergone all compliance determination and rule familiarization activities, and 20,985 article importers have undergone some level of compliance determination and rule familiarization since the promulgation of the final rule on October 11, 2023 (88 FR 70516) (FRL-7902-02-OCSPP). Therefore, EPA estimates that approximately 5% of the estimated total industry cost for the 2023 final rule has already occurred. These assumptions of sunk costs for article importers are based on inquiries EPA has received specifically related to this rule's imported article scope, EPA's expectation that small article importers would be less likely to have completed rule familiarization and compliance determination activities due to their delayed reporting deadline under the 2023 final rule, and EPA's best professional judgement.

In considering the burden reduction this proposed rule would provide, EPA is seeking comment on its assumptions, including on the sunk costs estimates described above and on the assumption that the exemption for article importers and the 26 percent reduction in reporting from manufacturers would not result in a large reduction in benefits. EPA requests any information that can be provided to refine its estimates related to cost savings of this proposed action.

The following is a listing of the documents specifically referenced in this document. The docket includes these documents and other information EPA considered, 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 under section 3(f)(1) of Executive Order 12866. Accordingly, it was submitted to the Office of Management and Budget (OMB) for review under Executive Order 12866 (58 FR 51735, October 4, 1993). Any changes made in response to Executive Order 12866 review have been documented in the docket. The EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis (Ref. 1) is available in the docket and is briefly summarize in Unit I.E.

This action is expected to be an Executive Order 14192 deregulatory action. Details on the estimated cost savings of this proposed rule can be found in EPA's analysis of the potential costs and benefits associated with this action (Ref. 1).

The information collection activities in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB) under the PRA. The Information Collection Request (ICR) document that the EPA prepared has been assigned EPA ICR number 2682.03, to replace an existing approved ICR. You can find a copy of the ICR in the docket for this rule (Ref. 12), and it is briefly summarized here.

The reporting requirements identified in the proposed rule would enable EPA to meet the statutory obligations required by TSCA section 8(a)(7) and collect data related to the identities, manufacture, use, exposure, and disposal of PFAS manufactured in the United States since 2011. These proposed reporting requirements would also help the Agency to collect existing information on the health and environmental effects of PFAS. EPA intends to use information collected under the rule to assist in chemical assessments under TSCA, and to inform any additional work necessary under environmental protection mandates beyond TSCA. Respondents may claim some of the information reported to EPA under the proposed rule as CBI under TSCA section 14. TSCA section 14(c) requires a supporting statement and certification for confidentiality claims asserted after June 22, 2016.

Respondents/affected entities: Non-exempt manufacturers (including importers) of PFAS in any year between January 1, 2011, and December 31, 2022.

Respondent's obligation to respond: Mandatory (15 U.S.C. 2607(a)(7)).

Estimated number of respondents: 255.

Frequency of response: Once.

Total estimated burden: 134,004 hours (per year). Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: $11.4 million (per year), includes no annualized capital or operation & 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 the EPA's regulations in 40 CFR are listed in 40 CFR part 9.

Submit your comments on the Agency's need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden to the EPA using the docket identified at the beginning of this rule. The EPA will respond to any ICR-related comments in the final rule. You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs using the interface at www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under Review—Open for Public Comments” or by using the search function. OMB must receive comments no later than [INSERT DATE 30 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER ].

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the EPA concludes that the impact of concern for this rule is any significant adverse economic impact on small entities and that the agency is certifying that this rule will not have a significant economic impact on a substantial number of small entities because the rule relieves regulatory burden on the small entities subject to the rule. This proposed action would alleviate reporting requirements on small entities subject to an existing rule by exempting certain activities from the scope of reporting. As a result of the proposed exemptions, an estimated 127,469 small article importers would no longer be subject to the regulation. Additionally, as a result of the proposed revisions, an estimated 241 small manufacturing firms would see lower reporting costs. Affected small businesses are expected to be relieved of $703-$761 million in costs. This proposed action would not impose incremental costs on any small entities. We have therefore concluded that this action will relieve regulatory burden for all directly regulated small entities.

This action does not contain an unfunded mandate of $100 million (in 1995 dollars and 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. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.

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. This action does not impose substantial direct compliance costs on federally recognized Indian tribal governments. Thus, Executive Order 13175 does not apply to this action.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. Therefore, this action is not subject to Executive Order 13045 because it does not concern an environmental human health risk or safety risk. Since this action does not concern human health, EPA's Policy on Children's Health also does not apply. Although this action would not establish an environmental standard intended to mitigate health or safety risks, the information that would be submitted to EPA in accordance with this proposed rule would be used to inform the Agency's decision-making process regarding chemical substances to which children may be disproportionately exposed. This information may also assist the Agency and others in determining whether the chemical substances covered in this proposed rule present potential risks, which would allow the Agency and others to take appropriate action to investigate and mitigate those risks.

This action is not a “significant energy action” because it is not likely to have any adverse effect on the supply, distribution or use of energy.

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

Therefore, for the reasons set forth in the preamble, EPA proposes to amend 40 CFR part 705 as follows:

The revisions to read as follows:

The revisions to read as follows: