The proposed rule has been determined to be not significant under E.O. 12866 and therefore has not been reviewed by the Office of Management and Budget (OMB).

The Regulatory Flexibility Act ensures that regulatory and information requirements are tailored to the size and nature of small businesses, small organizations, and small governmental jurisdictions. The Regulatory Flexibility Act is not applicable to this rule because FAS is not required by 5 U.S.C. 553 or any other provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule. Although the RFA does not apply, FAS has determined that this proposed rule will not have a significant economic impact on small businesses participating in the program.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This rule will not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rule. The proposed rule would not have a retroactive effect. Before any judicial action may be brought forward regarding this proposed rule, all administrative remedies must be exhausted.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. FAS has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that require Tribal consultation under Executive Order 13175.

FAS has determined that this action will not have a significant effect on the quality of the human environment. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is necessary for this rule.

Public Law 104-4 requires consultation with state and local officials and Indian tribal governments. This proposed rule does not impose an unfunded mandate or any other requirement on state, local, or tribal governments. Accordingly, these programs are not subject to the provisions of the Unfunded Mandates Reform Act.

This Executive Order requires careful evaluation of governmental actions that interfere with constitutionally protected property rights. This rule does not interfere with any property rights and, therefore, does not need to be evaluated on the basis of the criteria outlined in Executive Order 12630.

The United States Department of Agriculture (USDA) is committed to compliance with the Government Paperwork Elimination Act, which requires Government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

In accordance with provisions of the Paperwork Reduction Act of 1995, the information collection for the Dairy TRQ Import Licensing program is approved by OMB under OMB control number 0551-0001, expiring January 31, 2027.

The Foreign Agricultural Service (FAS), under a delegation of authority from the Secretary of Agriculture, through the Under Secretary for Trade and Foreign Agricultural Affairs, administers the Dairy Tariff-Rate Quota Import Licensing regulation, codified at 7 CFR 6.20 et seq., that provides for the issuance of licenses to import certain dairy articles under tariff-rate quotas (TRQs) as set forth in certain notes in Chapter 4 of the Harmonized Tariff Schedule of the United States. These dairy articles may only be entered into the United States at the low-tier tariff by or for the account of a person, as defined in the regulation, to whom such licenses have been issued and only in accordance with the terms and conditions of the regulation. Licenses are issued on a calendar year basis, and each license authorizes the licensee to import a specified quantity and type of dairy article from a specified country of origin.

Under TRQs, a low tariff rate, commonly referred to as the in-quota rate, applies to imports up to a specified quantity. A higher tariff rate, commonly referred to as the over-quota rate, applies to any imports in excess of that amount. No license is required to import products at the over-quota tariff rate.

USDA issues three types of annual licenses: historical, nonhistorical (lottery), and designated. For all three license types, the current regulation provides that persons must apply each year between September 1 and October 15 to receive a license for the following quota year. Historical and designated licensees may apply for lottery licenses, subject to certain limitations, if they are not affiliated or associated with another company holding a license for that same item from the same country of origin.

Licensees may fail to qualify for a license for a specific item from a specific country in the following year if they do not meet certain requirements, including but not limited to the following: licensees must (i) apply for the license each year, (ii) pay an annual fee, and (iii) have imported at least 85 percent of the final license amount from the previous year. To avoid ineligibility due to the 85 percent rule, licensees may surrender up to 100 percent of the license, but must import 85 percent of any quantity not surrendered. Section 6.25(b) of the regulation provides that any historical licensee who has surrendered more than 50 percent of the license amount for the same item from the same country during at least three of the most recent five years will be issued a license thereafter in an amount equal to the average amount imported under that license for those five quota years.

The following is a summary of the proposed substantive changes to the current regulation:

This rule proposes several changes throughout the subpart to update terminology and make the regulations more user friendly. These changes include directly addressing applicants and licensees using the term “you” rather than a “person” or “a licensee.” In addition, the rule would update all references to the former DAIRIES system to refer instead to its replacement, the Agriculture Trade License Administration System (ATLAS).

Throughout this subpart, references to various appendices that formerly were published in the CFR, but are now published only in the Federal Register as appendices to a Notice, would be removed to avoid confusion. In addition, the amended subpart would use the simpler term “non-cheese product” instead of “article other than cheese or cheese product.”

Section 6.20, Introduction, would be streamlined and updated to clarify the authority and purpose of the program.

Section 6.21, Definitions, would be updated to include several modifications. The term “article” would be changed to “dairy article” and simplified to include all dairy products subject to a dairy import license under specific HS codes. The term “dairy product” would be clarified to include dairy products not subject to dairy import licensing requirements. Additional proposed changes include adding a definition for “Days” to mean calendar days, except where specified in the subpart. The definition of “EC” would be updated to “EU 27” to reference the countries listed in the HTS. FAS proposes a clear definition of force majeure. FAS proposes adding a definition for “Non-cheese article” to clarify the term as it is referenced elsewhere in the subpart. FAS also proposes changing “Process or processing” to “processed” and “Tariff-rate quota amount or TRQ amount” to “Tariff-rate quota or TRQ” to simplify and clarify those definitions.

Section 6.22, Requirement for a license, would be modified to address more specifically who may obtain a license.

In Section 6.23, Eligibility to apply for a license, FAS proposes to modify subparagraph (a) to include requirements for “suitable business facilities” and maintaining up-to-date contact details in ATLAS.

Section 6.23(c) would be modified to clarify what is meant by “affiliated” applicants.

Section 6.24, Application for a license, would be reorganized for clarity and modified to include, among other requirements for an application, an address for physical business facilities, a tax identification number, and a certification that the applicant is not affiliated with another applicant that is applying for a nonhistorical license for the same dairy article from the same country.

Section 6.25, Allocation of licenses, would be updated to clarify the language for the allocation of historical, non-historical, and designated licenses, and to remove references to past suspensions of the historical license reduction provision that are no longer in effect. In order to maximize the utilization of designated quotas, the rule would add a provision allowing for the reallocation of designated quantities in the event that a country fails to notify USDA of its designated companies for the following quota year by an October 31 deadline. In addition, (d) was deleted to remove confusion about the applicable deadlines for countries to designate companies.

To permit reallocations earlier in the quota year, FAS proposes amending Section 6.26, Surrender and reallocation, to reflect a new deadline for surrender of unused quantities and a new timeframe for applications for reallocation. As modified, the final date to surrender license quantities would be September 1, rather than October 1, and the window to apply for reallocated quantities would be modified to August 1 through August 15, rather than September 1 through September 15. These changes would allow additional time for licensees to utilize quantities received through reallocation.

In addition to updating the language in Section 6.27, Limitations on use of license, the proposed rule would remove the requirement that eligible manufacturers and processors process at least 75 percent of licensed imports in their own facilities. The proposed rule would replace current section 6.28, Transfer of license, with a new provision governing how USDA will address changes to the name or business entity of the license holder when the ownership of the business has not changed. The new Section 6.28 would not allow for the transfer of any licenses in the event a business or division of a business is sold, merged, or otherwise conveyed to another person. A license permits the licensee to import under the tariff-rate quota (TRQ). The basis for historical licenses is that those eligible for such licenses are entities that were in the business of importing dairy articles before the TRQ was established. In the case of a non- historical or designated license holder, the license was issued to that specific individual or entity. Once a license holder ceases to operate as a historical, non-historical, or designated importer, the entity ceases to qualify for a dairy license, and USDA may reallocate the quantities covered by the license. This change is intended to result in greater utilization of the dairy import TRQ and to enable a greater number of participants to utilize the TRQs. In particular, by no longer providing for the transfer of historical licenses, the revised regulation would allow quantities previously available only to historical license holders to become available to other applicants.

Section 6.30 would be modified to clarify that licensees must provide license records to USDA officials upon request during the 5-year period following the end of a quota year.

The proposed rule would change the name of Section 6.31, Debarment and Suspension, to “Debarment, suspension, and revocation.” The revised Section 6.31 retains the existing reference to the USDA Suspension and Debarment Regulations at 2 CFR 417 and adds a citation to the Governmentwide Nonprocurement Suspension and Debarment Regulations at 2 CFR 180, as the dairy TRQ import licenses are “covered transactions” under the suspension and debarment regulations. In addition, revised Section 6.31 would specify the circumstances under which the Licensing Authority may suspend or revoke a license for violations of or failure to comply with the regulations set forth in this subpart. These changes will enable FAS to ensure compliance with the regulations and protect the integrity of the license program.

Section 6.33, “License fee,” would be modified to include the current payment method of pay.gov .

Section 6.34, Adjustment of appendices, would add a new subparagraph to explain the TRQ allotment and Appendices 1-4, which are published as notices in the Federal Register .

Section 6.35(b), “Correction of errors,” would be modified to move the deadline for reporting errors from August 31 to March 31 of the calendar year following the year in which the error was alleged to have occurred.

Section 6.36, “Miscellaneous,” would be modified to clarify that a document is filed on a day when it is received by 11:59 p.m., Eastern Time, and to note that all official correspondence, except where otherwise noted in the subpart, will be via email.

Accordingly, for reasons described in the preamble, 7 CFR part 6 is proposed to be amended as follows:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (the Act), and Marketing Order No. 923 (7 CFR part 923) (the Order), which regulates the handling of sweet cherries grown in designated counties of Washington. The Committee locally administers the Order and is comprised of growers and handlers of sweet cherries operating within the production area.

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends existing Marketing Order No. 923, as amended (7 CFR part 923), Sweet Cherries Grown in Designated Counties in Washington, and is necessary for the continued operation of Marketing Order No. 923. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This proposed rule has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” which requires Federal agencies to consider whether their rulemaking actions would have Tribal implications. The Agricultural Marketing Service (AMS) has determined this proposed rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This proposed rule is not intended to have a retroactive effect.

Under the Order, sweet cherries produced in designated counties in Washington are required to be inspected and are subject to grade, size, quality, maturity, pack, and container requirements. This proposed rule would increase the minimum size requirements for all sweet cherry varieties, except the Rainier, Royal Anne, and similar varieties, commonly referred to as “light sweet cherries.” In addition, the proposal would remove one row count/row size designation and add two new row count/row size designations to the Order's pack requirements.

Section 923.51 of the Order authorizes the Committee to recommend handling regulations to the Secretary. Section 923.52 of the Order authorizes the Secretary to establish such handling regulations. Further, § 923.53 authorizes the Committee to recommend the modification, suspension, or termination of handling regulations when it finds that industry conditions so dictate. Section 923.322 establishes the minimum grade, size, quality, maturity, pack, and container requirements for sweet cherries handled subject to the Order. Section 923.322(b) establishes the Order's minimum size requirements and § 923.322(d) details the Order's pack requirements. Section 923.322(d)(1) includes a table that specifies the allowable row count/row size designations and the corresponding allowable size variation tolerance.

Pursuant to 7 CFR 923.53, the Committee determined that the production and marketing conditions of Washington sweet cherries have changed and that the Order's handling regulations should be modified accordingly. The Committee met on May 22, 2024, and recommended, with a vote of nine in favor, three opposed, and one abstention, modifying the Order's handling regulations by increasing the minimum size requirements for all cherries, except cherries of the Rainier, Royal Anne, and other similar “light sweet cherries,” in § 923.322(b)(2). Later, the Committee met again on August 27, 2025, and unanimously recommended, with a vote of 12 in favor and none opposed, modifying the Order's pack requirements in § 923.322(d)(1). The Committee recommended these changes to allow the industry to maximize market returns and facilitate access to crop insurance for growers, when necessary.

Currently, the size requirements in the Order's handling regulations require that at least 90 percent of all sweet cherries, except the Rainier, Royal Anne, and other similar “light sweet cherries,” be a minimum size of 54/64 inch in diameter and not more than 5 percent, by count, may be less than 52/64 inch in diameter. In addition, under the Order's pack requirements, the current minimum row count/row size designation is a 12-row, with at least 90 percent, by count, not smaller than 54/64 inch in diameter. The largest defined row count/row size designation is an 8-row, with at least 90 percent, by count, not smaller than 84/64 inch in diameter. Because there is no maximum size requirement defined by the Order's handling regulations, cherries larger than 84/64 inches in diameter are all currently designated as 8-row size/row count. For context, higher number row count/row size designations correlate to smaller fruit and lower number row count/row size designations correlate to larger size fruit.

The Committee held two public meetings on May 22, 2024, and August 27, 2025, to consider changes to the Order's handling regulations. At its meeting on May 22, 2024, the Committee recommended, with a vote of nine in favor, three opposed, and one in abstention, modifying the Order's handling regulations by increasing the minimum size requirements for all cherries, except cherries of the Rainier, Royal Anne, and other similar “light sweet cherries,” from 54/64 inch in diameter (12-row count/row size designation) to 57/64 inch in diameter (11 1/2 -row count/row size designation). Under the proposed change, at least 90 percent, by count, of cherries in any lot would be required to measure not less than 57/64 inch in diameter, and not more than 5 percent, by count, could measure less than 54/64 inch in diameter. Additionally, the Committee recommended eliminating the 12-row count/row size designation from the table in the Order's pack requirements to conform with the proposed minimum size requirement increase to 57/64 inch in diameter (11 1/2 -row count/row size). The three members opposed did not believe the recommendation would be good for industry and would limit growers' ability to market all their fruit, as in some very specific circumstances, 12-row count/row size designated sweet cherries can be marketed. The abstaining member wanted additional time to consider the recommendation.

According to the Committee, small size cherries ranging from 54/64 to 57/64 inch in diameter (12-row count/row size) account for approximately 1 to 2 percent of the Washington sweet cherry market annually. In addition to making up a very small percentage of sweet cherry volume, small size cherries usually command a lower market price, which can create competition with the larger size fruit which is also produced within the production area. Further, during difficult crop years when weather events adversely impact yield and fruit size, growers are often required to pick and deliver their 12-row count/row size cherries to handlers to qualify for crop insurance coverage, even if picking the smaller size cherries is not economically viable. This is because crop insurance adjustors typically require harvesting all “marketable” fruit prior to submission of a crop insurance claim, even though the smaller size cherries have little market value to the grower or the handler. For these reasons, the Committee believes that increasing the minimum size requirement to 57/64 inch in diameter and eliminating the corresponding 12-row count/row size designation in the Order's pack requirements would be beneficial to the industry by preventing low value, small size cherries from competing in the market against larger, more valuable fruit, and by reducing crop insurance barriers for growers following weather-induced crop losses.

At its public meeting on August 27, 2025, the Committee recommended, with a vote of 12 in favor and none opposed, to further modify the Order's handling regulations by adding two new row count/row size designations to the Order's pack requirements. The proposal would add a 7 1/2 -row count/row size designation, with a minimum 88/64 inch diameter, and a 7-row count/row size designation, with a minimum 92/64 inch diameter. Currently, 8-row count/row size (minimum 84/64 inches in diameter) and larger sweet cherries are marketed without further size definition, making it difficult for industry to differentiate and capitalize on the larger size fruit. The Committee believes that adding the two larger size designations will benefit growers and handlers of larger size sweet cherries and facilitate industry's desire to market larger size cherries in export markets at premium prices.

Therefore, this proposed rule would amend the size requirements in § 923.322(b)(2) by increasing the minimum size requirement from 54/64 inch in diameter to 57/64 inch in diameter. Under the proposal, at least 90 percent, by count, of cherries in any lot would be required to measure not less than 57/64 inch in diameter, and not more than 5 percent, by count, could measure less than 54/64 inch in diameter. Further, this proposed rule would amend the table in 7 CFR 923.322(d)(1) by removing the 12-row count/row size designation in Column 1, as well as the corresponding minimum 54/64 inch in diameter from same row in Column 2. The proposal would also add two new row count/row size designations to the table: a 7 1/2 -row count/row size in Column 1, with a corresponding minimum 88/64 inch diameter in Column 2, and a 7-row count/row size in Column 1, with a corresponding minimum 92/64 inch diameter in Column 2. Lastly, this proposed rule will make a technical amendment to revise the title of the table to “Table 1 to paragraph (d)(1)”. The proposed changes in the Order's handling regulations are expected to benefit growers, handlers, and consumers of Washington sweet cherries.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of typically small entities acting on their own behalf.

There are approximately 1,350 sweet cherry growers in the production area and approximately 35 handlers subject to regulation under the Order. At the time this analysis was prepared, the Small Business Administration (SBA) defined small agricultural producers as those having annual receipts equal to or less than $3,500,000 (NAICS code 111339, Other Noncitrus Fruit Farming). Small agricultural service firms, which include sweet cherry handlers, were defined by the SBA as those having annual receipts equal to or less than $34,000,000 (NAICS code 115114, Postharvest Crop Activities) (13 CFR 121.201).

Based on data from the National Agricultural Statistics Service (NASS) and the Committee, the reported average price growers received for Washington sweet cherries during the 2024-2025 fiscal year was approximately $1.08 per pound. Using the average grower price, shipment information, and the number of growers, and assuming a normal distribution, the majority of growers have estimated average annual receipts of significantly less than $3,500,000 ($1.08 multiplied by 404,000,000 pounds equals $436,320,000, divided by 1,350 growers equals $323,200 per grower). Thus, the majority of growers may be classified as small entities.

According to data from Market News and production records from the Committee, the average price of Washington sweet cherries handled during the 2024-2025 fiscal year was approximately $3.17 per pound, with total shipments of around 404,000,000 pounds. Based on the average terminal market price, shipment information, and the number of handlers, and assuming a normal distribution, the majority of Washington sweet cherry handlers have estimated average annual receipts of more than $34,000,000 ($3.17 multiplied by 404,000,000 pounds equals $1,280,680,000 divided by 35 handlers equals $36,590,857 per handler). Thus, the majority of handlers may be classified as large entities.

This proposed rule would increase the minimum size requirements in the Order's handling regulation for all varieties, other than Rainier, Royal Anne, and other similar “light sweet cherries,” from 54/64 inch in diameter to 57/64 inch in diameter. Under the proposed change, at least 90 percent, by count, of cherries in any lot would be required to measure not less than 57/64 inch in diameter, and not more than 5 percent, by count, could measure less than 54/64 inch in diameter. Additionally, the proposal would modify the table in the Order's pack requirements by eliminating the 12-row count/row size designation, which corresponds to a minimum diameter of 54/64 inches, and by adding a 7 1/2 -row count/row size designation ( 88/64 inches in diameter) and a 7-row count/row size designation ( 92/64 inches in diameter). Under the proposed rule, the minimum row count/row size designation would be 11 1/2 , with a corresponding minimum diameter of 57/64 inches.

At its May 22, 2024, meeting, the Committee voted nine in favor, three opposed, and one in abstention, to recommend changes to the Order's minimum size and pack requirements. The Committee stated that 12-row ( 54/64 inch in diameter) cherries regularly make up only 1 to 2 percent of the market and are not readily accepted by wholesale buyers, nor do handlers often choose to pack and market such small cherries. The Committee further indicated that in years of weather-induced crop failure or yield reductions, crop insurance requires growers to harvest and deliver all the cherries produced, even if handlers would prefer that growers forgo delivery of small size fruit and growers would prefer to avoid the expense and burden of harvesting such small size fruit. With this proposed rule, sweet cherry growers would be able to harvest fruit that is more readily accepted by handlers and successfully market such fruit to consumers. The proposed rule would also facilitate growers' use of crop insurance in years when the industry experiences a crop failure.

At its August 27, 2025, meeting, the Committee voted, 12 in favor and none opposed, to add a 7 1/2 -row count/row size designation ( 88/64 inches in diameter) and a 7-row count/row size designation ( 92/64 inches in diameter) to the table in the Order's pack requirements. The Committee believes that adding these size designations will allow the industry to differentiate markets and facilitate marketing large size, premium sweet cherries.

This proposed rule would not impose any additional costs to industry. It is not expected to have a significant impact positively or negatively on the revenue of handlers or growers of Washington sweet cherries as the quantity of small, 12-row size fruit produced is very small, the market currently does not readily accept 12-row size sweet cherries, and such cherries, when produced and marketed, command lower prices than larger size fruit. The quality of sweet cherries is not expected to be significantly affected by this proposed change, and increasing the minimum size of marketable cherries aligns with what the market already demands. In addition, the Order's current minimum grade requirements would not be impacted by this proposed rule, and the addition of the larger size designations in the Order's pack requirements is expected to have a neutral or positive impact.

The Committee considered alternatives to the recommended changes made at its May 2024 meeting, including taking no action and continuing to regulate according to the requirements currently in effect under the Order. The Committee considered increasing the minimum size requirement to 61/64 inch in diameter and raising the minimum row count/row size designation to 11-row, thereby eliminating both the 12 and 11 1/2 -row count/row size designations from the pack requirements. However, the Committee determined that the minimum size and minimum row count/row size designation, as proposed herein, would be in the best interest of the growers, handlers, and consumers of Washington sweet cherries. As such, the Committee rejected all other alternatives.

Further, the Committee also discussed alternatives to the recommended changes made at the August 2025 meeting, including taking no action and continuing to regulate based on the recommended proposals presented at the May 2024 meeting. The Committee considered various options regarding defining larger size fruit in the table in the Order's pack requirements. However, the Committee ultimately determined that adding two additional row count/row size designations (7 1/2 -row ( 88/64 inch in diameter) and 7-row ( 92/64 inch in diameter)) would be in the best interest of the growers, handlers, and consumers of Washington sweet cherries and rejected all other alternatives.

Committee meetings are widely publicized throughout the Washington sweet cherry industry. All interested persons are invited to attend meetings and participate in Committee deliberations. Like all Committee meetings, the May 22, 2024, and August 27, 2025, meetings were public meetings and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189, Fruit Crops. This proposed rule does not require changes to the current information collection. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large sweet cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that this proposed rule is consistent with and would effectuate the purposes of the Act.

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered before a final determination is made on this action.

For the reasons set forth in the preamble, AMS proposes to amend 7 CFR part 923 as follows:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Order No. 932 as amended (7 CFR part 932), regulating the handling of olives grown in California. Part 932 (referred to as “the Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The California Olive Committee (Committee) locally administers the Order and is comprised of producers and handlers of olives operating within the area of production.

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends the existing Marketing Order No. 932 (7 CFR part 932), Olives Grown in California and is necessary for the continued operation of Marketing Order No. 932. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This proposed rule has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” which requires Federal agencies to consider whether their rulemaking actions would have Tribal implications. AMS has determined that this proposed rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” Under the Order now in effect, California olive handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate would be applicable to all assessable olives for the 2025 fiscal year, and continue until amended, suspended, or terminated.

This proposed rule would decrease the assessment rate for assessable olives handled under the Order from $28.00 to $24.00 per ton for the 2025 fiscal year and subsequent fiscal years.

Sections 932.38 and 932.39 of the Order authorize the Committee, with the approval of AMS, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are familiar with the Committee's needs and with the costs of goods and services in their local area and can formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting, and all directly affected persons have an opportunity to participate and provide input.

For the 2024 fiscal year and subsequent fiscal years, the Committee recommended, and AMS approved, an assessment rate of $28 per ton of assessable olives within the production area. That rate continues in effect from fiscal year to fiscal year until modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other information available to AMS.

The Committee met on December 19, 2024, and unanimously recommended 2025 fiscal year expenditures of $1,174,697 and an assessment rate of $24 per ton of assessed olives. In comparison, the 2024 fiscal year budgeted expenditures were $1,100,151. The proposed assessment rate of $24 is $4 lower than the rate currently in effect. Although the recommended 2025 fiscal year expenditures are higher than those in 2024, the Committee recommended decreasing the assessment rate due to the significantly higher crop size in 2024 (fruit that is marketed over the course of the 2025 fiscal year), and the need to maintain its reserve funds within a level authorized under the marketing order. The Committee estimates approximately 48,560 tons of olives from the 2024 crop year that will be assessable during the 2025 fiscal year. This amount is substantially higher than the 34,000 tons of olives that were harvested in 2023.

Olives harvested in 2024 will be marketed over the course of the 2025 fiscal year, which began on January 1, 2025, as the harvested olives are stored in brining tanks and processed over the subsequent year. The 48,560 tons of assessable olives from the 2024 crop would generate $1,165,440 (48,560 tons multiplied by the $24 assessment rate) in assessment revenue over the 2025 fiscal year at the proposed assessment rate. The balance of funds needed to cover budgeted expenditures would come from interest income and the Committee's financial reserve. The 2025 fiscal year assessment rate decrease is appropriate to ensure the Committee has sufficient revenue to fund the recommended 2025 fiscal year budgeted expenditures while also ensuring that funds in the reserve do not exceed approximately one fiscal year's expenses, the maximum reserve amount permitted by 7 CFR 932.40.

The Order has a fiscal year and a crop year that are independent of each other. The crop year is a 12-month period that begins on August 1 of each year and ends on July 31 of the following year. The fiscal year is the 12-month period that begins on January 1 and ends on December 31 of each year. Olives are an alternate-bearing crop, with a small crop (2023) followed by a large crop (2024). For this proposed rule, the Committee utilized the estimated 2024 crop year receipts to determine the recommended assessment rate for the 2025 fiscal year.

The Committee derived the recommended assessment rate by considering anticipated fiscal year expenses, the expected volume of assessable olives, and the level of funds available in the authorized financial reserve. The expected 48,560 tons of assessable olives would generate $1,165,440 in assessment revenue at the proposed rate (48,560 tons multiplied by the $24 assessment rate). The income generated from handler assessments, along with reserve funds and interest income, would be sufficient to meet the Committee's estimated program expenditures of $1,174,697 for the 2025 fiscal year. Funds available in the financial reserve (currently about $1,723,008) would be kept within the maximum permitted by the Order (approximately one fiscal year's expenses as authorized by 7 CFR 932.40).

The proposed assessment rate would continue in effect indefinitely until modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other available information. Although this assessment rate would be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or AMS. Committee meetings are open to the public and interested persons may express their views at these meetings. AMS evaluates Committee recommendations and other available information to determine whether modification of the assessment rate is needed. The Committee's 2025 fiscal year budget, and those for subsequent fiscal years, will be reviewed and approved by AMS.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

The Small Business Administration (SBA) defines, in 13 CFR part 121, small agricultural service firms, including handlers, as those whose average annual receipts are no greater than $34 million (North American Industry Classification System (NAICS) code 115114, Postharvest Crop Activities). SBA defines small agricultural producers of olives as those having average annual receipts no greater than $3.5 million (NAICS code 111339, Other Noncitrus Fruit Farming).

According to the Committee, there are two handlers subject to regulation under the Order. The volume of olives produced in the production area—a two-year average of 31,520 tons for crop years 2023 to 2024—would require large scale processing facilities for just two handlers to be able to process the entire California crop; therefore, it is likely that both handlers would exceed the SBA threshold of $34 million in annual receipts, and therefore, not be considered small businesses under the SBA definition of a small firm engaging in postharvest crop activities.

In the 2022 Census of Agriculture, the most recent to date, the National Agricultural Statistics Service (NASS) reports the existence of 1,613 olive-farming operations in California totaling 41,828 bearing acres. To estimate the number of olive growers that would be considered to be “small” per the SBA definition, AMS calculates the acreage required to produce the volume of olives at an average price to reach the $3.5 million threshold. Due to the alternate-bearing nature of olives, a two-year average is used to estimate price and yield, based on the most recent NASS data for 2023 and 2024.

NASS reports 2023 and 2024 California grower prices for olives for canning at $1,080 per ton and $1,140 per ton, respectively. This results in a two-year average price received by California growers of olives for canning of $1,110 per ton ($1,080 plus $1,140, divided by 2). Olive yields in California measured 3.04 tons per acre in 2023 and 3.78 tons per acre in 2024, resulting in an average yield of 3.41 tons of olives per acre (3.04 tons plus 3.78 tons, divided by 2). These figures are utilized in the equations below to estimate the amount of acreage needed to produce the volume of olives sold at the average price to reach the SBA threshold of $3.5 million.

Dividing the SBA threshold for a small olive grower of $3.5 million by the $1,110 per ton average grower received price and by the estimated average yield of 3.41 tons per acre results in approximately 925 acres that would be required for an olive grower to reach $3.5 million in annual receipts. Therefore, AMS concludes that an olive grower would need 926 bearing acres to be considered “large” per the SBA definition.

According to the 2022 Census of Agriculture, published by NASS in February 2024, of the 1,613 olive farms in California, four had bearing acreage between 750 and 999.9 acres, and three had bearing acreage equal to or exceeding 1,000 acres. This means that between 99.6 percent (1,613 minus 7 (4 plus 3), divided by 1,613) and 99.8 percent (1,613 minus 3, divided by 1,613) of farms, or growers, would be considered to be small businesses under the SBA definition.

This proposal would decrease the assessment rate collected from handlers for the 2025 fiscal year and subsequent fiscal years from $28.00 to $24.00 per ton of assessable olives. The Committee unanimously recommended 2025 expenditures of $1,174,697 and an assessment rate of $24 per ton. The recommended assessment rate of $24 is $4 lower than the 2024 assessment rate. The 2024 crop is estimated to be 48,560 tons. The $24 per ton should provide $1,165,440 in assessment income (48,560 tons multiplied by $24 assessment rate). Income derived from handler assessments, along with interest income and funds from the authorized reserve, should be sufficient to cover budgeted expenses.

The Committee deliberated on many of the expenses, weighed the relative value of various programs or projects, and decreased their expenses for inspection and marketing activities while increasing the expenses of their program administration and research activities. Overall, the 2025 budget of $1,174,697 is $74,546 more than the $1,100,151 budgeted for the 2024 fiscal year.

Prior to arriving at this budget and assessment rate, the Committee considered information from various sources including the Committee's Executive, Marketing, Inspection, and Research Subcommittees. Alternate expenditure levels were discussed by these groups, based upon the relative value of various projects to the olive industry and the increased olive production. The assessment rate of $24 per ton of assessable olives was derived by considering anticipated expenses, the high volume of assessable olives, the current balance in the monetary reserve, and additional pertinent factors.

A review of NASS historical and preliminary information indicates the two-year average producer price for California olives is approximately $1,180 per ton. Therefore, utilizing the recommended assessment rate of $24 per ton, assessment revenue for the 2024 fiscal year as a percentage of total producer revenue would be approximately 2 percent ($24 divided by $1,180, multiplied by 100).

This proposed rule would decrease the assessment obligation imposed on handlers. Assessments are applied uniformly to all handlers. Some of the assessment costs to handlers may be passed on to producers. Decreasing the assessment rate would reduce the burden on handlers and may also, therefore, reduce the burden on producers.

The Committee's meetings are widely publicized throughout the production area and all interested persons are invited to attend the meetings and participate in Committee deliberations on all issues. Like all Committee meetings, the December 19, 2024, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178, “Vegetable and Specialty Crops.” No changes in those requirements would be necessary because of this proposed rule. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large California olive handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that this proposed rule is consistent with, and would effectuate the purposes of, the Act.

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered.

For the reasons set forth in the preamble, the Agricultural Marketing Service proposes to amend 7 CFR part 932 as follows:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (the Act), amending Marketing Order No. 981 (7 CFR part 981; the Order), regulating the handling of almonds grown in California. The Almond Board of California (Board) locally administers the Order and is comprised of producers and handlers of almonds operating within the production area.

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends existing Marketing Order No. 981, as amended (7 CFR part 981), Almonds Grown in California, and is necessary for the continued operation of Marketing Order No. 981. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This proposed rule has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” which requires Federal agencies to consider whether their rulemaking actions would have Tribal implications. The Agricultural Marketing Service (AMS) has determined this proposed rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This proposed rule is not intended to have retroactive effect.

This proposed rule would extend the inedible disposition deadline prescribed under the Order from September 30 to November 30. Section 981.42 of the Order authorizes the Board, with the approval of the Secretary, to establish rules and regulations necessary for the administration of the inedible program for quality control. Under this section, the Order currently mandates that inedible kernels for each almond variety in excess of two percent shall constitute an inedible obligation that must be delivered to the Board or Board-accepted users. Section 981.442 of the Order establishes the disposition obligation schedule for California almonds. These requirements are specified in § 981.442(a)(5) and require handlers to meet the disposition obligation deadline no later than September 30 succeeding the crop year in which obligation was incurred.

Since the 2023-2024 crop year, meeting the disposition obligation deadline of September 30 has become problematic because heavy winter precipitation and insect damage have increased the percentage of inedible kernels, a trend that industry believes will continue to adversely impact future crops. For example, during the 2022-2023 crop year, the inedible disposition percentage was 2.12 percent. For the 2023-2024 crop year, the percentage was measured at 4.23 percent (the highest inedible percentage in 40 years), and during the 2024-2025 crop year, the inedible disposition percentage was 3.07 percent. Prior to the 2023-2024 crop year, the previous 15-year inedible percentage average was 1.44 percent. Thus, the lower crop quality in 2023-2024 led to the largest recorded inedible disposition at 55.8 million pounds (the previous largest industry inedible disposition was 14.4 million pounds in 2017-2018 when the inedible percentage was 2.42 percent). This nearly quadrupling of the inedible disposition obligation meant that in addition to handling a record of 6.7 million pounds of inshell credits, industry was also required to ship a record 49.1 million pounds of inedible kernels by September 30, 2024.

Because recent historical inedible percentages have been around 1.5 percent prior to the 2023-2024 crop year, the two percent inedible tolerance had remained reasonable for industry and could be addressed during the current 14-month timeframe. While the 2024-2025 crop year inedible disposition of 3.09 percent decreased from the record high percentage of 4.23 percent in 2023-2024, the current inedible percentage remains nearly double the historical inedible percentage. Such an increase in the inedible disposition percentage has made it difficult for industry to meet the current September 30 deadline.

Given the notable increase in overall inedible product occurring since 2023, the Board met on June 17, 2025, and unanimously recommended, eight in favor and none opposed, to extend the inedible disposition deadline from September 30 to November 30. This action was previously developed during a Loss & Exempt Task Force meeting on February 26, 2025, where it was supported unanimously, and was voted on at the Almond Quality, Food Safety & Services (AQFSS) Committee meeting on March 20, 2025, where it was also supported unanimously. The Board believes adjusting the deadline by 60 days, from September 30 to November 30, will allow sufficient time and more flexibility for industry to meet the disposition obligation deadline.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 7,600 growers of California almonds subject to regulation under the Order and approximately 100 handlers in the production area. At the time this analysis was prepared, the Small Business Administration (SBA) defined small agricultural growers of almonds are defined as those having annual receipts of less than $3,750,000 (NAICS code 111335, Tree Nut Farming) (13 CFR 121.201) and small agricultural service firms as those having annual receipts of less than $34,000,000 (North American Industry Classifications System (NAICS) code 115114, Postharvest Crop Activities).

Data from USDA's National Agricultural Statistics Service (NASS) 2022 Agricultural Census reports that there were 7,596 almond farms with bearing acres in the production area. Additionally, the Census indicates that out of the 7,596 California farms with bearing acres of almonds, 4,805 (63 percent) have fewer than 100 bearing acres.

In its annual Noncitrus Fruits and Nuts publication, NASS reported a 2023 crop year average yield of 1,790 pounds per acre (shelled basis) and a season average grower price of $1.64 per pound. Therefore, a 100-acre farm with an average yield of 1,790 pounds per acre would produce about 179,000 pounds of almonds (1,790 pounds times 100 acres equals 179,000 pounds). At $1.64 per pound, that farm's production would be valued at $293,560 (179,000 pounds times $1.64 per pound equals $293,560). Since the Census indicated that 63 percent of California's almond farms have fewer than 100 bearing acres, it could be concluded that the majority of California almond growers had annual receipts from the sale of almonds of less than $293,560 for the 2022 crop year, which is below the SBA threshold of $3,750,000 for small growers. Therefore, the majority of growers may be classified as small businesses.

To estimate the proportion of almond handlers that would be considered small or large businesses, it was assumed that the unit value per pound of almonds exported in a particular year could serve as a representative almond price at the handler level. A unit value for a commodity is the value of exports divided by the quantity exported. Data from the Global Agricultural Trade System (GATS) database of USDA's Foreign Agricultural Service showed that the value of almond exports from August 2022 to July 2023 (shelled equivalent, combining shelled and inshell) was $4.115 billion. The quantity of almond exports over that period was 1.783 billion pounds. Dividing the export value by the quantity yields a unit value of $2.31 per shelled pound ($4.115 billion divided by 1.783 billion pounds equals $2.31).

