Congress enacted the CRA  1 in 1977 based on its findings that: “(1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business; (2) the convenience and needs of communities include the need for credit services as well as deposit services; and (3) regulated financial institutions have continuing and affirmative obligation[s] to help meet the credit needs of the local communities in which they are chartered.”  2 Accordingly, the purpose of the CRA is to require the OCC  3 to encourage regulated financial institutions  4 “to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of the institutions.”  5 To achieve this purpose, the CRA requires the OCC to “assess [an] institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution.”  6 Upon completing this assessment, the statute requires the OCC to “prepare a written evaluation of the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods.”  7 The statute further provides that the OCC must “take such record into account in its evaluation of an application for a deposit facility by such institution.”  8

The CRA directs the OCC to publish regulations to carry out the purposes of the CRA. 9 In general, the OCC's CRA regulation, first promulgated in 1978, establishes the standards under which the OCC evaluates banks' 10 CRA performance. 11 The OCC's 1995 CRA regulations  12 significantly revised and clarified the 1978 CRA regulations. Currently, the OCC evaluates banks' CRA performance pursuant to the 1995 CRA regulation, as amended in the OCC's 2021 CRA Final Rule (CRA regulation). 13 During the OCC's 30 years of experience examining banks under the CRA regulation, the agency has developed an in-depth understanding of how banks of different sizes and business models meet the credit needs of their communities. This includes community banks, which under the OCC's current organizational structure, are those with up to $30 billion in assets. 14 The OCC also has received extensive feedback on the benefits of, as well as stakeholder concerns with, the CRA regulation. 15

Under the CRA regulation, any bank may elect to have the OCC assess its CRA performance under an approved strategic plan (strategic plan option). 16 A CRA strategic plan provides a bank with an alternative to the OCC's examination of its CRA performance under the otherwise applicable performance tests and standards. 17 Specifically, the CRA regulation includes performance tests and standards for banks of different sizes and types. The OCC uses these performance tests and standards to assess banks' performance under the CRA. Depending on a community bank's size or business model, the OCC may examine the bank pursuant to the (1) lending test, 18 investment test, 19 and service test;  20 (2) small bank performance standards, 21 which include a lending test  22 and a community development (CD)  23 test, 24 as applicable; or (3) CD test for wholesale or limited purpose banks. 25 The OCC examines small banks  26 using the lending test in the small bank performance standards. In addition, intermediate small banks are also evaluated pursuant to the CD test in the small bank performance standards. The OCC evaluates banks that exceed the small bank asset-size threshold—commonly referred to as large banks—using the lending test, investment test, and service test. In addition, the OCC evaluates a bank designated under the CRA regulation as a wholesale bank or a limited purpose bank  27 using the CD test for wholesale and limited purpose banks.

The strategic plan option  28 enables a bank to tailor its CRA examination based on the needs of its community and its ability to help address those needs based on its capacity and constraints, product offerings, and business strategy. The CRA regulation requires a bank seeking to elect the strategic plan option to develop a plan that details how it will meet its CRA obligations in consultation with members of the public, 29 publish the plan for public comment, 30 and include in the plan annual interim measurable goals. 31 The strategic plan provision provides (1) certain additional requirements that a bank must comply with when electing the strategic plan option  32 and (2) the OCC's criteria for evaluating and approving a proposed strategic plan. 33

Over the years, certain stakeholders have expressed concern with CRA-related regulatory burden, especially burden on smaller banks with more limited resources. The OCC recognizes that concerns with CRA-related regulatory burden stem, in part, from the qualitative evaluation framework provided in the CRA regulation's otherwise applicable performance tests and standards, which may make it difficult for banks to understand the OCC's supervisory expectations. This lack of transparency may also make it more challenging for banks to effectively manage their CRA programs. Further, the OCC has observed that the CRA regulation's otherwise applicable performance tests and standards may not be well suited for evaluating certain banks' business models, particularly in an evolving banking industry. For these banks, the current CRA regulatory framework may not effectively encourage or increase CRA-qualifying activity.

Considering this background, certain stakeholders have conveyed the importance of the strategic plan option, commenting that strategic plans should be available to all banks and could be useful for many banks, particularly branchless banks and banks with unique business models. 34 Further, some stakeholders have suggested simplifying the process for small banks to elect the strategic plan option. 35

Because of the certainty and flexibility that the strategic plan option provides banks to tailor their CRA examinations, the OCC has witnessed an increase in non-traditional banks' use of the strategic plan option, including certain community banks. 36 However, the OCC understands from its interactions with banks that the current strategic plan process can be complex and difficult to navigate. As a result, overall election of the strategic plan option remains limited. 37 Given the flexibility provided by the strategic plan option, the OCC believes that it may be a useful tool for reducing CRA-related regulatory burden for all community banks—from the smallest retail community banks to larger, non-traditional community banks that offer their products and services through the internet.

Consistent with stakeholder feedback, the OCC has determined that the strategic plan option could be a useful means for more community banks to tailor their CRA examinations based on bank size and other relevant factors. Further, the OCC has determined that providing a simplified strategic plan process for community banks would facilitate their ability to elect the strategic plan option. Evaluation under a strategic plan would provide community banks with clear CRA supervisory expectations and enable the banks to better focus their resources on meeting community credit needs. Specifically, community banks may find it challenging to determine what constitutes a “Satisfactory” or “Outstanding” level of performance under the otherwise applicable performance tests and standards or for purposes of the strategic plan option due to more limited in-house compliance and legal expertise and less robust compliance management systems, as compared with larger banks. While the strategic plan option is intended to provide banks with more certainty in their CRA examinations, community banks may find electing the strategic plan option difficult without help from outside consultants. This is because the current strategic plan guidance lacks clarity regarding the required components of a strategic plan, including what would constitute reasonable measurable goals. Based on feedback from banks, the OCC understands that these circumstances have had a chilling effect on banks' use of the strategic plan option, particularly community banks.

In addition to providing clarity, the proposed guidance would simplify the process for community banks electing the strategic plan option and help to potentially reduce their CRA-related regulatory burden—making the strategic plan option a more viable alternative for these banks. 38 Electing the strategic plan option would facilitate a community bank's ability to focus resources on engaging in CRA-qualifying activities consistent with the measurable goals specified in the bank's strategic plan. Reducing community banks' CRA-related regulatory burden is also consistent with the purpose and underlying policy of Executive Order 14192, Unleashing Prosperity Through Deregulation—“reduc[ing] the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen.”  39

Despite the potential advantages, as discussed above, banks have infrequently elected the strategic plan option. 40 This has been especially true for community banks, although recently the OCC has experienced a relative increase in community bank strategic plans. The proposed simplified strategic plan process would reduce burden for community banks by (1) providing more detailed guidance on the measurable goals and the other components of a strategic plan required by the CRA regulation and (2) simplifying the method for drafting and submitting a proposed strategic plan to the OCC for approval.

To develop the proposed simplified strategic plan process, the OCC reviewed current CRA guidance to identify opportunities to provide clarity on, and increase the efficiency of, strategic plan development. The OCC's current guidance for banks' electing the strategic plan option is provided in OCC Bulletin 2019-39. 41 This guidance provides the OCC's process for submitting a proposed strategic plan to the agency for approval but does not provide much clarification on how to develop a proposed strategic plan.

In addition, OCC Bulletin 2019-39 and the Interagency Questions and Answers on Community Reinvestment (Q&As) explain that banks may consult with and provide information to the OCC on a proposed strategic plan, and the OCC will provide guidance on whether the level of detail in the proposed plan would be sufficient to permit the OCC to evaluate the plan. 42 This guidance explains, however, that the OCC's advice on a bank's proposed strategic plan does not include commenting on the merits of the proposed strategic plan or the adequacy of the bank's measurable goals. As discussed below, the OCC has found that the consultation process described in the current guidance is often insufficient, and, in practice, banks generally require more detailed feedback during the strategic plan development process to help manage the burden of drafting a strategic plan. 43

The OCC believes that the limited guidance on the strategic plan option has contributed to the burden associated with the current strategic plan process. The OCC understands that many community banks perceive the burden of developing a proposed strategic plan to outweigh the benefit of being evaluated under a strategic plan. 44 The OCC believes that providing more clear and detailed guidance and a simplified process for the development of a strategic plan would make the strategic plan option a more viable alternative for a greater number of community banks and facilitate burden reduction in connection with the banks' CRA compliance.

The CRA regulation's strategic plan provision provides that a bank's strategic plan must specify annual interim measurable goals that constitute a “Satisfactory” level of performance for each assessment area covered by the strategic plan. 45 In addition to “Satisfactory” measurable goals, the CRA regulation provides that a bank's strategic plan may specify measurable goals that constitute an “Outstanding” level of performance. 46

Generally, the CRA regulation provides that a bank's proposed measurable goals must address all three performance categories ( i.e., lending, investment, and services) and, unless the bank has been designated as a wholesale or limited purpose bank, must emphasize lending and lending-related activities. 47 However, the CRA regulation also states that a different emphasis, including a focus on one or more performance categories, may be appropriate if responsive to the characteristics and credit needs of a bank's assessment areas, considering public comment and the bank's capacity and constraints, product offerings, and business strategy. 48 Notably, the CRA regulation provides banks with flexibility in developing a proposed strategic plan and does not require banks to specify measurable goals in all three performance categories. A community bank should consider its particular facts and circumstances and the credit needs of its community to determine the appropriate performance categories to include in its proposed strategic plan. The OCC's goal in developing the simplified strategic plan process is to enhance the substantial flexibility for community banks to tailor their CRA programs as intended by the strategic plan provision. 49

Currently, the available guidance on what constitutes an appropriate measurable goal is limited. The Q&As provide some explanation regarding the meaning of “measurable goals” in the CRA regulation, but the Q&As do not explain how a community bank would determine the appropriate level of performance for those goals. Specifically, the Q&As provide that annual interim measurable goals ( e.g., number of loans, dollar amount, geographic location of activity, and benefit to LMI areas or individuals) must be stated with sufficient specificity to permit the public and the OCC to quantify what performance will be expected. 50 However, banks are provided flexibility in specifying measurable goals. 51 The Q&A explains, for example, that a bank may provide ranges of lending amounts in different categories of loans or that measurable goals may be linked to funding requirements of certain public programs or indexed to other external factors as long as these mechanisms provide a quantifiable standard. 52 In the OCC's experience, the existing guidance is insufficient to enable banks, especially community banks, to draft proposed strategic plans without considerable support from the OCC or external consultants. For larger, more sophisticated banks, however, the current guidance provides appropriate flexibility to customize their strategic plans to the banks' unique circumstances. In contrast, community banks generally have less complex business strategies, resulting in a disconnect between the regulatory burden associated with developing a proposed strategic plan and the perceived benefits that would result from evaluation under an approved strategic plan. As noted above, this disconnect has chilled community banks' election of the strategic plan option and supports developing a simplified strategic plan process for community banks.

Under the proposed simplified strategic plan process for community banks, the OCC would provide more specific guidance on the types of measurable goals, including the performance measures ( e.g., percentage, number, dollar amount, or other quantifiable measure of a particular type of lending, investment, or service) and performance levels ( i.e., the specific value for a performance measure, such as a set percentage of lending), that may be appropriate for community banks based on the agency's supervisory experience. Specifically, the OCC would provide examples of measurable goals that a community bank could adopt in its proposed strategic plan ( hereinafter, elective goals), as appropriate. A community bank may also include as measurable goals bank-specific, custom goals if it determines that the elective goals are not suitable for the bank based on its performance context, 53 or the bank identifies unique goals that it would like to include in its strategic plan.

The OCC developed the proposed elective goals by considering measurable goals in approved strategic plans and the OCC's experience in evaluating community banks' CRA performance under the otherwise applicable performance tests and standards. A community bank could use one or more of the elective goals in its proposed strategic plan if, after considering its performance context, the bank determines those goals are an appropriate means of measuring the bank's CRA performance. As discussed in greater detail below, the proposed elective goals reflect different levels of performance that the OCC would likely consider “Satisfactory” or “Outstanding” for a community bank for that performance category or activity individually or in combination with other goals, depending on the circumstances. The elective goals, however, are not safe harbors and their use would not guarantee approval of a strategic plan. The OCC's approval of a strategic plan would be provided only after a community bank were to undertake the required public engagement and adjust its proposed strategic plan to address public comments, as appropriate. 54 In approving a proposed strategic plan, the OCC would consider the criteria for evaluating a strategic plan provided in the CRA regulation, as discussed below.

In drafting a proposed strategic plan, a community bank would comply with the regulatory requirement to address all three performance categories in its proposed strategic plan by specifying measurable goals for one or more performance categories and including related performance context. A community bank would also provide performance context addressing any performance categories for which the bank did not specify measurable goals.

The measurable goals a community bank specifies in its proposed strategic plan, including the number of goals, combination of goals, represented performance categories, and performance levels for those goals must be appropriate and reasonable for the community bank based on its circumstances. Specifically, in selecting elective goals or developing custom goals, a community bank should consider the needs of and opportunities in the assessment areas covered by its strategic plan and its performance context, particularly the bank's capacity and constraints, product offerings, and business strategy. 55 A community bank's historical CRA performance may also be a relevant consideration.

The OCC generally does not expect community banks' use of the simplified strategic plan process to result in reductions in CRA-qualifying activities as compared to the existing process. In addition, the OCC plans to periodically assess and, if appropriate, update the elective goals. 56 For example, the OCC may revise or add to the elective goals to account for changing economic conditions, public comments received in connection with banks' strategic plans, or other relevant information. Below is a discussion of considerations that informed the proposed guidance on measurable goals included in the simplified strategic plan process.

In the OCC's experience, one of the reasons banks elect the strategic plan option is to establish specific performance targets that they can manage their CRA programs to achieve. The OCC has observed that banks often express measurable goals in terms of dollar amounts to maximize predictability. In some instances, however, banks have used other performance measures to set measurable goals, including percent of tier one (T1) capital  57 or total assets. 58 When using these other performance measures, banks allocate capital or assets to each assessment area. Typically, banks will use the percentage of deposits assigned to a given assessment area as the basis for this allocation. The proposed elective goals would rely on this allocation method for specifying measurable goals in each assessment area covered by the plan. For multi-year strategic plans, a bank would be required to establish annual interim measurable goals for each year in the strategic plan term. Generally, the OCC has expected a bank to annually increase the dollar-denominated thresholds in its interim goals to account for a bank's expected growth and the resultant increase in capacity.

Considering this background, the OCC reviewed the measurable goals in approved strategic plans and considered community banks' CRA performance and the comparators used to assess that performance under the otherwise applicable performance tests and standards. 59 The OCC relied on this historical information to help identify potential elective goals that would generally reflect “Satisfactory” or “Outstanding” performance for community banks depending on the circumstances, including the banks' performance context.

In the OCC's experience, the adequacy of a bank's level of performance is informed by the sufficiency with which a bank has addressed its obligation to meet community credit needs, accounting for the bank's capacity to meet those needs. For example, the CRA requires that the OCC consider a bank's record of performance in meeting community credit needs consistent with the bank's safe or sound operations and the OCC would not expect banks to engage in levels of performance that would be unsafe or unsound. The OCC has identified that additional performance context factors—such as community needs and opportunities and business strategy—result in some variation in the appropriate levels of performance amongst community banks. Further, the appropriate performance level for a particular goal included in a community bank's proposed strategic plan would be influenced by whether the bank included other measurable goals in its strategic plan and the nature of those goals. The OCC also relied on its supervisory experience to identify additional factors that have influenced banks' specification of measurable goals, including the performance measures used in the goals. After considering this information, and as explained further below, the OCC is proposing elective goals that are consistent with the performance measures and performance levels that the agency historically has expected of community banks with “Satisfactory” or “Outstanding” ratings.

In specifying measurable goals, a community bank would determine which performance categories to include in its goals, and the performance measures and performance levels for the goals in those categories. The OCC expects that a community bank would specify measurable goals that are appropriate for the bank based on its performance context; however, because the strategic plan option provides community banks with significant flexibility to tailor their CRA examinations, measurable goals may vary even when comparing two similarly situated banks. Community banks may choose different variations of goals with different performance measures and performance levels to tailor their CRA examinations based on their individual circumstances. For that reason, the elective goals include performance measures with several options for performance levels. Further, community banks would have the option to specify custom goals to use in combination with or instead of the elective goals.

The standardized form that community banks would use in connection with the simplified strategic plan process ( hereinafter the Simplified Strategic Plan Form), discussed below, would include guidance for when a proposed elective goal may be appropriate for a community bank. For example, if a community bank's strategic plan were to include measurable goals focused on only one performance category, the OCC would generally expect the bank to specify measurable goals with higher performance levels than if the bank had included measurable goals in multiple performance categories. This expectation is not categorically applicable, however. In the OCC's view, it may be appropriate for certain community banks to specify fewer measurable goals with lower performance levels even if the bank does not include goals in all three performance categories. For example, it may be appropriate for a smaller community bank with a narrow product line to specify measurable goals in a single performance category at a performance level that would not be considered “Satisfactory” for a larger community bank with more diverse product offerings and greater capacity. Therefore, the guidance that would be included in the Simplified Strategic Plan Form along with the proposed elective goals would provide general guidelines for a community bank's use of the elective goals. In addition to the guidance provided, a community bank should consider its performance context to determine the elective goals that would be appropriate based on the bank's circumstances.

The OCC considered different performance context factors and how those factors may influence the appropriate performance measures and performance levels that would be used to express a community bank's proposed measurable goals. Specifically, performance context factors such as competition, market share, and bank size, or other bank-specific considerations may make total dollar amount alone an inadequate measure of a bank's CRA performance. For example, the OCC determined that goals that measure performance by both number and dollar amount may be appropriate for a bank that focuses on a larger number of small dollar, highly responsive activities. Further, goals with lower assessment area performance levels may be appropriate when a community bank's proposed strategic plan includes an elective goal with performance measures for an assessment area coupled with performance measures for the broader statewide or regional area that includes the assessment area. The OCC also determined that there are instances where it may not be reasonable, particularly without additional feedback, for the OCC to state elective goals with fixed performance levels, such as dollar-thresholds or percentage-based performance targets. In these circumstances, the OCC believes that it can improve on the current guidance by providing template-style elective goals that include a variable that the community bank would populate.

Based on the information considered, the OCC determined that the elective goals should include different performance levels within the same performance categories, subcategories ( e.g., retail lending goals and CD lending goals), or combined categories ( e.g., a CD lending and qualified investment combined goal). In general, smaller, less complex community banks would consider elective goals with lower performance levels, while larger, more complex community banks would consider specifying elective goals with higher performance levels. This guidance aligns with the OCC's different performance expectations based on its experience evaluating banks under the otherwise applicable performance tests and standards and in reviewing and approving strategic plans. Nonetheless, because performance context is unique to a bank, there may be exceptions from these general principles.

The simplified strategic plan process would help reduce burden for community banks by providing greater insight into the considerations that have informed the OCC's approval of strategic plans. The proposed guidance does not establish any new requirements for community banks. Instead, as discussed above, the proposed guidance would provide community banks with transparency into the types of measurable goals that the OCC has generally found to reflect “Satisfactory” or “Outstanding” performance and otherwise clarify and simplify the process for electing the strategic plan option. This transparency would facilitate a community bank's consideration of its performance context and determination of appropriate measurable goals as is currently required for any bank electing the strategic plan option. As also noted above, this proposed guidance would not establish safe harbors guaranteeing approval of a proposed strategic plan; however, provided that a community bank adequately supported the inclusion of particular elective goals in its proposed strategic plan based on its circumstances and complied with the other requirements of the strategic plan provision, the OCC would be likely to approve the bank's proposed strategic plan under the simplified strategic plan process.

Questions:

1. Does providing elective goals that a community bank may consider using as measurable goals in a proposed strategic plan provide clarity to community banks and make developing a proposed strategic plan less burdensome?

2. Are there other factors that the OCC should consider in determining appropriate elective goals?

3. For community banks that use the simplified strategic plan process, instead of setting performance levels for the elective goals based on the OCC's existing performance expectations, should the OCC consider increasing or decreasing its expected level of performance? If so, how and why should the OCC revise community bank performance expectations in the elective goals?

As discussed above, the simplified strategic plan process would also include the option for a community bank to develop bank-specific, custom goals instead of, or in addition to, using the elective goals. Under the current strategic plan process, all measurable goals are custom goals because the OCC currently does not provide examples of what may constitute reasonable measurable goals. The simplified strategic plan process would include the option for community banks to develop custom goals to maintain the flexibility intended by the strategic plan option.

A community bank may choose to develop a custom goal due to unique performance context factors or specific community needs that the bank wishes to address. This may be particularly appropriate for the performance categories with a more limited number of elective goals that apply to a narrow set of circumstances, as discussed below. Further, it may be appropriate for a bank to develop a custom goal that is similar to an elective goal but changes it in a meaningful way. For example, if an elective goal uses total assets as the performance measure, a community bank with cyclical assets instead may choose to specify a custom goal using average assets as its performance measure. A community bank would specify a custom goal along with any relevant performance context in its strategic plan.

Question:

4. Does providing guidance on custom goals appropriately simplify the strategic plan development process for community banks? Does this guidance appropriately balance the need for greater clarity on the types of goals that the OCC would likely approve for community banks with the flexibility intended by the strategic plan option to allow banks to tailor their CRA examinations?

A community bank may include different types of measurable goals for the three performance categories ( i.e., lending, investment, and services) in its proposed strategic plan. As noted above, the OCC based the proposed elective goals on the agency's supervisory experience and other relevant information. Under the proposed simplified strategic plan process, a community bank would determine whether certain goals were appropriate for inclusion in the bank's proposed strategic plan and when it may be appropriate to specify a custom goal. A community bank would include measurable goals for each assessment area included in its strategic plan. The number, combination, and represented performance categories for the elective goals or custom goals included in a community bank's proposed strategic plan may vary depending on assessment area needs and opportunities. The proposed elective goals for each of the performance categories discussed below are included in Appendix A.

Historically, banks have commonly included CD lending goals in their strategic plans. 60 Banks often express CD lending goals in terms of dollar amount; however, some banks have used other performance measures as the basis for a CD lending goal, such as a percentage of T1 capital or total assets allocated by deposits to each assessment area. The OCC understands that measurable goals expressed in terms of dollars provide banks with greater certainty while those expressed in terms of a percentage of T1 capital or total assets provide greater flexibility to adjust to future fluctuations in bank or economic conditions. Considering this background and the agency's supervisory experience, the OCC identified the proposed elective goals based on percentages, but the guidance also would provide options for convert those percentages into dollar amounts of CD lending.

Specifically, the OCC used a percentage of T1 capital or total assets as a starting point for the proposed CD lending elective goals. As noted above, use of these measures is consistent with approved strategic plans and the OCC's overall experience in evaluating community banks' CRA performance. In addition, use of these measures would adjust a community bank's elective goals as the value of these measures change over time, consistent with the regulatory requirement that banks specify annual interim measurable goals in multi-year strategic plans. However, an elective goal expressed as a percentage of T1 capital or total assets may not provide the level of certainty and predictability preferred by many community banks interested in the strategic plan option. Community banks would therefore have the option of converting the percentage-based elective goal into an annual dollar figure. Elective goals expressed as an annual dollar figure would be determined based on a target percentage of a bank's T1 capital or total assets as of December 31 of the previous year for (1) each year in the strategic plan term; (2) the first year of the strategic plan term and increased by 5 percent year-over-year for each subsequent year in the strategic plan term; or (3) the first year of the strategic plan term and increased by the annual change in Gross Domestic Product (GDP) as of December 31 of the previous year for each subsequent year in the strategic plan term.

A community bank would consider its circumstances to determine whether to convert a percentage-based CD lending goal into a dollar-based CD lending goal and, if applicable, the method of conversion and applicable growth rate. For example, a community bank that anticipates having stable levels of T1 capital or total assets may determine that a percentage-based CD lending goal offers sufficient certainty without the potential to inadvertently increase the bank's annual goals more than what is reasonable based on the bank's capacity and constraints. If that community bank nonetheless prefers the certainty of dollar-based goals, it could specify a dollar-based elective goal that would convert the percent of T1 capital or total assets to a dollar amount based on the value of the respective measure as of December 31 of the prior calendar year for each year in the strategic plan term. In contrast, a community bank that anticipates rapid asset growth may elect to use a dollar-based elective goal with a five percent annual growth rate, or a growth rate based on the annual change in GDP, as described above. Alternatively, a community bank could develop a custom goal that scales the annual dollar-based goal based on an alternate methodology or uses a different performance measure as the basis for the goal. For example, a community bank that is uncertain of its potential future growth could develop a custom goal requiring the bank to meet the lesser of a dollar based goal based on percent of T1 capital as of December 31 of the previous year for the first year in the strategic plan term and a five percent annual growth rate or the actual percent of T1 capital as of December 31 of the strategic plan year.

The OCC is also proposing CD lending elective goals with a range of performance levels to account for the differences in community banks' circumstances and the ways a community bank may incorporate CD lending elective goals into proposed strategic plans. As noted above, under the OCC's current organizational structure, community banks are those with up to $30 billion in assets. 61 Therefore, outside of the strategic plan option, community banks would be evaluated under each of the otherwise applicable performance tests and standards depending on their size or type. For example, the OCC generally would evaluate a small community bank based only on its retail lending activities. This reflects community banks' varying circumstances, including that certain community banks will have greater capacity, and therefore, generally higher performance expectations than other community banks. Varying performance expectations based on banks' circumstances is consistent the OCC's experience with approved strategic plans and evaluation under the otherwise applicable performance tests and standards. Some approved strategic plans focus on CD lending, while others focus on different or additional performance categories. For the reasons discussed above, the OCC specified several performance levels for the CD lending elective goals. A community bank would determine the performance level for its elective goals based on its performance context and the number and combination of measurable goals included in an assessment area and overall.

The OCC also considered that certain community banks, particularly banks that operate through online platforms with limited branch networks, have elected the strategic plan option to address challenges with being evaluated pursuant to the otherwise applicable performance tests and standards. For some of these banks, limited opportunities and high competition can make it difficult to identify a sufficient level of CD activities that benefit or serve the bank's assessment area. To address this issue, the proposed CD lending elective goals would include goals with performance measures for an assessment area coupled with performance measures for the broader statewide or regional area that includes the assessment area. 62 The assessment area performance levels proposed for these CD lending elective goals would be lower than for the assessment area-only CD lending elective goals.

Questions:

5. Are there additional elective goals for CD lending and qualified investment that the OCC should consider including in the simplified strategic plan process? For example, should the OCC consider developing deposit-based goals?

6. Are the proposed CD lending elective goals appropriately calibrated for community banks? Do they provide appropriate optionality for community banks with different sizes and business models while providing clarity and simplifying a community bank's strategic plan development?

7. Should the OCC consider adding to the elective goals other methods of scaling the goals on an annual basis, such as a bank's average annual asset growth?

8. Is it appropriate to increase the performance expectations for community banks' annual interim measurable goals over time? Are there circumstances under which goals should not increase?

In the OCC's experience, in addition to CD lending goals, some banks also include retail lending goals when addressing the lending performance category in their strategic plans. 63 The OCC considered its supervisory experience and assessed options for providing retail lending elective goals with identified measures similar to the percentages of T1 capital and total assets identified for the proposed CD lending goals. Based on these considerations, the OCC is proposing to include three types of retail lending elective goals. These elective goals would be a measure of a bank's loan portfolio comprised of originations or purchases to LMI borrowers or located in LMI geographies in a particular product line as compared to total originations or purchases based on (1) a percentage; (2) an aggregate dollar amount of loans; or (3) a specified number of loans. The OCC determined, however, that there is significant variation in banks' retail lending activities due to bank and community specific performance context factors. This variation presents challenges for identifying specific performance levels that are generally reflective of “Satisfactory” or “Outstanding” performance for community banks across assessment areas. Therefore, the proposed retail lending elective goals would be template-style goals with a variable that the community bank would populate. A community bank would determine whether to include one of the template-style retail lending elective goals and how to populate the variable included in the goal based on the bank's performance context.

In determining an appropriate performance level for a retail lending elective goal, a community bank could consider how the OCC assesses retail lending activities under the otherwise applicable performance tests and standards. For example, the OCC generally considers performance for the retail lending borrower and geographic distributions “Satisfactory” when a bank's percentage of lending for a particular product type is near to or below, but not well below, the relevant comparator for the assessment area and “Outstanding” when the percentage of lending equals or exceeds the demographic or peer comparator. However, the OCC determined that it may be challenging for a community bank to prospectively determine reasonable “Satisfactory” or “Outstanding” performance levels for retail lending performance measures ( i.e., percentage of an applicable retail loan portfolio, dollar amount of retail lending, or number of retail loans for a particular loan product) during the development of a strategic plan because the OCC does not assess a bank's performance in relation to relevant comparators until the OCC conducts its CRA examination. During a CRA examination, the OCC's assessment of a bank's retail lending activities using the relevant comparators would consider performance context. In addition, some of the comparators that the OCC considers in assessing retail lending performance, such as the peer comparators, are lagging and a community bank would not know the applicable comparator value during the development of a proposed strategic plan. For these reasons, the OCC determined that it may be challenging for a community bank to try to use the OCC's CRA examination methods to determine reasonable values for the performance level variable in a retail lending elective goal. Therefore, a community bank could populate the performance level variable in a retail lending elective goal based on the bank's prior retail lending performance which would have considered the relevant comparators. For a community bank that does not have a recent CRA examination that considered retail lending activities, the bank could determine an appropriate performance level based on the performance of peer banks.

Generally, banks have specified product-specific retail lending goals. A community bank could choose to focus its retail lending goals on a primary product line or could specify measurable goals for multiple product lines. Therefore, the elective goals allow community banks to specify the applicable retail lending product or products as part of the performance measures.

In addition to the retail lending elective goals, a community bank could specify one or more retail lending custom goals. A community bank considering a retail lending custom goal could base the goal on the performance criteria in the otherwise applicable performance tests and standards, such as lending activity or loan-to-deposit ratio. In the OCC's supervisory experience, however, if a community bank were to specify a retail lending custom goal based on these performance criteria that goal generally would be insufficient on its own. Instead, this type of retail lending custom goal generally would be included to support other measurable goals. For example, a small community bank that develops a proposed strategic plan focused on retail lending may choose to include a retail lending custom goal focused on lending activity to demonstrate that it is lending commensurate with its capacity and provide context for retail lending elective goals focused on lending to LMI individuals or geographies in a particular product line.

Custom goals could also be related to innovative, flexible, or responsive lending products, such as a goal for new loan originations in products tailored to meet the needs of LMI borrowers ( e.g., X number loans originated with down-payment assistance for first-time homebuyers, with an annual increase using the current number of loan originations as the starting point). Lastly, a custom retail lending goal could be designed to address the unique needs of a bank's assessment area, such as a retail lending goal targeting borrowers in distressed or underserved non-metropolitan middle-income geographies in an assessment area with no or few LMI census tracts or a goal targeting middle-income borrowers in high-cost areas.

For smaller retail community banks, a proposed strategic plan focused solely on one or more retail lending elective goals or custom goals may be sufficient for evaluating the bank's CRA performance ( i.e., the community bank would not specify measurable goals in other performance categories). Specifically, a strategic plan focused on retail lending activities would be consistent with the small bank performance standards. In this instance, the community bank would include in this proposed strategic plan one or more retail lending elective goals or custom goals for each assessment area covered by the proposed strategic plan. In addition, the community bank would address in its proposed strategic plan the performance categories not included in the proposed strategic plan by explaining the performance context that supports the narrower focus.

Larger community banks could consider including one or more retail lending elective goals, or retail lending custom goals, along with measurable goals in other performance categories, as appropriate, based on the banks' circumstances. The OCC's supervisory experience indicates that when larger community banks that offer mortgage, small business, small farm, or consumer lending product lines specify retail lending goals, they do so alongside goals focused on other types of CRA-qualifying activities. Moreover, given the flexibility offered by the strategic plan option, a community bank would not be required to establish retail lending measurable goals if a different focus was more appropriate based on the bank's performance context.

Questions:

9. Should borrower and geographic retail lending elective goals include an undefined variable that a community bank would populate based on its performance context, as proposed, or should the OCC include the unadjusted near to/below percentage as a default starting point that banks could adjust based on performance context?

10. Are there any other retail lending goals that the OCC should include as elective goals?

In addition to the CD lending measurable goals discussed above, in the OCC's experience, proposed strategic plans usually include measurable goals for qualified investments. As with the lending performance category, the OCC considered measurable goals for the investment performance category included in approved strategic plans and the otherwise applicable performance tests and standards to inform its determination of the qualified investment elective goals in this proposal. Based on this review, the OCC is proposing qualified investment elective goals that use the same performance measures and growth adjustment methods as the OCC used for the CD lending elective goals. However, the OCC's review of approved strategic plans and its experience in evaluating community banks' CRA performance resulted in the OCC proposing performance levels for certain qualified investment elective goals that are lower than the proposed CD lending elective goals due, for example, to frequent challenges smaller community banks experience competing for qualified investments.

During its review of approved strategic plans, the OCC also recognized that banks often use the flexibility provided by the strategic plan option to specify CD lending and qualified investment combined goals. These combined goals help banks manage their CRA programs by allowing the banks to determine what types of CRA-qualifying activities to engage in based on opportunities available during the strategic plan term. This flexibility may be particularly useful for banks in assessment areas with high competition or limited opportunities. As such, the elective goals include combined goals for CD lending and qualified investments.

The OCC also recognized that due to business strategy or market constraints, among other factors, certain community banks may want to focus on highly impactful activities, even if those activities have a lower relative dollar value. In evaluating banks' CRA performance, the responsiveness of a bank's CD activities is an important consideration. 64 For that reason, the proposed elective goals also include goals that would have lower overall performance levels provided that 50 percent of the activity would be allocated to high impact activities, such as donations or complex or innovative investments.

Question:

11. Should the OCC consider including an elective goal based on the percentage of qualified investments that are highly impactful, such as grants or donations?

12. Are the proposed qualified investment elective goals and combined elective goals appropriately calibrated for community banks? Do they provide appropriate optionality for community banks with different sizes and business models while providing clarity and simplifying a community bank's strategic plan development?

The third performance category that banks may specify measurable goals for in their strategic plans is services. The OCC considered the types of services-related measurable goals included in approved strategic plans and the criteria the OCC has used for evaluating retail banking and CD services under the otherwise applicable performance tests and standards, along with the guidance on CD service activities in the Q&As.

Based on this information, the OCC determined that the number of CD services hours per full-time employee per year is a common performance measure used for assessing banks' CD services performance. As such, the OCC included in the simplified strategic plan process a proposed elective goal based on this performance measure. The OCC notes that these proposed services elective goals are most appropriate for banks operating in assessment areas using a branch-based model. If a community bank's assessment area has a disproportionately large or small number of full-time employees, these proposed elective goals may not be appropriate for the bank. In those circumstances, a community bank could consider developing a CD services custom goal. For example, if a community bank has a large back-office facility in an assessment area that employs a significant number of full-time employees conducting functions that other banks may outsource, the community bank may consider a custom CD services goal based on hours per management employee. A CD services custom goal of this type would likely have a higher performance level than per employee elective goals. Alternatively, a bank with few employees may develop a CD services custom goal based, for example, on the number of beneficiaries of its CD services, as opposed to the hours per employee providing the services.

In addition to goals for CD services measured by volunteer hours, banks have included other services goals based on the number of new accounts opened that are tailored to the needs of LMI individuals. A bank could develop a services custom goal based on one of these activities. For guidance on the types of service activities that a community bank could use as the basis for a services custom goal, banks could consider the services listed in Q&A § __.26(c)(3)—1. These include (l) low-cost deposit accounts; (2) electronic benefit transfer accounts and point of sale terminal systems; (3) individual development accounts; (4) free or low-cost government, payroll, or other check cashing services; and (5) reasonably priced international remittance services. A bank's custom goals for these types of activities could account for demographic factors and the bank's current provision of the service. 65

Question:

13. Should the OCC include other elective goals for services based on alternate measures in the simplified strategic plan process? If so, how should the OCC identify “Satisfactory” or “Outstanding” performance for those goals?

The OCC assesses the performance of a bank operating under an approved strategic plan to determine if it has met the measurable goals in its strategic plan. The CRA regulation provides that the OCC will rate a bank “Satisfactory” if it substantially achieves its plan goals for a “Satisfactory” rating. 66 The CRA regulation further provides that the OCC will rate a bank “Outstanding” if it exceeds its plan goals for a “Satisfactory” rating and substantially achieves its plan goals for an “Outstanding” rating. 67 A bank that does not substantially meet its “Satisfactory” goals in an assessment area would be rated “Needs to Improve” or “Substantial Noncompliance,” depending on the extent to which it falls short of its plan goals, unless the bank elected to be evaluated under the otherwise applicable performance tests and standards. 68

In general, a bank would be considered to have substantially met its measurable goals if the bank meets most of the goals specified in its strategic plan in most of its assessment areas, considering (1) the extent to which the bank did not meet individual goals; (2) the importance of those goals to the plan as a whole; and (3) any performance context factors explaining why a particular goal was not met. The OCC generally considers a “Needs to Improve” rating for a bank that substantially meets some measurable goals in most assessment areas. A community bank that more significantly underperforms its measurable goals or fails to substantially meet its goals two evaluation periods in a row may receive a rating of “Substantial Noncompliance.” As provided in the CRA regulation, a community bank could also elect evaluation under the otherwise applicable performance tests and standards if its “Satisfactory” goals were not substantially met. 69 If this substitute election is not made in the community bank's strategic plan, the OCC would evaluate the bank only under the measurable goals provided in the strategic plan.

