This rulemaking is separate from NRC's comprehensive review and reform of its regulations in accordance with Executive Order (E.O.) 14300, “Ordering the Reform of the Nuclear Regulatory Commission” (90 FR 22587; May 29, 2025). The rulemakings associated with that effort will comprehensively reexamine NRC requirements. While there could be additional revisions as a result of these future rulemakings, the NRC is moving forward with publication of this proposed rule at this time because it is an action of high interest for stakeholders that was in progress before the issuance of E.O. 14300.

The IEEE periodically revises and updates its codes for nuclear power plants by issuing new editions; this proposed rule is in accordance with the NRC's practice to incorporate new editions into the NRC's regulations. This proposed rule allows nuclear power plant applicants to take advantage of the latest IEEE Std, enhancing efficiency for applicants and the NRC without affecting safety. The NRC's use of the IEEE Std is consistent with applicable requirements of the National Technology Transfer and Advancement Act (NTTAA). See also Section XII of this document, “Voluntary Consensus Standards.”

The primary effect of this proposed rule is the incorporation by reference of IEEE Std 603-2018 into title 10 of the Code of Federal Regulations (10 CFR) 50.55a, “Codes and standards,” and to provide for its use for nuclear power reactors of all types. This proposed rule also includes a conforming amendment to paragraph (b)(1)(v) of section 50.69, “Risk-informed categorization and treatment of structures, systems and components for nuclear power reactors,” of 10 CFR, which would extend that provision to allow risk-informed alternatives to Clauses 5.3 and 5.4 of IEEE 603-2018 for certain systems, structure, and components.

Please refer to Docket ID NRC-2024-0045 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:

• Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2024-0045.

• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly available documents online in the ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select “Begin ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, at 301-415-4737, or by email to PDR.Resource@nrc.gov. For the convenience of the reader, instructions about obtaining materials referenced in this document are provided in the “Availability of Documents” section.

• NRC's PDR: The PDR, where you may examine and order copies of publicly available documents, is open by appointment. To make an appointment to visit the PDR, please send an email to PDR.Resource@nrc.gov or call 1-800-397-4209 or 301-415-4737, between 8:00 a.m. and 4:00 p.m. eastern time, Monday through Friday, except Federal holidays.

• Technical Library: The Technical Library, which is located at Two White Flint North, 11545 Rockville Pike, Rockville, Maryland 20852, is open by appointment only. Interested parties may make appointments to examine documents by contacting the NRC Technical Library by email at Library.Resource@nrc.gov between 8:00 a.m. and 4:00 p.m., eastern time, Monday through Friday, except Federal holidays.

The NRC encourages electronic comment submission through the Federal rulemaking website ( https://www.regulations.gov ). Please include Docket ID NRC-2024-0045 in your comment submission.

The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at https://www.regulations.gov as well as enter the comment submissions into ADAMS. The NRC does not routinely edit comment submissions to remove identifying or contact information.

If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.

It has been the NRC's practice to establish requirements for the protection systems and safety systems in nuclear power plants by incorporating by reference certain standards published by the IEEE into 10 CFR 50.55a, “Codes and standards.”

Paragraph 50.55a(h)(2), “Protection systems,” currently requires that the protection systems in nuclear power plants with construction permits issued after January 1, 1971, but before May 13, 1999, meet the requirements stated in either IEEE Std 279, “Criteria for Protection Systems for Nuclear Power Generating Stations,” or with the requirements in IEEE Std 603-1991, “IEEE Criteria for Safety Systems for Nuclear Power Generating Stations,” including the correction sheet dated January 30, 1995. For nuclear power plants with construction permits issued before January 1, 1971, 10 CFR 50.55a(h)(2) requires that protection systems must be consistent with their licensing basis or meet the requirements of IEEE Std 603-1991 including the correction sheet dated January 30, 1995.

Paragraph 50.55a(h)(3), “Safety systems,” currently requires that applications filed on or after May 13, 1999, for construction permits and operating licenses under 10 CFR part 50, as well as standard design approvals, standard design certifications, and combined licenses under 10 CFR part 52, meet the requirements for safety systems stated in IEEE Std 603-1991 including the correction sheet dated January 30, 1995.

The IEEE superseded the previous standards with IEEE Std 603-2018. This proposed rule would update the NRC's regulations to incorporate by reference and specify the requirements for using this latest version of IEEE Std 603 on the basis of license date, construction permit date, and type of protection system or safety system modification. This proposed rule would apply to (1) reactor design applications for a license, construction permit, design approval, or design certification, and (2) applications for license amendments for nuclear power plants. The NRC is proposing to make the final rule effective 30 days after its publication in the Federal Register .

This proposed rule would incorporate voluntary consensus standard IEEE Std 603-2018 into the NRC's regulations to establish functional and design requirements for power, instrumentation, and control safety systems for nuclear power plants. This action would be consistent with the provisions of the NTTAA, which encourage Federal regulatory agencies to consider adopting voluntary consensus standards as an alternative to agency development of government-unique standards.

The NRC staff held two public meetings on IEEE Std 2018 before this rulemaking was initiated: one on September 14, 2023, and one on September 19, 2024. The NRC appreciates the feedback received through these public meetings, which contributed to the development of this proposed rule.

The NRC proposes to update 10 CFR 50.55a to incorporate by reference IEEE Std 603-2018. When applying IEEE Std 603-2018, the first sentence within Clause 5.16, “Common-cause failure,” captures the only regulatory requirement of Clause 5.16, that the safety system design and development shall address common-cause failures (CCFs) that create a potential to degrade or defeat the safety system function.

IEEE Std 603-2018 references several industry codes and standards that are not proposed for incorporation by reference in this rulemaking. These referenced standards are not mandatory NRC requirements, and if a referenced standard has been endorsed in a regulatory guide, the standard constitutes a method acceptable to the NRC for meeting a regulatory requirement.

This proposed rule also includes a conforming amendment to paragraph (b)(1)(v) of 10 CFR 50.69, “Risk-informed categorization and treatment of structures, systems and components for nuclear power reactors,” which would extend that provision to allow risk-informed alternatives to Clauses 5.3 and 5.4 of IEEE 603-2018 for certain systems, structure, and components.

IEEE Std 603-2018 includes Clause 5.16, which provides criteria for evaluating the potential for safety system CCF. As this Clause 5.16 does not exist in IEEE Std 603-1991, it is not in the currently incorporated by reference version. In the 2018 version, Clause 5.16 applies to any source of vulnerability to CCF.

The first sentence in Clause 5.16 states that—the safety system design and development shall address CCFs that create a potential to degrade or defeat the safety system function. This statement is consistent with the NRC's position on CCF, which is why it is proposed to be included as part of this proposed rule. The Commission's policy on addressing CCF is found in Staff Requirements Memorandum (SRM)-SECY-22-0076, “Expansion of Current Policy on Potential Common-Cause Failures in Digital Instrumentation and Control Systems,” dated August 10, 2022. As noted in the Commission's policy, before a nuclear generating station safety system is considered ready for implementation at the facility, developers must demonstrate that vulnerabilities to CCF have been adequately identified and addressed.

The NRC staff considers the remainder of Clause 5.16 of IEEE Std 603-2018 as guidance on how CCF could be addressed. The methods included in Clause 5.16 may be acceptable for licensees or applicants to address CCF as part of their overall defense-in-depth and diversity (D3) analyses, in appropriate circumstances; however, the list is not comprehensive and does not include flexibilities the Commission recently directed the NRC staff to incorporate into its licensing reviews. In its direction to the NRC staff in SRM-SECY-22-0076, the Commission approved expanded acceptance of risk-informed approaches in performing the defense-in-depth and diversity assessment and in determining the adequacy of design techniques, prevention measures, and mitigation measures, other than diversity, to address a postulated digital instrumentation and controls CCF. This policy provides additional flexibility in addressing CCFs beyond the methods described in Clause 5.16. Therefore, licensees or applicants may use the methods described in Clause 5.16 and other methods referenced in Draft Regulatory Guide (DG) DG-1251, Revision 1, “Guidance for the Power, Instrumentation, and Control Portions of Safety Systems for Nuclear Power Plants,” in their overall D3 analyses. The NRC staff guidance for evaluation of defense in depth and diversity to address CCF is found in NUREG-0800, “Standard Review Plan,” Chapter 7, Branch Technical Position 7-19 (BTP 7-19), Revision 9, “Guidance for Evaluation of Defense in Depth and Diversity to Address Common-Cause Failure Due to Latent Design Defects in Digital Instrumentation and Control Systems,” and the Design Review Guide, “Design Review Guide (DRG): Instrumentation and Controls for Non-Light-Water Reactor (Non-LWR) Reviews,” as applicable. Further, regarding the last paragraph in Clause 5.16, the NRC staff agrees that if a determination concludes that the consequences of a CCF are low or a determination concludes that the CCF has a very low likelihood of occurrence, then that conclusion could be credited in a plant-specific analysis toward justification of the proposed safety system design in a risk-informed approach. However, a risk-informed approach requires that risk insights are considered together with other factors to establish requirements that better focus licensee and regulatory attention on design and operational issues commensurate with their importance to public health and safety, consistent with SRM-SECY-98-144, “Risk-informed and Performance Based Regulation,” and SRM-SECY-22-0076. Finally, the NRC staff agrees that each identified source of CCF should be evaluated on a case-by-case basis.

Therefore, the NRC proposes to update 10 CFR 50.55a to incorporate by reference IEEE Std 603-2018. When applying IEEE Std 603-2018, the first sentence within Clause 5.16, “Common-cause failure,” captures the only regulatory requirement of Clause 5.16, that the safety system design and development shall address CCF that create a potential to degrade or defeat the safety system function.

The NRC's understanding of “protection systems” and “safety systems” as used in 10 CFR 50.55a(h) remains the same as described in the 1999 rulemaking to incorporate IEEE Std 603-1991 by reference into 10 CFR 50.55a (64 FR 17944; April 13, 1999). Currently, 10 CFR 50.55a(h) specifies that “protection systems” for plants with construction permits issued after January 1, 1971, but before May 13, 1999, must meet the requirements in IEEE Std 279-1968, “Proposed IEEE Criteria for Nuclear Power Plant Protection Systems,” or the requirements in IEEE Std 279-1971, “Criteria for Protection Systems for Nuclear Power Generating Stations,” or the requirements in IEEE Std 603-1991, “Criteria for Safety Systems for Nuclear Power Generating Stations, and the correction sheet dated January 30, 1995. IEEE Std 279-1971 states that a “protection system” encompasses all electric and mechanical devices and circuitry (from sensors to actuation device input terminals) involved in generating those signals associated with the protective function. These signals include those that actuate reactor trip and that, in the event of a serious reactor accident, actuate engineered safety features, such as containment isolation, core spray, safety injection, pressure reduction, and air cleaning. In turn, “protective function” is defined in IEEE Std 279-1971 as the sensing of one or more variables associated with a particular generating station condition, signal processing, and the initiation and completion of the protective action at values of the variables established in the design bases.

IEEE Std 603-2018 uses the term “safety systems” rather than “protection systems” to define its scope. A “safety system” is defined in IEEE Std 603-2018 as a system that is relied upon to remain functional during and following design basis events to assure one of the following: (a) The integrity of the reactor coolant pressure boundary, (b) the capability to shut down the reactor and maintain it in a safe shutdown condition, or (c) the capability to prevent or mitigate the consequences of accidents that could result in potential offsite exposures comparable to regulatory guidelines. A “safety function” is defined in IEEE Std 603-2018 as one of the processes or conditions (for example, emergency negative reactivity insertion, post-accident heat removal, emergency core cooling, post-accident radioactivity removal, and containment isolation) essential to maintain plant parameters within acceptable limits established for a design basis event.

The NRC recognizes that “protection systems” are a subset of “safety systems.” Safety system is a broad-based and all-encompassing term, embracing the protection system in addition to other electrical systems. Thus, the term “protection system” is not synonymous with the term “safety system.” This proposed rule would not change the scope of the systems covered in the final safety analysis report for currently operating nuclear power plants.

The following paragraphs describe the specific changes proposed by this rulemaking.

This proposed rule would revise paragraphs (a) and paragraphs (h)(2) and (h)(3) to include the IEEE standard 603-2018 and revise introductory text to paragraph (h) to align for readability.

This proposed rule would revise paragraph (b)(v) to extend that provision to allow risk-informed alternatives to Clauses 5.3 and 5.4 of IEEE 603-2018 for certain systems, structure, and components.

This proposed rule would correct the title, from “Protection Systems” to “Protection and safety systems,” referenced in footnote 7 of appendix E to 10 CFR part 50.

As required by the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b), the NRC certifies that this rule, if adopted, will not have a significant economic impact on a substantial number of small entities. This proposed rule affects only the licensing and operation of nuclear power plants. The companies that own these plants do not fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act or the size standards established by the NRC (10 CFR 2.810).

The NRC has prepared a draft regulatory analysis on this proposed regulation. The analysis examines the costs and benefits of the alternatives considered by the NRC. The NRC requests public comment on the draft regulatory analysis. The regulatory analysis is available as indicated in the “Availability of Documents” section of this document. Comments on the draft analysis may be submitted to the NRC as indicated under the ADDRESSES caption of this document.

The NRC's Backfit Rule in 10 CFR 50.109 states that the NRC shall require the backfitting of a facility only when it finds the action to be justified under specific standards stated in the rule. Section 50.109(a)(1) defines backfitting as the modification of or addition to systems, structures, components, or design of a facility; the design approval or manufacturing license for a facility; or the procedures or organization required to design, construct, or operate a facility. Any of these modifications or additions may result from a new or amended provision in the NRC's rules or the imposition of a regulatory position interpreting the NRC's rules that is either new or different from a previously applicable NRC position after issuance of the construction permit or the operating license or the design approval.

This rulemaking proposes to incorporate by reference the IEEE 603-2018. This proposed rule would not change requirements for existing licensees or applicants. If existing licensees or applicants request changes to their power and instrumentation control systems, this proposed rule would allow them to voluntarily comply with IEEE Std 603-2018 instead of other existing requirements. The proposed rule would require applicants and holders of new construction permits, new operating licenses, new final design certifications, and new combined licenses to meet IEEE Std 603-2018 after the effective date of the rule. However, changes in requirements for new applicants or licensees do not constitute backfitting. Therefore, this proposed rule, if finalized, would not constitute “backfitting” as defined in 10 CFR 50.109(a)(1).

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998, (63 FR 31885). The NRC requests comment on this document with respect to the clarity and effectiveness of the language used.

The Commission has determined under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in subpart A of 10 CFR part 51, that this rule, if adopted, would not be a major Federal action significantly affecting the quality of the human environment, and therefore an environmental impact statement is not required.

The proposed rule does not significantly increase the probability or consequences of accidents, no changes are being made in the types of effluents that may be released off-site, and there is no significant increase in public radiation exposure. This proposed rule does not involve non-radiological plant effluents and has no other environmental impact. Therefore, no significant non-radiological impacts are associated with this proposed action.

The determination of this environmental assessment is that there will be no significant effect on the quality of the human environment from this action. Public stakeholders should note; however, that comments on any aspect of this environmental assessment may be submitted to the NRC as indicated under the ADDRESSES caption.

This proposed rule does not contain any new or amended collections of information subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Existing collections of information were approved by the Office of Management and Budget (OMB), approval numbers 3150-0011, 3150-0264, and 3150-0151.

The NRC may not conduct or sponsor, and a person is not required to respond to a collection of information unless the document requesting or requiring the collection displays a currently valid OMB control number.

The following are Executive orders that are related to this proposed rule:

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

The NRC has examined this proposed rule and has determined that it is consistent with the policies and directives outlined in E.O. 14154.

This action is a regulatory action as defined by E.O. 14192. Details on the estimated costs of this proposed rule can be found in Section VI of this document, “Regulatory Analysis.”

E.O. 14270, “Zero-Based Regulatory Budgeting to Unleash American Energy,” requires the NRC to insert a conditional sunset date into all new or amended NRC regulations provided the regulations are (1) promulgated under the Atomic Energy Act of 1954, as amended (AEA), the Energy Reorganization Act of 1974, as amended (ERA), or the Nuclear Waste Policy Act of 1982, as amended (NWPA); (2) not statutorily required; and (3) not part of the NRC's permitting regime. The NRC determined that the regulatory changes proposed in this rule are part of the NRC's regulatory permitting scheme authorized by the AEA. Therefore, the NRC views this rulemaking to be outside the scope of Executive Order 14270 and did not insert conditional sunset dates for the regulatory changes in this proposed rule.

The National Technology Transfer and Advancement Act of 1995, Public Law 104-113, requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless using such a standard is inconsistent with applicable law or is otherwise impractical. In this proposed rule, the NRC would incorporate the following voluntary consensus standard: IEEE Std 603-2018, Institute of Electrical and Electronics Engineers, September 27, 2018. The NRC invites comment on the applicability and use of other standards.

The NRC proposes to incorporate by reference the IEEE Std 603-2018. When applying IEEE Std 603-2018, the first sentence within Clause 5.16, “Common-cause failure,” captures the only regulatory requirement of Clause 5.16, that the safety system design and development shall address CCFs that create a potential to degrade or defeat the safety system function. As described in the “Background” and “Discussion” sections of this document, the material contains standards for establishing the minimum functional and design criteria for the power, instrumentation, and control portions of safety systems for nuclear power generating stations.

The NRC is required by law to obtain approval for incorporation by reference from the Office of the Federal Register (OFR). The OFR's requirements for incorporation by reference are set forth in 1 CFR part 51. On November 7, 2014, the OFR adopted changes to its regulations governing incorporation by reference (79 FR 66267). The OFR regulations require an agency to include in a proposed rule a discussion of the ways that the material the agency proposes to incorporate by reference are reasonably available to interested parties or how it worked to make the material reasonably available to interested parties. The discussion in this section complies with the requirement for proposed rules as set forth in 1 CFR 51.5(a)(1).

The NRC considers “interested parties” to include all potential NRC stakeholders and not only the individuals and entities regulated or otherwise subject to the NRC's regulatory oversight. These NRC stakeholders are not a homogenous group but vary with respect to the considerations for determining reasonable availability. Therefore, the NRC distinguishes between different classes of interested parties for the purposes of determining whether the material is “reasonably available.” The NRC considers the following to be classes of interested parties in NRC rulemakings with regard to the material to be incorporated by reference:

• Individuals and small entities regulated or otherwise subject to the NRC's regulatory oversight (this class also includes applicants and potential applicants for licenses and other NRC regulatory approvals) and who are subject to the material to be incorporated by reference by rulemaking. In this context, “small entities” has the same meaning as a “small entity” under 10 CFR 2.810.

• Large entities otherwise subject to the NRC's regulatory oversight (this class also includes applicants and potential applicants for licenses and other NRC regulatory approvals) and who are subject to the material to be incorporated by reference by rulemaking. In this context, “large entities” are those that do not qualify as a “small entity” under 10 CFR 2.810.

• Non-governmental organizations with institutional interests in the matters regulated by the NRC.

• Other Federal agencies, States, local governmental bodies (within the meaning of 10 CFR 2.315(c)).

• Federally-recognized and State-recognized  1 Indian Tribes.

• Members of the public ( i.e., individual, unaffiliated members of the public who are not regulated or otherwise subject to the NRC's regulatory oversight) who may wish to gain access to the material that the NRC proposes to incorporate by reference by rulemaking in order to participate in the rulemaking process.

The IEEE 603-2018 Standard may be viewed, by appointment, at the Technical Library, which is located at Two White Flint, 11545 Rockville Pike, Rockville, Maryland 20852. You may submit your request to the Technical Library via email at Library.Resource@nrc.gov between 8:00 a.m. and 4:00 p.m. eastern time, Monday through Friday, except Federal holidays. In addition, as described in Section XVI of this document, documents related to this proposed rule are available online in the NRC's ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html.

Interested parties may purchase a copy of the IEEE material at the IEEE Standards Association website, https://standards.ieee.org/. The material also is accessible through a third-party subscription service such as Accuris IHS (15 Inverness Way East, Englewood, CO 80112; https://store.accuristech.com/publishers/ieee ).

The material is available to all interested parties in multiple ways and in a manner consistent with their interest in this proposed rule. Therefore, the NRC concludes that the material the NRC proposes to incorporate by reference in this proposed rule is reasonably available to all interested parties.

The NRC is issuing draft guidance in conjunction with this proposed rule. Draft Regulatory Guide (DG)DG-1251, Revision 1, “Guidance for the Power, Instrumentation, and Control Portions of Safety Systems for Nuclear Power Plants” (Regulatory Guide 1.153, Revision 2; ADAMS Accession No. ML25114A021), would provide additional guidance for implementing the requirements of the rule. DG-1251 is based upon the discussion in this proposed rule and does not modify the scope of paragraph 50.55a(h) of 10 CFR part 50. The NRC requests public comment on the draft regulatory guide. Comments on the draft guidance may be submitted by the methods provided in Section I, “Obtaining Information and Submitting Comments,” of this document.