NASS estimated that the California almond industry produced 2.511 billion pounds of almonds in 2022. Applying the $2.31 derived representative handler price per pound to total industry production results in an estimated total revenue at the handler level of $5.80 billion (2.511 billion pounds times $2.31 per pound equals $5.80 billion). With an estimated 100 handlers in the California almond industry, average revenue per handler would be approximately $58 million ($5.80 billion divided by 100 equals $58 million). Assuming a normal distribution of revenues, most almond handlers shipped almonds valued at more than $34,000,000 during the 2022 crop year. Therefore, the majority of handlers may be classified as large businesses.

This proposed rule would extend the inedible disposition obligation deadline in § 981.442(a)(5) of the Order from September 30 to November 30. This proposed rulemaking would revise § 981.442(a)(5). Authority for this change is provided in § 981.42. This proposed change would only impact the inedible disposition deadline prescribed under the Order. The Board's meetings are widely publicized throughout the California almond industry and all interested persons are invited to attend the meetings and participate in Board deliberations on all issues. Like all Board meetings, the June 17, 2025, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178, Vegetable and Specialty Crops, and 0581-0242, Almond Salmonella. This proposed rule does not require changes to the current information collection. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large California almond handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

After consideration of all relevant material presented, including the information and recommendations submitted by the Board and other available information, AMS has determined that this proposed rule is consistent with and would effectuate the purposes of the Act.

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered.

For the reasons set forth in the preamble, the Agricultural Marketing Service proposes to amend 7 CFR part 981 as follows:

This proposed rule affecting the Honey Packers and Importers Research, Promotion, Consumer Education and Industry Information Order (7 CFR part 1212) (Order) is authorized by the Commodity Promotion, Research, and Information Act of 1996 (7 U.S.C. 7411-7425) (Act).

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends an existing research and promotion program and is necessary for the continued operation of the Honey Packers and Importers Research, Promotion, Consumer Education and Industry Information Order. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This action has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” The AMS has assessed the impact of this proposed rule on Indian Tribes and determined that this rule would not have Tribal implications that require consultation under Executive Order 13175.

This proposal has been reviewed under Executive Order 12988, “Civil Justice Reform.” It is not intended to have retroactive effect. Section 524 of the Commodity Promotion, Research, and Information Act of 1996 (the Act) (7 U.S.C. 7423) provides that it shall not affect or preempt any other Federal or State law authorizing promotion or research relating to an agricultural commodity.

Under section 519 of the Act (7 U.S.C. 7418), a person subject to an order may file a written petition with USDA stating that an order, any provision of an order, or any obligation imposed in connection with an order, is not established in accordance with the law, and request a modification of an order or an exemption from an order. Any petition filed challenging an order, any provision of an order, or any obligation imposed in connection with an order, shall be filed within two years after the effective date of an order, provision, or obligation subject to challenge in the petition. The petitioner will have the opportunity for a hearing on the petition. Thereafter, USDA will issue a ruling on the petition. The Act provides that the district court of the United States for any district in which the petitioner resides or conducts business shall have the jurisdiction to review a final ruling on the petition if the petitioner files a complaint for that purpose not later than 20 days after the date of the entry of USDA's final ruling.

Under the Order, the National Honey Board (NHB or Board) administers a nationally coordinated program of research, development, advertising, and promotion designed to strengthen the honey industry's position in the marketplace, and to establish, maintain, and expand markets for honey and honey products. To fund the program, 7 CFR 1212.52 authorizes the Board to collect assessments on first handlers and importers who handle and/or import more than 250,000 pounds of honey or honey products per calendar year.

Currently, first handlers and importers who handle and/or import more than 250,000 pounds per calendar year pay $0.015 per pound of assessable honey and honey products. The Order specifies that first handlers are responsible for paying the assessment to the Board on all domestically produced honey and honey products the first handler handles. Producers who are first handlers are responsible for paying the assessment to the Board. Importers are responsible for payment of assessments to the Board on all honey and honey products the importer imports into the United States through the United States Customs and Border Protection (Customs).

The assessment rate has changed once since the program was established in 2008. In 2015, the assessment rate increased from $0.01 to the current rate of $0.015. Pursuant to 7 CFR 1212.52(f), the Board may recommend to the Secretary an assessment change as it deems appropriate by at least two-thirds vote of members present at a meeting of the Board. Additionally, the Order specifies that the recommendation may not increase the assessment by more than $0.02 per pound and by more than $0.0025 in any single fiscal year.

This proposed rule would amend 7 CFR 1212.52(a) by increasing the assessment rate from $0.015 per pound to $0.0175 per pound, effective June 1, 2026, and another increase to $0.02 per pound, effective January 1, 2027.

The Board first discussed this recommendation at their spring 2024 meeting. In June 2024, the Board shared the potential of an assessment increase at the National Honey Packers and Dealers Association (NHPDA) meeting. The NHPDA voted to request NHB raise the assessments to $0.02. The Board met on October 25, 2024, and voted 9 in favor to 1 opposed to recommend the assessment increase from $0.015 cents to $0.02 cents per pound of assessable honey.

Since the last assessment change in 2015, inflation in the U.S. has risen 36%. When applying this increase across costs for staffing, promotion, and research, it significantly affects the Board's budget and contracts with agency partners. Although NHB's assessment revenue has increased slightly since 2023, inflation and the cost of conducting business have outpaced it. Consequently, the Board's effectiveness is compromised due to the loss of purchasing power, which limits implementation of necessary promotion and research projects.

The Board's budget also continues to be constrained by rising reimbursement requests on imported organic honey. Pursuant to 7 CFR 1212.53(c), products that are 100 percent organic, as defined by the National Organic Program, may be exempt from assessments under the Order. Customs collects assessments on all imported honey and honey products, meaning importers must request a reimbursement from the NHB for any certified organic honey that was assessed. Aside from the costs incurred to process these reimbursement requests, the Board must set aside substantial funds for reimbursements requested throughout the fiscal year and 90 days into the next fiscal year as required by 7 CFR 1212.53(e)(1). This causes the Board to be more conservative with promotion and research efforts to ensure funds are available to reimburse these assessments. By increasing assessments, the Board will fund promotion and research efforts with less concern of having to move funds to cover reimbursement requests for certified organic honey.

In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS is required to examine the impact of the proposed rule on small entities. Accordingly, AMS has considered the economic impact of this action on such entities.

This rule proposes an increased assessment rate on importers and handlers of $0.02 per pound of honey. Based on the calculated volume of honey assessed in 2024, described below, the increased assessment rate would add $2.99 million to the program's budget, with $2.42 million being paid by importers and $567,782 paid by handlers. Assessments are applied uniformly to all first handlers and importers who handle or import an amount of honey above the de minimis threshold of 250,000 pounds. This proposed action would increase the assessment imposed on first handlers and importers but not disproportionately burden small domestic first handlers and importers.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be unduly or disproportionately burdened. The Small Business Administration (SBA) defines small agricultural producers of honey as those having annual receipts equal to or less than $3.25 million (North American Industry Classification System (NAICS code 112910, Apiculture)) (13 CFR 121.201), and small agricultural service firms (first handlers and importers) as those having annual receipts equal to or less than $34 million (NAICS code 115114, Postharvest Crop Activities except Cotton Ginning). 1

The Board reported there were 95 importers and 34 first handlers of honey and honey products covered under the program during the 2024 fiscal period. Total assessments for 2024 were $8.96 million, of which 81 percent was paid by importers and 19 percent was paid by first handlers. This data can be used to estimate the average annual revenue from honey sales of importers and first handlers along with determining the number of these considered to be small businesses based on the SBA definitions. Of total paid assessments in 2024, importers paid $7.26 million, and first handlers paid $1.70 million. The amount of honey assessed in pounds can be calculated by dividing 2024 assessment values by the 2024 assessment rate of $0.015 per pound. This results in assessed honey volumes of 484.11 million pounds for importers and 113.56 million pounds for first handlers. Based on analysis of Customs and Border Protection importer data, the 2024 average importer price for honey was $5.34 per pound. Little data is available regarding handler prices; therefore, USDA used this estimated importer price as a proxy for handler price for the purposes of this RFA. Multiplying the estimated importer and handler price of $5.34 per pound by the 2024 assessed volumes results in estimated 2024 total revenues for assessed entities of $2.59 billion for the 95 assessed importers and $606.39 million for the 34 assessed handlers. Assuming equal distribution of revenues, per entity annual receipts would be $27.21 million per importer and $17.83 million per handler, both below the SBA threshold for a small business, which calls for annual receipts no greater than $34 million.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the information collection and recordkeeping requirements imposed by the Order have been approved under OMB control number 0581-0093.

As with all Federal research and promotion programs, reports and forms are periodically reviewed to reduce the burden of information requirements and duplication by industry and public sector agencies. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

AMS is committed to complying with the E-Government Act to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to government information and services, and for other purposes.

Regarding alternatives, the Board considered not making the proposed changes to the Order and leaving it as-is. If the Order was left unchanged, operational costs and services provided by the Board would continue to be issues that could result in the Board failing to cover its expenses through assessments as prescribed by 7 CFR 1212.52(a). After considering these potential issue, the Board decided against leaving the Order unchanged.

Regarding outreach efforts, the Board discussed the assessment rate change at its meetings throughout 2024. Board staff also traveled to industry events, like the NHPDA meeting, to garner feedback and gauge support. On October 25, 2024, the Board voted to recommend the assessment rate change to the Secretary. The members who voted represent producers, handlers, importers, and the industry marketing cooperative. AMS performed this initial RFA analysis regarding the impact of this action on small entities and invites comments concerning the potential effects of this action.

USDA has determined that this proposed rule, if finalized, is consistent with and would effectuate the purposes of the Act. A 30-day comment period is provided to allow interested persons to respond to this proposal. All written comments received in response to this proposed rule by the date specified will be considered prior to finalizing this action.

For the reasons set forth in the preamble, AMS proposes to revise 7 CFR part 1212 as follows:

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2026-2292; Project Identifier MCAI-2024-00043-R” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Deep Gaurav, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

EASA, which is the Technical Agent for the Member States of the European Union, issued EASA AD 2021-0168, dated July 16, 2021 (EASA AD 2021-0168), to correct an unsafe condition on all Airbus Helicopters Model EC120B helicopters and on Model EC 130 B4, AS 350B2, and AS 350B3 helicopters with certain modifications installed. EASA AD 2021-0168 stated that during a flight on a Model EC 130 B4 helicopter, a “strong burnt smell” and smoke appeared in the cockpit, which activated visual and aural alarms. An investigation revealed that the root cause of this occurrence was a short circuit inside the LACU, which was probably caused by the presence of FOD or dust. EASA AD 2021-0168 further stated that failure of the LACU, if not detected and corrected, could lead to the loss of the EFS, resulting in failure of the EFS to activate during an emergency water landing. Due to the design similarities, EASA AD 2021-0168 stated the unsafe condition can also exist or develop on Model EC120B helicopters and on certain Model AS 350-series helicopters. Depending on the configuration of the helicopter, EASA AD 2021-0168 required either a one-time inspection and cleaning of the affected parts or repetitive inspections and cleaning of the affected parts and, depending on findings, accomplishment of applicable corrective actions. EASA AD 2021-0168 also included requirements for the installation of affected parts.

EASA superseded EASA AD 2021-0168 with EASA AD 2024-0018, dated January 11, 2024 (EASA AD 2024-0018) (also referred to as “the MCAI”), after determining that the unsafe condition can only develop if the helicopter is equipped with an EFS. Consequently, Airbus Helicopters developed a modification of the EFS activation buttons to allow the use of the EFS function even in the event of an LACU failure. The MCAI partially retains the repetitive cleaning and inspection requirements in EASA AD 2021-0168 and requires modifying certain helicopters as terminating action for the cleaning and inspections. Concurrently with the modification, the MCAI requires revising the existing RFMS (Rotorcraft Flight Manual Supplement) for the helicopter to include information and updated procedures that reflect the modification to the EFS activation buttons.

For further information, you may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2026-2292.

The FAA reviewed EASA AD 2024-0018, which specifies procedures for cleaning and repetitively inspecting the LACU for FOD. EASA AD 2024-0018 also specifies procedures for amending the RFMs and modifying the location of EFS activation switches on certain helicopters, which constitutes terminating action for the repetitive inspection requirements. Lastly, EASA AD 2024-0018 prohibits installing certain EFS and LACUs on any helicopter, unless certain requirements are met.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

These products have been approved by the civil aviation authority (CAA) of another country and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This proposed AD would require accomplishing the actions specified in EASA AD 2024-0018, described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this proposed AD. See “Differences Between this Proposed AD and the MCAI” for a general discussion of these differences.

EASA AD 2024-0018 requires informing all flight crews of the revisions to the RFMS and thereafter operating the helicopter accordingly. However, this AD does not require those actions as those actions are already required by FAA regulations. FAA regulations require operators furnish to pilots any changes to the flight manual (for example, 14 CFR 135.21) and to ensure the pilots are familiar with the flight manual (for example, 14 CFR 91.505). FAA regulations also require pilots to follow the procedures in the existing flight manual including all updates. Therefore, including a requirement in this AD to inform the flight crew and operate the helicopter according to the revised RFMS would be redundant and unnecessary.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some CAA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2024-0018 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA 2024-0018 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2024-0018 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2024-0018. Material required in EASA AD 2024-0018 for compliance will be available at www.regulations.gov by searching for and locating Docket No. FAA-2026-2292 after the FAA final rule is published.

The FAA estimates that this AD, if adopted as proposed, would affect 576 helicopters of U.S. registry.

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

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

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

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

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

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

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

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

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

This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) to implement section 530A of the Internal Revenue Code (Code). Section 530A(a) authorizes the Secretary  1 to prescribe special rules for when a Trump account is not treated in the same manner as an individual retirement account (IRA) under section 408(a). Section 530A(b)(1)(A)(i) provides that an individual's first Trump account (initial Trump account) is to be “created or organized by the Secretary.” Section 530A(b)(1)(B) provides that a Trump account must be “designated (in such manner as the Secretary shall prescribe)” at the time of its establishment as a Trump account. Section 530A(b)(2)(C) authorizes the Secretary to prescribe rules regarding the time and manner for making elections to establish a Trump account. Section 408(a)(2) authorizes the Secretary to approve nonbank trustees for an IRA. Section 7805(a) authorizes the Secretary to “prescribe all needful rules and regulations for the enforcement of [the Code], including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.”

Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly referred to as the One, Big, Beautiful Bill Act, added new sections 530A, 128, and 6434 to the Code. Section 530A provides for the establishment of a Trump account for an eligible individual.

A Trump account is a type of traditional IRA established for the exclusive benefit of an eligible individual or such eligible individual's beneficiaries under section 530A. The Secretary will create or organize the initial Trump account for each eligible individual. An eligible individual is any individual (i) who has not attained age 18 before the close of the calendar year in which an election to open an initial Trump account is made, (ii) for whom a social security number (within the meaning of section 24(h)(7)) has been issued before the date on which the election is made, and (iii) for whom the election is made. After an initial Trump account has been established, a subsequent Trump account (rollover Trump account) may be established for the account beneficiary during the period that begins when such initial Trump account is established and that ends on December 31st of the calendar year in which the account beneficiary  2 of the initial Trump account attains age 17 (growth period). The rollover Trump account must be funded by a qualified rollover contribution, which is a trustee-to-trustee transfer of the entire account balance from the account beneficiary's existing Trump account. 3

A Trump account is subject to certain special rules inapplicable to other traditional IRAs. The special rules that apply only during the growth period include rules regarding contributions, investments, distributions, and reporting. After the growth period, most of the special rules no longer apply and the rules under section 408 governing traditional IRAs generally apply. Proposed regulations regarding the special rules that apply during and after the growth period are reserved in this document. The Treasury Department and IRS anticipate proposing regulations regarding these rules at a future date.

Additionally, section 70204 of the One, Big, Beautiful Bill Act added section 6434, which provides for a one-time $1,000 pilot program contribution from the Secretary to the Trump account of an eligible child with respect to whom an election is made under section 6434. Section 6434(a) provides that an election for the pilot program contribution is made by an individual with respect to an eligible child of that individual. Section 6434(c) provides that an eligible child is a qualifying child under section 152(c) who (i) is born during the 2025, 2026, 2027, or 2028 calendar years; (ii) has had no prior pilot program election made by any individual; and (iii) is a United States citizen. The Treasury Department and the IRS are proposing regulations under section 6434 in a separate notice of proposed rulemaking (REG-117002-25) published elsewhere in this issue of the Federal Register .

Because the criteria under section 530A to be an eligible individual for whom an initial Trump account can be opened are less restrictive than the criteria under section 6434 to be an eligible child for a pilot program contribution, only some eligible individuals will also be an eligible child. Similarly, the criteria under section 530A for who can make the election to open an initial Trump account are less restrictive than the criteria under section 6434 for who can make the election for a pilot program contribution.

Section 128 employer contributions paid to a Trump account of an employee or a dependent of an employee are not includible in the employee's income. Such contributions are limited to $2,500, subject to cost-of-living adjustments after 2027. Section 128 employer contributions must be made pursuant to a section 128(c) Trump account contribution program. (The Treasury Department and the IRS intend to issue guidance under section 128 at a future date.)

Notice 2025-68, 2025-52 IRB 856, informed taxpayers that the Treasury Department and the IRS intend to propose regulations providing guidance with respect to section 70204, including with respect to making an election to open an initial Trump account. The notice addresses certain initial questions related to Trump accounts and requests comments, with the comment period ending February 20, 2026. The notice indicates that proposed regulations regarding the election to open an initial Trump account (that is, these proposed regulations) may be issued prior to the end of the comment period and to the extent comments in response to the notice regarding that subject are not received in time to consider in drafting the proposed regulations, they will be considered in drafting the final regulations.

Proposed § 1.530A-1 would provide general requirements for Trump accounts, certain definitions relating to Trump accounts, rules regarding the election to open an initial Trump account, and rules regarding the responsible party for the initial Trump account.

As provided under section 530A(b)(1), proposed § 1.530A-1(b)(1) would provide that a Trump account is a type of traditional IRA that is established for the exclusive benefit of an eligible individual and, after the death of the individual, his or her beneficiaries. As provided under section 530A(h)(1), proposed § 1.530A-1(b)(1) would clarify that a Trump account cannot be a SIMPLE IRA under section 408(p) and cannot accept contributions from an employer's SEP arrangement under section 408(k).

Proposed § 1.530A-1(b)(2) would provide requirements for a Trump account. First, as provided under section 530A(b)(1)(A)(i) and (ii), a Trump account is either (i) an initial Trump account, which is a Trump account created or organized by the Secretary for an eligible individual, or (ii) a rollover Trump account, which is a subsequent Trump account created during the growth period and funded by a qualified rollover contribution from the account beneficiary's existing Trump account. 4 Because a rollover Trump account must be funded by a qualified rollover contribution (which is a transfer of the entire account balance from the individual's prior Trump account), an individual is permitted to have only one Trump account containing funds (funded Trump account) at a time.

Second, because a Trump account is a traditional IRA, the written governing instrument establishing a Trump account must generally meet the requirements of section 408(a)(1) through (6), as well as the requirements of section 530A(b)(1)(C)(i) through (iii). The written governing instrument generally should reflect both the rules that apply during the growth period and the rules that apply after the growth period. The requirements of section 530A(b)(1)(C)(i) through (iii) would be clarified in §§ 1.530A-2 through 1.530A-4, which are reserved in this document and are expected to be proposed in the future.

Third, under the authority in sections 408(a)(2) and 530A(a), proposed § 1.530A-1(b)(2)(iii) would provide for the automatic approval to act as a trustee of a Trump account of any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA. Persons who are approved by the IRS after December 31, 2025, must request approval in the application to act as a trustee of a Trump account. The Treasury Department and the IRS are also considering changes to the requirements to be a nonbank trustee and request comments. In particular, comments are requested on whether the adequacy of net worth requirement in § 1.408-2(e)(5)(ii) should be changed to treat certain debt as equity (for example, for broker-dealers, debt meeting the conditions specified in the rule may be treated as capital pursuant to the Securities and Exchange Commission rule in 17 CFR 240.15c3-1), whether the special rule for a governmental unit seeking to be a nonbank trustee in § 1.408-2(e)(8) should be expanded to include other types of IRAs (including Trump accounts) beyond a deemed IRA that is part of the governmental unit's own qualified employer plan, and whether the fiduciary experience requirement in § 1.408-2(e)(2)(iii) should take into account the fiduciary experience of subcontractors of the applicant.

Fourth, as provided under section 530A(b)(1)(B), the written governing instrument establishing a Trump account must clearly designate the account as a Trump account at the time of establishment. Proposed § 1.530A-1(b)(2)(iv) would also require that the account must be titled as a Trump account.

Proposed § 1.530A-1(b)(3) would outline the general areas where Trump accounts differ from other traditional IRAs. There are special rules for Trump accounts during the growth period related to: contributions (as provided under section 530A(c)); investments (as provided under section 530A(b)(3)); distributions (as provided under section 530A(d)); reporting (as provided under section 530A(i)); and coordination with IRA rules (as provided under section 530A(h)). These requirements would be clarified in §§ 1.530A-2 through 1.530A-6, which are reserved in this document and are expected to be proposed in the future. Proposed § 1.530A-1(b)(3) would also provide that, after the growth period, the rules under section 408 that apply to other traditional IRAs generally apply to Trump accounts (as provided under section 530A(a) and (h)).

Proposed § 1.530A-1(b)(4) would define terms that apply for purposes of section 530A and the regulations thereunder.

In accordance with section 530A(b)(4), proposed § 1.530A-1(b)(4)(i) would define account beneficiary as the individual for whom a Trump account was established.

Proposed § 1.530A-1(b)(4)(ii) would define authorized individual as the individual described in proposed § 1.530A-1(c)(1)(i).

In accordance with section 530A(b)(2), proposed § 1.530A-1(b)(4)(iii) would define eligible individual as any individual who has not attained age 18 before the end of the calendar year in which an election to open an initial Trump account is made under § 1.530A-1(c), has been issued a social security number within the meaning of section 24(h)(7) before the election is made, and for whom the election is made pursuant to proposed § 1.530A-1(c).

Proposed § 1.530A-1(b)(4)(iv) would define an account beneficiary's growth period as the period that begins when the initial Trump account is established and ends on December 31 of the calendar year in which the account beneficiary attains age 17. This term is created for ease of reference and stands for the concept generally used in section 530A of “the period before the first day of the calendar year in which the account beneficiary attains age 18.”

Proposed § 1.530A-1(b)(4)(v) would define IRA for purposes of section 530A as an individual retirement account under section 408(a) and includes a custodial account that is treated as a trust pursuant to section 408(h). Although in other places in the Code and regulations, the term IRA includes both individual retirement accounts under section 408(a) and individual retirement annuities under section 408(b), this definition excludes individual retirement annuities under section 408(b), in accordance with section 530A(b)(1).

Proposed § 1.530A-1(b)(4)(vi) would define pilot program contribution as a $1,000 contribution made by the Secretary upon the processing of an election for the Trump accounts contribution pilot program under section 6434. Only individuals who meet the definition of an eligible child under section 6434 (which is different from the section 530A(b)(2) definition of eligible individual) are eligible to receive a pilot program contribution.

In accordance with section 530A(e), proposed § 1.530A-1(b)(4)(vii) would define qualified rollover contribution as a direct trustee-to-trustee transfer of the account beneficiary's entire Trump account balance to a rollover Trump account for the same account beneficiary.

Proposed § 1.530A-1(b)(4)(viii) would define traditional IRA as an individual retirement account under section 408(a) that is not a Roth IRA under section 408A.

Proposed § 1.530A-1(b)(5) would provide that, for purposes of section 530A, an individual will attain an age on the individual's birthday (the birthday rule). See Rev. Rul. 2003-72, 2003-33 IRB 346, for other instances in which the birthday rule is applied for specific sections of the Code.

Proposed § 1.530A-1(c)(1) would provide that an election to open an initial Trump account for an eligible individual could be made either by an authorized individual or by the Secretary, in accordance with the two methods for making an election provided under section 530A(b)(2)(C).

As provided under section 530A(b)(2)(C)(ii), a person other than the Secretary (which the proposed regulation would limit to a particular person referred to as the “authorized individual”) may make the election if no prior election to open an initial Trump account has been made by the Secretary for the eligible individual. Under the proposed regulation, an authorized individual would be defined in two different ways. If an election under section 6434 for a pilot program contribution is being made at the same time as the election to open the initial Trump account, proposed § 1.530A-1(c)(1)(i)(A) would provide that the authorized individual is the individual authorized to make (and is making) the election under section 6434 for a pilot program contribution. This approach would ensure that the person permitted to elect to open the initial Trump account is the same person making a pilot program election under section 6434. The proposed regulations would provide that, by making the election, the authorized individual is representing, under penalties of perjury, that he or she is the pilot program-electing individual.

If a pilot program election is not being made at the same time as the election to open an initial Trump account (for example, because the eligible individual was born before January 1, 2025, and therefore is not eligible for a pilot program contribution), proposed § 1.530A-1(c)(1)(i)(B) would provide an ordering rule to determine who is the authorized individual for purposes of making the election to open an initial Trump account. Because only one election to open an initial Trump account can be made for an eligible individual, the Treasury Department and the IRS believe that an ordering rule is necessary to provide a clearer process for determining who may make that election. Under the proposed ordering rule, the authorized individual would be, in order of priority, a legal guardian, parent, adult sibling, or grandparent of the eligible individual. If multiple individuals share the same highest level of priority and no prior election has been made for the eligible individual, any individual with that level of priority may make the election to open an initial Trump account. Because no pilot program election is being made, there is no need to conform to the requirements of section 6434. This ordering rule is based on § 1.529A-2(c), which governs who (other than the designated beneficiary of an account established under a section 529A  5 qualified ABLE program (an ABLE account)) may establish the designated beneficiary's only ABLE account. The proposed regulations would provide that, by making the election, the authorized individual is representing, under penalty of perjury, that he or she is authorized under these rules to open the initial Trump account for the eligible individual and that there is no other person with a higher priority available to make the election.

Comments are requested on (1) whether definitions are needed for the terms “legal guardian,” “parent,” “sibling,” and “grandparent,” (2) whether any other individual who bears a relationship to the eligible individual under section 152(c)(2) should also be an authorized individual, and (3) who may be the authorized individual in situations involving foster children, orphans, emancipated minors, wards of the State, and other situations involving minors that may need clarification in the regulations (particularly, whether a State that is the guardian of the child would be an authorized person eligible to open the account).

Alternatively, as would be provided in proposed § 1.530A-1(c)(1)(ii), if an election was made by an individual who was not an authorized individual with respect to an eligible individual at the time that the election was made, the Secretary is deemed to have made the election to open the initial Trump account. In such instance, even though the Trump account was opened based on an election by an individual who was not an authorized individual, the account will not cease to be a Trump account. See Section II.C for certain situations in which a responsible party may be removed and replaced.

The Treasury Department and the IRS have received comments that the Secretary should make an election on behalf of each individual who has met the requirements to be an eligible individual based on information from tax returns or otherwise (for example, from Social Security Administration data). Commenters argue that making an election to open an initial Trump account on behalf of these children is within the authority granted to the Secretary under section 530A(b)(2)(C)(i). Commenters point to the success of automatic enrollment (opt-out design) in analogous state-based early wealth building programs and also in qualified retirement plans. These opt-out designs (which do not require any participant action before enrollment) have increased participation relative to opt-in designs (which require action before enrollment).

Notably, opt-out designs that exist in analogous state-based early wealth building programs and qualified retirement plans involve pooled accounts as opposed to individual retirement accounts. Pooled accounts are well-suited to automatic enrollment because a plan or program can add a new individual as a participant or beneficiary of an existing pooled vehicle without establishing a new, separately maintained account in that individual's name. By contrast, automatically opening a Trump account would require establishing a new individual account and completing the associated administrative steps needed to open and maintain that account in compliance with the Code and other applicable law (including federal and state banking, securities, and anti-money laundering laws).

Although opt-out designs would result in higher participation, the Treasury Department and the IRS have determined that it is necessary to limit the situations in which the Secretary will make the election. Most significantly, the Secretary would be unable to fulfill certain requirements to open and operate a Trump account without disclosure of taxpayer information. Section 6103 prohibits the disclosure or inspection of information from taxpayers' tax returns or that is otherwise received, recorded, prepared, furnished to, or collected by the IRS with respect to the taxpayer except as expressly authorized in the Code. Without an exception from the prohibition on disclosure, the Treasury Department would be unable to perform necessary actions to open an account, make eligible investments (which could be reportable financial transactions), or assign a responsible party other than the Secretary; thus, an account opened in this way would therefore be unable to comply with the Code and applicable law.

Without an exception to section 6103, the Secretary may be prohibited from disclosing the existence of the Trump account to any individuals who might apply to become a responsible party. This would be a barrier to the account receiving any contributions from family members, who would not have any account information, or to receiving the pilot program contribution (because an election must be made by a pilot program-electing individual under section 6434). It would also prevent families from opening rollover Trump accounts because there would be no ability to authorize a qualified rollover contribution, which is needed to fund the rollover Trump account. Keeping the Secretary as the responsible party would be particularly problematic for account beneficiaries otherwise eligible for a rollover to an ABLE account because the Secretary generally will have no way of knowing whether such a rollover would be appropriate for a particular beneficiary.

The Treasury Department and the IRS have sought to make the election process as simple and frictionless as possible by permitting individuals to file a one-page Form 4547 at the time of filing their tax return or at a different time, or through an electronic application or web page made available by the Secretary. Comments are requested on additional ways in which the Treasury Department and the IRS can further simplify making the election to open an initial Trump account while complying with the requirements under the Code and applicable law (including federal and state banking, securities, and anti-money laundering laws). Comments are also requested on whether the Treasury Department and the IRS should authorize a State or other government entity to make an election on behalf of an eligible individual after a certain period of time if an initial Trump account has not yet been created by an authorized individual, again while complying with the requirements under the Code and other applicable laws.

Proposed § 1.530A-1(c)(2) would provide that an election by an authorized individual to open an initial Trump account must be made on or before December 31 of the calendar year in which the eligible individual attains age 17, as required by section 530A(b)(2)(A).

Proposed § 1.530A-1(c)(3) would provide that the election by an authorized individual must be made on the form prescribed by the Secretary (Form 4547, Trump Account Election(s) ) or through an electronic application or web page made available by the Secretary, in accordance with applicable instructions. The election may be made at any time during the period specified in proposed § 1.530A-1(c)(2), including at the same time that the authorized individual files such individual's Federal income tax return. The initial Trump account election, however, is not a part of any individual's tax return and is independent of the filing of the income tax return.

Proposed § 1.530A-1(c)(4) would provide that only the first election to open an initial Trump account processed by the IRS with respect to an eligible individual will result in an initial Trump account being opened for that eligible individual. Once the first election is processed, no further election to open an initial Trump account will be allowed. This proposed rule is intended to prevent multiple initial Trump accounts from being opened for the same eligible individual and conforms with the section 530A(b)(2)(C) requirements that no prior election for that eligible individual has been made.

Section 530A(b)(1)(A)(i) requires that the Secretary create or organize the initial Trump account. Because the account beneficiary of a Trump account does not initially have legal capacity under applicable law, a responsible party is needed to take actions on behalf of the account beneficiary in managing the Trump account; therefore, the Secretary must designate a responsible party to act on behalf of the account beneficiary. Proposed § 1.530A-1(d) would provides that, in general (that is, unless State law or, if the trustee chooses, the account agreement, provides otherwise), the responsible party of the initial Trump account will be the individual who makes the election to open the account. The responsible party could have the authority to select among eligible investments (if there is more than one eligible investment offered), to direct a transfer to a different trustee pursuant to a qualified rollover contribution or to an ABLE account pursuant to a qualified ABLE rollover contribution, or to select a successor responsible party. However, applicable law, including State law, or the account agreement could limit or condition the actions that the responsible party will be able to take on behalf of the account beneficiary.

The Treasury Department and the IRS recognize that there may be situations in which it may be appropriate for the person who is currently the responsible party of a Trump account to be replaced, including when the individual who made the election to open the initial Trump account was not, in fact, an authorized individual. In these situations, applicable law (including State law) or the account agreement will govern when and how a responsible party may be removed and replaced. For example, a legal guardian might be able to obtain a court appointment under applicable State law to be a responsible party of a Trump account. Further, to the extent not inconsistent with State law, the account agreement might provide procedures under which a responsible party may be removed and replaced without a court appointment. For example, to the extent not inconsistent with applicable law, these procedures could include who can request the removal of a responsible party (such as the account beneficiary's legal guardian) and who can be the new responsible party (such as a corporate trustee, the account beneficiary's legal guardian, or another person who is an authorized individual, consistent with the ordering rule in proposed § 1.530A-1(c)(1)).

This notice of proposed rulemaking reserves §§ 1.530A-2 through 1.530A-6 for future guidance addressing contributions, investments, distributions, reporting, and other special rules and coordination with IRA rules.

The regulations are proposed to apply to taxable years beginning on or after January 1, 2026. In accordance with section 7805(b)(2), the Treasury Department and the IRS intend to publish final regulations within 18 months of the date of enactment of section 530A.

Executive Orders 12866 and 13563 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.

The proposed regulations have been designated by the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA) as subject to review under Executive Order 12866 pursuant to the Memorandum of Agreement (MOA, July 4, 2025) between the Treasury Department and the OMB regarding review of tax regulations. OIRA has determined that the proposed rulemaking is economically significant under section 3(f)(1) of Executive Order 12866 and subject to review under Executive Order 12866 and section 1(b) of the MOA. Accordingly, the proposed regulations have been reviewed by OMB. This proposed rule is not expected to be considered a regulatory action under Executive Order 14192 because it imposes no more than de minimis costs.

The proposed regulations would explain how to make an election to open a Trump account under section 530A of the Internal Revenue Code (Code). The proposed regulations would define terms for the purpose of implementing section 530A, clarify who may elect to open an initial Trump account, explain how to elect to open an initial Trump account, and designate a default responsible party to manage an initial Trump account on behalf of the account beneficiary.

Public Law 119-21, commonly referred to as the One, Big, Beautiful Bill Act, added new sections 530A, 128, and 6434 to the Code. Section 530A describes Trump accounts, section 128 describes certain employer contributions to Trump accounts, and section 6434 describes the Trump accounts contribution pilot program. The proposed regulations provide guidance on making an election to open an initial Trump account under section 530A.

Section 530A defines a Trump account as a traditional individual retirement account (IRA) with some special rules. Most special rules that distinguish Trump accounts from other IRAs apply only during the growth period. The first day of the growth period is the day the account is established, and the final day of the growth period is December 31 of the calendar year in which the account beneficiary attains age 17. The rules for traditional IRAs generally apply after the growth period. A Trump account may be established for the benefit of a child prior to the calendar year in which the child attains age 18 if the child has been issued a social security number.

In general, distributions from Trump accounts are not permitted during the growth period. The entire balance of a Trump account may be rolled over in a direct trustee-to-trustee transfer to a new Trump account of the account beneficiary. The entire balance of a Trump account may be rolled over in a direct trustee-to-trustee transfer to an ABLE account of the account beneficiary in the calendar year the account beneficiary attains age 17.

Investments in a Trump account must track the returns of a broad index of equities in primarily U.S. companies for which regulated futures contracts are traded, avoid the use of leverage, and avoid annual fees and expenses above 0.1%.

Trump accounts may receive contributions from nonprofits, governments, employers, and individuals. In general, contributions to a Trump account are subject to an annual limit of $5,000, adjusted for inflation.

Governments and nonprofits may only make contributions through the Treasury Department, and such contributions must be made in equal amounts to the Trump accounts of every account beneficiary in a qualified class. Contributions from governments and nonprofits through the Treasury Department do not count towards the $5,000 annual contribution limit.

Section 128 sets rules for certain employer contributions to Trump accounts. Employers may contribute to the Trump account of an employee or an employee's dependent. Section 128 employer contributions to a Trump account are excluded from the employee's income, up to an annual limit of $2,500, adjusted for inflation. Section 128 employer contributions count towards the $5,000 annual contribution limit.

Section 6434 describes the Trump accounts contribution pilot program. In the pilot program, the Secretary will pay $1,000 to the Trump accounts of eligible children. A U.S. citizen born in 2025, 2026, 2027, or 2028 who has been issued a social security number and for whom no request for a pilot program contribution has previously been processed is eligible for a pilot program contribution. Pilot program contributions do not count towards the $5,000 annual contribution limit.

All other contributions to a Trump account, including contributions from friends or family members, are non-deductible contributions (they create investment in the contract (basis)) and count towards the $5,000 annual contribution limit.

The proposed regulations would be just one piece of the implementation of section 530A; the proposed regulations would reserve the following sections in the Code of Federal Regulations for future guidance: §§ 1.530A-2, 1.530A-3, 1.530A-4, 1.530A-5, and 1.530A-6. The proposed regulations would define the following terms for the purposes of implementing section 530A: growth period, IRA, pilot program contribution, and traditional IRA. Growth period is a concise term for the period described repeatedly by the statute as “the period before the first day of the calendar year in which the account beneficiary attains age 18.” An IRA is an individual retirement account. A pilot program contribution is a contribution to a Trump account under section 6434. A traditional IRA is an individual retirement account that is not a Roth IRA.

The proposed regulations would clarify who may elect to open an initial Trump account. Under the proposed regulations, an individual who is making a pilot program election for an eligible child under section 6434 must also elect to open an initial Trump account if no prior election was made to open an initial Trump account. 6 If no individual is making a pilot program election, then one of the following individuals may elect to open an initial Trump account: a legal guardian, a parent, an adult sibling, or a grandparent, in that order of priority.

The proposed regulations would explain how to elect to open an initial Trump account. Under the proposed regulations, the election to open an initial Trump account must be made on a form prescribed by the Secretary (Form 4547, Trump Account Election(s)) or through an electronic application or web page made available by the Secretary.

The proposed regulations would designate a default responsible party to manage an initial Trump account on behalf of the account beneficiary while the account beneficiary does not have legal capacity. Under the proposed regulations, in general, the default responsible party for an initial Trump account is the individual who makes the election to open an initial Trump account.

The Treasury Department and the IRS have assessed the benefits and costs of the proposed regulations relative to a no-action baseline reflecting anticipated Federal income tax-related behavior in the absence of these proposed regulations.

The proposed regulations are expected to affect 73 million children in 44 million families.

In general, the regulations would provide clarity to the 44 million families with children under age 18 who may be eligible to open an initial Trump account. The regulations would be responsive to the statutory requirement that the election to open an initial Trump account be made in a time and manner prescribed by the Secretary. These regulations would clarify who may open an initial Trump account for the minor child and in what order of priority, and who may be the responsible party for the initial Trump account while the child is still a minor. The statute does not prescribe a time or manner to make the election to open an initial Trump account; the statute requires the Secretary to prescribe the time and manner of an election. Providing clarity about the election to open an initial Trump account would result in initial Trump accounts opening for some children under age 18 for whom an account would have been opened later or not at all. Those children would benefit from receiving a qualified general contribution or a contribution from a family member that they may have missed had the account been opened later or not at all. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit at age 18 of $1,000 invested at various ages. 7 Among birth cohorts from 1926 to 2006, Table 1 shows that while an earlier investment allows for more growth, there are still typically benefits at age 18 from making an investment even at age 17.

The proposed regulations would clarify who may elect to open an initial Trump account. The proposed regulations would allow the following individuals to open an initial Trump account: an individual making a pilot program election for an eligible child under section 6434, a legal guardian, a parent, an adult sibling, or a grandparent. An alternative would be to allow only an individual for whom the eligible individual is a dependent under the Code to make the election.

This choice and several others would provide clarity about the election to open an initial Trump account, which may allow the account beneficiary to receive a contribution that they otherwise would have missed. See Table 1 for the value at age 18 of a $1,000 investment at a range of ages in a range of historical market conditions.

Although section 530A contemplates an election to open an initial Trump account made by the Secretary, the Treasury Department and IRS have determined that the Treasury Department would generally be unable to perform necessary actions to open an account (1) without a statutory exception to the disclosure prohibition in section 6103 and (2) due to additional legal constraints (including federal and state banking, securities, and anti-money laundering laws). For these reasons, the Secretary making the election to open an initial Trump account was not an alternative within the discretion of the Treasury Department and IRS. If there were a legal path for the Treasury Department to open initial Trump accounts, then there would still be substantial administrative challenges to consider.

The proposed regulations would set an ordering rule among individuals authorized to elect to open an initial Trump account. The proposed regulations would prioritize an individual making a pilot program election. If no one is making a pilot program election, then the proposed regulations would use the same ordering rule as is used in section 529A: legal guardian, parent, adult sibling, grandparent. An alternative would be to decline to specify an ordering rule. By prioritizing an individual making a pilot program election, the proposed regulations would streamline the process of opening an initial Trump account and making a pilot program election. By specifying the ordering rule used in section 529A in other cases, the proposed regulations would use an established system for guiding taxpayers and ordering elections.

This choice and several others would provide clarity about the election to open an initial Trump account, which may allow the account beneficiary to receive a contribution that they otherwise would have missed. See Table 1 for the value at age 18 of a $1,000 investment at a range of ages in a range of historical market conditions.

The proposed regulations would designate a default responsible party to manage an initial Trump account on behalf of the account beneficiary. Under the proposed regulations, the default responsible party for an initial Trump account would be the individual who makes the election to open an initial Trump account. One alternative would be for the legal guardian to be the responsible party. Another alternative would be for the individual making the initial Trump account election to specify a responsible party. Designating the individual who makes the initial Trump account election as the default responsible party simplifies the process and avoids confusion from involving multiple individuals in the process of opening and managing the account.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) generally requires that a Federal agency obtain the approval of the Office of Management and Budget (OMB) before collecting information from the public, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. The information collection in proposed § 1.530A-1(c) is used to open an initial Trump account for eligible individuals. The burden associated with the collection of information in these proposed regulations are included in Form 4547 and its instructions and approved under OMB control number 1545-2336 in accordance with PRA procedures under 5 CFR 1320.10.

The Secretary hereby certifies that these proposed regulations would not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6). The proposed rules would not impose any requirement or obligation upon small entities. The proposed rules affect individuals and the trustee of the initial Trump accounts, which is not a small entity. Because the regulation does not impose any requirement or obligation on small entities, a Regulatory Flexibility Act analysis is not required.

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

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

Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business.

Before these proposed regulations are adopted as final regulations, consideration will be given to comments regarding the notice of proposed rulemaking that are submitted timely to the IRS as prescribed in this preamble under the ADDRESSES section. The Treasury Department and the IRS request comments on all aspects of the proposed regulations. Any comments submitted will be made available at https://www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person who timely submits electronic or written comments. Requests for a public hearing are also encouraged to be made electronically. If a public hearing is scheduled, notice of the date and time for the public hearing will be published in the Federal Register .

IRS revenue procedures, revenue rulings, notices, and other guidance cited in this document are published in the Internal Revenue Bulletin (or Cumulative Bulletin) and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at http://www.irs.gov.

The principal author of these proposed regulations is the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes) at (202) 317-4148. Personnel from the Treasury Department and the IRS also participated in its development.

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

This document contains proposed amendments to the Procedure and Administration Regulations (26 CFR part 301) to implement section 6434 of the Internal Revenue Code (Code) relating to the Trump accounts contribution pilot program. Section 6434(d) authorizes the Secretary of the Treasury or the Secretary's delegate (Secretary) to prescribe rules for the time and manner for elections under section 6434. The proposed regulations are also issued under the authority of section 7805(a) of the Code, which authorizes the Secretary to “prescribe all needful rules and regulations for the enforcement of [the Code], including all rules and regulations as may be necessary by reason of any alteration of law to internal revenue.”

Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act of 2025, added new sections 530A and 6434 to the Code relating to Trump accounts. Section 530A of the Code provides for the establishment of a Trump account for an eligible individual as defined in section 530A(b)(2) and cross-references section 6434. Section 6434 provides for a one-time $1,000 contribution from the Secretary to the Trump account of an eligible child with respect to whom an election under section 6434 is made ($1,000 pilot program contribution).

These proposed regulations would implement section 6434. The Treasury Department and the IRS are proposing regulations under section 530A in another notice of proposed rulemaking (REG-117270-25) published elsewhere in this issue of the Federal Register .

A Trump account is a type of traditional individual retirement account (IRA) established for the exclusive benefit of an eligible individual or the individual's beneficiaries under section 530A. Section 530A directs the Secretary to create or organize the first Trump account (initial Trump account) for each eligible individual. An eligible individual is any individual (i) who has not attained age 18 before the close of the calendar year in which an election to open an initial Trump account (initial Trump account election) is made, (ii) for whom a social security number has been issued before the date of the initial Trump account election, and (iii) for whom the initial Trump account election is made.

A Trump account is subject to certain special rules on contributions, investments, distributions, and reporting that are inapplicable to other individual retirement arrangements under section 408 of the Code. After the period beginning when a Trump account is established and ending on December 31 of the calendar year in which a Trump account beneficiary attains age 17 (growth period), most of the special rules no longer apply and the rules under section 408 governing traditional IRAs generally apply. During the growth period, a subsequent Trump account (rollover Trump account) may be established for an individual and must be funded by a trustee-to-trustee transfer of the entire account balance from the individual's existing Trump account. Because a rollover Trump account must be funded by a qualified rollover contribution (which is a transfer of the entire account balance from the individual's prior Trump account), an individual may only have one Trump account containing funds at a time.

Unlike contributions to other IRAs, which require an IRA owner to have includible compensation, under the special rules applicable during the growth period of a Trump account, a $1,000 pilot program contribution may be made to the Trump account of a child eligible to receive the $1,000 pilot program contribution even if the child does not have includible income. Because the criteria under section 530A to be an eligible individual for the opening of an initial Trump account differ from the criteria under section 6434 to be an eligible child whose Trump account may receive a $1,000 pilot program contribution, only a portion of the individuals eligible for a Trump account will also be eligible to receive a $1,000 pilot program contribution. However, a child who is eligible for a $1,000 pilot program contribution must have a Trump account in order for the Secretary to pay the $1,000 pilot program contribution. A child who does not have a Trump account for any reason will not receive a $1,000 pilot program contribution, even if such child is otherwise eligible for a $1,000 pilot program contribution.

In general, section 6434 provides that when an individual makes an election with respect to an eligible child of the individual, the election results in a one-time, $1,000 pilot program contribution into the eligible child's Trump account. The term “Trump account” has the same definition as in section 530A.

Section 6434(a) provides that an individual makes an election for the Trump accounts contribution pilot program with respect to an eligible child of that individual. With such election, the eligible child is treated as making a $1,000 payment against the income tax liability imposed by subtitle A of the Code for the taxable year for which the election is made. Section 6434 does not require that the election be made for a particular calendar year. Although the eligible child is receiving the benefit of the pilot program election, the eligible child does not make the pilot program election.

Section 6434(b) provides that the same amount of the $1,000 payment is paid by the Secretary to the Trump account of the eligible child for which the election in section 6434(a) was made ($1,000 pilot program contribution). The $1,000 pilot program contribution into the eligible child's Trump account therefore cannot occur without an election having been made for that child. Section 6434(b) authorizes the Secretary to pay the $1,000 pilot program contribution only “to the Trump account with respect to which such eligible child is the account beneficiary.” Pursuant to section 6434(f)(1), a $1,000 pilot program contribution made under section 6434 is not subject to reduction or offset by the mandatory offsets of subsections (c) (past-due support), (d) (debts owed to Federal agencies), (e) (past-due, legally enforceable state income tax obligations), and (f) (unemployment compensation debts) of section 6402 of the Code or any other similar offset. Similarly, section 6434(f)(2) prohibits reduction or offset of such $1,000 pilot program contributions by other assessed Federal taxes subject to collection including levy. Section 6434(g) prevents overpayment interest under section 6611(a) of the Code from accruing prior to January 1, 2028, with respect to any payment under section 6434.

Section 6434(c) defines the term “eligible child” for purposes of section 6434. It provides that an eligible child is a qualifying child under section 152(c) of the Code; is born during the 2025, 2026, 2027, or 2028 calendar year; has had no prior pilot program election made by any individual; and is a United States citizen.

Section 6434(e)(1) requires the pilot program election to include the social security number of the eligible child for whom the election is made. Section 6434(e)(2) cross-references section 24(h)(7) of the Code to define the term “social security number” for section 6434. The social security number must be issued before the election is made.

Section 6434(d) authorizes the Secretary to provide the rules for the time and manner of making the pilot program election.

Proposed § 301.6434-1 would establish the framework for the Trump accounts contribution pilot program. First, it would provide the general rule that a pilot program-electing individual must make a pilot program election with respect to an eligible child of such individual in order for the Secretary to make a $1,000 pilot program contribution into the Trump account for which such eligible child is the beneficiary. Second, it would define several terms solely for purposes of section 6434, including the terms “eligible child,” “pilot program election,” “pilot program-electing individual,” “special taxable year,” and “social security number.” Third, it would identify how the deemed payment upon the processing of a pilot program election generates an overpayment of tax for the eligible child in the amount of $1,000, which is then refunded to the eligible child as a $1,000 pilot program contribution into such child's Trump account. Fourth, it would provide the rules for the timing of the pilot program election. Lastly, it would provide the rules for the manner of making the pilot program election.

Proposed § 301.6434-1(a) would provide that a pilot program-electing individual must make a pilot program election with respect to an eligible child of the pilot program-electing individual in order for the Secretary to make a $1,000 pilot program contribution into the Trump account of the eligible child. This general rule would conform with the statutory scheme of section 6434(a), which provides that after a pilot program election, an eligible child is treated as making a $1,000 payment against an income tax liability under subtitle A of the Code, and section 6434(b), which provides that the $1,000 amount treated as a payment under section 6434(a) is paid by the Secretary to the Trump account of the eligible child.

Proposed § 301.6434-1(b) would define terms that apply solely for purposes of § 301.6434-1.

Under proposed § 301.6434-1(b)(1), the term “eligible child” would mean an individual (i) who the pilot program-electing individual anticipates will be that individual's qualifying child under section 152(c) for the taxable year of the pilot program-electing individual in which the pilot program election is made, (ii) who is born in calendar year 2025, 2026, 2027, or 2028, (iii) who is a United States citizen, (iv) to whom a social security number has been issued, and (v) with respect to whom no prior pilot program election has been made by any individual and processed by the Secretary. The birth year and citizenship requirements in proposed § 301.6434-1(b)(1)(ii) and (iii) would implement section 6434(c)(1) and (3), and the social security number requirement in proposed § 301.6434-1(b)(1)(iv) would implement section 6434(e).

The relationship requirement between the pilot program-electing individual and the eligible child, reflected as part of the eligible child definition in proposed § 301.6434-1(b)(1)(i), is mandated by section 6434(a), which provides that an election is made by an individual “with respect to an eligible child of the individual,” and section 6434(c), which provides that an eligible child is a qualifying child as defined in section 152(c). Although an individual may anticipate that an eligible child will be the individual's qualifying child under section 152(c) for an ongoing taxable year, whether an eligible child is indeed any individual's qualifying child under section 152(c) with respect to that individual's taxable year cannot be conclusively determined until the close of such taxable year. However, section 6434 does not require elections to be made with reference to a closed taxable year of the pilot program-electing individual. Thus, to provide the pilot program-electing individual the flexibility to make the pilot program election at any time during a calendar year rather than wait until after the close of a taxable year, proposed § 301.6434-1(b)(1)(i) permits the child's eligibility as long as a pilot program-electing individual anticipates the eligible child will be that individual's qualifying child under section 152(c) for the taxable year in which the election is made. For additional information on who is a qualifying child under section 152(c), potential pilot program-electing individuals (including parents, foster parents, and other relatives) can look to IRS Publication 501, Dependents, Standard Deduction, and Filing Information.

Lastly, with respect to the definition of the term eligible child, under proposed § 301.6434-1(b)(1)(v), a child would no longer be eligible once a pilot program election is made and processed for that child. This is required by section 6434(c)(2), which provides that an eligible child, among other requirements, is a child with respect to whom no prior pilot program election has been made. Proposed § 301.6434-1(b)(1)(v) would ensure that an eligible child is not prevented from receiving a $1,000 pilot program contribution based on an erroneous or malicious election by conditioning the eligibility criteria on the making and processing of an election, rather than solely the making of an election.

Under proposed § 301.6434-1(b)(2), the term “pilot program election” means an election under section 6434.

Under proposed § 301.6434-1(b)(3), the term “pilot program-electing individual” means an individual authorized to make a pilot program election with respect to an eligible child. An individual is authorized to make a pilot program election with respect to an eligible child who the individual anticipates will be the individual's qualifying child under section 152(c) for the taxable year of the individual in which the pilot program election is made, which is the same requirement reflected in proposed § 301.6434-1(b)(1)(i) for the definition of eligible child. The definition of pilot program-electing individual in proposed § 301.6434-1(b)(3) would cross-reference the relevant portion of the definition of eligible child in proposed § 301.6434-1(b)(1)(i). This definition accomplishes the purpose of section 6434 to facilitate investment into and financial growth of an eligible child's Trump account by enabling a pilot program election to be made at any time during the calendar year. If section 6434 was interpreted to instead require pilot program elections to be made with respect to a calendar-based taxable year of the pilot program-electing individual for which the eligible child was such individual's qualifying child under section 152(c), the earliest a pilot program election could possibly be made would be after the close of the taxable year of the pilot program-electing individual during which the eligible child was born. Such an interpretation would impose a restriction on making a pilot program election not found in section 6434 and would limit the maximum growth potential of contributions into the eligible child's Trump account. Furthermore, under section 6434, the payment is deemed to be made by the eligible child and has no connection to any taxable year of the pilot program-electing individual, thereby providing no clear basis to tie a pilot program election to a taxable year of the pilot program-electing individual. If a pilot program-electing individual makes an election in anticipation that an eligible child will be the individual's qualifying child under section 152(c) and complies with all other rules promulgated by the Secretary for section 6434 elections, the pilot program election will not be rendered ineffective solely on the basis that it is later determined that the eligible child does not meet the definition of a qualifying child of the individual for the taxable year in which the pilot program election is made.

Under proposed § 301.6434-1(b)(4), the term “Secretary” means the Secretary of the Treasury or the Secretary's delegate. See section 7701(a)(11)(B) of the Code.

Under proposed § 301.6434-1(b)(5), the term “social security number” has the meaning given such term in section 24(h)(7)(B), determined by substituting “before the date of the election made under section 6434” for “before the due date of such return” in section 24(h)(7)(B)(ii).

Under proposed § 301.6434-1(b)(6), the term “special taxable year” means a taxable period of an eligible child that arises upon the processing of a pilot program election and is deemed to close immediately after arising, for which no Federal income tax liability is owed, and which bears no relationship to the Federal income tax liability of the pilot program-electing individual for any taxable period. This special taxable year is distinct from any calendar-based taxable year for the eligible child's Federal income tax liability and does not sever or modify the eligible child's calendar-based taxable period. To implement the requirements of section 6434(a), (b), and (f) as explained in Section III of this Explanation of Provisions, proposed § 301.6434-1(c)(1) would provide that a pilot program election is made with respect to the eligible child's special taxable year, rather than with respect to any calendar-based taxable year for the eligible child's Federal income tax liability.

As explained in Section III of this Explanation of Provisions, an overpayment can only be determined after the close of a taxable year by comparing the amount of tax liability owed to the amount of payments made. Like the proposed definition of pilot program-electing individual, the proposed definition of special taxable year accomplishes the purpose of section 6434 by allowing for the $1,000 pilot program contribution to be deposited by the Secretary into the Trump account without waiting for the close of a calendar-based taxable year, thus facilitating the financial growth of the Trump account. Determining an overpayment from a special taxable year also meets the statutory intent that the contribution be made at any time during a calendar year rather than after the close of the taxable year for which an election is made—at the earliest. Additionally, as explained more thoroughly in Section III of this Explanation of Provisions, the proposed definition of a special taxable year ensures that an eligible child's deemed payment upon election under section 6434(a) generates an overpayment of $1,000 instead of the deemed payment being reduced or eliminated if it were used to satisfy a child's potentially unpaid Federal income tax liability for a calendar-based taxable year election.

Under proposed § 301.6434-1(b)(7), the term “Trump account” has the meaning given to the term in section 530A(b)(1). This definition includes an initial Trump account and a rollover Trump account.

Proposed § 301.6434-1(c)(1) would provide that a pilot program election must be made by a pilot program-electing individual with respect to the special taxable year of an eligible child of the pilot program-electing individual. Proposed § 301.6434-1(c)(2) would provide that upon the processing of an election with respect to an eligible child, the eligible child would be treated as making a $1,000 payment against a Federal income tax liability under subtitle A of the Code for the eligible child's special taxable year, resulting in a $1,000 overpayment. Proposed § 301.6434-1(c)(3) would provide that the $1,000 overpayment described in § 301.6434-1(c)(2) will be refunded by the Secretary as a $1,000 pilot program contribution to the eligible child's Trump account.

Section 6434 fits into the existing framework for the refund of an overpayment of tax but creates some special rules for the determination and the refunding of the overpayment. In Jones v. Liberty Glass Co., 332 U.S. 524, 531 (1947), the Supreme Court explained that an overpayment of tax for a taxable year is determined by comparing the amount by which payments exceed the amount of tax properly due at the close of the taxable year. Under these rules, a taxpayer who pays $1,000 towards a taxable year but owes zero Federal income tax liability for that taxable year will have an overpayment of $1,000. See also section 6401(c) (“An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid.”). In contrast, for example, a taxpayer who pays $1,000 towards a taxable year but owes $500 for that taxable year will have an overpayment of only $500. Once the IRS determines the amount of an overpayment, the full amount of the overpayment may not necessarily be refunded to a taxpayer. Section 6402(a) provides the IRS the discretion to credit an overpayment against “any liability in respect of an internal revenue tax on the part of the person who made the overpayment.” Additionally, before the IRS can refund any remaining overpayment, the refund must be reduced and offset against any past-due non-tax debts of the taxpayer described in the provisions of section 6402(c), (d), (e), and (f), otherwise known as mandatory Treasury Offset Program offsets.

Concerning the determination of an overpayment, section 6434(b) provides that the “amount treated as a payment under subsection (a) shall be paid by the Secretary” to the eligible child's Trump account. Section 6434(a) provides that the eligible child for whom an election is made is treated as “making a payment . . . in an amount equal to $1,000.” For most children who have no Federal income tax liability, the plain language of section 6434(a) and (b) is consistent with the Supreme Court's explanation of how to determine an overpayment in Jones v. Liberty Glass. However, if section 6434(a) were to be construed as providing for a deemed payment of $1,000 for a taxable year for which an eligible child owes a Federal income tax liability, then that child would have an overpayment only if the deemed payment exceeded the tax owed and, if so, such overpayment would be less than $1,000. Read in conjunction, however, section 6434(a) and (b) instruct that the Secretary's contribution to an eligible child's Trump account must be in the amount of $1,000.

Moreover, section 6434(f) creates safeguards to ensure the entire $1,000 amount is contributed to an eligible child's Trump account. As explained above, section 6402(a) provides that the IRS has the discretion to credit an overpayment to a taxpayer's unpaid tax liabilities and is required to reduce the refund of any remaining overpayment by the mandatory Treasury Offset Program offsets of section 6402(c), (d), (e), and (f). Section 6434(f), which is described in proposed § 301.6434-1(c)(4), ensures that the entire $1,000 overpayment amount described in proposed § 301.6434-1(c)(2) would be contributed into the eligible child's Trump account as provided in section 6434(a) and (b).

To implement the requirements of section 6434(a), (b), and (f), proposed § 301.6434-1(c)(1) would provide that a pilot program election is made with respect to the eligible child's special taxable year instead of the calendar year generally used for individual income taxes. The use of a special taxable year instead of a calendar year ensures that the plain language of section 6434(a), (b), and (f)—that when an election is made with respect to an eligible child, the result is a $1,000 pilot program contribution to the eligible child's Trump account—may be accomplished with respect to any eligible child for whom an election is made in compliance with section 6434 and proposed § 301.6434-1.

Additionally, section 6434(b) and (i) require that the $1,000 pilot program contribution is made specifically to the section 530A Trump account of the eligible child. Proposed § 301.6434-1(c)(3) would provide that the $1,000 contribution will be made to the Trump account of the eligible child. Under section 6434(b) and (i) and proposed § 301.6434-1(c)(3) and (b)(7), the $1,000 contribution may be made to an eligible child's initial Trump account or to a rollover Trump account in the case of an eligible child who has a rollover Trump account. Because section 6434 only authorizes the Secretary to pay the $1,000 contribution “to the Trump account with respect to which such eligible child is the account beneficiary,” it does not allow for an eligible child who does not have a Trump account to receive a $1,000 pilot program contribution; nor does it allow for an eligible child to receive the $1,000 pilot program contribution in any manner other than as a contribution to the eligible child's Trump account. Thus, if an eligible child with respect to whom a pilot program election is made does not have an established Trump account for any reason—including if a Trump account was never established for the eligible child, or if an eligible child's Trump account ceased to be a Trump account for any reason including death of the eligible child—the Secretary is not authorized to remit the $1,000 pilot program contribution to any recipient because such a remittance would not be “to the Trump account with respect to which such eligible child is the account beneficiary.” See section 6434(b). Accordingly, proposed § 301.6434-1(c)(3) would provide that the $1,000 overpayment described in proposed § 301.6434-1(c)(2) will not be refunded unless the eligible child has an established Trump account and that no refund will be paid under the provisions of section 6434 except as a $1,000 pilot program contribution to the eligible child's Trump account.

Lastly, proposed § 301.6434-1(c)(5) would provide that a pilot program election is not a claim for credit or refund of an overpayment. Section 301.6402-2, which establishes the rules for a claim for credit or refund, provides that only the taxpayer with the overpayment may file such a claim. Section 6434(a), however, instructs that a pilot program election is not made by the eligible child for whom an overpayment for contribution is generated; it is instead made by a pilot program-electing individual with respect to an eligible child of the pilot program-electing individual. Because it is the filing of the pilot program election by the pilot program-electing individual that generates the overpayment that is refunded as a $1,000 pilot program contribution into the eligible child's Trump account and the eligible child is not the person making such pilot program election, the pilot program election cannot be a claim for credit or refund.

Proposed § 301.6434-1(d) would provide timing rules for pilot program elections as authorized by section 6434(d). The rules of proposed § 301.6434-1(d) would clarify that an election may only be made during the time period prescribed, that relief for an untimely election is not available under §§ 301.9100-1, 301.9100-2, and 301.9100-3, that only the first election made and processed with respect to an eligible child will result in a $1,000 contribution to the eligible child's Trump account, and that no subsequent elections will be processed after the first election is processed.

Section 6434 does not set forth a specific period in which a pilot program election must be made but instead prescribes that elections must be made at such time as the Secretary provides. Under proposed § 301.6434-1(d)(1)(i), elections may be made starting on the day that a child becomes eligible. An election made on any earlier date would not be allowed under section 6434 because it would not be “an election . . . with respect to an eligible child.” Proposed § 301.6434-1(d)(1)(ii) would provide that the last day for a pilot program election with respect to an eligible child would be December 31 of the calendar year in which the eligible child reaches age 17. This corresponds with the termination of the growth period, after which a child is no longer eligible to open a Trump account pursuant to section 530A(1)(A)(ii)(I) and (2)(A) and many of the special rules in section 530A no longer apply to the account. This broad election period—from the date of eligibility to the final date of growth period—is intended to ensure all children are able to receive a $1,000 pilot program contribution if they meet all section 6434 eligibility criteria during the time period in which a child would be eligible to have a Trump account opened. In cases where a pilot program election is not made until near the end of the growth period, the Secretary can nonetheless still make a $1,000 pilot program contribution to an eligible child's Trump account after the growth period ends as long as a Trump account was established for the eligible child under section 530A and has not ceased to exist for any reason.

Proposed § 301.6434-1(d)(2) would provide that only the first pilot program election processed by the IRS with respect to an eligible child will result in a $1,000 contribution to the eligible child's Trump account. Once the first pilot program election is processed no further election will be processed. This rule conforms with the section 6434(c)(2) requirement that an eligible child means a child with respect to whom no prior pilot program election has been made. Because this rule only applies once an election is processed, it would ensure that an unprocessed erroneous or malicious pilot program election would not preclude an eligible child from receiving a pilot program contribution.

Proposed § 301.6434-1(e)(1) would provide that a pilot program election must be made by a pilot program-electing individual on the form prescribed by the Secretary or through an electronic application or web page made available by the Secretary, in accordance with applicable instructions. The IRS is using Form 4547, Trump Account Election(s), for this purpose in calendar year 2026. A pilot program election may be made any time during the period in proposed § 301.6434-1(d)(1), including at the same time that the pilot program-electing individual files such individual's Federal income tax return. The pilot program election, however, is not a part of any individual's tax return and is independent of the filing of a tax return. The IRS has released instructions for making pilot program elections via Form 4547 and will provide instructions for making pilot program elections via an electronic application or web page when made available by the Secretary. Proposed § 301.6434-1(e)(2) would reiterate the requirement of section 6434(e) that an eligible child's social security number is included with the pilot program election for that eligible child. Because the length of time varies in which a social security number may be obtained, this rule reinforces the broad pilot program election timing proposed in § 301.6434-1(d)(1).

The regulations are proposed to apply on or after January 1, 2026. In accordance with section 7805(b)(2), the Treasury Department and the IRS intend to publish final regulations within 18 months of the date of enactment of section 6434.

Executive Orders 12866 and 13563 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.

The proposed regulations have been designated by the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA) as subject to review under Executive Order 12866 pursuant to the Memorandum of Agreement (MOA, July 4, 2025) between the Treasury Department and the OMB regarding review of tax regulations. OIRA has determined that the proposed rulemaking is economically significant under section 3(f)(1) of Executive Order 12866 and subject to review under Executive Order 12866 and section 1(b) of the MOA. Accordingly, the proposed regulations have been reviewed by OMB. This proposed rule is not expected to be considered a regulatory action under Executive Order 14192 because it imposes no more than de minimis costs.

The proposed regulations would explain how to make a Trump accounts contribution pilot program election under section 6434 of the Internal Revenue Code (Code). The proposed regulations would also define terms for the purpose of implementing section 6434, clarify the tax consequences of making a pilot program election, and explain the time and manner of making a pilot program election.

Public Law 119-21, commonly known as the One, Big, Beautiful Bill Act of 2025, added new sections 530A and 6434 to the Code. Section 530A describes Trump accounts and section 6434 describes the Trump accounts contribution pilot program. The proposed regulations explain how the pilot program in section 6434 will be implemented.

Section 530A defines a Trump account as a traditional individual retirement account (IRA) with some special rules. Most special rules that distinguish Trump accounts from other IRAs apply only during the growth period. The first day of the growth period is the day the account is established, and the final day of the growth period is December 31 of the calendar year in which the account beneficiary attains age 17. The rules for traditional IRAs generally apply after the growth period. A Trump account may be established for the benefit of a child prior to the calendar year in which the child attains age 18 if the child has been issued a social security number.

In general, distributions from Trump accounts are not permitted during the growth period. The entire balance of a Trump account may be rolled over in a direct trustee-to-trustee transfer to a rollover Trump account. The entire balance of a Trump account may be rolled over in a direct trustee-to-trustee transfer to an account established under a section 529A  1 ABLE program (ABLE account) of the account beneficiary in the calendar year the account beneficiary attains age 17.

Investments in a Trump account must track the returns of a broad index of equities in primarily U.S. companies for which regulated futures contracts are traded, avoid the use of leverage, and avoid annual fees and expenses above 0.1%.

Trump accounts may receive contributions from nonprofits, governments, employers, and individuals. In general, contributions to a Trump account are subject to an annual limit of $5,000, adjusted for inflation.

Governments and nonprofits may only make contributions through the Treasury Department, and such contributions must be made in equal amounts to the Trump accounts of every account beneficiary in a qualified class. Contributions from governments and nonprofits through the Treasury Department do not count towards the $5,000 annual contribution limit.

Section 6434 describes the Trump accounts contribution pilot program. In the pilot program, the Secretary will pay $1,000 to the Trump accounts of eligible children for whom elections under section 6434 are made. A U.S. citizen born in 2025, 2026, 2027, or 2028, who has been issued a social security number, and for whom no request for a pilot program contribution has previously been processed is eligible for a pilot program contribution. Pilot program contributions do not count towards the $5,000 annual contribution limit.

The proposed regulations would define the following terms for the purposes of implementing section 6434: eligible child, pilot program election, pilot program-electing individual, and special taxable year. A pilot program election is an election under section 6434, that is, a request for a pilot program contribution to the eligible child's Trump account. An eligible child is a U.S. citizen born in 2025, 2026, 2027, or 2028, who has been issued a social security number, for whom no pilot program election has previously been processed, and who is anticipated by the pilot program-electing individual to be that individual's qualifying child under section 152(c). A pilot program-electing individual is an individual who is authorized to make a pilot program election on behalf of an eligible child. The definitions of eligible child and pilot program-electing individual incorporate the following relationship: the pilot program-electing individual must anticipate that the eligible child will be a qualifying child of the individual for tax purposes for the taxable year in which the pilot program election is made. A special taxable year is a taxable year of the eligible child that is (1) created when a pilot program election is processed, (2) deemed to close immediately after arising, (3) defined to have zero tax liability, (4) distinct from any calendar-based taxable year for the child's income tax liability, and (5) not associated with any taxable period of the pilot program-electing individual.

The proposed regulations would clarify the tax consequences of making a pilot program election. Under the proposed regulations, when a pilot program election is processed by the Secretary, the Secretary would treat the eligible child as if the eligible child had made a $1,000 payment for the special taxable year. Because a special taxable year has zero tax liability, treating the child as if they had made a $1,000 payment against Federal income tax would result in an overpayment for the special taxable year. The IRS would not offset that overpayment by any other debts owed by the eligible child or the pilot program-electing individual. The Secretary would remit the full $1,000 overpayment for the special taxable year as a $1,000 pilot program contribution to the Trump account of the eligible child.

The proposed regulations would also explain the time and manner of making a pilot program election. A pilot program election would be made by a pilot program-electing individual with respect to an eligible child who the pilot program-electing individual anticipates will be the individual's qualifying child under section 152(c) for the taxable year of the individual during which the election is made. The first day a pilot program election can be made is the day the child becomes an eligible child, and the final day a pilot program election can be made is the final day of the calendar year in which the child attains age 17. The pilot program election would be made on a form, electronic application, or web page provided by the IRS. The pilot program election would not be made on the pilot program-electing individual's tax return.

The Treasury Department and the IRS have assessed the benefits and costs of the proposed regulations relative to a no-action baseline reflecting anticipated Federal income tax-related behavior in the absence of these proposed regulations.

The proposed regulations are expected to affect 15 million children in 12 million families.

The proposed regulations would make several choices that allow a pilot program election to be made as early as a few weeks after the birth of an eligible child instead of waiting until the following calendar year. For example, for a child born in 2027, these choices provide the opportunity to earn up to one additional year of investment returns, depending on the child's date of birth. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit of an additional six months of investment returns by age 18. 2 Among birth cohorts from June 1926 to May 2007, the median difference in account value at age 18 between $1,000 invested at birth and $1,000 invested six months after birth was $300.

The proposed regulations would clarify how to apply the statutory requirement that the eligible child be a qualifying child of the pilot program-electing individual. The proposed regulations would require a pilot program election to be made by an individual who anticipates that the eligible child will be a qualifying child for the year in which the pilot program election is made. An alternative would be to require a pilot program election to be made by an individual for whom the eligible child was a qualifying child for a closed tax year. The forward-looking standard would allow the pilot program election to be made earlier than the backward-looking standard. For example, under the forward-looking standard, an election for a child born in 2027 could be made as soon as the child is issued a social security number. Under a backward-looking standard, an election for a child born in 2027 could not be made until 2028.

This choice and several others would allow a pilot program election to be made as early as a few weeks after birth instead of waiting until the following calendar year. For a child born in 2027, these choices provide the opportunity to earn up to one additional year of investment returns, depending on the child's date of birth. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit of an additional six months of investment returns by age 18. 3 Among birth cohorts from June 1926 to May 2007, the median difference in account value at age 18 between $1,000 invested at birth and $1,000 invested six months after birth was $300.

The proposed regulations would clarify the taxable period in which the child is treated as making a $1,000 payment against tax. The proposed regulations would apply the $1,000 payment to a special taxable year that is created when a pilot program election is processed, deemed to close immediately after arising, and defined to have zero tax liability. An alternative would be to apply the $1,000 payment to an ordinary taxable year of the eligible child. Applying the $1,000 payment to a special taxable year allows the refund to be processed earlier, that is before the end of an ordinary taxable year.

This choice and several others would allow a pilot program election to be made as early as a few weeks after birth instead of waiting until the following calendar year. For example, for a child born in 2027, these choices provide the opportunity to earn up to one additional year of investment returns, depending on the child's date of birth. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit of an additional six months of investment returns by age 18. 4 Among birth cohorts from June 1926 to May 2007, the median difference in account value at age 18 between $1,000 invested at birth and $1,000 invested six months after birth was $300.

The proposed regulations would clarify how to make a pilot program election. The proposed regulations would require a pilot program election to be made on a form, electronic application, or web page. Under the proposed regulations, a pilot program election could be made at the same time as when a tax return is filed, but it would be on a form that is independent from the pilot program-electing individual's tax return. An alternative would be to require a pilot program election to be made on the pilot program-electing individual's tax return. Requiring the pilot program election to be made on a form that is independent from the pilot program-electing individual's tax return would allow the pilot program election to be made earlier than a pilot program election made on a tax return.

This choice and several others would allow a pilot program election to be made as early as a few weeks after birth instead of waiting until the following calendar year. For example, for a child born in 2027, these choices provide the opportunity to earn up to one additional year of investment returns, depending on the child's date of birth. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit of an additional six months of investment returns by age 18. 5 Among birth cohorts from June 1926 to May 2007, the median difference in account value at age 18 between $1,000 invested at birth and $1,000 invested six months after birth was $300.

The proposed regulations would clarify the earliest a pilot program election can be made. The proposed regulations would require a pilot program election to be made no earlier than the day that a child becomes eligible. An alternative would be to require a pilot program election to be made no earlier than January 1 of the year after a child becomes eligible. Allowing a pilot program election to be made as early as the day that a child becomes eligible is possible because of three other choices in the proposed regulations: (1) requiring a forward-looking qualifying child standard, (2) applying the $1,000 payment to a special taxable year, and (3) requiring the pilot program election to be on a form independent from a tax return. The proposed regulations made these choices to allow for the earliest possible pilot program election allowable by statute, which is the day that the child becomes eligible.

This choice and several others would allow a pilot program election to be made as early as a few weeks after birth instead of waiting until the following calendar year. For example, for a child born in 2027, these choices provide the opportunity to earn up to one additional year of investment returns, depending on the child's date of birth. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit of an additional six months of investment returns by age 18. 6 Among birth cohorts from June 1926 to May 2007, the median difference in account value at age 18 between $1,000 invested at birth and $1,000 invested six months after birth was $300.

The proposed regulations would clarify the latest that a pilot program election can be made. The proposed regulations would require a pilot program election to be made no later than December 31 of the year the child attains age 17. An alternative would be to require a pilot program election to be made no later than the year in which the child attains age 3. Age 3 is salient because, in general, a refund can be claimed no more than three years after a Federal return is filed. 7 Age 17 is salient because it coincides with the end of the period when a Trump account can be opened and the end of the growth period. Age 17 was chosen rather than age 3 to provide more time to make a pilot program election. The proposed regulations would clarify that the statute of limitations for claiming a refund is not relevant to the pilot program election because (1) a pilot program election is not a claim for a refund of an overpayment and (2) the $1,000 payment is applied to a special taxable year, not to the year of birth or any ordinary taxable year.

Investment growth is generally maximized by making the investment as early as possible. However, some pilot program-electing individuals might not make a pilot program election as early as possible. One benchmark for timely pilot program elections may be timely filing of tax returns. Around ten percent of taxpayers who are required to file a return fail to file a timely return. 8 For example, for a child born in 2027, the choice to require a pilot program election to be made no later than December 31 of the year in which the child attains age 17 provides the opportunity to make the pilot program election as late as 2044. The Treasury Department and the IRS used historical returns for a broad index of U.S. equities to quantify the benefit at age 18 of returns on investments made at various ages. 9 Among birth cohorts from 1926 to 2006, Table 1 shows that while an earlier investment allows for more growth, there are still typically benefits at age 18 from making an investment even at age 17.

The proposed regulations would clarify how to apply the statutory requirement that no prior pilot program election has been made for an eligible child. The proposed regulations would specify that a prior pilot program election is only disqualifying if the prior pilot program election was processed by the Secretary. An alternative would be to disqualify a child for whom a prior pilot program election was made even if that prior pilot program election was not processed by the Secretary. Specifying that a prior pilot program election is only disqualifying if it was processed by the Secretary allows children who are otherwise eligible to receive the pilot program contribution even if an error was made on an initial pilot program election. The proposed regulations propose this rule to avoid penalizing eligible children for the behavior of individuals who improperly attempt to make pilot program elections.

To assess the benefits of allowing a child for whom a pilot program election was made but not processed to receive a $1,000 pilot program contribution after a subsequent pilot program election is made properly, the best evidence comes from a program in Oklahoma called SEED OK. SEED OK generated experimental evidence by embedding a randomized controlled trial into the design of the program. In 2007, Oklahoma randomly selected Oklahoma families to participate in the SEED OK program and, for newborns of consenting families randomly assigned to the treatment group, automatically opened Oklahoma 529 accounts for qualified higher education expenses and deposited $1,000. Four years after the intervention, parents in the treatment group reported that their children exhibited higher levels of social-emotional development, 10 mothers were more likely to be using mainstream financial products, 11 and mothers reported fewer depressive symptoms. 12 Thirteen years after the intervention, parents in the treatment group had higher levels of educational expectations and college preparation. 13 Like other programs organized or run by American states and cities that fund asset-building accounts for young children, long-term outcomes on educational attainment, employment, earnings, and wealth are not yet available for SEED OK families because the oldest participants are still young adults.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA) generally requires that a Federal agency obtain OMB approval before collecting information from the public, whether that collection of information is mandatory, voluntary, or required to obtain or retain a benefit. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.

These proposed regulations describe an election required under section 6434 as set forth in proposed § 301.6434-1 (pilot program election). Specifically, section 6434(d) grants the Secretary the authority to establish the time and manner of the pilot program election and proposed § 301.6434-1(e) would provide that the pilot program election is made on a form prescribed by the Secretary or through an electronic application or web page made available by the Secretary, in accordance with applicable instructions. A taxpayer would use such form or electronic application to make a pilot program election for the Trump accounts contribution pilot program under section 6434 and to establish eligibility. The information provided on the form or electronic application will be used by the IRS for tax compliance purposes and to determine election eligibility. The burden associated with this election is included in Form 4547, Trump Account Election(s), and its instructions and approved with OMB control number 1545-2336 in accordance with PRA procedures under 5 CFR 1320.10. The Secretary may establish an electronic application or web page to collect the same information. If established, the burden associated with this electronic application will be included on the application and approved by OMB in accordance with the same PRA procedures.

The Secretary of the Treasury hereby certifies that these proposed regulations would not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6). The proposed rules would affect any individual who would like to make a pilot program election or receive a $1,000 pilot program contribution. By statute, small entities are not permitted to make a pilot program election or to receive a $1,000 pilot program contribution. The proposed rules would not impose any requirement or obligation upon small entities. Accordingly, a regulatory flexibility analysis under the Regulatory Flexibility Act is not required.

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

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

Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business.

Before these proposed amendments to the final regulations are adopted as final regulations, consideration will be given to any comments that are timely submitted to the IRS as prescribed in this preamble under the ADDRESSES heading. The Treasury Department and the IRS request comments on all aspects of the proposed regulations. Any comments submitted will be available at https://www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person who timely submits electronic or written comments. Requests for a public hearing are also encouraged to be made electronically. If a public hearing is scheduled, notice of the date and time for the public hearing will be published in the Federal Register .

The principal author of these proposed regulations is Molly E. Lovern of the Office of Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the IRS participated in its development.

Accordingly, the Treasury Department and IRS propose to amend 26 CFR part 301 as follows:

Docket: For access to the docket to read background documents or comments received, go to https://www.regulations.gov. In the entry titled, “Enter Keyword or ID,” enter BOEM-2025-0042 then click search. Here you can view supporting and related materials available for this rulemaking, as well as posted publicly submitted comments. In accordance with 5 U.S.C. 553(b)(4), a summary of this rule may be found at https://www.regulations.gov/docket/BOEM-2025-0042 .

Instructions for submitting comments: In the entry titled, “Enter Keyword or ID,” enter BOEM-2025-0042 then click search. Follow the instructions to submit public comments. All submissions received must include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking (1010-AE26). Please include your name, and phone number or email address in the https://www.regulations.gov submission portal so we can contact you if we have questions regarding your submission.

BOEM may post all comments to https://www.regulations.gov. Before including your name, return address, phone number, email address, or other personally identifiable information in the body of your comment, you should be aware that your entire comment—including your personally identifiable information—may be made publicly available. In order for BOEM to withhold from disclosure your personally identifiable information, you must identify, in a cover letter, any information contained in the submittal of your comments that, if released, would constitute a clearly unwarranted invasion of your personal privacy. You must also briefly describe in such cover letter any possible harmful consequences of the disclosure of information, such as embarrassment, injury, or other harm. While you can ask us in your comment to withhold your personally identifiable information from public review, we cannot guarantee that we will be able to do so. Even if BOEM withholds your information in the context of this rulemaking, your submission is subject to the Freedom of Information Act (FOIA) and any relevant court orders, and if your submission is requested under the FOIA or such court order, your information will only be withheld if a determination is made that one of the FOIA's exemptions to disclosure applies or if such court order is challenged. Such a determination will be made in accordance with the Department's FOIA regulations and applicable law.

Preamble acronyms and abbreviations. Multiple acronyms are included in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, BOEM explains the following acronyms here:

Background information. On April 24, 2024, the Department published the Risk Management and Financial Assurance for OCS Lease and Grant Obligations final rule (89 FR 31544, “2024 Final Rule”). The 2024 Final Rule finalized criteria for determining whether oil, gas, and sulfur lessees, RUE grant holders, and pipeline ROW grant holders on the OCS are required to provide financial assurance above the general financial assurance amount to ensure compliance with their OCSLA obligations. The 2024 Final Rule also streamlined the criteria for evaluating the financial health of lessees and grantees, codified the use of the Bureau of Safety and Environmental Enforcement's (BSEE) probabilistic estimates of decommissioning costs in setting the level of demands for supplemental financial assurance, removed restrictive provisions for third-party guarantees and decommissioning accounts, added new criteria for cancelling supplemental financial assurance, and clarified financial assurance requirements for RUEs serving Federal OCS oil, gas, and sulfur leases. In response to E.O. 14154 Unleashing American Energy, the Department is proposing this action to revise the provisions that were finalized in the 2024 Final Rule.

Organization of this document. The information in this preamble is organized as follows:

The purpose of this proposed regulatory action is to address concerns regarding recent changes in BOEM's financial assurance program. Specifically, on April 24, 2024, the Department published the Risk Management and Financial Assurance for OCS Lease and Grant Obligations final rule (89 FR 31544, “2024 Final Rule”), which finalized criteria for determining whether oil, gas, and sulfur lessees, RUE grant holders, and pipeline ROW grant holders on the OCS are required to provide supplemental financial assurance above the general financial assurance amount required by regulation to ensure compliance with their OCSLA obligations. The 2024 Final Rule also streamlined the criteria for evaluating the financial health of lessees and grantees, codified the use of the BSEE probabilistic estimates of decommissioning costs in setting the level of demands for supplemental financial assurance, removed restrictive provisions for third-party guarantees and decommissioning accounts, added new criteria for cancelling supplemental financial assurance, and clarified financial assurance requirements for RUEs serving Federal OCS oil, gas, and sulfur leases. At the time of publication, BOEM estimated that the 2024 Final Rule would require a total of $6.9 billion in new supplemental financial assurance from lessees and grant holders to cover potential costs of decommissioning activities. The Department is proposing this action to revise regulatory provisions that were finalized in the 2024 Final Rule, in response to E.O. 14154 Unleashing American Energy, and to reduce the economic burden on OCS lessees and grant holders.

The following amendments are included in this proposed rule:

• consideration of the financial strength of jointly and severally liable predecessors when determining the need to provide supplemental financial assurance;

• revising the credit rating threshold used for evaluating the financial health of lessees and grantees from BBB− to BB− from S&P Global Ratings (S&P) or Baa3 to Ba3 from Moody's Investor Service Inc. (Moody's) or other equivalent credit rating from a Nationally Recognized Statistical Rating Organization (NRSRO) as defined in section 3(a)(62) of the Securities Exchange Act of 1934;

• revising the level of BSEE probabilistic estimates of decommissioning cost used for determining the amount of supplemental financial assurance required from P70 to P50, as described in section II.C of this preamble;

• revising the list of acceptable supplemental financial assurance instruments for leases to explicitly include dual-obligee financial assurance instruments;

• adding an alternative option to allow the Regional Director to consider the use of the 3-to-1 proved reserves to decommissioning liabilities ratio for ROW grant holders (when they also have lease rights to the proved reserves) when determining supplemental financial assurance requirements;

• adding an alternative option for addressing supplemental financial assurance demands for short-term decommissioning activities; and

• removing the requirement that a lessee provide an appeal bond in the amount of the demand as a condition of staying the demand during the IBLA appeal process.

With this rulemaking, the Department is proposing to consider jointly and severally liable predecessors and revise the credit rating threshold used for evaluating the financial health of lessees and grantees when determining if supplemental financial assurance is required. The current regulations require the use of an investment grade credit rating (BBB− from S&P, or Baa3 from Moody's, or other equivalent credit rating from an NRSRO.) threshold (or proxy credit rating equivalent) or a minimum 3-to-1 ratio of the value of proved reserves to decommissioning liability associated with those reserves to determine if a current lessee is required to provide supplemental financial assurance. The current regulations do not consider predecessors in this determination. With this rule, the Department is proposing to revise this credit rating threshold to BB− (S&P), or Ba3 from Moody's, or other equivalent credit rating from an NRSRO, and to consider the credit rating of predecessors when determining if a current lessee is required to provide supplemental financial assurance. If a current lessee or a predecessor meets the credit rating threshold of BB−(S&P), or Ba3 from Moody's, or other equivalent rating from an NRSRO, or the ratio of the current lessee's value of proved reserves to decommissioning liability associated with those reserves is at least 3-to-1 (as under current regulations), the current lessee will not be required to provide supplemental financial assurance. These proposed amendments will significantly reduce the regulatory financial burden on companies, allowing them additional capital for current and future oil and gas operations, and acknowledge the protection provided by joint and several liability. The impacts of the financial burden and capital constraints on offshore companies is illustrated by previously received public comments on the 2023 NPRM, with Talos Energy Inc., stating that the financial burden “would significantly reduce the capital available to the affected small businesses that they would otherwise be able to deploy in their lease operations and decommissioning operations,” and Beacon Offshore Energy stating that the financial burden would “decrease oil and gas production in the [GOA].”

The Department is also proposing to revise the probabilistic value that would be used ( i.e., P-value) from among the available BSEE probabilistic estimates of decommissioning cost for determining the amount of supplemental financial assurance required. Probabilistic estimation involves determining the likelihood of certain outcomes or parameters based on observed data. BSEE decommissioning cost estimates are based on industry-reported decommissioning costs required by regulations at 30 CFR 250.1704 and clarified by guidance. 1 Based on the reported data, BSEE has developed three publicly available probabilistic estimates ( i.e., P-values) of decommissioning costs for each OCS facility on any given lease. 2 These probabilistic estimates represent the likelihood of covering the full cost of decommissioning a facility as a percentage. For example, P70 represents a 70 percent likelihood that the amount will cover the full cost of decommissioning a facility. The current regulations require the use of the P70 estimate when determining the amount of supplemental financial assurance that must be provided to cover future decommissioning activities. The Department is proposing to revise the probabilistic value used for determining the amount of supplemental financial assurance required from P70 to P50. BOEM also notes that the regulation only stipulates that the BSEE P-value be used to determine the amount of supplemental financial assurance that may be required to meet decommissioning obligations and does not limit the total cost of corrective action that may be required to bring a lease or grant into compliance.

In instances where decommissioning activities will be performed within 1 year of receiving a new supplemental financial assurance demand from BOEM, the Department is proposing to allow the Regional Director the discretion to accept third-party decommissioning contracts and decommissioning schedules from those entities in lieu of providing new supplemental financial assurance for that activity. This reduces the burden on the regulated community that may have difficulty acquiring new supplemental financial assurance for platforms scheduled for decommissioning. BOEM's review and approval of the decommissioning contracts and schedules for use in lieu of supplemental financial assurance is not an approval for decommissioning activities, which remains in BSEE's purview; BOEM's approval is only an acceptance of those documents in lieu of supplemental financial assurance.

As amended in 2024, the current appeals process requires that a lessee provide an appeal bond equivalent to the amount of the supplemental financial assurance demand if they seek to stay the supplemental financial assurance demand pending a decision from the IBLA. If the appeal is successful, the appeal bond would be returned to the appropriate party, and any required supplemental financial assurance would need to be posted in the form of bonds or other financial instruments. If the appeal is unsuccessful, the appeal bond could be replaced with, or converted into, bonds or other forms of financial assurance to cover the supplemental financial assurance demand. The Department is proposing to remove this requirement because of the undue burden it places on industry, as raised by commenters during the public comment period for that rulemaking.

The Department's goal for BOEM's financial assurance program continues to be the protection of the American taxpayers from exposure to loss associated with OCS development, while ensuring that the financial assurance program does not detrimentally affect offshore investment or position American offshore exploration and production at a competitive disadvantage. The Department acknowledges that, even though these proposed revisions will reduce the total amount of supplemental financial assurance required of offshore lessees and operators, there may still be some financial impact on affected companies because BOEM has not yet required them to provide supplemental financial assurance as directed by the 2024 Final Rule. For this reason, the Department is proposing to revise the current 3-year phase-in provision for existing leaseholders to start a new phase-in period with the effective date of the new supplemental financial assurance requirements.

The regulatory amendments in this proposed rule, if finalized, are expected to decrease the total amount of supplemental financial assurance required from OCS lessees and grant holders. BOEM has developed a Regulatory Impact Analysis (RIA) detailing the estimated impacts of the respective provisions of this proposed rule and has included it in the docket. The table below summarizes BOEM's monetized estimate of the savings incurred by lessees over a 20-year period. Additional information on the estimated transfers, costs, and benefits can be found in the RIA available in the docket for this proposed rulemaking (Docket No. BOEM-2025-0042).

This proposed rule is designed to minimize the amount of supplemental financial assurance required for financially strong companies while protecting the taxpayer from assuming responsibility for decommissioning liabilities. The regulatory amendments proposed with this action, if finalized, would help to reduce financial compliance burdens on the oil and gas industry that may hinder the continued development or use of domestically produced energy resources.

Entities potentially affected by this action are holders of oil, gas, and sulfur leases, ROW grants, and RUE grants on the OCS, as shown in the following table by North American Industry Classification System (NAICS) code.

In addition to being available in the docket, BOEM will post an electronic copy of the documents related to this action at: https://www.boem.gov/regulations-and-guidance.

Section 5 of OCSLA (43 U.S.C. 1334) authorizes the Secretary of the Interior (Secretary) to issue regulations to administer OCS leasing for mineral development. Section 5(a) of OCSLA (43 U.S.C. 1334(a)) authorizes the Secretary to “prescribe such rules and regulations as may be necessary to carry out [provisions of OCSLA]” related to leasing on the OCS. Section 5(b) of OCSLA (43 U.S.C. 1334(b)) provides that “compliance with regulations issued under” OCSLA must be a condition of “[t]he issuance and continuance in effect of any lease, or of any assignment or other transfer of any lease, under the provisions of” OCSLA.

The Secretary, in Secretary's Order 3299 (as amended), established BOEM and delegated to it the authority to carry out conventional energy- ( i.e., oil and gas) functions on the OCS, including, but not limited to, activities involving resource evaluation, planning, and leasing under the provisions of OCSLA. As such, BOEM is responsible for managing the development of the Nation's offshore energy, mineral, and geologic resources in an environmentally and economically responsible way. Secretary's Order 3299 also established BSEE and delegated to it the authority to, among other things, enforce an oil and gas lessee's obligation to perform decommissioning. BSEE provides estimates to BOEM to inform the financial assurance needed to cover the cost to perform decommissioning, thereby protecting the American taxpayer from incurring financial loss. When a current lessee is unable to perform its obligations, the Department's regulations at 30 CFR 556.604(d) and 556.605(e) hold current co-lessees responsible for all decommissioning obligations and predecessor lessees responsible for those decommissioning obligations that had accrued before they assigned their interests to others.

While BOEM also has program oversight for the financial assurance requirements set forth in 30 CFR parts 551, 581, 582, and 585, this proposed rule pertains only to the financial assurance requirements for oil and gas or sulfur leases and grants under parts 550 and 556 and appeals of supplemental financial assurance demands under part 590.

The Minerals Management Service (MMS), BOEM's predecessor, published the financial assurance requirements for oil, gas, and sulfur leases and pipeline ROW grants on May 22, 1997 (62 FR 27948). These regulations required lease-specific or area-wide base bonds in prescribed amounts, depending on the level of activity on a lease, and provided the authority to require additional supplemental financial assurance for leases above the base bonds depending on the financial health of the lessee. Additionally, MMS published the initial financial assurance requirements for RUE grants on December 28, 1999 (64 FR 72756). These regulations did not dictate a specific bond amount for a RUE but did provide the authority to require bonding if necessary. To implement these regulations, BOEM employed the same criteria for RUE and ROW grants as it does for leases to determine whether supplemental financial assurance is required, because specific criteria pertaining to supplemental financial assurance for grants were not stated in those regulations.

The bonding regulations at 30 CFR 556.901(d) established in 1997 provided five criteria that the Regional Director considered when determining whether a lessee's potential inability to carry out present and future decommissioning obligations warrants a demand for supplemental financial assurance; however, the bonding regulations did not specifically describe how the criteria are weighted. To provide guidance, MMS issued a Notice to Lessees (NTL) effective December 28, 1998, which provided details on how it would apply the five criteria (NTL No. 98-18N). This NTL was superseded by NTL No. 2003-N06, effective June 17, 2003, and that NTL was later superseded by NTL No. 2008-N07, which was effective August 28, 2008. NTL No. 2008-N07 was superseded on September 12, 2016, with NTL No. 2016-N01, which was later rescinded in February of 2020.

On August 19, 2014, DOI issued an advance notice of proposed rulemaking (79 FR 49027) seeking comments and information on its effort to update the risk management regulations and program oversight. BOEM was specifically interested in comments regarding financial risks and liabilities associated with aging offshore infrastructure, deepwater decommissioning, subsea decommissioning, pipeline abandonment, Arctic operations, and new technologies designed to address deepwater development or exploration and/or development of energy or mineral resources in locations with unusually adverse conditions. BOEM also requested information on business risk associated with the changing characteristics of entities operating on the OCS, underperformance, non-performance or default on financial or legal obligations, and underpayment or non-payment of rentals and royalties. Additionally, BOEM requested comments on the necessary elements of a comprehensive operational risk management, financial assurance, and loss prevention program, and how to monitor business risks. BOEM received 25 comments from affected entities on the advance notice.

In December 2015, the Government Accountability Office (GAO) reviewed BOEM's supplemental financial assurance procedures and issued a report titled “Offshore Oil and Gas Resources: Actions Needed to Better Protect Against Billions of Dollars in Federal Exposure to Decommissioning Liabilities.” (“2015 GAO Report”). The GAO identified three main shortcomings in the Department's prior approach to financial assurance: (1) the Department faced challenges in determining actual decommissioning liabilities due to data system limitations and inaccurate data; (2) the Department did not require sufficient financial assurance to cover liabilities, primarily due to the practice of waiving supplemental bonding requirements, resulting in financial assurance coverage (such as bonds) for less than 8% of an estimated $38.2 billion in decommissioning liabilities; and (3) the Department's criteria for assessing lessees' financial strength did not provide accurate and timely information about their ability to cover future decommissioning costs. As the 2015 GAO Report indicated, the then existing regulatory structure was inadequate, introduced needless financial risk, and was unsustainable. While acknowledging BOEM's ongoing efforts to update its policies, the 2015 GAO Report recommended, inter alia, that “BOEM complete its plan to revise its supplemental financial assurance procedures, including the use of alternative measures of financial strength.” See https://www.gao.gov/products/gao-16-40.

On October 16, 2020, DOI issued a notice of proposed rulemaking (85 FR 65904) to revise certain BSEE policies concerning decommissioning orders and the Department's financial assurance regulations that are administered by BOEM. In the joint proposed rule, the Department proposed the following based on comments received on the 2014 advanced notice for proposed rulemaking:

• adjustment of the supplemental financial assurance evaluation criteria to streamline implementation;

• consideration of the financial stability of predecessor lessees by waiving supplemental financial assurance requirements for a current lessee when there is a financially strong predecessor lessee;

• amendment of the methodology for measuring financial strength to focus on credit rating and the value of proved oil and gas reserves; and

• application of the credit rating methodology to RUE grants and ROW grants as well.

On April 18, 2023, DOI finalized the BSEE-administered provisions of the 2020 proposal (88 FR 23569) without the BOEM-administered provisions. The Department's 2023 final rule implements provisions of the 2020 proposed rule to clarify decommissioning responsibilities of RUE grant holders and formalizes BSEE's policies regarding performance by predecessors ordered to decommission OCS facilities.

On June 29, 2023, the Department proposed a new rule in lieu of finalizing the BOEM provisions of the 2020 joint proposal. The new proposed rule provided recommended revisions to the regulations concerning risk management and financial assurance for OCS lease and grant obligations. The DOI published the proposed rule in the Federal Register at 88 FR 42136, which proposed amendments to 30 CFR parts 550, 556, and 590. This rule proposed to streamline the criteria used for evaluating the financial health of lessees, codify the use of the BSEE probabilistic estimates of decommissioning cost for determining the amount of supplemental financial assurance required, remove restrictive provisions for third-party guarantees and decommissioning accounts, add criteria for which a bond or third-party guarantee that was provided as supplemental financial assurance may be canceled, and clarify bonding requirements for RUEs serving Federal OCS leases. Specifically, the Department proposed to revise the criteria used to evaluate the need for supplemental financial assurance from lessees from the existing five criteria—financial capacity, projected financial strength, business stability, reliability in meeting obligations based on credit rating or trade references, and record of compliance with laws, regulations, and lease terms—to one of two criteria: (1) credit rating and (2) the ratio of the value of proved reserves to decommissioning liability associated with those reserves. The Department proposed the use of an investment grade credit rating threshold (or proxy credit rating equivalent) and a minimum 3-to-1 ratio of the value of proved reserves to decommissioning liability associated with those reserves to determine if a lessee is required to provide supplemental financial assurance. The Department also proposed the use of the P70 value for determining the amount of supplemental financial assurance required.

On February 20, 2024, the GAO issued a new report titled, Offshore Oil and Gas: Interior Needs to Improve Decommissioning Enforcement and Mitigate Related Risks (GAO-24-106229) that provided four recommendations to DOI to strengthen BSEE's and BOEM's decommissioning oversight and enforcement. Recommendation 3 specifically stated the “Secretary of the Interior should ensure the BOEM Director completes planned actions to further develop, finalize, and fully implement changes to financial assurance regulations and procedures that reduce financial risks, including by (1) requiring higher levels of supplemental bonding, and (2) addressing other known weaknesses.”

After review of the public comments received, the Department published the Risk Management and Financial Assurance for OCS Lease and Grant Obligations final rule (89 FR 31544, “2024 Final Rule”) on April 24, 2024. This final regulatory action finalized criteria for determining whether oil, gas, and sulfur lessees, RUE grant holders, and pipeline ROW grant holders are required to provide financial assurance above the general financial assurance amount to ensure compliance with their OCSLA obligations. The 2024 Final Rule streamlined the criteria for evaluating the financial health of lessees and grantees, codified the use of the BSEE probabilistic estimates of decommissioning costs in setting the level of demands for supplemental financial assurance, removed restrictive provisions for third-party guarantees and decommissioning accounts, added new criteria for cancelling supplemental financial assurance, and clarified bonding requirements for RUEs serving Federal OCS leases. The Department finalized the use of an investment grade credit rating threshold (or proxy credit rating equivalent) and a minimum 3-to-1 ratio of the value of proved reserves to decommissioning liability associated with those reserves to determine if a lessee is required to provide supplemental financial assurance. The Department also finalized the use of the P70 value for determining the amount of supplemental financial assurance required. BOEM estimated that the final regulatory action, with an effective date of June 29, 2024, would require a total of $6.9 billion in new supplemental financial assurance from lessees and grant holders to cover potential costs of decommissioning activities.

After publication of the 2024 Final Rule but prior to its effective date on June 17, 2024, several oil and gas industry associations and states sued DOI in the U.S. District Court for the Western District of Louisiana to stay or enjoin the 2024 financial assurance rule. Louisiana v. Burgum, No. 2:24-cv-00820 (W.D. La. 2024). On April 7, 2025, DOI and plaintiffs filed a joint motion to stay the case to allow time for DOI to review and consider suspending, revising, or rescinding the 2024 Final Rule in line with Secretary's Order No. 3418, and for the parties to file periodic status reports on the progress. On the same date, the court granted the joint motion staying the case.

BOEM's existing financial assurance regulatory framework has two main components: (1) base financial assurance, generally required in amounts prescribed by regulation, and (2) supplemental financial assurance above the prescribed amounts that may be required by order of the Regional Director upon determination that an increased amount is necessary to ensure compliance with OCS obligations. BOEM's goal for its financial assurance program continues to be the protection of the American taxpayers from exposure to financial loss associated with OCS development, while ensuring that the financial assurance program does not detrimentally affect offshore investment or position American offshore exploration and production companies at a competitive disadvantage.

A significant component of BOEM's financial assurance program has traditionally been the joint and several liability shared between co-lessees and co-grant holders with joint ownership and the predecessor liability retained by lessees and grant holders after asset divestiture. The 2024 Final Rule failed to recognize the risk reduction afforded by predecessors in the decommissioning liability chain of title. As a result of failing to recognize the risk reduction of predecessors, if implemented, the 2024 Final Rule would have resulted in significant capital burdens on the current lessees and grant holders who have financially strong predecessors in the chain of title for the lease or grant, as evidenced by public comments received on the proposal in 2023. This proposed rule recognizes the financial strength of the jointly and severally liable predecessor lessees and grant holders when determining the financial contribution required from current lessees and grant holders based on the risk reduction afforded by the presence of creditworthy predecessors in interest, thereby reducing the imposed capital burden.

Since 2009, more than 30 corporate bankruptcies have occurred involving offshore oil and gas lessees. The volume of bankruptcies has decreased since 2019, however the financial losses from bankruptcy have increased recently as a result of orphaned liability ( i.e., those properties without a predecessor in the chain of title). Decommissioning liabilities on the OCS are large and increasing as more deepwater facilities are being constructed. Additionally, decommissioning costs generally increase over time with inflation. The current estimate for routine decommissioning-related liabilities offshore ranges from approximately $35 to $41 billion, using the P50 and P70 BSEE decommissioning estimates, respectively.

Additionally, the characteristics of the types of companies operating on the OCS have changed. Larger companies often transfer sunset properties to typically smaller, less experienced companies, including non-strategic players ( i.e., those who participate in oil and gas activities but do not necessarily aim to control significant market share or influence global prices and supply trends) and private equity firms. BOEM has gained experience with these various corporate structures and arrangements governing transactions on the OCS.

It is also noted that BOEM and BSEE continue to pursue decommissioning of older infrastructure, however older infrastructure is not necessarily an indicator of current or future financial risk. BSEE continues to monitor for “idle iron” in accordance with criteria in Bureau of Safety and Environmental Enforcement (BSEE) NTL no. 2018-G03 and can order remedial measures or decommissioning to address safety and environmental concerns.

In its mission to manage the development of OCS energy, mineral, and geological resources in an environmentally and economically responsible way, BOEM must balance OCS energy development with protection for both the taxpayer and the environment considering these factors.

As directed by E.O. 14154 and Secretary's Order 3418, BOEM reviewed the Risk Management and Financial Assurance for OCS Lease and Grant Obligations final rule (89 FR 31544; April 24, 2024) to consider whether it should be suspended, revised, or rescinded. With this rulemaking, DOI proposes to revise the regulations associated with the 2024 Final Rule as it unnecessarily burdens the development of domestic energy resources under current market conditions of high volatility and depressed prices. Additionally, BOEM is seeking public comment on the proposed amendments discussed in this preamble, as summarized in section VI.

For each topic, this section provides a description of what the Department is proposing with this action.

The Department is proposing revisions to the supplemental financial assurance requirements for OCS oil, gas, and sulfur leases, RUE grants, and pipeline ROW grants, as discussed in the subsections below.

The 2024 Final Rule finalized amendments to the financial assurance requirements to modify the evaluation process for requiring supplemental financial assurance by clarifying and streamlining the evaluation criteria. The 2024 Final Rule allows the BOEM Regional Director to require supplemental financial assurance when a lessee poses a substantial risk of becoming financially unable to carry out its obligations under its lease, or when the property may not have sufficient value to be sold to another company that could assume those obligations. In the former case, the risk that the taxpayer might have to take on the financial obligations of a lessee is mitigated when there is a co-lessee holder that has sufficient financial capacity to carry out the obligations. This proposed rule reevaluates the 2024 Final Rule amendments and proposes new amendments to reduce the regulatory burden on the regulated community associated with the 2024 Final Rule.

As discussed in the preamble to the 2020 joint proposed rule, the Department proposed to use credit rating instead of relying primarily on net worth to determine whether a lessee must provide additional security (85 FR 65907). Credit rating agencies take many factors into account when evaluating a company, particularly those that emphasize cash flow, such as debt-to-earnings ratios and debt-to-funds from operations. A credit rating considers forward-looking factors, including the income statement and cash flow statement, which provide a broader picture of how well a company can meet its future liabilities. At the time of the 2020 joint proposed rule, the regulations relied on a backward-looking net worth analysis based on a company's balance sheet, which shows the current amount of its assets and liabilities. A lessee's or grant holder's financial deterioration can occur quickly, and relying on the proposed more forward-looking credit rating analysis would allow BOEM to foresee a lessee's or grant holder's possible financial distress sufficiently ahead of time to take appropriate action.

The Department continued to support the stance of the 2020 joint proposed rule with the 2023 proposed rule, which again proposed to replace the five criteria ( i.e., financial capacity, projected financial strength, business stability, reliability, and record of compliance) with the credit rating criteria and proved reserves alternate criteria. As discussed in the preamble (88 FR 42142), DOI proposed to streamline the evaluation process by reducing the number of criteria from five to two and by better aligning BOEM's evaluation process with accepted financial risk evaluation methods used by the banking and finance industry. Corporate credit ratings are broadly intended to evaluate the potential for a company to default on its financial obligations and are designed so that the higher the credit rating, the lower the risk of default. Credit ratings and proved oil reserves are good indicators of the likelihood that a company will be able to meet its financial obligations. Eliminating subjective or less precise criteria—such as the length of time in operation to determine business stability, or trade references to determine reliability in meeting obligations  3 —would simplify the process and remove criteria that may not accurately or consistently predict financial distress. As a specific example, corporate parents may spin-off subsidiaries, resulting in a relatively well-financed new entity and no indications of immediate financial risk. While the spin-off has zero years of operation offshore as a new corporate entity, the personnel may have decades of experience working offshore and in the oil and gas markets.

The 2024 Final Rule amended the criteria in 30 CFR 556.901(d) that were used to evaluate the need for supplemental financial assurance from lessees from the previously used five criteria—financial capacity, projected financial strength, business stability, reliability in meeting obligations based on credit rating or trade references, and record of compliance with laws, regulations, and lease terms—to a simpler analysis of one of two criteria: (1) credit rating or (2) the ratio of the value of proved reserves to decommissioning liability associated with those reserves. Specifically, the Department finalized amendments in 30 CFR 556.901(d) to determine whether supplemental financial assurance on a lease may be required using: (1) a credit rating, either from an NRSRO, as defined in section 3(a)(62) of the Securities Exchange Act of 1934, or a proxy credit rating determined by BOEM based on a company's audited financial statements; or (2) a minimum ratio for the value of proved oil and gas reserves on a lease to the decommissioning liability associated with those reserves.

With this proposed rulemaking, DOI has reviewed the 2024 Final Rule evaluation criteria and is proposing to continue the use of the credit rating criterion, including a proxy credit rating, and the ratio of the value of proved oil and gas reserves on a lease to the decommissioning liability associated with those reserves criterion as the evaluation criteria for lessees. 4 The Department is not proposing any amendments to the use of the evaluation criteria with this proposed rule, however amendments to the evaluation criteria thresholds are discussed in section III.D of this preamble.

Lessees are jointly and severally liable for the lease decommissioning obligations that accrue during their ownership, as well as those that accrued prior to their ownership, which means that each current co-lessee is liable for the full obligation and BSEE may pursue full performance from any individual current lessee. See, e.g., 30 CFR 556.604(d). In addition, a lessee that transfers its interest to another party continues to be liable for any unperformed decommissioning obligations that accrued prior to, or during, the time that the lessee owned an interest in the lease. See, e.g., 30 CFR 556.710. This transferor liability applies, however, only to those obligations existing at the time of transfer. New facilities, or additions to existing facilities, that were not in existence at the time of any lease transfer are not obligations of a predecessor company but are considered obligations of the party that built such new facilities and its co- and successor lessees.

The existing supplemental financial assurance evaluation process, as amended by the 2024 Final Rule and contained in 30 CFR 556.901(d), does not allow for consideration of predecessor financial capacity when determining if supplemental financial assurance is required by the current lessee. The 2024 Final Rule failed to recognize the risk reduction afforded by the presence of financially strong predecessors in the chain of title; this proposed rule recognizes the reduced risk to the taxpayer by having multiple parties in the chain of title. The Department is proposing to add new paragraph 30 CFR 556.901(d)(4) to include an evaluation of the ability of a predecessor to carry out present and future obligations. This approach is rooted in the joint and several liability of all current lessees, co-lessees, and predecessor lessees for all non-monetary obligations on a lease. Except in cases of sole liability, when a default by a current lessee occurs, a predecessor lessee can be called to perform decommissioning, up to the amount of the decommissioning obligations that accrued during the predecessor lessee's interest in the lease. BOEM defines sole liability properties as those where only one owner is liable for the lease or grant obligations. BOEM defines non-sole liability properties as those that have more than one owner. This proposed amendment relies on the combined responsibility of all current and predecessor lessees to perform required decommissioning. Under current regulations, even in cases where a predecessor divested its full interest in a lease to another company by assignment after accruing an obligation to decommission certain infrastructure ( i.e., well, platform, pipeline), the predecessor remains jointly and severally liable for decommissioning that infrastructure. This proposed rule acknowledges the larger universe of companies to whom BSEE can look for performance under the law and so would reduce the circumstances under which BOEM would need to require additional security and, by extension, prevent tying up a current lessee's financial resources that are better used to foster ongoing operations and production. While the goal of BOEM's financial assurance program is to protect the taxpayer, financial assurance required by the Department, where there are viable predecessors, serves to protect the predecessors. There is evidence that sellers on the secondary OCS oil and gas market are now accounting for their contingent and retained decommissioning liabilities through different mechanisms in the structure of their sales, such as by requiring their own surety bonds or requiring funding of a trust account at the time of sale. This proposed deregulatory effort would allow market participants to arrange and price these OCS liabilities without unnecessary government interference, while still affording adequate protection to the taxpayer.

The Department is proposing that, if neither the lessee nor any co-lessee meets the issuer credit rating or proxy credit rating threshold and there are not sufficient oil and gas reserves on the lease, BOEM would look to the credit ratings of prior lessees. Under the proposed rule, the Regional Director may require a lessee to provide supplemental financial assurance if no predecessor lessee on that lease liable for decommissioning meets the issuer credit rating or proxy credit rating criteria. Moreover, even if a predecessor meets the issuer credit rating or proxy credit rating criteria, the Regional Director may require the lessee to provide supplemental financial assurance for decommissioning obligations for which such a predecessor is not liable.

The 2024 Final Rule amended the RUE financial assurance requirements to clarify the financial assurance requirement for RUEs serving Federal leases. The Department replaced the general statement in 30 CFR 550.160(c) that RUE grant holders “must meet bonding requirements” with the specific criteria governing financial assurance requirements found in 30 CFR 556.900 through 556.902, and the applicable financial assurance requirements in 30 CFR 550.166 and 30 CFR part 556, subpart I. Similar to the amendments to the evaluation criteria for lease holders, DOI finalized in 30 CFR 550.166(b) a provision to consider the issuer credit rating or proxy credit rating of RUE co-grant holders to determine if a grantee must provide supplemental financial assurance. The value of proved oil and gas reserves was not included in this evaluation because a RUE grant does not entitle the holder to any interest in oil and gas reserves.

BOEM has evaluated the 2024 Final Rule evaluation criteria and is proposing to continue the use of the credit rating criterion, including a proxy credit rating, as the evaluation criteria for determining if a RUE grant holder must provide supplemental financial assurance. The Department proposes to use the same credit rating or proxy credit rating for RUE grant holders as lessees, as modified by this proposed rule to the new proposed credit rating threshold of BB− (S&P), or Ba3 from Moody's, or other equivalent rating from an NRSRO, instead of the finalized credit rating threshold of the 2024 Final Rule of BBB−, as further discussed in section III.D of this preamble. Similar to leases, the Department is proposing to clarify that BOEM can consider the issuer credit rating or proxy credit rating of a predecessor RUE grant holder and a predecessor lessee ( i.e., a lessee that held interests in the lease on which the RUE is now located and is liable for accrued obligations for the facilities thereon), when determining if supplemental financial assurance is required.

Similar to the final amendments to the evaluation criteria for lease holders, DOI finalized in the 2024 Final Rule at 30 CFR 550.1011(c) a provision to consider the credit rating or proxy credit rating of ROW co-grant holders to determine if the grantee must provide supplemental financial assurance. The preamble to the 2024 Final Rule stated that the value of proved oil and gas reserves was not included in this evaluation because a ROW grant does not entitle the holder to any interest in the associated oil and gas reserves.

BOEM has evaluated the 2024 Final Rule evaluation criteria and is proposing the continued use of the credit rating criterion, including a proxy credit rating, as an evaluation criterion for determining if a ROW grant holder must provide supplemental financial assurance. As for OCS leases, with this proposed rule, the ROW grant holder and predecessors would be evaluated based on the new proposed credit rating threshold of BB− (S&P) instead of the finalized credit rating threshold of the 2024 Final Rule of BBB−, as further discussed in section III.D of this preamble. Similar to its proposal for leases, the Department is proposing to clarify that BOEM can consider the credit rating or proxy credit rating of a predecessor ROW grant holder when determining if supplemental financial assurance is required because they remain liable for accrued decommissioning obligations for facilities and pipelines on their right-of-way until each obligation is met.

Additionally, BOEM has evaluated if the ratio of proved oil and gas reserves to the decommissioning liability associated with those reserves should be considered in its evaluation for ROWs and determined that it may be appropriate to consider when a ROW grant-holder can demonstrate that the grant holder also holds a lease or leases with associated reserves that meet the minimum ratio for decommissioning liabilities. The Department is proposing in 30 CFR 550.1011 to allow the Regional Director's discretion to consider the combined decommissioning liability of the ROW and the lease or leases that the ROW grant holder holds to determine if the total decommissioning liability meets the minimum ratio to waive supplemental financial assurance.

In the 2024 Final Rule, the Department amended 30 CFR 556.905(a) to evaluate a potential guarantor using the same issuer credit rating or proxy credit rating criterion as was finalized for lessees. The value of proved oil and gas reserves of an associated lease would not be considered because that value is a characteristic of the lease belonging to the guaranteed lessee and not an asset belonging to the guarantor, and because liquid assets are needed to finance compliance or decommissioning. Additionally, to allow more flexibility in the use of third-party guarantees, the final rule allowed a third-party guarantee to be used as supplemental financial assurance for a RUE or ROW grant as well as a lease. Most significantly, the amendment finalized in section 556.902(a)(3) removed the requirement for a third-party guarantee to ensure compliance with the obligations of all lessees, operating rights owners, and operators on the lease, and, as agreed to by BOEM, would allow a guarantee limited to a specific amount or limited to one or more specific lease obligations.

BOEM has evaluated the 2024 Final Rule revisions to third-party guarantees and is proposing that the amendments are still appropriate. The flexibilities provided by the 2024 amendments do not reduce the taxpayers' protection against paying for decommissioning of offshore facilities and they provide industry additional options for securing supplemental financial assurance. It is noted, however, that with this proposed rule, the guarantor would be evaluated based on the new proposed credit rating threshold of BB− (S&P) instead of the finalized credit rating threshold of the 2024 Final Rule of BBB−, as further discussed in section III.D of this preamble.

If BOEM determines that supplemental financial assurance is required, BOEM bases the amount required on a BSEE decommissioning cost estimate. Prior to 2020, BSEE provided a single algorithm-based deterministic estimate for OCS facilities in the GOA to BOEM for use in determining the amount of supplemental financial assurance required. In 2020, BSEE updated decommissioning costs in the Technical Information Management System ( https://www.data.bsee.gov/Leasing/DecomCostEst/Default.aspx ) to reflect new estimates based on industry-reported decommissioning costs pursuant to the regulations at 30 CFR 250.1704 and clarified by NTL 2016-N03— Reporting Requirements for Decommissioning Expenditures on the OCS, later superseded by NTL 2017-N02.

Instead of the methodology used prior to 2020 for OCS facilities, where a deterministic estimate specifying that the cost to decommission an OCS facility was a specific dollar amount, BSEE's current methodology provides multiple decommissioning expenditure levels associated with a cumulative likelihood of not being exceeded. They do not represent a percentage of the cost to decommission any given facility; they represent the statistical likelihood that the specified value will be equal to or greater than the amount ultimately required ( i.e., there is an X percent chance that the cost will be equal to or less than Y).

Based on the industry-reported data, BSEE has developed three publicly available probabilistic estimates ( i.e., P-values) of decommissioning costs for each OCS facility on any given lease (available here: https://www.bsee.gov/research-record/tap-738-decommissioning-methodology-and-cost-evaluation ). The range of facility decommissioning estimates provided in the Technical Information Management System are at the P50, P70, and P90 levels. These values represent the likelihood of covering the full cost of decommissioning a facility as a percentage. The lowest cost estimate would have a 50 percent likelihood of covering the full cost of decommissioning a facility and is thus referred to as “P50.” The second lowest cost estimate, P70, would have a 70 percent likelihood of covering the full cost of decommissioning a facility. The third and highest cost estimate, P90, would have a 90 percent likelihood of covering the full decommissioning cost of a facility. These BSEE-generated estimates are based on actual decommissioning expenditures reported by offshore companies.

In the 2024 Final Rule, at 30 CFR 556.901, the Department finalized an amendment to replace BSEE's former single, algorithm-based deterministic estimates for OCS facility decommissioning costs with the new BSEE methodology that provides probabilistic estimates ( i.e., P-values) based on decommissioning costs reported by industry pursuant to NTL 2016-N03, later superseded by NTL 2017-N02. In the 2024 Final Rule, the Department amended 30 CFR 556.901(f) to use the P70 value to determine the amount of any required supplemental financial assurance and stated that if probabilistic estimates are not available, BOEM will use the deterministic value, if available.

BOEM has reevaluated the 2024 Final Rule use of the P70 value and is proposing that the P50 value is more appropriate for determining the amount of supplemental financial assurance an entity must provide. BOEM received numerous comments on the 2023 proposed rule, the majority from small independent operators, that asserted that P50 was the closest to their own internal asset retirement obligation estimates. BOEM's goal for its financial assurance program continues to be the protection of the American taxpayers from exposure to financial loss associated with OCS development, while ensuring that the financial assurance program does not detrimentally affect offshore investment or position American offshore exploration and production companies at a competitive disadvantage. The Department's proposal to use P50 would reduce financial burden on available capital for offshore investment by oil and gas operators as compared to the existing requirement to use P70. Reducing the financial burden on offshore investment would increase available capital for exploration and production of oil and gas resources on the OCS, and in return, generate more capital for the companies, reducing their likelihood of bankruptcy.

BOEM also notes that the regulation only stipulates that the BSEE P-value will be used to determine the amount of supplemental financial assurance that may be required to meet decommissioning obligations and does not limit the total cost of corrective action that may be required to bring a lease or grant into compliance with decommissioning regulations found in 30 CFR 250 subpart Q.

The 2024 Final Rule amended the financial assurance regulations to require supplemental financial assurance when a lessee or grant holder poses a substantial risk of becoming financially unable to carry out its obligations under its lease or grant, or when a leased property may not have sufficient value to be sold to another company that could assume those obligations. Specifically, the amendments required the use of an issuer credit rating with a threshold of investment grade, and, for leases, a ratio of 3-to-1 for the value of proved reserves to the value of decommissioning liabilities associated with those reserves. This proposed rule reevaluates the 2024 Final Rule amendments and proposes new amendments to address the regulatory burden on the regulated community associated with the 2024 Final Rule.

The Department finalized an amendment in the 2024 Final Rule to use an “issuer credit rating” to evaluate the financial health of OCS lessees, grant holders, and guarantors, and included the new term and corresponding definition in 30 CFR 556.105. An issuer credit rating provides the rating agencies' opinions of the entity's ability to honor senior unsecured debt and debt-like obligations. The Department will currently only use issuer credit ratings from an NRSRO, such as S&P Global Ratings and Moody's Investors Service Incorporated.

As discussed in the preamble to the 2020 joint rule (85 FR 65913), an evaluation of S&P's and Moody's rating methodologies revealed that the analyses they perform to determine an issuer credit rating are wide-ranging and include factors beyond corporate financials (such as history, senior management, and commodity price outlook). An issuer credit rating provides the rating agencies' opinions of the entity's ability to honor senior unsecured debt and debt-like obligations. It is common for lessees to have both an issuer credit rating and a bond issuance rating. However, bond issuance ratings are opinions of the credit quality of a specific debt obligation only, which can vary based on the priority of a creditor's claim in bankruptcy or the extent to which assets are pledged as collateral. Due to the priority of claims associated with debt and the limited purpose of bond issuance ratings, BOEM proposed in the 2020 joint rule and finalized in the 2024 Final Rule to accept only issuer credit ratings from a NRSRO. As such, BOEM has evaluated the 2024 Final Rule amendment to require the use of an issuer credit rating and is proposing that this requirement is still appropriate. As noted below, however, the Department is reevaluating the threshold credit rating above which supplemental financial assurance may not be required of a lessee or grant holder.

The Department finalized amendments with the 2024 Final Rule to use an investment grade credit rating threshold for determining if supplemental financial assurance may be required of a lessee or grant holder. The Department added the term and associated definition of “Investment grade credit rating” in 30 CFR 556.105. BOEM has evaluated the 2024 Final Rule amendments requiring an investment grade credit rating and has determined that this requirement should be revised.

As discussed in the 2023 proposed rule, BOEM reviewed historical default rates across the entire credit rating spectrum, as well as the credit profile of oil and gas sector bankruptcies arising from the commodity price downturn in 2014, to determine an appropriate level of risk. For this analysis, BOEM evaluated the S&P data, but it acknowledges that performance may vary across NRSROs. As expected, the average S&P historical 1-year default rates increase significantly with lower ratings. The 1-year default rate represents the percentage of companies having any given credit rating that have failed to meet their financial obligations during any given 12-month period. For example, for companies having had BBB− rating in 2020, 0.24 percent defaulted on their financial obligations in the subsequent 12-month period. The average S&P 1-year default rate for BBB− rated companies from 1981 to 2020 was 0.24 percent. Comparatively, the average 1-year default rate for BB− rated companies was 1.21 percent, for B− rated companies was 8.73 percent, and for C rated companies was 24.92 percent. BOEM believes that 1-year default rates are an appropriate measure of risk, given BOEM's policy of reviewing the financial status of lessees, ROW holders, and RUE holders at least on an annual basis (the review typically corresponding with the release of audited annual financial statements). In addition, throughout the year, BOEM monitors company credit rating changes, market reports, trade press, articles in major news media and quarterly financial reports to review the financial status of lessees, ROW holders, and RUE holders. The regulations do not preclude a demand for supplemental financial assurance through the Regional Director's regulatory authority at any time ( e.g., if an article about a company in a major news media indicates they may be having financial troubles, the Regional Director can issue a demand for supplemental financial assurance without having to wait for an NRSRO to lower the company's credit rating).

BOEM has reviewed the use of the BBB− threshold and is proposing to establish the issuer credit rating threshold of BB− (S&P) or Ba3 (Moody's), an equivalent credit rating provided by another NRSRO, or a proxy credit rating determined by the Regional Director. BOEM seeks to balance the financial risk to the government and the taxpayer with minimizing unnecessary regulatory burdens that could stifle offshore energy development and reducing the threshold from BBB− to BB− would achieve this goal, and determined that the increase in the current ( i.e., the revised 1981 to 2024 average) 1-year default rate from 0.21 percent at BBB(−) to 0.87 percent at BB(−) presented an acceptable increase in risk. Previous analysis of oil and gas bankruptcies (as evidenced in the 2020 initial RIA and the 2024 RIA) indicated only two instances of BB rated companies declaring bankruptcy within a 1-year window of losing their BB rating. However, both companies successfully reorganized in Chapter 11 without relinquishing decommissioning liability. BOEM anticipates that, due to the stronger financial position of companies in the BB rating category, the odds of a successful Chapter 11 reorganization with no financial impact on decommissioning liability is high enough to outweigh the relatively small increase in credit default risk.

In the case of a split-rating circumstance ( e.g., if S&P and Moody's credit ratings are different), BOEM will continue to consider the higher credit rating in making any financial assurance determination, as provided by 30 CFR 556.901(d)(1). This provision only impacts companies with split ratings at the credit risk threshold ( i.e., S&P BB−/B+ and Moody's Baa3/Ba1), thereby posing minimal additional risk and minimizing the possibility of requiring/releasing financial assurance unnecessarily due to split rating upgrades or downgrades along the credit risk threshold.

In the 2024 Final Rule, at 30 CFR 556.901(d), the Department allowed entities that do not have a NRSRO-issued credit rating to request that the Regional Director determine a proxy credit rating based on audited financial information for the most recent fiscal year, including an income statement, a balance sheet, a statement of cash flows, and the auditor's certificate. The Department intended the “most recent fiscal year” to mean a continuous 12-month period within the 24 months prior to the Regional Director's determination that supplemental financial assurance is required. BOEM has evaluated the 2024 Final Rule amendment to allow the use of a proxy credit rating in instances where an issuer credit rating is unavailable and is proposing that this requirement is still appropriate as it allows small entities that may not have an issuer credit rating to demonstrate that they are financially stable. The Department is therefore not proposing any amendments to the use of proxy credit ratings under these circumstances.

The 2024 Final Rule included 30 CFR 556.901(d) to allow BOEM to consider the proved reserves on a particular lease when determining whether supplemental financial assurance is required. To be exempted, BOEM requires the lessee to submit a reserve report for the proved oil and gas reserves (as defined by the SEC regulations at 17 CFR 210.4-10(a)(22)) located on a given lease. The 2024 Final Rule provides that companies should report the value of their reserves using the methodology pursuant to the SEC's regulations on reserve reporting, and the presentation should be by the lease, or leases, for which the exemption is being requested. These regulations are commonly used and understood by offshore oil and gas companies and such reserve reports are already produced by publicly traded companies. This also allows BOEM to rely on the established SEC regulations on the definitions, qualifications, and requirements for proved reserves, rather than attempting to recreate these regulations. BOEM has evaluated the 2024 Final Rule amendment to allow the use of the minimum ratio for companies without a credit rating meeting the threshold and is proposing that this alternative is still appropriate. BOEM continues to believe that a property with a high enough ratio would likely be purchased by another lessee if a current lessee defaults on its obligations, thereby reducing the risk that decommissioning costs would be borne by the government, consequently reducing the need for supplemental financial assurance. The Department is therefore not proposing any amendments to this provision.

Additionally, the Department finalized the use of a ratio of the value of proved reserves to decommissioning liability associated with those reserves that meets or exceeds a value of 3-to-1 in the 2024 Final Rule. Establishing an appropriate reserves-to-decommissioning cost ratio is one approach toward protecting the taxpayer during periods of commodity price volatility. While generally stable, oil and gas commodity markets can enter into periods of high price volatility. From an oil and gas financial risk perspective, this is only of concern when the volatility results in dramatic price decreases. Should commodity prices decline in a manner similar to late 2014 through early 2016, BOEM believes a 3-to-1 ratio means the property would most likely retain its economic viability, protect the taxpayer, and financial attractiveness to potential buyers. BOEM is soliciting comments on whether the 3-to-1 ratio remains the appropriate threshold.

In the preamble to the 2024 Final Rule, BOEM acknowledged that the new regulations could have a significant financial impact (over $6 billion of additional financial assurance would be required) on affected companies, reducing their financial capacity to produce oil and gas (89 FR 31560). For that reason, BOEM finalized a provision to phase in the new supplemental financial assurance requirements over a 3-year period for existing leaseholders in 30 CFR 556.901(h). As finalized, BOEM would allow any company receiving a supplemental financial assurance demand (within 3 years of the rule becoming effective) to request the phase-in option and post one-third of the total amount by the deadline listed on the demand letter. A second one-third would be required within 24 months of receipt of the demand letter. The final one-third payment would be due within 36 months of receipt of the demand letter.

While this proposed rulemaking reduces the amount of supplemental financial assurance required by lessees, the Department continues to acknowledge that providing the supplemental financial assurance could have a significant financial impact on affected companies because BOEM has not yet required them to provide the supplemental financial assurance as dictated by the 2024 Final Rule. As such, the Department is proposing to retain the available 3-year phase-in period for implementation of new requirements in 30 CFR 556.901(h), but starting on the date this rulemaking is finalized. BOEM specifically solicits comments regarding this approach from potentially affected parties, and requests comments on how the new supplemental financial assurance demands could be most effectively implemented to minimize any unnecessarily adverse effects.

Additionally, the Department is proposing to allow entities to provide the Regional Director with a proposed payment schedule for their potential supplemental financial assurance demands prior to receipt of an official demand letter. If the proposed payment schedule is accepted by the Regional Director, BOEM will forgo an official demand letter. Companies may be interested in resolving financial assurance before receiving an official demand letter, as the letter may trigger, unknown to BOEM, debt/surety/other financial covenants that may have financial implications on the companies.

In instances where decommissioning will be completed within a short period of time ( i.e., within 1 year) from the date of a new supplemental financial assurance demand, lessees and grant holders may have difficulty obtaining financial instruments to cover their decommissioning obligations. The Department is proposing a new section in 30 CFR 556.908 to allow the Regional Director's discretion to accept a third-party decommissioning contract or a decommissioning schedule in lieu of supplemental financial assurance.

The third-party decommissioning contract provided to BOEM for review and approval to be used in lieu of supplemental financial assurance should clearly define the responsibilities, expectations, and protections for all parties involved in the plugging, abandonment, and site restoration of oil and gas infrastructure. The decommissioning schedule provided to BOEM for review and approval to be used in lieu of supplemental financial assurance must include a detailed timeline that outlines the sequence, duration, and key milestones for decommissioning oil and gas infrastructure such as wells, facilities, and pipelines. Additionally, the decommissioning schedule must be signed by an officer of the company as designated in the BOEM qualification card.

To ensure that the decommissioning can and will be undertaken and completed, evidence of sufficient funding set aside for the decommissioning contract or schedule must also be provided to BOEM. If decommissioning is not complete within one year from the date of the original supplemental financial assurance demand, the entity must meet the original supplemental financial assurance demand within 10-calendar days of receipt of notification by the Regional Director.

BOEM's review and approval of the decommissioning contracts and schedules for use in lieu of supplemental financial assurance is not an approval for decommissioning activities, which remains in BSEE's purview; BOEM's approval is only an acceptance of those documents in lieu of an entity providing supplemental financial assurance.

In the 2024 Final Rule, the Department added a new requirement at 30 CFR 556.902(h) and 590.4(c) whereby any company seeking to stay a supplemental financial assurance demand pending appeal at the IBLA must, as a condition of obtaining a stay of the order, post an appeal bond in the amount of supplemental financial assurance required. If the appeal is successful, the appeal bond would be returned to the appropriate party, and any remaining required supplemental financial assurance would need to be posted in the form of bonds or other financial instruments. If the appeal is unsuccessful, the appeal bond could be replaced with, or converted into, bonds or other forms of financial assurance to cover the supplemental financial assurance demand.

During the public comment period for the 2024 rulemaking, multiple commenters expressed opposition to this proposal, asserting that it raises due process concerns, specifically because the requirement would inhibit the recipient's first opportunity to have an adjudication of BOEM's determination. The commenters asserted that the requirement of posting an appeal bond is disproportionate to the perceived risk because a lessee could be forced into posting a bond that could be held for years, depriving them of the operating capital diverted to the bonds, even if the appeal succeeds. Commenters highlighted that the process without the appeals bond requirement provides an opportunity for the parties to negotiate. Other commenters equated the requirement to “an automatic denial of stays” which, they asserted, could render most supplemental financial assurance demands subject to immediate judicial review, citing 5 U.S.C. 704 and 43 CFR 4.21(c). See 89 FR 31560; see also section 9 of the Response to Public Comments Received on the June 29, 2023, Notice of Proposed Rulemaking memorandum for detailed comment summaries at Docket ID: BOEM-2023-0027-2187. Even though the Department disagreed with the commenters that the appeal bond provision raised due process concerns and finalized the provision in the 2024 Final Rule, the Department has reviewed the provision in light of E.O. 14154 and is proposing in this action to remove the requirement in 30 CFR 556.902(h) and 590.4(c) that a company must provide an appeal bond in order to seek a stay of a supplemental financial assurance decision while an appeal of that decision is pending at the IBLA.

Removing this requirement allows offshore entities to retain the capital that they would have otherwise posted during an appeal to continue exploration and production on the OCS while posing minimal risk to the taxpayer and meeting the goals of E.O. 14154.

Similarly, the Department is retaining the provision in 30 CFR 556.902(g) that allows offshore lessees and grant holders to request an informal resolution if they believe that BOEM's supplemental financial assurance demand is unjustified, without losing the ability to provide supplemental financial assurance in a phased-in manner. The informal resolution provides an opportunity for all parties to achieve a successful financial assurance outcome before resorting to the longer IBLA process.

The Department is proposing to delete the term and associated definition for “Investment grade credit rating” in 30 CFR 556.105(b). The associated definition is currently the following: “ Investment grade credit rating means an issuer credit rating of BBB− or higher (S&P Global Ratings and Fitch Ratings, Inc.), Baa3 or higher (Moody's Investors Service Inc.), or its equivalent, assigned to an issuer of corporate debt by a nationally recognized statistical rating organization as that term is defined in section 3(a)(62) of the Securities Exchange Act of 1934.” This definition is currently the threshold above which BOEM would typically not require supplemental financial assurance per the financial assurance regulations. This proposed rule deletes the term and associated definition because it is no longer referenced in part 556, and the proposed threshold is specified in part 556, subpart I.

The Department is proposing to add the term and associated definition for “Issuer credit rating” in 30 CFR 550.105 because it is proposed to be used in 550.166. The associated definition is proposed as the following: “ Issuer credit rating means a credit rating assigned to an issuer of corporate debt by a nationally recognized statistical rating organization as that term is defined in section 3(a)(62) of the Securities Exchange Act of 1934.” This definition is consistent with the same term and definition in 30 CFR 556.105(b).

The Department is proposing to add the term and associated definition for “Predecessor” in 30 CFR 550.105. The associated definition is proposed as the following: “ Predecessor means a prior lessee or owner of operating rights, or a prior holder of a right-of-use and easement grant or pipeline right-of-way grant, that is liable for accrued obligations on that lease or grant.” This definition is consistent with the existing term and definition in 30 CFR 556.105(b).

The Department is proposing to add the term and associated definition for “ Dual-obligee financial assurance instrument” in 30 CFR 556.105. The associated definition is proposed as the following: “ Dual-obligee financial assurance instrument means a type of financial instrument that names a second obligee in addition to the original obligee.”

While always available for use as an “other approved form of supplemental financial assurance,” the Department is proposing to explicitly include dual-obligee financial assurance instruments as an acceptable financial instrument for financial assurance in 30 CFR 556.902(e).

This proposed rule will affect current and future lessees, sublessees, RUE grant holders, and pipeline ROW grant holders. BOEM's analysis shows that this includes approximately 185 companies with record title ownership or operating rights in leases, and with interests in RUE grants and pipeline ROW grants. These lessees and grant holders are responsible for complying with the regulations and therefore would bear the compliance costs and realize the cost savings associated with the provisions in this proposed rule, if finalized.

BOEM estimates the overall decommissioning costs for OCS facilities to be between $35 billion and $41 billion as of May 2025 using the P50 and P70 estimates, respectively. This decommissioning cost estimate represents the full cost of decommissioning all facilities on the OCS, including those facilities that are currently operating. It is noted that these costs would occur over many decades as the facilities reach the end of their useful life.

In the absence of this proposed rulemaking, BOEM assumes the 2024 Final Rule would be fully implemented as published. Pursuant to this baseline and given current decommissioning estimates, BOEM identified $9.67 billion in total liabilities that do not meet the current credit rating threshold of BBB− and above. Additionally, the 2024 Final Rule included a provision at 30 CFR 556.901(d) to allow BOEM to consider the proved reserves on a particular lease when determining whether supplemental financial assurance is required. BOEM estimates that $2.66 billion in additional liabilities would meet the 3-to-1 value of proved reserves to liabilities associated with those reserves. Therefore, BOEM estimates that, given the full implementation of the current regulations, it would expect to hold $7.02 billion in its financial assurance portfolio, costing approximately $566.65 million in estimated annual premiums associated with that financial assurance.

As discussed earlier in this preamble, the Department is proposing three major deregulatory changes that would have impacts on this regulatory baseline. These three major amendments are: (1) lowering the credit rating threshold; (2) consideration of predecessor strength; and (3) use of the P50 decommissioning estimate instead of P70. The proposed amendments are generally independent, allowing for individual or combined implementation, however the impacts of each provision are interrelated, with the effect of any single provision depending on the others that are present. The Department is not proposing any amendments to the provision allowing the use of the 3-to-1 minimum ratio of value of proved reserves to liabilities associated with those reserves provision, and thus does not by itself, have any impacts on the costs and benefits of this proposed rule; however, it is highlighted that changing the P-value from P50 to P70 impacts the calculation of the ratio.

For the first major amendment, lowering the credit rating threshold from BBB− to BB−, BOEM estimates the financial liabilities that would be held by companies with BB+, BB, and BB− credit ratings for full implementation of the 2024 Final Rule at $54.2, $205.4, and $67.4 million, respectively. The average one-year default rate for companies in these categories are 0.27 percent, 0.44 percent, and 0.87 percent respectively using the S&P default statistics. For this analysis, BOEM evaluated the S&P data, but notes that performance may vary across NRSROs. Using these values, BOEM estimates that the increased risk of default from this group of lessees is approximately $1.6 million. This increased risk of default is offset by an annual decrease of $13.7 million in supplemental financial assurance premiums, an unjustifiable burden on offshore energy development for a limited reduction in the risk of default.

For the second major amendment, consideration of predecessor strength when determining if the current lessee must provide supplemental financial assurance, BOEM evaluated the credit rating of predecessor lessees. If BOEM were to implement this proposed amendment independently of the other amendments, this provision would result in a reduction of $5.8 billion in BOEM's financial assurance portfolio and an annual premium savings for lessees of $483.6 million. Though predecessor companies have always been held responsible for decommissioning liabilities if the current owner is incapable of meeting those obligations, the proposed rule explicitly incorporates predecessor companies' financial strength when determining supplemental financial assurance requirements for current lessees. This proposed change reduces the need for additional bonding or other forms of supplemental financial assurance on properties while only minimally increasing risk to the taxpayers.

The final major amendment, use of P50 instead of P70 when determining decommissioning liability cost estimates, impacts both the amount of liability that needs to be covered through financial assurance and the calculation of the 3-to-1 reserves ratio. If BOEM were to implement this amendment independently of the other amendments, this provision would result in a reduction of BOEM's financial assurance portfolio by $2.1 billion and would provide an annual regulatory compliance savings of $175.2 million. This proposed change reduces the amount of supplemental financial assurance required to cover decommissioning obligations by a lessee without a significant increase in risk to the taxpayers because many companies asserted that P50 was the closest to their own internal asset retirement obligation estimates during the 2024 rulemaking.

As discussed in the RIA, this proposed rule includes changes that cannot be quantitatively modeled in this analysis. BOEM makes clarifications regarding its acceptance of dual-obligee financial assurance instruments, removes the requirement for an appeals bond, and makes changes for short-term decommissioning obligations and pipeline ROW Grants. Given the uncertainty in the frequency and the scale of impacts resulting from these changes, compared to the remaining proposed changes, BOEM does not quantitatively analyze these changes, but does not anticipate the impacts to be of any significance.

When considering all three amendments jointly, BOEM estimates a reduction of $6.2 billion of the $7.0 billion in baseline financial assurance, leaving $798 million in remaining financial assurance requirements. BOEM estimated that in the baseline, lessees would face annual premiums of $567 million, but with the reduction in financial assurance requirements per the proposed rule, that estimate is reduced to $59 million, for a savings of $508 million annually. The 20-year discounted and annualized values at 3 percent are $7.21 billion and $484.46 million, respectively. The 20-year discounted and annualized values at 7 percent are $5.16 billion and $498.21 million, respectively.

Of the $7 billion in baseline required supplemental financial assurance, 89 percent ($6.2 billion) would no longer be required under the proposed rule, if finalized. Of the baseline financial assurance requirements, 81 percent would no longer be required given the predecessor consideration, 5 percent would no longer be required given the change in credit rating, and 3 percent would no longer be required given the change in P-value. The proposed rule, if finalized, achieves significant cost savings from the consideration of predecessors in determining supplemental financial assurance requirements. The risk that the government would be responsible for the costs associated with decommissioning is minimal because financially viable co-lessees and predecessors remain jointly and severally liable for accrued decommissioning obligations. The proposed rule results in a 20-year annualized savings of more than $480 million in financial assurance premiums. The majority of these savings originate from BOEM's consideration of predecessors when evaluating whether a company needs to provide supplemental financial assurance. In this way, predecessor lessees serve the same purpose as surety companies as new lessees are not required to post financial assurance.

BOEM is not quantifying benefits other than the cost savings for this rule. However, BOEM expects that less capital will be tied up in financial assurance and that could lead to more development on the OCS, which could lead to more job creation, and higher production of oil and gas from the OCS. BOEM will work to estimate the risk change in the final rule and welcomes public comments on methods to quantify benefits, costs, cost savings, and other methods of quantification beyond bond premium cost savings.

On September 4, 2025, BOEM sent letters to all federally recognized Tribal Nations and Alaska Native Claims Settlement Act (ANCSA) Corporations to ensure they are aware of the proposed rulemaking, to answer any immediate questions they may have had, and to invite formal consultation if desired.

The Department is proposing to amend the regulations as follows:

As discussed in section III.H of this preamble, the Department is proposing to add the terms “Issuer credit rating” and “Predecessor” to 30 CFR 550.105. The proposed definitions are consistent with the existing definition in 30 CFR 556.105(b).

While reviewing this section for potential revisions, a grammatical error was found in paragraph (a)(3). The Department is proposing to revise paragraph (a)(3) to clarify that it should reference sections 556.900(d) through (g) and section 556.902. The paragraph is currently missing the “and” between the 556.900(g) and 556.902 references. This proposed amendment does not change the intent of paragraph (a)(3).

As discussed in section III.A.1.a of this preamble, the Department is proposing to consider predecessors when determining if supplemental financial assurance is required from a RUE grant holder. Specifically, the Department is revising paragraph (b) to include the consideration of predecessors' issuer credit rating or proxy credit rating when determining if the current RUE grant holder must provide supplemental financial assurance. The predecessor must meet the criteria in 30 CFR 556.901(d)(1) through (d)(3) ( i.e., the predecessor must have a minimum issuer credit rating or proxy credit rating of BB− (S&P) or its equivalent). The predecessor interest may have been that of a predecessor lessee, if the entity was responsible for decommissioning the facility now associated with an RUE. The Department is also including in paragraph (b) that the BOEM Regional Director can require supplemental financial assurance for decommissioning obligations for which there is not a liable predecessor.

As discussed in section III.A.1.a of this preamble, the Department is proposing to consider predecessors when determining if supplemental financial assurance is required from a ROW grant holder. Specifically, the Department is revising paragraph (d) to include the consideration of predecessors' issuer credit ratings or proxy credit ratings when determining if the current ROW grant holder must provide supplemental financial assurance. The predecessor must meet the criteria in 30 CFR 556.901(d)(1) through (d)(3) ( i.e., the predecessor must have a minimum issuer credit rating or proxy credit rating of BB− (S&P) or its equivalent). The Department is also including in paragraph (d) that the BOEM Regional Director can require supplemental financial assurance for decommissioning obligations for which there is not a liable predecessor.

Additionally, as discussed in section III.A.2 of this preamble, the Department is proposing to allow the Regional Director to consider a ROW grant holder's OCS leases that they may hold, if any, to evaluate whether the value of proved reserves for such leases exceed 3 times the combined decommissioning liability for those leases and ROWs when determining if a ROW grant holder must provide supplemental financial assurance.

The Department is proposing, and as discussed in section III.G of this preamble, to remove the term “Investment Grade Credit Rating” and the associated definition as it is no longer the threshold used to determine if supplemental financial assurance is required. The Department is also proposing, as discussed in section III.G of this preamble, to add the new term and associated definition of “Dual-obligee financial assurance instrument.”

The Department is proposing, as discussed in section III.A.1.b of this preamble, to consider predecessors when determining if supplemental financial assurance is required. The Department is proposing to renumber existing paragraph (d)(4) as (d)(5) and create a new paragraph (d)(4) that states if a predecessor has an issuer credit rating or proxy credit rating meeting the threshold, you may not have to provide supplemental financial assurance. Additionally, it acknowledges that the Regional Director may require additional security for those decommissioning obligations for which there is no predecessor meeting the criteria of paragraphs (d)(1) or (2).

The Department is proposing to revise the BSEE probabilistic estimate value used when determining the amount of supplemental financial assurance required, as discussed in section III.C of this preamble. Specifically, the Department is proposing to replace the references to the P70 value with reference to the P50. These references are found in newly designated paragraph (d)(5)(i) and paragraph (f).

As discussed in section III.E of this preamble, the Department continues to acknowledge that providing the supplemental financial assurance could have a significant financial impact on affected companies and, as such, is retaining the option in 30 CFR 556.901(h) to phase in the new requirements over a 3-year period, but amended to start with the effective date of the new final rule. Specifically, the Department is proposing to replace “June 24, 2024” with the effective date of the new final rule which effectively starts a new timeline for impacted entities to provide supplemental financial assurance in phases.

Also as discussed in section III.E. of this preamble, the Department is proposing in new paragraph (i) to allow entities to provide the Regional Director with a proposed schedule for fulfilling their potential supplemental financial assurance demands. If the proposed installment schedule is accepted by the Regional Director, BOEM will forgo an official demand letter.

As discussed in section III.H.2 of this preamble, the Department is proposing to explicitly include dual-obligee financial assurance instruments as an acceptable financial instrument for financial assurance in paragraph 556.902(e).

As discussed in section III.G of this preamble, the Department is proposing to remove the portion of the provision in 556.902(h) that requires a company seeking a stay of a supplemental financial assurance demand to provide an appeal bond ( i.e., “However, if you request that the IBLA stay the demand pending a final ruling on your appeal, you must post an appeal surety bond equal to the amount of the demand that you seek to stay before any such stay is effective.”).

As discussed in section III.F of this preamble, the Department is proposing this new section at 30 CFR 556.908 to allow the Regional Director discretion to accept a third-party decommissioning contract or a decommissioning schedule in lieu of supplemental financial assurance in cases where decommissioning will occur within 1-year of receiving the supplemental financial assurance demand. The third-party decommissioning contract provided to BOEM for review and approval for use in lieu of supplemental financial assurance should clearly define the responsibilities, expectations, and protections for all parties involved in the plugging, abandonment, and site restoration of oil and gas infrastructure. The decommissioning schedule provided to BOEM for review and approval for use in lieu of supplemental financial assurance must include a detailed timeline that outlines the sequence, duration, and key milestones for decommissioning oil and gas infrastructure such as wells, facilities, and pipelines. Additionally, the decommissioning schedule must be signed by an officer of the company as designated in the BOEM qualification card. To ensure that the decommissioning can and will be undertaken and completed, evidence of sufficient funding set aside for the decommissioning contract or schedule must be also provided to BOEM per this section.

As discussed in section III.F of this preamble, the Department is proposing to completely remove the provision in subsection 590.4(c) that requires a company seeking a stay of a supplemental financial assurance demand to provide an appeal bond when appealing the demand to the IBLA.

BOEM proposes to include in the final rule that, should any court hold unlawful and/or set aside portions of this rulemaking, the remaining portions are severable and therefore should not be remanded to the agency. The proposed rule contains four major components: (1) return to the previous BOEM practice of considering the financial strength of jointly and severally liable predecessor lessees and grant holders; (2) revising the credit rating threshold when determining whether oil, gas, and sulfur lessees, RUE grant holders, and pipeline ROW grant holders on the OCS are required to provide supplemental financial assurance above the required general financial assurance amount to ensure compliance with their OCSLA obligations; (3) revising the decommissioning estimate used to determine the amount of supplemental financial assurance required; and (4) revising the appeals bond provision related to the IBLA appeal procedures.

These four major components operate largely independent of each other; the Department believes they are sufficiently distinct and that their severability does not depend on the specifics of this proposed rule. For example, BOEM is amending the regulations to consider the financial strength of predecessors when determining if financial assurance is required from a current OCS lessee if that lessee does not have a credit rating above BB− (S&P); BOEM is also amending to the regulations to change the BSEE decommissioning estimate used to determine the amount of supplemental financial assurance a current OCS lessee must provide. Whether or not a lessee or grant holder must provide supplemental financial assurance is largely independent of the amount they are required to provide.

BOEM invites public comments on all aspects of this proposed rule using the procedures described earlier in this preamble. In summary, BOEM specifically requests comments on the following provisions:

• consideration of the financial strength of predecessors when determining if a current lessee or grant holder must provide supplemental financial assurance;

• allowing the Regional Director's discretion to consider the combined decommissioning liability of the ROW and the lease or leases that the ROW grant holder holds to determine if the total decommissioning liability meets the minimum ratio to waive supplemental financial assurance;

• revising the credit rating threshold from BBB− to BB− (S&P) when determining the financial strength of current lessees and grant holders, and predecessor lessees and grant holders;

• appropriateness of utilizing the 3-to-1 minimum ratio of the value of proved reserves to the decommissioning liabilities associated with those reserves;

• including a 3-year phased approach to providing new supplemental financial assurance in response to a demand;

• allowing entities to provide a proposed payment schedule for their potential supplemental financial assurance demands prior to receipt of an official demand letter and BOEM forgoing the official demand letter;

• allowing the Regional Director discretion to accept a third-party decommissioning contract or a decommissioning schedule in lieu of supplemental financial assurance for short-term decommissioning obligations;

• removal of the appeal bond requirement;

• alternatives in a regulatory design where BOEM could incorporate a risk-diversified total portfolio approach or other innovative de-regulatory approaches; and

• explicitly allowing dual-obligee financial assurance instruments.

Additionally, BOEM requests comments on the following topics associated with regulatory impacts:

• if the reliance of Tier 1 predecessors increases the moral hazard risk of current Tier 2 lessees and grant holders diverting capital to activities other than pending decommissioning obligations;

• methods to quantify benefits other than bon premium cost savings;

• how companies would deploy capital that would have previously been spent on financial assurance premiums that may become available as a result of the rule, if finalized;

• additional impacts and unintended consequences BOEM did not consider, including any impacts to existing predecessors who may be in strong financial positions;

• potential deregulatory cost savings not quantified under E.O. 14154 and E.O. 14192;

• analytical assumptions underlying the regulatory impact analysis, and we request that entities provide relevant data that BOEM could use to improve our analysis;

• potential impacts to the energy supply (both positive and negative) in light of E.O. 13211; and

• small business or small operator impacts.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires agencies to analyze the economic impact of regulations when a significant economic impact on a substantial number of small entities is likely and to consider regulatory alternatives that will achieve the agency's goals while minimizing the burden on small entities. Pursuant to sections 603 and 609(b) of the RFA, BOEM has prepared an initial regulatory flexibility analysis (IRFA) for this proposed rule that examines the impacts of the rule on small entities, along with regulatory alternatives that could minimize that impact. The complete analysis is available for review in the docket, Risk Management and Financial Assurance for OCS Lease and Grant Obligations Regulatory Impact Analysis, Docket ID No. BOEM-2025-0042, and is summarized here.

This proposed rule would apply to all OCS lessees and right-of-use and easement and pipeline right-of-way grant holders and affect many predecessor lessees or grant holders with accrued decommissioning liabilities. Most entities would fall primarily under the following Small Business Administration's (SBA) North American Industry Classification System (NAICS) codes: 211120 (Crude Petroleum Extraction), 211130 (Natural Gas Extraction), and 486110 (Pipeline Transportation of Crude Oil and Natural Gas). For NAICS classifications 211120 and 211130, SBA defines a small business as one with fewer than 1,251 employees. For NAICS code 486110, it is a business with fewer than 1,501 employees. Of the 185 companies with active facility, well, or pipeline ownership, BOEM estimates that approximately 92 (49.7 percent) of the businesses operating on the OCS are considered small.

BOEM reviewed its current financial assurance portfolio and considered the difference in required financial assurance amounts from small and large companies. The 2024 Rule baseline financial assurance portfolio is $7.0 billion, and the breakdown by small and large entities is approximately $6.7 billion and $301 million, respectively. BOEM estimates that small companies are responsible for approximately 96 percent of the total financial assurance required by the 2024 Rule. As this proposed rule would apply to all OCS lessees and grant holders and given the correlation between small entities and those required to provide supplemental financial assurance under the existing regulations, BOEM finds that it will affect a substantial number of small entities.

As discussed in section IV of this preamble, the Department is proposing three major deregulatory changes that would impact the regulatory baseline. These three major amendments are: (1) lowering the credit rating threshold; (2) consideration of predecessor strength; and (3) use of the P50 decommissioning estimates instead of P70. The proposed amendments are generally independent, allowing for individual or combined implementation, however the impacts of each provision are interrelated, with the effect of any single provision depending on what others are present.

For the first major amendment, lowering the credit rating threshold from BBB− to BB−, results in 15 companies that would meet the credit rating threshold and would not be required to provide supplemental financial assurance as compared to the baseline. Of these 15 companies, 12 are small companies and 3 are large companies. This change in credit rating threshold impacts more than 23 percent of the baseline small companies that do not meet the existing threshold ofBBB−. These 15 companies would not be required to provide supplemental financial assurance under the proposed rule and would realize savings by avoiding the associated premiums. Small entities would largely be beneficiaries of this proposed rule provision, if finalized.

For the second major amendment, consideration of predecessor strength when determining if the current lessee or grant holder must provide supplemental financial assurance, BOEM, where information was available, evaluated the credit rating of predecessor lessees and grant holders. BOEM estimated that 88 percent of the proposed Tier 2 liabilities held by small entities have a financially strong predecessor that would allow them to be exempt from the supplemental financial assurance requirements, for a total savings of $5.6 billion. In comparison, there is only $93.5 million in similar predecessor-backed liability held by large companies with credit ratings below the BBB− threshold, demonstrating that the bulk of the regulatory benefits of this provision would be realized by small entities.

While small entities will generally benefit from this proposed rulemaking, BOEM acknowledges that higher credit rated-small entities holding joint and several liabilities with other lower credit-rated small entities may realize increased compliance burdens. BOEM estimates that there is approximately $259 million of OCS liability at the P50 level that is currently held by Tier 2 lessees that would be exempt from supplemental financial assurance based on the strength of Tier 1 small entities. These Tier 1 small entities could face increased risk of being called on to perform decommissioning obligations if the current lessee fails to perform.

The final major amendment, use of P50 instead of P70 when determining decommissioning liability cost estimates, impacts the amount of liability that needs to be covered through supplemental financial assurance. When financial assurance is required, or when entities are seeking forbearance based on their reserves value, the rulemaking proposes to use decommissioning cost estimates using BSEE's P50 values, rather than the higher P70 estimates. This would reduce the amount of supplemental financial assurance small entities are required to provide and would lead to reduced premiums.

When considering all three major proposed provisions collectively, the proposed rule reduces the amount of supplemental financial assurance by 90 percent for small businesses, from $6.7 billion in the baseline to $699 million in liabilities that require supplemental financial assurance. Additionally, BOEM estimated that under the liabilities requiring financial assurance in the baseline, small entities would face annual premiums of $546.9 million. With the reduction in financial assurance requirements, BOEM estimates that the proposed rule would result in annual premiums of $48.9 million, yielding savings of $498 million annually.

This proposed rule, if finalized, would revise the financial assurance requirements for OCS lessees and grant holders and would require supplemental financial assurance where the risk of default is the highest. For more information on the small business impacts, see the IRFA analysis in Risk Management and Financial Assurance for OCS Lease and Grant Obligations Regulatory Impact Analysis, Docket ID No. BOEM-2025-0042.

BOEM did not propose to categorically exempt or provide differing compliance requirements for small entities; however, given that approximately half of OCS operators are small entities, the proposed provisions provide disproportionate benefits to small businesses. Small entities are welcome to provide comments on the NPRM. Additionally, small entities may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman, and to the Regional Small Business Regulatory Fairness Board. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of BSEE or BOEM, call 1-888-REG-FAIR (1-888-734-3247).

The UMRA, 2 U.S.C. 1531-1538, requires BOEM, unless otherwise prohibited by law, to assess the effects of regulatory actions on State, local, and Tribal governments, and the private sector. Section 202 of UMRA generally requires BOEM to prepare a written statement, including a cost-benefit analysis, for each proposed and final rule with “federal mandates” that may result in expenditures by State, local, and Tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. This proposed action does not impose an unfunded Federal mandate or have a significant or unique effect on State, local, or Tribal governments. Therefore, the proposed rule does not have disproportionate budgetary effects on these governments. BOEM has determined that this rule would not impose costs on the private sector of more than $100 million in a single year. As such, the rule does not trigger the requirement to prepare a written statement under UMRA, and BOEM has chosen not to prepare such a written statement.

The PRA of 1995 (44 U.S.C. 3501-3521) provides that an agency may not conduct or sponsor, and a person is not required to respond to, a “collection of information” unless it displays a currently valid OMB control number. Collections of information include requests and requirements that an individual, partnership, or corporation obtain information and report it to a Federal agency (44 U.S.C. 3502(3); 5 CFR 1320.3(c) and (k)). This proposed rule references existing ICs previously approved by OMB and revises IC requirements for BOEM regulations that require OMB review and approval under the PRA. As such, an information collection request for BOEM is being submitted to OMB for review and approval. The ICs related to this rulemaking concern certain requirements under 30 CFR parts 550 and 556.

The updates associated with this proposed risk management and financial assurance for OCS lease and grant obligations rule are in the ICs under OMB control number 1010-0006, Leasing of Sulfur or Oil and Gas in the Outer Continental Shelf (30 CFR parts 550, 556, and 560) (expires 07/31/2027).

This proposed rule would modify collections of information under 30 CFR part 550, subparts A and J, and 30 CFR part 556, subpart I, concerning financial assurance requirements (such as bonding) for leases, pipeline ROW grants, and RUE grants. OMB has reviewed and approved the existing information collection requirements associated with financial assurance regulations for leases (30 CFR 556.900-556.907), pipeline ROW grants (30 CFR 550.1011), and RUE grants (30 CFR 550.166).

BOEM estimates that the number of information collection burden hours for the proposed rule overall is close to the same as that for the existing regulatory framework. The existing approved annual burden hours of OMB Control Number 1010-0006 are 22,012 hours and 22,090 annual responses. If this proposed rule becomes final and effective, the new and changed provisions will increase the overall annual burden hours for OMB Control Number 1010-0006 by 21 hours (totaling 22,033 annual burden hours) and 22 responses (totaling 22,112 responses) as justified below.

When needed, BOEM would submit future burden changes (either increases or decreases) of the OMB control number with reasoning to OMB for review and approval. Every 3 years, BOEM will also review the burden numbers for changes, seek public comment, and submit any request for changes to OMB for approval.

Title of Collection: 30 CFR part 550, 556, and 560, “Leasing of Sulfur or Oil and Gas in the Outer Continental Shelf.”

OMB Control Numbers: 1010-0006.

Form Number: No new forms.

Type of Review: Revision of currently approved collection.

Respondents/Affected Public: Federal OCS oil, gas, and sulfur operators and lessees, and RUE grant and pipeline ROW grant holders.

Total Estimated Number of Annual Responses: 22,112 responses (+22 responses).

Total Estimated Number of Annual Burden Hours: 22,033 hours (+21 hours).

Respondent's Obligation: Responses to these collections of information are mandatory or are required to obtain or retain a benefit.

Frequency of Collection: The frequency of response varies but is primarily on the occasion or as per the requirement.

Total Estimated Annual Non-hour Burden Cost: No additional non-hour costs. Non-hour costs remain at $766,053.

The following is a brief explanation of how the regulatory changes in this rulemaking affect the various subparts' hour and non-hour cost burdens for OMB Control Number 1010-0006:

BOEM's existing regulations concerning RUE grants supporting an OCS lease and a State lease are found at 30 CFR 550.160-550.166.

BOEM is proposing to revise the 30 CFR 550.166 to add the consideration of the issuer credit rating or proxy credit rating of a predecessor RUE grant holder and a predecessor lessee ( i.e., a lessee that held interests in the lease on which the RUE is now located and is liable for accrued obligations for the facilities thereon), when determining if supplemental financial assurance is required. This new provision will not increase annual burden hours since BOEM would utilize credit ratings from nationally recognized statistical rating organizations or would itself generate a proxy credit rating based on existing audited financial statements.

Section 550.1011(d) relates to BOEM's determination of whether supplemental financial assurance is necessary to ensure compliance with the obligations under a pipeline ROW grant. This determination will be based on whether pipeline ROW grant holders have the ability to carry out present and future obligations. Currently, the criterion for the determination is an issuer credit rating or a proxy credit rating. The Department is proposing to add the consideration of a predecessor lessee liable for decommissioning and the consideration of the total decommissioning liabilities of a ROW grant and a lease when determining if supplemental financial assurance is required. The issuer credit rating and the audited financial information on which BOEM determines a proxy credit rating for the current ROW grant holder and the predecessors already exist. The burden of determining a proxy credit rating, based on the submitted audited financial information, falls on BOEM.

This new provision will not increase annual burden hours since BOEM would utilize credit ratings from nationally recognized statistical rating organizations or would generate a proxy credit rating based on audited financial statements.

Section 556.901(d) relates to BOEM's determination of whether supplemental financial assurance is necessary to ensure compliance with the obligations under a lease. The lessee is required to provide supplemental financial assurance if it does not meet at least one of the criteria outlined in the proposed regulations in this section if finalized. The proposed requirement has the following proposed changes:

• Section 556.901(d)(1) proposes to base this determination on an issuer credit rating of greater than or equal to either BB− from S&P Global Ratings or Ba3 from Moody's Investor Service or equivalent.

• Section 556.901(d)(2) provides that, alternatively, BOEM will consider a proxy credit rating, which must be based on audited financial information for the most recent fiscal year. The Department is proposing that the proxy credit rating must reflect a creditworthiness equivalent to an issuer credit rating greater than or equal to either BB− from S&P Global Ratings or Ba3 from Moody's Investor Service or other equivalent rating from an NRSRO.

• The Department is proposing a new section 556.901(d)(4) to consider the credit rating of predecessor lessees liable for decommissioning obligations on a lease when determining if supplemental financial assurance is required.

• The Department is proposing to redesignate existing section 556.901(d)(4) to 556.901(d)(5). This section provides that BOEM will also consider the net present value of proved oil and gas reserves on the lease. Lessees' submission of information on proved reserves is accounted for in the OMB approved annual burden hours. The Department is proposing to change the decommissioning estimate used to determine the net present value of the decommissioning obligations from P70 to P50. The lessee would not need to submit proved reserve information if supplemental financial assurance is not required based on its issuer credit rating or proxy credit rating, or those of its co-lessees or predecessors. This change will not impact the information collection burdens.

In this proposed rule, the revision of the criteria thresholds does not change for the time required for the respondents to prepare and submit the information.

The Department is proposing to update paragraph (h) in section 556.901 to establish the limited opportunity to provide the required supplemental financial assurance in installments during the first 3 years after the effective date of the final regulation. Currently, the provision establishes a timeline from June 24, 2024. The proposed update to the provision changes the start date for the 3-year installment period. Because this provision is not being changed other than the date on which the provision starts, BOEM is retaining the current burden estimate.

The Department is proposing to add a new paragraph (i) in section 556.901 to allow a lessee to provide a proposed installment schedule for supplemental financial assurance prior to the receipt of an official demand letter. BOEM is adding additional burden for the submission of this installment schedule. BOEM estimates an increase of 20 annual burden hours (20 responses × 1 hour burden).

The Department is proposing in section 556.902(e) to explicitly allow the use of a dual-obligee financial assurance instruments as a type of financial assurance. Because dual-obligee financial assurance instruments have been allowed as “another form of security approved by the Regional Director,” BOEM proposes to keep the burdens the same as the existing approved OMB burdens.

The Department is proposing a new section 556.908 to address instances where decommissioning will occur within 1 year of a new supplemental financial assurance demand. This provision will allow the Regional Director the discretion to accept third-party decommissioning contracts and/or decommissioning schedules from those entities in lieu of supplemental financial assurance. This is a new provision that may slightly increase annual burden hours. BOEM estimates an increase of 1 annual burden hours (2 responses × 1/2 hour burden).

The following is the revised burden table and a brief explanation of how the regulatory changes affect the various subparts' hour and non-hour cost burdens for OMB Control Number 1010-0006:

If this proposed rule becomes effective and OMB approves the information collection requests, BOEM would revise the existing OMB control numbers to reflect the changes. The IC does not include questions of a sensitive nature. BOEM will protect proprietary information according to the Freedom of Information Act (5 U.S.C. 552) and DOI implementing regulations (43 CFR part 2), 30 CFR 556.104, Information collection and proprietary information, and 30 CFR 550.197, Data and information to be made available to the public or for limited inspection.

The PRA requires agencies to estimate the total annual reporting and recordkeeping non-hour cost burden resulting from the collection of information, and we solicit your comments on this item. For reporting and recordkeeping only, your response should split the cost estimate into two components: (1) total capital and startup cost component; and (2) annual operation, maintenance, and purchase of service component. Your estimates should consider the cost to generate, maintain, and disclose or provide the information. You should describe the methods you use to estimate major cost factors, including system and technology acquisition, expected useful life of capital equipment, discount rate(s), and the period over which you incur costs. Generally, your estimates should not include equipment or services purchased: (1) before October 1, 1995; (2) to comply with requirements not associated with the information collection; (3) for reasons other than to provide information or keep records for the Government; or (4) as part of customary and usual business or private practices.

As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other Federal agencies to comment on any aspect of this information collection, including:

(1) Is the proposed information collection necessary or useful for BOEM to properly perform its functions?

(2) Are the estimated annual burden hour increases and decreases resulting from the proposed rule reasonable?

(3) Is the estimated annual non-hour cost burden resulting from this information collection reasonable?

(4) Do you have any suggestions that would enhance the quality, clarity, or usefulness of the information to be collected?

(5) Is there a way to minimize the information collection burden on those who must respond, such as by using appropriate automated digital, electronic, mechanical, or other forms of information technology?

Send your comments and suggestions on this information collection by the date indicated in the DATES section to the Desk Officer for the Department of the Interior at OMB—OIRA at (202) 395-5806 (fax) or via the online portal at https://www.reginfo.gov. You may view the information collection request(s) at https://www.reginfo.gov/public/do/PRAMain. Please provide a copy of your comments to the BOEM Information Collection Clearance Officer (see the ADDRESSES section). You may contact Anna Atkinson, BOEM Information Collection Clearance Officer at (703) 787-1025 with any questions. Please reference Risk Management and Financial Assurance for OCS Lease and Grant Obligations (OMB Control No. 1010-0006), in your comments.

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed environmental analysis under NEPA is not required because this proposed rule is covered by a categorical exclusion (see 43 CFR 46.205). This proposed rule meets the criteria set forth at 43 CFR 46.210(i) for a Departmental categorical exclusion in that this action is “of an administrative, financial, legal, technical, or procedural nature.” BOEM has also determined that the proposed rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.

E.O. 12630 ensures that government actions affecting the use of private property are undertaken on a well-reasoned basis with due regard for the potential financial impacts imposed by the government. This action does not effect a taking of private property or otherwise have taking implications under E.O. 12630, and therefore, a takings implication assessment is not required.

E.O. 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the OMB will review all significant rules. This rulemaking will result in an annual effect on the economy of $100 million or more, therefore OIRA has determined that this rule is a significant action under E.O. 12866. As such, this action was submitted to OMB for interagency review.

E.O. 13563 reaffirms the principles of E.O. 12866, while calling for improvements in the Nation's regulatory system to promote predictability and 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. BOEM has developed this rule in a manner consistent with these requirements.

The amendments proposed in this action are expected to significantly decrease the private costs to lessees in the form of bonding or other financial assurance premiums. BOEM prepared an analysis of the potential costs and benefits associated with this action, which are described in the following OMB Circular A-4 Accounting Statement. For further discussion, this analysis, Risk Management and Financial Assurance for OCS Lease and Grant Obligations Regulatory Impact Analysis, is available in the docket (BOEM-2025-0042) and is summarized in sections IV.B and IV.C of this preamble.

This rule complies with the requirements of E.O. 12988. Specifically, this rule:

(1) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(2) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

Regulatory actions that have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government are subject to E.O. 13132. Under the criteria in section 1 of E.O. 13132, this proposed rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

BOEM strives to strengthen its government-to-government relationships with Tribal Nations through a commitment to consultation with Tribes, recognition of their right to self-governance and Tribal sovereignty, and honoring BOEM's trust responsibilities for Tribal Nations. Executive Order 13175 defines polices that have Tribal implications as regulations, legislative comments or proposed legislation, and other policy statements or actions that will or may have a substantial direct effect on one or more Indian Tribes, or on the relationship between the Federal Government and one or more Indian Tribes. Additionally, the DOI's consultation policy for Tribal Nations and ANCSA Corporations, as described in Departmental Manual part 512 chapter 4, expands on the above definition from E.O. 13175 and requires that BOEM invite Indian Tribes and ANCSA Corporations “early in the planning process to consult whenever a Departmental plan or action with Tribal Implications arises.”

BOEM has evaluated the proposed rule under DOI's consultation policy and under the criteria in E.O. 13175 and determined that, while the proposed rule would likely not cause any substantial direct effects on environmental or cultural resources, there may be resource or economic impacts to one or more federally recognized Indian Tribes or ANCSA Corporations as a result of the proposed rule. BOEM is notifying tribes and ANCSA Corporations with current and/or historical connections to the Gulf of America and offshore Alaska to ensure they were aware of the proposed rulemaking, to answer any immediate questions they may have, and to invite formal consultation if they would like to consult. See section IV.D of this preamble for details on consultations held for this proposed rule. BOEM can consult at any time with federally recognized Tribes as sovereign nations.

Under E.O. 13211, BOEM is required to prepare and submit to OMB a “Statement of Energy Effects” for “significant energy actions.” This should include a detailed statement of any adverse effects on energy supply, distribution, or use (including a shortfall in supply, price increases, and increased use of foreign supplies) expected to result from the action and a discussion of reasonable alternatives and their effects. The OMB provides guidance for implementing this E.O., outlining outcomes that may constitute “a significant adverse effect” when compared with the regulatory action under consideration:

• Reductions in crude oil supply in excess of 10,000 barrels per day (bbls);

• Reductions in fuel production in excess of 4,000 bbls;

• Reductions in coal production in excess of five million tons per year;

• Reductions in natural gas production in excess of 25 million Mcf per year;

• Reductions in electricity production in excess of one billion kilowatt-hours per year or in excess of 500 megawatts of installed capacity;

• Increases in energy use required by the regulatory action that exceed the thresholds above;

• Increases in the cost of energy production in excess of one percent;

• Increases in the cost of energy distribution in excess of one percent; or

• Other similarly adverse outcomes.

In addition, a regulation may have “significant adverse effects” if it:

• Adversely affects, in a material way, the productivity, competition, or prices in the energy sector;

• Adversely affects, in a material way, productivity, competition or prices within a region;

• Creates a serious inconsistency or otherwise interferes with an action taken or planned by another agency regarding energy; or

• Raises novel legal or policy issues adversely affecting the supply, distribution or use of energy arising out of legal mandates, the President's priorities, or the principles set forth in E.O.s 12866 and 13211.

The proposed rule is a deregulatory action and does not directly add new regulatory compliance requirements that would lead to significant adverse effects on the nation's energy supply, distribution, or use. Rather, the regulatory changes would help to reduce compliance burdens on the oil and gas industry that may hinder the continued development or use of domestically produced energy resources.

The proposed financial assurance changes could yield unintended consequences to OCS asset investments, particularly in their later years of viability. The proposed rule may deter OCS investment by discouraging Tier 1 companies from pursuing farm-in or farm-out deals with Tier 2 companies or prompting companies to decommission infrastructure when project economics fall below their IRR or NPV thresholds. Smaller Tier 2 companies, with lower operating costs and return thresholds, may recover additional late-life OCS hydrocarbon resources. While contractual financial security agreements could mitigate these risks, net adverse effects on OCS energy production remain possible. These Tier 1 predecessors may also decide they need to set aside additional contingency funds should they be required to cover potential decommissioning obligations from successor lessees exempted from providing supplemental financial assurance. These are funds that could otherwise be invested in new energy projects. BOEM does not anticipate these effects will exceed the OMB E.O. 13211 guidance but welcomes comments on additional potential impacts.

Section 3 of E.O. 14154 requires immediate review of all agency actions that potentially burden the development of domestic energy resources. Secretary's Order 3418 directed BOEM to determine if the Risk Management and Financial Assurance for OCS Lease and Grant Obligations (89 FR 31544; April 24, 2024) should be suspended, revised, or rescinded. With this rulemaking, DOI is proposing to revise the regulations associated with the 2024 Final Rule as it potentially burdens the development of domestic energy resources.

Section 1 of E.O. 14156 declares a national emergency because “[o]ur Nation's current inadequate development of domestic energy resources leaves us vulnerable to hostile foreign actors and poses an imminent and growing threat to the United States' prosperity and national security.” Section 2 instructs the heads of executive departments and agencies to identify and exercise any lawful emergency authorities available to them to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources. This proposed rule does not address any emergency actions related to facilitating the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.

Executive Order 14192 requires that for each new regulation issued, at least 10 prior regulations be identified for elimination. Section 3(c) requires that any incremental costs associated with new regulations shall be offset by the elimination of existing costs associated with at least 10 prior regulations. This action proposes to reduce existing regulatory burden to offshore oil and gas companies by $6.2 billion. Therefore, there are no incremental costs to be offset. Moreover, the proposal is not a “new regulation” but itself is the elimination of burdensome features of existing regulations.

This action by the Assistant Secretary for Land and Minerals Management is taken herein pursuant to an existing delegation of authority.

For the reasons stated in the preamble, BOEM proposes to amend 30 CFR chapter V as follows:

The revisions and additions read as follows:

In accordance with the Marine Mammal Protection Act of 1972 (MMPA; 16 U.S.C. 1371(a)(5)(A)) and its implementing regulations, we, the U.S. Fish and Wildlife Service (hereafter “FWS” or we), propose incidental take regulations (ITRs) that, if finalized, would facilitate the authorization of the incidental, unintentional take of small numbers of polar bears ( Ursus maritimus ) and Pacific walruses ( Odobenus rosmarus divergens ) during oil and gas exploration, development, production, and transportation activities in the Beaufort Sea (Alaska and the Outer Continental Shelf) and adjacent northern coast of Alaska, not including lands within the Arctic National Wildlife Refuge (ANWR). If finalized, this proposed rule would be effective for a 5-year period.

This proposed rule is based on our preliminary findings that the total takings of polar bears and Pacific walruses during specified activities will impact small numbers of animals, will have a negligible impact on the species or stocks, and will not have an unmitigable adverse impact on the availability of these species or stocks for subsistence use by Alaska Natives. We base our draft findings on data from monitoring the encounters and interactions between these species and the oil and gas industry; research on these species; oil spill risk assessments; potential and documented effects on these species from similar activities; information regarding the natural history and conservation status of polar bears and Pacific walruses; and data reported from Alaska Native subsistence hunters. In conjunction with this proposed rulemaking, the FWS has prepared a draft environmental assessment, which is also available for public review and comment.

These proposed regulations set forth permissible methods of taking; mitigation measures to ensure that Alaska Oil and Gas Association's (AOGA) activities will have the least practicable adverse impact on these species or stocks, their habitat, and the availability of these species for subsistence uses; and requirements for monitoring and reporting.

Section 101(a)(5)(A) of the MMPA gives the Secretary of the Interior (Secretary) the authority to allow the incidental, but not intentional, taking of small numbers of marine mammals, in response to requests by U.S. citizens (as defined in title 50 of the Code of Federal Regulations (CFR) in part 18 (at 50 CFR 18.27(c)) engaged in a specified activity, other than commercial fishing, within a specified geographic region. The Secretary has delegated authority for implementation of the MMPA to the FWS. According to the MMPA, the FWS shall allow this incidental taking for a period of up to 5 consecutive years if we find that the total of such taking:

(1) will affect only small numbers of individuals of the species or stock;

(2) will have no more than a negligible impact on the species or stock;

(3) will not have an unmitigable adverse impact on the availability of the species or stock for taking for subsistence use by Alaska Natives; and

(4) we issue regulations that set forth:

(a) permissible methods of taking,

(b) means of effecting the least practicable adverse impact on the species or stock and its habitat and the availability of the species or stock for subsistence uses, and

(c) requirements for monitoring and reporting of such taking.

If final regulations allowing such incidental take are issued, we may then subsequently issue letters of authorization (LOAs), upon request, to authorize incidental take during the specified activities.

The term “take” means to harass, hunt, capture, or kill, or attempt to harass, hunt, capture, or kill any marine mammal. Harassment for activities other than military readiness activities or scientific research conducted by or on behalf of the Federal Government means “any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild” (the MMPA defines this as “Level A harassment”), or “(ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering” (the MMPA defines this as “Level B harassment”).

The terms “negligible impact” and “unmitigable adverse impact” are defined in 50 CFR 18.27 ( i.e., regulations governing small takes of marine mammals incidental to specified activities) as follows: “Negligible impact” is an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival. “Unmitigable adverse impact” means an impact resulting from the specified activity: (1) that is likely to reduce the availability of the species to a level insufficient for a harvest to meet subsistence needs by (i) causing the marine mammals to abandon or avoid hunting areas, (ii) directly displacing subsistence users, or (iii) placing physical barriers between the marine mammals and the subsistence hunters; and (2) that cannot be sufficiently mitigated by other measures to increase the availability of marine mammals to allow subsistence needs to be met.

The term “small numbers” is also defined in 50 CFR 18.27. However, we do not rely on that definition here as it conflates “small numbers” with “negligible impact.” We recognize “small numbers” and “negligible impact” as two separate and distinct requirements for promulgating ITRs under the MMPA (see Natural Res. Def. Council, Inc. v. Evans, 232 F. Supp. 2d 1003, 1025 (N.D. Cal. 2002)). Instead, for our small numbers determination, we evaluate if the number of marine mammals estimated to be incidentally taken is small relative to the size of the species or stock.

The term “least practicable adverse impact” is not defined in the MMPA or its implementing regulations. In promulgating ITRs, we ensure the least practicable adverse impact by requiring mitigation measures that are effective in reducing the impact of specified activities, but not so restrictive as to make specified activities unduly burdensome or impossible to undertake and complete.

In this proposed rule, the term “Industry” includes individuals, companies, and organizations involved in exploration, development, production, and transportation activities of the petroleum industry. Industry activities may result in the incidental taking of Southern Beaufort Sea (SBS) polar bears and Pacific walruses (hereafter “walruses”). The MMPA does not require any party to obtain an incidental take authorization; however, any incidental taking that occurs without authorization is a violation of the MMPA. Since 1993, the oil and gas industry operating in the Beaufort Sea and the adjacent northern coast of Alaska has requested and we have issued ITRs for the incidental take of polar bears and walruses within a specified geographic region during specified activities. For a detailed history of our current and past Beaufort Sea ITRs, refer to the Federal Register at 90 FR 27398, June 26, 2025; 86 FR 42982, August 5, 2021; 81 FR 52276, August 5, 2016; 76 FR 47010, August 3, 2011; 71 FR 43926, August 2, 2006; and 68 FR 66744, November 28, 2003. The current ITRs are codified at 50 CFR part 18, subpart J (§§ 18.121 to 18.129).

On September 30, 2025, the FWS received a request from AOGA on behalf of its members and other participating companies to promulgate regulations for incidental take of small numbers of polar bears and walruses during oil and gas exploration, development, production, and transportation activities in the Beaufort Sea and adjacent northern coast of Alaska for a period of 5 years (2026-2031) (hereafter referred to as the “Request”). The FWS deemed AOGA's Request as adequate and complete on January 12, 2026.

The AOGA requests regulations that will be applicable to the oil and gas exploration, development, production, and transportation activities of multiple companies specified in the Request. This includes AOGA member and non-member companies that have applied for these regulations. The companies of AOGA represented in the Request (as modified via subsequent communication from AOGA concerning membership changes) include: Alyeska Pipeline Service Company; BlueCrest Energy, Inc.; Chevron Corporation; ConocoPhillips Alaska, Inc. (CPAI); ExxonMobil Alaska Production, Inc. (ExxonMobil); Finnex; Furie Operating Alaska, LLC; Glacier Oil and Gas Corporation (Glacier); Hilcorp Alaska, LLC and Hilcorp North Slope, LLC (Hilcorp); Marathon Petroleum Corporation; Petro Star, Inc.; Repsol; Santos; Shell Exploration and Production Company (Shell); APA Corporation; and 8 Star Alaska, LLC (a non-member company). If the proposed rule is finalized in its current form, these regulations would apply only to the member companies and the non-member company represented in the Request, their corporate affiliates, respective contractors, subcontractors, partners, owners, co-lessees, designees, or successors-in-interest that plan to conduct oil and gas operations in the specified geographic region.

AOGA also informed FWS that further membership changes may occur during the ITR period and requested that eligibility for incidental take authorization pursuant to the final ITR, if issued, be conditioned upon active AOGA membership. The FWS requests public comments on the degree of flexibility to be afforded by a final rule and, relatedly, the eligibility criteria to be applied during the LOA request and review process.

The activities within the scope of the Request are consistent with the nature of oil and gas activities that have occurred on the Alaska North Slope for decades. Those activities have occurred in parallel with monitoring and reporting that has provided a record of polar bear interactions in connection with such activities. AOGA has indicated that not all activities described in the Request will actually occur during the ITR period, noting the broad scope of activities in the Request was included to support a comprehensive analysis and account for variability.

These proposed regulations, if finalized, would facilitate the authorization of the incidental, unintentional take of small numbers of polar bears and walruses that may result from the specified activities. They would not authorize or “permit” the specified activities themselves. The proposed regulations include:

(1) permissible methods of taking;

(2) measures designed to ensure the least practicable adverse impact on polar bears and walruses, their habitat, and on the availability of these species or stocks for subsistence uses; and

(3) requirements for monitoring and reporting.

These proposed regulations, if finalized in their current form, would differ from prior iterations of the Beaufort Sea ITR in terms of the types of incidental take that would be allowed. Past iterations of the Beaufort ITR have been consistent in expressly prohibiting incidental lethal take but inconsistent in terms of allowable types of incidental harassment. See 76 FR 47010, August 3, 2011 (allowing all nonlethal incidental take); 81 FR 52276, August 5, 2016 (allowing incidental Level B harassment but not incidental Level A harassment); 86 FR 42982, August 5, 2021 (allowing incidental Level B harassment but not incidental Level A harassment); and 90 FR 27398, June 6, 2025 (allowing incidental Level B harassment and incidental Level A harassment). Some of these inconsistencies reflect differences in the types of incidental harassment that FWS anticipated to result from each set of specified activities. For instance, the FWS did not anticipate or authorize incidental Level A harassment in the original 2021-2026 regulations (86 FR 42982, August 5, 2021) but did anticipate and thus allowed Level A harassment in the revised 2021-2026 regulations (90 FR 27398, June 6, 2025). However, Level A harassment was not anticipated but was nevertheless allowed (at least implicitly) in the 2006-2011 regulations (71 FR 43926, August 2, 2006).

The FWS is now considering whether the best reading of the MMPA's provisions concerning ITRs requires the FWS to allow (1) all types of incidental take that result from the specified activities; (2) only the types of incidental take that FWS anticipated during the rulemaking process; or (3) only the types of incidental take that were requested to be allowed. While this proposed rule reflects the first of these interpretations, FWS requests public comment on this issue and notes that a final rule may adopt a different approach responsive to public comment.

An LOA is required to conduct activities pursuant to ITRs. Under this proposed ITR, if finalized, eligible parties may request LOAs that would authorize incidental take of polar bears and walruses resulting from the specified activities described in the ITR. Eligible parties are the member and non-member companies specified in AOGA's Request, and their corporate affiliates, respective contractors, subcontractors, partners, owners, co-lessees, designees, or successors-in-interest. Requests for LOAs must be consistent with the activity descriptions and mitigation and monitoring requirements of the ITR and be received in writing at least 90 days before the activity is to begin. Requests must include (1) an operational plan for the activity, including the timing of work and the nature of work to be conducted; (2) an interaction plan for polar bears and walruses; (3) a site-specific marine mammal monitoring and mitigation plan that specifies the procedures to monitor and mitigate the effects of the activities on polar bears and walruses, including frequency and dates of aerial infrared (AIR) surveys when such surveys are required; and (4) plans of cooperation (if required as described in Mitigation Measures, below). Once this information has been received, we will evaluate whether the level of activity identified in the request exceeds that analyzed by us in considering the findings made for the total taking allowable under the ITRs. If the level of activity exceeds that analyzed, the Service may request additional information. For more information on requesting and receiving an LOA, refer to 50 CFR 18.27(f).

The specified geographic region covered by the requested ITR (Beaufort Sea ITR region, see figure 1, below) encompasses all Beaufort Sea waters (including State waters and Outer Continental Shelf waters as defined by the Bureau of Ocean Energy Management) east of a north-south line extending from Point Barrow (latitude 71.39139° N, longitude 156.475° W; Board on Geographic Names (BGN)1944) to the Canadian border, except for marine waters located within the ANWR. The offshore boundary extends 80.5 kilometers (km) (50 miles (mi)) offshore. The onshore boundary includes land on the North Slope of Alaska from Point Barrow to the western boundary of ANWR. The onshore boundary is 40 km (25 mi) inland. No lands or waters within the exterior boundaries of ANWR are included in the Beaufort Sea ITR region. The geographical extent of the proposed Beaufort Sea ITR region (approximately 7.9 million hectares (ha) (approximately 19.8 million acres (ac))) is the same region covered in previous regulations set forth in the final rule that published at 86 FR 42982, August 5, 2021; revised 90 FR 27398, June 26, 2025. The specified geographic region includes but is not limited to the following oil and gas development areas on the North Slope of Alaska: Nikaitchuq, Oooguruk, Badami, Northstar, Endicott (Duck Island), Liberty, Milne Point, Point Thomson, Prudhoe Bay, Pikka, Quokka, Southern Miluveach, Kuparuk River, Greater Mooses Tooth, Colville River, Horseshoe, and Bear Tooth.

The specified activities include oil and gas exploration, development, production, and transportation activities within the specified geographic region. This section summarizes the type and scale of Industry activities anticipated to occur in the Beaufort Sea ITR region from 2026 to 2031. Year-round onshore and offshore Industry activities are anticipated. During the 5-year ITR period, Industry activities are expected to be generally similar in type, timing, and effect to activities evaluated under the prior ITRs. Additional information is available in the AOGA Request for an ITR at https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694.

Transportation activities will include aircraft operations; vehicle and equipment operations on gravel roads, gravel pads, ice roads, and ice pads; vehicle operations on tundra; and vessel transit and barging operations.

Aircraft operations will consist of personnel and cargo transport flights to support operations, aerial pipeline inspections, and environmental monitoring surveys. Personnel and cargo flights will be conducted routinely throughout the Beaufort Sea ITR region to support operations, and the frequency of these flights may vary depending on the location and type of operation. Fixed-wing aircraft will generally be used to transport personnel and cargo across development areas. Helicopters will be used to transport personnel and cargo to coastal or offshore facilities and to access remote areas. Flight altitude for personnel and cargo transport flights will generally be above 305 meters (m) (1,000 feet (ft)) above ground level unless inclement weather requires a lower flight altitude for personnel safety. Aerial pipeline inspections will be conducted frequently year-round using helicopters or unmanned aerial vehicles (UAVs). Environmental monitoring surveys will be conducted using helicopters, UAVs, or fixed-wing aircraft depending on the type of survey and the frequency of these environmental monitoring surveys will vary across location and time of year during the ITR period.

Vehicle and equipment operations will occur on the existing gravel road system and gravel pads within the ITR region to support operations. Expansion of existing gravel roads and gravel pads as well as construction of new gravel roads and gravel pads will be conducted to support operations as needed throughout the ITR period. Gravel roads and pads typically will be constructed or expanded during the winter, although new gravel placement on the tundra may occur during any season. Equipment that will be used to construct or expand gravel roads and pads includes all-terrain vehicles (ATVs), graders, loaders, excavators, rollers, dump trucks, tractors, bulldozers, vehicles, and other heavy equipment. Gravel road and pad maintenance will occur as needed to support transportation and operations throughout the ITR period. Gravel will be obtained from existing gravel mine sites and new gravel mine sites that may be developed within the ITR region.

During the winter, ice roads and ice pads will be constructed both onshore and offshore to support vehicle and equipment transportation and operations. The number, size, and personnel occupancy of ice roads and pads will vary each winter depending on the operations. Some ice roads will be constructed annually in the same location and other ice roads will be constructed in different locations based on operation requirements that vary during the ITR period. Offshore ice roads, trails, and pads will be constructed on floating sea ice or grounded ice in shallow water (less than 2 m (7 ft)). Offshore ice roads, trails, and pads may be constructed as early as December and be used until May during each winter. Equipment that will be used to construct ice roads, trails, and pads includes tracked vehicles, tractors, snowplows, pump trucks, ATVs, graders, and loaders.

Vehicle operations will occur on the tundra to support surveys, scout transportation routes, conduct environmental monitoring studies, and support infrastructure inspections and maintenance activities. Tundra travel will occur year-round throughout the ITR period. Equipment that will be used for tundra travel includes tracked vehicles, ATVs, snowmachines, Tucker Sno-Cat vehicles, and Rolligons.

Vessel transit and barging operations will support transportation of personnel, equipment, and supplies for operations. There are several marine dock facilities that will be used to support vessel transit and barging operations in the ITR region including West Dock, Oliktok Dock, and other private dock facilities in development areas. West Dock is located on the northwestern shore of Prudhoe Bay east of Point McIntyre. Oliktok Dock is located on the eastern side of West Harrison Bay at Oliktok Point. Maintenance dredging or screeding will be conducted as needed at the marine dock facilities. Majority of the vessel transit and barging operations will occur during the open water season (July through October). Vessels of various sizes will be used to support transportation activities and may include crew boats, hovercrafts, zodiac vessels, and catamarans. Hovercrafts will also be used to transport personnel and cargo during both the ice-covered season and open water season. Barges, sealifts, and tugboats will be used to transport facility modules, construction materials, cargo, fuel, and other heavy equipment during the open water season. Sealifts are anticipated to occur over multiple years of the ITR period to transport facility modules to Oliktok Dock or West Dock, and offloading of sealifts may occur in and around offshore, subtidal, or intertidal areas of the Beaufort Sea. Barge lightering may be used to transfer cargo between vessels to allow vessels to enter shallow water. Barges may be transferred to shallow draft tugs for nearshore transportation. During offloading, barges may be staged offshore if dock space is limited.

A variety of surveys and studies will be conducted such as geophysical surveys, airborne gravity/magnetic surveys, geotechnical surveys, seismic exploration surveys, vibroseis seismic surveys, vertical seismic profiles (VSPs), seafloor imaging, offshore bathymetry surveys, shallow hazard surveys, open water marine vibroseis surveys, environmental monitoring studies, and aerial infrared (AIR) surveys to detect polar bear dens. These surveys and studies may occur with routine frequency or be conducted as needed for specific projects. The specific locations and numbers of surveys and studies will vary depending on location-specific and operation-specific needs throughout the ITR period.

Geophysical surveys will be conducted to collect information about subsurface geology. Geophysical survey personnel will survey the surface of the land or seafloor to collect information on near-surface hazards that can be avoided during drilling operations or map deep strata beneath the surface of the ground to search for gas and oil-bearing rock formations. Geophysical surveys will occur routinely at existing development areas.

Airborne gravity and airborne magnetic surveys will record passive measurements of the Earth's gravitational and magnetic fields to collect information on potential geologic structures that may contain oil and gas. Surveys conducted onshore will use rotary-wing aircraft and surveys conducted offshore will use fixed-wing aircraft. Survey flight altitudes for rotary-wing aircraft will range from 91.5 m (300 ft) to 152.4 m (500 ft)above ground level. Survey flight altitude for fixed-wing aircraft will be a minimum of 152.4 m (500 ft) above sea level.

Geotechnical surveys will consist of collecting shallow core samples to provide information about soil conditions where onshore and offshore roads, pipelines, structures, or other facilities are planned to be constructed or to locate gravel sources. Geotechnical surveys will often occur simultaneously with other operations such as ice or gravel road construction or seismic exploration surveys. Geotechnical survey personnel will generally use winter tundra travel routes to access their survey areas and use a geotechnical drill unit to collect the core samples. A small mobile camp to support the survey personnel and other machinery will often be used during these geotechnical surveys. Geotechnical surveys will occur routinely at existing development areas.

Seismic exploration surveys will collect information on the subsurface structure of rock formations. Sound energy waves will be sent into the ground using an energy source such as an airgun or vibroseis, where different layers within the Earth's crust reflect this energy. These reflected energy waves will be recorded by geophones in the ground to identify hydrocarbon-containing structures. Vibroseis seismic operations will use truck-mounted vibrators that emit frequency energy into the ground, and these operations may occur both onshore and on sea ice. Vibroseis seismic operations may consist of 40 to 200 personnel, small and heavy equipment, and a mobile sled-mounted camp to support personnel. Vibroseis seismic operations may occur during the winter from January through May.

VSP surveys will consist of lowering geophones into a well bore on land and repeatedly activating the energy source to gather seismic data from the well. These surveys will be conducted both on and off a drill pad, extending up to 5 km (3 mi) from the drilling rig, and up to eight personnel will conduct these surveys.

Seafloor imagery surveys will collect information about the seafloor by emitting sound energy towards the seafloor and interpreting the reflected sound energy to create a two-dimensional image of the seafloor and any features or objects on it. Equipment that will be used during these seafloor imagery surveys includes side-scan sonar that is towed behind a vessel. Side-scan sonar will generally emit high-frequency sound greater than 200 kilohertz (kHz).

Offshore bathymetry studies will collect information about the water depth, seafloor contours, hazards, and other environmental conditions. Equipment that will be used during these bathymetry surveys includes echosounders, such as a single-beam or multi-beam sonar device, that is mounted on the vessel's hull or on a side-mounted pole. Single-beam sonar devices emit a high-frequency single pulse of sound to record water depth, and these devices may operate at a frequency of either 100 kHz or 200 kHz. Multi-beam sonar devices will be composed of a transducer array that emits a swath of sound, motion sensor on the vessel, gyrocompass on the vessel, and a sound velocity probe in order to create a three-dimensional view of the seafloor. Multi-beam sonar devices may generally operate at a frequency of 240 kHz.

Shallow hazard surveys will collect information about the seafloor and immediate subsurface. Equipment that will be used during these shallow hazard surveys includes a high-frequency sub-bottom profiler, intermediate-frequency profiler, and a multi-channel system, which is an array of hydrophones towed by a vessel to receive reflected sound energy emitted by the sparker. Different types of sub-bottom profilers may be used depending on the type of seafloor imagery required for the shallow hazard surveys and the general frequency of this equipment may range from 0.3 to 20 kHz.

Open water marine vibroseis may be conducted as a potential alternative to using traditional airguns for offshore oil and gas surveys. Equipment that will be used during these marine vibroseis surveys includes a vibrating plate or shell to displace water to produce acoustic signals.

Environmental monitoring studies to support oil and gas activities will include but are not limited to those that examine geomorphology (soils, ice content, permafrost); archaeology and cultural resources; vegetation mapping; analysis of fish, bird, and mammal species and their habitat; acoustic monitoring; hydrology; and other freshwater, marine, and terrestrial studies of the Arctic coastal and offshore regions. Environmental monitoring studies may be conducted by individual operators or in cooperation with other entities such as government agencies, academic institutions, or local communities. These environmental monitoring studies will often be conducted in response to regulatory requirements and may occur across multiple years. Equipment that will be used during environmental monitoring studies may include vehicles, vessels, snow machines or tuckers, helicopters, or fixed-wing aircraft depending on the type of study. Flight altitudes for fixed-wing aircraft may range from 30 m (98 ft) to 450 m (1,476 ft) depending on the type of study. Environmental monitoring surveys will be conducted to fulfill regulatory and permit requirements and support natural resource exploration and development in the ITR region throughout the ITR period.

AIR surveys will be conducted to detect maternal polar bear dens near Industry each winter. Infrared cameras mounted on a fixed-wing aircraft will be used to detect body heat from denning female polar bears that permeates through the snow.

Drilling, production, and maintenance of operating wells for oil and gas exploration, development, and production at existing facilities will occur throughout the ITR period. Industry also plans to drill new exploration, appraisal, and production wells within the ITR region depending on resources and other factors. The number and location of these well drilling and maintenance activities will vary throughout the ITR period, but the level of these activities is anticipated to be similar to previous years. New wells may require construction of new gravel pads or new gravel roads or ice roads to access well locations. New wells may also require installation of stream crossings, vertical support members (VSMs), pipelines, power cables, and fiber optic cables to support well drilling and production activities. Temporary camps may be established to accommodate personnel during well drilling and production activities as needed. Equipment that will be used to support well drilling, production, and maintenance activities includes drill rigs, pumps, processing facilities, and support infrastructure. Industry plans to conduct plugging and abandonment of wells that are currently suspended or will be suspended during the ITR period. The number of wells that may be plugged and abandoned will vary each year throughout the ITR period but the level of these activities is anticipated to be similar to previous years. These activities may be supported by aircraft or vehicles using the existing road network depending on the location of the well that will be plugged and abandoned.

Artificial and natural islands along the Beaufort Sea coastline may serve as well drilling platforms for offshore production. Artificial islands may be constructed at various times of the year using a combination of gravel, boulders, artificial structures, or ice. Vibratory and impact pile driving will be conducted to install conductor pipes, foundation pipes, and sheet piles to support development of the islands for production. Monitoring and maintenance of the islands used for production will be conducted as needed throughout the ITR period. Monitoring inspections may use sonar and divers, and these inspections may occur multiple times throughout each year of the ITR period depending on weather and wave conditions.

Maintenance of existing terrestrial pipelines (buried and above ground) and subsea pipelines to transport oil and gas products will occur throughout the ITR period. Pipeline inspections and maintenance activities will be conducted by tundra travel vehicles throughout the year. Industry will replace and extend existing pipelines and associated infrastructure as needed to maintain the integrity of the pipeline system throughout the ITR region. New pipelines may be installed within the ITR region to transport oil and gas products from existing wells or new wells. Pipeline installation will generally occur during winter and ice roads will be constructed to support pipeline installation. VSMs will be installed using vibratory and impact pile driving or drilling to support pipelines above ground.

Support facilities and infrastructure include the Deadhorse Airport, Dalton Highway, and Spine Road to transport personnel, equipment, and supplies across the North Slope of Alaska. Permanent camps will be used to house personnel at operation centers, processing facilities, drill sites, and other similar facilities. Temporary camps may be installed for specific projects or travel with personnel to complete projects as needed. Other support functions will include waste management, emergency response training for personnel, in-water dredging and screeding to remove or deposit sediment materials and smooth the seafloor for in-water operations, and pile driving to construct docks and land structures.

Waste management protocols will be implemented in an effort to prevent interactions with wildlife. Solid waste from camps will be disposed of at the Oxbow Landfill in the Prudhoe Bay Development or other permitted facilities. Food and burnable wastes will often be incinerated. Food waste will be carefully managed to avoid attracting wildlife such as placing food waste in wildlife-proof receptacles. Drilling and production wastes will be injected into underground injection control disposal wells where it will be inaccessible to wildlife and will not have the potential to contact any sources of groundwater or surface soils. Hazardous waste will be kept inside closed containers and disposed of in accordance with applicable regulations.

Emergency and oil spill response training activities for personnel will occur at various times throughout the year during the ITR period. Oil spill equipment deployment exercises conducted during the ice-covered period will use snowmachines, ATVs, portable generators, skid steer loaders, snow blowers, and various types of equipment to cut ice slots or drill holes through floating sea ice. Other equipment and supplies that will be used during emergency response training activities include vessels, trucks, booms, and sorbents. The location and frequency of emergency and oil spill response training activities will vary depending on the sea ice or winter tundra conditions and training requirements.

In-water dredging and screeding will be conducted to remove and deposit seafloor sediment and smooth the seafloor to support in-water operations. These activities will be conducted during the open water season of each year at various dock locations including but not limited to Oliktok Dock and West Dock. Dredging may also be conducted during the winter depending on conditions. Equipment that will be used for dredging includes a barge-mounted suction dredge, excavator, or a crane with a dredging bucket on a barge platform. Equipment that will be used for screeding includes a device such as a plow or rake-like structure that is attached to a barge or backhoe.

Pile driving or drilling activities will be conducted to support construction or repair of docks, bridges, and offshore or riverine structures as needed throughout the ITR period. Pile driving activities may include vibratory pile driving, impact pile driving, drilling, and down-the-hole drilling, and the pile driving methods, depending on the project requirements.

Industry anticipates that the oil and gas exploration and development activities described above will continue at levels similar to previous years during the ITR period throughout the ITR region. There are also several new projects anticipated for the ITR period in addition to the routine oil and gas operations described above. Those projects are described in AOGA's Request and are not a comprehensive or exhaustive list of future projects that will occur during the ITR period. The scope of future projects and their associated schedules may change, and some listed projects may not occur at all. All projects that do occur, and for which LOAs are requested under the proposed ITR, will fall within the class of oil and gas exploration, production, development, and transportation activities described in AOGA's Request (and appendices) and summarized above.

The applicant has proposed a decision framework and a number of mitigation measures in section 9 of their Request in order to minimize the effects of proposed activities on polar bears and walruses and effect the least practicable adverse impacts on those stocks. AOGA's proposed measures include mitigation for general avoidance and minimization that apply to a variety of their planned activities as well as measures specific to aircraft and vessels; they have also included in their Request plans for conducting maternal polar bear den surveys and methods for minimizing the impacts of their activities on the subsistence harvest of polar bears and walruses.

The general avoidance and minimization measures proposed in AOGA's Request include maintaining a current polar bear and walrus interaction plan in coordination with the FWS that details their protocols for food and waste management, training, snow removal, polar bear and walrus avoidance and encounters, and polar bear and walrus reporting procedures. The applicant also intends to design facilities and plan projects in such a way that polar bears' access to attractants is reduced. Further, they will designate personnel for specific activities to observe and record sightings of polar bears and walruses. Finally, they highlight how they will avoid operating equipment in potential den locations.

Proposed mitigation measures for aircraft use include not flying below an altitude of 457 m (1,500 ft) or within 805 m (0.5 mi) of polar bears or walruses observed on ice or land except in emergency situations. Helicopters will not be allowed to hover or circle over polar bears or walruses. Additionally, the applicant has proposed that if weather conditions prevent flying at an altitude of 457 m (1,500 ft) or higher, that the pilot will avoid areas of known polar bear and walrus concentration.

The proposed measures for vessel use include having observers to monitor for polar bears and walruses during marine operations and maintaining the maximum distance possible from concentrations of polar bears or walruses, as well as not approaching within an 805-m (0.5-mi) radius of any polar bears or walruses observed on land or sea ice except in the case of an emergency. Furthermore, vessels will not separate groups of two or more walruses and will reduce speed and maintain a minimum 805-m (0.5-mi) exclusion zone around groups of 12 or more walruses in the water or polar bears on ice. Vessels that are over 15 m (50 ft) long will maintain a distance of 805 m (0.5 mi) from any walrus haulout. When visibility is reduced, vessels will adjust speed accordingly to avoid the likelihood of injury to walruses.

AOGA plans to survey for maternal polar bear dens via AIR during the early polar bear denning season, in November through January. AOGA LOA holders will conduct one AIR survey of all denning habitat within 1.6 km (1 mi) of winter activity. This survey would occur in November or December. LOA holders will also conduct a second survey of denning habitat within 1.6 km (1 mi) of winter activities in the high and moderate denning density zones established by FWS (for more information about the creation of denning density zones and a map, a summary of this information is available in Supplemental Information on https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694.The second survey would occur in December or January. Additionally, surveyed locations that yield heat signatures that indicate the possible presence of a maternal polar bear den will be re-surveyed. Protocols for conducting the maternal polar bear den surveys are documented in section 9.2 of the Request. If AIR surveys yield any putative polar bear dens within 1.6 km (1 mi) of planned activities, AOGA will consult with the FWS and if necessary, will treat the site as an active den and create an exclusion zone or buffer around the suspected den site such that it will not be disturbed by any project activities for the remainder of the denning season (November to April). The applicant has also proposed follow-up surveys via AIR, handheld or vehicle-mounted infrared cameras or binoculars, or the use of unmanned aerial system (UAS) to confirm den presence or identify when the den is no longer in use. Known active den sites will be monitored by personnel in trucks or off-road vehicles, or by remote cameras that can record or stream data. This monitoring of bears' activity can assist with avoiding disturbance, especially during the den emergence period when polar bear sows and cubs make repeated short trips outside before returning to the den. Monitoring will be conducted from an appropriate distance established in consultation with the FWS to avoid disturbance from the monitoring activities. Finally, personnel working during the den emergence period will be trained to look for signs of polar bear dens in their work areas and dedicated personnel may be assigned to monitor work areas for polar bears to protect workers and allow polar bears to pass through undisturbed.

Trained and qualified personnel will monitor for, record, and report polar bear and walrus sightings, and initiate mitigation measures (Request, sections 9 and 10). LOA holders will report the efficacy of mitigation measures and any observed effects of industry activities on these species. Monitoring personnel will complete a training program approved by FWS. Details of the monitoring procedures will be provided in a FWS-approved, site- and project-specific marine mammal monitoring and mitigation plan.

To help ensure that incidental taking of polar bears and walruses does not have an unmitigable adverse impact on the availability of the species for Alaska Native subsistence hunting opportunities, the Request states all LOA applicants will provide the FWS documentation of communication and coordination with Alaska Native communities potentially affected by the specified activity and, as appropriate, with representative subsistence hunting and co-management organizations. If Alaska Native communities or representative subsistence hunting organizations express concerns about the potential impacts of specified activities on subsistence activities, and such concerns are not resolved during this initial communication and coordination process, then a plan of cooperation (POC) must be developed and submitted with the applicant's request for an LOA. In developing the POC, the LOA applicant will further engage with Alaska Native communities and/or representative subsistence hunting organizations to provide information and respond to questions and concerns. The POC must provide adequate measures to ensure that specified activities will not have an unmitigable adverse impact on the availability of polar bears and walruses for Alaska Native subsistence uses.

Should community outreach result in concerns about adverse impacts to subsistence harvest from the planned activities, the Request states that LOA holders will develop a POC to address those concerns and prevent interference with the subsistence harvest. Regardless of the need for a POC, the applicant will limit the timing of activities (including aircraft- and vessel-based activities) and avoid known locations of importance for the subsistence harvest of polar bears and walruses.

Polar bears and walruses are the marine mammal species managed by the FWS likely found within the specified geographic region. Information on the range, stocks, biology, and climate change impacts on polar bears and walruses was considered in the development of these proposed ITRs. A summary of this information is available in supplemental information on https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694.

Disturbance impacts on polar bears will be influenced by the type, duration, intensity, timing, and location of the source of disturbance. The noises, sights, and smells produced by these activities could elicit variable responses from polar bears, ranging from avoidance to attraction. When disturbed by noise, animals may respond behaviorally by walking, running, or swimming away from a noise source, or physiologically via increased heart rates or hormonal stress responses (Harms et al. 1997; Tempel and Gutierrez 2003). However, individual response to noise disturbance can be based on previous interactions, sex, age, and maternal status (Anderson and Aars 2008; Dyck and Baydack 2004). Noise and odors could also potentially attract polar bears to work areas. Attracting polar bears to these locations could result in human-polar bear interactions, incidental harassment, and/or intentional take (which is not authorized via ITRs) by hazing or defense of human life. The Request includes mitigation measures to manage attractants in work areas and reduce the risk of human-polar bear interactions.

From mid-July to mid-November, SBS polar bears can be found in large numbers and high densities on barrier islands, along the coastline, and in the nearshore waters of the Beaufort Sea, particularly on and around Barter and Cross Islands (Wilson et al. 2017). This distribution leads to a significantly higher number of human-polar bear interactions on land and at offshore structures during the open-water season than other times of the year. Polar bears that remain on the multi-year pack ice are not typically present in the ice-free areas where vessel traffic occurs, as barges and vessels associated with Industry activities travel in open water and avoid large ice floes.

On land, most polar bear observations occur within 2 km (1.2 mi) of the coastline based on polar bear monitoring reports. Facilities within the offshore and coastal areas are more likely to be approached by polar bears, and they may act as physical barriers to polar bear movements. As polar bears encounter these facilities, the chances for human-polar bear interactions increase. However, polar bears have frequently been observed crossing existing roads and causeways, and they appear to traverse the human-developed areas as easily as the undeveloped areas based on monitoring reports.

A larger percentage of SBS polar bears are spending more time on land during the open-water season, which may increase the risk for human-polar bear interactions (Atwood et al. 2016; Kelner et al. 2022; Rode et al. 2022). It is likely that human-polar bear interactions will occur at some point during the specified activities. Per the Request, operators would maintain human-polar bear interaction plans and attractant management plans, design facilities and plan projects to reduce the possibility of polar bears reaching attractants and humans, and monitor for polar bears. These plans and requirements are designed to reduce human-polar bear interactions and minimize the risks to polar bears and humans when interactions occur. Interaction plans detail how to respond to the presence of polar bears, the chain of command and communication, and required training for personnel. Attractant ( e.g., human food, garbage) management plans can prevent polar bears from associating humans with food, which mitigates the risk of human-polar bear interactions (Atwood and Wilder 2021). Information gained from monitoring polar bears near industrial infrastructure can be useful for better understanding polar bear distribution, behavior, and interactions with humans. Tools that may be used to facilitate detection and monitoring of polar bears include bear monitors, thermal cameras, and remotely operated cameras.

The Federal Aviation Administration tests aircraft-produced sound at all frequencies measured (50 Hz to 10 kHz) (Healy 1974). At frequencies centered at 5 kHz, jets flying at 300 m (984 ft) produced 1/3 octave band noise levels of 84 to 124 decibels (dB), propeller-driven aircraft produced 75 to 90 dB, and helicopters produced 60 to 70 dB (Richardson et al. 1995). Thus, the frequency and level of airborne sounds typically produced by aircraft are unlikely to cause either temporary or permanent impairment to polar bear hearing unless polar bears are very close to the sound source (Southall et al. 2019).

Although neither temporary nor permanent hearing impairment is anticipated during the specified activities, impacts from aircraft overflights have the potential to elicit biologically significant behavioral responses from polar bears. Exposure to aircraft overflights is expected to result in short-term behavior changes, such as walking, running, or ceasing to rest and, therefore, has the potential to be energetically costly. Quigley et al. (2022 and 2024) conducted intentional aircraft overflights above polar bears to determine their responses to overflights. Researchers approached polar bears repeatedly at decreasing altitudes with an average flight altitude of 143 m (469 ft). Polar bears exhibited biologically meaningful behavioral responses during 66.6 percent of experimental overflights. These behavioral responses were significantly correlated with the aircraft's altitude, the bear's location ( e.g., coastline, barrier island), and the bear's activity at the time of the encounter. In a separate study, polar bears associated with dens were exposed to aircraft flying at altitudes of 150 m (492 ft) or less and exhibited various responses that ranged from increased head movement and observation of the disturbance to the initiation of rapid movement and/or den abandonment (Larson et al. 2020). Aircraft activities can impact polar bears across all seasons; however, aircraft have a greater potential to disturb both individuals and groups of polar bears on land during the summer and fall. These onshore polar bears are primarily fasting or seeking alternative terrestrial foods (Cherry et al. 2009; Griffen et al. 2022), and polar bear responses to aircraft overflights may result in metabolic costs to limited energy reserves. To reduce potential disturbance of polar bears during aircraft activities, the Request incorporates mitigation measures, such as minimum flight altitudes over polar bears and their frequently used areas and flight restrictions around known polar bear aggregations, to be conducted when safe to perform these operations during aircraft activities.

While polar bears swim in and hunt from open water, they spend less time in the water than most marine mammals. Stirling (1974) reported that polar bears observed near Devon Island during late July and early August spent 4.1 percent of their time swimming and an additional 0.7 percent engaged in aquatic stalking of prey. More recently, Lone et al. (2018) found 75 percent of polar bears swam daily during open-water months, with animals spending 9.4 percent of their time in July in the water. While polar bears typically swim with their ears above water, there are occasions when a polar bear may dive and therefore have its ears below the surface.

Polar bear behavior is expected to be impacted by the presence of humans and equipment in the water. In 2012, during the open-water season, Shell USA, Inc (Shell) vessels encountered a few polar bears swimming in ice-free water more than 112.6 km (70 mi) offshore in the Chukchi Sea. In those instances, the bears were observed to either swim away from or approach the Shell vessels, sometimes swimming around a stationary vessel before leaving. In at least one encounter, a polar bear approached, touched, and investigated a stationary vessel from the water before swimming away. We anticipate that polar bears that encounter vessels during the specified activities may have an evasive or curious response, similar to these reports.

Some of the specified activities may introduce noise into the marine environment at sound levels capable of causing a behavioral change or temporary or permanent damage to polar bear hearing. However, the majority of the sound-producing instruments that will be used do not produce in-water sound above the threshold designated for Level B harassment or they do not produce sound within the hearing range of polar bears (for a discussion of this threshold and polar bear hearing see supplemental information on https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694. Echosounders and side-scan sonar are typically operated at a frequency at or above 200 kilohertz (kHz), which is outside the hearing range for polar bears (Southall et al. 2019). Other equipment types, such as sub-bottom profilers and sparkers may produce sounds within the hearing range of polar bears (2 kHz to 16 kHz and 300 hertz (Hz) to 1.5 kHz, respectively), and at an estimated sound source level above the Level B harassment threshold (202 decibels referenced to a pressure of 1 microPascal (dB re 1µPa)); however, their sound production is typically highly directional and focused within a narrow beam. While exposure to other underwater sounds such as those created by such as screeding, dredging, pile driving, or anchor handling and thrusting may cause changes in behavior, temporary or permanent changes in hearing sensitivity, or discomfort, polar bears are not expected to be frequently exposed because they do not typically swim with their heads under water unless diving (Lone et al. 2018).

Known or suspected polar bear dens around the oilfield, discovered opportunistically and/or during planned surveys for tracking marked polar bears and detecting polar bear dens, are monitored by the FWS. However, these sites are only a small percentage of the total active polar bear dens for the SBS stock in any given year. Each year LOA and incidental harassment authorization (IHA) holders coordinate with the FWS to conduct surveys to attempt to determine the location of known or suspected polar bear dens and denning habitat within 1 mile of human activity. Per typical LOA requirements, if a known or suspected den site is located, LOA holders immediately consult with the FWS to determine if additional surveys or mitigation measures are required. The exact prescription of mitigation measures may vary based on the specifics of an individual den site but in the past, after locating a known or suspected den site, FWS has worked with operators to implement various mitigation measures such as activity exclusion zones and 24-hour monitoring of the den site. In their Request, AOGA has committed to “maintain a minimum avoidance distance of 805 m from all polar bears at a den site when operating vehicles, vessels, and aircraft, except in the event of an emergency or a den-specific plan when safe and practicable to do so.” The responses of denning polar bears to disturbance and the consequences of these responses can vary throughout the denning process, which entails four stages: den establishment, early denning, late denning, and post-emergence; definitions and descriptions are provided by Woodruff et al. (2022a) and are also located in the 2021-2026 Beaufort Sea ITR (86 FR 42982, August 5, 2021; revised 90 FR 27398, June 26, 2025). The probability that denning polar bears will be disturbed by nearby industry activities and the polar bears' resulting responses to disturbance (den abandonment, early emergence from the den, or early departure from the den site) varies by denning stage (A summary of this information is available in supplemental information on https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694.

Walruses do not inhabit the Beaufort Sea frequently. The likelihood of encountering walruses during Industry operations is low and limited to the open-water season. During the time period of this ITR, Industry operations may occasionally encounter small groups of walruses swimming in open water or hauled out onto ice floes or along the coast. Industry monitoring data have reported 49 walruses between 1995 and 2023, with only a few instances of disturbance to those walruses (AES Alaska 2015; FWS unpublished data). If walruses are encountered during the specified activities, the interaction could potentially result in disturbance.

Anecdotal observations by walrus hunters and researchers suggest that males tend to be more tolerant of disturbances than females, and individuals tend to be more tolerant than groups. Females with dependent calves are considered least tolerant of disturbances. In the Chukchi Sea, disturbance events are known to cause walrus groups to abandon land or ice haulouts and occasionally result in trampling injuries or cow-calf separations, both of which are potentially fatal. Calves and young animals at terrestrial haulouts are particularly vulnerable to trampling injuries. However, due to the lack of previous walrus haulouts in the ITR area, the most likely potential impacts of the specified activities include displacement from preferred foraging areas, increased stress, energy expenditure, interference with feeding, and masking of communications. Any impact of human presence on walruses is likely to be limited to a few individuals due to their geographic range and seasonal distribution.

The reaction of walruses to vessel traffic is dependent upon vessel type, distance, speed, and previous exposure to disturbances. Walruses in the water appear to be less readily disturbed by vessels than walruses hauled out on land or ice. Furthermore, barges and vessels associated with Industry activities travel in open water and avoid large ice floes or land where walruses are likely to be found. In addition, walruses can use a vessel as a haulout platform. In 2009, during Industry activities in the Chukchi Sea, an adult walrus was observed hauled out on the stern of a vessel.

Aircraft overflights may disturb walruses. Reactions to aircraft vary with range, aircraft type, and flight pattern, as well as walrus age, sex, and group size. Adult females, calves, and immature walruses tend to be more sensitive to aircraft disturbance. Walruses are particularly sensitive to changes in engine noise and are more likely to stampede when planes turn or fly low overhead. Researchers conducting aerial surveys for walruses in sea ice habitats have observed little reaction to fixed-winged aircraft above 457 m (1,500 ft) (FWS unpublished data). Although the intensity of the reaction to noise is variable, walruses are probably most susceptible to disturbance by fast-moving and low-flying aircraft (100 m (328 ft) above ground level) or aircraft that change or alter speed or direction. In the Chukchi Sea, there are recent examples of walruses being disturbed by aircraft flying in the vicinity of haulouts. It appears that walruses are more sensitive to disturbance when hauled out on land versus sea ice.

Walruses hear sounds both in air and in water. They have been shown to hear from 60 Hz to 23 kHz in air (Reichmuth et al. 2020). Tests of underwater hearing have shown their range to be between 1 kHz and 12 kHz with greatest sensitivity at 12 kHz (Kastelein et al. 2002). The underwater hearing abilities of the walrus have not been studied sufficiently to develop species-specific criteria for preventing harmful exposure. However, sound level thresholds have been developed for members of the “other marine carnivore” group of marine mammals. For a discussion of these thresholds information is available in Supplemental Information on https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694.). As we discussed in Effects of In-Water Activities on Polar Bears, the majority of the sound-producing instruments that will be used during the specified activities will not produce in-water sound above the threshold designated for Level B harassment or they do not produce sound within the hearing range of walruses.

If walruses are present within an ensonified area that reaches Level B harassment thresholds, noise may prevent ordinary communication between individuals and prevent them from locating one another. The noise may also prevent walruses from using potential habitats in the Beaufort Sea and may have the potential to alter the frequency or duration of biologically significant behaviors such as feeding, foraging, or nursing. The most likely response of walruses to acoustic disturbances in open water would be for animals to move away from the source of the disturbance. Displacement from a preferred feeding area may reduce foraging success, increase stress levels, and increase energy expenditures.

Information on the potential impacts of the specified activities on polar bear and walrus prey species can be found in the Supplemental Information. Based on this information, the FWS does not anticipate any substantial impacts of prey availability to polar bears or walrus as a result of AOGA's specified activities.

The FWS reviewed the potential impacts of oil spills on the SBS stock of polar bears and walruses, as well as records of oil spills in the specified geographic region and evaluated oil spill response methods in the specified geographic region. Information from this review can be found in Supplemental Information at https://www.regulations.gov in Docket No. FWS-R7-ES-2026-0694. Based on this review, the likelihood of a large oil spill in the next 5 years is low. In the unlikely event of a large spill, the likelihood that spills would contaminate areas occupied by large numbers of bears or walruses is low. While individual polar bears could be negatively affected by a spill, the potential for a stock-level effect is low unless the spill contacted an area where large numbers of polar bears were gathered. Known polar bear aggregations tend to be seasonal during the fall, further minimizing the potential of a spill to impact the stock. Onshore oil spills would not impact walruses unless they occurred on or near beaches or oil moved into the offshore environment. In the event of a spill that occurs during the open-water season, oil could be released into the water column, or it could drift from onshore water sources to offshore areas, possibly encountering a small number of walruses. However, as was stated earlier, the Beaufort Sea is not within the primary range for walruses. Therefore, the probability of walruses encountering oil or waste products as a result of a spill from Industry activities is low. Therefore, we conclude that the likelihood of a large spill occurring is low, but if a large spill does occur, the likelihood that it would contaminate areas occupied by large numbers of polar bears or walruses is also low. If a large spill does occur, we conclude that only small numbers of polar bears or walruses are likely to be affected, though some animals may be killed, and there would be only a negligible impact to the SBS stock or walrus population.

Below we discuss three types of MMPA take and how such takes could occur in the polar bear and walrus contexts. This discussion is provided for context and background and does not necessarily reflect what is anticipated to result from the specified activities.

Human activity may result in biologically significant impacts to polar bears and walruses. In the most serious interactions with polar bears ( e.g., vehicle collision, running over an unknown den causing its collapse), human actions can result in the mortality of polar bears. We also note that, while not considered incidental, in situations where there is an imminent threat to human life, polar bears may be killed. Additionally, though not considered incidental, polar bears have been accidentally killed during efforts to deter polar bears from a work area for safety and from direct chemical exposure (81 FR 52276, August 5, 2016). If unintentional disturbance of a female polar bear by human activity during the denning season caused the female to abandon her cubs in the den before the cubs can survive on their own, incidental lethal take of polar bear cubs would occur. Incidental lethal take of walruses could occur if the animal were directly struck by a vessel or trampled by other walruses in a human-caused stampede at a walrus haulout site.

Human activity may result in the injury of polar bears or walruses. Level A harassment, for nonmilitary readiness activities, is defined as “any act of pursuit, torment, or annoyance which . . . has the potential to injure a marine mammal or marine mammal stock in the wild.” 16 U.S.C. 1362(18).

Numerous actions can cause take by Level A harassment of polar bear cubs during the denning period, such as creating a disturbance that separates mothers from dependent cubs (Amstrup 2003), inducing early den emergence during the late denning period (Amstrup and Gardner 1994; Rode et al. 2018), instigating early departure from the den site during the post-emergence period (Andersen et al. 2024), or repeatedly interrupting the nursing or resting of cubs to the extent that it impacts the cubs' body condition. As with lethal take, walruses are most vulnerable to Level A harassment when congregated in haulouts. The risk of stampede-related injuries increases with the number of walruses hauled out and with the duration spent on coastal haulouts. Calves and young are the most vulnerable to suffer injuries and/or mortality (88 FR 53510, August 8, 2023).

Level B harassment, for nonmilitary readiness activities, is defined as “any act of pursuit, torment, or annoyance which . . . has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, feeding, or sheltering.” 16 U.S.C. 1362(18). Changes in behavior that disrupt biologically significant behaviors or activities for the affected animal are indicative of take by Level B harassment under the MMPA. Such reactions include, but are not limited to, the following:

• Fleeing (running or swimming away from a human or a human activity);

• Displaying a stress-related behavior such as jaw or lip-popping, front leg stomping, vocalizations, circling, intense staring, or salivating for polar bears;

• Abandoning or avoiding preferred movement corridors such as ice floes, leads, polynyas, a segment of coastline, barrier islands, or other resting sites;

• Abandoning prey or feeding areas;

• Using a longer or more difficult route of travel instead of the intended path;

• Interrupting breeding, sheltering, or feeding;

• Moving away at a fast pace (adult) and polar bear cubs or walrus calves struggling to keep up;

• Temporary, short-term cessation of nursing or resting (cubs or calves);

• Ceasing to rest repeatedly or for a prolonged period (adults); or

• Loss of hunting opportunity due to disturbance of prey.

This list is not meant to encompass all possible behaviors; other behavioral responses may be indicative of take by Level B harassment. Relatively minor changes in behavior such as the animal raising its head or temporarily changing its direction of travel are not likely to disrupt biologically important behavioral patterns, and the FWS does not view such minor changes in behavior as indicative of a take by Level B harassment. It is also important to note that eliciting behavioral responses that equate to take by Level B harassment repeatedly may result in Level A harassment.

To evaluate incidental take of polar bears from the specified activities and inform our MMPA-required findings, we start by considering the estimates of likely incidental take and the analysis of associated impacts provided by the Request. We then identify some inherent uncertainties associated with forecasting impacts in this context, discuss legislative intent concerning how such uncertainties are to be considered in the ITR process, and effectuate that intent via further analysis that considers predictive model results. We then propose findings that account for qualitative considerations, the Request's estimates of likely incidental take, and FWS predictive model results. In light of the inherent uncertainties and challenges with quantifying take and the disparate results produced through different methodologies, the Service proposes to still consider its predictive model results to provide quantitative estimates but will consider the results alongside additional distinct methodologies.

The FWS predictive model results for incidental take of polar bears were not a component of determining the MMPA-required findings in the Beaufort Sea ITRs issued between 1993 and 2016. As a part of a change introduced around that time for MMPA-required findings, the first Beaufort Sea ITR using the FWS predictive model was the current, 2021-2026 Beaufort Sea ITR. The FWS is now further refining its approach to evaluate MMPA-required findings with additional information, including the estimates provided by AOGA. The FWS also recognizes that this approach to rendering MMPA-required findings differs from the approaches used in ITRs and IHAs concerning polar bears since 2021, in which we relied on qualitative considerations and predictive model results but not a separate set of incidental take estimates provided by the requester. The reason for this change relates to the fact that the present Request, in providing the estimates and analysis required by 50 CFR 18.27(d), uses methodologies and assumptions that differ from those employed by FWS's predictive modeling, resulting in different quantitative estimates. In this context, considering the additional types of analysis provided by the Request, while continuing to consider qualitative considerations and the FWS predictive modeling results, should facilitate more comprehensive analysis to inform FWS's MMPA-required findings. The approach here also preserves the utility of the regulatory requirement that requests for ITRs provide estimates of likely incidental take. This approach is robust, well-tailored to the present circumstances, and permissible under 16 U.S.C. 1371(a)(5)(A), which does not prescribe any particular methodology for rendering required findings.

Appendix A of the Request, “Critique of USFWS's Methodology for Estimating Take and Rationale for AOGA's Evidence-Based Approach.” In summary, the Request notes that it developed its methodology “because the Service's approach—based solely on numerical modeling—has proven to be flawed and legally insufficient in multiple ways.” Appendix A provides four “primary flaws with the Service's approach . . . .”

The Request states that it estimates incidental take of polar bears via a “weight of evidence” approach (Request, p. 3-1). The sources of data considered include field observations, historical data, modeling, and literature review (Request, table 3-1). Among the lines of evidence afforded the most weight are field observations from AOGA's LOA database, select Industry denning bear case studies, and scientific literature concerning polar bear biology and denning phenology (see Request, table 3-1). The Request expresses a high level of confidence in operators' ability to detect all (or nearly all) polar bears near industry activities (See Request, p. 3-5 which state “[w]hile it is theoretically possible that a bear or bear den in proximity to industry could go undetected, it is highly unlikely given the necessary vigilance and extensive and continuous monitoring that occurs during oil and gas activities.”). The effectiveness of mitigation measures is also addressed. See, e.g., Request, section 3.7. Provided below is a summary of the Request's estimates of incidental take concerning surface ( i.e., non-denning) bears and denning bears.

In estimating the likely incidental take of surface bears, the Request states that “. . . the most recent 10-year period of observational data . . . provides the most reliable estimation of future incidental take of surface bears resulting from the [specified activities]” because “[t]he 2014-2024 period of observational data best reflects recent patterns in polar bear distribution and habitat use in the [Request] area, as well as industry activity, monitoring methods, and reporting practices that are consistent with today's regulatory and operational environment” (Request, p. 3-42. The Request states that the average number of incidental Level B harassments observed “for the recent 10-year period (2014-2024) was 16, with a standard deviation of (SD) of 9.95 and an annual range of 4-35” (Request, p. 3-42). Also noted is “a trend of increased presence of polar bears in coastal areas and their duration on land, particularly during the ice-free season.” For the purposes of estimating incidental Level B harassment of surface bears from the specified activities, the Request “assumes these trends will continue and therefore uses the five highest incidental take years from the most recent 10-year period of observational data as the most reasonable representation of incidental take levels of non-denning bears for the 2026-2031 period” (Request, p. 3-42). This approach resulted in an estimated “annual average of 24” incidental Level B harassments of surface bears, “with a SD of 7.62 and an annual range of 15-35” (Request, p. 3-42). The number was derived using a dataset that includes Level B harassment events that occurred during vessel-based and aircraft-based activities, therefore the FWS has assumed AOGA intends the estimate to encompass these activities as well. The Request does not anticipate any forms of incidental take of surface bears other than Level B harassment.

The Request states that “[b]ased on the data from the five highest years of dens detected near industry during the last decade (Request, table 3-16), an estimate of 1.8 dens/year may be present near industry activities” (Request, p. 3-52). AOGA conducted a denning case study review that evaluated 64 case studies, 23 of which they found to be relevant to industry, to “infer the disposition of denning bears exposed to industry activity” (Request, p. 3-47). They provide a full description of their methodology in section 3.5 and appendix C of their Request. The results of AOGA's denning case study review are then summarized as follows: “87% of dens resulted in no effect, 11% resulted in the Level B incidental harassment and 2% resulted in Level A harassment” (Request, p. 3-53). Applying these probabilities in light of the estimated number of dens near industry activities, and assuming three bears per den (a sow and two cubs), the Request estimates that “23 denning bears would experience no effect, 3 denning bears would experience Level B incidental harassment, and the probability of Level A harassment is exceedingly low (less than one over the five-year period)” (Request, p. 3-53).

In sum, with respect to likely incidental take over the 2026-2031 period, the Request estimates the Level B harassment of 123 polar bears (120 surface bears and three denning bears) and no other forms of take.

The Request also discusses the methods used by the FWS to estimate impacts to polar bears in recent regulatory processes (Request, section 3.3 and appendix A). This discussion asserts various flaws in FWS's modeling approach and characterizes FWS model outputs as substantially overestimating impacts. For comparative purposes, the Request reports two sets of results from AOGA-conducted runs of FWS's surface and denning models: one set described as using FWS parameters, and one set using parameters developed by AOGA (Request, p. 3-13, tables 3-6 and 3-7). Each set of results is further compared to AOGA's accounting of reported take reflected in their LOA database (Request, p. 3-16).

Disparities in projections of future impacts can result not only from different interpretations of existing data, but also from use of different assumptions and methods to account for uncertainties. In the present context, several inherent uncertainties increase the difficulty of accurately estimating the future impacts of the specified activities on polar bears. Most notably, based on general observational data and reports along with various scientific studies:

• There is variability in how polar bears use the ITR area each year and in how individual polar bears respond (if at all) to industry activities. This is demonstrated by the 43 Level B takes observed and reported by two operators in the ITR area for calendar year 2025, which is more than a standard deviation above the annual Level B take requested.

• The detailed observation reports submitted by operators pursuant to MMPA take authorization requirements provide valuable data concerning, among other things, polar bear distribution in the ITR area and how polar bears react (if at all) to industrial stimuli. However, ambient conditions common to the ITR area ( e.g., darkness, snow, fog, and wind) can reduce the ability to observe all polar bears (and impacts, if any) in the vicinity of industry activities.

• During the particular denning timeframe when a sow's abandonment of her maternal den prior to her cub(s) developing sufficient strength and/or ability to thermoregulate would be presumed to result in mortality of the cub(s), denning sows are thought to exhibit a relatively higher tolerance to disturbance. The existing dataset contains no definitive evidence that an industry activity caused a maternal den abandonment that in turn resulted in cub mortality. That said, given environmental conditions, the existence of scavengers, and difficulty of observation, it remains possible that this scenario has occurred but was not fully observed.

• Several scientific studies have found a correlation between premature maternal den emergence and/or premature maternal den site departure and cub survival, suggesting these behavioral responses may result in a decline in cub fitness and associated reduction in cub survival probability. Observations indicating that denning polar bears prematurely emerged from their den and/or prematurely departed from their den site in response to industry disturbance are rare. Assessment of this potential behavioral response is complicated by natural variability in the times that undisturbed polar bears establish their dens, remain in their dens, and remain at their den sites post-emergence. Also, any disturbance-caused decline in cub fitness would be difficult to observe, and any associated cub mortality would likely manifest after the family unit has departed from the observable area and onto the sea ice.

• The exact numbers and precise locations of maternal polar bear dens that will be established in the ITR area during each winter of the 2026-2031 period is unknown. The exact percentage of those dens that will be successfully detected and avoided by operators is also unknown.

The FWS addressed how to consider uncertainties regarding the probability and extent of potential impacts in the ITR context when it developed its implementing regulations at 50 CFR 18.27. Responding to a variety of public comments in its final rule, the FWS confirmed that the approach described in its proposed rule accurately interpreted the legislative intent behind the 1986 Amendments to the MMPA:

The final rule continues:

In the present context, where there exists substantial uncertainty as to the potential impacts of the specified activities, and where high rates of human-caused cub mortality (which has not been observed in the ITR area) could represent a significant effect to the SBS stock of polar bears, the FWS will consider the results of its predictive modeling to further inform its balancing. While the legislative history on this point concerns “negligible impact” analyses, the FWS will utilize a similar, comprehensive approach for all MMPA-required findings.

To ensure that any action resulting from this proposed rule will be as accurate and as effective as possible, we request that you send relevant information for our consideration. The comments that will be most useful and likely to influence our decisions are those supported by quantitative information or studies and those that include citations to, and analyses of, the applicable laws and regulations. Please make your comments as specific as possible and explain the basis for them. In addition, please include sufficient information with your comments to allow us to authenticate any scientific or commercial data you include.

You must submit your comments and materials concerning this proposed rule by one of the methods listed above in ADDRESSES . We will not accept comments sent by email or fax or to an address not listed in ADDRESSES . If you submit a comment via https://www.regulations.gov, your entire comment—including any personal identifying information, such as your address, telephone number, or email address—will be posted on the website.

If you mail a hardcopy comment directly to us that includes personal 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. All comments and materials we receive will be available for public inspection via https://www.regulations.gov under Docket No. FWS-R7-MB-2025-1694.

The Migratory Bird Treaty Act of 1918 (MBTA, 16 U.S.C. 703 et seq. ) was enacted to protect migratory birds and gives the Secretary of the Interior the authority to regulate the harvest of certain migratory birds. The law further authorizes the Secretary to issue regulations to ensure that the indigenous inhabitants of the State of Alaska may take certain migratory birds and collect their eggs for nutritional and other essential needs during seasons established by the Secretary to provide for the preservation and maintenance of these migratory birds (16 U.S.C. 712(1)).

The take of migratory birds for subsistence uses in Alaska occurs primarily during the spring and summer, a timeframe not included in the fall and winter general migratory game bird hunting regulations for the United States. Regulations governing the subsistence harvest of migratory birds in Alaska are located in title 50 of the Code of Federal Regulations (CFR) in part 92. These regulations allow for the continuation of customary and traditional subsistence uses of migratory birds and establish when and where the harvesting of certain birds in Alaska may occur within each subsistence region.

The migratory bird subsistence harvest regulations are developed cooperatively. The Alaska Migratory Bird Co-Management Council (Council or AMBCC) consists of the Service, the Alaska Department of Fish and Game (ADFG), and Alaska Native representatives. The Council's primary purpose is to develop recommendations pertaining to the subsistence harvest of migratory birds.

The Council generally holds an annual spring meeting to review and recommend any regulatory changes for migratory bird subsistence harvest regulations in Alaska. The Council met April 9-10, 2025, and recommended changes to the subsistence harvest regulations intended to take effect beginning with the 2026 harvest season. The Council's recommendations were presented to the Pacific Flyway Council for their review and comment and subsequent submission to the Service Regulations Committee (SRC) for consideration at the SRC meeting on December 16, 2025.

Under the collaborative process described above, this document proposes the following revisions to the regulations for the taking of certain migratory birds for subsistence uses in Alaska during the spring and summer.

In 50 CFR part 92, subpart A (general provisions), we propose to change the name of the Upper Copper River region to the Ahtna Territory region in § 92.5. The Upper Copper River region is one of 12 geographic regions (called regional management areas) in Alaska based on common subsistence resource use patterns and the 12 Alaska Native regional corporation boundaries established under the Alaska Native Claims Settlement Act (ANCSA, 43 U.S.C 1606). The Upper Copper River region has eight eligible communities whose harvest area includes Alaska State Game Management Units 11, 12, and 13. The Copper River Migratory Bird Co-Management Council submitted a proposal to the AMBCC requesting their region be renamed Ahtna Territory to reflect the desires of member communities to self-identify with an appropriate regional name. The current name inaccurately reflects the region's community membership and eligible harvest area, as the community of Cantwell is not located in the Copper River drainage and its traditional hunting areas are within the watersheds of other major rivers ( e.g., the Yukon and Susitna). Renaming this region as the Ahtna Territory will help clarify Ahtna Tribal communities included in the region and better identify those eligible to participate in the spring-summer subsistence harvest.

The AMBCC recommended an amendment to the regulations to change the name of the Upper Copper River region to the Ahtna Territory region on April 9, 2025. This regulatory amendment was supported by the Pacific Flyway Council on September 12, 2025, and the SRC on December 16, 2025, and intended for implementation beginning with the 2026 subsistence season.

In 50 CFR part 92, subpart B (program structure), we propose to change the name of the Upper Copper River region to the Ahtna Territory region in § 92.11 as described above for subpart A.

In 50 CFR part 92, subpart D (annual regulations governing subsistence harvest), we propose several changes for the Upper Copper River region: changing the region's name, clarifying language regarding the harvest area, and modifying the season dates.

First, we propose to change the name of the Upper Copper River region to the Ahtna Territory region in § 92.31(i) as described above for subpart A.

Second, we propose clarifying and simplifying the language in § 92.31(i) regarding which Alaska State Game Management Units (GMUs) are included in the harvest area for the Upper Copper River region. Currently, § 92.31(i) states that the harvest area for the eight eligible communities—Gulkana, Chitina, Tazlina, Copper Center, Gakona, Mentasta Lake, Chistochina, and Cantwell—includes GMUs 11 and 13. However, § 92.31(i)(3) later adds GMU 12 as a harvest area for the Copper River Basin communities listed in § 92.31(i). This creates confusion, as one of the communities (Cantwell) is not located in the Copper River Basin. The current language implies that GMUs 11, 12, and 13 are open for the seven Copper River Basin communities, while Cantwell's harvest area is limited to GMUs 11 and 13. However, Cantwell is located north of the Alaska Range, which qualifies it as an “included area” under § 92.5(a). As such, its residents are eligible to harvest birds during the spring-summer season in areas north of the Alaska Range, like GMU 12. To clarify the regulations, we propose adding GMU 12 to the list of GMUs in § 92.31(i) for all eight communities. We also propose removing § 92.31(i)(3), as it would become redundant following this change and the proposed season date revisions described below.

Third, we propose to modify the season dates within the Upper Copper River region listed in § 92.31(i)(1) and (i)(2). This proposed change will simplify the regulations and better align season dates with bird presence in the region. The Upper Copper River region's harvest area includes GMUs 11, 12, and 13 as described above, but currently the hunting and egg gathering seasons for GMUs 11 and 13 are different from those in GMU 12. The Copper River Migratory Bird Co-Management Council proposed changing the season dates for GMUs 11 and 13 (currently: April 15-May 26 and June 27-August 31; closure: May 27-June 26) to match those in GMU 12 (season: April 2-June 14 and July 16-August 31; egg gathering May 1-June 14 only; closure: June 15-July 15). The proposed change will better align the season dates in GMUs 11 and 13 with the availability of birds in the region and improve alignment of the 30-day nesting closure with the principal nesting period. The proposed change would also simplify regulations for the region by establishing consistent season dates in all three GMUs (11, 12, and 13) and, along with the clarification described above, allows the removal of § 92.31(i)(3). The AMBCC lacked biological data to analyze the potential effects of the proposed change but instead relied on Indigenous Knowledge from the region to substantiate the necessity of adjusting season dates. The AMBCC does not anticipate any negative effects to migratory birds from these proposed changes.

On April 9, 2025, the AMBCC recommended an amendment to the regulations to change the season dates for GMUs 11 and 13 in the Upper Copper River region to April 2-June 14 and July 16-August 31; egg gathering May 1-June 14 only; closure: June 15-July 15 to match those in GMU 12. The word “only” is used after the egg gathering season dates to be consistent with the current regulations, e.g., at 92.31(h) for the Interior region. This regulatory amendment was supported by the Pacific Flyway Council on September 12, 2025, and the SRC on December 16, 2025, and intended for implementation beginning with the 2026 subsistence season.

The Service has dual objectives and responsibilities for authorizing a subsistence harvest while protecting migratory birds and threatened species. Although these objectives are challenging, they are not irreconcilable, provided that: (1) Regulations continue to protect threatened species, (2) measures to address documented threats are implemented, and (3) the subsistence community and other conservation partners commit to working together.

Mortality, sickness, and poisoning from lead exposure have been documented in many waterfowl species, including threatened spectacled eiders ( Somateria fischeri ) and the Alaska-breeding population of Steller's eiders ( Polysticta stelleri ). While lead shot has been banned nationally for waterfowl hunting since 1991, Service staff have documented the availability of lead shot in waterfowl ammunition for sale in communities on the Yukon-Kuskokwim Delta and North Slope. The Service continues to work with partners to increase education, outreach, and enforcement efforts to ensure that subsistence waterfowl hunting is conducted using nontoxic shot.

Based on long-term monitoring of harvest and population size of the migratory bird species taken for subsistence, we find that this proposed rule will provide for the preservation and maintenance of migratory birds as required by the MBTA. Communication and coordination with the AMBCC and the Pacific Flyway Council have aided in the establishment of hunting regulations to ensure the long-term viability of the migratory birds exposed to harvest.

Spectacled eiders and the Alaska-breeding population of Steller's eiders are listed as threatened species under the Endangered Species Act of 1973, as amended (ESA, 16 U.S.C. 1531 et seq. ). Their migration and breeding distribution overlap with areas where the spring and summer subsistence migratory bird harvest is open in Alaska. However, neither eider species is present in the Upper Copper River region where this proposed rule applies. In addition, both species are closed to subsistence harvest and under §§ 92.21 and 92.32 the Service may implement emergency closures, if necessary, to protect Steller's eiders or any other endangered or threatened species or migratory bird population.

Section 7 of the ESA requires the Secretary of the Interior to review other programs administered by the Department of the Interior and utilize such programs in furtherance of the purposes of the ESA. The Secretary is further required to ensure that any action authorized, funded, or carried out by the Department of the Interior is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of critical habitat.

The Service's Alaska Region Migratory Bird Management Program conducted an intra-agency consultation with the Service's Northern Alaska Fish and Wildlife Field Office on this proposed rule. Given the absence of listed eiders in the action area, a no effect determination was made. Therefore, the Service will not need to issue a letter of concurrence or biological opinion, and we expect this proposed rule to comply with the ESA.

Implementation of the Service's 2013 supplemental environmental impact statement (SEIS) on the hunting of migratory birds resulted in changes to the overall timing of the annual regulatory schedule for the establishment of migratory bird hunting regulations and the Alaska migratory bird subsistence harvest regulations. The programmatic document, “Second Final Supplemental Environmental Impact Statement: Issuance of Annual Regulations Permitting the Hunting of Migratory Birds (SEIS 20130139),” filed with the Environmental Protection Agency on May 24, 2013, addressed compliance with the National Environmental Policy Act by the Service for issuance of the annual framework regulations for hunting of migratory game bird species. We published a notice of availability of the SEIS in the Federal Register on May 31, 2013 (78 FR 32686), and our Record of Decision on July 26, 2013 (78 FR 45376).

With the SRC meeting occurring on December 16, 2025, there is a short timeframe for finalizing the changes to the subsistence harvest regulations by the April 2, 2026, season opening. Thus, we have established a 30-day comment period for this proposed rule (see DATES , above), and we will be conducting Tribal consultations within Alaska simultaneously. We believe a 30-day comment period gives the public adequate time to provide meaningful comments.

E.O. 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the OMB will review all significant rules. OIRA has determined that this rule is not significant.

E.O. 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 these proposed revisions to the CFR in a manner consistent with these requirements.

The Department of the Interior certifies that, if adopted as proposed, this proposed rule will not have a significant economic impact on a substantial number of small entities as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). A regulatory flexibility analysis is not required.

Accordingly, a small entity compliance guide is not required. The regulations at 50 CFR part 92 legalize a preexisting subsistence activity. The commodities that are regulated under these regulations are migratory birds, and the resources harvested are consumed. This proposed rule would make only modest changes to the current regulations.

This proposed rule is not a major rule under 5 U.S.C. 804(2), the Congressional Review Act. This proposed rule:

(a) Would not have an annual effect on the economy of $100 million or more. The regulations at 50 CFR part 92 legalize the subsistence harvest of migratory birds and, as such, do not involve commodities traded in the marketplace. This proposed rule would not result in a substantial increase in subsistence harvest or a significant change in harvesting patterns.

(b) Would not cause a major increase in costs or prices for consumers; individual industries; Federal, State, or local government agencies; or geographic regions. This proposed rule does not deal with traded commodities and, therefore, would not have an impact on prices for consumers.

(c) Would 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. This proposed rule deals with the harvesting of wildlife for personal consumption. It would not regulate the marketplace in any way to generate substantial effects on the economy or the ability of businesses to compete.

We have determined and certified under the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq. ) that this proposed rule would not impose a cost of $100 million or more in any given year on local, State, or Tribal governments or private entities. The proposed rule would not have a significant or unique effect on local, State, or Tribal governments or the private sector. A statement containing the information required by the Unfunded Mandates Reform Act is not required. Participation on regional management bodies and the Council requires travel expenses for some Alaska Native organizations and local governments. In addition, they assume some expenses related to coordinating involvement of village councils in the regulatory process. Total coordination and travel expenses for all Alaska Native organizations are estimated to be less than $300,000 per year. When funding permits, the Service makes annual grant agreements available to the partner organizations and the ADFG to help offset their expenses. However, this proposed rule would not revise any regulations pertaining to participation in the regulatory process.

Under the criteria in E.O. 12630, this proposed rule would not have significant takings implications. The proposed changes to the regulations at 50 CFR part 92 are not specific to particular landownership but instead apply to the harvesting of migratory bird resources in portions of Alaska. A takings implication assessment is not required.

In accordance with E.O. 13132 (Federalism), this proposed rule does not have significant federalism implications to warrant the preparation of a federalism summary impact statement. The Service worked with the State of Alaska to develop these proposed regulations. Therefore, a federalism summary impact statement is not required.

The Department, in promulgating this proposed rule, has determined that it would not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of E.O. 12988.

In accordance with E.O. 13175 (“Consultation and Coordination with Indian Tribal Governments”), and the Department of the Interior's manual at 512 DM 2, 512 DM 4 and 512 DM 6, we readily acknowledge our responsibility to communicate meaningfully with federally recognized Tribes and Alaska Native Corporations on a government-to-government basis. We will send letters via electronic mail to all 229 federally recognized Indian Tribes in Alaska. Consistent with 512 DM 5 and 512 DM 7, we also will send letters to approximately 200 Alaska Native Corporations and other Tribal entities in Alaska soliciting their input as to whether or not they would like the Service to consult with them on the proposed changes to the migratory bird subsistence harvest regulations.

We implemented the amended treaty with Canada with a focus on local involvement. The treaty calls for the creation of management bodies to ensure an effective and meaningful role for Alaska's indigenous inhabitants in the conservation of migratory birds. According to the Letter of Submittal, management bodies are to include Alaska Native, Federal, and State of Alaska representatives as equals. They develop recommendations for, among other things: seasons and bag limits, methods and means of take, law enforcement policies, population and harvest monitoring, educational programs, research and use of traditional knowledge, and habitat protection. The management bodies involve village councils to the maximum extent possible in all aspects of management. To ensure maximum input at the village level, we required each of the 11 participating regions to create regional management bodies consisting of at least one representative from the participating villages. The regional management bodies meet twice annually to review and/or submit proposals to the statewide body.

This proposed rule does not contain any new collection of information that requires approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. OMB has previously approved the information collection requirements associated with subsistence harvest reporting and assigned the following OMB control numbers:

• Alaska Migratory Bird Subsistence Harvest Household Survey, OMB Control Number 1018-0124 (expires July 31, 2027), and

• Regulations for the Taking of Migratory Birds for Subsistence Uses in Alaska, 50 CFR part 92, OMB Control Number 1018-0178 (expires July 31, 2027).

The regulations at 50 CFR part 92 and options are considered in the environmental assessment, “Managing Migratory Bird Subsistence Hunting in Alaska: Hunting Regulations for the 2026 Spring/Summer Harvest.” Copies are available from the person listed under FOR FURTHER INFORMATION CONTACT .

E.O. 13211 requires agencies to prepare statements of energy effects when undertaking certain actions. This proposed rule is not a significant regulatory action under this E.O.; it allows only for traditional subsistence harvest and improves conservation of migratory birds by allowing effective regulation of this harvest. This proposed rule would not have any effect on energy supplies, distribution, or use. Therefore, this action is not a significant energy action under Executive Order 13211, and a statement of energy effects is not required.

Kevin Lilly, Principal Deputy Assistant Secretary for Fish and Wildlife and Parks, Exercising the Delegated Authority of the Assistant Secretary for Fish and Wildlife and Parks, approved this action on March 5, 2026, for publication. On March 5, 2026, Kevin Lilly authorized the undersigned to sign the document electronically and submit it to the Office of the Federal Register for publication as an official document of the U.S. Fish and Wildlife Service.

For the reasons set out in the preamble, we propose to amend 50 CFR part 92 as set forth below: