On July 18, 2025, President Trump signed the GENIUS Act into law. The GENIUS Act establishes a regulatory framework for payment stablecoins and provides pathways for regulation at both the Federal and State level.

Under the GENIUS Act, “insured depository institutions,” which the Act defines to include both FDIC-insured depository institutions and FICUs (collectively referred to as “IDIs”), cannot be issuers of payment stablecoins. Instead, IDIs must use “subsidiaries” as issuers. The GENIUS Act defines the term “subsidiary of an insured credit union” to mean “(A) an organization providing services to the insured credit union that are associated with the routine operations of credit unions, as described in section 107(7)(I) of the Federal Credit Union Act (12 U.S.C. 1757(7)(I)); (B) a credit union service organization, as such term is used under part 712 of title 12, Code of Federal Regulations, with respect to which the insured credit union has an ownership interest or to which the insured credit union has extended a loan; and (C) a subsidiary of a State chartered insured credit union authorized under State law.” The GENIUS Act requires that issuers that are subsidiaries of IDIs (including subsidiaries of FICUs) must be regulated by the primary Federal payment stablecoin regulators and does not allow them to opt for the state-level regulatory framework. Thus, the NCUA has jurisdiction over payment stablecoin issuers that are FICU subsidiaries.

Under the GENIUS Act, only PPSIs may issue a payment stablecoin in the United States, subject to certain exceptions and safe harbors. PPSIs are subject to a number of requirements, including requirements related to reserves, capital, liquidity, illicit finance, and information technology risk management standards. For example, PPSIs must maintain reserves backing the stablecoin on a one-to-one basis using U.S. currency or certain other liquid assets, as specified. PPSIs must also publicly disclose their redemption policy and publish monthly the details of their reserves.

The GENIUS Act details the process for the primary Federal payment stablecoin regulators, which include the NCUA, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Board of Governors of the Federal Reserve System (Federal Reserve Board), to evaluate and review applications for licenses to be PPSIs and provides examination, supervision, and enforcement authority over PPSIs. Other issues addressed in the GENIUS Act include the provision of custody services for payment stablecoins; application of the Bank Secrecy Act and anti-money laundering and economic sanctions requirements; and treatment of payment stablecoin issuers in insolvency proceedings.

The GENIUS Act establishes clear prohibitions and penalties to prevent the misrepresentation of Federal backing or insurance for payment stablecoins and to ensure that only authorized products may be marketed as such. 1 The Act explicitly dictates that payment stablecoins are not backed by the full faith and credit of the United States, they are not guaranteed by the U.S. Government, nor are they covered by deposit or share insurance from the FDIC or NCUA. Similarly, it is unlawful to market any product as a “payment stablecoin” in the United States unless it is issued pursuant to the GENIUS Act's procedures. 2

As detailed below, the GENIUS Act imposes a number of rulemaking, review, and reporting requirements on the primary Federal payment stablecoin regulators, including the NCUA. This proposal proposes regulations to implement the statutorily required process for licensure of PPSIs subject to the NCUA's jurisdiction. It also proposes regulations limiting FICUs to investing in NCUA-licensed PPSIs. A forthcoming proposal will propose regulations to implement the standards and restrictions imposed by the GENIUS Act on PPSIs.

Separately, as is required by the GENIUS Act, the NCUA is engaging in a required review of its existing guidance and regulations to determine what steps are necessary, if any, to amend or promulgate new regulations and guidance to clarify FICUs' authority to engage in the payment stablecoin activities and investments contemplated by the GENIUS Act.

In addition to the above, the GENIUS Act requires the NCUA to examine and supervise issuers that are FICU subsidiaries. Thus, the NCUA is working to update various NCUA examination policies, guidance, and procedures, such as the National Supervision Policy Manual and Examiner's Guide, to accommodate the new examination and supervision authority over FICU subsidiaries. The NCUA is also working to determine whether further guidance to FICUs and FICU subsidiaries may be necessary on these subjects.

As discussed in Section I. Background of this SUPPLEMENTARY INFORMATION section, the NCUA is a primary Federal payment stablecoin regulator with respect to a FICU or FICU subsidiary. 3 As a primary Federal payment stablecoin regulator, the GENIUS Act provides authority for the NCUA to approve and license issuance of payment stablecoins through FICU subsidiaries, 4 establish regulations for issuing payment stablecoins, 5 and examine for and enforce applicable requirements imposed on FICU subsidiaries. 6 The GENIUS Act also confers authority related to standards for custody of payment stablecoin reserves. 7 The GENIUS Act grants the NCUA general authority to promulgate regulations to carry out the GENIUS Act through appropriate notice and comment rulemaking. 8

Apart from the GENIUS Act, the FCU Act grants the NCUA a broad mandate to issue regulations governing both Federal Credit Unions (FCUs) and all FICUs. Section 120 of the FCU Act is a general grant of regulatory authority, and it authorizes the Board to prescribe rules and regulations for the administration of the FCU Act. 9 Section 209 of the FCU Act is a plenary grant of regulatory authority to the NCUA to issue rules and regulations necessary or appropriate to carry out its role as share insurer for all FICUs. 10

Additionally, Section 204 of the FCU Act authorizes the Board, through its examiners, “to examine any [federally] insured credit union . . . to determine the condition of any such credit union for insurance purposes.”  11 Section 206(e) of the FCU Act authorizes the Board to take certain actions against a FICU, if, in the opinion of the Board, the credit union “is engaging or has engaged, or the Board has reasonable cause to believe that the credit union or any institution affiliated party is about to engage, in any unsafe or unsound practice in conducting the business of such credit union.”  12 Therefore, the Board has statutory authority to determine whether a FICU is operated in an unsafe or unsound manner and terminate a FICU's insurance if a FICU is not operated in a safe or sound manner.

The Board interprets the GENIUS Act to limit PPSI status to those institutions functioning as a subsidiary of an insured depository institution (including a FICU), 13 a Federal qualified payment stablecoin issuer, 14 and a State qualified payment stablecoin issuer. 15 FICUs are not permitted to issue stablecoins directly. However, the GENIUS Act provides that subsidiaries of IDIs may apply and be approved to be PPSIs. As FICUs are expressly defined as IDIs, FICU subsidiaries may apply for and receive approval and license under the GENIUS Act to be PPSIs.

Section 5 of the GENIUS Act establishes the procedures and standards for the “approval of subsidiaries of insured depository institutions.”  16 The NCUA is required to “receive, review, and consider for approval applications” to issue payment stablecoins through a FICU subsidiary and to “establish a process and framework for the licensing, regulation, examination and supervision of such entities that prioritizes the safety and soundness of such entities.” Section 5(a)(2) requires the NCUA to issue regulations to carry out section 5. 17 Section 5(g) further requires that the NCUA issue rules necessary for the regulation of the issuance of payment stablecoins. 18

As explained in more detail later in this preamble, the GENIUS Act does not allow FICUs to directly issue payment stablecoins and instead provides that they must be issued through FICU subsidiaries that receive an NCUA-PPSI license. The Board has made certain decisions in implementing the GENIUS Act's application and licensing requirements that it believes will simplify the process and reduce the costs for the credit union industry and the NCUA. The Board discusses this approach in more detail later in this preamble, but wishes to provide a high-level summary so that interested parties understand why the Board has taken this nuanced approach and are able to appreciate the efficiencies it will allow in implementation.

The Board has preliminarily determined that it is preferrable for FICU subsidiaries themselves to submit the required applications to be an NCUA-licensed PPSI jointly with their FICU Parent Company(ies), as defined in this proposed rule, rather than having every single FICU investing in them submit an application. The Board's proposed approach would also require the applying FICU subsidiary, and any of its FICU Parent Companies and Principal Shareholders, to provide written certification that any filing or supporting material submitted to the NCUA contains no material misrepresentations or omissions. Further, as required by the GENIUS Act, all Directors and Officers of the applying FICU subsidiary, its FICU Parent Company(ies), and any of its Principal Shareholders would have to provide certain information so that the NCUA can evaluate their competence, experience, and integrity and ensure they do not have felony convictions prohibited by the GENIUS Act. Finally, the Board is proposing to limit FICUs to investing in NCUA-licensed PPSIs. The Board believes this limitation is consistent with the definition of FICU subsidiary in the GENIUS Act and should not pose a barrier to the credit union industry's ability to facilitate payment stablecoin services for their members.

The Board has chosen this approach because it believes it is most consistent with the intent of the GENIUS Act as applied to FICUs and FICU subsidiaries. The Board believes that if the NCUA required every single investing FICU to apply to the NCUA directly for PPSI licenses instead of the FICU subsidiary applying jointly with any FICU Parent Company(ies), a widely held applying FICU subsidiary would result in an unmanageable number of applications from each applying FICU. The Board is of the view that widely held FICU subsidiaries are likely and thinks that the chosen approach will minimize burdens on both the credit union industry and the NCUA.

The proposed approach requires the applying FICU subsidiary to work with FICUs and others investing materially in the subsidiary as part of the application process. The Board believes that the requirements for joint application and written certification that any filing or supporting material submitted to the NCUA contains no material misrepresentations or omissions will ensure that the applying FICU subsidiary and all material investors stand behind the application and understand what services they are intending to offer, their responsibilities, and their associated risks.

The Board understands that the approach taken in this proposed rule is nuanced. However, the Board believes that this nuance is key to ensuring that the NCUA fulfills its obligations in approving permitted payment stablecoin issuers under the GENIUS Act and minimizing the administrative burdens and costs on both the NCUA and the credit union industry. The Board also believes this approach better reflects standards and characteristics that are unique to the cooperative model in which credit unions operate

Request for Comment: The Board requests comment on the approach it has taken with regards to applications, certifications, and investment limitations and as to whether requiring each FICU investing in a PPSI to apply would be more prudent.

The NCUA is proposing the below procedures and standards for the approval of a license for a PPSI that is a FICU subsidiary. Each section of the proposed rule will be discussed separately.

The proposed rule would state that the NCUA is issuing part 706 under the GENIUS Act. Section 706.1 would state that part 706 applies to FICUs and all payment stablecoin issuers with investment or loans from FICUs and sets forth such entities' requirements for an NCUA-issued license. Finally, § 706.1 would state that there is nothing in this part that shall be read to limit the authority of the NCUA to take action under provisions of law other than the GENIUS Act, including action to address unsafe or unsound practices or conditions, or violations of law or regulation, under section 206 of the FCU Act.

Proposed § 706.2 would provide the definitions used throughout part 706. It would state that, unless otherwise provided in part 706, the terms used in this part have the same meanings as set forth in 12 U.S.C. 1752 and 5901. It would also state that all accounting terms not otherwise defined in this part have meanings consistent with the commonly accepted meanings under United States generally accepted accounting principles (U.S. GAAP). Proposed § 706.2 would provide the following defined terms specific to part 706.

The proposed rule would define the term “Applying Issuer” to mean any entity applying to the NCUA for an NCUA-PPSI license. The proposed rule would use this term throughout part 706 to generally refer to any entity, whether licensed or approved as a PPSI or yet to be licensed or approved, that is applying for an NCUA-PPSI license. As is required in proposed § 706.103, an Applying Issuer must apply jointly with any insured credit union Parent Company(ies), as defined in the proposed rule.

The proposed rule would define the term “Director” to mean an individual who serves on the board of directors of an Applying Issuer, a Parent Company of the Applying Issuer, or a Principal Shareholder of the Applying Issuer. Under the proposed rule, individuals meeting the definition of a Director will generally need to complete the NCUA's Biographical and Financial Report so that the NCUA can verify their competence, experience, and integrity, as is required by the GENIUS Act. 19 The Directors and proposed Directors of an Applying Issuer will also generally need to provide legible fingerprints for a biometric based criminal history search so that the NCUA can evaluate whether any of these individuals have been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud as is required by the GENIUS Act. 20

The proposed rule would define the term “Issuing Group” to mean the Applying Issuer and Parent Company(ies) and the Officers, Directors, and Principal Shareholders, if applicable, of the Applying Issuer, its subsidiaries, and Parent Company(ies).

The proposed rule would define an NCUA-Licensed Permitted Payment Stablecoin Issuer to mean a person formed in the United States that is a FICU subsidiary that has been approved and licensed by the NCUA under subpart A to issue payment stablecoins.

The proposed rule would define the term “Officer” to mean the president, chief executive officer, chief operating officer, chief financial officer, chief technology officer, chief lending officer, chief investment officer, chief risk officer, Bank Secrecy Act officer, and any other individual the NCUA identifies in writing to the Issuing Group who exercises significant influence over, or participates in, major policy making decisions of the Issuing Group without regard to title, salary, or compensation. The term also includes employees of entities retained by an Issuing Group to perform such functions in lieu of directly hiring the individuals. Under the proposed rule, individuals meeting the definition of an Officer will generally need to complete the NCUA's Biographical and Financial Report so that the NCUA can verify their competence, experience, and integrity, as is required by the GENIUS Act. 21 The Officers and proposed Officers of an Applying Issuer will also generally need to provide legible fingerprints for a biometric based criminal history search so that the NCUA can evaluate whether any of these individuals have been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud as is required by the GENIUS Act. 22

The proposed rule would define the term “Parent Company.” The GENIUS Act requires that applications for a PPSI license granted by a primary Federal payment stablecoin regulator be evaluated using specifically defined factors. 23 One of these factors requires the NCUA to evaluate the competency, experience, and integrity of the Officers and Directors of the Applying Issuer's Parent Company(ies). 24 The proposed rule would define the term Parent Company to specify when a FICU must sign onto an application and when a FICU's Officers and Directors should be evaluated as part of an Applying Issuer's licensure application. The term Parent Company would also be used to determine when a FICU's investment in an NCUA-licensed PPSI requires prior notice as a change in control.

The proposed rule would define a Parent Company as “an insured credit union(s) that will own, control or hold the power to vote 10 percent or more of any class of voting securities, or has the ability to direct the management or policies, of a Permitted Payment Stablecoin Issuer. If no insured credit union will own, control or hold the power to vote 10 percent or more of any class of voting securities, the FICU with the largest percentage of voting securities in relation to all other FICUs is considered the Parent Company.” Under this definition, any FICU that owns 10 percent or more of a class of voting securities would be a Parent Company. Additionally, if no FICU owns 10 percent or more of a class of voting securities, then the FICU with the greatest percentage of a class of voting securities in relation to any other FICU is the Parent Company for purposes of an NCUA PPSI license. The definition would also provide that a FICU that has the ability to direct the management or policies of a PPSI would be considered a Parent Company. The Board believes it is important that the definition of Parent Company cover FICUs that have the power to direct the management or policies of a PPSI regardless of their ownership interests.

The proposed definition is derived from the FDIC's change of control regulations. 25 The intent of the definition is to capture only the FICUs that are most likely to control or direct the management and policies of the PPSI. Under the proposed definition, if there is an Applying Issuer that is widely held by FICUs, then only the FICUs with 10 percent or more of a class of voting securities would be considered Parent Companies. For example, if 87 FICUs have an ownership interest in an Applying Issuer, but 83 of those FICUs own less than 10 percent, the NCUA would only require the four FICUs that own 10 percent or more to jointly file the application.

As another example, if one FICU shareholder owns 8 percent of a class of voting securities and no other FICU shareholder owns 10 percent or more, then the FICU shareholder with 8 percent would be considered the Parent Company. Under the proposed definition, it does not matter if there are six other FICU shareholders that own 5 percent or if there is a non-FICU shareholder that owns 51 percent. However, if, instead, there is a FICU shareholder that owns 13 percent of a class of voting securities, then only the FICU with the 13 percent ownership would be considered the Parent Company.

The Board believes the definition is the best interpretation of the term Parent Company as used in the GENIUS Act and appropriately balances the NCUA's allocation of its resources with its statutory mandate under the GENIUS Act. While the GENIUS Act requires that the Board evaluate certain statutory factors related to the Officers and Directors of the Parent Company, the Board does not believe it is practical or consistent with congressional intent for the NCUA to review the Officers and Directors of each investing FICU. The Board also does not believe it is practical or consistent with congressional intent for the NCUA to review licensure applications from each investing FICU. Requiring this level of review would disadvantage Applying Issuers seeking NCUA licenses and FICUs investing in them as compared to proposed PPSIs and other IDIs seeking licenses from other primary Federal payment stablecoin regulators that may be more likely to have a single-parent ownership structure. It would also impose a prohibitive burden on the NCUA's resources, especially when considering the 120-day deadline the GENIUS Act imposes on the NCUA for rendering a decision on a substantially complete application.

In summary, the Board believes it is prudent to only require joint application filing and review of the Officers and Directors of an investing FICU when the FICU would have a material amount of control of the PPSI. The Board selected 10 percent as that is a reasonable threshold used for determining a material amount of control under certain banking laws.

Request for Comment: The Board specifically solicits comment on whether this is the appropriate threshold. Do commenters believe that a higher threshold would be appropriate? For example, 25 percent of any class of voting securities? If so, why? Should other factors be considered in evaluating control?

Request for Comment: Under the proposed definition, if no FICU owns 10 percent or greater of a class of voting securities, then the FICU(s) with the greatest ownership interest, even if that ownership is less than 10 percent, is the Parent Company. In theory, 100 FICUs could each own 1 percent and all would technically be considered the Parent Company. Is a widely held subsidiary with equal de minimis ownership interests likely? If so, should the Board adopt a provision such that the widely held group selects one FICU to be the Parent Company? The Board may consider adopting a provision that the widely held Issuing Group could designate the Parent Company(ies).

The proposed rule would define the term “Principal Shareholder.” The GENIUS Act requires that applications for a PPSI license granted by a primary Federal payment stablecoin regulator be evaluated using specifically defined factors. 26 One of these factors requires the NCUA to evaluate the competency, experience, and integrity of the Officers and Directors of the Appling Issuer's Principal Shareholders. 27 The proposed rule would define a Principal Shareholder to mean “a person other than an insured credit union that directly or indirectly or acting in concert with one or more persons or companies, or together with members of their immediate family, will own, control, or hold the power to vote 10 percent or more of any class of voting securities.” Under this definition, any non-FICU that owns 10 percent or more of a class of voting securities would be a Principal Shareholder. The proposed rule would include the defined term of Principal Shareholder to specify when a non-FICU's Officers and Directors should be evaluated as part of an Applying Issuer's licensure application.

The proposed definition is derived from the FDIC's change of control regulations. 28 The intent of the definition is to capture only the non-FICUs that are most likely to have an ability to control or direct the management and policies of the PPSI. Under the proposed definition, if there is an Appling Issuer that is widely held by FICUs that also has non-FICU shareholders, then only the non-FICU shareholders with 10 percent or more of a class of voting securities would be considered Principal Shareholders.

The Board believes the definition is the best interpretation of the term Principal Shareholders as used in the GENIUS Act and appropriately balances the NCUA's allocation of its resources with its statutory mandate under the GENIUS Act. While the GENIUS Act requires that the Board evaluate certain statutory factors related to the Officers and Directors of the Principal Shareholders, the Board does not believe it is practical or consistent with congressional intent for the NCUA to review the Officers and Directors of each investing shareholder. Requiring this level of review would disadvantage Applying Issuers seeking NCUA licenses and FICUs investing in them as compared to proposed PPSIs and other IDIs, which are more likely to be wholly owned, seeking licenses from other primary Federal payment stablecoin regulators. It would also impose a prohibitive burden on the NCUA's resources, especially when considering the 120-day deadline the GENIUS Act imposes on the NCUA for rendering a decision on a substantially complete application.

In summary, the Board believes it is prudent to only review Officers and Directors of an investing shareholder when the investing shareholder would have a material amount of control of the PPSI. The Board selected 10 percent as that is a common threshold used for determining a material amount of control under banking law.

Request for Comment: The Board specifically solicits comment on whether this is the appropriate threshold. Do commenters believe that a higher threshold would be appropriate? For example, 25 percent of any class of voting securities? If so, why? Should other factors be considered in evaluating control?

Request for Comment: The Board also specifically solicits comment as to whether an NCUA-licensed PPSI should be permitted to have non-FICU investors or if there should otherwise be a cap on non-FICU investment.

The definition of Subsidiary of an Insured Credit Union, or FICU subsidiary, in the GENIUS Act includes three separate prongs. Specifically, the GENIUS Act defines a “subsidiary of an insured credit union” to include the following:

(A) an organization providing services to the insured credit union that are associated with the routine operations of credit unions, as described in section 1757(7)(I) of this title;

(B) a credit union service organization, as such term is used under part 712 of title 12, Code of Federal Regulations, with respect to which the insured credit union has an ownership interest or to which the insured credit union has extended a loan; and

(C) a subsidiary of a State chartered insured credit union authorized under State law. 29

Each prong is a separate and distinct avenue to qualify as a FICU subsidiary for purposes of being a PPSI. Each prong will be discussed separately below.

An FCU subsidiary would have two avenues to qualify as a FICU subsidiary PPSI. First, the GENIUS Act, under the first prong, states that a FICU subsidiary includes “an organization providing services to the insured credit union that are associated with the routine operations of credit unions, as described in section 1757(7)(I) of the FCU Act.”  30 The GENIUS Act also provides, under the second prong of the definition, that a credit union service organization (CUSO) as defined in part 712 of the NCUA's regulations would meet the definition of FICU subsidiary. Therefore, under the language of the GENIUS Act, an entity does not have to be, but may be, a CUSO under part 712 to qualify as a FICU subsidiary.

However, the NCUA has historically interpreted the lending and investment authority under the FCU Act as referring to the same types of organizations. 31 The NCUA's first CUSO rule explicitly stated that “an organization described at Section 107(7)(I) of the [FCU Act], and a `credit union organization,' as described at Section 107(5)(D) of the [FCU Act], are identical entities.” The NCUA explained its interpretation in the preamble to its 1979 final rule after several commenters questioned the definitional section of the proposed rule that defined “credit union service corporation” to be both the entity described at Section 107(7)(1) and Section 107(5)(D). In the preamble, the NCUA discussed that the thrust of the comments was that the definition was unduly restrictive and was not legally mandated. In response, the NCUA stated that “in light of the mandate in the legislative history by Congressman St Germain that [investment] authority is to be `exercised on a carefully controlled basis by NCUA,' the Administration feels justified in tying the two definitions together.” The NCUA also stated that it found no substantive difference in an organization “which is established primarily to serve the needs of its member credit unions, and whose business relates to the daily operations of the credit unions they serve” and an organization “providing services which are associated with the routine operations of credit unions.” The NCUA articulated that the legislative history indicated that the House committee stands ready to review investment interpretation matters upon request from NCUA “[s]hould a case be made for a more liberal interpretation of the provisions.”

The NCUA also noted that the FCU Act specifically “intertwines the lending and investment powers. For instance, section 107(7)(A) allows a Federal credit union to “invest” its funds in “loans exclusively to members.” Due to the preceding analysis, the NCUA believed that its interpretation of sections 107(5)(D) and 107(7)(I) were justified. The NCUA stated that “[w]hile it may restrict the permissible activities for Federal credit unions in this field, legislative history mandates a rather conservative approach.”  32

Given NCUA's longstanding interpretation that the entities described in sections 107(5)(D) and 1757(7)(I) of the FCU Act are identical, the proposed rule would require any FCU that seeks to issue payment stablecoins indirectly to do so through a CUSO. Specifically, the Board will interpret the first and second prong under the definition of Subsidiary of an Insured Credit Union as referring to the same entity. Therefore, any proposed PPSI applicant must meet the requirements in part 712. The Board is aware there may be some provisions in part 712 that are unnecessary for NCUA-licensed PPSIs. For example, investing or lending FICUs would not need to include a contractual provision with the PPSI for the NCUA's access to books and records given other more direct examination and enforcement authorities under the GENIUS Act. However, other requirements such as the CUSO Registry may be beneficial to apply to NCUA-licensed PPSIs. The CUSO Registry is intended for the NCUA to gather certain operational and financial data of CUSOs and could be used by NCUA-licensed PPSIs to submit certain statutorily required information to NCUA. Additionally, the public may use the Registry as a resource to find contact and service information about various CUSOs. Including NCUA-licensed PPSIs on the Registry would allow the public to search for and verify that a payment stablecoin issuer is an NCUA-licensed PPSI.

Request for Comment: The Board solicits comments on which provisions of part 712 should not be applicable to NCUA-licensed PPSIs. The Board seeks to reduce regulatory redundancies and is considering whether to explicitly exclude NCUA-licensed PPSIs from certain provisions in part 712 as part of future rulemakings related to PPSI issuer standards.

The Board notes that in 2021 it sought comments on whether it should reconsider its longstanding interpretation of the lending and investment authorities under the FCU Act. 33 The Board has not yet adopted this interpretation. However, if the Board does so at a future date it would increase the types of organizations that an FCU may invest in. Under such an interpretation, FCUs could potentially invest in companies that broadly serve the financial services community, but do not primarily serve credit unions and their members. For instance, an FCU could invest in an organization with community banks that could be primarily used by the community banks' customers but is also used by the FCU's members.

If the Board revises its historic interpretation, then the first and second prong of the Subsidiary of an Insured Credit Union definition would refer to separate entities. The practical effect of this would be that FCU subsidiaries that issue payment stablecoins would not have to meet the “primarily serve” test under § 712.3(b).

The Board also notes that the GENIUS Act has slightly different wording related to FCU investment authority under section 1757(7)(I) of the FCU Act. The FCU Act provides that any organization in which the FCU invests must be providing services which are associated with the routine operations of credit unions. The GENIUS Act, however, states the organization providing services to the insured credit union must be associated with the routine operations of credit unions. It appears that the GENIUS Act requires investing FCUs to receive services from any PPSI that qualifies as a subsidiary. The Board would more fully consider the implications of this provision should it reconsider its historic interpretation on sections 107(5)(D) and 1757(7)(I) of the FCU Act.

Finally, the Board notes that there is a statutory limitation on the amount of investment under section 1757(7)(I) of the FCU Act. An FCU is only authorized to invest up to 1 percent of its total paid in and unimpaired capital and surplus in organizations. An FCU that has already invested 1 percent of its total paid in and unimpaired capital and surplus in CUSOs, would not be able to invest any additional money in a PPSI. Principally, the Board's interpretation related to sections 107(5)(D) and 1757(7)(I) of the FCU Act does not affect an FCU's total investments under section 1757(7)(I) of the FCU Act. Total CUSO investments and PPSI investments must be aggregated and limited to 1 percent of total paid in and unimpaired capital and surplus regardless of the Board's interpretation.

Request for Comment: Should the Board reconsider in a separate rulemaking its longstanding interpretation that the entities described in sections 107(5)(D) and 1757(7)(I) of the FCU Act are identical? If so, what would the implication be for PPSIs and non-PPSI CUSOs? Would a revised interpretation result in any additional risk to FCUs?

Request for Comment: What is the impact of the wording differences in the FCU Act and GENIUS Act related to section 1757(7)(I) of the FCU Act? Would FCUs have to receive services from any PPSI in which it invests under section 1757(7)(I) of the FCU Act?

Request for Comment: If the Board revises its historic interpretation, what provisions of part 712 should apply to subsidiaries of insured credit unions, if any? Should non-CUSO FICU subsidiaries be required to register with the CUSO Registry? The Board may consider requiring all FICU subsidiaries to register.

The GENIUS Act also broadly defines a subsidiary of a state-chartered insured credit union (hereinafter a FISCU) as a FICU subsidiary. Therefore, any entity that meets the FDI Act definition of a subsidiary and is chartered by a FISCU would meet the definition of a FICU subsidiary and be subject to NCUA supervisory authority if it is a PPSI. The Board notes that under part 712, certain State subsidiaries are defined as CUSOs and subject to certain requirements in part 712. 34 However, a subsidiary is only a CUSO if that entity is engaged primarily in providing products or services to credit unions or credit union members. State subsidiaries that are not engaged primarily in providing products or services to credit unions or credit union members, would not meet the definition of CUSO and therefore would not be subject to part 712.

The GENIUS Act definition does not require that the entity meet the “engaged primarily in providing products or services to credit unions or credit union members” standard. Therefore, a FISCU subsidiary may not be a CUSO, and not subject to part 712, but may be a FICU subsidiary for purposes of the GENIUS Act and subject to NCUA supervisory authorities if it is, or applies to be, a PPSI.

A FICU may establish one or more intermediate entities, by itself or with third parties, to invest in a PPSI. If the FICU is an FCU then any entity in which it invests is subject to the CUSO regulation as all levels or tiers of a CUSO are subject to part 712. Therefore, establishing multi-tiered corporate structures does not circumvent the NCUA's jurisdiction as a primary Federal payment stablecoin regulator. This would also be true for subsidiaries of FISCUs that primarily serve credit unions, as such entities are also subject to the CUSO rule.

However, for a FISCU that has a subsidiary that does not primarily serve credit unions, part 712 is not applicable. 35 Therefore, the proposed rule would provide that all tiers or levels of a FICU subsidiary are included as a FICU subsidiary under part 706. Thus, if a FISCU establishes a holding company or issues payment stablecoins through a multi-tiered subsidiary structure, the NCUA would remain a primary Federal payment stablecoin regulator with respect to the subsidiary.

The GENIUS Act generally limits the activities that a PPSI may engage in. 36 Specifically, a PPSI may only (i) issue payment stablecoins; (ii) redeem payment stablecoins; (iii) manage related reserves, including purchasing, selling, and holding reserve assets or providing custodial services for reserve assets, consistent with State and Federal law; (iv) provide custodial or safekeeping services for payment stablecoins, required reserves, or private keys of payment stablecoins, consistent with the GENIUS Act; and (v) undertake other activities that directly support any of the above activities. PPSIs may also engage in digital asset service provider activities specified in the GENIUS Act and activities incidental thereto, that are authorized by the primary Federal payment stablecoin regulators. 37

Given this limitation on other activities, the Board believes it is likely that existing CUSOs would not seek to become PPSIs. Additionally, the NCUA would have examination and enforcement authority over the PPSI that it does not have over traditional CUSOs. The Board notes that for existing CUSOs the NCUA only has contractual rights to access books and records. For example, the NCUA cannot take an enforcement action against a CUSO (provided the CUSO is not an institution-affiliated party), even if the NCUA perceives a risk after accessing the CUSO's books and records.

Request for Comment: To what extent do commenters believe FICUs will seek to issue payment stablecoins through existing CUSOs? Or do commenters believe it will be more likely for FICUs to establish new subsidiaries if they seek to issue payment stablecoins?

Request for Comment: The Board solicits commenter's feedback on all of these definitions and the approach to generally incorporating the definitions in the GENIUS Act by reference. Should the NCUA include the definitions in the GENIUS Act in the NCUA's regulation? The Board also notes that further definitions may be proposed as part of a future notice of proposed rulemaking implementing standards for NCUA-licensed PPSIs. The Board also requests input as to whether additional defined terms are necessary for implementation of the GENIUS Act.

Section 706.101 establishes the scope of Subpart A and states the subpart contains the NCUA rules and procedures for FICUs seeking to invest in payment stablecoin issuers and for FICUs and their subsidiaries to jointly apply for a license from the NCUA to be a PPSI. It also notes that Subpart A contains the information on rules of applicability, where and how to file an application to become an NCUA-licensed PPSI, and provides the requirements and policies applicable to filings.

Section 706.102 sets forth the general rules governing the process for an Applying Issuer to seek a license to become an NCUA-licensed PPSI. Paragraph (a) of proposed § 706.102 would state that additional filing guidance, including policies and procedures, are included in the NCUA's Payment Stablecoin Issuer Manual (Manual). The Manual would be posted on NCUA's website and include detailed information about the application process, including the required information, examples, forms, and additional resources for Applying Issuers. Paragraph (b) of proposed § 706.102 would state that electronic filing is encouraged but not required.

Paragraph (c) of proposed § 706.102 would include a reservation of authority. The reservation of authority would state that the Board may adopt materially different procedures for a particular filing, or class of filings as it deems necessary, for example, in exceptional circumstances or for unusual transactions. The Board would provide notice of the change to the filer and to any other party that the Board determines should receive notice. The Board expects to apply the reservation of authority only in limited circumstances. When making any such determination, the Board would consider all relevant factors affecting the filing and the activities of the Applying Issuer, its investors, and Parent Company, including their activities, business models, and risk-management practices. Any exercise of authority under this section by the Board would be in writing.

Finally, paragraph (d) of proposed § 706.102 provides additional information on timing considerations. Specifically, the proposed rule would provide that the NCUA does not include the day of the act or event ( e.g., the date a filing is received by the NCUA) from which the period begins to run. When the last day of a period is a Saturday, Sunday, or Federal holiday, the period runs until the end of the next day that is not a Saturday, Sunday or Federal holiday.

Request for Comment: The Board seeks comment on these general rules of applicability. The Board is especially interested in commenter input as to adoption of a Manual. Do commenters believe this approach is appropriate? If so, what do commenters believe should be addressed in the Manual? The Board specifically solicits comment as to:

1. What information or resources would be most helpful for the NCUA to include in the Manual? Are there specific areas such as financial projections, risk management strategies, or operational models where more detailed explanations or model templates would be useful?

2. What documentation or evidence should the Manual suggest applicants provide to demonstrate the financial condition and resources necessary to maintain reserves on a 1:1 basis as a payment stablecoin issuer?

3. What specific documentation or evidence should the Manual detail that applicants should be able to demonstrate to show that their technology systems can comply with the terms of any lawful orders and execute actions required by law enforcement or regulatory authorities, such as freezing, seizing, burning, reissuing, and preventing the transfer of stablecoins, and the blocking of stablecoins or accounts?

4. What specific technological capabilities should the Manual detail applicants should be able to demonstrate with respect to:

a. Transaction monitoring and suspicious activity detection;

b. Reserve management and real time reconciliation; and

c. Cybersecurity and operational resilience?

5. The NCUA is considering requiring applicants to provide attestations of independent third-party technology assessments or audits. What standards or frameworks should govern such assessments? What challenges or benefits do you anticipate this requirement might pose? How should the Manual help address any challenges?

6. The NCUA is considering requiring audited financial statements as part of the initial application. What challenges or benefits do you anticipate this requirement might pose? How should the Manual help address any challenges?

7. What documentation or evidence should the Manual suggest that an applicant could provide to demonstrate that they meet operational, compliance, and information technology risk management requirements and standards? More specifically, what documentation or information should the Manual suggest applicants provide regarding their:

a. distributed ledger or blockchain infrastructure, including network architecture, smart contract design, and protocol governance;

b. technology systems' scalability, reliability, and disaster recovery capabilities; and

c. ability to demonstrate operational readiness to process redemptions in a timely manner?

8. It is expected that applicants be able to provide documented disclosures regarding redemption fees, procedures, and timelines at the time of application. What challenges or benefits do you anticipate this requirement might pose? How can the Manual help to address any challenges?

9. What additional factors, if any, should the NCUA consider in evaluating applications to ensure the safety and soundness of permitted payment stablecoin issuers? How can the Manual help address these factors?

Section 5(a)(1)(A) of the GENIUS Act requires the NCUA to receive, review, and consider for approval applications from any FICU that seeks to issue payment stablecoins through a FICU subsidiary. 38 Section 5(a)(1)(B) requires the NCUA to establish a process and framework for the licensing, regulation, examination, and supervision of such entities that prioritizes the safety and soundness of such entities. 39 Section 5(a)(3) requires that the NCUA, upon receipt of a substantially complete application, evaluate and make a determination on each application based on the criteria established under the GENIUS Act (hereinafter the “Statutory Evaluation Factors”). 40

The proposed rule states that a FICU subsidiary seeking to issue payment stablecoins must apply to the NCUA for a license and receive NCUA approval before issuing the stablecoins. The proposed rule requires that this application be filed jointly with any insured credit union Parent Company(ies). The Board notes that the FDIC's proposed rule requires only the IDI to apply.

The proposed rule would provide that the proposed PPSI would apply jointly with its FICU Parent Company(ies). The proposed rule would also require that the proposed PPSI, the Parent Company(ies), and any Principal Shareholders certify in writing that any filing or supporting material submitted to the NCUA contains no material misrepresentations or omissions. The Board believes it is more efficient and practical for the issuer, the entity receiving the license to engage in issuing payment stablecoins, to submit the application directly with its FICU Parent Company(ies) rather than having all investing FICUs apply.

Additionally, the Board believes PPSIs are more likely to be widely held in the credit union industry than in the banking industry. Jointly held credit union subsidiaries have the potential to provide significant value to the credit union industry by facilitating cooperation among credit unions. To compete effectively in the payment stablecoin market, FICUs may need to rely on pooling their resources to jointly fund a FICU subsidiary as the associated costs of issuing payment stablecoins may be prohibitive for all but a very few of the largest FICUs.

For these reasons, the Board anticipates that FICUs may jointly form a FICU subsidiary to issue payment stablecoins. Therefore, the proposed rule requires the potential PPSI to apply to the NCUA to be an NCUA-licensed PPSI jointly with only investing FICUs that are considered Parent Company(ies) under the proposed rule. The definition of Parent Company in the proposed rule is intended to capture only the FICUs that are most likely to control or direct the management and policies of the PPSI and have those FICUs apply jointly with the Applying Issuer. The Board does not believe it is practical or consistent with congressional intent for the NCUA to review licensure applications from each investing FICU.

As noted, the proposed rule would also require that the Applying Issuer and all Parent Companies and any Principal Shareholders of the Applying Issuer make certain certifications about the application and submit certain information on their Officers and Directors. The Board seeks comments on the proposed application scheme; specifically, whether (1) the application should be made by the proposed PPSI, (2) an application from FICUs is preferred, or (3) the application should require joint filing and certification of all information in it by both the Applying Issuer and all investing FICUs.

The Board does understand, however, that requiring the proposed PPSI and the FICU Parent Company(ies) to apply may result in minor inconsistencies with the regulations of the other primary Federal payment stablecoin regulators in certain situations. Paragraph (b) of proposed § 706.103 provides that filings are submitted as provided in the NCUA's Payment Stablecoin Issuer Manual.

Paragraph (c) of proposed § 706.103 provides that before submitting a filing to the NCUA, a potential filer may contact the NCUA to discuss whether a prefiling meeting would be beneficial. The NCUA would decide whether to grant a prefiling meeting on a case-by-case basis and would consider whether the application would represent a novel, complex, or unique proposal such that a prefiling meeting would be beneficial. Paragraph (c) notes that submission of a draft business plan or other relevant information before any prefiling meeting may expedite the filing review process. It states that a potential filer considering a novel, complex, or unique proposal is encouraged to contact the NCUA to request a prefiling meeting early in the development of its proposal for the early identification and consideration of policy issues. Finally, paragraph (c) notes that information on model business plans can be found in the NCUA's Payment Stablecoin Issuer Manual.

As noted above, paragraph (d) of proposed § 706.103 provides that an Applying Issuer, and its Parent Company(ies), and any Principal Shareholders, must certify in writing that any filing or supporting material submitted to the NCUA contains no material misrepresentations or omissions. The Board notes that any person responsible for any material misrepresentation or omission in a filing or supporting materials may be subject to an enforcement action and other penalties, including criminal penalties provided in 18 U.S.C. 1001.

Paragraph (e) of proposed § 706.103 states that the NCUA may require filing fees to accompany certain filings made under Subpart A. At this time, the Board does not believe a filing fee is necessary. However, if the number of applications received, or the resources to process the application, are substantial, the Board may consider imposing a filing fee. The Board would not impose a filing fee without publishing an applicable fee schedule on its website at http://www.NCUA.gov.

Request for Comment: The Board is seeking comments on the pros and cons of recovering the costs of administering the stablecoin program by imposing charges on individual FICUs or NCUA-licensed PPSIs. The Board is particularly interested in comments as to whether annual NCUA costs for staff and contractors to review proposed stablecoin issuer applications and conduct examinations should be borne entirely by the FICUs who own the applying PPSIs or spread across all FICUs through the NCUA's usual budget process. The Board is considering imposing a licensing fee or examination fee to offset the NCUA's additional costs. The Board believes that because payment stablecoin activities are optional and based on each FICU's business judgment; and that because it is likely that, at least initially, only a minority of FICUs participate in payment stablecoin activities, commenters may consider it more equitable to not pay these costs out of the general FCU operating fee and National Credit Union Share Insurance Fund (NCUSIF) overhead transfer.

However, previously when the Board raised the potential for charging a program-based fee, the Board declined to impose the fee following the notice and comment process. Previous commenters have raised negative precedent related to distinct fees; concerns about NCUA cost estimates; the collective benefit of certain programs are to the industry even if only select FICUs are engaged in the activity; and that by reducing risk to the NCUSIF, the specific activity in question may be saving the agency and the industry money. The Board requests comments on whether these considerations are present for administering a program-based fee for PPSI licensing or examination.

Finally, the Board notes that the intent for any charges would not be to act as a deterrent, but rather as an equitable way of assessing the cost of payment stablecoin activities and the NCUA's expanded supervision requirements.

Section 706.104 of the proposed rule would detail certain information about examinations and investigations the NCUA may conduct related to filings. Paragraph (a) of proposed § 706.104 would express the NCUA's authority to examine or investigate and evaluate facts related to a filing to the extent necessary to reach an adequately informed decision. Paragraph (b) of proposed § 706.104 would clarify that for certain filings the NCUA will require legible fingerprints for a biometric based criminal history search. The Board believes that such criminal history background checks are necessary for the NCUA to review the required Statutory Evaluation Factors, 41 but requests commenters' input as to this approach.

The NCUA reserves the right to assess fees for investigations or examinations conducted under paragraph (a) of this section. The Board would not impose a fee without publishing an applicable fee schedule on its website at http://www.NCUA.gov.

Request for Comment: The Board specifically solicits commenter feedback as to whether the proposed rule should address the NCUA's authority to assess fees related to investigations or examinations under this section.

Upon receipt of a substantially complete application, the NCUA is required to evaluate and make a determination on each application based on the criteria established under the GENIUS Act. 42 The GENIUS Act requires the NCUA to evaluate a substantially complete application using the following Statutory Evaluation Factors:  43

(1) The ability of the applicant (or, in the case of an applicant that is an insured depository institution, the subsidiary of the applicant), based on financial condition and resources, to meet the requirements set forth under section 4.

(2) Whether an individual who has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud is serving as an officer or director of the applicant.

(3) The competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant, its subsidiaries, and parent company, including—

(A) the record of those officers, directors, and principal shareholders of compliance with laws and regulations; and

(B) the ability of those officers, directors, and principal shareholders to fulfill any commitments to, and any conditions imposed by, their primary Federal payment stablecoin regulator in connection with the application at issue and any prior applications.

(4) Whether the redemption policy of the applicant meets the standards under section 4(a)(1)(B).

(5) Any other factors established by the primary Federal payment stablecoin regulator that are necessary to ensure the safety and soundness of the permitted payment stablecoin issuer. 44

The NCUA proposes to adopt and implement these required Statutory Evaluation Factors in § 706.105 as described below.

Paragraph (a) of proposed § 706.105 addresses the scope of the section and would describe the procedures and requirements governing NCUA evaluation of an application for an NCUA PPSI license using the Statutory Evaluation Factors. Proposed § 706.105 clarifies that the NCUA would evaluate each substantially complete application to determine whether approval would be consistent with the safety and soundness of the applying payment stablecoin issuer based on the Statutory Evaluation Factors set forth in the GENIUS Act and implemented in proposed § 706.105. Proposed paragraph (a) concludes by advising that an applicant should consult the NCUA's Payment Stablecoin Issuer Manual to determine what other information is necessary for the NCUA to evaluate an application using the Statutory Evaluation Factors described in this section. As a supplement to these proposed regulations, the NCUA will be issuing the NCUA's Payment Stablecoin Issuer Manual to provide guidance to and assist PPSIs in seeking an NCUA PPSI license.

Paragraph (b) of proposed § 706.105 would state that the NCUA grants NCUA-PPSI licenses under the authority provided by the GENIUS Act at 12 U.S.C. 5904, which requires the NCUA to evaluate applications using the Statutory Evaluation Factors described in subsection (c) of that section. The proposed rule would specifically codify these Statutory Evaluation Factors in paragraph (b) as follows:

(1) The ability of the Applying Issuer, based on financial condition and resources, to meet the requirements set forth under 12 U.S.C. 5903 and incorporated in Subpart B of part 706;

(2) Whether an individual who has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud is serving as an Officer or Director of the Applying Issuer;

(3) The competence, experience, and integrity of the Officers, Directors, and Principal Shareholders of the Applying Issuer, its subsidiaries, and Parent Company, including:

(i) the record of those Officers, Directors, and Principal Shareholders of compliance with laws and regulations; and

(ii) the ability of those Officers, Directors, and Principal Shareholders to fulfill any commitments to, and any conditions imposed by, the NCUA in connection with the application at issue and any prior applications;

(4) Whether the redemption policy of the Applying Issuer meets the standards under 12 U.S.C. 5903(a)(1)(B) and incorporated in Subpart B of part 706; and

(5) Any other factors established by the NCUA that are necessary to ensure the safety and soundness of the Applying Issuer.

Paragraph (c) of proposed § 706.105 would provide the policy considerations that would guide the NCUA's evaluation of an Applying Issuer's ability to satisfy the Statutory Evaluation Factors provided by the GENIUS Act at 12 U.S.C. 5904(c) and reproduced in proposed § 706.105(b). Proposed paragraph (c)(1) would detail specific policy considerations that would guide the NCUA's evaluation. Paragraph (c)(2) would provide a framework as to the NCUA's policy for cumulatively evaluating an Applying Issuer based on its Issuing Group and its business plan together, along with factors specific to the markets and economic conditions in which an Applying Issuer intends to operate and the risks specific to the services it intends to provide.

As noted, proposed paragraph (c)(1) would detail specific policy considerations that would guide the NCUA's evaluation of the Statutory Evaluation Factors. The first three policy considerations stated in proposed (c)(1)(i)-(iii), would all relate to the competence, experience, and integrity Statutory Evaluation Factor. Proposed paragraph (c)(1)(i) would consider whether the Applying Issuer has an Issuing Group that has a record of compliance with laws and regulations and that is familiar with the laws and regulations applicable to PPSIs and digital asset service providers, as that term is defined in the GENIUS Act. Proposed paragraph (c)(1)(ii) would consider whether the Applying Issuer has an Issuing Group with the ability to fulfill any commitments to, and any conditions imposed by, the NCUA in connection with the application at issue and any prior applications. Paragraph (c)(1)(iii) would consider whether the Applying Issuer has competent management, including a board of directors, with ability and experience relevant to the types of services to be provided.

The Board recognizes that these policy considerations are somewhat redundant of the required Statutory Evaluations Factors incorporated in paragraph (b). However, the Board feels it important to make it clear how the NCUA will consider the competence, experience, and integrity factors. Key to these factors would be completion of the NCUA's Biographical and Financial Report, as would be required in proposed § 706.105(f)(3).

Paragraph (iv) would articulate that the NCUA will consider whether the Applying Issuer has the capital, liquidity, and the capital and liquidity plans, sufficient to support the projected volume and type of business. The Board views realistic and well-developed capital and liquidity plans as fundamental to an Applying Issuer's demonstration that, as is required by the Statutory Evaluation Factors, 45 it has the ability, based on financial condition and resources, to meet the requirements for PPSIs set forth in the GENIUS Act  46 and to be implemented in the NCUA's regulations. The Board also views this as key to ensuring the safety and soundness of the Applying Issuer, as is required by the Statutory Evaluation Factors. 47

Paragraph (v) would articulate that the NCUA will consider whether the Applying Issuer has a redemption policy that is sufficient to meet all requirements in subpart B of this part. The Board views a redemption policy that is sufficient to meet all requirements in Subpart B as prescriptively required by the Statutory Evaluation Factors and key to the safety and soundness of an Applying Issuer.

Paragraph (vi) would articulate that the NCUA will consider whether the Applying Issuer can reasonably be expected to achieve and maintain profitability. The Board views a realistic and well-developed plan for achieving and maintaining profitability as fundamental to an Applying Issuer's demonstration that, as is required by the Statutory Evaluation Factors, 48 it has the ability, based on financial condition and resources, to meet the requirements for PPSIs set forth in the GENIUS Act. 49 The Board also views this is as key to ensuring the safety and soundness of the Applying Issuer, as is required by the Statutory Evaluation Factors. 50

Paragraph (vii) would articulate that the NCUA will consider whether the Applying Issuer will be operated in a safe and sound manner. The Board views its consideration of an Applying Issuer's ability to operate in a safe and sound manner as prescriptively required by the Statutory Evaluation Factors. 51 Paragraph (vii) would clarify that the NCUA's evaluation of an Applying Issuer's ability to operate in a safe and sound manner would include, but not be limited to (1) the ability of the Applying Issuer to meet the operational, compliance, and information technology risk management requirements and standards to be outlined in subpart B of this part; and (2) the ability of the Applying Issuer to maintain sufficient technological capabilities to comply with the terms of any lawful order and all applicable laws and regulations.

As noted, paragraph (c)(2) of proposed § 706.105 would provide additional information as to how the NCUA cumulatively evaluates an Applying Issuer based on its Issuing Group and its business plan together. Paragraph (c)(2) would clarify that the NCUA's judgment concerning one of these aspects may affect the evaluation of the other. It would also stress that an Issuing Group and its business plan must be stronger in markets where economic conditions are marginal, competition is intense, or the services to be provided have greater or unknown risk.

The Board believes that this policy for a cumulative evaluation that considers both the Issuing Group and the business plan together will best ensure proper consideration of the Statutory Evaluation Factors and that NCUA-licensed PPSIs are able to be successful, safe, and sound enterprises. The Board further believes that consideration of the markets and economic conditions in which an Applying Issuer intends to operate and the risks specific to the services it intends to provide are key to this holistic evaluation.

Request for Comment: The Board specifically solicits comment as to whether these policy considerations should be included in paragraph (c) and as to whether any additional factors or details should be included.

Request for Comment: The Board also solicits comment as to whether the policy considerations listed in paragraph (c)(1)(vii) providing examples relevant to the NCUA's evaluation of an Applying Issuer to operate safely and soundly are appropriate to include in the regulation. Should the Board include any examples? Are there additional examples the Board should include?

Paragraph (d) of proposed § 706.105 would provide specific requirements applicable to the Applying Issuer's Issuing Group. An Issuing Group, as defined in proposed § 706.2, would include the Applying Issuer and the Officers, Directors, and Principal Shareholders of the Applying Issuer, its subsidiaries, and Parent Company or Companies. A FICU or other party that is not covered by this definition, such as a FICU that has invested in the Applying Issuer, but is not a Parent Company, would not be a member of the Issuing Group.

Paragraph (d)(1) of proposed § 706.105 would generally discuss how the NCUA proposes to evaluate an Issuing Group as part of the Statutory Evaluation Factors and the holistic application. It would provide that, in general, an Issuing Group must have the competence, experience, and integrity to be active in directing the Applying Issuer's affairs in a safe and sound manner. It would require that the business plan and other information supplied in the application, including the completed NCUA Biographical and Financial Report forms, demonstrate an Issuing Group's collective ability to establish and operate a successful PPSI in the economic and competitive conditions of the market to be served. This proposed rule would also require that this be demonstrated with consideration of the activities to be engaged in by the Applying Issuer and the services it intends to provide. Paragraph (d)(1) would also state that each member of the Issuing Group must be knowledgeable about the business plan. The NCUA believes an inadequate business plan may be a reason for the NCUA to deny an application because it reflects adversely on the Issuing Group's qualifications.

Paragraph (d)(2) of proposed § 706.105 would prescribe standards for selection of management by the Issuing Group. Specifically, it would require that the initial board of directors select competent Officers before the NCUA grants an NCUA-PPSI License. The Board understands that selected Officers may be conditional pending NCUA's review and approval of the application. Early selection of Officers, especially the chief executive officer, contributes favorably to the preparation and review of a business plan that is accurate, complete, and appropriate for the activities the Applying Issuer intends to engage in, and is necessary for a substantially complete application.

Paragraph (d)(3) of proposed § 706.105 would address requirements related to the financial resources of the Issuing Group. Specifically, paragraph (d)(3)(i) would require that each member of the Issuing Group have a history of responsibility, personal honesty, and integrity. The Board views this as required by the Statutory Evaluation Factors, both in terms of the competence, experience, and integrity of the Officers and Directors in the Issuing Group  52 and the prohibition on certain felony offenses. 53 The Board envisions Officers and Directors in the Issuing Group generally demonstrating their history of responsibility, personal honesty, and integrity in the NCUA Biographical and Financial Report form required under paragraph (f)(3) of this section. However, the Board retains the right to request additional information in evaluating this requirement.

Paragraph (d)(3)(ii) would require the Issuing Group to have a realistic plan, or plans, for enabling the Applying Issuer to obtain capital and liquidity when needed. The Board views demonstrating realistic plans for obtaining capital and liquidity as key to an Applying Issuer's prospects and viability and a matter that the Issuing Group must be able to address. However, the Board does not believe FICUs should attempt to financially obligate themselves beyond their initial investments in a manner that poses future material risk to the investing FICUs and thus their members and the NCUSIF. The Board views it as inappropriate for a FICU to implicitly financially obligate its members and the NCUSIF as a backstop for Applying Issuers. The Board also notes that it may consider any purported financial obligation as an investment in or loan to the PPSI for purposes of the 1 percent investment and lending limitations under the FCU Act. 54

Background

Under title VIII of the Alaska National Interest Lands Conservation Act (ANILCA) (16 U.S.C. 3111-3126), the Secretary of the Interior and the Secretary of Agriculture (hereafter referred to as “the Secretaries”) jointly implement the Federal Subsistence Management Program (the Program). The Program provides a preference for take of fish and wildlife resources for subsistence uses on Federal public lands and waters in Alaska. Only Alaska residents of areas or communities identified as rural are eligible to participate in the Program. The Secretaries published temporary regulations to carry out the Program in the Federal Register on June 29, 1990 (55 FR 27114), and final regulations on May 29, 1992 (57 FR 22940). Program officials have subsequently amended these regulations a number of times. Because the Program is a joint effort between the Departments of the Interior and Agriculture, these regulations are located in two titles of the Code of Federal Regulations (CFR): The Agriculture regulations are at title 36, “Parks, Forests, and Public Property,” and the Interior regulations are at title 43, “Public Lands: Interior,” at 36 CFR 242.1-28 and 43 CFR 51.1-28, respectively. Consequently, to indicate that identical changes are proposed for regulations in both titles 36 and 43, in this document we will present references to specific sections of the CFR as shown in the following example: § _.27.

The Program regulations contain subparts as follows: Subpart A, General Provisions; Subpart B, Program Structure; Subpart C, Board Determinations; and Subpart D, Subsistence Taking of Fish and Wildlife. Consistent with subpart B of these regulations, the Secretaries established a Federal Subsistence Board (the Board) to administer the Program. The Board comprises:

• A Chair appointed by the Secretary of the Interior with concurrence of the Secretary of Agriculture;

• Five public members appointed by the Secretary of the Interior with concurrence of the Secretary of Agriculture;

• The Alaska Regional Director, Bureau of Indian Affairs;

• The Alaska State Director, Bureau of Land Management;

• The Alaska Regional Director, National Park Service;

• The Alaska Regional Director, U.S. Fish and Wildlife Service; and

• The Alaska Regional Forester, U.S. Forest Service.

Through the Board, these agencies and public members participate in the development of regulations for subparts C and D. Subpart C sets forth important Board determinations regarding program eligibility, i.e., which areas of Alaska are considered rural and which species are harvested in those areas as part of a “customary and traditional use” for subsistence purposes. Subpart D sets forth specific seasons, limits, and other harvest parameters and requirements.

In administering the Program, the Secretaries divided Alaska into 10 subsistence resource regions, each of which is represented by a Federal Subsistence Regional Advisory Council. The Councils provide a forum for rural residents with personal knowledge of local conditions and resource requirements to have a meaningful role in the subsistence management of fish and wildlife on Federal public lands in Alaska. The Council members represent varied geographical, cultural, and user interests within each region.

The Councils have a substantial role in reviewing this proposed rule and making recommendations for the final rule. The Board, through the Councils, will hold public meetings in person and via teleconference on this proposed rule at the following locations in Alaska, on the following dates:

After the comment period concludes, the written proposals to change the regulations at subpart D, take of fish and shellfish and subpart C, customary and traditional use and rural determinations, will be compiled and distributed for public review. Written public comments will be accepted on the distributed proposals during a second minimum 30-day public comment period, which will be announced in statewide newspaper and radio ads and posted to the Program web page and social media. The Board, through the Councils, will hold a second series of public meetings or teleconference meetings in September through October 2026, to receive comments on specific proposals and to develop recommendations to the Board on the following dates:

Public notice of specific dates, times, call-in number(s), and how to participate and provide public testimony will be announced in radio ads and posted to the Program web page and social media at least 2 weeks prior to each meeting. The amount of work on each Council's agenda determines the length of each Council's meeting, but typically the meetings are scheduled to last 2-3 days. Occasionally a Council will lack the necessary information during a scheduled meeting to make a recommendation to the Board or to provide comments on other matters affecting subsistence in the region. If this situation occurs, the Council may announce on the record a later teleconference to address the specific issue when the requested information or data is available; it is noted that any follow-up teleconference would be an exception and must be approved, in advance, by the Director of the Office of Subsistence Management. These teleconferences are open to the public, along with opportunities for public comment; the date and time will be announced during the scheduled meeting, and through news releases and local radio, the Program web page, and social media ads.

The Board will discuss and evaluate proposed changes to the subsistence management regulations during a public meeting scheduled to be held in Anchorage, Alaska, in February 2027. The Council Chairs, or their designated representatives, will present their respective Councils' recommendations at the Board meeting. Additional oral testimony may be given on specific proposals before the Board at that time. At that public meeting, the Board will deliberate and take final action on proposals received that request changes to this proposed rule.

Proposals to the Board to modify the general fish and wildlife regulations, fish and shellfish harvest regulations, customary and traditional use determinations, and rural determinations must include the following information:

a. Name, address, and telephone number of the requestor;

b. Each section and/or paragraph designation in the current regulations for which changes are suggested, if applicable;

c. A description of the regulatory change(s) desired;

d. A statement explaining why each change is necessary;

e. Proposed wording changes; and

f. Any additional information that you believe will help the Board in evaluating the proposed change.

The Board will immediately reject proposals that fail to include the above information, or proposals that are beyond the scope of § _.23, and _.24 subpart C (rural determinations and customary and traditional use determinations) and § _.25, _.27, and _.28 of subpart D (the general and specific regulations governing the subsistence take of fish and shellfish). If a proposal needs clarification, prior to being distributed for public review, the proponent may be contacted, and the proposal could be revised based on their input. Once a proposal is distributed for public review, no additional changes may be made. During the February 2027 meeting, the Board may defer review and action on some proposals to allow time for cooperative planning efforts, or to acquire additional needed information. The Board may elect to defer taking action on any proposal if the workload of staff, Councils, or the Board becomes excessive. These deferrals may be based on recommendations by the affected Council(s) or staff members or on the Board's intention to do least harm to the subsistence user and the resource involved. A proponent of a proposal may withdraw the proposal provided it has not been considered by a Council. The Board may consider and act on alternatives that address the intent of a proposal while differing in approach.

You may submit written comments and materials concerning this proposed rule by one of the methods listed in ADDRESSES . If you submit a comment via http://www.regulations.gov, your entire comment, including any personal identifying information, will be posted on the website. If you submit a hardcopy comment that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. We will post all hardcopy comments on http://www.regulations.gov.

Comments and materials we receive, as well as supporting documentation we used in preparing this proposed rule, will be available for public inspection on http://www.regulations.gov at Docket No. DOI-2025-0071, or by appointment, provided no public health or safety restrictions are in effect, between 8 a.m. and 3 p.m., Monday through Friday, except Federal holidays, at: Office of Subsistence Management, 1011 East Tudor Road, Anchorage, AK 99503.

The Board is committed to providing access to these meetings for all participants. Please direct all requests for sign language interpreting services, closed captioning, or other accommodation needs to the Office of Subsistence Management at 907-786-3888, subsistence@ios.doi.gov, or 800-877-8339 (TTY), 7 business days prior to the meeting you would like to attend.

As expressed in Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” the Federal officials that have been delegated authority by the Secretaries are committed to honoring the unique government-to-government political relationship that exists between the Federal Government and Federally Recognized Indian Tribes (herein after referred to as “Tribes”) as listed in 82 FR 4915 (January 17, 2017). Consultation with Alaska Native corporations is based on Public Law 108-199, div. H, Sec. 161, Jan. 23, 2004, 118 Stat. 452, as amended by Public Law 108-447, div. H, title V, Sec. 518, Dec. 8, 2004, 118 Stat. 3267, which provides that: “The Director of the Office of Management and Budget and all Federal agencies shall hereafter consult with Alaska Native corporations on the same basis as Indian tribes under Executive Order No. 13175.”

The Alaska National Interest Lands Conservation Act does not provide specific rights to Tribes for the subsistence taking of wildlife, fish, and shellfish. However, because Tribal members are affected by subsistence fishing, hunting, and trapping regulations, the Secretaries, through the Board, will provide Tribes and Alaska Native corporations an opportunity to consult on this proposed rule.

The Board will engage in outreach efforts for this proposed rule, including a notification letter, to ensure that Tribes and Alaska Native corporations are advised of the mechanisms by which they can participate. The Board provides a variety of opportunities for consultation: proposing changes to the existing rule, commenting on proposed changes to the existing rule, engaging in dialogue at the Regional Council meetings, engaging in dialogue at Board meetings, and providing input in person, by mail, email, or phone at any time during the rulemaking process. The Board will commit to efficiently and adequately provide an opportunity to Tribes and Alaska Native corporations for consultation regarding subsistence rulemaking according to the Board's policies on consultation.

The Board will consider Tribes' and Alaska Native corporations' information, input, and recommendations, and address their concerns as much as practicable.

In titles 36 and 43 of the CFR, the subparts C and D regulations are subject to periodic review and revision. The Board currently completes the process of revising subsistence take of fish and shellfish regulations in odd-numbered years and subsistence taking of wildlife regulations in even-numbered years; public proposal and review processes take place during the preceding year. The Board also addresses customary and traditional use determinations during the applicable cycle. Rural determinations are taken up during every other fish and shellfish cycle, beginning in 2018.

Based on Board policy, the Board reviews each closure to the take of fish/shellfish and wildlife every 4 years, during each applicable cycle. The following table lists the current closures being reviewed for this cycle. In reviewing a closure, the Board may maintain, modify, or rescind the closure. If a closure is rescinded, the existing regulations apply, or if no regulations are in place, any changes to or the establishment of seasons, methods and means, and harvest limits must go through the full public proposal and review process. The public is encouraged to comment on these closures, and anyone recommending a regulatory change outside the scope of a closure review ( i.e., a change not directly affecting the closure) should submit a regulatory proposal. Anyone recommending a closure to federally qualified subsistence users be rescinded should consider also responding to this proposed rule by submitting a proposal to establish Federal regulations for the area and species that was closed.

The current subsistence program regulations form the starting point for consideration during each new rulemaking cycle. Consequently, in this fish and shellfish rulemaking action, the Board will consider proposals to revise the regulations in any of the following sections of titles 36 and 43 of the CFR:

• § _.23: rural determinations;

• § _.24: customary and traditional use determinations;

• § _.25: general provisions governing the subsistence take of wildlife, fish, and shellfish;

• § _.27: specific provisions governing the subsistence take of fish; and

• § _.28: specific provisions governing the subsistence take of shellfish.

As such, the text of the proposed 2027-2029 subparts C and D subsistence regulations in titles 36 and 43 is the combined text of previously issued rules that revised these sections of the regulations. The following Federal Register citations show when these CFR sections were last revised. Therefore, the regulations established by these final rules constitute the text of this proposed rule:

The text of the proposed amendments to 36 CFR 242.23, 242.27, and 242.28 and 43 CFR 51.23, 51.27, and 51.28 is the final rule for the 2025-2027 regulatory period for fish and shellfish (90 FR 34157, July 18, 2025).

The text of the proposed amendments to 36 CFR 242.24 and 242.25 and 43 CFR 51.24 and 51.25 is the final rule for the transfer and amendment of Federal Subsistence Management Program regulations (90 FR 34148; July 18, 2025).

These regulations will remain in effect until subsequent Board action changes them as a result of the public review process outlined above in this document and a new final rule is published.

A Draft Environmental Impact Statement that described four alternatives for developing a Federal Subsistence Management Program was distributed for public comment on October 7, 1991. The Final Environmental Impact Statement (FEIS) was published on February 28, 1992. The Record of Decision (ROD) on Subsistence Management for Federal Public Lands in Alaska was signed April 6, 1992. The selected alternative in the FEIS (Alternative IV) defined the administrative framework of an annual regulatory cycle for subsistence regulations.

A 1997 environmental assessment dealt with the expansion of Federal jurisdiction over fisheries and is available at the office listed under FOR FURTHER INFORMATION CONTACT . The Secretary of the Interior, with concurrence of the Secretary of Agriculture, determined that expansion of Federal jurisdiction does not constitute a major Federal action significantly affecting the human environment and, therefore, signed a Finding of No Significant Impact.

An ANILCA section 810 analysis was completed as part of the FEIS process on the Federal Subsistence Management Program. The intent of all Federal subsistence regulations is to accord subsistence uses of fish and wildlife on public lands a priority over the taking of fish and wildlife on such lands for other purposes, unless restriction is necessary to conserve healthy fish and wildlife populations or to continue subsistence uses. The final section 810 analysis determination appeared in the April 6, 1992, ROD and concluded that the Federal Subsistence Management Program, under Alternative IV with an annual process for setting subsistence regulations, may have some local impacts on subsistence uses, but will not likely restrict subsistence uses significantly.

During the subsequent 1997 environmental assessment process for extending fisheries jurisdiction, an evaluation of the effects of the subsistence program regulations was conducted in accordance with section 810. That evaluation also supported the Secretaries' determination that the regulations will not reach the “may significantly restrict” threshold that would require notice and hearings under ANILCA section 810(a).

This proposed rule does not contain any new collections of information that require Office of Management and Budget (OMB) approval under the PRA (44 U.S.C. 3501 et seq. ). OMB has reviewed and approved the collections of information associated with the subsistence regulations at 36 CFR part 242 and 43 CFR part 51, and assigned OMB Control Numbers 1090-0014 and 1090-0015, with an expiration date of November 30, 2028. We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number.

According to Executive Order 12866, as reaffirmed by E.O. 13563, regulations must be based on the best available science, and the rulemaking process must allow for public participation and an open exchange of ideas. The OMB Office of Information and Regulatory Affairs (OIRA) has determined that this proposed rule is not significant.

Executive Order 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this proposed rule in a manner consistent with these requirements.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq. ) requires preparation of flexibility analyses for rules that will have a significant economic impact on a substantial number of small entities, which include small businesses, organizations, or governmental jurisdictions. In general, the resources to be harvested under this proposed rule are already being harvested and consumed by the local harvester and do not result in an additional dollar benefit to, or impact on the economy. Therefore, the Departments certify that this rulemaking will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act.

Under the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801 et seq. ), this proposed rule is not a major rule. It will not have an effect on the economy of $100 million or more, will not cause a major increase in costs or prices for consumers, and will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

Title VIII of ANILCA requires the Secretaries to administer a subsistence priority on federal public lands. The scope of this program is limited by definition to certain federal public lands. Likewise, these proposed regulations have no potential takings of private property or require any permitting on private property as defined by Executive Order 12630.

The Secretaries have determined and certify pursuant to the Unfunded Mandates Reform Act, 2 U.S.C. 1502 et seq., that this rulemaking will not impose a cost of $100 million or more in any given year on local or State governments or private entities. The implementation of this rule is by Federal agencies and there is no cost imposed on any State or local entities or Tribal governments.

The Secretaries have determined that these regulations meet the applicable standards provided in sections 3(a) and 3(b)(2) of Executive Order 12988, regarding civil justice reform.

In accordance with Executive Order 13132, this proposed rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. Title VIII of ANILCA precludes the State from exercising subsistence management authority over fish and wildlife resources on Federal lands unless it meets certain requirements.

Title VIII of ANILCA does not provide specific rights to Tribes for the subsistence taking of wildlife, fish, and shellfish. However, as described above under Tribal Consultation and Comment, the Secretaries, through the Board, will provide federally recognized Tribes and Alaska Native corporations a variety of opportunities for consultation: commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Advisory Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, email, or phone at any time during the rulemaking process.

This Executive Order requires agencies to prepare Statements of Energy Effects when undertaking certain actions. However, this proposed rule is not a significant regulatory action under E.O. 13211, affecting energy supply, distribution, or use, and no Statement of Energy Effects is required.

This Executive order directs all bureaus of the Department of the Interior to consider the Alaskan cultural significance of hunting and fishing and the statutory priority of subsistence management required by ANILCA, to conduct meaningful consultation with the State fish and wildlife management agencies prior to enacting regulations that affect the ability of Alaskans to hunt and fish on public lands, and to ensure to the greatest extent possible that hunting and fishing opportunities on Federal lands are consistent with similar opportunities on State lands.

The Board will offer consultation with the State of Alaska on all matters addressed during this regulatory cycle. In addition, the State will be afforded opportunities to provide input into the analyses of all the proposed changes to the regulations and to provide comments to the Councils and the Board on regulatory matters being considered. The Board will consider all comments and information provided by the State in this process. The Board will also review applicable State regulations. Deviations in consistency between State and Federal hunting and fishing opportunities will be minimized to the extent possible while the Program continues to meet the mandates of ANILCA.

This Executive order requires that, for each new regulation issued, at least 10 prior regulations be identified for elimination. The purpose is to ensure that the cost of planned regulations is responsibly managed and controlled through a rigorous regulatory budgeting process. The Program's rulemaking does not create new regulations, rather it revises existing regulations. Since this rulemaking does not create new regulations, it does not necessitate the identification of regulations for recission.

Justin Koller drafted this proposed rule under the guidance of Crystal Leonetti of the Office of Subsistence Management, Department of the Interior, Office of the Assistant Secretary for Policy, Management, and Budget, Anchorage, Alaska. Additional assistance was provided by:

• Matt Varner, Alaska State Office, Bureau of Land Management;

• Eva Patton, Alaska Regional Office, National Park Service;

• Dr. Glenn Chen, Alaska Regional Office, Bureau of Indian Affairs;

• Jill Klein, Alaska Regional Office, U.S. Fish and Wildlife Service; and

• Gregory Risdahl, Alaska Regional Office, USDA—Forest Service.

For the reasons set out in the preamble, the Federal Subsistence Board proposes to amend 36 CFR part 242 and 43 CFR part 51 for the 2027-28 and 2028-29 regulatory years:

Proposed amendments to 36 CFR 242.23, 242.27, and 242.28 and 43 CFR 51.23, 51.27, and 51.28 last amended by the final rule for the 2025-2027 regulatory period for fish and shellfish (90 FR 34157, July 18, 2025).

Proposed amendments to 36 CFR 242.24 and 242.25 and 43 CFR 51.24 and 51.25 last amended by the final rule for the transfer and amendment of Federal Subsistence Management Program regulations (90 FR 34148; July 18, 2025).

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

Pursuant to title I of the CAA, the EPA establishes ambient air quality standards for six “criteria” air pollutants known to be harmful to human health and the environment. States are required to submit plans, referred to as SIPs, that provide for implementation, maintenance, and enforcement of each standard. As appropriate, this includes measures to reduce emissions of criteria air pollutants and/or “precursor” air pollutants that lead to the formation of the criteria air pollutants. Areas causing or contributing to a violation of a NAAQS are designated under the CAA as “nonattainment” and must adopt and submit additional SIP elements. Ozone nonattainment areas are further classified as “Marginal,” “Moderate,” “Serious,” “Severe,” or “Extreme.”

In ozone nonattainment areas, one of the additional SIP elements is the submission of a RACT SIP. CAA sections 182(b)(2) and 182(f) require RACT to be implemented in ozone nonattainment areas classified as Moderate or higher for any source category covered by a Control Techniques Guidelines (CTG) document issued by the EPA and for any major stationary source of volatile organic compounds (VOC) and oxides of nitrogen (NO X ). 1 The EPA defines RACT as the “. . . lowest emission limitation that a particular source is capable of meeting by the application of control technology that is reasonably available considering technological and economic feasibility.”  2

In this proposal, we are evaluating a RACT SIP submitted by Arizona. In 2015, the EPA revised the ozone NAAQS establishing an 8-hour standard of 0.070 parts per million (“2015 ozone NAAQS” or “2015 standard”). 3 In 2018, the EPA initially designated the Phoenix-Mesa area in Arizona as nonattainment for the 2015 standard with a classification of Marginal. 4 In 2022, the EPA reclassified the Phoenix-Mesa ozone nonattainment area to Moderate. 5 The reclassification to Moderate triggered the CAA requirement for Arizona to implement RACT in the Phoenix-Mesa ozone nonattainment area for the 2015 standard. 6

On March 26, 2025, the Arizona Department of Environmental Quality (ADEQ) submitted a SIP revision to the EPA certifying that RACT requirements for the portion of Gila County within the Phoenix-Mesa ozone nonattainment area have been met (“2025 RACT SIP” or “submittal”). The ADEQ is the governor's designee for submitting official revisions of the Arizona SIP to the EPA. Table 1 lists the document in the submittal that is addressed by this proposal with the date that it was adopted and submitted to the EPA by the ADEQ.

On May 1, 2025, the EPA determined that ADEQ's 2025 RACT SIP met the completeness criteria in 40 CFR part 51, appendix V.

The ADEQ has jurisdiction for regulating stationary sources of air pollution within Gila County, Arizona. Therefore, consistent with CAA sections 182(b)(2) and 182(f), the 2025 RACT SIP must demonstrate that the ADEQ is implementing RACT in this area for all sources covered by a CTG document and for all major stationary sources of VOC or NO X . Because the Phoenix-Mesa ozone nonattainment area is classified as Moderate, a major stationary source is any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant. 7

The ADEQ's 2025 RACT SIP certifies that there are no sources subject to RACT requirements within the Gila County portion of the Phoenix-Mesa ozone nonattainment area for the 2015 ozone NAAQS. As such, the ADEQ submitted negative declarations for all CTG documents and for major stationary sources of VOC and NO X . The ADEQ based its negative declarations on reviewing its permitting database, internal point source emissions inventory, and the EPA National Emissions Inventory (NEI). The ADEQ stated that “[t]here are currently no air permitted sources within the area.”  8 The EPA's technical support document (TSD) in the docket for this action has more information about the ADEQ's 2025 RACT SIP.

The ADEQ's 2025 RACT SIP must demonstrate that it implements RACT in the Gila County portion of the Phoenix-Mesa ozone nonattainment area. The EPA's implementation rule for the 2015 standard provides guidance for making a RACT demonstration and references prior discussions in our implementation rules for the 1997 and 2008 ozone standards. 9 In sum, RACT SIPs must contain adopted RACT regulations, certifications (where appropriate) that existing provisions are RACT, and/or negative declarations that no sources in the nonattainment area are covered by a specific CTG. 10 Furthermore, states must submit appropriate supporting information for their RACT submissions. 11

Additionally, relevant requirements in CAA sections 110(a) and 110(l) must also be met. CAA section 110(a) requires emissions limitations in the SIP to be “enforceable.” CAA section 110(l) requires SIP revisions to be adopted after reasonable notice and public hearing and prohibits EPA approval if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress or any other applicable requirement of the Act.

Rules, guidance, and policy documents that we used for our review include the following:

We evaluated the ADEQ's 2025 RACT SIP to ensure it meets RACT and other CAA requirements. We reviewed the EPA's NEI, reviewed the EPA's Enforcement and Compliance History Online (ECHO) database, and performed multiple internet searches for sources potentially located within the nonattainment area to determine whether the ADEQ's determination that no sources are subject to RACT was reasonable.

We did not identify any major stationary sources of VOC or NO X or any sources subject to a CTG document within the Gila County portion of the Phoenix-Mesa ozone nonattainment area. Given that no air permits have been issued for stationary sources within this area of Gila County, this is a reasonable finding. Additionally, this conclusion is not unexpected considering the portion of Gila County in the Phoenix-Mesa ozone nonattainment area represents less than 0.5 percent of the entire acreage of the nonattainment area, and the land is entirely National Forest and National Park land.

Thus, we did not identify any sources that would be subject to RACT requirements, and we agree with the ADEQ's submitted negative declarations. We also find that the submittal meets CAA section 110(l) because it was adopted after reasonable notice and public hearing and because it would not interfere with any applicable requirement concerning attainment, reasonable further progress, or any other applicable requirement of the Act. Because only negative declarations were adopted, the submittal does not contain any emissions limitations to evaluate for enforceability under CAA section 110(a). The TSD has more information on our evaluation.

As authorized in section 110(k)(3) of the Act, the EPA proposes to approve the ADEQ's 2025 RACT SIP under CAA sections 182(b)(2) and 182(f) as meeting RACT for the Gila County portion of the Phoenix-Mesa ozone nonattainment area for the 2015 ozone NAAQS and because it fulfills the relevant requirements in CAA sections 110(a) and 110(l). For each RACT element, Table 2 lists the rule or negative declaration relied upon to address RACT and our proposed action for that RACT element.

We will accept comments from the public on this proposal until March 16, 2026. If finalized as proposed, our final action will add the document in Table 1 into the Arizona SIP and the negative declarations into 40 CFR 52.122.

Table 2—Proposed Action on RACT Elements for 2015 Ozone NAAQS  12

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this proposed action merely proposes to approve state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Is not subject to Executive Order 14192 (90 FR 9065, February 6, 2025) because SIP actions are exempt from review under Executive Order 12866;

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L.104-4);

• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it proposes to approve a state program;

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. In those areas of Indian country, the rule does not have Tribal implications and will not impose substantial direct costs on Tribal governments or preempt Tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

The EPA has established NAAQS for particulate matter with an aerodynamic diameter less than or equal to 2.5 micrometers, known as PM 2.5 , to protect human health and the environment. In 1997, EPA established the first PM 2.5 standards based on significant scientific evidence and health studies demonstrating the serious health effects associated with exposure to PM 2.5 . See 62 FR 38652, July 18, 1997. EPA set an annual standard of 15.0 micrograms per cubic meter (μg/m 3 ) and a 24-hour (or daily) standard of 65 μg/m 3 . In 2006, EPA strengthened the 24-hour PM 2.5 NAAQS by revising it to 35 μg/m 3 and retained the level of the annual PM 2.5 standard at 15.0 μg/m 3 . See 71 FR 61144, October 17, 2006. Subsequently, in 2012, EPA established an annual primary PM 2.5 NAAQS at 12.0 μg/m 3 and retained the 2006 24-hour PM 2.5 NAAQS at 35 μg/m 3 . See 78 FR 3086, January 15, 2013. In a rule that became effective on October 24, 2016, EPA revoked the 1997 primary annual PM 2.5 standard in lieu of the more stringent 2012 primary annual PM 2.5 NAAQS. See 81 FR 58010, August 24, 2016. In early 2024, EPA strengthened the level of the annual primary PM 2.5 standard to 9.0 μg/m 3 and retained the 2006 24-hour PM 2.5 NAAQS at 35 μg/m 3 . 1 See 89 FR 16202, March 6, 2024.

Throughout this document whenever “we,” “us,” or “our” is used, we mean the EPA.

On December 28, 2015, the EPA promulgated a revised 8-hour ozone NAAQS of 0.070 parts per million (ppm). 1 Promulgation of a revised NAAQS triggers a requirement for the EPA to designate all areas of the country as nonattainment, attainment, or unclassifiable for the NAAQS. For the ozone NAAQS, this also involves classifying any nonattainment areas at the time of designation. 2 Ozone nonattainment areas are classified based on the severity of their ozone levels as determined by area's “design value,” which represents air quality in the area for the most recent three years. The classifications for ozone nonattainment areas are Marginal, Moderate, Serious, Severe, and Extreme. 3

Areas that the EPA designates nonattainment for the ozone NAAQS are subject to the general nonattainment area planning requirements of CAA section 172 and the ozone-specific planning requirements of CAA section 182. Ozone nonattainment areas in the lower classification levels have fewer and/or less stringent mandatory air quality planning and control requirements than those in higher classifications. In the EPA's December 6, 2018 (83 FR 62998), rule, “Implementation of the 2015 National Ambient Air Quality Standards for Ozone: Nonattainment Area State Implementation Plan Requirements,” known as the “SIP Requirements Rule,” the EPA set forth nonattainment area requirements for the 2015 ozone NAAQS. These requirements are codified at 40 CFR part 51 subpart CC. For Marginal areas, a State is required to submit a baseline emissions inventory, adopt provisions into the SIP requiring emissions statements from stationary sources, and implement a nonattainment new source review program for the relevant ozone NAAQS. 4 For Moderate areas, a State needs to comply with the Marginal area requirements, plus additional Moderate area requirements, including the requirement to submit a modeled demonstration that the area will attain the NAAQS as expeditiously as practicable but no later than six years after designation, the requirement to submit an RFP plan, the requirement to adopt and implement certain emissions controls, such as Reasonably Available Control Technology (RACT) and a Basic I/M program, and the requirement for greater emissions offsets for new or modified major stationary sources under the State's NNSR program.

Effective June 4, 2018, the EPA designated the Chicago and Metro East St. Louis areas as Marginal nonattainment. The Chicago area includes Cook County, DuPage County, Grundy County, Kane County, Kendall County, Lake County, McHenry County, and Will County, and the Metro East area includes Madison County, Monroe County, and St. Clair County. Under CAA section 181(b)(2), Marginal nonattainment areas that fail to attain the 2015 ozone NAAQS by the applicable attainment date will be reclassified as Moderate by operation of law upon the effective date of the final determination. For Chicago and Metro East, the deadline was August 3, 2021.

On October 7, 2022 (87 FR 60897), the EPA determined that the Chicago and Metro East areas failed to attain the 2015 ozone NAAQS by the August 3, 2021, deadline, resulting in the reclassification of the areas from Marginal to Moderate ozone attainment. In that action, the EPA established January 1, 2023, as the due date for Illinois to submit all Moderate area nonattainment plan SIP requirements applicable to newly reclassified areas. More recently, on December 17, 2024 (89 FR 101901), the EPA determined the areas did not attain the standards by the Moderate attainment date, and the areas were reclassified as Serious; however, this action is only addressing Moderate elements.

The Illinois Environmental Protection Agency (Illinois EPA) submitted SIP revisions on December 18, 2024, to address Moderate area requirements for the Chicago and Metro East areas under the 2015 ozone NAAQS. These submittals contained several nonattainment plan elements, including an updated 2017 base year emissions inventory for volatile organic compounds (VOC) and oxides of nitrogen (NO X ) and a 15% RFP plan with 2023 VOC and NO X motor vehicle emissions budgets, an I/M program certification, and an NNSR certification. The submissions also included an attainment demonstration, a reasonably available control measures demonstration, and contingency measures, which are not being addressed in this action. Illinois' SIP submissions and associated supporting documents are available in the docket for this action.

CAA sections 172(c)(3) and 182(a)(1), 42 U.S.C. 7502(c)(3) and 7511a(a)(1), require States to develop and submit, as SIP revisions, comprehensive, accurate, and complete emissions inventories for all areas designated as nonattainment for the ozone NAAQS. The specific emissions inventory requirements are codified at 40 CFR 51.1315, and the term “base year inventory” is defined at 51.1300(p). For ozone, the base year inventory is an estimation of actual emissions of VOC and NO X from all sources within the boundaries of the nonattainment area.

The regulation at 40 CFR 51.1315(a) requires that the inventory year be selected consistent with the baseline year for the RFP plan as required by 40 CFR 51.1310(b), which states that the baseline emissions inventory shall be the emissions inventory for the most recent calendar year for which a complete triennial inventory is required to be submitted to the EPA under the provisions of subpart A of 40 CFR part 51, Air Emissions Reporting Requirements, 40 CFR 51.1 through 50. For areas designated as nonattainment in 2018, the most recent triennial inventory year conducted for the National Emissions Inventory (NEI) pursuant to the Air Emissions Reporting Requirements (AERR) rule is 2017. 5

Further, 40 CFR 51.1315(c) requires emissions values included in the base year inventory to be actual ozone season day emissions as defined by 40 CFR 51.1300(q), which states: “Ozone season day emissions mean an average day's emissions for a typical ozone season work weekday. The State shall select, subject to the EPA approval, the month(s) in the ozone season and the day(s) in the work week to be represented, considering the conditions assumed in the development of RFP plans and/or emissions budgets for transportation conformity.”

On October 22, 2020, Illinois EPA submitted a SIP revision addressing the emissions inventory requirement of CAA section 182(a)(1). The EPA approved Illinois' 2017 base year emissions inventories for the Chicago area on August 15, 2023 (88 FR 55383).

As part of Illinois' SIP revision request, Illinois EPA updated the 2017 base year emissions inventories to incorporate improved emissions estimates where available. In Illinois' original base year emissions inventory submittal, Illinois EPA used the 2016v1 modeling platform to generate emissions data for the point and nonpoint sectors and MOVES2014 to generate emissions data for the on-road and nonroad sectors. Illinois EPA updated the 2017 base year emissions inventories for the Chicago and Metro East areas using the 2016v1 modeling platform for point and nonpoint sectors and MOVES3 for nonroad and on-road sectors. Illinois EPA did not update biogenic emissions estimates.

Illinois EPA converted annual point and nonpoint values to tons per day (tpd) following the same procedure as was used when preparing the original 2017 base year emissions inventories. Illinois EPA extracted data from the 2016v1 modeling platform to calculate the ratio of July emissions to total annual emissions for each county by sector.

Table 1, below, shows the updated 2017 ozone season day emissions in tons per ozone season day of NO X and VOC for the Chicago and Metro East nonattainment areas, respectively.

Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.

On June 2, 2010, the EPA established a revised primary 1-hour SO 2 NAAQS with a level of 75 parts per billion (ppb), based on a three-year average of the annual 99th percentile of daily maximum 1-hour average concentrations. 1 CAA section 110(a)(1) requires all states to submit, within three years after promulgation of a new or revised NAAQS, SIP submissions to provide for the implementation, maintenance, and enforcement of the NAAQS. 2 The EPA has historically referred to these SIPs as “infrastructure SIPs.” Specifically, section 110(a)(1) provides the procedural and timing requirements for SIP submissions. Section 110(a)(2) lists specific elements that all states must meet related to a newly established or revised NAAQS, such as requirements for monitoring, basic program requirements, and legal authority that are designed to assure attainment and maintenance of the NAAQS.

Section 110(a)(2)(D)(i)(I) of the CAA requires a state's SIP to include provisions prohibiting any source or other type of emissions activity in the state from emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in any other state. The EPA has long interpreted this language to enact a “functional prohibition” on certain emissions from upwind states, necessitating the EPA's independent assessment of whether those emissions will occur or have been adequately controlled in the state where they originate. 3 The EPA often refers to these requirements as Prong 1 (significant contribution to nonattainment of the NAAQS) and Prong 2 (interference with maintenance of the NAAQS). We are addressing Prongs 1 and 2 in this action. All other applicable infrastructure SIP requirements of the Oklahoma SIP submission are addressed in separate rulemakings.

In this proposed action, the EPA has considered information from the 2010 1-hour SO 2 NAAQS designations process which is discussed in more detail in section III.C of this notice. For this reason, a brief summary of the EPA's designations process for the 2010 1-hour SO 2 NAAQS is included here. 4

On August 9, 2022, the Oklahoma Secretary of Energy and Environment, the State of Oklahoma designee for submitting documents to the EPA for approval and incorporation into the SIP, submitted a revision to the Oklahoma SIP to address regional haze for the second implementation period. Oklahoma made this SIP submission to satisfy the requirements of the CAA's regional haze program pursuant to CAA sections 169A and 169B and 40 CFR 51.308. The EPA is proposing to find that the Oklahoma regional haze SIP submission for the second implementation period meets the applicable statutory and regulatory requirements and thus proposes to approve Oklahoma's submission into its SIP. Specifically, the EPA is proposing to approve Oklahoma's 2022 SIP submission as satisfying the requirements of:

(1) 40 CFR 51.308(f)(1): calculations of baseline, current, and natural visibility conditions, progress to date, and the uniform rate of progress (URP);

(2) 40 CFR 51.308(f)(2): long-term strategy;

(3) 40 CFR 51.308(f)(3): reasonable progress goals (RPGs);

(4) 40 CFR 51.308(f)(4): reasonably attributable visibility impairment (RAVI);

(5) 40 CFR 51.308(f)(5) and 40 CFR 51.308(g): progress report requirements;

(6) 40 CFR 51.308(f)(6): monitoring strategy and other implementation plan requirements; and

(7) 40 CFR 51.308(i): Federal Land Manager (FLM) consultation.

A detailed history and background of the regional haze program is provided in multiple prior EPA proposal actions. 1 For additional background on the 2017 RHR revisions, please refer to section III of this document. Overview of Visibility Protection Statutory Authority, Regulation, and Implementation of “Protection of Visibility: Amendments to Requirements for State Plans” of the 2017 RHR. 2 The following is an abbreviated history and background of the regional haze program and 2017 Regional Haze Rule as it applies to the current action.

In the 1977 CAA amendments, Congress created a program for protecting visibility in the nation's mandatory Class I Federal areas, which include certain national parks and wilderness areas. CAA section 169A. The CAA establishes as a national goal the “prevention of any future, and the remedying of any existing, impairment of visibility in mandatory class I Federal areas which impairment results from manmade air pollution.” CAA section 169A(a)(1).

Regional haze is visibility impairment that is produced by a multitude of anthropogenic sources and activities that are located across a broad geographic area and that emit pollutants that impair visibility. Visibility impairing pollutants include fine and coarse particulate matter (PM) ( e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust) and their precursors ( e.g., sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and, in some cases, volatile organic compounds (VOC) and ammonia (NH 3 )). Fine particle precursors react in the atmosphere to form fine particulate matter (PM 2.5 ), which impairs visibility by scattering and absorbing light. Visibility impairment reduces the perception of clarity and color, as well as visible distance. 3

To address regional haze visibility impairment, the 1999 RHR established an iterative planning process that requires both states in which Class I areas are located and states “the emissions from which may reasonably be anticipated to cause or contribute to any impairment of visibility” in a Class I area to periodically submit SIP revisions to address such impairment. CAA section 169A(b)(2); see also 40 CFR 51.308(b), (f) (establishing submission dates for iterative regional haze SIP revisions); (64 FR at 35768, July 1, 1999).

On January 10, 2017, the EPA promulgated revisions to the RHR, (82 FR 3078, January 10, 2017), that apply for the second and subsequent implementation periods. The reasonable progress requirements as revised in the 2017 rulemaking (referred to here as the 2017 RHR Revisions) are codified at 40 CFR 51.308(f).

Because the air pollutants and pollution affecting visibility in Class I areas can be transported over long distances, successful implementation of the regional haze program requires long-term, regional coordination among multiple jurisdictions and agencies that have responsibility for Class I areas and the emissions that impact visibility in those areas. To address regional haze, states need to develop strategies in coordination with one another, considering the effect of emissions from one jurisdiction on the air quality in another. Five regional planning organizations (RPOs), which include representation from state and Tribal governments, the EPA, and FLMs, were developed in the lead-up to the first implementation period to address regional haze. RPOs evaluate technical information to better understand how emissions from State and Tribal land impact Class I areas across the country, pursue the development of regional strategies to reduce emissions of particulate matter and other pollutants leading to regional haze, and help states meet the consultation requirements of the RHR.

The Central Regional Air Planning Association (CenRAP), one of the five RPOs described above, that Oklahoma was a member of during the first planning period, was a collaborative effort of state governments, Tribal governments, and Federal agencies established to initiate and coordinate activities associated with the management of regional haze, visibility, and other air quality issues in parts of the Great Plains, Midwest, Southwest, and South Regions of the United States.

After the first planning period SIPs were submitted, the planning was shifted to the Central State Air Resources Agencies (CenSARA). CenSARA is a collaborative effort of state governments established to initiate and coordinate activities associated with the management of Regional Haze and other air quality issues in parts of the Great Plains, Midwest, Southwest, and South Regions of the United States. Member states include: Arkansas, Iowa, Kansas, Louisiana, Missouri, Nebraska, Oklahoma, and Texas. Unlike CenRAP, CenSARA has solely state members. However, CenSARA does reach out to Tribal and Federal partners. The Federal partners of CenSARA are the EPA, the U.S. National Parks Service (NPS), the U.S. Fish and Wildlife Service (FWS), and the U.S. Forest Service (USFS).

Oklahoma submitted its regional haze SIP for the first implementation period to the EPA on February 19, 2010. The EPA partially approved and partially disapproved Oklahoma's first implementation period regional haze SIP submission on December 28, 2011 (76 FR 81728, December 28, 2011). In that final rule, we disapproved Oklahoma's SO 2 best available retrofit technology (BART) determinations for the Oklahoma Gas and Electric (OG&E) Sooner Units 1 and 2, the OG&E Muskogee Units 4 and 5, and the American Electric Power/Public Service Company of Oklahoma (AEP/PSO) Northeastern Units 3 and 4 and we disapproved the state's long-term strategy. To address these deficiencies, the EPA promulgated a Federal Implementation Plan (FIP) that imposed SO 2 BART emission limits for these six units in the same final action. The EPA approved the remaining portions of the 2010 Oklahoma regional haze SIP submission with the exception of the reasonable progress requirements found at 40 CFR 51.308(d)(1), on which we took no action in that final rule. We deferred consideration of the reasonable progress requirements at the time, because in order to properly assess whether Oklahoma had satisfied these requirements, we first needed to evaluate and act upon the first planning period regional haze SIP revision submitted by the State of Texas.

On June 20, 2013, Oklahoma submitted a regional haze SIP revision to replace the FIP's SO 2 BART requirements for the AEP/PSO Northeastern Units 3 and 4 and to make revisions to the NO X BART compliance dates for the two units. On March 7, 2014 (79 FR 12944, 12954, March 7, 2014), we approved this SIP revision and concurrently withdrew the FIP's applicability to these two units. The FIP provisions applicable to the OG&E Muskogee and Sooner plants remain in place.

On January 5, 2016 (81 FR 296, January 5, 2016), we addressed the outstanding portion of Oklahoma's first planning period SIP related to the reasonable progress requirements under 40 CFR 51.308(d)(1). 4 Specifically, we disapproved the portion of Oklahoma's 2010 Oklahoma regional haze SIP submission that addressed 40 CFR 51.308(d)(1), with the exception of the minimum progress requirement under 40 CFR 51.308(d)(1)(vi), which we approved. 5 The disapproval stemmed from consideration of impacts from Texas sources in establishing the reasonable progress goals for Oklahoma's Class I area, Wichita Mountains Wilderness Area (Wichita Mountains). In that same action, we promulgated a FIP for both Texas and Oklahoma to address the identified deficiencies in the Texas and Oklahoma regional haze SIP for the first planning period. 6

The January 5, 2016, final rule was challenged in the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) and was stayed by the court on July 15, 2016. 7 Considering the stay, the EPA requested a partial voluntary remand of the January 5, 2016, final rule, which was granted by the Fifth Circuit on March 22, 2017. 8 On July 26, 2023 (88 FR 48152, July 26, 2023), the EPA proposed a rule to address the remanded January 5, 2016, final rule, and proposed to disapprove the same portions of the Texas and Oklahoma SIPs which had been previously disapproved in the January 5, 2016, final rule and amend the FIP portion of the rule. 9

On September 3, 2024, the EPA filed a motion for voluntary vacatur, 10 and the Fifth Circuit granted the EPA's motion on December 17, 2024, vacating the SIP disapproval and FIP portions of the January 5, 2016, final rule. 11

On December 12, 2025 (90 FR 56001), the EPA finalized approval of portions of the Oklahoma regional haze SIP revision submitted on February 19, 2010, that relate to reasonable progress requirements for the first planning period from 2007 through 2018. Specifically, the EPA approved the portion of the 2010 Oklahoma Regional Haze SIP that addressed the requirements of 40 CFR 51.308(d)(1)(i) through (v). 12

Pursuant to 40 CFR 51.308(g), Oklahoma was also responsible for submitting a five-year progress report as a SIP revision for the first implementation period, which it did on September 28, 2016. The EPA approved the progress report into the Oklahoma SIP on June 28, 2019 (84 FR 30918, June 28, 2019).

On August 9, 2022, the Oklahoma Department of Environmental Quality (ODEQ)  13 submitted a revision to the Oklahoma SIP to address regional haze for the second planning period (2018-2028). 14 Oklahoma made this SIP submission to satisfy the requirements of the CAA's regional haze program pursuant to CAA sections 169A and 169B and 40 CFR 51.308. Oklahoma's 2022 SIP submission contains the State's evaluation of which measures to include in its long-term strategy to address regional haze visibility impairment for each Class I area within the State and each Class I area outside the State that may be affected by emissions from the State. The State examined the need to implement additional enforceable emission limitations, compliance schedules, and other measures that may be necessary to make reasonable progress since the first implementation period. Specifically, Oklahoma's 2022 SIP submission contains an assessment of visibility progress made at Class I areas since the first implementation period and the State's determinations regarding a long-term strategy to address regional haze visibility impairment at the Class I areas the State identified, including: Oklahoma's selection of sources that may affect visibility in impacted Class I areas; its evaluation of the selected sources to determine what emission reduction measures may be necessary to achieve reasonable progress for the long-term strategy, through consideration of the four statutory factors; and ultimately, Oklahoma's determinations on what measures are necessary for the long-term strategy to address regional haze visibility impairment in Class I areas.

Under the CAA and the EPA's regulations, all 50 states, the District of Columbia, and the U.S. Virgin Islands are required to submit regional haze SIPs satisfying the applicable requirements for the second implementation period of the regional haze program by July 31, 2021. Each state's SIP must contain a long-term strategy for making reasonable progress toward meeting the national goal of remedying any existing and preventing any future anthropogenic visibility impairment in Class I areas. CAA section 169A(b)(2)(B). To this end, 40 CFR 51.308(f) lays out the process by which states determine what constitutes their long-term strategies, with the order of the requirements in 40 CFR 51.308(f)(1) through (3) generally mirroring the order of the steps in the reasonable progress analysis  15 and (f)(4) through (6) containing additional, related requirements. Broadly speaking, a state first must identify the Class I areas within the state and determine the Class I areas outside the state in which visibility may be affected by emissions from the state. These are the Class I areas that must be addressed in the state's long-term strategy. See 40 CFR 51.308(f), (f)(2). For each Class I area within its borders, a state must then calculate the baseline (five-year average period of 2000-2004), current, and natural visibility conditions ( i.e., visibility conditions without anthropogenic visibility impairment) for that area, as well as the visibility improvement made to date and the URP. The URP is the linear rate of progress needed to attain natural visibility conditions, assuming a starting point of baseline visibility conditions in 2004 and ending with natural conditions in 2064. This linear interpolation is used as a tracking metric to help states assess the amount of progress they are making towards the national visibility goal over time in each Class I area. See 40 CFR 51.308(f)(1). Each state having a Class I area and/or emissions that may affect visibility in a Class I area must then develop a long-term strategy that includes the enforceable emission limitations, compliance schedules, and other measures that are necessary to make reasonable progress in such areas. A reasonable progress determination is based on applying the four factors in CAA section 169A(g)(1) to sources of visibility impairing pollutants that the state has selected to assess for controls for the second implementation period. Additionally, as further explained below, the RHR at 40 CFR 51.3108(f)(2)(iv) separately provides five “additional factors”  16 that states must consider in developing their long-term strategies. See 40 CFR 51.308(f)(2). A state evaluates potential emission reduction measures for those selected sources and determines which are necessary to make reasonable progress. Those measures are then incorporated into the state's long-term strategy. After a state has developed its long-term strategy, it then establishes RPGs for each Class I area within its borders by modeling the visibility impacts of all reasonable progress controls at the end of the second implementation period, i.e., in 2028, as well as the impacts of other requirements of the CAA. The RPGs include reasonable progress controls not only for sources in the state in which the Class I area is located, but also for sources in other states that contribute to visibility impairment in that area. The RPGs are then compared to the baseline visibility conditions and the URP to ensure that progress is being made towards the statutory goal of preventing any future and remedying any existing anthropogenic visibility impairment in Class I areas. 40 CFR 51.308(f)(2) through (3). There are additional requirements in the rule, including FLM consultation, that apply to all visibility protection SIPs and SIP revisions. See e.g., 40 CFR 51.308(i).

While states have discretion to choose any source selection methodology that is reasonable, whatever choices they make should be reasonably explained. To this end, 40 CFR 51.308(f)(2)(i) requires that a state's SIP submission include “a description of the criteria it used to determine which sources or groups of sources it evaluated.” The technical basis for source selection, which may include methods for quantifying potential visibility impacts such as emissions divided by distance metrics, trajectory analyses, residence time analyses, and/or photochemical modeling, must also be appropriately documented, as required by 40 CFR 51.308(f)(2)(iii).

Once a state has selected the set of sources, the next step is to determine the emissions reduction measures for those sources that are necessary to make reasonable progress for the second implementation period. 17 This is accomplished by considering the four factors—“the costs of compliance, the time necessary for compliance, and the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any existing source subject to such requirements.” CAA section 169A(g)(1). The EPA has explained that the four-factor analysis is an assessment of potential emission reduction measures ( i.e., control options) for sources; “use of the terms `compliance' and `subject to such requirements' in section 169A(g)(1) strongly indicates that Congress intended the relevant determination to be the requirements with which sources would have to comply to satisfy the CAA's reasonable progress mandate.” 82 FR at 3091. Thus, for each source it has selected for four-factor analysis, 18 a state must consider a “meaningful set” of technically feasible control options for reducing emissions of visibility impairing pollutants. Id. at 3088.

The EPA has also explained that, in addition to the four statutory factors, states have flexibility under the CAA and RHR to reasonably consider visibility benefits as an additional factor alongside the four statutory factors. 19 Ultimately, while states have discretion to reasonably weigh the factors and to determine what level of control is needed, 40 CFR 51.308(f)(2)(i) provides that a state “must include in its implementation plan a description of . . . how the four factors were taken into consideration in selecting the measure for inclusion in its long-term strategy.”

As explained above, 40 CFR 51.308(f)(2)(i) requires states to determine the emission reduction measures for sources that are necessary to make reasonable progress by considering the four factors. Pursuant to 40 CFR 51.308(f)(2), measures that are necessary to make reasonable progress towards the national visibility goal must be included in a state's long-term strategy and in its SIP. If the outcome of a four-factor analysis is that an emissions reduction measure is necessary to make reasonable progress towards remedying existing or preventing future anthropogenic visibility impairment, that measure must be included in the SIP.

The characterization of information on each of the factors is also subject to the documentation requirement in section 51.308(f)(2)(iii). The reasonable progress analysis is a technically complex exercise, and also a flexible one that provides states with bounded discretion to design and implement approaches appropriate to their circumstances. Given this flexibility, 40 CFR 51.308(f)(2)(iii) plays an important function in requiring a state to document the technical basis for its decision making so that the public and the EPA can comprehend and evaluate the information and analysis the state relied upon to determine what emission reduction measures must be in place to make reasonable progress. The technical documentation must include the modeling, monitoring, cost, engineering, and emissions information on which the state relied to determine the measures necessary to make reasonable progress. Additionally, the RHR at 40 CFR 51.3108(f)(2)(iv) separately provides five “additional factors”  20 that states must consider in developing their long-term strategies: (1) Emission reductions due to ongoing air pollution control programs, including measures to address reasonably attributable visibility impairment; (2) measures to reduce the impacts of construction activities; (3) source retirement and replacement schedules; (4) basic smoke management practices for prescribed fire used for agricultural and wildland vegetation management purposes and smoke management programs; and (5) the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the period addressed by the long-term strategy.

Because the air pollution that causes regional haze crosses state boundaries, 40 CFR 51.308(f)(2)(ii) requires a state to consult with other states that also have emissions that are reasonably anticipated to contribute to visibility impairment in a given Class I area. If a state, pursuant to consultation, agrees that certain measures ( e.g., a certain emission limitation) are necessary to make reasonable progress at a Class I area, it must include those measures in its SIP. 40 CFR 51.308(f)(2)(ii)(A). Additionally, the RHR requires that states that contribute to visibility impairment at the same Class I area consider the emission reduction measures the other contributing states have identified as being necessary to make reasonable progress for their own sources. 40 CFR 51.308(f)(2)(ii)(B). If a state has been asked to consider or adopt certain emission reduction measures, but ultimately determines those measures are not necessary to make reasonable progress, that state must document in its SIP the actions taken to resolve the disagreement. 40 CFR 51.308(f)(2)(ii)(C). Under all circumstances, a state must document in its SIP submission all substantive consultations with other contributing states. 40 CFR 51.308(f)(2)(ii)(C).

Reasonable progress goals “measure the progress that is projected to be achieved by the control measures states have determined are necessary to make reasonable progress based on a four-factor analysis.” 82 FR at 3091.

For the second implementation period, the RPGs are set for 2028. Reasonable progress goals are not enforceable targets, 40 CFR 51.308(f)(3)(iii).While states are not legally obligated to achieve the visibility conditions described in their RPGs, 40 CFR 51.308(f)(3)(i) requires that “[t]he long-term strategy and the reasonable progress goals must provide for an improvement in visibility for the most impaired days since the baseline period and ensure no degradation in visibility for the clearest days since the baseline period.”

RPGs may also serve as a metric for assessing the amount of progress a state is making towards the national visibility goal. To support this approach, the RHR requires states with Class I areas to compare the 2028 RPG for the most impaired days to the corresponding point on the URP line (representing visibility conditions in 2028 if visibility were to improve at a linear rate from conditions in the baseline period of 2000-2004 to natural visibility conditions in 2064). If the most impaired days RPG in 2028 is above the URP ( i.e., if visibility conditions are improving more slowly than the rate described by the URP), each state that contributes to visibility impairment in the Class I area must demonstrate, based on the four-factor analysis required under 40 CFR 51.308(f)(2)(i), that no additional emission reduction measures would be reasonable to include in its long-term strategy. 40 CFR 51.308(f)(3)(ii). To this end, 40 CFR 51.308(f)(3)(ii) requires that each state contributing to visibility impairment in a Class I area that is projected to improve more slowly than the URP provide “a robust demonstration, including documenting the criteria used to determine which sources or groups [of] sources were evaluated and how the four factors required by paragraph (f)(2)(i) were taken into consideration in selecting the measures for inclusion in its long-term strategy.”

Section 51.308(f)(6) requires states to have certain strategies and elements in place for assessing and reporting on visibility. Individual requirements under this section apply either to states with Class I areas within their borders, states with no Class I areas but that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area, or both. Compliance with the monitoring strategy requirement may be met through a state's participation in the Interagency Monitoring of Protected Visual Environments (IMPROVE) monitoring network, which is used to measure visibility impairment caused by air pollution at the 156 Class I areas covered by the visibility program. 40 CFR 51.308(f)(6), (f)(6)(i), (f)(6)(iv). All states' SIPs must provide for procedures by which monitoring data and other information are used to determine the contribution of emissions from within the state to regional haze visibility impairment in affected Class I areas, as well as a statewide inventory documenting such emissions. 40 CFR 51.308(f)(6)(ii), (iii), and (v). All states' SIPs must also provide for any other elements, including reporting, recordkeeping, and other measures, that are necessary for states to assess and report on visibility. 40 CFR 51.308(f)(6)(vi).

Section 51.308(f)(5) requires a state's regional haze SIP revision to address the requirements of paragraphs 40 CFR 51.308(g)(1) through (5) so that the plan revision due in 2021 will serve also as a progress report addressing the period since submission of the progress report for the first implementation period. The regional haze progress report requirement is designed to inform the public and the EPA about a state's implementation of its existing long-term strategy and whether such implementation is in fact resulting in the expected visibility improvement. See 81 FR 26942, 26950 (May 4, 2016), (82 FR at 3119, January 10, 2017). To this end, every state's SIP revision for the second implementation period is required to assess changes in visibility conditions and describe the status of implementation of all measures included in the state's long-term strategy, including BART and reasonable progress emission reduction measures from the first implementation period, and the resulting emissions reductions. 40 CFR 51.308(g)(1) and (2).

CAA section 169A(d) requires that before a state holds a public hearing on a proposed regional haze SIP revision, it must consult with the appropriate FLM or FLMs; pursuant to that consultation, the state must include a summary of the FLMs' conclusions and recommendations in the notice to the public. Consistent with this statutory requirement, the RHR also requires that states “provide the [FLM] with an opportunity for consultation, in person and at a point early enough in the State's policy analyses of its long-term strategy emission reduction obligation so that information and recommendations provided by the [FLM] can meaningfully inform the State's decisions on the long-term strategy.” 40 CFR 51.308(i)(2). For the EPA to evaluate whether FLM consultation meeting the requirements of the RHR has occurred, the SIP submission should include documentation of the timing and content of such consultation. The SIP revision submitted to the EPA must also describe how the state addressed any comments provided by the FLMs. 40 CFR 51.308(i)(3). Finally, a SIP revision must provide procedures for continuing consultation between the state and FLMs regarding the state's visibility protection program, including development and review of SIP revisions, five-year progress reports, and the implementation of other programs having the potential to contribute to impairment of visibility in Class I areas. 40 CFR 51.308(i)(4).

In section IV of this document, we describe Oklahoma's 2022 SIP submission and evaluate it against the requirements of the CAA and RHR for the second implementation period of the regional haze program.

Section 169A(b)(2) of the CAA requires each state in which any Class I area is located or “the emissions from which may reasonably be anticipated to cause or contribute to any impairment of visibility” in a Class I area to have long-term strategy for making reasonable progress toward the national visibility goal. The RHR implements this statutory requirement in 40 CFR 51.308(f) for the second and subsequent planning periods for regional haze. Section 51.308(f)(2) requires states to submit a long-term strategy that addresses regional haze visibility impairment for each mandatory Class I area within the state and for each mandatory Class I area located outside the state that may be affected by emissions from the state.

To address 40 CFR 51.308(f), Oklahoma identified the one mandatory Class I Federal area within its borders, the Wichita Mountains Wilderness, located in the Wichita Mountains National Wildlife Refuge in Comanche County, in the southeast part of Oklahoma. Wichita Mountains Wilderness is managed by the US Fish and Wildlife Service (FWS).

To work collectively on regional haze SIP development for the second planning period, CenSARA contracted Ramboll-Environ to produce an area of influence (AOI) study for the region (CenSARA 2018 AOI analysis). 21 The CenSARA 2018 AOI analysis was developed to estimate impacts from individual stationary sources on visibility conditions at Class I areas of interest. Oklahoma relied on this AOI analysis to identify sources within Oklahoma with the potential for impairing visibility at the Wichita Mountains and Class I areas in neighboring states. Oklahoma initially assessed five Class I areas outside the state for potential visibility impacts by Oklahoma sources. Through consultation with neighboring states and Oklahoma's own analysis using the results of the CenSARA 2018 AOI analysis, Oklahoma identified three of those Class I areas outside the state as having potential visibility impacts from Oklahoma emission sources: Caney Creek Wilderness Area and Upper Buffalo Wilderness Area in Arkansas and Hercules-Glades Wilderness Area in Missouri. 22

More information on how Oklahoma used the CenSARA 2018 AOI analysis to identify sources that could potentially impact visibility in Class I areas within and outside Oklahoma and to conduct its four-factor analysis is discussed in section IV.C.1 of this document.

EPA agrees with Oklahoma's conclusions that they properly identified Class I areas within and outside of Oklahoma that may be affected by emissions from within the State due to the following: (1) the State analyzed its statewide sulfate and nitrate contributions to total visibility impairment at out-of-state Class I areas; (2) none of the Class I areas that Oklahoma sources contribute to have 2028 RPGs on the 20 percent most impaired days above the URP;  23 (3) Oklahoma analyzed its in-state and out-of-state impacts through the AOI analysis; and (4) the State completed consultation with CenSARA States via the RPO processes.

Section 51.308(f)(1) requires states to determine the following for “each mandatory Class I Federal area located within the State”: baseline visibility conditions for the most impaired and clearest days, natural visibility conditions for the most impaired and clearest days, progress to date for the most impaired and clearest days, the differences between current visibility conditions and natural visibility conditions, and the URP. This section also provides the option for states to propose adjustments to the URP line for a Class I area to account for visibility impacts from anthropogenic sources outside the United States and/or the impacts from wildland prescribed fires that were conducted for certain, specified objectives. 40 CFR 51.308(f)(1)(vi)(B).

In sections 3, 6.1, and 7 of Oklahoma's 2022 SIP submission, Oklahoma determines and presents the baseline, natural, and current visibility conditions for both the 20 percent most anthropogenically impaired days and the 20 percent clearest days for the State's Class I area, Wichita Mountains Wilderness, consistent with the EPA's RHR and guidance, and through the use of IMPROVE monitoring data. Oklahoma calculated baseline visibility based on data from 2002-2004, as the IMPROVE monitoring site at Wichita Mountains Wilderness was not established until 2001. Oklahoma determined that Wichita Mountains Wilderness has, respectively, on the 20 percent clearest days and 20 percent most impaired days: (1) 2000-2004 baseline visibility conditions of 9.92 deciviews and 22.18 deciviews; (2) 2015-2019 current visibility conditions of 8.33 deciviews and 17.56 deciviews; and (3) natural visibility conditions of 4.20 deciviews and 10.19 deciviews. This information is also provided in table 1 of this document.

In sections 3 and 5.4 of Oklahoma's 2022 SIP submission, Oklahoma discusses the visibility progress in Wichita Mountains Wilderness. The 2015-2019 current visibility conditions for the most impaired days show a 21 percent improvement over the 2000-2004 baseline visibility conditions, with a 1.27 and 4.6 deciviews improvement from 2000-2004 baseline to 2015-2019 current visibility conditions for the 20 percent clearest and most impaired days respectively. From information provided in Oklahoma's 2022 SIP submission, EPA calculated the difference between 2015-2019 current visibility and natural conditions, which show a 4.13 and 7.37 deciviews difference for the 20 percent clearest and most impaired days respectively. This information is provided in table 2 of this document.

The RHR allows states the option to adjust the 2064 glidepath endpoint to account for both international anthropogenic and certain prescribed fire impacts at Class I areas. EPA's 2018 Visibility Tracking Guidance  25 provides recommendations to assist states in satisfying their obligations under 40 CFR 51.308(f)(1); specifically, in developing information on baseline, current, and natural visibility conditions, and in making optional adjustments to the URP to account for the impacts of international anthropogenic emissions and prescribed fires. 26

Under 40 CFR 51.308(f)(1)(vi)(B), Oklahoma chose to adjust the URP glidepath for the State's Class I area, Wichita Mountains Wilderness, to account for impacts from anthropogenic sources outside the United States and impacts from wildland prescribed fires. 27 28 Oklahoma used photochemical modeling conducted by EPA used to project visibility impairment at Class I areas in 2028 as part of its URP determination. 29 At Wichita Mountains, the unadjusted URP for 2028 is 16.06 deciviews. EPA's 2028 modeling provided for adjusted URP values that accounts for contributions of international emissions. Based on baseline, 2064 natural conditions, and EPA's default adjustment, Oklahoma determined the 2028 URP for Wichita Mountains to be 17.36 deciviews for the 20 percent most impaired days. 30

The EPA is proposing to find that Oklahoma's regional haze plan meets the requirements of 40 CFR 51.308(f)(1) related to the calculations of baseline, current, and natural visibility conditions; progress to date; and the uniform rate of progress for the second implementation period.

Each state having a Class I area within its borders or emissions that may affect visibility in any Class I area must develop a long-term strategy for making reasonable progress towards the national visibility goal for each impacted Class I area. CAA section 169A(b)(2)(B). After considering the four statutory factors, all measures that are determined to be necessary to make reasonable progress must be in the long-term strategy. In developing its long-term strategy, a state must also consider the five additional factors in 40 CFR 51.308(f)(2)(iv). As part of its reasonable progress determinations, the state must describe the criteria used to determine which sources or group of sources were evaluated ( i.e., subjected to four-factor analysis) for the second implementation period and how the four factors were taken into consideration in selecting the emission reduction measures for inclusion in the long-term strategy. 40 CFR 51.308(f)(2)(iii).

Sections 6.2 and 6.3 in Oklahoma's 2022 SIP submission discuss Oklahoma's long-term strategy development as well as source selection methodology. As mentioned in section IV.A of this document, Oklahoma relied on the CenSARA 2018 AOI analysis to identify sources within Oklahoma with the potential for impairing visibility at the Wichita Mountains and Class I areas in neighboring states. This section of this document further discusses Oklahoma's source selection methodology, including how Oklahoma used the CenSARA 2018 AOI analysis in developing its long-term strategy.

In the report documenting the CenSARA 2018 AOI analysis (CenSARA AOI report), it states that “EPA's previous analysis of contributions of individual PM components to total extinction on the 20 percent most anthropogenically impaired days during 2010-2014 showed that sulfate and nitrate are two major PM components that account for a large fraction of the anthropogenic visibility impairment at these Class I areas.”  31 The CenSARA AOI report also states that industrial sources, including electric generating unit (EGU) and other industrial point (non-EGU) sources, are major contributors to both SO 2 and NO X emissions (precursors of sulfate and nitrate, respectively). 32 CenSARA chose to focus the AOI analysis on EGU and non-EGU point sources since these sources comprise major fractions of the SO 2 and NO X emissions inventory. 33

The Hybrid-Single Particle Lagrangian Integrated Trajectory (HYSPLIT) back-trajectory model was used to generate 72-hour back trajectories for each IMPROVE site ( i.e., Class I area) of interest on the 20 percent most impaired days for the five-year period from 2012 to 2016. Based on the five years of individual back trajectories on the most 20 percent most impaired days, trajectory paths were mapped into 36-kilometer (km) by 36-km horizontal grid cells and residence time data were generated for each IMPROVE site. The residence time is the cumulative time that trajectories reside in a specific geographical area ( e.g., a grid cell of a modeling domain) and are usually normalized to display percentage of total trajectory time. To define geographical areas with a high probability of influencing visibility ( i.e., the area of influence) at each IMPROVE site that has impairment due to sulfate and nitrate, extinction weighted residence time (EWRT) plots were generated separately for sulfate and nitrate. To determine the potential impact from individual point sources, the EWRT values for sulfate and nitrate were combined with facility-level emissions ( Q ) of SO 2 and NO X (respectively) using emissions data from the 2016 EPA modeling platform and 2028 emissions projections. 34 To incorporate the effects of dispersion, deposition and chemical transformation along the path of the trajectories, emissions were inversely weighted by the distance ( d ) between the centers of the grid cell emitting the emissions and the grid cell containing the IMPROVE site. This resulted in EWRT*Q/d values for SO 2 and NO X (separately) for each stationary source for each IMPROVE site. Oklahoma's methodology for identifying Oklahoma sources that may impact visibility at Wichita Mountains and Class I areas in other states using the results of the CenSARA 2018 AOI analysis is discussed in the paragraphs that follow.

Oklahoma's 2022 SIP submission noted that implementation of BART determinations for the first planning period continued beyond 2016, which was used as the baseline emissions year for conducting the AOI study. This means that some BART emission reductions that took place after 2016 are not reflected in the emissions inventory used in the AOI study. In identifying sources for analysis, Oklahoma chose to use emissions from the same year for every source to avoid potential misrepresentation of effects of emission controls. Oklahoma also noted that due to the substantial variation in weather conditions among years, the use of an inventory for a different, more recent year than the year of the meteorological analysis in the CenSARA 2018 AOI analysis would introduce uncertainty and indefensible inconsistencies. However, based on suggestions from EPA during early SIP development, Oklahoma decided to remove some sources and their corresponding emissions from the source selection calculations. These eliminations were done in an effort to not skew the source selection criteria towards sources that had already achieved significant, known reductions that were not reflected in the 2016 emissions data. 35

In evaluating individual source contribution to visibility impairment, Oklahoma considered NO X and SO 2 emissions separately instead of aggregating contributions from each pollutant for a total source contribution. Visibility impairment at the Wichita Mountains is dominated by NO X in winter conditions and SO 2 in the majority of the remainder of the year. To justify considering source contribution to visibility impairment due to NO X and SO 2 emissions separately, the SIP submittal stated that there is the possibility that controlling one, but not both pollutants, is cost effective and also noted that conducting four-factor analyses is resource intensive.