The NRC will conduct a public meeting on the proposed rule for the purpose of describing the incorporation by reference of the 2018 version of the IEEE 603 standard. The NRC staff will be available to answer questions from the public regarding this proposed rule.

The NRC will publish a notice of the location, time, and agenda of the meeting in the Federal Register , on Regulations.gov , and on the NRC's public meeting website within at least 10 calendar days before the meeting. Stakeholders should monitor the NRC's public meeting website for information about the public meeting at: https://www.nrc.gov/public-involve/public-meetings/index.cfm.

The documents identified in the following table are available to interested persons through one or more of the following methods, as indicated.

The NRC may post materials related to this document, including public comments, on the Federal rulemaking website at https://www.regulations.gov under Docket ID NRC-2024-0045. In addition, the Federal rulemaking website allows members of the public to receive alerts when changes or additions occur in a docket folder. To subscribe: (1) navigate to the docket folder (NRC-2024-0045); (2) click the “Subscribe” button; and (3) enter an email address and click on the “Subscribe” button.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is proposing to amend 10 CFR part 50.

The revision and addition read as follows:

The FDIC is issuing this notice of proposed rulemaking (proposed rule) to implement certain application provisions under the GENIUS Act (or the Act). 1 The proposed rule would establish a tailored application process for an FDIC-supervised institution to obtain approval from the FDIC to issue payment stablecoins  2 through a subsidiary. The FDIC seeks to evaluate the safety and soundness of an applicant's proposed activities based on consideration of statutory factors and support the responsible growth and use of digital assets and related technologies  3 while minimizing the regulatory burden on applicants.

The GENIUS Act was enacted on July 18, 2025, and will become effective on January 18, 2027, or 120 days after the date on which the primary Federal payment stablecoin regulators  4 issue any final implementing regulations, if earlier. 5 This proposed rule, once finalized, will implement the Federal statutory framework for applications for issuance of payment stablecoins and related payment stablecoin activities by subsidiaries of FDIC-supervised institutions for which the FDIC is the primary Federal payment stablecoin regulator, as defined under section 2 of the Act. 6 A subsidiary of an insured depository institution (IDI)  7 that has been approved to issue payment stablecoins under section 5 of the GENIUS Act is a permitted payment stablecoin issuer, or PPSI.

Under the GENIUS Act, subject to certain limited exceptions, only a PPSI may issue a payment stablecoin in the United States. A PPSI is a person  8 formed in the United States that is (1) a subsidiary of an IDI approved by its primary Federal payment stablecoin regulator; (2) a Federal qualified payment stablecoin issuer approved by the OCC; or (3) a State-qualified payment stablecoin issuer approved by its State payment stablecoin regulator. 9 With respect to a PPSI that is a subsidiary of an IDI, the PPSI's primary Federal payment stablecoin regulator is the same as the IDI's appropriate Federal banking agency under section 3 of the Federal Deposit Insurance (FDI) Act or the National Credit Union Administration, as applicable. 10

The FDIC is the appropriate Federal banking agency of each IDI that is a State-chartered insured bank that is not a member of the Federal Reserve System (State non-member bank)  11 and each State-chartered savings association (State savings association) (collectively, as noted above, FDIC-supervised institutions). 12 Accordingly, an FDIC-supervised institution must obtain approval for its subsidiary PPSI from the FDIC pursuant to the GENIUS Act and, once the application is approved, the FDIC will supervise that PPSI as its primary Federal payment stablecoin regulator.

Section 5 of the GENIUS Act directs the FDIC, and the other primary Federal payment stablecoin regulators, to establish a process and Federal framework for the licensing, regulation, examination, and supervision of PPSIs that prioritizes the safety and soundness of such entities. 13 As required by the GENIUS Act, this proposed rule would establish a process and Federal framework for the acceptance and processing of PPSI applications  14 from FDIC-supervised institutions that is consistent with the requirements of the Act. 15

In connection with the processing of applications to issue payment stablecoins, section 5 of the GENIUS Act includes specific timelines, evaluation criteria, and appeal rights for denied applicants.

The FDIC is required to evaluate and make a determination on a substantially complete application  16 using the factors listed in section 5(c) of the GENIUS Act, including the subsidiary's ability to meet statutory and regulatory requirements and other factors related to management and safety and soundness. 17 These factors are discussed in greater detail in section II.B.3 of this document. The GENIUS Act provides that the FDIC shall only deny an application upon determining that the activities of the applicant (including the proposed activities of the subsidiary) would be unsafe or unsound based on the factors. 18

If the FDIC denies an application, it must provide the applicant with an opportunity to appeal. The GENIUS Act sets forth specific timelines for requesting an appeal, holding a hearing, and issuing a final decision, but is silent on the modus for appeal. 19 Lastly, the GENIUS Act states that a denial does not prohibit an applicant from filing a subsequent application. 20

When evaluating an application, section 5(c)(1) of the GENIUS Act provides that the FDIC is required to consider the ability of the IDI's subsidiary, based on financial condition and resources, to meet the requirements for issuing payment stablecoins set forth in section 4 of the GENIUS Act. 21 Section 4 sets out standards for the issuance of payment stablecoins by PPSIs. 22 Section 4 requires that a PPSI maintain identifiable reserves backing the outstanding payment stablecoins on at least a 1 to 1 basis, comprised of specified categories of reserves, 23 and the ability to relatedly meet the monthly reserve disclosure requirements applicable to a PPSI. The reserve disclosure requirements include disclosing the composition of the PPSI's reserves on its website  24 and submitting to the FDIC certified reports examined by a public accounting firm regarding the prior month's reserve composition disclosure. 25

Additionally, the FDIC is required to consider the ability of the IDI's subsidiary, based on financial condition and resources, to comply with forthcoming regulations to be issued by the FDIC regarding capital requirements; liquidity requirements; reserve asset diversification; and operational, compliance, and information technology risk management principles-based requirements and standards, including Bank Secrecy Act (BSA) and sanctions compliance standards. 26

Section 4 also establishes certain limitations on a PPSI's activities and generally only permits PPSIs to issue and redeem payment stablecoins, manage related reserves, provide certain payment stablecoin and reserve custodial and safekeeping services, 27 undertake other activities that directly support those activities, 28 and engage in digital asset service provider activities. 29 In addition, section 4 establishes, subject to limited exceptions, a prohibition on pledging, rehypothecating, or reusing a PPSI's reserves assets. 30

The FDIC is also required to consider factors related to management described in sections 5(c)(2) and 5(c)(3) of the GENIUS Act. Section 5(c)(2) requires the FDIC to consider whether an individual that has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud is serving as an officer or director of the applicant. 31 Section 5(c)(3) requires the FDIC to consider the competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant, its subsidiaries, and parent company, including the record of compliance with laws and regulations and ability to fulfill any commitments and conditions of the FDIC in connection with the application and prior applications. 32

Under section 5(c)(4) of the GENIUS Act, the FDIC is required to consider whether the applicant's redemption policy can meet the standards specified under section 4(a)(1)(B). 33 This includes whether the applicant has established clear and conspicuous procedures for timely redemption of outstanding payment stablecoins;  34 whether the PPSI will publicly, clearly, and conspicuously disclose, in plain language, all fees associated with purchasing or redeeming its payment stablecoins;  35 and whether the PPSI will meet the prohibition on changing such fees without at least 7 days' prior notice to consumers. 36

Lastly, section 5(c)(5) of the GENIUS Act allows the FDIC to establish and consider any other factors as necessary to ensure the safety and soundness of the PPSI when evaluating an application. 37 The FDIC is not proposing to establish any additional factors pursuant to section 5(c)(5) of the GENIUS Act at this time.

To implement the statutory requirements described above, the proposed rule would add a new § 303.252 to title 12, part 303, subpart M of the FDIC Rules and Regulations, titled “Permitted payment stablecoin issuers.” This new section would apply to FDIC-supervised institutions that seek to issue payment stablecoins through a subsidiary. The proposed rule, as described below, addresses scope; definitions; filing location; contents of the filing; additional information for applications; processing decisions; and hearing and appeal procedures and final determination. The proposed rule would implement the requirements of section 5 of the GENIUS Act with respect to evaluating the factors, processing applications within specified timeframes, and establishing an appeal process. As required under the GENIUS Act, the FDIC would only deny an application if the activities of the applicant would be unsafe or unsound based on the factors described in section 5(c) of the Act.

Paragraph (a) of proposed § 303.252 would establish the scope of the proposed section. It would state that proposed § 303.252 sets forth the application requirements and procedures for an FDIC-supervised institution to submit an application to issue payment stablecoins through a subsidiary that would become a PPSI under the GENIUS Act.

Paragraph (b) would define relevant terms for purposes of proposed § 303.252. The term “applicant” would mean an FDIC-insured State nonmember bank or an FDIC-insured State savings association that seeks to issue payment stablecoins through a subsidiary. This definition would distinguish the applicant—the FDIC-supervised institution—from the PPSI subsidiary through which the institution would issue payment stablecoins and perform certain other payment stablecoin activities permitted by the GENIUS Act. “Digital asset service provider,” “payment stablecoin,” and “permitted payment stablecoin issuer” would be defined by referencing the relevant definitions in section 2 of the GENIUS Act. The terms “State nonmember bank,” “State savings association,” and “subsidiary” would have the meanings given those terms in section 3 of the FDI Act. 38 Finally, the term “substantially complete” would be defined in a manner consistent with the standard set forth in section 5(d)(1)(B)(i) of the GENIUS Act.

Paragraph (c) of proposed § 303.252 would state that applications under the new section shall be filed with the appropriate FDIC region, as defined in 12 CFR 303.2(g), which is consistent with the FDIC's practice for receiving other types of applications.

Paragraph (d) of proposed § 303.252 would describe the contents of the filing. Under the proposed rule, the applicant would submit information to the FDIC in the form of a letter application that would contain the information listed in the regulation, to the extent applicable. Paragraph (d) would minimize the regulatory burden for applicants by requesting only information necessary to evaluate the factors to be considered under section 5(c) of the GENIUS Act and to determine the safety and soundness of the proposed activities of the applicant, inclusive of the activities of its subsidiary. Whenever possible, the FDIC would utilize information already available to it as the primary Federal regulator of the applicant, such as supervisory and examination information, rather than requiring duplicative information to be submitted as part of an application. Given that the applicant would be an FDIC-supervised institution, known to the appropriate region, the FDIC, at this time, has not proposed to establish any additional factors pursuant to section 5(c)(5) of the GENIUS Act. The applicant may, however, include any other materials or information that it would like the FDIC to consider.

Proposed paragraph (d)(1) would require a description of the proposed payment stablecoin and the proposed activities of the subsidiary of the applicant, including related activities of the applicant, how the subsidiary plans to maintain the proposed payment stablecoin's stable value, or the reasonable expectation thereof, and any proposed incidental activities to the payment stablecoin activities or digital asset service provider activities. The FDIC would expect that the applicant's materials provide a description of the characteristics and features of the proposed payment stablecoin as well as the identities, roles, and responsibilities of the entities involved in the proposed payment stablecoin activities. The FDIC would expect applicants to describe what activities would be performed at the applicant and subsidiary levels regarding the proposed payment stablecoin, as well as whether any third parties would participate in the proposed payment stablecoin activity. In addition, when describing how the subsidiary plans to maintain the proposed payment stablecoin's stable value, or the reasonable expectation thereof, the FDIC would expect the application to include whether there are any planned applicant-provided sources of strength, applicant guarantees, and/or intercompany agreements. Finally, the FDIC would expect a description of any proposed incidental activities of the applicant or the subsidiary to payment stablecoin activities or digital asset service provider activities, and those that directly support activities that a PPSI may undertake in accordance with section 4(a)(7)(A) of the GENIUS Act. The FDIC is proposing to include this information in the contents of the filing because understanding the proposed payment stablecoin and proposed activities of the subsidiary, including related activities of the applicant, the mechanism to maintain the proposed payment stablecoin's stable value or the reasonable expectation thereof, and any proposed incidental activities and digital asset service provider activities of the subsidiary are necessary to evaluate the ability of the subsidiary in light of its financial condition and resources to meet the requirements set forth under section 4 of the GENIUS Act. Furthermore, information on the proposed payment stablecoin and related activities would be necessary for the FDIC to determine whether the activities of the applicant would be unsafe or unsound based on the factors described in section 5(c), which is the sole basis for any denial. 39

Proposed paragraph (d)(2) would request relevant financial information for the subsidiary, including planned capital and liquidity structure; reserve assets and composition and associated asset management plan; and financial projections for the first three years of operations. With respect to a planned capital and liquidity structure, the FDIC may consider any planned financial commitments from the applicant's or subsidiary's officers, directors, and principals or shareholders, or if there is a plan to launch the payment stablecoin as part of a consortium approach. The FDIC would expect that information provided on reserve assets and composition and their associated asset management plan to include a description of whether any reserves are proposed to be in tokenized form. In addition, the FDIC would expect that the asset management plan to contain details of how the applicant or subsidiary would manage the reserves, including how reserve assets are expected to change and what would prompt such a change in reserves. The FDIC would further expect the relevant financial information, including capital and liquidity, reserve assets and composition, and the associated asset management plan, to demonstrate consistency with forthcoming regulations that would implement the standards required by section 4 of the GENIUS Act. Finally, the applicant would provide financial projections for the first three years of the subsidiary's operations. Such content would generally align with the FDIC's practice of requesting three years of pro forma financial statements as a component of other applications, such as with mergers and deposit insurance applications for de novo institutions. The information in this proposed paragraph would be relevant to the FDIC's consideration of the factor in section 5(c)(1) of the GENIUS Act regarding the ability of the subsidiary, based on financial condition and resources, to meet the requirements set forth under section 4 of the Act.

Proposed paragraph (d)(3) would state that an application shall contain a description of the subsidiary's ownership and control structure; organizing documents; and a list of the subsidiary's proposed directors, officers, and shareholders (if different from the applicant), including a statement as to whether any of the proposed directors and officers have been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud. The FDIC could accept an organizational chart that includes the requisite information to show the subsidiary's ownership and control structure. The FDIC could accept proposed or draft organizing documents initially, with final versions to be provided when available, either prior to FDIC approval, or subsequently as a condition of the FDIC's approval. If a proposed payment stablecoin is to be backed or offered by multiple banks through a consortium structured as a subsidiary of an FDIC-supervised institution, the FDIC would expect the application to include the governance structure of such arrangement, including expected activities of the other members of the consortium. The FDIC would anticipate accepting and processing a single application on behalf of all other FDIC-supervised members of the consortium if the consortium could be considered a subsidiary of each. The FDIC is proposing to include this information in the contents of the filing because it is necessary to resolve the factors set forth in sections 5(c)(2) and 5(c)(3) of the GENIUS Act.

Proposed paragraph (d)(4) would require submission of relevant policies and procedures and customer agreements, including for custody and safekeeping; segregating customer and reserve assets; recordkeeping; reconciliation and transaction processing; redemption; and BSA/anti-money laundering (AML)/countering the financing of terrorism (CFT) and economic sanctions requirements pursuant to section 4(a)(5) of the GENIUS Act. When including relevant policies and procedures and customer agreements, the FDIC would expect the applicant to include terms of use, privacy disclosures, any public disclosures required under the GENIUS Act, and any disclosures required by other applicable laws and regulations. Policies and procedures such as those related to custody and safekeeping, segregating customer and reserve assets, recordkeeping, reconciliation, and transaction processing would be relevant for the FDIC to evaluate the financial condition and resources affecting the ability of the subsidiary to meet the requirements set forth under section 4 of the GENIUS Act, pursuant to the factor set forth in section 5(c)(1) of the GENIUS Act. Such information is relevant to the FDIC's evaluation, based on the financial condition and resources of the subsidiary, of whether it would be able to maintain the proposed payment stablecoin's stable value or reasonable expectation thereof, the ability of the subsidiary to meet customer redemption requests, and the accuracy of public disclosures of reserve assets. The FDIC would review any recordkeeping, reconciliation, and transaction processing policies and procedures, including both on- and off-chain procedures. The FDIC would expect the redemption policy, required by section 4(a)(1)(B) of the GENIUS Act, to explain the responsibilities and obligations of the applicant and the subsidiary, the process, conditions, and time period by which the payment stablecoin may be redeemed, who may redeem the payment stablecoin, and the circumstances under which the redemption of the payment stablecoin may be limited, delayed, or suspended. Additionally, the submission of BSA/AML/CFT and economic sanctions information would be necessary to evaluate whether the subsidiary would be able to comply with requirements under section 4 pursuant to the factor in section 5(c)(1) of the GENIUS Act. The submission of the policies, procedures, and customer agreements enumerated in proposed paragraph (d)(4) is each designed to allow the FDIC to evaluate the factors in section 5(c) of the GENIUS Act and determine whether the activities of the applicant would be unsafe or unsound.

Finally, proposed paragraph (d)(5) would require inclusion of an engagement letter with a registered public accounting firm. This information is intended to demonstrate that the applicant's subsidiary would be able to comply with the examination of monthly reserve reports and certification requirements in section 4 of the GENIUS Act, which is necessary for the FDIC to evaluate the factors in section 5(c)(1) of the GENIUS Act.

Paragraph (e) of proposed § 303.252 would specify that the FDIC may request additional information as it deems necessary solely for its consideration of the factors listed in section 5(c) of the GENIUS Act. As described above, to the extent possible, the FDIC would use information available to it as the primary Federal regulator of the applicant rather than requesting duplicative information.

Paragraph (f) of proposed § 303.252 would describe application processing, following the requirements and timelines established by the GENIUS Act. Pursuant to section 5(d)(1)(B)(ii) of the GENIUS Act, the FDIC would notify an applicant as to whether the application is considered substantially complete not later than 30 days after the FDIC receives an application under the proposed section. At that time, if the application is not considered substantially complete— i.e., the application does not contain sufficient information for the FDIC to render a decision on whether the applicant satisfies the factors described in section 5(c) of the GENIUS Act—the FDIC shall specify the additional information the applicant shall provide for the application to be considered substantially complete. Examples of instances where the FDIC might not consider an application to be substantially complete include if it does not provide all of the items required by regulation, if the information provided contains significant gaps or is unclear in any material respect, or if the FDIC determines that there are issues or deficiencies in the information provided that must be resolved or supplied for the FDIC to be able to adequately consider the GENIUS Act factors. This proposed paragraph would also state that, following notification by the FDIC that the application is considered substantially complete, the applicant shall notify the FDIC if there is a material change in circumstances that would require the FDIC to treat the pending application as a new application, pursuant to section 5(d)(1)(B)(iii) of the GENIUS Act. Such material changes may include a change to the applicant's financial condition, the proposed activities of the PPSI, or any other change that could implicate the safety or soundness of the applicant. The proposed rule would provide that if the FDIC fails to notify the applicant within 30 days after receiving an application, the application shall be deemed substantially complete as of the date it was received by the FDIC.

The GENIUS Act establishes the Federal payment stablecoin regulators' decision-making process regarding an application, such as timing, considerations, and notices. Therefore, paragraph (g) of proposed § 303.252 would largely follow the language of the GENIUS Act in describing the FDIC's decision-making process. It would state that the FDIC shall approve or deny an application not later than 120 days after receiving a substantially complete application under proposed § 303.252. In accordance with section 5(d) of the GENIUS Act, proposed paragraph (g)(1) would provide for deemed approval, stating that if the FDIC does not render a decision on a substantially complete application within 120 days of receiving a substantially complete application, the application shall be deemed approved. Proposed paragraph (g)(2), regarding approval with conditions, would state that the FDIC may impose conditions upon approving an application, including the standard conditions defined under 12 CFR 303.2(bb), and that such conditions shall not impose requirements in addition to the requirements of section 4 of the GENIUS Act. The FDIC generally intends for approval with conditions to include routine items. This may include, for example, the submission of items that were not included or finalized in the application, such as final organizing documents, or fulfillment of commitments of the applicant such as capital injections. Finally, proposed paragraph (g)(3) would describe the FDIC's denial of an application. The proposed paragraph would state, in accordance with the grounds for denial provided by section 5(d)(1) of the GENIUS Act, that the FDIC shall deny a substantially complete application if the activities of the applicant would be unsafe or unsound based on the factors to be considered. In accordance with the response and timelines required by section 5(d)(2) of the GENIUS Act, the proposed paragraph would also state that the FDIC shall provide the applicant with written notice of the basis for denial not later than 30 days after the date of such denial with an explanation that shall include all findings made by the FDIC with respect to all identified material shortcomings in the application, including recommendations to address such shortcomings. As described above, the FDIC's proposed paragraph (g) largely follows and reiterates the provisions of the GENIUS Act regarding decisions on applications.

Section 5(d)(2)(C) of the GENIUS Act provides for hearing and appeal processes following denial of an application, which would be implemented by proposed paragraph (h). In accordance with the GENIUS Act, proposed paragraph (h)(1) would state that not later than 30 days after the receipt of a denial of an application under the proposed section, the applicant may request, in writing, a written or oral hearing before the FDIC. Under the proposed rule, for purposes of an appeal, the FDIC would treat a denial of a PPSI application as akin to a material supervisory determination, requiring a denied applicant to follow procedures similar to the process for an appeal of a material supervisory determination but within the timelines provided under the GENIUS Act. Proposed paragraph (h)(2) would provide the timing for such a hearing. It would state that upon receipt of a timely request for a written or oral hearing, the FDIC shall issue a notice of the time and place for the applicant to submit written materials or provide oral testimony and oral argument. The time for the hearing would be within 30 days of receipt of the request for hearing, in accordance with the required timeline of the GENIUS Act. Proposed paragraph (h)(3) would state that the FDIC shall notify the applicant of its final determination not later than 60 days after the date of a hearing, which shall contain a statement of the basis for that determination, with specific findings. Finally, pursuant to the GENIUS Act, proposed paragraph (h)(4) would describe the notice provided by the FDIC if there is no hearing. The FDIC would provide written notice to the applicant who does not make a timely request for a hearing that the denial of the application is the final determination. Such notice would be provided not later than 10 days after the date by which the applicant could have requested the hearing under proposed paragraph (h)(1). Conforming edits are also proposed in § 303.11(f) to cross reference the process under proposed § 303.252, which would exclude appeals of denials under this section from existing processes and procedures under existing 12 CFR parts 303 and 308 of the FDIC Rules and Regulations.

Consistent with section 5(f) of the GENIUS Act, an applicant could request a waiver of certain requirements of the GENIUS Act regarding a pending application. An applicant would be able to submit an application to the FDIC pursuant to proposed § 330.252 upon a final rule becoming effective, which is anticipated to be prior to the effective date of the GENIUS Act. If an applicant files an application ahead of the effective date of the Act, pursuant to section 5(f) of the Act, the applicant may request a waiver from the FDIC from all or some of the requirements under the Act, with any granted waiver not to exceed 12 months from the effective date of the Act. The FDIC would invite an applicant to submit, together with an application, a written request for a waiver in writing that explains the basis for the request, the extent of the requirements to be waived, and the time period sought. The FDIC has determined not to include a provision regarding procedures for requesting a waiver under the GENIUS Act's safe harbor provision due to the temporary nature of the provision and the case-by-case analysis required for any waiver.

As previously discussed, the FDIC is proposing to amend its regulations to implement application requirements and procedures for an FDIC-supervised institution to request approval to issue payment stablecoins through a subsidiary in accordance with provisions of the GENIUS Act. The proposed rule would establish application requirements and procedures to address the factors for consideration as outlined in 12 U.S.C. 5904(c).

To estimate the expected effects of the proposed rule, this analysis considered all relevant regulations applicable to FDIC-supervised institutions, as well as information on the financial condition of FDIC-supervised institutions as of the quarter ending September 30, 2025, as the baseline to which the effects of the proposed rule are estimated.

As previously discussed, the proposed rule would apply to all FDIC-supervised institutions that seek to issue payment stablecoins through a subsidiary as well as engage in certain other payment stablecoin activities permitted by the GENIUS Act. 40 As of the quarter ending September 30, 2025, there were 2,772 insured State nonmember banks and State savings associations. 41 The FDIC recognizes the significant uncertainty regarding estimates of the number of FDIC-supervised institutions that would seek to issue payment stablecoins or engage in other permitted payment stablecoin activities through a subsidiary in future periods and, thereby, be directly affected by the proposed rule. As this is a developing market, there is uncertainty as to the number of FDIC-supervised institutions that might apply to issue payment stablecoins, either independently or through consortia and other partnerships. Without predicting the actual participation rate, for the purposes of this analysis, the FDIC assumed that 10 FDIC-supervised institutions would file an application each year, on average.

The FDIC estimates that in applying, FDIC-supervised institutions seeking approval to issue payment stablecoins and engage in certain other payment stablecoin activities through a subsidiary would expend 80 labor hours to comply with the proposed application requirements. As stated above, the intent of the proposed rule is to minimize the regulatory burden for applicants by requesting only information necessary to evaluate the factors to be considered under section 5(c) of the GENIUS Act and to determine the safety and soundness of the proposed activities of the applicant, inclusive of the activities of its subsidiary. To the extent possible, the FDIC has tailored and streamlined the application process and would use information already available to it as the primary Federal regulator of the applicant rather than requiring duplicative information to be submitted as part of an application. At an estimated total compensation rate of $152.40 per hour, 42 the proposed rule would result in estimated application compliance costs of $12,192 per institution or $121,920 in aggregate each year, on average. 43 The FDIC believes that the application requirements as proposed effectively balance the collection of information necessary to address the factors for consideration established by the GENIUS Act while containing burden on the applicant.

The FDIC is proposing to amend its regulations to implement certain provisions of the GENIUS Act. Because the amendments are statutorily mandated, the FDIC did not consider alternatives to the proposed rule.

The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a proposed rule, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities. 44 However, an initial regulatory flexibility analysis is not required if the agency certifies that the proposed rule would not, if promulgated, have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $850 million. 45 Generally, the FDIC considers a significant economic impact to be a quantified effect in excess of 5 percent of total annual salaries and benefits or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of one or more of these thresholds typically represent significant economic impacts for FDIC-insured institutions.

To estimate the expected effects of the proposed rule, this analysis considered all relevant regulations applicable to FDIC-supervised institutions, as well as information on the financial condition of such FDIC-supervised institutions as of the quarter ending June 30, 2025.

As previously discussed, the proposed rule would apply to all FDIC-supervised institutions that seek to issue payment stablecoins through a subsidiary as well as engage in certain other payment stablecoin activities permitted by the GENIUS Act. 46 As of the quarter ending June 30, 2025, there were 2,802 insured State nonmember banks and State savings associations. Of those institutions, 2,085 are considered “small” for the purposes of RFA. 47 The FDIC recognizes the considerable uncertainty regarding estimates of the number of FDIC-supervised institutions that would seek to issue payment stablecoins or engage in other permitted payment stablecoin activities through a subsidiary in future periods and, thereby, be directly affected by the proposed rule. As this is a developing market, there is uncertainty as to the number of FDIC-supervised institutions that might apply to issue payment stablecoins, either independently or through consortia and other partnerships. Without predicting the actual participation rate, for the purposes of this analysis the FDIC assumed that all 10 estimated annual applicants seeking to issue payment stablecoins through a subsidiary would be small, FDIC-supervised institutions.

As previously discussed, the FDIC estimates that FDIC-supervised institutions seeking approval to issue payment stablecoins through a subsidiary would expend 80 labor hours to comply with the proposed application requirements. At an estimated total compensation rate of $152.40 per hour, 48 the proposed rule would result in application compliance costs of $12,192 per small, FDIC-supervised institution or $121,920 in aggregate, on average. 49 Estimated application costs of $12,192 per small, FDIC-supervised institution exceeds 5 percent of total annual salaries and benefits or 2.5 percent of total noninterest expenses for no more than three small, FDIC-supervised institutions. 50

In light of the foregoing, the FDIC certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities. Accordingly, an initial regulatory flexibility analysis is not required.

The FDIC invites comments on all aspects of the supporting information provided in this RFA section. The FDIC is particularly interested in comments on any significant effects on small entities that the agency has not identified.

Certain provisions of the proposed rule contain “collections of information” within the meaning of the Paperwork Reduction Act (PRA) of 1995. 51 In accordance with the requirements of the PRA, the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collections contained in the proposed rule have been submitted to OMB for review and approval by the FDIC under section 3507(d) of the PRA  52 and 5 CFR 1320.11 of OMB's implementing regulations. 53 The FDIC is proposing a new information collection.

Title of information Collection: Payment stablecoin issuer application for FDIC-supervised institutions.

OMB Number: 3064-NEW.

Frequency of Response: Periodic—see table below.

Affected Public: Businesses or other for-profit.

Respondents: Insured State nonmember banks and insured State savings associations that seek to issue payment stablecoins through a subsidiary.

Current Actions: The proposed rule would establish procedures to be followed by an insured State nonmember bank or State savings association that seeks to obtain FDIC approval to issue payment stablecoins through a subsidiary pursuant to the GENIUS Act.

Comments are invited on:

(a) Whether the collection of information is necessary for the proper performance of the FDIC's functions, including whether the information has practical utility;

(b) The accuracy of the estimate of the burden of the information collection, including the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected; and

(d) Ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology.

All comments will become a matter of public record. Comments on aspects of this document that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the address listed in the ADDRESSES section of this document. Written comments and recommendations for this information collection also should be sent within 60 days of publication of this document to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under 60-day Review—Open for Public Comments” or by using the search function.

Section 722 of the Gramm-Leach-Bliley Act  54 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The FDIC invites your comments on how to make the proposed rule easier to understand. For example:

• Has the FDIC organized the material to suit your needs? If not, how could the proposed rule be more clearly stated?

• Are the requirements in the proposed rule clearly stated? If not, how could the proposed rule be more clearly stated?

• Does the proposed rule contain language or jargon that is not clear? If so, which language requires clarification?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the proposed rule easier to understand? If so, what changes to the format would make the proposed rule easier to understand?

• What else could the FDIC do to make the proposed rule easier to understand?

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA), 55 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, 56 each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on affected depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of the RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. The FDIC invites comments that further will inform its consideration of the RCDRIA. 57

Executive Order 12866, as amended, directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This proposed rule was drafted and reviewed in accordance with Executive Order 12866. Within OMB, the Office of Information and Regulatory Affairs (OIRA) has determined that this rulemaking is a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the draft rule was submitted to OIRA for review. As noted in other sections of the SUPPLEMENTARY INFORMATION of this document, the FDIC has assessed the costs and benefits of this rulemaking and has made a reasoned determination that the benefits of this rulemaking justify its costs. This proposed rule, if finalized as proposed, is not expected to be a regulatory action under Executive Order 14192 because it imposes no more than de minimis costs.

The FDIC invites comments on all aspects of this proposed rulemaking. In particular, the FDIC seeks feedback on the scope of the proposed rule and its requirements, and responses to the following specific questions:

Question 1: Does the proposed rule adequately reflect the application process outlined by Congress in the GENIUS Act? How could the proposed rule be improved to better align with the GENIUS Act's application requirements?

Question 2: The proposed rule would require applicants to submit a letter application. Should the FDIC consider requiring applicants to instead submit a structured form to be developed by the FDIC? What are the advantages and disadvantages of each approach?

Question 3: Are the proposed filing content requirements appropriate to garner sufficient information for the FDIC to evaluate the factors described in section 5(c) of the GENIUS Act? Is it clear what information the FDIC would expect the contents of a filing to contain under the proposed rule? Are there additional types of information the FDIC should consider? Should the FDIC seek to remove any of the proposed types of information? If so, please explain how the addition or removal of such information would facilitate the FDIC's consideration of the factors.

Question 4: Among the factors to be considered and listed in section 5(c), the FDIC may establish any other factors to be considered. The FDIC is not proposing to establish other factors beyond those listed in the GENIUS Act as indicated by the proposed rule. Should the FDIC consider other factors? If so, please describe the additional factors that the FDIC should consider and why they would be necessary to consider whether the activities of the applicant would potentially be unsafe or unsound.

Question 5: What types of information should applicants submit to the FDIC to substantiate the sufficiency of their capital or liquidity structures? What information can best demonstrate the appropriate composition, custody, and valuation of the reserve assets backing the payment stablecoin?

Question 6: What types of ownership or control structures of PPSIs may be proposed that the FDIC has not considered? Does the proposed rule capture the types of information the FDIC would need about such ownership or control structures to evaluate the factors? Why or why not?

Question 7: Does the proposed rule effectively capture the types of policies, procedures, and customer agreements of the applicant and/or PPSI necessary to evaluate the factors? What information could be eliminated or added in the proposed rule to allow the FDIC to evaluate the factors while minimizing application burden?

Question 8: The FDIC has determined not to include a provision in the proposed regulatory text regarding procedures for requesting a waiver under the GENIUS Act's safe harbor provision due to the temporary nature of the provision and the case-by-case analysis required for any waiver. Should the FDIC include regulatory text on this provision? Why or why not? In what circumstances might an applicant request a waiver of provisions of the GENIUS Act, and what provisions would the applicant request to be waived?

Question 9: Does the proposed appeal process effectively protect an applicant's due process, minimize regulatory burden, and meet the requirements of the GENIUS Act? Are there any other possible processes that could be used for appeals of denied applications?

Question 10: Are the estimate of the number of applications received under this section and the potential costs of such applications likely to be accurate? Why or why not?

Question 11: Would the proposed rule have any costs, benefits, or other effects that the FDIC has not identified?

For the reasons stated in the preamble, the Federal Deposit Insurance Corporation proposes to amend 12 CFR part 303 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace in Franklin, NC.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments it receives.

Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edits, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.

An electronic copy of this document may be downloaded through the internet at www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Operations office (see ADDRESSES section for address, phone number, and hours of operations). An informal docket may also be examined during regular business hours at the office of the Eastern Service Center, Federal Aviation Administration, Room 210, 1701 Columbia Ave., College Park, GA 30337.

Class E airspace designations are published in Paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11K, Airspace Designations and Reporting Points, dated August 4, 2025, and effective September 15, 2025. These updates would be published in the next update to FAA Order JO 7400.11. FAA Order JO 7400.11K, which lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points, is publicly available as listed in the ADDRESSES section of this document.

The FAA proposes an amendment to 14 CFR part 71 to update Class E airspace by removing the point in space reference and updating the coordinates for Angel Medical Center in Franklin, NC. It would also update the legal description for Macon County Airport to reflect the most accurate and up-to-date coordinates. Controlled airspace is necessary for the safety and management of instrument flight rules (IFR) operations in the area.

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

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1G, “FAA National Environmental Policy Act Implementing Procedures,” prior to any final regulatory action by the FAA.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class D, Class E2, Class E4, and Class E5 airspace in Patuxent River, MD.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments it receives.

Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edits, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.

An electronic copy of this document may be downloaded through the internet at www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Operations office (see ADDRESSES section for address, phone number, and hours of operations). An informal docket may also be examined during regular business hours at the office of the Eastern Service Center, Federal Aviation Administration, Room 210, 1701 Columbia Ave., College Park, GA 30337.

Class D, Class E2, Class E4, and Class E5 airspace designations are published in paragraphs 5000, 6002, 6004, and 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11K, dated August 4, 2025, and effective September 15, 2025. These updates would be published in the next update to FAA Order JO 7400.11. FAA Order JO 7400.11K, which lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points, is publicly available as listed in the ADDRESSES section of this document.

This action proposes to amend 14 CFR part 71 by modifying the Class D, Class E2, Class E4, and Class E5 airspace for Patuxent River NAS (Trapnell Field), Patuxent River, MD. Controlled airspace is necessary for the safety and management of IFR operations in the area for existing instrument approach procedures.

This action proposes to amend the Class D airspace over Patuxent River, MD, by updating the Patuxent River NAS (Trapnell Field) geographic coordinates and increasing the lateral boundary of the Class D airspace to within a 4.7-mile radius of Patuxent River NAS (Trapnell Field) and within a .5-mile radius of Chesapeake Ranch Airpark excluding that airspace within Restricted Areas R-4005 and R-4007 when active. The superseded reference to the “Airport Facility Directory” would also be replaced with “Chart Supplement” in the airspace legal description.

This action also proposes to amend the Class E2 airspace over Patuxent River, MD, by updating the geographic coordinates of Patuxent River NAS (Trapnell Field) and modifying the dimensions from the current configuration to that airspace extending upward from the surface within a 4.7-mile radius of Patuxent River NAS (Trapnell Field) and within 1.8 miles each side of the 047° bearing from Patuxent River NAS extending from the 4.7-mile radius of Patuxent River NAS to 6.5 miles northeast of the airport; and within 1.9 miles each side of the 233° bearing from Patuxent River NAS extending from the 4.7-mile radius to 6.2 miles southwest of the airport; and within 1.8 miles each side of the 137° bearing from Patuxent River NAS extending from the 4.7-mile radius to 10.8 miles southeast of the airport; and within a .5-mile radius of Chesapeake Ranch Airpark, excluding that airspace within Restricted Areas R-4005 and R-4007 when active. This reconfiguration would properly contain the currently published standard instrument approach procedures. The reference to the decommissioned Patuxent VORTAC in the Class E2 legal description would also be removed, and the geographic coordinates of the Patuxent River NDB would be updated.

This action also proposes to amend the Class E4 airspace over Patuxent River, MD, by updating the geographic coordinates of Patuxent River NAS (Trapnell Field) and modifying the dimensions from the current configuration to that airspace extending upward from the surface within 1.8 miles each side of the 047° bearing from Patuxent River NAS extending from the 4.7-mile radius of Patuxent River NAS to 6.5 miles northeast of the airport; and within 1.9 miles each side of the 233° bearing from Patuxent River NAS extending from the 4.7-mile radius to 6.2 miles southwest of the airport; and within 1.8 miles each side of the 137° bearing from Patuxent River NAS extending from the 4.7-mile radius to 10.8 miles southeast of the airport, excluding that airspace within Restricted Areas R-4005 and R-4007 when active. This reconfiguration will properly contain the currently published standard instrument approach procedures. Additionally, the reference to the decommissioned Patuxent VORTAC in the Class E4 legal description would be removed; the superseded reference to the “Airport Facility Directory” would be replaced with “Chart Supplement”; and the geographic coordinates of the Patuxent River NDB would be updated.

Lastly, this action proposes to amend the Class E5 airspace over Patuxent River, MD, by replacing the reference to the decommissioned Patuxent VORTAC with point in space coordinates using the same geographic coordinates.

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

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1G, “FAA National Environmental Policy Act Implementing Procedures” prior to any FAA final regulatory action.

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

On June 1, 2025, Sail250®  1 and the United States Navy formally notified the Coast Guard Captain of the Port, New York (COTP) that, from July 1, 2026, through July 9, 2026, they will be conducting a series of major marine events in New York Harbor. Tall Ship Parade of Sail, 2 an International Naval Review 250 (INR 250), 3 an International Aerial Review (IAR), 4 and U.S. Navy Fleet Week events in New York Harbor in celebration of America's 250th birthday. The Sail250® Tall Ships tour, which also includes the ports of New Orleans, LA; Norfolk, VA; Baltimore, MD; and Boston, MA, has been designated as a Marine Event of National Significance. 5

The purpose of this rulemaking is to ensure the safety of vessels and spectators in the vicinity of New York Harbor, before, during, and after the scheduled events are completed. The Coast Guard anticipates thousands of spectator crafts will attend the events. The proposed regulations would create temporary spectator areas, temporary participant staging areas, vessel movement control measures, and security zones around all U.S. Naval Vessels, and foreign naval vessels while anchored, transiting, and moored in various berths around the Port of New York and New Jersey. Additionally, these proposed regulations will temporarily suspend certain anchorage grounds. The proposed regulations would be enforced at various times between July 1, 2026, through July 9, 2026. Due to a high concentration of expected spectator vessels and the series of events, the Coast Guard Northeast District Commander (CGD-NE) and the COTP, have determined these regulations are necessary for the safety of Sail 4th 250 participants, INR 250 participants, spectator vessels, non-participant and non-spectator vessels operating in and around Port of New York and New Jersey, and life and property.

While this rulemaking does not propose establishing any safety zones, it is important to note that after the Sail 4th 250 Tall Ship Parade of Sail, INR 250, IAR, and U.S. Navy Fleet Week events, we anticipate that numerous safety zones would be promulgated for fireworks displays occurring in the harbor through separate rulemaking projects or that safety zones would be enforced under our authorities in 33 CFR 165.160—Table 1. 6

The Coast Guard is proposing this rulemaking under authorities in 33 U.S.C. 2071; 46 U.S.C. 70006, 70034, 70041, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.4.