For community banks with multiple measurable goals or assessment areas, the OCC is also considering including in the Simplified Strategic Plan Form fields that would allow a community bank to specify how its performance with respect to its measurable goals and in its assessment areas would be weighted to determine if the bank has substantially met or exceeded the “Satisfactory” goals in its strategic plan. This weighting could be based, for example, on the bank's deposit market share, lending market share, or a combination of the two. Weighting could also account for assessment area needs and opportunities. Providing this option would increase predictability for community banks by establishing in the plan how the OCC would determine if a bank substantially met is measurable goals. Further, it would be consistent with certain previously approved strategic plans.

Question:

14. Should the OCC include the option for banks to specify a methodology for weighting measurable goals included in the proposed strategic plan? If so, should the Simplified Strategic Plan Form, discussed below, provide options for weighting methodologies? What methodologies should the OCC consider?

In addition to providing clearer guidance on the development of a proposed strategic plan, the simplified strategic plan process would provide community banks with a streamlined process for drafting proposed strategic plans and submitting those plans to the OCC for approval. This proposed simplified strategic plan process would reduce the complexity involved in developing a proposed strategic plan by improving transparency and leveraging tools and technology, as appropriate.

First, the OCC would implement process improvements to the strategic plan consultation process to formalize its existing practice of engaging in more detailed strategic plan consultations. Next, the OCC would provide community banks with the Simplified Strategic Plan Form to clarify the information a community bank must include in its proposed strategic plan to comply with the CRA regulation. 70 As a result, the simplified strategic plan process would help limit the instances in which a community bank unnecessarily expends resources by gathering and including information in a proposed strategic plan that the OCC does not need for purposes of evaluating the merits of the plan. The combination of improved written guidance, tools, and procedures for developing and requesting approval of a proposed strategic plan would result in a simplified process requiring fewer bank resources during plan development, and a more predictable evaluation framework once the OCC approves a community bank's proposed strategic plan.

As provided in the current guidance, including the Q&As, a community bank may consult the OCC during the development of a proposed strategic plan. The OCC has engaged in strategic plan consultations since first introducing the strategic plan option in the 1995 CRA Regulation; however, the current consultation process envisions a high-level interaction where the OCC would only provide guidance on the procedures and information necessary to ensure a complete submission. 71 The current guidance on strategic plan consultations states that the OCC does not provide guidance on the adequacy of the proposed strategic plan or the merits of the measurable goals. 72

As discussed above, the OCC has learned over time that the high-level consultation process envisioned in the guidance does not provide many banks with sufficient direction to develop a proposed strategic plan that meets the requirements of the regulation without undue burden. For this reason, and at banks' request, the OCC has in practice reviewed draft strategic plans as part of this consultation, including with respect to proposed measurable goals.

Although optional, in the OCC's experience, the consultation process is one factor that has contributed significantly to the protracted timeframe and burden associated with developing and obtaining approval of a strategic plan, and to banks deciding not to pursue the strategic plan option in the first instance. To address these deficiencies, the OCC would improve the consultation process by clarifying that the agency would provide a community bank with timely, initial feedback on the adequacy of its proposed strategic plan and the merits of the proposed measurable goals considering the bank's performance context. This feedback would not constitute OCC approval of a strategic plan. The OCC would approve a proposed strategic plan submitted using the simplified strategic plan process after considering the regulatory criteria for evaluating a proposed strategic plan that has complied with the required public comment process.

Under the simplified strategic plan process, the OCC's consultation process would include providing guidance to a community bank on the measurable goals it intends to specify in its proposed strategic plan. As discussed above, however, the elective goals are not safe harbors and community banks would still need to consider the appropriate number, combination, represented performance categories, and appropriate performance levels of elective goals, and custom goals, for each assessment area included in the strategic plan and based on the bank's performance context. The purpose of the consultation would be to help the community bank understand the requirements of the regulation, what information is responsive to those regulatory requirements, how to consider performance context in selecting and supporting elective goals or developing custom goals, and how the OCC applies the regulation's criteria for evaluating a strategic plan once a plan is submitted for approval following the public comment process.

In the OCC's experience, the consultation process is an informal opportunity for a community bank to engage with the OCC; the extent and length of a consultation is dictated by the bank and is only necessary if it benefits the bank. The OCC expects that the more detailed written guidance provided as part of the proposed simplified strategic plan process, including clarifications related to the required content of a proposed strategic plan, along with a more streamlined process for drafting and submitting the plan to the OCC, will focus and shorten these strategic plan consultations. For example, a community bank that primarily selects elective goals would likely engage in a relatively short consultation process. However, a community bank that specifies more custom goals may need a more extensive consultation to help determine if the performance measures and performance levels in the custom goals are appropriate and fully supported.

The proposed simplified strategic plan process would further reduce burden by introducing the Simplified Strategic Plan Form, which would remove some of the subjectivity associated with the development of a strategic plan. Under the current process, banks that wish to use the strategic plan option need to draft fully custom strategic plans with little guidance on the necessary content, reasonableness of measurable goals, design, or level of detail necessary for a complete proposed plan.

The OCC understands from comments provided in other contexts  73 that the considerable resources currently required to develop a proposed strategic plan have deterred banks from electing the strategic plan option. The OCC anticipates that changing the method community banks may use to submit proposed strategic plans to the OCC would substantially improve the quality of proposed strategic plans while diminishing the need to revise these plans to ensure completeness. In particular, the Simplified Strategic Plan Form would contain fields for all of the information required in a strategic plan under the CRA regulation, including measurable goals, relevant performance context, public participation documentation, proposed effective date, substitute election of evaluation under the otherwise applicable performance tests and standards, and assessment areas covered by the plan. Presuming a bank completes all fields that address CRA regulatory requirements with responsive information, the OCC would expect that submitted proposed strategic plans would be complete. In limited circumstances, the OCC may require a community bank to submit additional information not required by the Simplified Strategic Plan Form that the OCC deems necessary to make a determination on the strategic plan.

The OCC is also considering using technology, where possible, to simplify the strategic plan approval request process. Specifically, the OCC is considering options for community banks to submit a completed Simplified Strategic Plan Form electronically via email or through Banknet. If the OCC decides to utilize Banknet for submission of the Simplified Strategic Plan Form, the OCC would provide community banks that do not have Banknet with the opportunity to submit the form by email using the subject line “CRA Simplified Strategic Plan Form.”

The OCC is also considering different potential formats for developing the Simplified Strategic Plan Form. The OCC is considering the following options: (1) a fillable Portable Document Format (PDF) and (2) an interactive web-based form. In considering the merits of these options, the OCC is weighing the tradeoff between providing more immediate but less sophisticated improvements through the PDF option compared with the more sophisticated and dynamic web-based option, which would require a longer implementation time horizon. While the OCC could implement the less sophisticated PDF option quickly, converting information in a fillable PDF form into a proposed strategic plan would require a manual process on the part of the OCC or the community bank. In contrast, the more sophisticated web-based option could leverage technology to convert the contents of the form into a proposed strategic plan. To balance these considerations, the OCC could take a combined approach and implement the simplified strategic plan process through the less sophisticated PDF option first and later replace it with the more sophisticated and agile web-based option.

The OCC is also considering ways to streamline the development of subsequent strategic plans once the term of a community bank's strategic plan ends. One option would be to allow a bank that previously received approval for a strategic plan using the simplified strategic plan process to prepopulate the Simplified Strategic Plan Form with the contents of its prior strategic plan and then modify the prepopulated information, as appropriate. The viability of this option would depend on the format used for implementing the Simplified Strategic Plan Form.

Included in appendix B to this SUPPLEMENTARY INFORMATION is an outline of the potential fields that would be included in the Simplified Strategic Plan Form.

Questions:

15. Does the outline of the potential fields for the Simplified Strategic Plan Form appropriately reflect the components of a proposed strategic plan? Are any additions or modifications necessary?

16. Should the OCC prioritize providing more immediate or more sophisticated implementation?

17. If the OCC implements the guidance using a fillable PDF form, should the OCC also develop a template for converting the information in the form into a strategic plan?

18. Would prepopulating the Simplified Strategic Plan Form with the information contained in previously approved plans help to further simplify the strategic plan process in the future?

After completing both the Simplified Strategic Plan Form and the required public engagement, a community bank would submit its proposed strategic plan to the OCC for approval. Upon receipt of a Simplified Strategic Plan Form, the OCC would review the plan, and if complete, send an acknowledgment of receipt to the bank. The OCC would deem a request complete if the bank has populated all required fields of the Simplified Strategic Plan Form with responsive information, including any necessary supporting documentation. 74 For incomplete proposed strategic plans, the OCC would request that the community bank complete the necessary fields on the Simplified Strategic Plan Form and resubmit the form to the OCC. A community bank should expeditiously communicate material changes to information initially furnished in the Simplified Strategic Plan Form to the OCC during the processing of a community bank's request for approval. The OCC would determine whether to approve a proposed strategic plan by considering the information provided by the community bank in the Simplified Strategic Plan Form. This evaluation would consider whether to approve the elective goals or custom goals, as applicable, based on the criteria provided in the CRA regulation. As necessary, the OCC may consider information regarding a community bank's performance context that was not provided by the bank in the Simplified Strategic Plan Form.

As noted above, in addition to measurable goals, the strategic plan option includes certain other regulatory requirements. These include requirements related to: (1) the proposed effective date; (2) data reporting; (3) public engagement; (4) substitute election of evaluation under the otherwise applicable performance tests and standards; and (5) plan amendment. The simplified strategic plan process would incorporate these requirements and any other necessary information into the Simplified Strategic Plan Form. As discussed above, the OCC is also considering providing fields in the Simplified Strategic Plan Form that would allow the bank to specify how performance would be weighted in and across its assessment areas to determine if the bank has substantially met or exceeded its “Satisfactory” or “Outstanding” goals, as applicable.

The simplified strategic plan process would provide guidance on the regulatory requirements that is generally consistent with the existing guidelines in OCC Bulletin 2019-39, with one notable difference. Specifically, the simplified strategic plan process would modify the information required to document a community bank's compliance with the CRA regulation's public participation requirements to require a certification of compliance rather than documentation of newspaper publication. In addition, the OCC has recognized during its past review and approval of strategic plans that there may be instances where it would be reasonable to waive certain regulatory requirements on a case-by-case basis.

The OCC has determined that, in certain instances, it may be appropriate to waive the strategic plan provision's proposed effective date requirement or certain data requirements based on a community bank's particular facts and circumstances. For the remaining regulatory requirements, the OCC has determined that waiver generally would not be inappropriate.

Under the simplified strategic plan process, on a case-by-case basis, the OCC would consider waiving the requirement that a community bank submit its proposed strategic plan to the OCC for approval at least three months prior to the proposed effective date  75 if a strategic plan has been deemed complete and the OCC would have sufficient time to review and opine on the plan. Based on the OCC's experience, it may be appropriate to waive the proposed effective date requirement if it would allow the bank to: (1) align the effective date of its strategic plan with the beginning of a performance year ( i.e., a January 1st effective date); (2) avoid a gap between approved strategic plan terms; or (3) address other circumstances deemed relevant by the OCC. The OCC has also determined that it may be appropriate to waive certain of the CRA regulation's data reporting requirements  76 on a case-by-case basis if those data are not necessary for evaluating the measurable goals included in a community bank's proposed strategic plan. For example, the OCC may consider waiving the small business and small farm data collection and reporting requirements if a community bank has not included a retail lending goal in its strategic plan. The OCC notes, however, that it generally would be inappropriate for a community bank to develop a strategic plan that does not include measurable goals for lending products that are integral to the bank's business strategy in order to seek waiver of the associated data requirements.

The OCC believes that waiver may be appropriate, on a case-by-case basis, when: (1) a regulatory requirement is for the benefit of the OCC ( e.g., the three month lead time for the proposed effective date provides time for the OCC to review a proposed strategic plan) and (2) waiving the requirement would have minimal impact on the OCC's ability to evaluate the bank pursuant to the strategic plan, if approved. For example, a waiver would have minimal impact on the OCC's ability to evaluate a bank pursuant to a proposed strategic plan if the data that the bank was exempted from collecting and reporting would not be considered in evaluating the bank's measurable goals or the bank's performance under the otherwise applicable performance tests and standards for a bank that chose the substitute election. If the OCC were to decide to grant a waiver, the OCC would communicate that decision to the community bank in writing. The OCC believes it is appropriate to consider case-specific waivers to minimize the impact of regulatory requirements that impose unnecessary burden on community banks.

Under the simplified strategic plan process, community banks would continue to be required to comply with the public participation requirements. 77 In determining whether to approve a proposed strategic plan, the OCC will consider any public comments and how the community bank addressed those comments. Obtaining information from the public when developing a strategic plan helps to provide a community bank with information related to the lending, investment, and service needs of its community and the opportunities available to meet those needs.

Compliance with the strategic plan provision's public participation requirements is important to the OCC's decision on a strategic plan. To facilitate this public engagement, the Simplified Strategic Plan Form would be completed in two stages. The first stage would generate a draft plan for use in soliciting public comment in the required newspapers of general circulation. At the end of the comment period, the community bank would complete the second stage of the Simplified Strategic Plan Form by revising the plan as appropriate and completing the certification of compliance with the public comment process, which would include providing a list of the newspapers that published the plan for comment and the dates of publication. The community bank would then submit the proposed strategic plan to the OCC for approval.

In evaluating a community bank's proposed strategic plan, the OCC would apply the evaluation criteria provided in the regulation. 78 The strategic plan provision requires the OCC to act on a plan within 60 days of receiving a complete plan or else the plan is deemed approved. 79 When possible, the OCC would aim to act within 45 days of receiving a complete strategic plan, provided there are at least 45 days before the plan's proposed effective date.

The guidance and process changes included in the simplified strategic plan process would supplement the OCC's existing guidance on the strategic plan process contained in OCC Bulletin 2019-39, as applicable. Community banks may continue to develop strategic plans using the guidance in OCC Bulletin 2019-39 or may elect to use the proposed simplified strategic plan process.

The OCC invites comment on all aspects of the proposed simplified strategic plan process for community banks. In addition, the OCC specifically request commenters' views on the questions included in this SUPPLEMENTARY INFORMATION .

This supplemental proposed guidance (proposed guidance) has been reviewed for compliance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ). In accordance with the PRA, the OCC may not conduct or sponsor, and an organization is not required to respond to, an information collection unless the information collection displays a currently valid Office of Management and Budget (OMB) control number. The OCC has reviewed the proposed guidance and has determined that certain aspects of the proposed guidance constitute a collection of information and is therefore revising its information collection titled Community Reinvestment Act. The OMB control number for the information collection is 1557-0357. The OCC is proposing to extend the information collection for three years, with revision.

Description: Under the current CRA regulation, any bank may elect to have the OCC assess its CRA performance under an approved strategic plan. The strategic plan provision requires a bank seeking to use the strategic plan option to develop its plan in consultation with members of the public, publish the plan for public comment, and include in the plan annual interim measurable goals. The strategic plan provision further provides the regulatory requirements that a bank must comply with when electing the strategic plan option and the OCC's criteria for evaluating a strategic plan.

The proposed guidance would make the strategic plan option more accessible and less burdensome for community banks to implement and does not impose any new requirements on community banks. The proposed simplified strategic plan process would serve as an optional resource for community banks that clarifies the requirements of the strategic plan option and streamlines the development and submission of a proposed strategic plan.

The reporting requirements in the proposed guidance are as follows:

Under the proposed guidance, the OCC would provide community banks with a Simplified Strategic Plan Form to clarify the information that a community bank must include in its proposed strategic plan in order to comply with the CRA regulation. The Simplified Strategic Plan Form would include fields for all information required for a strategic plan under the CRA regulation, including measurable goals, relevant performance context, public participation documentation, proposed effective date, substitute election of evaluation under the otherwise applicable performance tests and standards, and assessment areas covered by the plan.

Presuming a bank completes all fields that address CRA regulatory requirements with responsive information, the OCC expects that submitted proposed strategic plans would be complete. In limited circumstances, the OCC may require a community bank to submit additional information not required by the Simplified Strategic Plan Form to disposition the merits of the strategic plan.

The current CRA regulation provides that a bank's strategic plan must specify annual interim measurable goals that constitute “Satisfactory” performance for each assessment area covered by the plan. These goals must address all three performance categories and, if a bank is not designated as a wholesale or limited purpose bank, must emphasize lending and lending-related activities. The proposed guidance provides that a community bank should include in its proposed strategic plan lending, investment, and services measurable goals, as appropriate. Under the proposed guidance a community bank would also have the option to emphasize qualified investments or service activities, if appropriate. To determine the appropriate performance categories to specify measurable goals for and which to emphasize in its proposed strategic plan, a community bank would consider the credit needs of its community, public comments, and its performance context, particularly the bank's capacity and constraints, business strategy, and product offerings.

Community banks' proposed strategic plans would also need to provide performance context addressing performance categories for which the banks did not specify a measurable goal. Using the simplified strategic plan process, a community bank would specify “Satisfactory” elective goals or custom goals for each performance category, as appropriate, in its proposed strategic plan for each year and assessment area included in the plan. In addition to “Satisfactory” measurable goals, a community bank's proposed strategic plan may also specify measurable goals that constitute an “Outstanding” level of performance. Community banks also have the option to specify “Outstanding” custom goals. The proposed guidance offers that a community bank should consider community needs and its performance context ( e.g., its capacity and constraints, business strategy, and product offerings) when specifying elective or custom goals in its proposed strategic plan.

A bank may request approval of an amendment to an approved strategic plan if there is a material change in circumstances ( e.g., a downturn in the economic environment, a shift in the bank's business strategy, or entrance into or exit from one or more assessment areas). Public participation is required in the development of an amendment to a previously approved strategic plan. To request approval by the OCC of a strategic plan amendment, a bank should submit the amendment portion of the Simplified Strategic Plan Form.

Type of Review: Regular.

Affected Public: Businesses or other for-profit.

Respondents: National banks, Federal savings associations, Federal branches and agencies.

Comments are invited on:

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

(b) The accuracy of the OCC's estimate of the burden of the collection of information;

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

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

(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

The Office of the Comptroller of the Currency (OCC) is issuing this guidance to inform national banks, Federal savings associations, and Federal branches of foreign banking organizations (collectively, banks) about supplemental guidance applicable to community banks  80 that are interested in electing to have the OCC assess their Community Reinvestment Act (CRA) performance under a strategic plan (strategic plan option). 81 Under the CRA regulation, any bank may elect to have the OCC assess its CRA performance under an approved strategic plan. The strategic plan option enables a bank to tailor its CRA examination based on the needs of its community and its ability to help address those needs based on its capacity and constraints, product offerings, and business strategy. The CRA regulation's strategic plan provision requires a bank seeking to use the strategic plan option to develop its plan in consultation with members of the public, publish the plan for public comment, and include in the plan annual interim measurable goals. The strategic plan provision provides the: (1) regulatory requirements that a bank must comply with when electing the strategic plan option and (2) OCC's criteria for evaluating a strategic plan.

This guidance supplements the guidelines for requesting approval of a strategic plan included in OCC Bulletin 2019-39, “Community Reinvestment Act: Guidelines for Requesting Approval of a Strategic Plan.” This supplemental guidance helps clarify the OCC's implementation of the CRA regulation's strategic plan provision for community banks by outlining a simplified strategic plan process and providing additional guidance on the development of a proposed strategic plan for those banks. This supplemental guidance includes:

A Simplified Strategic Plan Form used to provide the OCC with

Annual interim measurable goals for each assessment area included in the proposed strategic plan; and

Other information related to the bank's proposed strategic plan.

The OCC's simplified strategic plan process and additional strategic plan guidance for community banks.

This supplemental guidance is designed to make the strategic plan option more accessible to and less burdensome for community banks. This guidance does not impose any new requirements on community banks. The simplified strategic plan process is an optional resource for community banks that clarifies the requirements of the strategic plan option and streamlines the development and submission of a proposed strategic plan. Any bank interested in the strategic plan option may continue to follow the guidelines provided in OCC Bulletin 2019-39.

The CRA regulation provides that a bank's strategic plan must specify annual interim measurable goals that constitute “Satisfactory” performance for each assessment area covered by the plan. 82 Generally, these goals must address all three performance categories and, unless the bank has been designated as a wholesale or limited purpose bank, must emphasize lending and lending-related activities. 83 However, the CRA regulation also states that a different emphasis, including a focus on one or more performance categories, may be appropriate if responsive to the characteristics and credit needs of a bank's assessment areas, considering public comment and the bank's capacity and constraints, product offerings, and business strategy. 84

Consistent with the CRA regulation, a community bank should include in its proposed strategic plan lending, investment, and services measurable goals, as appropriate. A bank has great flexibility to fashion its proposed strategic plan within those parameters and would not be required to specify measurable goals in all three performance categories. Although the CRA regulation provides that a bank generally should emphasize lending and lending-related activities, a community bank would have the option to emphasize qualified investments or service activities, if appropriate. A bank would consider the credit needs of its community, public comments, and its performance context—in particular the bank's capacity and constraints, business strategy, and product offerings—to determine the appropriate performance categories for which to specify measurable goals and emphasize in its proposed strategic plan. 85 The bank would also provide in its proposed strategic plan performance context addressing performance categories for which the bank did not specify a measurable goal.

The OCC has determined that the “Satisfactory” measurable goals  86 provided in the Simplified Strategic Plan Form ( hereinafter, elective goals) generally are consistent with the OCC's supervisory expectations for what constitutes a “Satisfactory” performance level for community banks, as discussed below. In addition to the elective goals, community banks also may request approval for “Satisfactory” custom goals. In developing a proposed strategic plan using the simplified strategic plan process, for each year and assessment area included in the plan, a community bank would specify “Satisfactory” elective goals or custom goals for each performance category, as appropriate.

In addition to “Satisfactory” measurable goals, the CRA regulation provides that a bank's strategic plan may specify measurable goals that constitute an “Outstanding” level of performance. 87 The Simplified Strategic Plan Form also includes elective goals that generally are consistent with the OCC's supervisory expectations for what constitutes “Outstanding” performance for community banks, as discussed below. In addition, community banks have the option to specify “Outstanding” custom goals.

The OCC based the “Satisfactory” and “Outstanding” elective goals on its supervisory experience. The elective goals reflect the performance measures and related performance levels for a community bank that the OCC determined may reflect “Satisfactory” or “Outstanding” performance individually or in combination with other measurable goals, depending on the circumstances. The elective goals, however, are not safe harbors and their use would not guarantee approval of a strategic plan. 88 In specifying elective goals or custom goals in a proposed strategic plan, a community bank should consider community needs and its performance context ( e.g., its capacity and constraints, business strategy, and product offerings). 89

A community bank's performance context informs which measurable goals are appropriate for the bank overall or for an assessment area, including the number, combination, represented performance categories, and appropriate performance levels for those goals. Because the strategic plan option provides community banks with significant flexibility to tailor their CRA examination, the measurable goals will likely vary even when comparing two similarly situated banks. Based on the OCC's supervisory experience, community banks may choose different variations of goals with different performance levels to tailor their CRA examinations based on the circumstances. Therefore, the elective goals include performance measures with several options for performance levels. Community banks also have the option to specify custom goals to use in combination with, or instead of, the elective goals. The appropriate performance levels for a community bank's measurable goals would depend on the goals selected and the bank's performance context. The Simplified Strategic Plan Form, discussed below, includes guidance that provides examples of when an elective goal may be appropriate for a community bank.

For example, a community bank operating in an assessment area with extremely high competition for CD loans and qualified investments, may select an elective goal with a lower “Satisfactory” performance level for the assessment area, and a related “Satisfactory” performance level for the broader statewide or regional area that includes the assessment area. However, in an assessment area with less competition, a bank may select a higher “Satisfactory” elective goal and include consideration of CRA-qualifying activities in the broader state-wide regional area in an “Outstanding” custom goal. In another example, a smaller community bank that is unable to compete for large, complex investments may opt for an elective goal focused on a lower volume of highly impactful qualified investments, such as grants and donations. Further, it may be appropriate for a small community bank that would otherwise be evaluated solely based on the small bank lending test ( i.e., the community bank is a small bank that does not meet the definition of intermediate small bank) to specify elective goals related only to retail lending.

Under the simplified strategic plan process, community banks must comply with the public participation requirements of the CRA strategic plan provision. 90 To comply with the public participation requirements, a community bank would complete the Simplified Strategic Plan Form in two stages. A bank would complete the first stage of the form to develop a draft strategic plan for use in the public comment process. Following the public comment process, the community bank would complete the second stage of the Simplified Strategic Plan Form, which includes fields for certifying compliance with public participation requirements.

The OCC will rate a bank's CRA performance “Satisfactory” if the bank substantially achieves its “Satisfactory” plan goals. 91 In general, a community bank would be considered to have substantially met its “Satisfactory” goals if the bank meets most of its measurable goals in most of its assessment areas, considering the importance of those goals to the strategic plan as a whole, and performance context factors explain the bank's failure to meet particular goals. The OCC would rate a bank “Outstanding” if it exceeds its plan goals for a “Satisfactory” rating and substantially achieves its plan goals for an “Outstanding” rating. 92 A bank that does not substantially meet its “Satisfactory” goals in an assessment area, would be assigned a “Needs to Improve” or “Substantial Noncompliance” rating, as appropriate. 93 The OCC generally considers a “Needs to Improve” rating for a bank that substantially meets some measurable goals in most assessment areas. A community bank that under performs its measurable goals to a greater extent or fails to substantially meet its goals two evaluation periods in a row would generally receive a rating of “Substantial Noncompliance.” A community bank may designate in the Simplified Strategic Plan Form a weighting methodology that would address how the OCC would determine if the bank had substantially met its goals for a “Satisfactory” or “Outstanding” rating.

The Simplified Strategic Plan Form would also permit a community bank to elect evaluation under the otherwise applicable performance tests and standards if it fails to substantially meet its strategic plan's measurable goals for a “Satisfactory” rating. 94 If a community bank does not make this election, the OCC will evaluate the bank's CRA performance solely based on the measurable goals provided in the strategic plan.

Before a community bank submits a proposed strategic plan to the OCC for approval, bank management is encouraged to contact the bank's supervisory office to request a consultation with OCC staff. The supervisory office schedules a consultation that generally includes staff from the supervisory office and other OCC offices. The purpose of the consultation would be to help the bank understand the requirements of the regulation, what information is responsive to those regulatory requirements, how to think about performance context in selecting and supporting elective goals or developing custom goals, and how the OCC applies the CRA regulation's criteria for evaluating a strategic plan once submitted to the OCC for approval following the public comment process.

During this consultation, the OCC would provide a community bank with preliminary feedback on the adequacy of its proposed strategic plan and the merits of the proposed measurable goals considering the bank's performance context. This feedback would not constitute OCC approval of a strategic plan. The OCC would evaluate whether to approve a proposed strategic plan by considering the regulatory criteria for evaluating a strategic plan submitted to the agency for approval following the public comment process.

Upon receipt of a complete Simplified Strategic Plan Form, the OCC will send an acknowledgment of receipt to the community bank. The OCC will deem a request for approval of a strategic plan complete if the bank has provided responsive information for all the fields on the Simplified Strategic Plan Form that provide information required by the regulation and attached any necessary supporting documentation. 95 If the Simplified Strategic Plan Form is deemed incomplete, the OCC will request the bank complete necessary fields on the Simplified Strategic Plan Form and resubmit the form to the OCC. In limited circumstances, the OCC may require the bank to submit additional information that the OCC deems necessary to make a determination on the strategic plan. A community bank should expeditiously communicate material changes to information initially furnished in the Simplified Strategic Plan Form to the OCC during the processing of a community bank's request for approval. The OCC evaluates the information provided by the bank in the Simplified Strategic Plan Form to determine whether to approve the measurable goals in light of the public comments and relevant performance context ( e.g., the bank's capacity and constraints, business strategy, and product offerings). The OCC considers, as necessary, other information regarding the bank's performance context in addition to the public comments and information submitted by the bank.

Each request for approval of a strategic plan submitted to the OCC must contain a proposed effective date. 96 The proposed effective date must be at least three months after the request is submitted to the OCC. A community bank is not evaluated under a strategic plan until the bank has been operating under an approved and effective strategic plan for at least one year. 97

Community banks should direct questions regarding the simplified strategic plan process, completion of the Simplified Strategic Plan Form, or a pending submission by sending an email to the OCC or contacting their supervisory office.

The OCC has determined that, in certain instances, it may be appropriate to waive the strategic plan provision's proposed effective date requirement or certain CRA data requirements  98 based on a community bank's particular facts and circumstances. For the remaining regulatory requirements, the OCC has determined that waiver generally would not be appropriate.

Under the simplified strategic plan process, on a case-by-case basis, the OCC would consider waiving the requirement that a community bank submit its proposed strategic plan to the OCC for approval at least three months prior to the proposed effective date if a strategic plan has been deemed complete and the OCC would have sufficient time to review and opine on the plan. Based on the OCC's experience, it may be appropriate to waive the proposed effective date requirement if it would allow the bank to: (1) align the effective date of its strategic plan with the beginning of a performance year ( i.e., a January 1st effective date); (2) avoid a gap between approved strategic plan terms; or (3) address other circumstances deemed relevant by the OCC. The OCC has also determined that it may be appropriate to waive certain of the CRA regulation's data reporting requirements  99 on a case-by-case basis if those data are not necessary for evaluating the measurable goals included in a community bank's proposed strategic plan. For example, the OCC may consider waiving the small business and small farm data collection and reporting requirements if a community bank has not included a retail lending goal in its strategic plan. The OCC notes, however, that it generally would be inappropriate for a community bank to develop a strategic plan that does not include measurable goals for lending products that are integral to the bank's business strategy in order to seek waiver of the associated data requirements.

The OCC believes that waiver may be appropriate, on a case-by-case basis, when: (1) a regulatory requirement is for the benefit of the OCC ( e.g., the three month lead time for the proposed effective date provides time for the OCC to review a proposed strategic plan) and (2) waiving the requirement would have minimal impact on the OCC's ability to evaluate the bank pursuant to the strategic plan if approved. For example, a waiver would have minimal impact on the OCC's ability to evaluate a bank pursuant to a proposed strategic plan if the data that the bank was exempted from collecting and reporting would not be considered in evaluating the bank's measurable goals or the bank's performance under the otherwise applicable performance tests and standards for a bank that were to choose the substitute election. If the OCC were to decide to grant a waiver, the OCC would communicate that decision to the community bank in writing. The OCC believes it is appropriate to consider case-specific waivers to minimize the impact of regulatory requirements that impose unnecessary burden on community banks.

The strategic plan provision requires the OCC to act on plan within 60 days of receiving a complete plan or else the plan is deemed approved. 100 When possible, the OCC would aim to act within 45 days of receiving a complete strategic plan. The OCC may extend the review period for good cause and would notify the community bank in writing of any extension of the review period, the reason for the extension, and the date by which the agency expects to act on the request. Provided a bank submits a complete proposed strategic plan, the OCC expects that it generally will not extend the review period unless the bank's capacity and constraints, product offerings, or business strategy materially change after submission of the plan. If the OCC fails to act within the review period or timely extend the review period, the OCC will deem the strategic plan to be approved.

Under the provisions of the Freedom of Information Act (FOIA) (5 U.S.C. 552), a request for approval of a strategic plan submitted to the OCC through the Simplified Strategic Plan Form is a public document and is available to the public upon request. The OCC's decision approving or denying a strategic plan may also be available to the public under the FOIA. Under the CRA regulation, a community bank may submit information along with its strategic plan to the OCC on a confidential basis. 101 The Simplified Strategic Plan Form contains a confidential section that a bank requesting confidential treatment of certain information would use to submit that information.

A request for confidential treatment of commercial information means the records arguably contain material exempt from release under Exemption 4 of the FOIA. For example, if the requesting community bank believes that disclosure of commercial or financial information included with its request would likely result in substantial harm to its competitive position or that of its affiliates, confidential treatment of such information may be requested. This request for confidential treatment would be included in the confidential section of the Simplified Strategic Plan Form and must discuss in detail the justification for confidential treatment. The bank's request for confidential treatment should explain the harm that would result from public release of the information. If a community bank requests confidential treatment of supplemental information provided outside of the confidential section of the Simplified Strategic Plan Form, the community bank should: (1) segregate the information from any other information that is submitted and (2) label the information as “Confidential.”

The OCC determines whether information labeled “Confidential” warrants confidentiality and advises the requesting community bank of any decision to make information labeled “Confidential” available to the public. A community bank should follow the guidance in this section when submitting confidential supervisory information, which includes any information contained in, related to, or derived from reports of examination, or confidential operating and condition reports.

During the term of an approved strategic plan, a bank may request approval of an amendment to the strategic plan if there is a material change in circumstances ( e.g., a downturn in the economic environment, a shift in the bank's business strategy, or entrance into or exit from one or more assessment areas). Public participation is required in the development of an amendment to a previously approved strategic plan. To request approval by the OCC of a strategic plan amendment under the simplified strategic plan process, a community bank should submit the amendment portion of the Simplified Strategic Plan Form.

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments using a method listed under ADDRESSES . Include “Docket No. FAA-2025-5394; Project Identifier AD-2025-01194-R” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may revise this proposal because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov , including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this NPRM.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Sarah Illg, Aviation Safety Engineer, FAA, 3960 Paramount Boulevard, Lakewood, CA 90712. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA received reports of fatigue cracking of the RH forward transmission support beam fitting having part number 145S1838-1 on CH-47D helicopters. CH-47D type certificate holders and operators have reported experiencing at least one cracking event around the fastener on the RH forward transmission support beam fitting at the right butt line (RBL) 18 from station (STA) 76 to STA 120. This condition, if not addressed, could result in crack propagation and lead to failure of the RH forward transmission support beam fitting, excessive vibration, and consequent loss of control of the helicopter.

The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This proposed AD would require repetitively inspecting the RH forward transmission support beam fitting for cracking and, depending on the results, repairing any crack(s) or replacing parts. This proposed AD would also require submitting data on any previous repairs and replaced fittings to the FAA.

The FAA estimates that this AD, if adopted as proposed, would affect 42 helicopters of U.S. registry.

The FAA estimates the following costs to comply with this proposed AD:

The FAA has received no definitive data on which to base the cost estimates for the on-condition repairs specified in this proposed AD.

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB Control Number. The OMB Control Number for this information collection is 2120-0056. Public reporting for this collection of information is estimated to be approximately 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. All responses to this collection of information are mandatory. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to: Information Collection Clearance Officer, Federal Aviation Administration, 10101 Hillwood Parkway, Fort Worth, TX 76177-1524.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. 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.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Would not affect intrastate aviation in Alaska, and

(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

Participation in virtual public hearing. To request a virtual public hearing, contact the public hearing team at (888) 372-8699 or by email at SPPDpublichearing@epa.gov. If requested, the virtual hearing will be held on January 12, 2026. The EPA will announce further details at https://www.epa.gov/haps/deletion-2-butoxyethyl-benzoate-2-beb-glycol-ethers-category-clean-air-act-list-hazardous-air. We note that if a hearing is requested, the planned schedule for the hearing will be provided on this website, but the EPA may close a session 15 minutes after the last pre-registered speaker has testified if there are no additional speakers.

If a public hearing is requested, the EPA will begin pre-registering speakers for the hearing no later than one business day after a request has been received. To register to speak at the virtual hearing, please use the online registration form available at https://www.epa.gov/haps/deletion-2-butoxyethyl-benzoate-2-beb-glycol-ethers-category-clean-air-act-list-hazardous-air or contact the public hearing team at (888) 372-8699 or by email at SPPDpublichearing@epa.gov. The last day to pre-register to speak at the hearing will be Saturday, January 3, 2026. Prior to the hearing, the EPA will post a general agenda that will list pre-registered speakers at: https://www.epa.gov/haps/deletion-2-butoxyethyl-benzoate-2-beb-glycol-ethers-category-clean-air-act-list-hazardous-air.

The EPA will make every effort to follow the schedule as closely as possible on the day of the hearing; however, please plan for the hearings to run either ahead of schedule or behind schedule.

Each commenter will have four minutes to provide oral testimony. The EPA encourages commenters to submit a copy of their oral testimony as written comments to the rulemaking docket. The EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral testimony and supporting information presented at the public hearing.

Please note that any updates made to any aspect of the hearing will be posted online at https://www.epa.gov/haps/deletion-2-butoxyethyl-benzoate-2-beb-glycol-ethers-category-clean-air-act-list-hazardous-air. While the EPA expects the hearing to go forward as described in this section, please monitor our website or contact the public hearing team at (888) 372-8699 or by email at SPPDpublichearing@epa.gov to determine if there are any updates. The EPA does not intend to publish a document in the Federal Register announcing updates.

If you require special accommodation such as audio description, please pre-register for the hearing with the public hearing team and describe your needs by Monday, December 29, 2025. The EPA may not be able to arrange accommodations without advanced notice.

Docket. The EPA has established a docket for this rulemaking under Docket ID No. EPA-HQ-OAR-2024-0392. All documents in the docket are listed at https://www.regulations.gov. Although listed, some information is not publicly available, e.g., Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The EPA does not place certain other material, such as copyrighted material, on the internet; this material is publicly available only as pdf versions accessible only on EPA computers in the docket office reading room. The public cannot download certain data bases and physical items from the docket but may request these items by contacting the docket office at 202-566-1744. The docket office has 10 business days to respond to such requests. With the exception of such material, publicly available docket materials are available electronically at regulations.gov.

Written Comments. Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2024-0392, at https://www.regulations.gov (our preferred method), or the other methods identified in the ADDRESSES section. Once submitted, comments cannot be edited or removed from the docket. The EPA may publish any comment received to its public docket. Do not submit to EPA's docket at https://www.regulations.gov any information you consider to be CBI or other information for which disclosure is restricted by statute. This type of information should be submitted as discussed in the Submitting CBI section of this document.

Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

The https://www.regulations.gov website allows you to submit your comment anonymously, which means the EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to the EPA without going through https://www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the internet. If you submit an electronic comment, the EPA recommends that you include your name and other contact information in the body of your comment and with any digital storage media you submit. If the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, the EPA may not be able to consider your comment. Electronic files should not include special characters or any form of encryption and be free of any defects or viruses. For additional information about the EPA's public docket, visit the EPA Docket Center homepage at https://www.epa.gov/dockets.

Submitting CBI. Do not submit information containing CBI to the EPA through https://www.regulations.gov. Clearly mark the part, or all, of the information that you claim to be CBI. For CBI information on any digital storage media that you mail to the EPA, note the docket ID, mark the outside of the digital storage media as CBI, and identify electronically within the digital storage media the specific information that is claimed as CBI. In addition to one complete version of the comments that includes information claimed as CBI, you must submit a copy of the comments that does not contain the information claimed as CBI directly to the public docket through the procedures outlined in the Written Comments section of this document. If you submit any digital storage media that does not contain CBI, mark the outside of the digital storage media clearly that it does not contain CBI and note the docket ID. Information not marked as CBI will be included in the public docket and the EPA's electronic public docket without prior notice. Information marked as CBI will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

Our preferred method to receive CBI is transmitted electronically using email attachments, File Transfer Protocol (FTP), or other online file sharing services ( e.g., Dropbox, OneDrive, Google Drive). Electronic submissions must be transmitted directly to the OAQPS CBI Office at the email address oaqps_cbi@epa.gov and, as described above, should include clear CBI markings and note the docket ID. If assistance is needed with submitting large electronic files that exceed the file size limit for email attachments, and if you do not have your own file sharing service, please email oaqps_cbi@epa.gov to request a file transfer link. If sending CBI information through the postal service, please send it to the following address: OAQPS Document Control Officer (C404-02), OAQPS, U.S. Environmental Protection Agency, 109 T.W. Alexander Drive, P.O. Box 12055 RTP, North Carolina 27711, Attention Docket ID No. EPA-HQ-OAR-2024-0392. The mailed CBI material should be double wrapped and clearly marked. Any CBI markings should not show through the outer envelope.

Preamble acronyms and abbreviations. Throughout this document, the use of “Agency,” “we,” “us,” or “our” refers to the EPA. We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

In addition to being available in the docket, an electronic copy of this action is available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this proposed action at https://www.epa.gov/haps/deletion-2-butoxyethyl-benzoate-2-beb-glycol-ethers-category-clean-air-act-list- hazardous-air. Following publication in the Federal Register, the EPA will post the Federal Register version of the proposal and key technical documents at this same website. In accordance with 5 U.S.C. 553(b)(4), a brief summary of this rule may be found at https://www.regulations.gov, Docket ID No. EPA-HQ-OAR-2024-0392.

A memorandum showing the edits that would be necessary to incorporate the changes to 40 CFR part 63, subpart C proposed in this action is available in the docket (Docket ID No. EPA-HQ-OAR-2024-0392). The EPA also will post a copy of this document to https://www.epa.gov/haps/deletion-2-butoxyethyl-benzoate-2-beb-glycol-ethers-category-clean-air-act-list-hazardous-air.

In this section, the EPA provides a brief overview of the list of HAP subject to regulation under CAA section 112 (“the HAP list”), the Agency's process for considering petitions to modify the HAP list by adding or deleting a substance, and information about 2-BEB, CAS No. 5451-76-3.

The HAP list is a list of organic and inorganic substances that have been identified as HAP to be regulated under CAA section 112. The initial HAP list, which can be found in CAA section 112(b)(1), was established by Congress in the 1990 amendments to the CAA. The substances listed as HAP have been associated with a wide variety of adverse health effects, including cancer, neurological effects, reproductive effects, and developmental effects. The health effects associated with various HAP differ depending on the toxicity of the specific HAP and the circumstances of exposure, such as the amount of the substance present, the length of time a person is exposed, and the stage of life at which the person is exposed. CAA section 112(c) directs the EPA to first identify and list source categories that emit HAP, then set emission standards for those listed source categories under CAA section 112(d). Standards promulgated under CAA section 112(d) are commonly referred to as National Emission Standards for Hazardous Air Pollutants (NESHAP).

CAA section 112(b)(3)(A) specifies that any person may petition the Administrator to modify the HAP list by adding or deleting a substance. 1 The Administrator must grant or deny a petition to delete a HAP within 18 months. CAA section 112(b)(3)(C) and (D) sets out the substantive criteria for granting a petition to delete a HAP from the HAP list. 2 Petitions should include sufficient information to support the requested deletion of a HAP.

To grant a petition to delete a substance from the HAP list, CAA section 112(b)(3)(C) provides that the Administrator must determine that “there is adequate data on the health and environmental effects of the substance to determine that emissions, ambient concentrations, bioaccumulation, or deposition of the substance may not reasonably be anticipated to cause any adverse effects to the human health or adverse environmental effects.”  3 CAA section 112(a)(7) defines an “adverse environmental effect” as “[a]ny significant and widespread adverse effect, which may reasonably be anticipated, to wildlife, aquatic life, or other natural resources, including adverse impacts on populations of endangered or threatened species or significant degradation of environmental quality over broad areas.”  4

The EPA has long explained that CAA section 112(b)(3)(C) does not require absolute certainty that a pollutant will not cause adverse effects on human health or the environment before it may be deleted from the list. 5 The use of the terms “adequate” and “reasonably” in CAA section 112(b)(3)(C) indicate that the EPA must weigh the potential uncertainties and likely significance of any projections, assessments, and estimations. Uncertainties concerning the risks of adverse health or environmental effects may be mitigated if it is shown that projected exposures are sufficiently low in relation to levels where adverse effects may occur, thus providing reasonable assurance that such adverse effects will not occur. Similarly, uncertainties concerning the magnitude of projected exposures may be mitigated if it is demonstrated that the levels that might cause adverse health or environmental effects are sufficiently high to provide reasonable assurance that exposures will not reach harmful levels.

The EPA further posited that questions as to whether HAP emissions present adverse health and environmental effects, and questions regarding the kinds of effects that can come from exposure to those emissions, may, in certain instances, border on the frontiers of scientific knowledge and involve limited or inconsistent data. For example, there could be limited scientific knowledge of the effects of pollutant exposure on human health or the environment. There could also be limited emissions data from the relevant source category. Further, some pollutants have no known safe level of exposure. CAA section 112(b)(3)(C) does not require the Administrator to base his determination to grant a delisting petition solely on a single parameter or measure; therefore, the EPA's historical view has been that the Administrator has the discretion to weigh various factors or data differently. 6 The Administrator's decision to delist (or to deny a petition to delist) a HAP is made on a case-by-case basis and involves a thorough and comprehensive review of factual issues, scientific evidence, and data provided in support of a delisting petition. The EPA has also long explained that CAA section 112(b)(3)(C) allows the Administrator to balance the likelihood of adverse health effects against the limits of available scientific data and to exercise informed judgement in making decisions considering uncertainties in scientific data. Any projections, assessments, and estimations by a petitioner must thus be reasonable and not based on conjecture. In sum, the CAA does not call for certitude of harm but rather accords the Administrator discretion and flexibility in taking action that is protective of public health and the environment, including by considering and balancing factors and relevant policy concerns.

If the Administrator decides to deny a petition, the EPA publishes a written explanation of the basis for denial in the Federal Register . A decision to deny a petition is a final Agency action subject to judicial review in the U.S. Court of Appeals for the District of Columbia Circuit under CAA section 307(b). If the Administrator decides to grant a petition, the EPA publishes a written explanation of the decision in a proposed rule to delete the substance from the HAP list codified in 40 CFR part 63, subpart C as we are doing here.

In this section, the EPA describes the Agency's historical process for considering petitions to delist a HAP from the HAP list and what process the EPA is following for the petition to delist 2-BEB.

A petition to delist a HAP is a formal request to the EPA from an individual or group to remove a substance from the HAP list. Removal from the HAP list means the substance is no longer subject to the regulatory provisions of CAA section 112 and related statutory provisions governing HAP. CAA section 112(b)(3)(A) requires the Administrator to either grant or deny a petition by publishing a written explanation of the reasons for the Administrator's decision. CAA section 112(b)(3)(A) does not specifically require a formal rulemaking process to either grant or deny a petition to delist a HAP from the HAP list. Although the delisting action for a listed HAP is not subject to the rulemaking procedures of CAA section 307(d), for all previous delisting actions the EPA has published and solicited public comment on relevant aspects of the Agency's consideration of such a complete petition in the Federal Register . 7 Once the EPA grants a petition to delist a HAP, such deletion is codified into 40 CFR part 63, subpart C.

The EPA's petition review process proceeds in two phases: a completeness determination and a technical review. During the completeness determination, the EPA conducts a broad review of the petition to determine whether all the necessary subject areas are addressed and whether reasonable information and analyses are presented for each of these subject areas. During the technical review, the EPA conducts a thorough scientific review of the complete petition to determine whether the data, analyses, interpretations, and conclusions in the petition are appropriate and technically sound. During the technical review, the EPA also determines whether the petition satisfies the necessary requirements of CAA section 112(b)(3)(B) or (C) and adequately supports a decision to either list or delist the HAP.

Under prior EPA practice, once a petition was determined to be complete, the Agency placed a notice of receipt of a complete petition in the Federal Register . The Federal Register notice announced a public comment period on the complete petition and started the technical review phase of our decision-making process. 8 Then, during the technical review of the petition, the EPA considered all comments and data submitted during the public comment period for the notice of receipt of a complete petition. Subsequently, the EPA would publish a document in the Federal Register containing a written explanation of the basis for the decision to either grant or deny the petition. If the EPA intended to grant the delisting petition, the Agency would also propose the addition of regulatory text to 40 CFR part 63, subpart C to codify the deletion. After consideration of public comments, the EPA would publish the final decision on the petition in the Federal Register . If the EPA granted a delisting petition, in a final action the Agency would amend 40 CFR part 63, subpart C, List of Hazardous Air Pollutants, Petitions Process, Lesser Quantity Designations, Source Category List, to codify the deletion of the substance from the HAP list. Thus, the EPA's prior practice encompassed at least three publications in the Federal Register .

In this action, the EPA is announcing a streamlined approach to petitions under section CAA 112(b)(3)(B) effective with this petition to delist 2-BEB. Rather than issuing a Federal Register document announcing the receipt of a complete petition, the EPA will now inform the petitioner by letter once a preliminary evaluation determines that the petition is complete according to Agency criteria. 9 Subsequently, once the EPA's technical review is complete, the Agency will publish a Federal Register document with a written explanation of the basis for the proposed decision to grant or deny the petition and, if appropriate, propose the addition of regulatory text to 40 CFR part 63, subpart C to codify the deletion. After the opportunity for comment and review of the comments, the EPA will publish in the Federal Register the final action either granting or denying the petition. If the petition to delist is granted, 40 CFR part 63, subpart C will be modified to incorporate the change.

Additionally, the EPA intends to reorganize 40 CFR part 63, subpart C to provide clarity and allow space for future amendments. See section IV. of this preamble for more information on this reorganization.

In this section, the EPA provides an overview and information about the Agency's technical review of the petition to delist 2-BEB.

On September 30, 2019, the Dow Chemical Company (the “Petitioner”) submitted a petition to delete 2-BEB (CAS No. 5451-76-3) from the glycol ethers category of the HAP list (the “Petition”). 2-BEB is a colorless liquid with low odor, a high boiling point (292 °C at 760 millimeters of mercury (mmHg)), and low vapor pressure (2.09E-04 mmHg at 20 °C). It is miscible in water with moderate water solubility (106 mg/L at 20 °C). 2-BEB has utility as a coalescing solvent for water-based, low volatility organic compound (VOC) coatings. It can also be used as a replacement for phthalate-based plasticizers in caulking compounds and in some polyvinyl chloride (PVC) formulations.

Following receipt of the Petition, the EPA conducted a preliminary evaluation to determine whether the Petition was complete according to Agency criteria. To be deemed complete, the EPA requires that a petition consider available data on health and environmental effects of the substance to be deleted. A petition should also provide comprehensive emissions data, including peak and annual average emissions for each known source or for an appropriately selected subset of sources, and must estimate the resulting exposures to people living in the vicinity of the sources. In addition, a petition must discuss the environmental impacts associated with emissions of the substance to the ambient air and impacts associated with the subsequent cross-media transport of those emissions. 10 The EPA determined the Petition to be incomplete and requested additional information from the Petitioner. After receiving additional submittals from the Petitioner through August 13, 2021, the EPA determined the Petition to be complete. 11 The EPA notified the Petitioner by electronic mail of this determination on November 24, 2021. 12

Following the completeness determination, the EPA conducted a preliminary technical review of the Petition. Based on the preliminary assessment, the EPA had follow-up conversations with the Petitioner in June 2022 to further clarify certain aspects of the Petition. After these discussions, the Petitioner submitted additional information in September 2022. 13 The Petition and all supplements to the Petition are available for review in the docket. 14 The EPA has fully considered all of the Petitioners' submissions in the technical review and the determination to propose granting the Petition to delist 2-BEB from the glycol ethers category in the HAP list.

In this section, the EPA presents the details of the Petition that includes the exposure assessment, the human health effects assessment, the Petitioners' risk assessment and methodology and ecological assessment and conclusions.

The Petition is presented in the form of a risk assessment that considers multiple routes of exposure and evaluates the likelihood and severity of adverse effects to human health and the environment arising from exposures to ambient levels of 2-BEB. Existing literature on the toxicity and health effects of 2-BEB is sparse. To address this gap, the Petitioner performed oral, dermal, and inhalation toxicity testing according to the Organisation for Economic Co-operation and Development (OECD) guidelines. 15 The Petitioner also relied on the EPA's 2010 Integrated Risk Information System (IRIS) assessment for ethylene glycol monobutyl ether (EGBE) as the basis for the human health effects evaluation of 2-BEB. 16 The Petitioner further provided a worst-case inhalation toxicity analysis that used ethylene glycol monomethyl ether (EGME), which is the most potent chemical with a reference concentration (RfC) available from the EPA's IRIS assessment program for the glycol ethers category. 17 In sum, the Petition characterizes the sources and releases of 2-BEB, estimates exposures, identifies the potential hazard and the dose-response relationship of 2-BEB, characterizes environmental risk, and characterizes the human health risk from a reasonable worst-case lifetime exposure to 2-BEB and a reasonable worst-case short-term (24-hour) exposure to 2-BEB.

The Petitioner estimated 2-BEB emissions based on nationwide projected production volume and modeled emissions estimates. In the Petition, the Petitioner states that, as of September 30, 2019, all 2-BEB produced domestically has been for export and use outside of the United States. The Petitioner estimated that about 200,000 pounds (lbs) (91,000 kilograms (kg)) of 2-BEB were produced in the United States from 2016 to mid-2019, an average of about 57,000 lbs/yr (26,000 kg/yr). The Petitioner further stated that 2-BEB is being explored as a substitute for current components of water-based coatings but is not currently used or sold in the United States. Additionally, there are no emissions or monitoring data available that are pertinent to the domestic manufacture, use, and release of 2-BEB in the United States.

To address the absence of available domestic emissions or monitoring data for 2-BEB, the Petitioner estimated 2-BEB emissions based on their projected production volume. To estimate the projected maximum production volume of 2-BEB, the Petitioner assumed that the production time would be 48-50 hours per batch and that 2-BEB would be manufactured in 10 batches. Thus, the approximate production time for the entire quantity of 2-BEB would range from 480-500 hours. For processing, it was assumed that 2-BEB would be incorporated into a water-based paint product and that 265,000 kg/yr would be available for processing (275,000 kg/yr minus 10,000 kg/yr lost to emissions in manufacturing). The Petitioner estimated that the projected maximum production volume of 2-BEB would be about 275,000 kg/yr.

The Petitioner then used the Chemical Screening Tool for Exposure and Environmental Releases (ChemSTEER) to generate screening-level emissions estimates for potential releases of 2-BEB into the air and water from manufacturing and processing. ChemSTEER is a computer-based software program developed by the EPA's Office of Pollution Prevention and Toxics (OPPT). ChemSTEER combines multiple mathematical models ( e.g., EPA/OPPT penetration model) and emissions estimation methods ( e.g., AP-42) into one tool that can be used to generate “screening-level estimates for environmental releases of and worker exposures to a chemical manufactured and used in industrial and commercial operations ( i.e., workplaces).”  18 ChemSTEER results are considered screening level because many of the models in ChemSTEER are characterized by the EPA to be screening-level models. As such, the screening-level results from ChemSTEER “are intended to be conservative in that predicted results are likely to be higher, or at least higher than average, as compared to actual releases and exposures occurring in the real-world setting.”  19

To generate screening-level emissions estimates for potential releases of 2-BEB into the air from manufacturing and processing, the Petitioner used the following emission points. For manufacturing, emissions points for 2-BEB included:

• Aqueous wash of organic mass.

• Distillation column bottoms disposal.

• Sampling of liquid product.

• Loading of liquid product into drums.

• Equipment cleaning losses of liquids from multiple vessels.

For processing, emissions points for 2-BEB included:

• Unloading liquid raw material from drums.

• Vapor release from open liquid surfaces.

• Sampling liquid product.

• Loading liquid product into drums.

• Equipment cleaning of liquids from multiple vessels.

• Cleaning liquid residuals from drums used to transport raw material.

This is a summary of the Commission's Public Notice, DA 25-1045, released December 10, 2025 by the Commission's Space Bureau. The document is available for public inspection online at https://docs.fcc.gov/public/attachments/DA-25-1045A1.pdf.

Interested parties may file comments and reply comments on or before the dates indicated in the DATES section above.

☐ Electronic Filers. Comments may be filed electronically using the internet by accessing the Commission's Electronic Comment Filing System (ECFS): http://apps.fcc.gov/ ecfs.

☐ Paper Filers. Parties who file by paper must include an original and one copy of each filing.

○ Filings can be sent by hand or messenger delivery, by commercial courier, or by the U.S. Postal Service. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

○ Hand-delivered or messenger-delivered paper filings for the Commission's Secretary are accepted between 8:00 a.m. and 4:00 p.m. by the FCC's mailing contractor at 9050 Junction Drive, Annapolis Junction, MD 20701. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

○ Commercial courier deliveries (any deliveries not by the U.S. Postal Service) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.

○ Filings sent by U.S. Postal Service First-Class Mail, Priority Mail, and Priority Mail Express, must be sent to 45 L Street NE, Washington, DC 20554.

• People with Disabilities. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530.

This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with 47 CFR 1.1206(b). In proceedings governed by 47 CFR 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format ( e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

The NGSO ESIM FNPRM included an Initial Regulatory Flexibility Analysis (“IRFA”) pursuant to 5 U.S.C. 603, exploring the potential impact on small entities of the Commission's proposals. We invite parties to file comments on the IRFA in light of this request to refresh the record.

Consistent with the Providing Accountability Through Transparency Act, Public Law 118-9, a summary of this document will be available on https://www.fcc.gov/proposed-rulemakings.

In the document, the Space Bureau seeks to refresh the record on proposed rules to permit the use of additional frequency bands for non-geostationary orbit (“NGSO”) Fixed Satellite Service (“FSS”) satellites to communicate with Earth Stations in Motion (“ESIMs”). The Commission sought comment in 2020 on proposals that would allow NGSO FSS systems to communicate with ESIMs in the 28.35-28.6 GHz band. The comment period closed over five years ago. To ensure that the Commission has the benefit of current information, including any developments relating to these issues since the release of the underlying NGSO ESIM FNPRM, we invite interested parties to update the record as discussed below.

Background. In 2018, the Commission adopted rules governing communications for ESIMs with geostationary orbit (“GSO”) satellites. At that time, the Commission also sought comment on allowing ESIMs to operate in all the frequency bands in which earth stations at fixed locations operating in GSO fixed satellite service (“FSS”) satellite networks can be blanket-licensed. Later that same year, the Commission adopted a Notice of Proposed Rulemaking (NPRM) that sought comment on expanding the Commission's ESIM rules to cover communications with NGSO FSS satellites.

In 2020, the Commission adopted rules that allowed for NGSO FSS operations of ESIMs in certain bands and opened up additional frequency bands for GSO FSS ESIM use. At that time, the Commission permitted NGSO FSS ESIMs in the 28.4-28.6 GHz subject to compliance with future determinations but deferred consideration on permitting NGSO FSS ESIMs in the 28.35-28.4 GHz band, and sought comment to further address issues raised by commenters in the record and to allow for additional study of out-of-band emissions issues.

Since the Commission last sought comment on permitting NGSO FSS ESIMs in the entirety of the 28.35-28.6 GHz band, multiple parties have met with the Commission staff on this matter. For instance, Verizon met with Commission staff in 2023 to discuss its concerns related to out-of-band emissions limits and the potential interference to terrestrial services in the 27.5-28.35 GHz adjacent band and a proposal to harmonize part 25 out-of-band emissions limits for NGSO ESIMs with out-of-band emission limits for terrestrial wireless operations, given the terrestrial operations in the 27.5-28.35 GHz band.

Because the NGSO ESIM FNPRM comment period closed more than five years ago, and in recognition of the subsequent changes to the terrestrial and ESIM environments during that period, we seek to refresh the record to ensure the record in this proceeding is current and complete.

Request for Additional Comment. Accordingly, the Space Bureau invites all stakeholders to update the record after reviewing the specific proposals, underlying analysis, and questions contained in the NGSO ESIM FNPRM, as well as the existing record in this proceeding. The NGSO ESIM FNPRM presented a number of questions related to the current out of band emissions limits in § 25.202(f) and whether they would be sufficient to protect Upper Microwave Flexible Use Service (UMFUS) operations in the 27.5-28.35 GHz band. In addition, the NGSO ESIM FNPRM sought comment on what level of interference generated by out-of-band emissions from ESIM operations with NGSO space stations above 28.35 GHz would be acceptable for UMFUS receivers operating below 28.35 GHz without unduly constraining ESIM operations above 28.35 GHz. The NGSO ESIM FNPRM also sought comment on other issues related to harmful interference and whether UMFUS operators are developing any equipment with characteristics that make them less susceptible to adjacent band users. In addition to these questions, the NGSO ESIM FNPRM sought comment on issues related to guard bands, minimum elevation angle, aggregation interference, and how to specify out-of-band emissions limits.

We encourage interested parties to submit new or additional relevant information since the close of the previous comment period related to these and other questions laid out in the NGSO ESIM FNPRM. In addition, commenters are encouraged to submit new or additional relevant information about the present state of the UMFUS and ESIM environments, including the current or anticipated uses of these services. In addition, commenters are encouraged to provide any information gained since the close of the previous comment period related to the intensity of use of ESIMs in the 28.35-28.6 GHz band by both GSO and NGSO operators, as permitted. We also encourage commenters to provide any additional or new studies since the close of the previous comment period demonstrating protection criteria for ESIMs in the 28.35-28.6 GHz band that would protect adjacent band operations in the 27.5-28.35 GHz band.

This is a summary of the Commission's document (Public Notice), in SB Docket No. 25-305, DA 25-1060, released December 16, 2025. The document is available for public inspection online at https://docs.fcc.gov/public/attachments/DA-25-1060A1.pdf. The document is also available for inspection and copying during business hours in the FCC Reference Center, 45 L Street NE, Washington, DC 20554.

1. In the document, the Space Bureau extends the deadlines for filing comments and reply comments for the Facilitating More Intensive Use of Upper Microwave Spectrum Notice of Proposed Rulemaking ( UMFUS NPRM ) in SB Docket No. 25-305 to January 20, 2026 and February 18, 2026, respectively.

2. On October 29, 2025, the Federal Communications Commission (Commission) released the UMFUS NPRM seeking comment on section 25.136 of the Commission's rules, which governs spectrum sharing between the terrestrial Upper Microwave Flexible Use Service and the Fixed Satellite Service. The UMFUS NPRM specified that comments and reply comments would be due 30 and 60 days after Federal Register publication. That publication occurred on December 3, 2025, announcing a comment filing deadline of January 2, 2026 and a reply comment date of February 2, 2026.

3. On December 11, 2025, CTIA requested extension of the comment and reply comment filing deadlines until January 20, 2026 and February 18, 2026. In its request, CTIA begins by noting that the issues in the UMFUS NPRM are complex and intersect with proposals contained in the simultaneously-adopted Notice of Proposed Rulemaking addressing Space Modernization ( Modernization NPRM ), which has a comment deadline of January 20, 2026 and a reply comment deadline of February 18, 2026. CTIA argues that that alignment of the pleading cycles for the UMFUS NPRM and the Modernization NPRM would allow commenters to provide integrated, consistent, and nonduplicative analyses in both proceedings, as well as a more fulsome record for the Commission to review. CTIA also argues that the brief extension requested would not harm any other party in this proceeding, alter any substantive rights, or prejudice any participant. Finally, CTIA states that the requested deadline changes—extending the comment window by less than three weeks and the reply comment window by just over two weeks—would not cause significant delay or impede Commission consideration or timelines, as the new dates align with already-established dates for the Modernization NPRM.

4. As set forth in § 1.46(a) of the Commission's rules, the Commission's policy is that extensions of time shall not be routinely granted. The Space Bureau finds, however, that CTIA has provided sufficient justification to warrant grant of their requested extension. An extension would enable interested parties to present more complete comments to the Commission, and the Space Bureau agrees with CTIA that the extension should not disadvantage any party or cause significant delay in the resolution of this proceeding.