Sail250® and INR 250 are international events that bring together tall ships and military vessels to celebrate the 250th anniversary of the United States. Sail 4th 250 comprises the Sail250® events in the Port of New York and New Jersey. Additional information about Sail 4th 250 can be found at https://sail4th.org/. INR 250, hosted by the U.S. Navy in the Port of New York and New Jersey concurrent with Sail 4th 250, will include a series of events to commemorate this historic occasion. Additional information about INR 250 can be found at https://www.navy.mil/Navy-250/Events/. The regulations would be subject to enforcement upon the arrival of U.S. Naval Vessels, and foreign naval vessels at the Port of New York and New Jersey. These vessels would anchor in the Upper Bay and Hudson River on July 1, 2026, prior to the Sail 4th 250 Tall Ship Parade of Sail, INR 250, IAR, and Independence Day fireworks displays within the regulated areas established within Port of New York and New Jersey on July 4, 2026. Participating tall ships, U.S. Naval Vessels, and foreign naval vessels will be mooring and anchoring in various areas throughout the Port of New York and New Jersey until their departure on July 9, 2026.

The Sail 4th 250 Tall Ship Parade of Sail, INR 250, IAR, and the Independence Day fireworks displays are expected to be extraordinary marine events, celebrating maritime heritage and honoring the 250th anniversary of the founding of the United States. These events will offer unique opportunities to witness impressive parades and celebrations on the water. The Coast Guard typically establishes special local regulations and spectator areas to ensure safer viewing during marine events, and as discussed in this document, this event is no exception. The Coast Guard has collaborated with port partners, area stakeholders, Sail250® and the U.S. Navy, and numerous federal, state, and local agencies, as well as law enforcement organizations, to develop and propose regulations that will support a safe and secure event. However, it is worth mentioning, due to the scale of the event, its heightened security posture, the anticipated crowd size, and limited spectator areas, viewing the Sail 4th 250 Tall Ship Parade of Sail, the INR 250, the IAR, and Independence Day fireworks displays from shore may provide a safer and more convenient alternative, particularly for smaller vessels or less experienced mariners.

Mariners transiting the regulated areas to and from spectator areas should use extra caution, ensure proper watch and assess all risk factors. Large marine events present new challenges to safe navigation, but proper voyage planning and access to relevant information should ensure that safety is not compromised. In general, mariners transiting within the Port of New York and New Jersey during this event should make a careful assessment of all factors associated with their voyage.

These factors at a minimum should include:

(1) The operator's qualifications—which should include their level of experience, physical fitness, and alertness, ensuring they are well-rested and capable of safely operating the vessel.

(2) The vessel's characteristics—which should include the following: appropriate size to safely accommodate passengers and equipment, sufficient maneuverability to navigate the crowded waterway, and sea-keeping ability to handle expected water and weather conditions. The vessel must be capable of remaining in a designated spectator area for extended periods. The vessel should be equipped with required essential safety gear, including U.S. Coast Guard-approved life jackets, functioning navigation lights, fire extinguishers, and reliable communication devices. Additionally, the vessel should provide adequate protection from environmental elements, such as sun, wind, and rain. The propulsion, steering, fuel, and navigational equipment must be in excellent operational condition to ensure reliability and safety throughout the event. Furthermore, the vessel should have the ability to retain or manage its sewage in compliance with environmental regulations.

(3) Weather conditions—both current and forecasted—should include an assessment of sea state, visibility, temperature, sun exposure, precipitation, and wind speed and direction.

(4) Voyage planning should incorporate up-to-date information on the event schedule, including activities such as the Sail 4th 250 Tall Ship Parade of Sail, INR 250, IAR, and Independence Day fireworks displays, as well as the enforcement of regulations, such as designated spectator areas and security zones. Careful consideration should be given to whether the transit will occur during daytime or nighttime. Additional factors to account for include crowded waterways, wake and wave action, limited maneuvering space, anchoring challenges due to strong currents, water depth variations during tidal cycles, and prolonged exposure to environmental conditions including high temperatures and sun or cooler temperatures, rain, and wind.

At the time of this notice, Sail 4th 250 and the United States Navy events and a general overview of proposed regulations include:

1. June 17, 2026-June 29, 2026: The United States Navy will commence installation of moorings for U.S. naval vessels that will be occupying Federal Anchorage FA-21B.

2. July 1, 2026—Proposed Regulated Area `B' will become effective as the United States Navy will commence 4-point mooring of vessels in FA-21B in the Upper Bay. A naval vessel protection zone  7 will be enforced around all U.S. Naval Vessels and a 100-yard security zone is proposed around all foreign naval vessels. Upon anchoring, a security zone would be established around the vessels. Certain anchorage grounds in the Port of New York and New Jersey will be temporarily suspended; however, vessels seeking to anchor in an anchorage ground while it is temporarily suspended and not being used as a spectator area or staging area must request authorization from the U.S. Coast Guard Vessel Traffic Service New York (VTS).

3. July 2, 2026—Class A tall ships will commence anchoring in the proposed Sandy Hook Bay staging area. Regulated Area `A' is proposed to be effective as outlined below. The United States Navy will continue anchoring vessels in the Upper Bay and Hudson River each with a proposed security zone as discuss below.

4. July 3, 2026—U.S. and foreign naval vessels continue to transit to their designated anchorages in the Upper Bay and Hudson River with proposed security zones as later discussed below. Established spectator areas would be effective and opened for viewing the Sail 4th 250 Tall Ship Parade of Sail, INR 250, and IAR that are scheduled for July 4, 2026, as below.

5. July 4, 2026—The INR 250 will commence. It is anticipated to consist of a person under the protection of the United States Secret Service onboard a U.S. Naval Vessel transiting past all U.S. and foreign naval vessels anchored in the Hudson River and Upper Bay. The `U.S. Naval Review Vessel' will have a moving security zone as discussed below and will sail from north of the George Washington Bridge, south to the Verrazano Bridge reviewing the Navy fleet. Upon completion of the INR 250, the lead tall ship will commence the Sail 4th 250 Tall Ship Parade of Sail starting from the Verrazano Bridge to the vicinity of the George Washington Bridge. Upon arrival at the end of the parade route, each tall ship will then proceed to their assigned berth at various locations throughout the Port of New York and New Jersey. Simultaneously, the IAR will commence while the Sail 4th 250 Tall Ship Parade of Sail is occurring. At the conclusion of the Sail 4th 250 Tall Ship Parade of Sail, some naval vessels may weigh anchor and transit to berth at various locations in the Port of New York and New Jersey. In the evening, there will be multiple fireworks displays occurring throughout the Hudson River and East River. Safety zones and/or special local regulations for these events will be proposed and created under a separate rulemaking projects at a later date.

6. July 5, 2026—Additional naval vessels will shift from anchorage to their berths located at various areas in Port of New York and New Jersey. There would still be U.S. and foreign naval vessels anchored in the Upper Bay and Hudson River. These vessels would still have a security zone around them in their anchored locations.

7. July 6, 2026—INR 250 participant vessels will continue shifting to berths; however, some will remain at anchor at various locations throughout the Port of New York and New Jersey.

8. July 7, 2026, through July 9, 2026—Tall ships, U.S. naval vessels, and foreign naval vessels depart the Port of New York and New Jersey. Enforcement periods for security zones would collapse as vessels depart. However, naval vessel protection zones as codified in 33 CFR 165.2025 or temporary security zones for foreign naval vessels created by this proposed regulation would remain in effect for vessels as they remain within the Captain of the Port New York Zone.

In 1976, 1986, and 2000, similar events, including OPSAIL 1976, 1986 and 2000, drew several million spectators by land, as well as tens of thousands spectator vessels in Port of New York and New Jersey waters.

An organized water event of limited duration which is conducted according to a prearranged schedule is a “Regatta or marine parade,” as defined at 33 CFR 100.05. 8 An individual or organization planning to hold a regatta or marine parade which, by its nature, circumstances or location, will introduce extra or unusual hazards to the safety of life on the navigable waters of the U.S. must submit an application to hold it in accordance with 33 CFR 100.15. 9

On June 1, 2025, the sponsors of the Sail 4th 250 and INR 250 events submitted applications under 33 CFR 100.15 to conduct the Sail 4th 250 Tall Ship Parade of Sail and INR 250 on July 4, 2026, with participating vessels mooring and anchoring in various berths and areas through the Port of New York and New Jersey, until their departure on July 9, 2026.

Per 33 CFR 100.35, after approving plans for the holding of a regatta or marine parade within their district or zone, CGD-NE and the COTP are authorized to promulgate such special local regulations (SLRs) as they deem necessary to ensure safety of life on the navigable waters immediately prior to, during, and immediately after the approved regatta or marine parade. Due to the high-profile nature of these events, the large number of tall ships, naval vessels, spectator vessels, and support craft will certainly cause vessel congestion in the Port of New York and New Jersey. The COTP has determined that there will be potential hazards associated with the large number of tall ships and naval vessels and significant amount of recreational boating traffic. Thus, the Coast Guard proposes to establish SLRs that would create vessel movement control measures, spectator areas, and staging areas in the Port of New York and New Jersey that will be in effect during the entirety of the Sail 4th 250 Tall Ship Parade of Sail and INR 250 events celebrating America's 250th anniversary. This section would be designated as section 100.T0199-0903.

The Coast Guard proposes establishing two regulated areas in the Port of New York and New Jersey that would be in effect from July 1, 2026, through July 9, 2026. These two proposed regulated areas are needed to protect the maritime public and participating vessels from possible hazards to navigation associated with an INR conducted on the Hudson River and New York Harbor Upper Bay, a Tall Ship Parade of Sail in the waters of Sandy Hook Bay, New York Harbor, Hudson River, and East River, and a large number of naval vessels, tall ships, and spectator craft anchored in close proximity throughout the duration of the events. These regulated areas include spectator areas, staging areas, and vessel operating restrictions.

From 6 a.m. on July 4, 2026, through the conclusion of the Sail 4th 250 Tall Ship Parade of Sail, no vessel except Sail 4th 250 or INR 250 participating vessels and their assisting tugs and ticketed spectator vessels may enter or navigate within Regulated Areas `A' or `B', unless specifically authorized by the COTP or their designated representative. Vessels operating on established schedules, such as ferries, may be granted authorization to transit the regulated areas.

Any vessels transiting through Port New York and New Jersey would be required to proceed in accordance with established vessel movement control measures directed by the COTP or designated representative.

Regulated Area `A': All waters of New York Harbor Lower Bay and Sandy Hook Bay within the following boundaries: south of the Verrazano-Narrows Bridge; west of a line drawn shore to shore along 074°00′00″ W between Coney Island, NY, and Highlands, NJ; and east of a line drawn shore to shore along 074°03′12″ W between Fort Wadsworth, Staten Island, and Leonardo, NJ and all waters of Ambrose Channel shoreward of buoys `1' and `2'. These coordinates are based on the World Geodetic System (WGS 84). Please see Figure 1 below depicting proposed Regulated Area `A', included within this NPRM for the convenience of the reader. The proposed area is to be used as a staging area for vessels participating in the Sail 4th 250 Tall Ship Parade of Sail. This proposed area would be enforced from 6 a.m. July 2, 2026, until 4 p.m. on July 4, 2026.

Regulated Area `B': All waters of New York Harbor, Upper Bay, the Hudson, Harlem, and East Rivers, and the Kill Van Kull Channel within the following boundaries: south of 40°54′12″ N, on the Hudson River at Spuyten Duyvil Creek; west of the Throgs Neck Bridge on the East River; north of the Verrazano-Narrows Bridge; and east of a line drawn from shore to shore along 074°05′15″ W, between New Brighton, Staten Island, and Constable Hook, NJ, in the Kill Van Kull Channel. These coordinates are based on the World Geodetic System (WGS 84). Please see Figure 2 below depicting proposed Regulated Area `B', included with this NPRM for the convenience of the reader. This proposed area is for the Sail 4th 250 Tall Ship Parade of Sail, INR 250 and totality of events that are occurring throughout the week. Swimming, conducting underwater diving operations, operating surface or underwater drones, and conducting surveying operations would be prohibited for the duration of these events, unless expressly permitted by the COTP or a designated representative. The heightened security posture within the Port of New York and New Jersey would continue until departure of the participating naval vessels and tall ships. The proposed regulated area would be effective from 10 a.m. on July 1, 2026, until 11:59 p.m. on July 9, 2026. Additional regulations governing these areas can be found at the end of this document under 100.T0199-0903.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: https://www.regulations.gov Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments. We encourage commenters to include supporting facts, research, and evidence in their comments. When doing so, commenters are encouraged to provide citations to the published materials referenced, including active hyperlinks. Likewise, commenters who reference materials which have not been published are encouraged to upload relevant data collection instruments, data sets, and detailed findings as a part of their comment.

Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this proposed rule may be found at https://www.regulations.gov/.

Title XIX of the Social Security Act (the Act) authorizes Federal grants to the States for Medicaid programs to provide medical assistance to persons with limited income and resources and title XXI of the Act authorizes Federal grants to States to provide child health assistance to targeted low-income children under age 19 through a separate CHIP, a Medicaid-expansion program, or a combination of the two. Separate CHIPs are programs under which a State receives Federal funding from its title XXI allotment to provide child health assistance through coverage that meets the requirements of section 2103 of the Act and 42 CFR 457.402. For the purposes of this proposed rule, the term CHIP is used to refer to separate CHIPs. Medicaid and CHIP programs are administered primarily by the States, subject to Federal oversight and approval. Each State establishes its own Medicaid and CHIP eligibility standards, benefits packages, and payment rates in accordance with (and subject to) Federal statutory and regulatory requirements. If States comply with requirements in the Federal Medicaid and CHIP statutes and regulations (such as reflected in the provisions of their Federally-approved State plans), the Federal Government will match their expenditures with Federal funds. Each State Medicaid program and CHIP must be described and administered in accordance with a Federally approved State plan. This comprehensive document describes the nature and scope of the States' Medicaid program and CHIP and provides assurances that they will be administered in conformity with applicable Federal requirements.

Under title XIX, the Federal Government makes matching payments to States for medical assistance expenditures according to the formula described in sections 1903 and 1905(b) of the Act. Under title XXI, the Federal Government makes matching payments to States for child health assistance at the enhanced Federal medical assistance percentage (FMAP) established under section 2105 of the Act. Section 1903 of the Act requires that the Secretary of Health and Human Services (the Secretary) (except as otherwise provided) pay to each State which has a plan approved under title XIX of the Act, for each quarter, an amount equal to the FMAP of the total amount expended by the State during such quarter as medical assistance under the State plan. Section 1905(b) of the Act defines the FMAP. For CHIP, section 2105 requires the Secretary to pay each State with an approved plan under title XXI of the Act, for each quarter, an amount equal to the enhanced FMAP of expenditures in the quarter, paid from the State allotment. The enhanced FMAP, as defined at section 2105(b), for a State for a fiscal year, is equal to the FMAP (as defined in the first sentence of section 1905(b)) for the State increased by a number of percentage points equal to 30 percent of the number of percentage points by which (1) such FMAP for the State is less than (2) 100 percent; but in no case shall the enhanced FMAP for a State exceed 85 percent.

As relevant to this proposed rule, among the statutory requirements for Medicaid State plans, section 1902(a)(19) of the Act  2 requires that a State plan for medical assistance provide such safeguards as may be necessary to assure that care and services under the plan will be provided in a manner consistent with the best interests of the recipients. Furthermore, under section 1902(a)(30)(A) of the Act, 3 the State plan must provide such methods and procedures relating to payment for care and services as may be necessary to assure that payments are consistent with quality of care. Among the statutory requirements for CHIP State plans, under section 2101(a) of the Act, funds are provided to States to provide health care services to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children.

Section 1102 of the Act requires the Secretary to make and publish such rules and regulations, not inconsistent with the Act, as may be necessary for the efficient administration of the functions with which the Secretary is charged under the Act. In Medicaid, these Secretarial functions would include oversight of Medicaid State programs for consistency with the requirements of sections 1902(a)(19) and 1902(a)(30)(A) of the Act. In CHIP, these Secretarial functions would include oversight of CHIP under section 2101(a), which calls for effective and efficient administration of CHIP and coordination with other health care programs, including Medicaid, and under section 2107(e) of the Act, carrying out the functions required by the Medicaid provisions that apply to title XXI in the same manner as they apply under title XIX.

On January 28, 2025, President Trump issued Executive Order (E.O.) 14187, Protecting Children from Chemical and Surgical Mutilation (E.O. 14187). Section 5(a) of that order directs the Secretary to take all appropriate actions consistent with applicable law to end what the order refers to as the chemical and surgical mutilation of children, including regulatory and sub-regulatory actions for specific programs, including Medicaid. The Centers for Medicare & Medicaid Services (CMS) is aware that the U.S. District Court for the Western District of Washington has issued a preliminary injunction that enjoins defendant agencies from enforcing or implementing section 4 of E.O. 14187 within the plaintiff States, as well as sections 3(e) or 3(g) of E.O. 14168, Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (E.O. 14168), to condition or withhold Federal funding based on the fact that a health care entity or health professional provides “gender-affirming care” within the plaintiff States. Washington v. Trump , 768 F. Supp. 3d 1239, 1282 (W.D. Wash. 2025). In addition, the U.S. District Court for the District of Maryland has issued a preliminary injunction that enjoins the Federal defendants in that case from conditioning, withholding, or terminating Federal funding under section 3(g) of E.O. 14168 and section 4 of E.O. 14187, based on the fact that a healthcare entity or health professional provides “gender-affirming care” to a patient under the age of 19 and required that written notice of this order be given to the aforementioned groups that Defendants may not take any steps to implement, give effect to, or reinstate under a different name the directives in section 3(g) of E.O. 14168 or section 4 of E.O. 14187 that condition or withhold Federal funding based on the fact that a healthcare entity or health professional provides “gender-affirming medical care” to a patient under the age of 19. PFLAG, Inc. v. Trump , 769 F. Supp. 3d 405, 455 (D. Md. 2025). We note that if this proposed rule were to be finalized, it would not conflict with those preliminary injunctions because, among other things, it would be based on independent legal authority and section 5(a) of E.O. 14187 and not the enjoined sections of the executive orders. In any event, any regulatory provisions on this issue would not be effective until the specified effective date of any final rule, and would not be implemented, made effective, or enforced in contravention of any court orders.

As further discussed later in this proposed rule, we propose to implement sections 1902(a)(19) and 1902(a)(30)(A) of the Act by adding a new subpart N to 42 CFR part 441 to prohibit the use of Federal Medicaid dollars to fund sex-rejecting procedures, as defined in this proposed rule, for individuals under the age of 18. In addition, we propose to implement section 2103 of the Act by revising subpart D of part 457 of the Act to prohibit the use of Federal CHIP dollars to fund sex-rejecting procedures, as defined in this proposed rule, for individuals under the age of 19. These proposed changes would not prevent States from providing coverage for sex-rejecting procedures with State-only funds outside of the Federally-matched Medicaid program or CHIP.

Over the past decade, increasing numbers of children and adolescents have been diagnosed with gender dysphoria. The recorded prevalence of gender dysphoria/incongruence increased substantially in children and young people between 2011 and 2021, particularly in recorded females. Levels of anxiety, depression and self-harm were high, indicating an urgent need for better prevention and treatment of mental health difficulties in these patients [with gender dysphoria]. 4

Similar research in Germany showed increasing rates in the diagnosis of gender incongruence. 5 Additionally, research in England explained that “[r]ecent increases in incidence of gender dysphoria/incongruence have a range of potential explanations, including social factors (for example, . . . increasing use of social media and networking); increasing rates of emotional distress and poor mental health in this age group, particularly for females; and changes in supply and delivery of healthcare.”  6 The number of children receiving medical interventions for gender dysphoria rose significantly following the publication of the “Dutch Protocol” in an article in the European Journal of Endocrinology in 2006. 7 Over the past decade, increasing numbers of children have received diagnoses of gender dysphoria and received sex-rejecting procedures as recommended by the World Professional Association for Transgender Health (WPATH) and the Endocrine Society (ES). 8 9 The WPATH Standards of Care for the Health of Transgender and Gender Diverse People, Version 8 (SOC-8) noted that the creation of a chapter on adolescents was due in part to the “exponential growth in adolescent referral rates.”  10 Surveys measuring “transgender” identity find prevalence of 1.2 percent among adolescents and “gender diverse” identities as high as 9 percent. 11 WPATH also noted that female adolescents were seeking such procedures at twice to seven times the rate of males. 12

Included in SOC-8 is the recommendation that care providers “undertake a comprehensive biopsychosocial assessment of adolescents” who seek medical transition  13 and “involve relevant disciplines, including mental health and medical professionals,” as well as parents, “unless their involvement is determined to be harmful.”  14

The number of pediatric patients seeking sex-rejecting procedures can only be roughly estimated. In recent years, “the United States—characterized by its decentralized and privatized healthcare system—saw the emergence of many new specialty gender clinics, along with a proliferation of independently practicing clinicians. According to a recent conservative estimate, as of March 2023 there were 271 clinics offering [pediatric medical transition] in the U.S., though 70 were inactive due to legislative restrictions.”  15

An approach for gender dysphoria, referred to in this proposed rule as sex-rejecting procedures, 16 can involve the use of puberty suppressing drugs to prevent the onset of puberty; cross-sex hormones to spur the secondary sex characteristics of the opposite sex; and surgeries including mastectomy and (in rare cases) vaginoplasty. “Thousands of American children and adolescents have received these interventions.”  17

A study published in 2023 estimated that between 2016 and 2020, nearly 3,700 children between the ages of 12 and 18 diagnosed with gender dysphoria underwent surgical procedures, including over 3,200 children who had breast or chest surgery, and over 400 children who had genital surgery. 18 Another analysis found that between 2017 and 2021, more than 120,000 children ages 6 to 17 were diagnosed with gender dysphoria and, of that group, more than 4,700 started taking puberty blockers and more than 14,000 started hormonal therapy. 19 However, as discussed later in this proposed rule, current medical evidence does not support a favorable risk/benefit profile for the use of chemical or surgical procedures in children to treat gender dysphoria.

The existing guidelines to support the care of children and adolescents experiencing gender dysphoria around the world vary in their methodological rigor and quality.

On May 1, 2025, the United States Department of Health and Human Services (HHS) released a comprehensive review of the evidence and best practices for promoting the health of children and adolescents diagnosed with gender dysphoria. 20 On November 19, 2025, HHS published a final version of the review following conclusion of the peer review process (HHS Review). 21 The HHS Review, informed by an evidence-based medicine approach, indicated serious concerns about outcomes associated with certain medical interventions, such as puberty blockers, cross-sex hormones, and surgeries, that attempt to transition children and adolescents away from their sex. 22 The HHS Review highlights evidence pointing to significant risks associated with the use of these procedures, including irreversible harms such as infertility, and finds extremely weak evidence of benefit. Significantly, the HHS Review finds that the evidence base does not support conclusions about the effectiveness of medical and surgical interventions in improving mental health or reducing gender dysphoria symptoms, stating that “[a]nalysis of the biological plausibility of harms is necessary, and suggests that some short- and long-term harms are likely (in some cases expected) sequalae of treatment.”  23 Likewise, the data considered in the HHS Review indicate that the risk/benefit profile of medical and surgical interventions for children and adolescents diagnosed with gender dysphoria is unfavorable. While the HHS Review itself does not make clinical, policy, or legislative recommendations, it provides critical insights that should inform policymakers as they make decisions to promote health and safety, especially for vulnerable populations such as minors.

Specifically, the HHS Review conducted an overview of systematic reviews—also known as an “umbrella review”—to evaluate the evidence regarding the benefits and harms of hormonal and surgical interventions for children and adolescents diagnosed with gender dysphoria. Existing systematic reviews of evidence, including several that have informed health authorities in Europe, were assessed for methodological quality. The umbrella review found that the overall quality of evidence concerning the effects of sex-rejecting procedures on psychological outcomes, quality of life, regret, or long-term health, is very low.

Although the HHS Review acknowledges that systematic reviews offer limited evidence regarding the harms of sex-rejecting procedures in minors, it also provides plausible explanations for why evidence of harms may not have been sought, detected or reported. This may be due to several factors: the relatively recent adoption of hormonal and surgical treatment approaches, shortcomings in existing studies in consistently monitoring and reporting adverse effects, and publication bias. Even in the absence of strong evidence from large-scale population studies, the HHS Review notes, based on what is known about human physiology and the effects and mechanisms of the pharmacological agents used, there are known and plausible risks of significant harms from puberty blockers, cross-sex hormones, and surgeries. These include “infertility/sterility, sexual dysfunction, impaired bone density accrual, adverse cognitive impacts, cardiovascular disease and metabolic disorders, psychiatric disorders, surgical complications, and regret.”  24

The HHS Review documents the weak evidence and growing international retreat from the use of puberty blockers, cross-sex hormones, and surgeries to treat gender dysphoria in minors  25 and the “risk of significant harms.”  26 The HHS Review explains that “many treatments ( e.g. surgery, hormone therapy) can lead to relatively common and potentially serious long-term adverse effects.”  27 The HHS Review includes a methodologically rigorous assessment of evidence underpinning the use of surgical or endocrine interventions, including puberty blockers and cross-sex hormones, while also drawing on international practice evaluations such as the United Kingdom's Cass Review, described in more detail below. The HHS Review documents serious concerns regarding the lack of reliable evidence of benefits, and risks of significant harms for this model of care that have mounted in recent years, and points to psychotherapy (talk therapy) as a noninvasive alternative. The HHS Review makes clear that “the evidence for benefit of pediatric medical transition is very uncertain, while the evidence for harm is less uncertain.”  28 The HHS Review cites widely accepted principles of medical ethics to conclude that when “medical interventions pose unnecessary, disproportionate risks of harm, healthcare providers should refuse to offer them even when they are preferred, requested, or demanded by patients.”  29

We are aware that approximately 17 State Medicaid programs cover sex-rejecting procedures for children, citing guidelines from several major U.S. medical professional associations (American Medical Association, the American Academy of Pediatrics, and the American Psychological Association) who have issued statements deeming sex-rejecting procedures, which they refer to as “gender-affirming care,” safe and effective. 30 31 32 33 These medical society endorsements further supported adoption of sex-rejecting procedures by clinicians across the U.S. The HHS Review explains why such guidelines, including the WPATH Standards of Care for the Health of Transgender and Gender Diverse People, Version 8 (SOC-8), are not trustworthy according to accepted standards for evaluating guideline quality. As the HHS Review documents in detail, the creation of SOC-8 marked a “clear departure from the principles of unbiased, evidence-driven clinical guideline development.”  34 In the context of developing its recommendations, WPATH suppressed systematic reviews of evidence, failed to manage conflicts of interest, and relied on legal and political considerations rather than clinical ones. 35 A recent systematic review of international guideline quality concluded that “[h]ealthcare professionals should consider the lack of quality and independence of available guidance when utilizing this [WPATH and Endocrine Society international guidelines] for practice.”  36

The HHS Review's current findings are aligned with conclusions reached by multiple European countries. Sweden, Finland, and the United Kingdom conducted independent systematic reviews of evidence commissioned by their public health authorities. “All three concluded that the risks of medicalization  37 may outweigh the benefits for children and adolescents with gender dysphoria at the population level, and subsequently sharply restricted access to medical gender transition interventions for minors.”  38 These three countries now recommend exploratory psychotherapy as the first line of treatment. Sweden and Finland reserve hormonal interventions only for exceptional cases, recognizing their experimental status. 39 40 41

In particular, the most influential effort to date has been the United Kingdom's Cass Review—a 4-year independent evaluation of pediatric gender medicine that was published in April 2024. 42 The findings of the Cass Review led to the closure of the United Kingdom's Gender Identity Development Service (GIDS), which had been given a rating of “inadequate” by the Care Quality Commission in 2021. The Cass Review recommended a restructuring of the care delivery model—away from the centralized “gender clinic” model of care toward a more holistic framework centering on psychosocial support, to be delivered through regional hubs. The Cass Review's findings also led the United Kingdom to ban the use of puberty blockers outside of clinical trials, and to significantly restrict cross-sex hormones. While cross-sex hormones are still officially an available treatment, the National Health Service (NHS) recently revealed that since the Cass Review was published, no minor has been found eligible to receive cross-sex hormones according to the updated policy. In the United Kingdom, minors have never received gender dysphoria-related surgery through the NHS.

In 2022, Sweden's National Board of Health and Welfare (NBHW) reviewed and updated its guidelines for minors under the age of 18. Sweden's NBHW determined that the risks of puberty suppressing treatment with GnRH-analogues (injectable drugs that prevent the ovaries and testicles from producing sex hormones) and gender-affirming hormonal treatment likely outweigh the possible benefits. 43 Specifically, Sweden's NBHW outlined that the first line of treatment should be mental health support and exploratory psychological care. Hormonal interventions can be a last resort measure for some youth. Sweden has made the decision to no longer offer gender transition [sex-rejecting procedures] to minors outside of research settings, and restricted eligibility to the early childhood-onset of gender dysphoria.

In 2020, Finland's Council for Choices in Health Care, a monitoring agency for the country's public health services, issued guidelines that called for psychosocial support as the first line treatment, hormone therapy on a case-by-case basis after careful consideration, and no surgical treatment for minors. Finland has restricted eligibility for hormone therapy to minors with early childhood-onset of gender dysphoria and no mental health comorbidities. 44

In Denmark, more than 1300 minors with gender incongruence were “referred to the national service between 2016 and 2022 with increasing referral numbers over time,” of which females constituted 70 percent. 45 The increase in the number of referrals for these procedures and reports of regret or reversal of hormone-induced changes to the body led Denmark to take an approach that focuses on assessment and psychosocial support for minors, and postpones decisions on hormone therapy, including puberty blockers and cross-sex hormones, in circumstances “when gender incongruence has been brief,” such as “when there are concerns about the stability of the experienced gender identity.”  46

In Norway, the Norwegian Commission for the Investigation of Health Care Services (UKOM), an independent State-owned agency, made recommendations in 2023 on the treatment offered to children and young people with gender incongruence. 47 The recommendations consisted of: defining puberty blockers and surgical treatment for children as experimental, revising national guidelines based on a systematic knowledge summary, and consideration for a national registry to improve quality and reduce variation in patient treatment. Norway's public health authority has signaled an intention to respond to UKOM's concerns by considering whether the current treatment guidelines need to be adjusted. 48

Other countries which have restricted various approaches to treatment for minors (or have contemplated restrictions) include: New Zealand, 49 Italy, 50 Brazil, 51 and Australia. 52

In sum, there is growing international concern about the use of hormonal and surgical interventions for pediatric gender dysphoria. We are aware that some medical associations have endorsed sex-rejecting procedures, but as the HHS Review makes clear, their endorsement is not based on sound principles of evidence-based medicine. In addition to other issues, we solicit comment of any published findings that measure the effects of similar restrictions as proposed on insurers, providers, and patients in these countries.

We are aware that numerous organizations  53 (including the American Medical Association (AMA), 54 the American Academy of Pediatrics (AAP), 55 and the American Psychological Association  56 57 ) have issued statements supporting access to sex-rejecting procedures, including for minors. The most influential sources of clinical guidance for treating pediatric gender dysphoria in the U.S. are the WPATH and the ES clinical practice guidelines and the AAP guidance document. We reviewed each of these documents and agree with the conclusions of a recent systematic review of international guideline quality by researchers at the University of York (the York appraisal) that found all three documents as very low quality and should not be implemented. 58

As the HHS Review notes regarding the role of medical organizations in the treatment of pediatric gender medicine:

U.S. medical associations played a key role in creating a perception that there is professional consensus in support of pediatric medical transition (PMT). This apparent consensus, however, is driven primarily by a small number of specialized committees, influenced by WPATH. It is not clear that the official views of these associations are shared by the wider medical community, or even by most of their members. There is evidence that some medical and mental health associations have suppressed dissent and stifled debate about this issue among their members. 59

The Endocrine Society (ES) issued clinical practice guidelines in 2017 entitled “Endocrine Treatment of Gender-Dysphoric/Gender-Incongruent Persons.”  60 As the HHS Review notes:

In WPATH and ES guidelines, the principal goal of CSH administration [cross sex hormone] is to induce physical characteristics typical of the opposite sex. When hormone levels rise beyond the typical reference range for a person's sex, they are considered supraphysiologic. ES guidelines suggest that the sex an individual identifies as—as opposed to their biological sex—should determine the target reference range for hormonal concentrations. Critics have argued that perceived identity does not alter physiological processes and that such a belief can result in inappropriate and potentially dangerous hormone dosing. 61

The HHS Review states:

The ES 2017 guideline, which used the GRADE [Grading of Recommendations Assessment, Development and Evaluation] framework, has been criticized for making strong recommendations for hormonal interventions in the setting of a weak evidence base. Notably, none of the systematic reviews that supported the ES guidelines were based on outcomes for children or adolescents. The ES recommendation to initiate puberty blockade using gonadotropin-releasing hormone agonists was derived by putting a higher value on achieving a “satisfactory physical appearance” while putting the lowest value on avoiding physical harms. The ES recommendation for the initiation of cross-sex hormones no earlier than age 16 was justified by placing a higher value on adolescent's purported ability to meaningfully consent to cross-sex hormones (CSH) and placing a lower value on avoiding harm from potentially prolonged pubertal suppression. 62

As explained in Chapter 9 of HHS Review, the guidelines issued by the World Professional Association for Transgender Health (WPATH) “have been rated among the lowest in quality and have not been recommended for implementation by systematic reviews (SRs) of guidelines.”  63 As the HHS Review points out: “Despite their lack of trustworthiness, for more than a decade WPATH guidelines have served as the foundation of the healthcare infrastructure for gender dysphoric (GD) youth in the United States. The WPATH Standards of Care guidelines are embedded in nearly all aspects of healthcare including clinical education, delivery of care, and reimbursement decisions by private and public insurers.”  64 In 2022, WPATH issued guidelines entitled “Standards of Care for the Health of Transgender and Gender Diverse People, Version 8” (SOC-8). 65 These guidelines relaxed eligibility criteria for children to access sex-rejecting procedures, and ultimately recommend that adolescents wishing to undergo sex-rejecting procedures receive them. Besides the problems identified in systematic reviews of international guidelines, as the HHS Review states, “in the process of developing SOC-8, WPATH suppressed systematic reviews its leaders believed would undermine its favored treatment approach. SOC-8 developers also violated conflict of interest management requirements and eliminated nearly all recommended age minimums for medical and surgical interventions in response to political pressures.”  66

The HHS Review goes on to explain: “The recommendations are couched in cautious-sounding language, stating that GD should be `sustained over time,' particularly before administering CSH. However, no clear standard is set; the only guidance offered is the vague and clinically meaningless phrase `several years, leaving critical decisions open to broad and subjective interpretation.' ”  67

Regarding the WPATH guidelines, the HHS review states:

On the surface, WPATH SOC-8 might appear to recommend a cautious approach toward assessment. Mental health providers are to conduct a “comprehensive biopsychosocial assessment” prior to initiating medical interventions in order “to understand the adolescent's strengths, vulnerabilities, diagnostic profile, and unique needs to individualize their care.” At the same time, however, WPATH recommends that clinicians use the International Classification of Diseases (ICD-11) diagnosis of “Gender Incongruence of Adolescence and Adulthood,” which, unlike the DSM-5 diagnosis of “Gender Dysphoria,” requires only “marked and persistent incongruence between an individual's experienced gender and the assigned sex.” Because SOC-8 defines transgender in a similar way (“people whose gender identities and/or gender expressions are not what is typically expected for the sex to which they were assigned at birth”) and provides no meaningful distinction between this meaning of transgender and gender non-conformity, SOC-8 effectively recognizes transgender identification as a medical condition justifying medical interventions. 68

The HHS Review also argues: “Although WPATH's guidelines do not necessarily discourage mental healthcare, they likewise do not require it as a precondition for PMT [pediatric medical transition]. Some guideline authors opposed even minimal requirements for mental health support, arguing that such provisions were analogous to “conversion therapy.” SOC-8's only formal recommendation is for a “comprehensive biopsychosocial assessment,” although WPATH emphasizes that its guideline is “flexible,” thereby leaving room for considerable variation in clinical practice.”  69

While AMA and the AAP have not issued their own treatment guidelines, they support the ES and WPATH guidelines, as discussed previously in this proposed rule. AAP issued a policy statement in 2018 supporting the use of puberty blockers, cross-sex hormones, and surgeries for minors. 70 In support of sex-rejecting surgeries, AAP stated that while “current protocols [(ES, WPATH)] typically reserve surgical interventions for adults, they are occasionally pursued during adolescence on a case-by-case basis, considering the necessity and benefit to the adolescent's overall health and often including multidisciplinary input from medical, mental health, and surgical providers as well as from the adolescent and family.” The AAP reaffirmed its policy statement in 2023, but also stated that it was conducting its own review of the evidence and guideline development—which still have not been released. 71 Regarding the AAP policy statement, the HHS Review states:

The AAP 2018 policy statement is not technically a CPG [clinical practice guideline] but has been widely cited in the U.S. as influential in establishing how pediatricians respond to children and adolescents with GD. Because the document offers extensive clinical recommendations regarding every step of PMT—from social transition to PBs [puberty blockers], CSH, and surgery—the York team assessed the trustworthiness of the AAP guidance using the same criteria they applied to CPGs. Using the AGREE II criteria, the AAP policy statement received the second-lowest average score among all international guidelines: 2 out of 7. As noted in Chapter 2, the AAP's policy statement's use of “gender diverse” casts a very wide net regarding which patients the organization considers eligible for medical intervention. The statement has been heavily criticized in peer-reviewed articles, which have pointed out that it is rife with referencing errors and inaccurate citations. Despite persistent advocacy among its members, who have petitioned the organization to release updated, evidence-based guidance for treating pediatric GD, the organization chose to reaffirm their policy statement in 2023. 72

In addition to other issues, we solicit comment of any published peer-reviewed findings that measure the effects of restrictions similar to those in this proposed rule on insurers, providers, and patients in international settings as well as the U.S.

State lawmakers have adopted policy positions reflecting the emerging evidence of sex-rejecting procedures administered to youth. There are 27 States and one Territory that have enacted laws restricting sex-rejecting procedures. 73 These include Alabama, Arkansas, Arizona, Florida, Georgia, Iowa, Idaho, Indiana, Kansas, Kentucky, Louisiana, Missouri, Mississippi, Montana, North Carolina, New Hampshire, 74 North Dakota, Nebraska, Ohio, Oklahoma, Puerto Rico, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming. As of August 8, 2025, some of these States have ongoing litigation proceedings impacting whether the State laws are partially or fully enjoined by a court.

There are a mix of age ranges for these bans. Of the 28 States and Territories with enacted laws/policies (in effect or not), 25 States prohibit some sex-rejecting procedures to young people under the age of 18, two States prohibit them for those under the age of 19, and Puerto Rico prohibits them for those under the age of 21.

Of the 24 States and one Territory with restriction statutes in effect as of August 8, 2025, 21 States and one Territory prohibit both the prescribing of at least one type of sex-rejecting medication and surgeries. 75 No State bans only medications without also banning surgeries. However, all the States and the Territory with restrictions provide exceptions to the law/policies. The most common exceptions include procedures to treat:

• A medically verifiable disorder of sexual development. This allows treatment for children who are born with medical conditions that affect their sexual development. These are rare conditions where a child's reproductive or sexual anatomy does not develop in typical ways due to genetic, hormonal, or other medical factors that can be medically verified.

• Any infection, injury, disease, or disorder that has been caused or exacerbated by the performance of gender transition procedures.

• A physical disorder, physical injury, or physical illness that would otherwise place the minor in danger of death or impairment of bodily function.

We note that 12 States provide tapering off periods for patients who started puberty blockers or hormones before enactment of the State restriction, with some specifying specific dates (for example, in South Carolina services cannot go beyond January 31, 2025) and others specifying a period of time from the time of enactment (ranging between 6 months and 1 year). Ten States have grandfather clauses primarily allowing minors who were already receiving treatment to continue receiving it indefinitely. However, we note that many of these States do not provide such exceptions or grandfather clauses for purposes of prohibitions on State funding, including for State funding under the Medicaid program and CHIP, for sex-rejecting procedures.

Conversely, 14 States and the District of Columbia have shield laws protecting some or all sex-rejecting procedures, and three States have executive orders (State EOs) protecting these procedures. These States are Arizona, 76 California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington. Shield laws and State E.O.s often describe various types of sex-rejecting procedures broadly, including medications and surgeries, and include these under broader definitions of protected health care activities. These laws and State E.O.s generally attempt to shield providers and recipients (of all ages) against laws in other States that restrict these services. They also often protect providers from adverse action by medical malpractice insurers and licensure boards and allow for their address to remain confidential. One State, Maine, has a shield law specific to minors that allows minors 16 and over to receive hormone therapy when the guardian has refused sex-rejecting procedures. Four States explicitly provide child abuse and child custody protections for parents who supported their children in receiving sex-rejecting procedures. Four States have requirements for sex-rejecting procedures to be covered under health plans. Arizona requires coverage for State employee health plans. Illinois, Oregon, and Vermont require some level of coverage of sex-rejecting procedures by all health insurance providers. Vermont includes an exception for services that do not comply with Federal law.

Some States may experience negative financial impacts as a result of having built their Medicaid programs and CHIPs, including policies and operations, on the understanding that we would make Federal Medicaid and CHIP payments to States for services that this proposed rule would define as sex-rejecting procedures. We believe protecting children enrolled in Medicaid and CHIP from the harms of sex-rejecting procedures, including possible long-term and irreversible harms, outweighs the possible financial costs some States may experience if they begin to pay with State funds the full cost of sex-rejecting procedures for children enrolled in Medicaid and CHIP.

Providers in these States may be concerned that this proposed regulation would interfere with the physician-patient relationship. This proposed regulation would only prohibit Federal Medicaid and CHIP payment for certain services and does not require providers to communicate certain advice or information to patients. Federal Medicaid and CHIP payments will still be available for mental health counseling and psychotherapy for gender dysphoria. We believe a prohibition on Federal Medicaid and CHIP payments for sex-rejecting procedures is needed to avoid the possibility of minors receiving irreversible or risky pharmaceutical or surgical interventions, particularly in circumstances where the minor may be of an age to not have the capacity to understand the irreversible or long-term risks of these procedures or have the capacity to continue to communicate with providers their preferences regarding treatment after treatment has already begun.

Certain medical providers may also be relying on continued Federal funding for sex-rejecting procedures. These providers may face financial harm by the loss of the revenue from the proposed limitations on Federal payment for these procedures; however, these providers have other avenues to continue to receive compensation for providing medical care. Providers may continue to receive payment for pharmaceutical or surgical interventions for purposes of aligning a child's physical appearance or body with an asserted identity that differs from the child's sex from sources other than Medicaid or CHIP. Providers may also receive payment for these services when providing these procedures for the exempted purposes as outlined in the proposed rule. Lastly, providers may be paid through Medicaid and CHIP for providing other types of care for individuals diagnosed with gender dysphoria, such as psychotherapy.

We also recognize that Medicaid and CHIP beneficiaries and their families would be impacted by this proposed rule. Families of these beneficiaries may look to obtain other health insurance or privately pay for these services. Medicaid and CHIP beneficiaries who are unable to find alternative means to pay for these services may either have to rely on other methods of intervention such as psychotherapy or mental health counseling, or never begin receiving these services because of this proposed rule, if finalized. We are concerned about the difficulties that these minors may experience and encourage other, less invasive, ways to support these individuals, such as encouraging psychotherapy as a first line of treatment.

This proposed rule would help to protect these children from the risks of adverse effects of sex-rejecting procedures. CMS carefully considered the scope of its limitation on Federal Medicaid and CHIP payments and permits coverage of other procedures, such as psychotherapy, which does not carry the same concerns of pharmaceutical or surgical interventions included in the definition of sex-rejecting procedures. Moreover, CMS does not believe Federal Medicaid and CHIP payment for these sex-rejecting procedures is consistent with quality of care given the state of the research into the effectiveness of these procedures for the purposes included in our proposed definition of this term, namely as treatments for gender dysphoria. In light of the HHS Review, CMS believes State reliance on certain medical organizations and the SOC-8 to justify covering sex-rejecting procedures is misplaced.

In addition to other issues, we solicit comment on any published studies or findings that measure the effects of similar restrictions as proposed (or laws protecting these procedures) on insurers, providers, and patients in these States.

Recently, the U.S. Supreme Court in United States v. Skrmetti, 605 U.S. 495 (2025), upheld Tennessee's law restricting certain surgical and chemical interventions for minors diagnosed with gender dysphoria (and similar conditions), referred to as Senate Bill 1 or “SB1” in litigation challenging that law under the Equal Protection Clause of the U.S. Constitution. SB1 prohibits a healthcare provider from performing medical procedures, including surgery, and prescribing puberty blockers, for a minor for the purpose of enabling the minor to identify with a purported identity inconsistent with the minor's sex. At the same time, SB1 allows healthcare providers to perform medical procedures for minors if the procedure is to treat a minor's congenital defect, precocious puberty, disease, or physical injury. On June 18, 2025, the Court found that SB1's prohibition of certain medical procedures for minors diagnosed with gender dysphoria incorporates classifications based on age and medical use—not the minor's sex. Because the classifications turned on age and medical use rather than sex, the Court held that SB1 was not subject to heightened scrutiny under the Equal Protection Clause of the Fourteenth Amendment and went on to find the law satisfied rational basis review. As discussed in more detail later in this proposed rule, like the law at issue in Skrmetti, this proposed rule would not discriminate on the basis of sex and it is not based on an invidious discriminatory purpose. The proposed rule is animated by significant child safety concerns when sex-rejecting procedures are used for certain medical uses-that is to align a child's physical appearance or body with an asserted identity that differs from the child's sex.

Since 2010, there has been a significant increase in mental health conditions among teens and young adults. 77 Current research has not revealed a simple explanation for this rise in the need for youth mental health services. The etiology of gender dysphoria remains understudied. 78 However, patients presenting to pediatric gender medicine clinics have a high rate of comorbid mental health conditions. 79

We believe interested parties supporting the use of sex-rejecting procedures to treat gender dysphoria in children may state that limiting access to these treatments (which prohibiting Federal Medicaid and CHIP funding for them could do) will exacerbate these comorbidities and lead to adverse mental health outcomes and increase suicide risks. As noted previously, the Cass Review emphasized the lack of robust evidence regarding the effectiveness of interventions such as puberty blockers and cross-sex hormones to treat gender dysphoria and incongruence in children and adolescents. 80 Taylor et al. recently conducted a review of 23 international, national, and regional clinical guidelines that contained recommendations about the management of children/adolescents experiencing gender dysphoria. They found that the majority of these guidelines were developed without an independent or evidence-based approach and raised questions about the credibility of available guidance. 81 As Sweden's national health authority has recommended, “[p]sychosocial support that helps adolescents deal with natal puberty without medication needs to be the first option when choosing care measures.”  82

While evidence on the benefits of medical and surgical interventions to improve mental health or reduce symptoms of gender dysphoria is lacking, psychotherapy has been proven to be an effective intervention for many of the neurodevelopmental disorders and mental health conditions that are highly prevalent in children and adolescents, including those frequently co-occurring in patients diagnosed with gender dysphoria. 83 Psychotherapy and mental health counseling are non-invasive interventions that would remain available to youth under Medicaid's mandatory Early and Periodic Screening, Diagnostic and Treatment (EPSDT) provisions in section 1905(r) of the Act. EPSDT requires the provision of screening, vision, dental, and hearing services, and such other necessary health care, diagnostic services, treatment, and other measures described in section 1905(a) of the Act to correct or ameliorate defects and physical and mental illness and conditions discovered by the screening services, whether or not such services are covered under the State plan. Most children enrolled in Medicaid are entitled to coverage of robust and comprehensive psychotherapy services under EPSDT . We note that under a State's EPSDT program, States may only include tentative limits on services and must take into account the individual needs of the child. Thus, EPSDT is key to ensuring that children receive appropriate mental health screenings and treatments. Furthermore, we have developed numerous resources to provide information regarding services and good practices for children and youth with mental health conditions. 84 While EPSDT is not a required CHIP benefit for States that have separate CHIPs, many States with such programs have opted to provide EPSDT services that mirror the Medicaid standards set out at section 1905(r) of the Act to children enrolled in CHIP. In addition, section 2103(c)(7) of the Act requires States to provide mental health services in CHIP that are applied in the same manner as required under section 2726(a) of the Public Health Service Act [([42 U.S.C. 300gg-26(a)])] for group health plans under such section.

Under section 1902(a)(19) of the Act, State Medicaid agencies are required to ensure that Medicaid-covered services are in the best interests of beneficiaries; as relevant to this proposed rule, children under age 18. Additionally, States are required, under section 1902(a)(30)(A) of the Act, to ensure that Medicaid payments for Medicaid covered services are consistent, in relevant part, with quality of care. Under section 2101(a) of the Act, CHIP programs are required to provide health care services to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children, including State Medicaid programs. The research described previously in this proposed rule indicates that sex-rejecting procedures lack the necessary outcomes data to reasonably rely on for evidence of long-term effectiveness.

On April 11, 2025, we issued a letter to State Medicaid Directors to ensure Medicaid agencies were aware of growing utilization of certain interventions offered to children to treat gender dysphoria, and to remind States of their statutory responsibilities to ensure that Medicaid payments are consistent with quality of care and that covered services are provided in a manner consistent with the best interests of recipients. 85 In the letter, we also stated that due to the underdeveloped body of evidence, the use of sex-rejecting procedures to treat gender dysphoria lacks reliable evidence of long-term benefits for minors and are now known to cause long-term and irreparable harm for some children. 86 A second letter, issued on May 28, 2025, was sent to a number of hospitals to address significant issues concerning quality standards and specific procedures affecting children diagnosed with gender dysphoria. The letter requested hospitals to provide information on their policies and procedures related to the adequacy of informed consent protocols for children diagnosed with gender dysphoria, including how children are deemed capable of making these potentially life changing decisions and when parental consent is required; changes to clinical practice guidelines and protocols that the institution plans to enact in light of the recent comprehensive review and guidance released by the Department; medical evidence and any adverse events related to these procedures, particularly children who later look to detransition; and complete financial data for all pediatric sex-rejecting procedures performed at the institution and paid, in whole or in part, by the Federal Government. 87

As outlined previously in this proposed rule, we take very seriously the absence of rigorous scientific data demonstrating the effectiveness of sex-rejecting procedures and the considerable evidence regarding the risks. Given the potential risks and lack of clear benefits associated with sex-rejecting procedures, we believe that covering them with Federal Medicaid or CHIP funding would be, for Medicaid beneficiaries, inconsistent with their best interests and with quality of care; and, for CHIP beneficiaries, inconsistent with the provision of health care services to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage. In this section, we describe how this proposed rule would intersect with existing statutory and regulatory provisions.

This proposed rule is not a form of sex discrimination in violation of section 1557 of the Patient Protection and Affordable Care Act (Affordable Care Act). 88 Section 1557 of the Affordable Care Act prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in health programs or activities, any part of which is receiving Federal financial assistance.

A Federal court recently considered the question of whether the prohibition on sex discrimination found in section 1557 of the Affordable Care Act includes discrimination on the basis of gender identity. On October 22, 2025, in State of Tennessee et al v. Kennedy et al, 89 the district court declared that “HHS exceeded its statutory authority when (1) it interpreted Title IX, as incorporated into Section 1557, to prohibit discrimination on the basis of gender identity, and (2) when it implemented Section 1557 regulations concerning gender identity and `gender affirming care.' ” Accordingly, the Court vacated the following regulations to the extent that they expand Title IX's definition of sex discrimination to include gender-identity discrimination: 42 CFR 438.3(d)(4), 438.206(c)(2), 440.262, 460.98(b)(3), and 460.112(a), and 45 CFR 92.101(a)(2)(iv), 92.206(b)(1)-(4), § 92.207(b)(3) through(5), 92.8(b)(1), 92.10(a)(1)(i), and 92.208. 90

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this proposed rule may be found at https://www.regulations.gov/.

On January 28, 2025, President Trump signed Executive Order (E.O.) 14187 “Protecting Children from Chemical and Surgical Mutilation.”  1 In particular, Section 5(a) of the order directs the Secretary of HHS consistent with applicable law to “take all appropriate actions to end the chemical and surgical mutilation of children, including regulatory and subregulatory actions, which may involve [. . .]: Medicare or Medicaid conditions of participation or conditions for coverage.” CMS has developed this proposed rule in compliance with this E.O. As further discussed in this proposed rule, we describe CMS' statutory authority related to patient health and safety standards (known as Medicare “Conditions of Participation” (CoPs), “Conditions for Coverage” (CfCs), or simply “Requirements”), summarize data on the rise of sex-rejecting procedures (SRPs) on children, review the latest information on SRPs in children as described in the HHS Review (the Review), provide an overview of State laws, as well as prior CMS actions on this topic. We propose to add a new section to 42 CFR part 482, subpart C that would prohibit Medicare-participating hospitals from performing sex-rejecting procedures (SRPs) on any child (§ 482.46(a)).

CMS has broad statutory authority under the Social Security Act (the Act) to establish health and safety regulations, which includes the authority to establish requirements that protect the health and safety of children. Section 1861(e)(9) of the Act, applicable to hospitals that participate in the Medicare program, explicitly gives CMS the authority to enact regulations that the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services in a hospital, while section 1871 of the Act gives CMS the authority to prescribe regulations as necessary to carry out the administration of the program. Under this authority, the Secretary has established regulatory requirements that a hospital must meet to participate in Medicare at 42 CFR part 482, entitled “Conditions of Participation” for Hospitals. Section 1905(a) of the statute provides that Medicaid payments from States may be applied to hospital services. Under regulations at §§ 440.10(a)(3)(iii) and 440.20(a)(3)(ii), hospitals that provide inpatient and outpatient services, respectively, to Medicaid enrollees are required to meet the Medicare CoPs to also participate in Medicaid. In this way, the CoPs regulate the safety of all patients in a facility that is subject to 42 CFR part 482, regardless of payor (for example, Medicare, Medicaid, private insurance, and self-pay).

The CoPs for hospitals include specific, process-oriented requirements for certain hospital services or departments. The purposes of these conditions are to protect patient health and safety and to ensure that quality care is furnished to all patients in Medicare-participating hospitals.

Gender dysphoria is a condition defined by the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders (DSM-5-TR) as a “marked incongruence between one's experienced/expressed gender and assigned gender” that “must also be associated with clinically significant distress or impairment in social, occupational, or other important areas of functioning.”  2 3 Over the past decade, increasing numbers of children have been diagnosed with gender dysphoria and been treated with SRPs. 4 5 SRPs can encompass a range of hormonal and surgical interventions: pharmacological interventions including puberty blocking medications to delay the onset of puberty, cross-sex hormone therapy to promote secondary sexual characteristics associated with the opposite biological sex, and surgical procedures (such as chest/breast and genital surgery). 6 7

The recorded prevalence of SRPs for children with gender dysphoria varies across sources. A study published in 2023 estimated that between 2016 and 2020, nearly 3,700 children aged 12 to 18 years old diagnosed with gender dysphoria underwent SRPs (2.50 per 100,000), 8 including an estimated 3,200 chest/breast procedures (2.17 per 100,000)  9 and 400 genital surgeries (0.27 per 100,000). 10 11 Another study documented that almost 0.2 percent (or almost 2 in every 1,000) of 17-year-olds  12 with private insurance received SRP hormone treatment between 2018 through 2022. 13 14

While Medicare does not pay for a significant number of SRP procedures for children, we conclude that, based on the previously cited data, hospitals that participate in Medicare perform a considerable number of these procedures every year. We further note that the Medicare hospital CoPs apply to hospitals providing services to patients receiving Medicaid covered services ((§§ 440.10(a)(3)(iii) and 440.20(a)(3)(ii)). Approximately half of U.S. children receive health care through Medicaid.

The rising numbers of children seeking and receiving SRPs in recent years  15 has spurred ongoing debates regarding the safety and efficacy of these interventions.

In compliance with Executive Order (E.O.) 14187, “Protecting Children from Chemical and Surgical Mutilation”  16 signed on January 28, 2025 (as discussed previously in this proposed rule), HHS released a preliminary comprehensive review of the evidence and best practices for treating pediatric gender dysphoria on May 1, 2025. 17 On November 19, 2025, HHS published a final version following the conclusion of a peer review process. 18 the Review provides an overview of systematic reviews—also known as an “umbrella review”—to evaluate the evidence of the benefits and harms of SRPs in children. Several existing systematic reviews of evidence that have informed health authorities in Europe were assessed for methodological quality.

The Review itself does not provide clinical or policy recommendations. Instead, it analyzes evidence and best practices for children experiencing gender dysphoria. The Review also contains an ethics review that applies widely accepted principles of medical ethics to the practice of SRPs in children. 19 Accordingly, the Review states:

“As demonstrated throughout this Review, the presuppositions that guide [pediatric medical transition (PMT)] have not been shown to be valid; the nature, probability and magnitude of risks associated with PMT have not been distinguished with sufficient clarity; PMT proponents' estimates of the probability of harm and benefit have not been shown to be reasonable, as judged by known facts and available studies; and the risks of serious impairment that PMT involves have not been shown to be justified. For these reasons, administering PMT to adolescents, even in a research context, is in tension with well-established ethical norms for human subjects research.”  20

The Review (as further discussed in Section I.B.c. of this proposed rule) provides evidence of the clinical realities of SRPs in the United States, documenting the abandonment of medical guardrails. For example, the Review highlights how a protocol establishing SRPs in minors originated in the Netherlands and quickly spread to other Western countries without rigorous testing, and was codified in medical guidelines, which later did away with some of their already contested safeguards. 21 The Endocrine Society (ES) incorporated puberty blockers and hormones into their 2009 and 2017 clinical practice guidelines, recommending hormonal interventions for certain pediatric patients with gender dysphoria while also acknowledging the lack of reliable evidence for these treatments. 22 ES justified this recommendation in a “values and preferences” statement that places a higher priority on “avoiding a[n] unsatisfactory physical outcome when secondary sex characteristics have become manifest and irreversible” than on “avoiding potential harm from early pubertal suppression.”  23

The World Professional Association for Transgender Health (WPATH) endorsed a similar approach and most recently recommend these in their Standards of Care, Version 8 (SOC-8). 24 However, as carefully documented in the Review, the creation of SOC-8 marked “a clear departure from the principles of unbiased, evidence-driven clinical guideline development.”  25 The HHS Review cites court documents containing internal WPATH communications used when developing SOC-8 that show WPATH suppressed systematic reviews of evidence after learning that these reviews would not support its preferred medical approach. WPATH also failed to manage conflicts of interest and eliminated age minimums for hormones and most surgeries due to political pressures. 26 A recent systematic review of international guidelines did not recommend either the WPATH or ES guidelines for clinical use after determining they “lack developmental rigour and transparency.”  27

The Review also describes practice reversals in several European countries (Norway, Finland, Sweden, Denmark, United Kingdom) following systematic reviews of evidence.

In 2020, Finland's Council for Choices in Health Care, a monitoring agency for the country's public health services, issued guidelines stating that “gender reassignment of minors is an experimental practice.” While not banning SRPs outright, the guidelines state “based on studies examining gender identity in minors, hormonal interventions [puberty blockers, hormone therapy] may be considered before reaching adulthood in those with firmly established transgender identities, but it must be done with a great deal of caution, and no irreversible treatment should be initiated.”  28 For children with gender dysphoria prior to and worsening at the onset of puberty, the report recommends that “puberty suppression treatment [that is, puberty blockers] may be initiated on a case-by-case basis after careful consideration and appropriate diagnostic examinations if the medical indications for the treatment are present and there are no contraindications.” This is similar to past recommendations, and as before, these treatments would be limited to research settings for payment by the nation's health service. For children with gender dysphoria that have undergone puberty, the guidelines recommend that decisions regarding initiation of hormone treatment that alter sex characteristics be “based on thorough, case-by-case consideration, [. . .] [and] only if it can be ascertained that their identity as the other sex is of a permanent nature and causes severe dysphoria [. . .] and that no contraindications [that is, mental health conditions] are present.” Previously, recommendations noted that hormone therapy should not begin before age 16 in this group and that patients under 18 may receive 3 to 6 months of puberty blockers prior to beginning hormone therapy. The current report mentions no age or month specific treatment guidelines. The report continues to recommend that all such interventions be done in a research setting. The report adds that “[i]nformation about the potential harms of hormone therapies is accumulating slowly and is not systematically reported” and calls for further rigorous research of the benefits and risks of these treatments. Consistent with past recommendations, the report adds that “surgical treatments are not part of the treatment methods for dysphoria caused by gender-related conflicts in minors.”  29

In 2022, Sweden's National Board of Health and Welfare (NBHW) reviewed and updated its guidelines for treatment of children with gender dysphoria. 30 31 At the population level, NBHW issued “weak, negative recommendation as guidance to the healthcare system” that the risks of hormone treatment (which included gonadotropin releasing hormones (GnRH) also known as puberty blockers) and mastectomy likely outweigh the expected benefits for most adolescents. NBHW concludes that “existing scientific evidence is insufficient for assessing the effects of puberty suppressing and gender-affirming hormone therapy on gender dysphoria, psychosocial health and quality of life of adolescents with gender dysphoria.” While not banning access to SRPs, NBHW suggests restricting such treatments to exceptional circumstances or research settings, and adhering to the original “Dutch protocol” criteria including “existence of the incongruence since childhood, the stability of gender identity over time, clear distress caused by the onset of puberty, and the absence of factors that complicate the diagnostic assessment.”  32 The report did not discuss SRP surgeries aside from mastectomy.

In the United Kingdom, the National Health Service (NHS) commissioned a comprehensive review of the existing literature on SRPs and the prevailing service model. The 4-year independent evaluation of pediatric gender medicine (PGM), known as the “Cass Review,” was published by Dr. Hilary Cass in April 2024. The Cass review concluded that the evidence base for SRPs in children is “remarkably weak” and recommended restructuring of the service model towards prioritization of psychotherapy. 33

In terms of research quality, the Cass Review notes that the number of studies on gender dysphoria treatment in children is very low, with small study sizes that have inconsistent metrics, low quality methods (uncontrolled observational studies), results of low certainty, and lack of longitudinal data (that is, do not follow youth into adulthood; average duration of hormone treatment is between 1 year and 5.8 years). The Cass Review notes that this weak evidence base makes conclusions regarding the benefits versus risk of gender dysphoria treatment in children extremely difficult to assess. The Cass Review also critiques WPATH guidelines, noting that WPATH's own systemic review acknowledges a high risk of bias in study designs, small sample sizes, and confounding variables.

Regarding guideline development, the Cass Review notes that most current guidelines have not followed the international standards for guideline development, including the WPATH guidelines. As such, the Cass Review only recommends two guidelines: the Finnish guideline (2020) and the Swedish guideline (2022) as discussed above. However, the Cass Review notes that even these guidelines lack clear recommendations regarding certain aspects of practice and “would be of benefit if they provided more detailed guidance on how to implement recommendations.”

While not banning access to puberty blockers, Dr. Cass concluded in a July 2023 letter that “because of the potential risks to neurocognitive development, psychosexual development and longer-term bone health, [puberty blockers] should only be offered under a research protocol [for treatment of pediatric gender dysphoria].” NHS England and National Institute for Health and Care Research (NIHR) have enacted this recommendation as of December 2024. Exceptions are permitted for non-gender dysphoria-related medical conditions ( i.e. precocious puberty) and for those patients already on treatment. 34 For hormone interventions, the Cass Review highlights a lack of high-quality research assessing the (long-term) outcomes of hormone interventions in children with gender dysphoria. Given this weak evidence base, Dr. Cass notes that “no conclusions can be drawn about the effect [of hormone interventions] on gender dysphoria, body satisfaction, psychosocial health, cognitive development, or fertility. Uncertainty remains about the outcomes for height/growth, cardiometabolic and bone health.” the Cass Review ultimately calls for caution, better research (prospective studies with long-term outcome data), honest communication with patients about the limitations of current knowledge, and development of evidence-based guidelines that acknowledge the limitations of current evidence. Of note, in the United Kingdom, children have never received gender dysphoria related surgery as paid by the NHS; Cass therefore did not systemically review evidence for gender dysphoria related surgeries in children.

Norway and Denmark are exploring or have enacted similar restrictions, though neither have issued direct bans of SRPs. In 2023, the Norwegian Commission for the Investigation of Health Care Services (Ukom), an independent State-owned agency, made recommendations on the treatment for youth with gender dysphoria. 35 The recommendations consisted of: defining SRPs (that is, puberty blockers, hormonal therapies, and surgical treatment) as “experimental treatment,” revising national guidelines based on a systematic knowledge summary, and consideration for a national registry to improve quality and reduce variation in patient treatment.While not banning access to SRPs, Norway's public health authorityhas signaled an intention torespond to UKOM's concerns with an adjustment to the current treatment guidelines. 36 While also not banning access to SRPs, Denmark has also taken a cautious approach to hormone interventions (that is, puberty blockers and cross-sex hormones) pending more evidence of its beneficial effects becoming available. 37 Notably, Denmark does not offer surgical treatment to children with gender dysphoria before age 18 as paid for by its national health service. 38 Other countries that have considered or restricted various gender dysphoria treatments for children include Italy, 39 Brazil, 40 New Zealand, 41 and Australia. 42

We are aware that major medical organizations  43 (including the American Medical Association (AMA), 44 the American Academy of Pediatrics (AAP), 45 and the American Psychological Association  46 47 ) have issued statements supporting access to SRPs, including for children. The most influential sources of clinical guidance for treating pediatric gender dysphoria in the U.S. are the WPATH and the ES clinical practice guidelines and the AAP guidance document. 48 We reviewed each of these documents and agree with the HHS Review that discusses the conclusions of a recent systematic review of international guideline quality by researchers at the University of York (the York Appraisal) that found all three documents are very low quality and should not be implemented. 49

As the HHS Review notes regarding the role of medical organizations in the treatment of pediatric gender medicine:

“U.S. medical associations played a key role in creating a perception that there is professional consensus in support of pediatric medical transition. This apparent consensus, however, is driven primarily by a small number of specialized committees, influenced by WPATH. It is not clear that the official views of these associations are shared by the wider medical community, or even by most of their members. There is evidence that some medical and mental health associations have suppressed dissent and stifled debate about this issue among their members.”  50

The Endocrine Society (ES) issued clinical practice guidelines in 2017 entitled “Endocrine Treatment of Gender-Dysphoric/Gender-Incongruent Persons.”  51 As the HHS Review notes:

“In WPATH and ES guidelines, the principal goal of CSH administration is to induce physical characteristics typical of the opposite sex. When hormone levels rise beyond the typical reference range for a person's sex, they are considered supraphysiologic. ES guidelines suggest that the sex an individual identifies as—as opposed to their biological sex—should determine the target reference range for hormonal concentrations. Critics have argued that perceived identity does not alter physiological processes and that such a belief can result in inappropriate and potentially dangerous hormone dosing.”  52

The HHS Review states:

“The ES 2017 guideline, which used the GRADE [Grading of Recommendations Assessment, Development and Evaluation] framework, has been criticized for making strong recommendations for hormonal interventions in the setting of a weak evidence base. Notably, none of the systematic reviews that supported the ES guidelines were based on outcomes for children or adolescents. The ES recommendation to initiate puberty blockade using gonadotropin-releasing hormone agonists was derived by putting a higher value on achieving a “satisfactory physical appearance” while putting the lowest value on avoiding physical harms. The ES recommendation for the initiation of cross-sex hormones no earlier than age 16 was justified by placing a higher value on adolescent's purported ability to meaningfully consent to cross-sex hormones (CSH) and placing a lower value on avoiding harm from potentially prolonged pubertal suppression.”  53

As explained in Chapter 9 of HHS Review, the guidelines issued by the World Professional Association for Transgender Health (WPATH) “have been rated among the lowest in quality and have not been recommended for implementation by systematic reviews (SRs) of guidelines.”  54 As the HHS Review points out: “Despite their lack of trustworthiness, for more than a decade WPATH guidelines have served as the foundation of the healthcare infrastructure for gender dysphoric (GD) youth in the United States. The WPATH Standards of Care guidelines are embedded in nearly all aspects of healthcare including clinical education, delivery of care, and reimbursement decisions by private and public insurers.”  55 In 2022, WPATH issued guidelines entitled “Standards of Care for the Health of Transgender and Gender Diverse People, Version 8” (SOC-8). 56 These guidelines relaxed eligibility criteria for children to access sex-rejecting procedures and ultimately recommends that adolescents wishing to undergo sex-rejecting procedures receive them. Besides the problems identified in systematic reviews of international guidelines, as the HHS Review states, “in the process of developing SOC-8, WPATH suppressed systematic reviews its leaders believed would undermine its favored treatment approach. SOC-8 developers also violated conflict of interest management requirements and eliminated nearly all recommended age minimums for medical and surgical interventions in response to political pressures.”  57 The HHS Review goes on to explain: “The recommendations are couched in cautious-sounding language, stating that GD should be “sustained over time,” particularly before administering CSH. However, no clear standard is set; the only guidance offered is the vague and clinically meaningless phrase “several years”, leaving critical decisions open to broad and subjective interpretation. 58

Regarding the WPATH guidelines, the HHS review states:

“On the surface, WPATH SOC-8 might appear to recommend a cautious approach toward assessment. Mental health providers are to conduct a “comprehensive biopsychosocial assessment” prior to initiating medical interventions in order “to understand the adolescent's strengths, vulnerabilities, diagnostic profile, and unique needs to individualize their care.”  59 At the same time, however, WPATH recommends that clinicians use the International Classification of Diseases (ICD-11) diagnosis of “Gender Incongruence of Adolescence and Adulthood,” which, unlike the DSM-5 diagnosis of “Gender Dysphoria,” requires only “marked and persistent incongruence between an individual's experienced gender and the assigned sex.”  60 Because SOC-8 defines transgender in a similar way (“people whose gender identities and/or gender expressions are not what is typically expected for the sex to which they were assigned at birth”) and provides no meaningful distinction between this meaning of transgender and gender non-conformity, SOC-8 effectively recognizes transgender identification as a medical condition justifying medical interventions.”  61

While AMA and the AAP have not issued their own treatment guidelines, they support the ES and WPATH guidelines, as discussed previously in this proposed rule. AAP issued a policy statement in 2018 supporting the use of puberty blockers, cross-sex hormones, and surgeries for minors. 62 In support of sex-rejecting surgeries, AAP stated that while “current protocols [(ES, WPATH)] typically reserve surgical interventions for adults, they are occasionally pursued during adolescence on a case-by-case basis, considering the necessity and benefit to the adolescent's overall health and often including multidisciplinary input from medical, mental health, and surgical providers as well as from the adolescent and family.” The AAP reaffirmed its policy statement in 2023 but also stated that it was conducting its own review of the evidence and guideline development—which still has not been released. 63

Regarding the AAP policy statement, the HHS Review states:

“The AAP 2018 policy statement is not technically a CPG [clinical practice guideline] but has been widely cited in the U.S. as influential in establishing how pediatricians respond to children and adolescents with GD [gender dysphoria]. 64 Because the document offers extensive clinical recommendations regarding every step of PMT—from social transition to PBs [puberty blockers], CSH [cross-sex hormones], and surgery—the York team assessed the trustworthiness of the AAP guidance using the same criteria they applied to CPGs. Using the AGREE II criteria, the AAP policy statement received the second-lowest average score among all international guidelines: 2 out of 7. As noted in Chapter 2, the AAP policy statement's use of “gender diverse” casts a very wide net regarding which patients the organization considers eligible for medical intervention. The statement has been heavily criticized in peer-reviewed articles, which have pointed out that it is rife with referencing errors and inaccurate citations. Despite persistent advocacy among its members, who have petitioned the organization to release updated, evidence-based guidance for treating pediatric GD, the organization chose to reaffirm their policy statement in 2023.”  65

We solicit comment of any published peer-reviewed findings that measure the effects of restrictions similar to those in this proposed rule on insurers, providers, and patients in international settings as well as the U.S.

The United States has seen a high level of activity both at the State level and within the judicial system on this topic in recent years.

Several States and territories have adopted laws reflecting their views of the evidence on SRPs for children with 28 restricting and 15 protecting this treatment. As of August 2025, 27 States and one territory have laws limiting or prohibiting some or all SRPs for children. 66 These include Alabama, Arkansas, Arizona, Florida, Georgia, Iowa, Idaho, Indiana, Kansas, Kentucky, Louisiana, Missouri, Mississippi, Montana, North Carolina, New Hampshire, North Dakota, Nebraska, Ohio, Oklahoma, Puerto Rico, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming. Of these, 2 States' laws or policies (Montana and Arkansas) are pending resolution of ongoing legal challenges (as of August 2025).

States with such laws or policies apply them to varying age ranges. Twenty-five States prohibit certain SRPs in individuals under the age of 18. Two States (Nebraska and Alabama) prohibit them for those under the age of 19. Puerto Rico prohibits such procedures for those under the age of 21.

Which SRPs (that is puberty blockers, hormone therapy, and surgery) are banned for children varies by State. As of August 2025, 25 States have laws that prohibit access to puberty blockers, hormone therapies, and gender dysphoria related surgeries for children. Two States (New Hampshire and Arizona) have restrictions on surgery (but permit endocrine SRPs) for this population. No State bans only medications without also banning surgical procedures. 67

All the States and the territory with restrictions provide exceptions to the law/policies. The most common exceptions include:

• Children born with medically verifiable disorder of sex development. This allows treatment for children who are born with medical conditions that affect their sexual development. These are rare conditions where a child's reproductive or sexual anatomy does not develop in typical ways due to genetic, hormonal, or other factors that can be medically verified.

• Children who have been diagnosed with a disorder of sexual development by a physician through genetic or biochemical testing.

• Treatment for any infection, injury, disease, or disorder that has been caused or exacerbated by the performance of SPRs.

• Children suffering from physical disorders, physical injuries, or physical illnesses that would otherwise place the children in danger of death or impairment of bodily function.

We note that 12 States provide tapering off periods for patients who started puberty blockers or hormones before enactment of the restriction, with some specifying specific dates (for example, in South Carolina services cannot go beyond January 31, 2025) and others specifying a period of time from the date of enactment (ranging between 6 months and 1 year). Ten States have grandfather clauses primarily allowing children who were already receiving treatment to continue receiving it indefinitely.

Conversely, 14 States and the District of Columbia have shield laws protecting SRPs, and three other States have E.O.s protecting these procedures. 68 These States are (not including the District of Columbia): Arizona, 69 California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington. Shield laws and State E.O.s often describe SRPs broadly, including medications and procedures, and include these under broader definitions of protected healthcare activities. These laws often protect providers from adverse action by medical malpractice insurers and licensure boards and allow for their address to remain confidential. One State (Maine) has a shield law that allows children 16 and over to receive hormone therapy when the guardian has refused SRPs. Four States explicitly provide child abuse and child custody protections for parents who supported their children in receiving specified procedures. Four State shield laws and E.O.s have requirements for SRPs to be covered under health plans. Arizona requires coverage for State employee health plans. Illinois, Oregon, and Vermont require some level of SRPs coverage by all health insurance providers. Vermont includes an exception for services that do not comply with Federal law.

Recently, the Supreme Court in United States v. Skrmetti , 145 S. Ct. 1816 (2025) upheld Tennessee's law (referred to as Senate Bill 1; SB 1) banning certain surgical and chemical interventions for children with gender dysphoria, in litigation challenging that law under the Equal Protection Clause of the U.S. Constitution. SB1 prohibits a healthcare provider from performing medical procedures, including surgery, and prescribing puberty blockers, for a child for the purpose of enabling the child to identify with a purported identity inconsistent with the child's sex. At the same time, SB1 allows healthcare providers to perform medical procedures for children if the procedure is to treat a child's congenital defect, precocious puberty, disease, or physical injury. On June 18, 2025, the Court found that SB1's prohibition of certain medical procedures for children with gender dysphoria incorporates classifications based on age and medical use—not the child's sex. As a result of these classifications based on age and medical use, the Court held that SB1 was not subject to heightened scrutiny under the Equal Protection Clause of the Fourteenth Amendment and the law satisfied so called “rational basis” review.

The proposed rule is animated by significant child safety concerns when SRPs are used for certain medical uses—that is to align a child's physical appearance or body with an asserted identity that differs from the child's biological sex. CMS published a formal guidance letter to State Medicaid Directors regarding SRPs on April 11, 2025, reminding States of their responsibility to ensure that Medicaid payments are consistent with quality of care and that covered services are provided in a manner consistent with the best interest of recipients. 70 In addition, the Administrator of CMS sent a letter issued on May 28, 2025, to a number of hospitals addressing significant issues concerning quality standards and specific procedures affecting children. The letter requested that the recipient hospitals provide CMS with copies of certain hospital policies and procedures on the adequacy for informed consent protocols for children with gender dysphoria, including how hospitals determine that children are capable of making these potentially life changing decisions and when parental consent is required; describe any changes to clinical practice guidelines and protocols that the institution plans to enact in light of the recent comprehensive review and guidance released by the Department; provide CMS with medical evidence of any adverse events related to these procedures, particularly in children who later sought to detransition; and complete financial data for all pediatric SRPs performed at the institution and paid, in whole or in part, by the Federal Government. 71

In addition, on May 28, 2025, Secretary Kennedy wrote to hospitals, health care providers, health care risk managers, and State medical boards across the nation, asking them to read the HHS Review, and to make necessary updates to their “treatment protocols and training for care for children and adolescents with gender dysphoria to protect them from these harmful interventions.”  72

These letters reaffirmed CMS' and HHS' commitment to following the highest standards of care and to adhering closely to the foundational principles of medicine, especially relating to doing no harm to America's children and in alignment with CMS's obligations to ensure baseline quality standards at institutions participating in the Medicare and Medicaid programs.

We have undertaken a review of the current hospital health and safety standards (known as the CoPs) as well as the latest information regarding SRPs in children to ensure hospitals are best protecting the health and safety of children. The evidence as presented in the Review (see section I.B.2. of this proposed rule) indicates that SRPs lack the necessary outcomes data on safety and long-term effectiveness. CMS takes very seriously the absence of rigorous scientific data demonstrating the safety and effectiveness of SRPs and the considerable evidence regarding the risks. Based on this, we believe that certain SRPs (namely pharmaceutical and surgical interventions) are not consistent with the health and safety of children, given the risk of significant (long term) harms, known complications, and weak and uncertain evidence of benefits.

We therefore propose to add a new section to 42 CFR part 482, subpart C that would prohibit Medicare and Medicaid-participating hospitals from performing sex-rejecting procedures (SRPs) on any child (§ 482.46(a)). As set out in proposed § 482.46(a)(5), we propose to define SRPs as any pharmaceutical or surgical intervention that attempts to align an individual's physical appearance or body with a stated identity that differs from the individual's sex by either (1) intentionally disrupting or suppressing the development of biological functions, including primary or secondary sex-based traits or (2) intentionally altering an individual's physical appearance or body, including removing, minimizing, or permanently impairing the function of primary or secondary sex-based traits such as the sexual and reproductive organs.

We propose at § 482.46(a)(1) through (4) to include several additional definitions critical to interpreting the proposal. We propose that the term “child” be defined as any individual younger than 18 years of age. We further propose that the term “female” be defined as an individual of the sex characterized by a reproductive system with the biological function of (at maturity, absent disruption or congenital anomaly) producing eggs (ova). We propose that the term “male” be defined as an individual of the sex characterized by a reproductive system with the biological function of (at maturity, absent disruption or congenital anomaly) producing sperm. Finally, we propose that the term “sex” is defined as an individual's immutable biological classification as either male or female.

At § 482.46(b), we are proposing exceptions to § 482.46(a) to protect the health and safety of children in certain rare and exceptional circumstances. Proposed exceptions include:

• Procedures to treat an individual with a medically verifiable disorder of sexual development (§ 482.46(b)(1)). This allows treatment for children who are born with certain medical conditions that affect their sexual development. These are rare conditions where a child's reproductive or sexual anatomy does not develop in typical ways due to genetic, hormonal, or other medical factors that can be medically verified and documented. Examples include a child with external biological sex characteristics that are irresolvably ambiguous, such as those born with 46 XX chromosomes with virilization, 46 XY chromosomes with under-virilization, or having both ovarian and testicular tissue.

• Procedures for purposes other than attempting to align an individual's physical appearance or body with an asserted identity that differs from the individual's sex (§ 482.46(b)(2)). This permits procedures that are done for reasons entirely separate from changing a child's physical appearance to match a gender identity that differs from their biological sex, including procedures for children with a physical disorder, injury, or physical illness. In other words, the procedure must have a purpose separate from intending to change the body to not correspond to one's biological sex.

• Treating Complications (§ 482.46(b)(3)). This exception allows treatment for any infections, injuries, diseases, or other medical disorders that were caused by or made worse by previous SRPs. This exception allows physicians or other licensed practitioners to treat complications that arise from these procedures.

While we are proposing certain exceptions, any procedures or treatments under these exceptions must still be performed with the consent of the child's parent or legal guardian, as currently required under the patient rights CoP at § 482.13(b)(2), the medical records CoP at § 482.24 (c)(4)(v), the surgical services CoP at § 482.51(b)(2), and in compliance with applicable State law(s).

Under Section 1801 of the Act, CMS may not “exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, (42 U.S.C. 1395). However, we believe that providing the SRPs for children is not healthcare and hence are not subsumed under the term of “the practice of medicine.” Therefore, the proposed rule would not regulate the practice of medicine. As the Review notes regarding SRPs, when “medical interventions pose unnecessary, disproportionate risks of harm, healthcare providers should refuse to offer them even when they are preferred, requested, or demanded by patients.”  73 As the Review states, “in the domain of pediatrics, these norms limit the authority not only of patients (who in any case lack full decision-making capacity) but of parents as well.”  74 The first obligation of the physician, under the Hippocratic Oath, originating in the fourth century BC, is to first do no harm, as the purpose of the practice of medicine is to heal. SRPs introduce a unique set of iatrogenic harms, especially, “surgeries to remove healthy and functioning organs.”  75 The Review states: “to discharge their duties of nonmaleficence and beneficence, clinicians must ensure, insofar as reasonably possible, that any interventions they offer to patients have clinically favorable risk/benefit profiles relative to the set of available alternatives, which includes doing nothing.”  76 As related previously in this proposed rule, the risk-benefit profile of these procedures for children is extremely poor. At the same time,” the Review notes, “there is increasing recognition of the risk and harms associated” with pediatric sex-rejecting procedures, including “possible outcomes, such as impaired cognitive function, greater susceptibility to hormone-sensitive cancers, cardiac disease, reduced bone density, sexual dysfunction, infection, and infertility [that] are objectively detrimental to health” The Review concludes that“[s]uch medical harms, or plausible risks thereof, should not be imposed on children or adolescents in the absence of a reasonable expectation of proportionate medical benefit.”  77

There are other considerations for why the regulations proposed in this rule do not regulate the practice of medicine. A person's body (including its organs, organ systems, and processes natural to human development like puberty) are either healthy or unhealthy based on whether they are operating according to their biological functions. Organs or organ systems do not become unhealthy simply because the individual may experience psychological distress relating to his or her sexed body. For this reason, removing a patient's breasts as a treatment for breast cancer is fundamentally different from performing the same procedure solely to alleviate mental distress arising from gender dysphoria. The former procedure aims to restore bodily health and to remove cancerous tissue. In contrast, removing healthy breasts or interrupting normally occurring puberty to “affirm” one's “gender identity” involves the intentional destruction of healthy biological functions. This is not health care and hence imposing restrictions as this rule proposes does not limit the practice of medicine. The Review further notes there is lack of clarity about what SRPs' fundamental aims are, unlike the broad consensus about the purpose of medical treatments for conditions like appendicitis, diabetes, or severe depression. 78 Rather as discussed above, these procedures lack strong evidentiary foundations, and our understanding of long-term health impacts is limited and needs to be better understood. Nothing in this proposed rule prohibits or permits the basic legality of SRPs. Rather, this proposed rule would ensure patient safety and medical integrity. CMS would no longer directly or indirectly support harm to children by allowing facilities that engage in such harmful practices to receive Medicare and Medicaid funds.

Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. To fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comment on each of these issues for the following section of this document that contains information collection requirements (ICRs).

Proposed § 482.46 would require that hospitals not perform sex-rejecting procedures (SRPs) on children, barring certain exceptions. We expect that hospitals that are currently performing these procedures on children would need to inform the child and their parents or legal guardian who are seeking such procedures that they no longer perform such procedures. Based on our experience, we expect that the child's physician or the licensed practitioner providing this care would spend an average of 30 minutes writing each notification. In addition, they would spend 30 minutes answering any questions from the child and their parents or legal guardian. This leads to a total burden of 1 hour per patient.

To calculate the total provider burden across all patients, we first examined State laws and found that 25 States have active laws restricting SRPs. 79 Given these State laws that already prohibit these procedures, we do not expect that physicians or licensed practitioners in these States would be writing a significant number of notifications. While acknowledging that some children living in these States may be traveling to States that permit SRPs for children, we do not expect that this is a large number of children for two reasons. First, across States with these restrictions, nearly 45 percent of children were enrolled in Medicaid or CHIP as of March 2025 and these programs would not fund SRPs outside the State. 80 Second, a recent study showed that across States with restrictions on SRPs, the average driving time to the nearest clinic in a State without restrictions was 5.3 hours, with the average time in Florida reaching 9 hours. 81 As such, we base our estimate on the number of children affected for children in States that currently do not have restrictions but seek comments on this assumption.

The second step was to identify the number of individuals under the age of 18 who live in States that allow SRPs. We combined information on State restrictions with Census Bureau population estimates  82 and found that there are approximately 8,674,717 females and 9,165,563 males between the ages of 10 and 17 living in States that do not have active laws restricting SRPs. While acknowledging that children younger than 10 may be receiving SRPs, we believe this is a reasonable estimate of the population affected by the proposed requirement.

The third step was to identify the number of individuals under 18 years of age who may be receiving SRPs. A recent study  83 found that among children between the ages of 8 and 17 covered by private insurance, males received puberty blockers and hormones at a rate of 15.22 per 100,000 and 25.34 per 100,000, respectively. Meanwhile, females received puberty blockers and hormones at a rate of 20.81 per 100,000 and 49.9 per 100,000, respectively. Applying these rates to the number of males and females in States without active laws restricting SRPs, 84 we estimate that there are approximately 6,651 individuals receiving hormones and 3,200 individuals receiving puberty blockers for a total of 9,851 individuals. As the authors note, these rates are more likely to be generalizable to patients with private insurance in large care plans and they expect lower rates for those utilizing Medicaid and in less comprehensive care plans. Another study  85 used national data to estimate the rate of sex rejecting surgical procedures and found that in 2019, there were approximately 85 sex-rejecting surgical procedures for children with a gender dysphoria diagnosis. The same as our estimates for the number of children receiving puberty blockers and hormones, this estimate is for insured patients and there may be lower rates for those utilizing Medicaid and in less comprehensive care plans. Given the overlap in treatment for some patients who may receive both surgical procedures and hormones, we estimate that a maximum of 9,851 individuals under the age of 18 are receiving SRPs.

While hospitals often prescribed puberty blockers and hormone replacement therapy as part of sex-rejecting procedures, primary care providers and endocrinologists outside of hospitals, who would not be affected by these requirements, can also prescribe these treatments. A recent analysis found that approximately 52 percent of primary care physicians were not affiliated with a hospital. 86 We do not know the share of children receiving puberty blockers or hormone replacement therapy outside the hospital setting and, therefore, would not need to receive notification that SRPs were no longer offered. Assuming that 25 percent of children are receiving care from primary care physicians or endocrinologists and that 52 percent of these providers are outside the hospital system, then 8,570 of the 9,851 children receiving treatment as identified above would need to receive notices and have discussions with their treating physician or licensed practitioner. We seek comments on data sources on the number of children receiving puberty blockers or hormone replacement therapy outside the hospital setting who would not be affected by the proposed requirement.

To estimate the total cost for this requirement, we assumed that a physician would write these notices. We calculated the physician's hourly rate by doubling the national mean salary for physicians (occupation code 29-1210) using the BLS' May 2024 National Occupational Employment and Wage Estimates for hospitals (NAICS code 622000), 87 leading to an hourly cost of $226.18 ($113.09 × 2). We doubled the mean salary since the BLS data do not include overhead costs and fringe benefits. The HHS wide guidance on preparation of regulatory and paperwork burden estimates states that doubling salary costs is a good approximation for including these overhead and fringe benefit costs. Utilizing these data, in Table 1, we estimate that this requirement would cost $1,938,363. We seek comments on the estimated time burden for physicians to provide written notices to their patients that the hospital is no longer providing SRPs.

In addition to sending out notices to patients that they are no longer providing SRPs, hospitals will need to update their policies and procedures to ensure that they align with the proposed requirements.

To estimate the cost for hospitals to update their policies and procedures, we used data from the BLS' May 2024 National Occupational Employment and Wage Estimates for hospitals (NAICS code 622000), 88 and doubled the mean salary since the BLS data do not include overhead costs and fringe benefits. Based on our experience, we estimate that updating the hospital's policies and procedures related to SRPs for children would take 3 hours of work from a physician (occupation code 29-1210) at $678.54 ($226.18 × 3 hours) and a member of the clerical staff (occupation code 43-6010) at $143.40 ($47.80 × 3 hours), and 3 hours of work from a lawyer (occupation code 23-1010) at $650.16 ($216.72 × 3 hours) to review the updated policies and procedures to ensure that they meet the legal guidelines. This leads to a total per facility cost of $1472.10.

To estimate the number of hospitals that would need to update their policies and procedures, we first used the CMS' Q2 2025 Provider of Services File—Hospitals & Non-Hospital Facilities dataset and identified a total of 4,832 Medicare/Medicaid certified hospitals. 89 We expect that even in States that have active bans on SRPs, some hospitals would still need to update their policies and procedures since many of these States have exceptions that conflict with the requirements in this proposed rule. We recognize, however, that not all hospitals offer SRPs for children, and increasingly more hospitals nationwide are ending these services. 90 Given these uncertainties, we assume that 75 percent, or 3,624 hospitals would need to update their policies and procedures. Using this estimate, we expect that hospitals would spend $5,334,890 updating their policies and procedures. We seek comments on this estimate, specifically whether there are data sources to more accurately estimate the number of hospitals nationwide that currently offer SRPs for children.

The information collections will be sent to OMB for approval under the OMB Control number: 0938-NEW.

If you comment on this information collection, that is, reporting, recordkeeping or third-party disclosure requirements, please submit your comments electronically as specified in the ADDRESSES section of this proposed rule.

Comments must be received by the date and time specified in the DATES section of this proposed rule.

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

Throughout the United States, thousands of children are receiving sex-rejecting procedures (SRPs), specifically pharmacological and surgical interventions, for gender dysphoria. As outlined in section I. and II. of this proposed rule, however, recent HHS and international analyses question the efficacy and safety of SRPs in children. To protect children's health and safety, we are proposing to prohibit hospitals subject to part 482 from performing SRPs on any child with certain exceptions to best protect children's health and safety.

We have examined the impacts of this proposed rule as required by Executive Order 12866, “Regulatory Planning and Review”; Executive Order 13132, “Federalism”; Executive Order 13563, “Improving Regulation and Regulatory Review”; Executive Order 14192, “Unleashing Prosperity Through Deregulation”; the Regulatory Flexibility Act (RFA) (Pub. L. 96 354); section 1102(b) of the statute; and section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

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; distributive impacts; and equity). 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 Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) has determined this rulemaking is significant per section 3(f) of Executive Order 12866.

As noted above in Table 1 and Table 2, estimated costs of approximately $7.3 million are due to the time that a physician or licensed practitioner would spend providing patients with notification that the hospital no longer provides these procedures and for hospitals to update their policies and procedures related to SRPs for children. Below, we estimate additional impacts from the proposed requirement.

We estimated the value of treatments in hospitals that would change in response to the proposed requirements using data from a study analyzing the per person cost of these treatments based on commercial claims data from 1993 to 2019. 91 This study estimated that for SRPs that included testosterone, estrogens and anti-androgens, and GnRH, there was an average combined cost to payors of $755 per person in 2019 dollars. Adjusting for inflation, 92 this leads to an average cost of approximately $909 per patient in 2024 dollars. For surgical procedures, there was an average per procedure cost of $28,367 in 2019 dollars. Adjusting for inflation, this leads to an average cost of approximately $34,165 in 2024 dollars. Utilizing our estimate in the collection of information section that 8,570 children would be affected by our rule and that there are 85 surgical SRPs on children annually, we estimate an annual value of $7,790,130 (8,570 patients × $909) for non-surgical SRPs and $2,904,025 (85 patients × $34,165) for surgical SRPs, for a total annual value of $10,694,155.

For children who are currently receiving SRPs at hospitals, there is likely to be bifurcation in their response to the proposed requirement. Some of these children may no longer receive SRPs at non-hospital providers that are not covered by the proposed requirement due to factors, such as difficulty in identifying in-network providers that have available space and longer commute times to these providers. 93 94 The end of SRPs for these children would result in a reduced payments from payors, including insurance companies and private persons, to hospitals. Other children, however, are likely to switch to other provider types that are not affected by this proposed requirement. For these children, the proposed requirement would result in a change in transfers from Medicare-certified hospitals to other providers.

In the absence of data showing the likely share of patients in each category, we assumed that 50 percent of affected children would fall into each of the categories described above. Using this percentage, we estimate that the proposed requirements would result in $5,347,077 in reduced costs for payors and a $5,347,077 change in transfers from hospitals to other provider types annually. We seek comments on our assumption regarding the share of patients in each group.

For children who continue receiving SRPs, there are the costs associated with switching providers. Dahl and Forbes (2023) estimate that 46-percent of individuals are willing to pay over $600 per person (in 2011 dollars, or approximately $821 when updated for inflation) to avoid switching medical providers. 95 96 The full willingness-to-pay (WTP) distribution is not reported, but for purposes of this regulatory impact analysis, it is assumed that $821 is a reasonable estimate of an average that includes the 46-percent of WTP amounts above it and the 54-percent below. Applying this $821 amount to the above-estimated 8,570 affected patients (including 4,285 patients who would switch providers and 4,285 patients for whom the switching-cost estimate is a lower bound on the WTP to avoid the experience of being unable to switch  97 yields a cost estimate of $7,035,970 that declines over several years to an annual $3,517,985. Because the Dahl and Forbes estimate is derived from a choice between retaining or switching primary-care physicians—where finding substitute providers may be relatively easy as compared with finding, and maintaining patient-provider relationship with facilities offering the specialized treatment associated with adolescent gender dysphoria—this estimate may have a tendency toward understatement of the proposed rule's cost to patients for switching providers.

In Table 3, we estimate the costs and transfers associated with the proposed requirement over 10 years. Overall, we expect that this proposed rule would result in approximately $53.5 million in savings for payors due to some patients ending SRPs, with a cost of $44 million to patients who continue treatment at new providers for finding a new provider and for patients who would have paid to avoid the experience of being unable to switch providers. We also expect a change in transfers of $53.5 million from hospitals to other provider types as patients seek alternative sources of care. The effect attributable to this proposed rule might be lower in magnitude than the aggregate presented here if other actions, such as the HHS/CMS proposal titled “Prohibition on Federal Medicaid and Children's Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children” are finalized before finalization of this proposal.

In developing our estimate, we acknowledge that this quantitative approach may fail to capture a societal cost pattern that may be somewhat concentrated in upfront transition activity—for example, the potential establishment of free-standing clinics to provide SRPs that would newly be prohibited at hospitals participating in Medicare. 98 There may also be costs for clinicians who provide SRPs for children at hospitals who would incur costs to move to other provider types where these procedures are allowed. We also acknowledge that some patients may choose new forms of treatment such as psychotherapy. Given these various uncertainties, we request comment on how to refine the estimation of regulatory costs.

As we have noted throughout the proposed rule in Sections I and II, the proposed requirement is designed to ensure the health and safety of children by limiting SRPs given recent research that questions its efficacy and safety. Although we do not have quantitative financial data on the impact of the proposed rule's provision, we estimate the number of children who this proposed rule would positively affect using the same strategy used when estimating the rule's collection of information costs. Specifically, we expect that due to factors such as difficulty in identifying in-network providers that have available space and longer commute times to these providers  99 100 , half of the 8,570 (or 4,285) children who are receiving SRPs in hospitals would stop receiving these procedures leading to the avoidance of unnecessary health complications. As noted in the collection of information section, we assumed this percentage in the absence of quantitative data showing the number of children who will no longer seek SRPs. We seek comments on additional benefits that could emerge from these proposed requirements and sources of data to provide a quantitative estimate of the proposed rule's benefits. We also seek comments on sources of data to more accurately estimate the number of children who will stop receiving SRPs.

As we detailed earlier in this proposed rule, the growth in SRPs in children is a growing concern given recent research that questions its efficacy and safety. We believe that the changes we are proposing are necessary to ensure the health and safety of children throughout the United States and align with the best available scientific evidence. We acknowledge, however, that there are different standards that we could have used in developing these proposed requirements.

In developing this proposed rule, we considered aligning our requirements with those States that already have restrictions on SRPs but with a variety of exceptions they provide as outlined in Section 1.B of this proposed rule. For example, we could have allowed those currently receiving these procedures to continue receiving them. Ultimately, however, we have decided to adopt the proposed provisions with fewer exceptions than are allowed in these States to maximize health and safety for all children. We seek comments, however, on whether we should adopt one or more of the additional State exceptions related to SRPs.

Due to the uncertainty involved with accurately quantifying the number of entities that will review the proposed rule when finalized, we assume that all hospitals will review this rule. We acknowledge that this assumption may understate or overstate the costs of reviewing this proposed rule. It is also possible that other individuals and providers will review this proposed rule. For these reasons we thought that doubling the number of Medicare or Medicaid certified hospitals (n = 4,832) would be a fair estimate of the number of reviewers of this proposed rule. We welcome any comments on the approach in estimating the number of entities which will review this proposed rule. We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this proposed rule, and therefore, for the purposes of our estimate, we assume that each reviewer reads approximately 75 percent of the rule. We seek comments on this assumption.

Using the wage information from the Bureau of Labor Statistics (BLS) for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this proposed rule is $132.44 per hour, including overhead and fringe benefits ( https://www.bls.gov/oes/current/oes_nat.htm ). Assuming an average reading speed of 250 words per minute, we estimate that it would take approximately ([9,500 words/250 words per minute] × 75 percent) 28.5 minutes for the staff to review 75 percent of this proposed rule. For each entity that reviews the rule, the estimated cost is $62.91 (0.475 hours × $132.44). Therefore, we estimate that the total cost of reviewing this regulation is $607,962 ($[62.91] × [9,664]).

As required by OMB Circular A-4 (available online at https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf ), we have prepared an accounting statement in Table 4 showing classification of the costs and benefits associated with the provisions of this proposed rule. This includes the total costs for hospitals providing notices to children and their parents that they are no longer providing SRPs as identified in Table 1, the cost for hospitals to update their policies and procedures in Table 2, the reduction in costs due to the ending of SRPs for some patients as well as an increase in cost for patients who seek new providers in Table 3, as well as the regulatory review costs. There are also transfer costs for patients seeking care at other providers as outlined in Table 3. There are $0 benefit estimates in the statement. This statement provides our best estimate for the Medicare and Medicaid provisions of this proposed rule.

The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, we estimate that most hospitals (NAICS 6221) are considered small businesses either by the Small Business Administration's size standards with total revenues of $47.0 million or less in any single year or by the hospital's not for profit status. According to the 2022 Economic Census, 101 general medical and surgical hospitals (NAICS 6221) have revenues of $1.27 trillion.

Individuals and States are not included in the definition of a small entity. As its measure of significant economic impact on a substantial number of small entities, HHS uses a change in revenue of more than 3 to 5 percent. With estimated annual costs and reduction in transfers resulting in the loss of approximately $11.4 million in annual revenues for hospitals, which is approximately 0.0008 percent of revenues, this proposed rule would not have a significant economic impact as measured on a substantial number of small businesses or other small entities as measured by a change in revenue of 3 to 5 percent. Therefore, the Secretary has certified that this proposed rule will not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the statute requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the statute, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. With total requirement costs and the loss of transfers reducing hospital revenues by approximately $11.4 million annually for all 4,832 hospitals, or $2,194 per hospital, we expect that this proposed rule would have a negligible impact on small rural hospitals. Therefore, the Secretary has certified that this proposed rule will not have a significant impact on the operations of a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2025, that threshold is approximately $187 million. This proposed rule does not mandate any spending requirements for State, local, or tribal governments, or for the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it issues a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, pre-empts State law, or otherwise has federalism implications. This proposed rule would pre-empt State laws that prohibit SRPs for children that include exceptions for reasons beyond those exceptions provided in this proposed rule, including for children who are already undergoing these procedures. It would also pre-empt State laws requiring hospitals to provide SRPs.

Consistent with the Executive Order, we find that State and local laws that provide exceptions from the prohibition beyond those listed in this proposed rule, as well as State and local laws that require hospitals to provide SRPs for children, directly conflict with this exercise of CMS' statutory health and safety authority to prohibit providers subject to this proposed rule from providing these procedures.

Similarly, to the extent that State-run hospitals that receive Medicare and Medicaid funding are required by State or local law to provide SRPs for children except in those cases covered by our exceptions, there is direct conflict between the provisions of this proposed rule (prohibiting such procedures) and the State or local law (allowing them).

As is relevant here, this proposed rule preempts the applicability of any State or local law providing for SRPs to the extent such law provides broader grounds for these procedures than provided for by Federal law and are inconsistent with this proposed rule. In these cases, consistent with the Supremacy Clause of the Constitution, the agency intends that this proposed rule preempts State and local laws to the extent the State and local laws conflict with this proposed rule. The agency has considered other alternatives (for example, relying entirely on State laws prohibiting SRPs) and has concluded that the requirements established by this proposed rule are the minimum regulatory action necessary to achieve the objectives of the statute.

Given the growth in SRPs among children in recent years, we believe that the prohibition of these procedures for children is necessary to promote and protect patient health and safety. The agency has examined research on SRPs for children and concludes that it can cause permanent harm with uncertain benefits. We are inviting State and local comments on the substance as well as legal issues presented by this proposed rule, and its impact on them.

Executive Order 14192, entitled “Unleashing Prosperity Through Deregulation” was issued on January 31, 2025, and requires that “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.” We followed the implementation guidance from OMB-M-25-20 ( https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-20-Guidance-Implementing-Section-3-of-Executive-Order-14192-Titled-Unleashing-Prosperity-Through-Deregulation.pdf ) when estimating the proposed rule's impact related to the executive order. Specifically, we used a 7 percent discount rate when estimating the cost for the purposes of Executive Order 14192. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

Mehmet Oz, Administrator of the Centers for Medicare & Medicaid Services, approved this document on December 17, 2025.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below: