The FPA (Sec. 90101, Public Law 119-21, 139 Stat. 362) directs OPM to issue regulations and implement a process to verify: (1) that a member of family is eligible to participate as a covered family member, including during any open season; and (2) any QLE through which an Federal Employees Health Benefits (FEHB) or PSHB plan enrollee seeks to add a member of family to their enrollment, by July 4, 2026. These regulations apply to both the FEHB and PSHB Programs. For clarity and brevity, this rulemaking uses “FEHB Program” to include both the Federal Employees Health Benefits Program and the Postal Service Health Benefits Program. The PSHB Program launched in 2025 as a separate Program within the FEHB Program and provides health benefits to Postal Service employees, Postal Service annuitants, and their covered family members.

In addition to the statutorily required elements, the rule is clarifying that OPM can authorize the employing office to determine family member eligibility for the PSHB Program.

The FEHB Program was established in 1960 and is the largest employer-sponsored health insurance program in the United States. There are approximately 8.3 million covered individuals in the FEHB Program. Covered individuals include employees of the federal government, annuitants, covered family members, former spouses, and statutorily eligible groups enumerated in 5 U.S.C. 8901; and tribal employees of tribal employers, pursuant to 25 U.S.C. 1647b. Postal Service employees, Postal Service annuitants, and their family members are eligible for health benefits under the PSHB Program pursuant to 5 U.S.C. 8903c.

Per the FEHB statute at 5 U.S.C 8901(5), as adopted by reference in the PSHB statute at 5 U.S.C. 8903c(a)(13), and FEHB and PSHB regulations at 5 CFR 890.101, 890.302 and 5 CFR 890.1602, 890.1603, 890.1604 respectively, a covered family member means a member of the family of an enrollee who meets applicable eligibility requirements. This includes the enrollee's spouse and children under the age of 26. Covered children include children born within marriage, recognized natural children, adopted children, stepchildren, and foster children. A disabled child age 26 or older who is determined by OPM to be incapable of self-support because of a physical or mental disability that existed before their 26th birthday can be a covered family member.

As delineated in the FEHB Handbook, a grandchild is not an eligible family member unless the child qualifies as a foster child. (The FEHB Handbook is available at https://www.opm.gov/healthcare-insurance/healthcare/reference-materials/fehb-handbook. ) Other examples of family members who are not eligible for coverage under an employee or annuitant's enrollment include an enrollee's parents, former spouse, and domestic partner, even if they live with and are dependent upon the enrollee. A covered family member can be added during the initial opportunity to enroll, subsequent to a qualifying life event, such as birth or adoption of a child or marriage, or during any open season. Under certain circumstances outlined in 5 CFR part 890, subpart H Benefits for Former Spouses, former spouses may have their own FEHB enrollment, separate from the enrollment of the federal employee or annuitant to whom they were married.

There are several ways that ineligible family members become covered by FEHB plans. Some ineligible family members are added during open season, and OPM has not required verification of eligibility by the employing office. Some family members were once eligible as spouses or covered children, but lost eligibility due to divorce, aging out, or change in family status and were not removed from coverage.

OPM has addressed FEHB Program family member eligibility verification and removal in earlier rulemaking. On January 23, 2018, OPM issued a final rule titled, Federal Employees Health Benefits Program: Removal of Eligible and Ineligible Individuals from Existing Enrollments (83 FR 3059). The rule provided a process for removal of certain individuals who are found not to be eligible as family members for FEHB enrollment. The processes in the rule apply to individuals for whom there is a failure to provide adequate documentation of eligibility when requested. The rule also allowed certain eligible family members to be removed from existing self and family or self plus one enrollments upon request. If appropriate, the enrollee can change from self and family or self plus one to a lower enrollment type. The enrollment type can be changed either during open season or subsequent to a QLE for enrollees paying for health benefits premiums on a pre-tax basis (also called premium conversion). Enrollees not participating in premium conversion can change enrollment type at any time.

As explained in the 2023 interim final rule Postal Service Reform Act: Establishment of the Postal Service Health Benefits Program (88 FR 20383) all requirements for the FEHB Program apply to the PSHB Program, which began January 1, 2025, unless otherwise indicated through rulemaking.

Subsequent to the 2018 rulemaking, OPM issued several guidance documents for employing offices and carriers to further delineate disenrollment and removal procedures for ineligible individuals. Carrier Letter 2020-16  1 provided guidance to carriers on (1) the process for requesting proof of family member eligibility for existing enrollments; (2) the documents that may be used as proof; and (3) the actions FEHB carriers can take based on an enrollee's or family member's response to a request for verification of eligibility. Carrier Letter 2022-15  2 provided guidance to FEHB carriers on proactively removing covered children when they reach age 26, unless the child is determined to be incapable of self-support due to a disability that began before age 26. Benefits Administration Letter 20-203  3 provided guidance to employing offices on (1) the process for requesting proof of family member eligibility for existing enrollments; (2) the documents that may be used as proof; and (3) the employing office actions that can be taken based on an employee's or family member's response to a request for verification of eligibility. (Carrier Letters and Benefits Administration Letters are available at https://opm.gov/healthcare-insurance/carriers/fehb/ and https://www.opm.gov/healthcare-insurance/carriers/pshb/. )

The FPA also requires that OPM develop a process to disenroll or remove anyone from enrollment who is found to be ineligible for enrollment or coverage. Pursuant to subsection (f) of the FPA, OPM has reissued and reinforced guidance on disenrolling ineligible individuals. in Carrier Letter 2025-15 and Benefits Administration Letter 25-203.

In addition to the regulatory requirements, the FEHB Handbook details the responsibilities of the employing office to verify eligibility of family members. For a newly added family member, the employing office must obtain proof of a family member's eligibility in two circumstances: during the initial opportunity to enroll and when an enrollee has any other qualifying life event. For a QLE, the employing office must require proof of family member eligibility for those that have not previously provided proof including a:

• spouse not verified within the last year;

• foster child; and

• disabled child age 26 or older who is incapable of self-support.

Acceptable documentation is listed in the FEHB Handbook and could include government-issued marriage certificates, Federal or state tax returns, or birth certificates. The employing office, OPM, or the carrier may disenroll or remove an individual from an enrollment if the enrollee fails to provide adequate documentation of the eligibility, per 5 CFR 890.308 and 890.1608. An enrollee or removed individual may request reconsideration of the decision to remove the individual from enrollment from the employing office or OPM within 60 days of the initial decision. That reconsideration is final.

This final rule builds on the 2018 rulemaking, which strengthened verification and removal processes. This rule implements the FPA by adding a new subparagraph (i) to § 890.302(a)(1) to require, rather than allow, enrollees to provide proof of eligibility to the employing office, the carrier, or OPM, as specified by OPM, when adding a family member to the enrollment. This proof will be required at any time that an enrollee seeks to add a family member to their enrollment, including during any open season, or for any QLE, including an initial opportunity to enroll. This goes beyond the current requirement, which allows employing offices, OPM, or the carrier to request proof at any time, but only requires such proof for a QLE, including the initial opportunity to enroll.

New subparagraph (ii) in § 890.302(a)(1) requires the enrollee to provide documentation verifying a QLE to an employing office, the carrier, or OPM, as specified by OPM, to add a family member to the enrollment. Once that information has been provided, OPM's existing guidance will ensure that the event is verified, in addition to verifying the eligibility of the added family member.

These new sections fulfill the statutory requirement for OPM to implement a process for verification of family member eligibility. Details of these processes, including responsibilities of the employing office, will continue to be published in the FEHB Handbook and updated as necessary.

Examples of acceptable eligibility documentation can be found in 5 CFR 890.308 and the FEHB Handbook and include:

In addition to the statutorily required provisions, OPM is amending § 890.1607, which addresses the entity responsible for family member eligibility verification for the PSHB Program. OPM's 2024 final rule titled, Postal Service Health Benefits Program: Additional Requirements and Clarifications (89 FR 85012) included § 890.1607(b)(2). Prior to the launch of the PSHB Program, USPS was responsible for family member eligibility verification for Postal employees, as all employing offices are for FEHB enrollments. This regulatory change is consistent with the Postal Service's past practice under the FEHB Program and aligns with the responsibilities of other employing offices.

OPM is required by section 90101 of Public Law 119-21 to issue this regulatory action. The statutory provision directs that by July 4, 2026, the Director of OPM must “issue regulations and implement a process to verify” (1) the veracity of any QLE through which an enrollee in the Program seeks to add a member of the enrollee's family to a health benefits plan under the Program; and (2) that, when an enrollee seeks to add a member of his or her family to the health benefits plan, the individual added is a qualifying member of family with respect to the enrollee. The statute requires this process to apply not only during a QLE but also during any open season.

This regulation is necessary to address the presence of ineligible family members covered by the FEHB Program. OPM addressed coverage of ineligible family members through issuing regulations to provide a new process for identifying and removing ineligible family members from coverage in 2018. This final rule builds on and strengthens that 2018 rule.

Ineligible family member coverage was highlighted in a Government Accountability Office (GAO) report ( https://www.gao.gov/products/gao-23-105222 ) in late 2022. In response to that report, OPM concurs that there are ineligible family members participating in the Program and more can be done to identify and remove them from coverage. That report made several recommendations, many of which OPM concurred with and implemented. While this work progresses, OPM is also preparing for the family member eligibility audit required by the FPA. That audit is a critical piece of addressing ineligible family member coverage and restoring program integrity, but the economic effects of the audit are not included in this rule since it is not affected by this rule.

Since some FEHB and PSHB QLE and family member eligibility verifications are required by current OPM guidance and rules, OPM expects this regulation to have an impact below the threshold for economic significance. However, given the importance of reducing waste, fraud, and abuse through removing ineligible family members, this rule is significant on policy grounds.

This final rule also includes a change specific to the PSHB Program. This rule clarifies that responsibility may reside with OPM or with the employing office as specified by OPM. This revision is not expected to result in any significant impact as it is consistent with the Postal Service's past practice under the FEHB Program and will align with the responsibilities of other employing offices.

The baseline for this regulation is the FEHB and PSHB Programs as currently administered. Since 2018, OPM has strengthened the verification process, which historically has been largely delegated to carriers and to employing offices. In 2025, OPM began requiring agencies to conduct a self-audit of 10% of family member eligibility for changes made during open season. Due to high transactions in open season 2024 and staffing challenges in 2025, many agencies did not reach the 10% threshold or did not report when OPM requested audit information.

The FPA and this regulation mandate verification of the eligibility of all family members and all QLEs for any enrollment, including any open season. Agencies may see cost increases if additional employees are required to conduct the statutorily mandated verification.

Congress authorized $66 million over ten years for OPM to carry out the requirements of the FPA, including the family member eligibility audit.

There is a time cost for enrollees and family members associated with this rule. Assuming that it would take on average half an hour per family member to gather and upload supporting documents such as marriage and birth certificates, enrollees would spend about 50,000 hours annually complying with the requirements of the rule. A few more complex cases may require additional documents and communication, e.g., to obtain updated proof for children incapable of self-support and communicate it to employing offices, OPM, or carriers, but many others will take less time.

This rule requires that all newly added family members are verified. Member cost estimates assume an average hourly rate of $52  4 in end of year 2025 dollars adjusted with a nominal growth rate of 2% over the following decade. These do not explicitly include the costs of obtaining certificates of birth, marriage, and other supporting documents from authoritative sources. See Table 1.

Family members found ineligible will have to pay for alternative coverage or go without coverage. Some individuals who are not enrolled in FEHB coverage may be eligible for public insurance programs such as Medicaid, the Children's Health Insurance Program (CHIP), or Medicare. Some family members may be eligible to purchase coverage on the Affordable Care Act (ACA) Exchanges with federal advance premium tax credits that may cover all or a portion of an enrollee's premiums. That coverage would transfer costs from the FEHB Program to other publicly or privately funded health insurance coverage.

The information reported by agencies to OPM so far indicates that, of the more than 19,000 cases reviewed in 2024, almost 2% of FEHB and PSHB family members have been confirmed to be ineligible, with up to 4.36% of family members that could be deemed ineligible due to non-responses or insufficient documentation. More children (2.2%) than spouses (1.66%) were confirmed to be ineligible or could end up being deemed ineligible (4.67% vs 3.92%).

Because the information reported by agencies to OPM is a sample with some degree of uncertainty that may not be entirely representative of the underlying population, OPM considered estimates using somewhat wider bounds ranging from 2% to 5% for ineligible children and 1.5% to 4.5% for spouses. The median projections of 3.5% ineligible children and 3% ineligible spouses are in line with findings from audits performed on state health insurance programs and in the private market.

In 2025, there were approximately 4 million family members in FEHB and PSHB, about 2.1 million children and 1.9 million spouses. OPM assumes that approximately 100,000 family members would be verified annually—63,000 children and 38,000 spouses. OPM estimates that the annual premium cost for FEHB and PSHB family members with claims was $5,510 for children and $12,461 for spouses with claims. The incentives are stronger to fraudulently cover ineligible individuals when their health care needs and costs are higher, but without other information, savings estimates conservatively assume that the average premium cost for ineligible family members with claims are the same as for eligible family members.

Based on the assumptions above, OPM's central projection is that in 2025 total FEHB and PSHB premium rates would have been 0.018% lower without those ineligible family members, with a low of 0.010% and a high of 0.027%.

In Table 2, OPM applied these percentages to estimated annual premiums calculated using a nominal medical inflation rate of 6.5% per year, higher than the assumed 3.5% inflation for the next decade. Total FEHB and PSHB premiums were approximately $72.7 billion in FY 2025.

Based on the parameters above, OPM estimated low, medium, and high net present values (NPV) and annualized amounts of FEHB and PSHB premium savings, and agency costs over the next decade, separately for 3% and 7% annual real discount rates. The results are summarized in Table 2.

The benefits of this rule include more appropriate use of federal dollars and a more sustainable FEHB Program. This rule will help direct premium dollars to support eligible individuals only, thereby improving the integrity of the program.

OPM estimates the net present value (NPV) of premium savings over the next decade to be $153.7 million and $124.1 million at real discount rates of 3% and 7% per year. The corresponding annualized amounts are $18 million and $17.7 million, about 70 percent of which is paid by the government. The NPV of agency verification costs over the next decade are estimated at $20.9 million and $17.3 million for real discount rates of 3% and 7% per year, with corresponding annualized amounts of $2.4 million and $2.5 million. The NPV of member costs over the next decade are estimated at $20.9 million and $17.3 million for real discount rates of 3% and 7% per year, with corresponding annualized amounts of $2.4 million and $2.5 million.

High and low estimates are also calculated using the wider bounds for estimates of the true percentages of ineligible children and spouses in the FEHB and PSHB population, and this range is described in the preceding tables.

Some of the ineligible family members who are not covered by FEHB or PSHB may qualify and enroll in other federal and state health insurance programs, affecting federal, state, and personal budgets. OPM lacks data on effects along these lines.

There are no feasible alternatives to regulation, as OPM is required by law to issue these regulations. As an alternative to the limited approach in this final rule, OPM could require regular reverification of all enrollees and covered family members. The rule does not include such changes for several reasons. First, OPM will have an opportunity to consider such changes through notice and comment rulemaking in the FEHB Enrollment Integrity regulation (RIN 3206-AO93) planned for 2026. Such major policy and operational changes would be issued after a full notice and comment process to be sure all viewpoints are considered.

Second, OPM is actively planning the family member audit required by the FEHB Protection Act. OPM expects to use knowledge leveraged from the planning and execution of the audit to inform any family member reverification process in the future.

The Administrative Procedure Act (APA) provides that traditional notice and comment procedures are not required when, as relevant here, the agency for good cause finds that following those procedures would be impracticable, unnecessary, or contrary to the public interest, 5 U.S.C. 553(b)(B). These exceptions are also available in OPM rulemakings. See 5 U.S.C. 1105. OPM finds that notice and comment is unnecessary because OPM lacks discretion in revising its regulations to require verification of enrollment eligibility and QLEs. Furthermore, delaying this final rule to allow public comment would be contrary to the public interest and is also unnecessary as Federal law already prohibits the coverage of ineligible individuals. This rule does not change any eligibility criteria or the Government's ability to remove ineligible individuals from coverage. Similarly, the rule does not change an individual's obligation to provide requested documentation to support a claim of eligibility. Instead, the rule only updates the circumstances under which the Government is required to verify eligibility as required by statute. Accordingly, issuing these regulations as a final rule allows OPM to promptly pursue the Administration's goal of reducing fraud, waste, and abuse in public programs ensuring the lawful use of taxpayer dollars. The regulation is part of the Administration's approach to addressing the program integrity issues raised by GAO regarding ineligible family member enrollments. It is in the public interest to ensure taxpayer dollars for premium payments are only used for eligible and legitimate FEHB enrollees. Finally, this rule revises regulatory text from a relatively recent rulemaking addressing roles and responsibilities between OPM and the employing office in the PSHB Program. This revision would not benefit from public comment as it is a minor technical change concerning government operations.

The Office of Information and Regulatory Affairs in the Office of Management and Budget has designated this as a significant regulatory action under E.O. 12866 section 3(f). Accordingly, OPM has examined the impact of this rule as required by Executive Orders 12866 and 13563, which direct agencies to assess all 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). A regulatory impact analysis must be prepared for rules that have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. This rulemaking is not likely to reach that threshold. This rule is not an E.O. 14192 regulatory action because it does not impose any more than de minimis regulatory costs relative to estimated federal budgetary savings.

The Director of OPM certifies this rulemaking will not have a significant economic impact on a substantial number of small entities because the affected entities are federal agencies, employees, annuitants, and carriers, rather than small entities.

This rulemaking will not have substantial direct effects on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, the Director of OPM certifies that this rulemaking does not have sufficient federalism implications to warrant preparation of a Federalism Assessment.

This rulemaking meets the applicable standards set forth in section 3(a) and (b)(2) of Executive Order 12988.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits before issuing any rule that would impose spending costs on State, local, and Tribal governments in the aggregate, or on the private sector, in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2025, that threshold was approximately $206 million. This rulemaking will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, in excess of the threshold. Thus, no written assessment of unfunded mandates is required.

The Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs has determined that this is not a “major rule” as defined by the Congressional Review Act (5 U.S.C. 804(2)). OPM will submit to Congress and the Comptroller General of the United States a report regarding the issuance of this action.

Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid OMB Control Number.

This rule is tied to a current OPM approved information collection 3206-0160 SF 2809 Federal Employees Health Benefits Program Election Form; OPM 2809 Health Benefits Election Form. Access to the current version of the collection—including all supporting materials—can be found at www.reginfo.gov by searching for the collection by the OMB Control Number or the title. The combined total burden hour estimate for the two forms is estimated to be 20,667 hours for 48,000 responses.

OPM has published a 60-day notice of updates to this information collection at 91 FR 32135 on May 29, 2026. This notice proposes updating the information collection and calls for comment.

A list of routine uses associated with these forms can be found in the Privacy Act System of Records Notice (SORN), OPM/Central-23 FEHB Program Enrollment Records, available at 89 FR 72902 (September 6, 2024) at https://www.federalregister.gov/d/2024-20061.

If any of the provisions of this final rule is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, it shall be severable from the remaining sections and shall not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other dissimilar circumstances.

The Director of OPM, Scott Kupor, reviewed and approved this document and has authorized the undersigned to electronically sign and submit this document to the Office of the Federal Register for publication.

For reasons stated in the preamble, OPM amends 5 CFR part 890 as follows:

On July 4, 2025, President Trump signed into law H.R. 1 (Pub. L. 119-21), also known as the One Big Beautiful Bill Act (OBBBA). This rule amends 7 CFR part 1400 to implement payment limitation changes made by OBBBA regarding equitable treatment of certain entities and an exception to the average adjusted gross income (AGI) limitation for certain programs. In addition to the payment limitation changes addressed in this rule, OBBBA increased the payment limitations for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs and mandated annual increases to those limits based on the Consumer Price Index for All Urban Consumers. Those changes were implemented through a final rule published on January 12, 2026 (91 FR 1043). This rule also makes discretionary changes to the payment limitation and payment eligibility regulations to improve program administration and clarify and update existing provisions.

Section 10306 of OBBBA amended Section 1001 of the Food Security Act of 1985 (7 U.S.C. 1308) to provide equitable treatment of certain entities under the provisions for payment limitations. Payment limitations are the maximum amount that a person or legal entity can receive for any crop year, directly or indirectly, under certain CCC, FSA, and NRCS programs, and payments to legal entities are tracked (“attributed”) through four levels of ownership (7 U.S.C. 1308(e)(3)). Attribution of payments through four levels of ownership of legal entities is applied according to 7 U.S.C. 1308(e) and 7 CFR 1400.105. When a legal entity is a payment applicant, then the entity itself (the “payment entity”) is attributed the full payment amount and all owners in the first three member levels are attributed an amount equal to their indirect ownership share in the payment entity. In this way, payments are limited to eligible participants comprising the payment entity and owners through the fourth level of ownership. Owners at the member level may be persons or other legal entities, including qualified pass-through entities.

Prior to the changes discussed below, only joint ventures and general partnerships (“joint operations”) were allowed to receive payments up to the amount determined by multiplying the applicable payment limitation for a program by the number of persons or legal entities that comprise the ownership of that joint venture or general partnership. Other types of legal entities were allowed to receive payments up to the amount of a single payment limitation, regardless of the number of persons or legal entities that comprised the ownership.

Section 10306(a)(1)(B) of OBBBA, which amends section 1001(a) of the Food Security Act of 1985, added the new defined term “Qualified pass-through entity.” Section 10306(b) of OBBBA also amended requirements relating to the attribution of payments by removing references to “Joint Ventures and General Partnerships” and replacing it with the newly defined term “Qualified pass-through entity.” (7 U.S.C. 1308(e)(3)(B)(ii)). Qualified pass-through entities, as amended by and defined under OBBBA, include joint ventures and general partnerships. However, the term also includes: (A) a partnership (within the meaning of subchapter K of chapter 1 of the Internal Revenue Code of 1986 [26 U.S.C. 701 et seq. ]); (B) an S corporation (as defined in section 1361 of that Code); and (C) a limited liability company that does not affirmatively elect to be treated as a corporation. Sections 10306 and 10307 of OBBBA then updated the language regarding requirements for attribution of payments and payment limitations to include “Qualified-pass through entities.” Thus, the interpretation that previously applied only to joint ventures and general partnerships now applies to qualified pass-through entities as amended and defined by OBBBA.

In alignment with OBBBA, this rule defines “qualified pass-through entity” in § 1400.3 to mean:

(1) A partnership within the meaning of subchapter K of chapter 1 of the Internal Revenue Code of 1986 (26 U.S.C. 701 et seq. ). Partnership is defined in 26 U.S.C. 761 to include a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not, a corporation or a trust or estate. In simplified terms, this means a business entity with two or more members that is recognized as a separate entity for federal tax purposes and is not classified as a corporation, trust, or estate under the Internal Revenue Code;

(2) An S corporation as defined in 26 U.S.C. 1361(a);

(3) A limited liability company (LLC) that does not affirmatively elect to be treated as a corporation for federal tax purposes; and

(4) A joint venture or general partnership.

This rule amends the payment limitation provisions of subpart B and the payment eligibility provisions of subpart C as described below. This rule also updates references that apply to joint operations throughout part 1400 to specify that those references are now applicable to qualified pass-through entities. For example, CCC is updating the definitions of “attribution” and “farming operation” to replace references to “joint operations” with “qualified pass-through entities” to align with OBBBA.

As required by Section 10307 of OBBBA (7 U.S.C. 1308), maximum payment limitation amounts for qualified pass-through entities will be determined in a manner consistent with the limitation applied to joint ventures and general partnerships prior to this rule. Specifically, a qualified pass-through entity's maximum payment limitation will be equal to the applicable announced payment limitation times the number of persons or entities, other than qualified pass-through entities, that comprise the ownership of the qualified pass-through entity (7 U.S.C. 1308(e)(3)(B)(ii)).

For example, if the program payment limitation is $125,000 and an S corporation has two individual owners (shareholders), the program payment limitation is multiplied by two, resulting in a maximum payment limitation for the S corporation of $250,000. Prior to the change required by OBBBA, the S corporation would have been capped at one maximum payment limitation, which was $125,000. To illustrate further, if a qualified pass-through entity, such as an LLC that has not affirmatively elected to be taxed as a corporation, has two general partnership owners (partners) and each general partnership has two individual owners (partners), the embedded general partnerships are bypassed and the maximum payment limitation for the LLC will be multiplied by four, resulting in a maximum payment limitation of $500,000. Prior to this change, the LLC would have been subject to one payment limitation of $125,000.

Accordingly, this final rule amends § 1400.106(b) to implement this change to the payment limitation calculation for all qualified pass-through entities beginning with program year 2026.

To be eligible for payments, a person or legal entity shall be “actively engaged in farming” (7 U.S.C. 1308-1(b)(2)). This requirement is currently implemented in USDA regulations at 7 CFR part 1400, subpart C.

Section 10306(c)(1) of OBBBA extended this requirement to a qualified pass-through entity. A qualified pass-through entity shall be considered as “actively engaged in farming” if it separately makes a significant contribution (based on the total value of the farming operation) of capital, equipment and land, the stockholders or members collectively make a significant contribution of personal labor or active personal management to the operation, the share of the profits or losses from the farming operation is commensurate with the contributions to the farming operation and the contributions are at risk (7 U.S.C. 1308-1(b)(2)). Section 10306(c)(2) of OBBBA also provides that the partners or members of the qualified pass-through entity who make a significant contribution of personal labor or active personal management shall be considered actively engaged in farming if the qualified pass-through entity “separately makes a significant contribution (based on the total value of the farming operation involved) of capital, equipment, or land” and the contribution is determined commensurate and at risk.

Accordingly, this rule amends the “actively engaged in farming” provisions to provide consistent requirements for all qualified pass-through entities. To be determined “actively engaged in farming,” members of qualified pass-through entities will be required to meet applicable payment eligibility requirements including contributions of capital, equipment, land, active personal labor, and active personal management as provided in this rule (§ 1400.203). To meet this requirement, contributions must be significant, commensurate with the members' share of the farming operation, and must be at risk of loss. The definition of a “contribution” refers to the provision of capital, equipment, land, active personal labor, or active personal management made with the expectation of receiving a benefit that depends solely on the success of the farming operation. This rule updates §§ 1400.201 and 1400.203 to allow members of qualified pass-through entities to include compensated labor or management contributions towards meeting the actively engaged in farming requirement. Previously, contributions associated with guaranteed payments, such as salaries, were not credited when determining whether a member is actively engaged in farming. This update provides consistent treatment of member contributions across all entity types.

Certification of compliance with the average AGI limitations applies to a person or legal entity. (7 U.S.C. 1308-3a(c)). Historically, joint operations do not certify compliance at the entity level due to the pass-through nature of income for those entities. Instead, the certification requirement for joint operations was met by requiring certification at the member level.

When Section 10306(a)(1)(B) of OBBBA added the new term “Qualified pass-through entity,” it included “a joint venture or general partnership” in the meaning of the term. Consistent with the historical interpretation discussed above, for program year 2026 and subsequent years, qualified pass-through entities are not required to certify compliance with the average AGI limitation at the entity level (§ 1400.502(a)). Members, through the fourth level of ownership, other than qualified pass-through entities embedded in the ownership structure of other legal entities, remain required to certify compliance. For example, if an S corporation has two individual owners, only the two individual owners must certify compliance. Prior to this change, the S corporation was required to certify compliance at the entity level in addition to the two individual members. To illustrate further, if a qualified pass-through entity Limited Liability Company (LLC) has two general partnership owners and each general partnership has two individual owners, the four individual owners at the third level of ownership must certify compliance (but not the two general partnerships). Prior to this change, the LLC and the four individual owners were required to certify compliance, and the two general partnerships were exempt (as is the case under OBBBA).

The changes for qualified pass-through entities will be effective beginning with the 2026 program year. For the purpose of administering the direct attribution provisions of § 1400.105, the applicable date for determining ownership interest for qualified pass-through entities for the 2026 program year will be September 15, 2026.

OBBBA was passed on July 4, 2025, and funding for some 2025 and prior year programs has been expended. Applying this change retroactively to 2025 or earlier program years would result in an added administrative and participant burden and inconsistency between programs. Current program participants that are LLCs or corporations must file updated farm operating plans with FSA for program year 2026, or later, to declare their operation type as one of the existing types or one of the new qualified pass-through entity types (§ 1400.100). The updated certifications will be effective for the program year for which the certification is made and subsequent program years and will not be retroactive. To implement this change, CCC is defining “program year ” to mean the program year as defined by the applicable program. For the purpose of implementing payment limitation and payment eligibility absent a specific program requirement, the program year aligns with the fiscal year.

In general, as discussed above, a person or legal entity is not eligible to receive, directly or indirectly, certain program payments or benefits described in § 1400.1 if the average AGI of the person or legal entity exceeds $900,000 for the 3 taxable years preceding the most immediately preceding complete taxable year. Section 10308 of OBBBA (7 U.S.C. 1308-3a(b)) creates an exception to this limitation for an “excepted payment or benefit,” which includes payments or benefits for:

• Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP),

• Livestock Forage Assistance Program (LFP),

• Livestock Indemnity Program (LIP),

• Tree Assistance Program (TAP),

• Noninsurable Crop Disaster Assistance Program (NAP), and

• Conservation benefits under Title II of the Agricultural Improvement Act of 2018, Title II of the Agricultural Act of 2014, Title II of the Farm Security and Rural Investment Act of 2002, Title II of the Food, Conservation, and Energy Act of 2008, or Title XII of the Food Security Act of 1985 received on, or after, October 1, 2024.

The exception can be requested by participants who provide an acceptable certification, discussed below, that at least 75 percent of the participants' average gross income was derived from farming, ranching, or silviculture activities. For both the average AGI and the average gross income calculations, participants must use income as reported to the Internal Revenue Service (IRS), or as would have been reported had a Federal tax return been required, for the 3 taxable years preceding the most immediately preceding complete taxable year. For example, to certify for 2026, a participant would use information from tax years 2022, 2023, and 2024. Acceptable certifications must be accompanied by a verification statement signed by a licensed certified public accountant (CPA) duly qualified to practice as a CPA in any state, territory, or possession of the United States, including a Commonwealth, or the District of Columbia; an attorney who is a member in good standing of the bar of the highest court of any state, territory, or possession of the United States, including a Commonwealth or the District of Columbia; or an individual who has been authorized to practice before the IRS in accordance with 31 CFR part 10. Individuals enrolled as agents pursuant to 31 CFR part 10 (enrolled agents), who are not currently under suspension or disbarment from practice before the IRS may practice before the IRS. . CCC is adding enrolled agents as an acceptable third-party to complete certifications of income from farming, ranching, or silviculture activities to improve participant ability to provide required certifications. However, for individual taxpayers filing joint tax returns, Congress limited such certifications to an attorney or CPA (7 U.S.C. 1308-3a(a)(3); § 1400.501(a)(2)). Accordingly, certifications of average AGI for joint tax return filers specifying the manner in which their income would have been declared and reported if they had filed two separate returns continue to be accepted from only a CPA or attorney. This rule amends § 1400.504 to include the exception and provide the requirements for the certification.

To implement this change, CCC is defining “income derived from farming, ranching, or silviculture activities” in § 1400.3. This definition includes the sources of income previously included in the definition of “income derived from farming, ranching, or forestry operations” used in recent programs, and adds agritourism and direct-to-consumer marketing of agricultural products to align with OBBBA. The term “income derived from farming, ranching, or forestry operations” has been used in recent ad hoc disaster assistance programs for the purpose of determining whether an applicant is eligible for an increased payment limitation. For example, see the Supplemental Disaster Relief Program regulation at 7 CFR 760.2202, and the Emergency Livestock Relief Program 2023 and 2024 regulation at § 760.2002. The definition no longer includes the previous limitation on inclusion of income from the sale of equipment used for agricultural purposes; therefore, a participant is not required to realize at least 66.66 percent of their income from other listed sources before being able to include income from the sale of agricultural equipment. This change is made to more closely align FSA determinations of income with current IRS requirements and to remove the burden on participants resulting from the inequity in the classification of this income. CCC is also adding income from the trade of equipment to the definition, as trading used equipment when purchasing new equipment is a common business practice.

In addition to the changes described above, this rule makes the following discretionary changes:

• Allows State Executive Directors to designate review teams within their respective State to ensure the 60-day timeline is met for initial payment eligibility determinations for qualified pass-through entities with 6 or more members (§ 1400.2(g));

• Establishes June 1 as the date by which foreign person status is determined for the program year (§ 1400.401(b)(2)); and

• Amends the notification of interest requirements to clarify that legal entities and joint operations must provide the name, address, and ownership share of all interest holders in the legal entity, regardless of ownership level (§ 1400.10(e)).

The modifications to the payment limitation and eligibility provisions authorized by OBBBA are distinct and severable from one another, as well as from the minor administrative changes and updates to the payment limitation and eligibility regulations. Each provision is designed to function independently, ensuring that the rule as a whole remains effective and aligned with the agency's intent, even if certain provisions were to be invalidated.

As specified in 7 U.S.C. 9091(c)(2), the regulations to implement payment limitation and payment eligibility are exempt from:

• The Paperwork Reduction Act (44 U.S.C. chapter 35), and

• The notice and comment provisions of 5 U.S.C. 553.

Further, the Administrative Procedure Act (APA, 5 U.S.C. 553(a)(2)) provides that the provisions requiring notice and comment and a 30-day delay in the effective date do not apply when the rule involves specified actions, including matters relating to benefits or contracts. This rule governs payments to agricultural producers and therefore falls within the benefits exemption.

In addition, 7 U.S.C. 9091(c)(3) directs the Secretary to use the authority provided in 5 U.S.C. 808 of the Congressional Review Act (CRA), which would ordinarily necessitate delaying its effective date for 60 days (5 U.S.C. 801(a)(3)(A)). The CRA, at 5 U.S.C. 808(2), allows an agency to make such regulations effective immediately if the agency finds there is good cause to do so. USDA has determined that such good cause exists here. This rule is implementing mandatory requirements of the OBBBA, and the regulatory changes included in this rule are necessary to administer CCC programs that help the beneficiaries of those programs sustain their normal business operations. As a result, USDA finds that notice and public procedure are contrary to the public interest. Therefore, USDA is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review. Accordingly, this rule is effective upon publication in the Federal Register .

This rule is exempt from the regulatory analysis requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) because it involves matters relating to benefits. The requirements for the regulatory flexibility analysis in 5 U.S.C. 603 and 604 are specifically tied to the requirement for a proposed rule by section 553 or any other law; in addition, the definition of rule in 5 U.S.C. 601 is tied to the publication of a proposed rule.

Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” direct agencies to assess all 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 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14192, “Unleashing Prosperity Through Deregulation,” announced the Administration policy to significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen and to alleviate unnecessary regulatory burdens placed on the American people. In line with the Executive Order requirements, the Agency chose this regulatory approach, which implements mandatory provisions of the OBBBA and clarifies and simplifies program requirements, to maximize benefits and minimize burden on American producers. This rule is not an Executive Order 14192 regulatory action because it does not impose any more than de minimis regulatory costs.

The Office of Management and Budget (OMB) designated this rule as significant under Executive Order 12866, and therefore, OMB has reviewed this rule. The costs and benefits of this rule are summarized below. The full CBA is available on regulations.gov.

Prior to OBBBA, farms operated as LLCs or S corporations were treated as a single “person” for payment limitation purposes. As a result, a farming operation owned by multiple family members under one LLC was capped at a single (often, $125,000) payment limit. With OBBBA, LLCs and S corporations are now treated as “pass-through entities” for the purposes of payment limits. This allows each member of the entity who is “actively engaged in farming” to qualify for their own individual payment limit. This change is projected to increase outlays by $597 million over 10 years.

This rule also makes a discretionary change to permit members of a general partnership or joint venture to receive a salary and qualify the farming operation for a payment limit; prior, salaried members of these two entity types could not qualify for farm program payments. This provision is not expected to significantly change outlays because many general partnerships and joint ventures added an ownership layer prior to this change, allowing them to receive payment even though the members were salaried.

In general, a person or legal entity is not eligible to receive payments if the average AGI of the person or legal entity exceeds $900,000 for the 3 taxable years preceding the immediately preceding tax year. OBBBA creates an exception for ELAP, LFP, LIP, TAP, and NAP if the producer can demonstrate that at least 75 percent of their income is from agriculture. This change is expected to increase outlays by $267 million over 10 years.

In total, this rule is expected to increase outlays by $864 million over 10 years (or $86.4 million annually).

The environmental impacts have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347) and the USDA regulation for compliance with NEPA (7 CFR part 1b).

This rule implements primarily mandatory changes to payment limitation and payment eligibility provisions that are required by the OBBBA, with limited discretionary aspects that do not have the potential to impact the human environment as they are administrative. Accordingly, these discretionary aspects are covered by the FSA Categorical Exclusions specified in 7 CFR 1b.4(c)(16)(ix) that applies to safety net programs and § 1b.(c)(16)(vii) that applies to price support programs.

No Extraordinary Circumstances (§  1b.3(f)) exist because these are administrative payment programs. As such, the implementation of the payment eligibility and payment limitation provisions do not constitute major Federal actions that would significantly affect the quality of the human environment, individually or cumulatively. Therefore, FSA will not prepare an environmental assessment or environmental impact statement for this action and, consistent with §  1b.3(g), this document serves as the programmatic finding of applicability and no extraordinary circumstance (FANEC) for this Federal action.

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.

USDA has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that required Tribal consultation at this time. If a Tribe requests consultation, the USDA Farm Service Agency will work with the FSA Federal Preservation Officer, who will engage the Office of Tribal Relations as needed, to ensure meaningful consultation is provided.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4) requires Federal agencies to assess the effects of their regulatory actions of State, local, and Tribal governments or the private sector. Agencies generally must prepare a written statement, including cost benefit analysis, for proposed and final rules with Federal mandates that may result in expenditures of $100 million or more in any 1 year for State, local or Tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates, as defined in Title II of UMRA, for State, local and Tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

FSA is committed to complying with the E-Government Act of 2002, 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.

The titles and numbers of the Federal assistance programs, as found in the Assistance Listing, to which this document applies are:

10.051—Commodity Loans and Loan Deficiency Payments;

10.069—Conservation Reserve Program;

10.088—Livestock Indemnity Program;

10.089—Livestock Forage Disaster Program;

10.091—Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program;

10.092—Tree Assistance Program;

10.113—Agriculture Risk Coverage;

10.112—Price Loss Coverage;

10.451—Noninsured Assistance;

10.912—Environmental Quality Incentives Program; and

10.917—Agricultural Management Assistance.

For the reasons discussed above, CCC amends the regulations in 7 CFR part 1400 as follows:

The Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS or the Department) is responsible for enforcing Section 1557 of the Affordable Care Act (ACA) (Section 1557). 1 Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in a health program or activity, any part of which is receiving Federal financial assistance. On August 4, 2022, the Department published a Notice of Proposed Rulemaking (NPRM). 2 On May 6, 2024, the Department published a final rule, the Nondiscrimination in Health Programs and Activities Rule (2024 Rule or Rule), 3 which finalized proposals in the NPRM. The 2024 Rule provides, among other things, that discrimination on the basis of sex includes discrimination on the basis of gender identity. 4

On July 3, 2024, the United States District Court for the Southern District of Mississippi granted a preliminary injunction that prohibited HHS from enforcing, relying on, implementing, or otherwise acting pursuant to the 2024 Rule's provisions concerning gender- identity discrimination. 5 The Court also stayed the Rule's effective date as to specific provisions, insofar as the Rule was intended to extend discrimination on the basis of sex to include discrimination on the basis of gender identity.

On October 22, 2025, the court issued a final judgment vacating the following parts of the 2024 Rule to the extent that they expand Title IX's definition of sex discrimination to include gender-identity discrimination: 42 CFR 438.3(d)(4), 42 CFR 438.206(c)(2), 42 CFR 440.262 (which apply to CHIP managed care through cross-references in §§  457.1201(d) and 457.1230(a), and CHIP fee-for-service through cross-reference at §  457.495(e)), 42 CFR 460.98(b)(3), 42 CFR 460.112(a), 45 CFR 92.101(a)(2)(iv), 45 CFR 92.206(b)(1)-(4), 45 CFR 92.207(b)(3)-(5), 45 CFR 92.8(b)(1), 45 CFR 92.10(a)(1)(i), and 45 CFR 92.208. 6 The court also issued plaintiffs the following declaratory judgment: “HHS exceeded its statutory authority when (1) it interpreted Title IX, as incorporated into Section 1557, to prohibit discrimination on the basis of gender identity, and (2) when it implemented Section 1557 regulations concerning gender identity and `gender affirming care.' ”  7

As long as the specified provisions of the 2024 Section 1557 Rule remain vacated, those provisions are legally void to the extent that they expand Title IX's definition of sex discrimination to include gender-identity discrimination. OCR cannot and will not investigate or enforce compliance with, the provisions of the 2024 Rule that were vacated, to the extent that such provisions expanded Title IX's definition of sex discrimination to include gender-identity discrimination.

This Notification applies to all covered entities with respect to their compliance with the provisions of the 2024 Section 1557 Rule that were deemed unlawful and vacated by the court.

This Notification does not apply to the provisions of the Section 1557 Rule that were not vacated in the Court's October 22, 2025, final judgment or to the specified provisions to the extent they relate to things other than expanding Title IX's definition of discrimination to include gender-identity discrimination. The other provisions of the 2024 Rule remain in force.

This Notification creates no legal obligations and no legal rights. Because this Notification imposes no information collection requirements, it need not be reviewed by the Office of Management and Budget under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Administrator of the Centers for Medicare & Medicaid Services (CMS), Mehmet Oz, having reviewed and approved this document, authorizes Evell Barco Holland, who is the Federal Register Liaison, to electronically sign this document for purposes of publication in the Federal Register .

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114-74, sec. 701), which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410), was enacted on November 2, 2015. 1 The 2015 Act requires agencies to annually adjust the level of civil monetary penalties for inflation based on Consumer Price Index (CPI-U) data from the Bureau of Labor Statistics (BLS). 2 Per the 2015 Act, the annual civil monetary penalties cost-of-living adjustment is based on BLS data from the month of October of the prior year. Due to the Government shutdown, BLS did not release a CPI-U for October 2025.

On April 17, 2026, OMB issued memorandum M-26-11, Cancellation of Penalty Inflation Adjustments for 2026, Regarding the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, informing agencies of the cancellation of the inflation adjustment for 2026. Based on the lack of CPI-U data for October 2025, which is needed to make adjustments under the 2015 Act, and in accordance with OMB Memorandum M-26-11, the Commission will continue using the 2025 civil monetary penalty levels.

Adjustments under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, as amended, are not subject to the procedural rulemaking requirements of 5 U.S.C. 553, including the requirements for prior notice, an opportunity for comment, and a delay between the issuance of a final rule and its effective date. 3

OIRA has determined that this rule is not significant for purposes of section 3 of Executive Order 12866.

The rule is not a “major rule” as defined by the Congressional Review Act, codified at 5 U.S.C. 801 et seq. The rule will not result in: (1) an annual effect on the economy of $100,000,000 or more; (2) a major increase in costs or prices; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign-based companies. 5 U.S.C. 804(2).

The Regulatory Flexibility Act (codified as amended at 5 U.S.C. 601-612) provides that whenever an agency promulgates a final rule after being required to publish a notice of proposed rulemaking under the APA (5 U.S.C. 553), the agency must prepare and make available a final regulatory flexibility analysis describing the impact of the rule on small entities or the head of the agency must certify that the rule will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 604-605. As indicated above, this final rule is not subject to the APA's notice and comment requirements, and the Commission is therefore not required to either conduct a regulatory flexibility analysis or certify that the final rule would not have a significant economic impact on a substantial number of small entities.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) requires an agency to seek and receive approval from the Office of Management and Budget (OMB) before collecting information from the public. 44 U.S.C. 3507. The agency must submit collections of information in rules to OMB in conjunction with the publication of the notice of proposed rulemaking. 5 CFR 1320.11. This final rule does not contain any collection of information, as defined by 44 U.S.C. 3502(3) and 5 CFR 1320.3(c).

For the reasons stated in the preamble, 46 CFR part 506 is amended as follows:

PHMSA is adopting, with some modification based on comments received, the amendments proposed in the HM-257A notice of proposed rulemaking (NPRM), titled Hazardous Materials: Streamlining Requirements for the Approval of Certain Energetic Materials. 1 This final rule:

• Streamlines the classification and approval process for transporting certain low-hazard fireworks by allowing self-certification using an online application in the PHMSA portal;

• Ensures exception from regulation of low hazard fireworks commonly known as novelty devices by adopting guidance criteria into the HMR;

• Revises the classification criteria for small arms cartridges to include tracer ammunition as eligible for self-classification as a Division 1.4S material;

• Designates the PHMSA portal as the sole method to submit applications for all explosives approvals; and

• Authorizes an approval holder to terminate an explosive approval voluntarily.

PHMSA expects the final rule will generate aggregate cost savings by reducing unnecessary burdens on the classification process for the transportation of explosives—such as low hazard fireworks—and providing additional flexibility for stakeholders while maintaining current levels of safety. 2 The amendments in the final rule will also reduce unnecessary regulatory burdens constraining innovation and commerce consistent with Executive Order (E.O.) 14192 ( Unleashing Prosperity Through Deregulation ).

PHMSA expects the final rule will result in net cost savings of $2.2 million (2024 dollars) over a 10-year analysis period, or approximately $200,000 annually. PHMSA also estimates that 846 labor hours will be saved annually from time that would have been spent processing fireworks approvals, resulting in an annual budget savings of $85,341 to the government—significantly increasing government efficiency and making government resources available for other higher priority tasks. The final rule will streamline the approval process, improve regulatory clarity, and facilitate international trade without adversely affecting safety. PHMSA has developed a detailed economic analysis in the final regulatory impact analysis (RIA), a copy of which has been placed in the docket.

PHMSA incorporates by reference into the HMR all or parts of numerous standards and specifications developed and published by standard development organizations (SDOs). In general, SDOs update and revise their published standards every two to five years to reflect modern technology and best technical practices.

The National Technology Transfer and Advancement Act of 1995 (NTTAA; 15 U.S.C. 3701 et seq. ) directs Federal agencies to use standards developed by voluntary consensus standards bodies in lieu of government-written standards whenever possible. Voluntary consensus standards bodies develop, establish, or coordinate technical standards using agreed-upon procedures. The Office of Management and Budget (OMB) issued Circular A-119, Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities, to implement section 12(d) of the NTTAA relative to the utilization of consensus technical standards by Federal agencies. This circular provides guidance for Federal agencies participating in voluntary consensus standards bodies and describes procedures for satisfying the reporting requirements in the NTTAA.

PHMSA is responsible for determining which standards currently referenced in the HMR should be updated, revised, or removed, and which standards should be added to the HMR, under the NTTAA and Circular A-119. Revisions to materials incorporated by reference in the HMR are handled via the rulemaking process, which allows for the public and regulated entities to provide input. During the rulemaking process, PHMSA must also obtain approval from the Office of the Federal Register to incorporate by reference any new materials. The Office of the Federal Register issued a rulemaking that revised 1 CFR 51.5 to require that an agency detail in the preamble of a final rule the ways the materials it proposes to incorporate by reference are reasonably available to interested parties, or how the agency worked to make those materials reasonably available to interested parties. 3

The following American Pyrotechnics Association (APA) standards appear in the regulatory text of this final rule and have already been incorporated by reference into the HMR in 49 CFR 171.7 and approved for the locations in which they appear: (1) APA 87-1A: Standard for the Construction, Classification, Approval and Transportation of Consumer Fireworks (2018); (2) APA 87-1B: Standard for the Construction, Classification, Approval, and Transportation of Display Fireworks (2018); and (3) APA 87-1C: Standard for the Construction, Classification, Approval, and Transportation of Entertainment Industry and Technical Pyrotechnics (2018). No changes to these standards are established in this final rule.

The final rule amends the classification and approval process for certain low hazard fireworks determined to be Division 1.4G explosives under the HMR. Section 173.50(b)(4) defines Division 1.4 explosives to consist of explosives that present a minor explosion hazard. Table 1 to § 173.52 assigns a “G” to Division 1.4 explosives that are pyrotechnic substances or articles containing a pyrotechnic substance, or articles containing both an explosive substance and an illuminating, incendiary, tear-producing or smoke-producing substance. Many fireworks are assigned to compatibility group “G.” These low hazard fireworks include ground and novelty device fireworks under the 2018 APA Standard 87-1A. However, novelty fireworks that comply with the requirements of the 2018 APA Standard 87-1A are regulated as hazardous materials effectively only when transported by air, and then as Division 4.1 flammable solids instead of as Class 1 explosives.

Low hazard fireworks are explosive articles that are not designed to leave ground level, contain no aerial components, and contain less than 100 grams of chemical composition per tube. These explosive articles are known to present a minimum safety risk in transportation. Manufacturing is restricted to using only chemicals from the “Permitted and Restricted Chemical Table for Consumer Fireworks and Novelties” found in 2018 APA Standard 87-1A and reports ( i.e., the “pop” or “bang” heard from a firework) being limited to no more than 50 milligrams of report composition.

Classifying low hazard fireworks as Division 1.4G fireworks is consistent with the United Nations (UN) default fireworks table (“the UN table”) and 30 years of classification experience under the APA standards. The UN table for explosives, specifically within Class 1, categorizes explosives into six divisions based on their potential effects. The six divisions range from those with a mass explosion hazard (1.1) to those with a minor explosion hazard (1.4) and include categories for projection hazards and fire hazards with varying degrees of severity. The UN table is used primarily when specific test data or competent authority classifications are unavailable, particularly for imported fireworks. For clarity, PHMSA is adding a separate term and description for “low hazard fireworks” to § 173.59 (description of terms for explosives). The addition of this description maintains current levels of safety by ensuring proper understanding of the meaning of low hazard fireworks in the HMR for purposes of the provisions adopted in this rulemaking.

The final rule streamlines the approval or certification process to allow self-certification. Ground device fireworks are designed to produce their effects at or near ground level. The following 17 individual ground devices are considered low hazard fireworks that may be approved or certified for transportation using the new system, provided they meet HMR and APA requirements for construction, formulation, and packaging: Chaser, Crackling Ball, Crackling Strip, Crackling Tube, Firecracker, Flasher/Strobe, Flitter Sparkler, Fountain Cone, Fountain Cylindrical, Fountain Nitrocellulose, Ground Spinner, Illuminating Torch, Smoke, Snake, Specialty Device, Wheel, and Sparklers (to include the Wire Sparkler or Dipped Stick varieties).

Ground devices meeting 2018 APA Standard 87-1A are described and classified as “UN0336, Fireworks, Division 1.4G.” Currently, ground device classifications are either approved by PHMSA personnel or certified by a Fireworks Certification Agency (FCA) upon completion of a multi-step review of each application. The final rule allows manufacturers to self-certify using an online application in the PHMSA portal that employs an automated system for review and issuance of a certification. This automated system may be used for the ground devices identified in this final rule in lieu of the current process, which will avoid time-consuming reviews by PHMSA or FCA personnel and reduce costs to manufacturers who opt to use an FCA to certify these firework types.

Manufacturers of fireworks that meet the criteria for the construction, formulation, and packaging of these ground devices—specifically discussed in Section V of the 2018 APA Standard 87-1A—certify compliance with specified conditions and limitations and receive a certificate with a unique identifier number ( i.e., a FW number) for each firework type. The online application in the PHMSA portal provides immediate comparison of the technical information provided by the applicant against the criteria established for ground device fireworks. PHMSA will maintain oversight of the self-certification information submitted to the PHMSA portal for these low hazard firework types through a quality assurance and quality control (QA/QC) review program. Accordingly, PHMSA finds the current safety level will be maintained when using this process for self-certification of eligible ground device fireworks.

PHMSA is not authorizing cake and combination ground devices to be eligible for self-certification at this time. Manufacturers can use the PHMSA portal to submit an application for these ground devices following the standard approval application process to obtain an EX number or, alternatively, use an FCA to obtain an FC number for transportation.

The final rule adopts conditions and criteria for exceptions from regulation for novelty devices (“novelties”) consistent with past guidance and the 2018 APA Standard 87-1A. Shippers and carriers of novelties that meet the construction, formulation, and packaging criteria for these devices are not subject to regulation under the HMR beyond the conditions adopted for novelties. Though excepted from regulation in most circumstances, novelty devices meeting the conditions and criteria prescribed in the final rule are still subject to PHMSA oversight.

PHMSA guidance currently allows for five novelties—when shipped domestically by ground, rail, or vessel—to be transported without being regulated as explosives when manufactured in accordance with the applicable provisions in the 2001 edition of APA Standard 87-1. The 2018 APA Standard 87-1A includes two additional novelties that may be excluded from HMR requirements—for a total of seven novelties—provided they meet the conditional requirements for construction, formulation, packaging, and transportation mode. The seven novelties are Booby Trap/Pull Apart, Novelty Flitter Sparkler, Party Popper, Novelty Snake, Snapper, Novelty Wire Sparkler or Novelty Dipped Stick, and Novelty Smoke Device. However, when prepared for transportation by air, these novelties must be described and classified as “UN3178, Flammable solid, inorganic, n.o.s. (novelties), 4.1” and shipped as flammable solids under the HMR.

When transported domestically by ground, rail, or vessel, a PHMSA approval or FCA certification is not required for novelties manufactured in accordance with the PHMSA guidance document and the applicable provisions in 2018 APA Standard 87-1A. PHMSA is not aware of any systemic safety issues or safety concerns involving shipments of novelties meeting these conditions. This final rule adopts the relief provided in the PHMSA guidance by regulation to provide manufacturers of novelties with greater clarity and certainty without reducing levels while maintaining safety. 4

The final rule clarifies that certain tracer ammunition is a small arms cartridge eligible for self-classification as a Division 1.4S material and excepted from the explosive application approval process, provided the applicable criteria in 49 CFR 173.56(h) are met. However, the text of an exception for small arms cartridges in a subsequent provision, § 173.56(h)(3), has created uncertainty as to whether an inert projectile with a tracer can be included under that regulation. Tracer ammunition uses a small amount of pyrotechnic charge at the base or as coating of the projectile to make the trajectory of the projectile visible to the naked eye. Affected entities have expressed concern about whether tracer ammunition is considered inert under § 173.56(h)(3) and qualifies for the exception in that regulation. PHMSA considers the small amount of pyrotechnic charge as a negligible quantity of explosive material compared to the quantity of propelling charge contained within the cartridge itself, and this small amount of pyrotechnic charge at the base of or coated on the projectile does not increase the hazard posed by the packaged cartridges in a bonfire test nor make unintentional initiation any more likely.

The final rule amends § 107.705(a)(1) to allow the PHMSA portal to be used for submitting all approval applications and to require the use of the PHMSA portal for explosives approval applications, including to self-certify the manufacture of ground device fireworks. Persons will no longer be able to submit explosives approval applications by mail, email, or fax and must use the PHMSA portal after the final rule becomes effective. PHMSA believes that moving to an electronic-only service will increase efficiency in processing the large volume of explosives approval applications that are submitted on an annual basis. The PHMSA portal provides the public online access to PHMSA services, creating a single source for Hazardous Materials and Pipeline Safety applications and data. Persons need only to register to create an account to access and use the portal. Further discussion is provided in “Section V.”

The final rule modifies the process for the modification, suspension, and termination of approvals in § 107.713. As currently prescribed in § 107.713(c), before an approval is modified, suspended, or terminated, PHMSA must provide approval holders an opportunity to show cause why the proposed action should not be taken. The final rule amends § 107.713 to add a new provision allowing approval holders to request termination of approvals. The final rule also revises the current requirements to clarify that when an approval holder voluntarily seeks to terminate an approval, PHMSA is not required to issue a show cause letter.

PHMSA issued an NPRM under Docket No. PHMSA 2020-0103 (HM-257A). 5 The comment period for the NPRM closed February 28, 2024. PHMSA received seven sets of comments from the following:

All comments are generally supportive of PHMSA's efforts under this rulemaking—especially self-certification of “low hazard fireworks” and streamlining of the approval process overall. The comments submitted to this docket may be accessed via the docket file numbers listed in the above table at https://www.regulations.gov. PHMSA developed this final rule in consideration of the comments received to the public docket.

Within the seven sets of positive comments, PHMSA did receive several outside the scope of this rulemaking. Specifically, PHMSA received comments from SAAMI recommending the following revisions to the HMR to improve efficiency:

• Establish a de minimis threshold for minute amounts of explosives in either very small per-unit quantities or percentages in dilutions.

• Review testing requirements for high hazard explosives in Division 1.1 by relying only on sensitivity and thermal stability testing to ensure that an explosive is safe to transport.

• Specify a high, medium, and low hazard explosives groups scheme.

• Use a management approach to Division 1.4S explosives.

• Standardize the approach to Class 9 energetics, consistent with proposals and the United Nations.

• Consider more fully relying on the recommendations from PHMSA-approved explosive laboratories.

PHMSA appreciates SAAMI's feedback on areas for increasing efficiency in the safe transportation of explosives. Though relevant to the discussion of the approach to classifying and transporting explosives, PHMSA did not propose these changes in the NPRM and is therefore declining to pursue them at this time. However, PHMSA invites SAAMI and its member companies to submit petitions for rulemaking that include economic and safety information in support of such changes. PHMSA also will consider these suggestions as part of its efforts to improve government efficiency.

PHMSA also received comment from the AFSL—an independent, not-for-profit standards development and testing organization serving the consumer fireworks industry. AFSL sets design, construction, and product performance standards for all current categories of consumer fireworks and novelties. AFSL recommended that PHMSA audit all products requiring EX or FC numbers to ensure manufacture of the product is consistent with the information provided to PHMSA. AFSL believes that consumer fireworks devices which differ materially from information submitted and approved in the application process are being imported into the U.S. and creating a risk to the American public. PHMSA acknowledges the AFSL's concerns about product quality and agency oversight. Though beyond the scope of this rulemaking, PHMSA will take AFSL's recommendation into consideration for development of a plan and allocation of enforcement resources to inspect consumer fireworks products.

The final rule amends certain regulations in the HMR for explosives approvals to streamline procedural requirements for fireworks manufacturers and shippers. PHMSA will continue to use the current approval process for Division 1.4G consumer fireworks in accordance with § 173.56(b), (f), or (i), and § 173.65. However, the final rule allows manufacturers to self-certify the classification of certain ground device fireworks using the PHMSA portal and creates a conditional exception from further regulation under the HMR for novelties. Furthermore, the final rule revises the self-classification of inert projectile cartridges in § 173.56(h) to include explicitly tracer ammunition; amends § 107.705 to mandate the use of the PHMSA portal for explosives approval applications; and amends § 107.713 to clarify that an approval holder may voluntarily terminate an approval and to clarify that a show cause letter from PHMSA is unnecessary in these circumstances. Note that the ability to terminate an approval voluntarily is not limited to holders of explosives approvals and applies to all approval holders.

In the final RIA, PHMSA determined that the aggregate benefits of the amendments in the final rule justify their aggregate costs. The amendments are expected to reduce the paperwork burden on the regulated community and PHMSA personnel by eliminating paper-based explosives approval applications. The overall net benefits include a cost savings of 846 labor hours annually. See the RIA for additional information. These cost savings will not have a material effect on the safety impact of PHMSA's explosives approval program. Based on an assessment of the comments received in response to the NPRM, PHMSA amends the HMR as detailed in this section.

The final rule revises § 173.64—Exceptions for Division 1.3 and 1.4 Fireworks—to codify exceptions for ground devices and novelties. Specifically, for these low hazard fireworks, the final rule allows an exception from the standard explosive device approval process for the classification into Division 1.4G. This exception is implemented by establishing an automated system within the PHMSA portal that allows for self-certification. This automated system, which may be used for the ground devices identified in this rulemaking, reviews the information provided by the applicant, which is the same as currently required under the HMR, and issues a certificate with a unique identifier ( i.e., an FW number). PHMSA personnel will no longer need to conduct a time-consuming review of each application under the automated system. This includes firsthand review of the diagram of the firework device and its chemical formulation sheets since compliance is certified by the applicant. Adopting the automated system is consistent with the directive in E.O. 12866 to implement alternatives to direct regulation and will not have any adverse impacts on public health and safety or the environment. 6

Currently, the HMR requires explosives—such as fireworks—to be examined, classed, and approved by PHMSA. Certain fireworks may also be certified for transportation by a DOT-approved FCA instead. Streamlining the process to authorize transportation of low-hazard fireworks through self-certification will introduce efficiencies and maintain transportation safety under the HMR.

Though the NPRM proposed to include novelties in the self-certification process, PHMSA is not adopting that proposal in the final rule. Novelties historically have not been subject to a PHMSA “approval process,” and PHMSA has no information indicating that this practice presents a safety risk. In addition, commenters raised concerns in response to the NPRM that self-certification would impose a new regulatory burden on manufacturers of novelties. For these reasons, PHMSA is codifying the conditions and criteria found in the PHMSA guidance and 2018 APA Standard 87-1A to provide an exception from further regulation for seven novelties. Manufacturers need only comply with conditions and criteria in § 173.59 to claim the exception, as opposed to also certifying compliance using the PHMSA portal. Finally, a new definition for “low hazard firework” is added to § 173.59 consistent with the other changes adopted in the final rule.

PHMSA received a comment from SAAMI stating that the phrase “low explosive hazard,” as proposed in the new definition of “low hazard fireworks” in § 173.59, has distinct meaning and should not be generally conflated with “low hazard fireworks.” SAAMI understands that “low hazard fireworks” include medium explosive hazards, which PHMSA also classifies as Division 1.4 explosive hazards, and suggests that PHMSA use the term “Division 1.4” instead of “low explosive hazard” in the definition of “low hazard fireworks.” Division 1.4 includes both Division 1.4G and 1.4S, which SAAMI views as both medium and low explosive hazards encompassed by the term “low hazard fireworks.” PHMSA agrees that using the phrase “low explosive hazard” in the definition of “low hazard fireworks” may be confusing. Accordingly, the final rule refers generally to a Division 1.4 material in the new definition.

SAAMI also states that the fireworks industry uses the phrase “low hazard fireworks” for products classified as Division 1.4G, which SAAMI views as a medium explosive hazard, while some of these fireworks likely do have a Division 1.4S low explosive hazard. SAAMI states that the assignment of “low hazard fireworks” (as a Division 1.4G) may be a conservative approach in some cases, and that PHMSA may want to clarify that performance testing to obtain a Division 1.4S classification remains an alternative option. SAAMI specifically suggests that PHMSA should point out the availability of the option to continue using procedures provided in § 173.56 to obtain a Division 1.4S classification in the newly revised § 173.64(b). PHMSA agrees. The final rule revises § 173.64(b) to include additional language that low hazard consumer fireworks may still be classified as specified in § 173.56. This revision adds value by clarifying flexibilities offered in the HMR for manufacturers of fireworks devices while maintaining safe transportation of explosives material.

Ground device fireworks certified using the PHMSA portal as conforming to the construction, formulation, and packaging requirements in § 173.64 are authorized for transport as “UN0336, Fireworks, 1.4G.” Seventeen ground devices are eligible for this new certification process: Chaser, Crackling Ball, Crackling Strip, Crackling Tube, Firecracker, Flasher/Strobe, Flitter Sparkler, Fountain Cone, Fountain Cylindrical, Fountain Nitrocellulose, Ground Spinner, Illuminating Torch, Smoke, Snake, Specialty Device, Wheel, and Sparklers (Wire Sparkler or Dipped Stick). Cake and combination devices are excluded from eligibility for certification using this automated system.

The final rule specifies the criteria for manufacturing (construction and formulation) and packaging of these ground devices. They are subject to both general and specific requirements as presented below in the table of Criteria for Ground Devices. General requirements for ground devices are as follows:

• Devices must use chemicals in conformance with the “Permitted and Restricted Chemicals for Consumer Fireworks and Novelties” table in APA Standard 87-1A, incorporated by reference in § 173.64. Note that all chemical specifications in the table are maximum limits.

• All reports are limited to 50 mg (0.050 g) of composition per report.

• All devices are initiated by a safety fuse with the exception of firecrackers, flitter sparklers, nitrocellulose fountains, snakes, wire sparklers, or dipped sticks.

• All devices must be finished ( i.e., cannot be a component intended to be used in another device).

• All devices must successfully pass a thermal stability test as specified in § 173.64(a)(2).

• Each device must be marked with the alphanumeric PHMSA-assigned identifier number (“FW number”) consisting of the letters FW, followed by the year and month issued, and a sequential number based on order of issuance that year ( e.g., FWYYYYMMSSSS). If the device is too small, the package that contains the device must display the certification number.

The specific requirements for each of the 17 eligible ground device types are as follows:

To receive an FW number, a manufacturer must follow a multi-step process. First, the applicant must register with PHMSA to create an account (if not already an account holder within the PHMSA portal) and provide the following contact information: Company name, contact person, title, address, phone, and email address; manufacturing location; and U.S. agent (if applicable), address, phone, and email address. A unique profile is created for each applicant based on their email address, which allows for repeated access. If already registered as an account holder with the PHMSA portal, persons must ensure all necessary information is provided to allow for self-certification.

Then, the applicant must select the option for self-certification of a firework and provide specific information about a device and certify that the construction, chemical composition, and packaging are in accordance with the HMR. This step requires the applicant to respond to the following questions:

• What is the name and/or product code of the device? (Must be unique.)

• What is the category of the ground device? (There will be a drop-down menu with the 17 authorized ground devices.)

• What is the maximum weight in grams of chemical composition in the device?

• Does the device contain a report? (List how many reports.)

• What is the maximum weight in milligrams of any single report in the device?

• What is the total report weight in milligrams in the device?

• Did the device pass a thermal stability test?

• Does the device comply with the Permitted and Restricted Chemicals Table found in the APA Standard 87-1A, Appendix 1, currently incorporated by reference in § 173.64?

• Does the device use a safety fuse for ignition?

• Does the device meet one of the descriptions listed in § 173.64?

• Do you certify the device will be manufactured and transported in accordance with all the statements you attested to above?

A certificate will be issued for each device following the successful completion of the process. The certificate contains the unique alphanumeric identifier number described above.

The People's Republic of China (PRC) submitted comments requesting that PHMSA expand the self-certification process for low hazard fireworks to all consumer fireworks classified as Division 1.4G. PHMSA appreciates PRC's perspective on this issue but is not prepared at this time to expand the self-certification process to all consumer fireworks classified as Division 1.4G.

Novelties conforming to the construction, formulation, and packaging requirements in § 173.64 are authorized for transport without further regulation except for air transport. Though considered Division 1.4 fireworks under PHMSA's regulatory scheme, consistent with the guidance previously discussed in this Section V.A, novelties that meet the requirements of § 173.64 are not regulated by PHMSA, except that they must be classed, described, and packaged as “UN3178, Flammable solid, inorganic, n.o.s. (novelties), 4.1, PG II,” when transported by air. Seven novelties are eligible for this exception: Booby Trap/Pull Apart, Novelty Flitter Sparkler, Party Popper, Novelty Snake, Snapper, Novelty Wire Sparkler or Novelty Dipped Stick, and Novelty Smoke Device.

Novelties must comply with both the general and specific requirements as presented below in the table of Criteria for Novelties. The general requirements for novelties are as follows:

• Devices that do not list specific chemical restrictions must use chemicals in conformance with the permitted and restricted chemical table in the APA Standard 87-1A, Appendix 1, incorporated by reference in § 173.64. Note that all chemical specifications in the table are maximum limits.

• No reports are permitted in novelties.

• Smoke devices must be initiated by a fuse.

• Devices must be finished and packaged in the inner packagings.

• All novelties must successfully pass a thermal stability test specified in § 173.64(a)(2).

The specific requirements for each of the seven novelties are as follows:

Novelties must be in inner packagings that are further packed in strong outer packagings. The packages must conform to the general packaging requirements of § 173.24. The maximum gross weight of a completed package may not exceed 30 kilograms (66 pounds). In addition, each outer package must be plainly marked with “NOVELTIES, IN CONFORMANCE WITH § 173.64, NOT REGULATED, EXCEPT WHEN TRANSPORTED BY AIR.” If an overpack is used and the marking on packages contained therein is not visible, the overpack must also be marked with this marking. As stated earlier, when novelties are transported by air, they must be classed and described as “UN3178, Flammable solid, inorganic, n.o.s. (novelties), 4.1, PG II,” and packaged for air transport accordingly.

APA submitted comments requesting that PHMSA expand the exceptions for the seven eligible novelty devices to include fuseless smoke devices, fireworks fuses, and pull string smoke devices that do not require a fuse. 8 PHMSA believes more information is needed to support expanding the group of novelties that are eligible for the exception beyond those proposed in the NPRM. PHMSA suggests APA provide that supporting information in a petition for a rulemaking.

As a baseline, fireworks must be approved and assigned an explosives approval number by PHMSA ( i.e., an EX number) based on actual testing and classification prior to transportation to, from, and within the United States based on the requirements for a new explosive under § 173.56. However, § 173.64 permits Division 1.3G and 1.4G fireworks to be approved without prior examination based on certain conditions, including compliance with the provisions of the 2018 APA Standards 87-1A, 1B, and 1C, which are incorporated by reference in § 171.7. Further, § 173.65 permits—in lieu of an approval—Division 1.4G consumer fireworks (as defined in § 173.59) to be certified by a DOT-approved FCA. After the FCA reviews the consumer fireworks application and certifies it meets the requirements, the FCA assigns an FC number.

The final rule streamlines the process for approval or certification of ground device fireworks by allowing self-certification using the PHMSA portal. Manufacturers will certify compliance with specified conditions and limitations online and receive a certificate with a unique identifier number ( i.e., an FW number) for each firework type. The FW number will identify the ground device that has been certified through the newly established automated system as specified § 173.64. An example of an FW number would be “FW2023100001” consisting of the letters FW, followed by the year and month issued, and a sequential number based on order of issuance that year.

PHMSA requested comment on the supply chain implications, the economic impact, and safety concerns associated with the proposed FW numbering system, as well as comment on how to implement the changes if they are adopted. PHMSA received comment from APA stating that novelties have not been required to have an EX approval number since 2009. APA did not understand why PHMSA would propose to now require manufacturers of novelties to apply ( i.e., self-certify) for an “FW” number. APA further mentioned that requiring an “FW” number contradicts the 2018 APA Standard 87-1A, which states that “[a]n EX-approval or FC certification letter is not required to ship the novelty devices, specifically those listed in the APA Standard 87-1A, into or within the United States.” APA stated that requiring an “FW” number will be a burdensome task for manufacturers—requiring manufacturers to certify novelties, and develop diagrams and technical files, along with the tedious process of entering data in the PHMSA portal.

PHMSA appreciates APA's concerns and is not adopting the proposal to include novelties in the automated self-certification process. Given the historical transport of these low hazard fireworks since issuance of the guidance without any known or anecdotal incidents in transportation, PHMSA believes adopting requirements for manufacturers to certify compliance and supply information to PHMSA in the portal imposes an undue burden without a corresponding safety benefit. Yet, PHMSA can still provide certainty for the exception. Therefore, the final rule only adopts the conditions and criteria for relief from transportation regulations for novelties into the HMR. PHMSA notes that novelties will still be regulated for transportation by air.

PHMSA also received comment from APA stating that requiring a diagram for the self-certification of both ground devices and novelties be uploaded with the application is a redundant action. APA stated that these types of low hazard fireworks are well-known and well described in the 2018 APA 87-1A; therefore, the diagrams are not necessary. Though PHMSA generally agrees with APA's statement, a diagram of the device aids in determining compliance by providing useful information on the category of the device and quantity of pyrotechnic in the device. PHMSA's experience has generally shown that some applicants have submitted diagrams for categories of devices that are outside the scope of the approval. In lieu of the proposal to include diagram(s) for ground devices with the information submitted to self-certify the fireworks device, the final rule requires applicants to maintain a record demonstrating compliance, which may include information such as a drawing of the device. The record must be accessible at or through the principal place of business for five years after the device is manufactured and must be made available, upon request.

APA also stated its understanding is that PHMSA currently has a quality assurance (QA) process for reviewing applications certified by FCAs. APA urges PHMSA to have a “similar and consistent process” for the low hazard fireworks subject to the automated system. Without such a process, APA does not support the proposal for self-certification of select ground devices. PHMSA provides assurances to APA and the public that we have a quality assurance and quality control (QA/QC) process to monitor low hazard fireworks self-certifications modeled after QA/QC process we have for the FCA program.

PHMSA also received comment in the form of several questions from American Promotional Events, Inc., and its subsidiaries (collectively known as TNT Fireworks)—an importer, distributor, and transporter of consumer fireworks and novelties in the U.S. TNT Fireworks requested clarification of the self-certification process for low hazard fireworks. PHMSA has paraphrased TNT Fireworks' questions and provided responses as follows:

• Can a U.S. designated agent certify an application for an FW Number on behalf of a non-U.S. manufacturer?

○ A U.S. designated agent may submit the application on behalf of a non-U.S. manufacturer, but the application must be certified by the non-U.S. manufacturer. See Federal Register Notice 10-9  9 —Clarification of the Fireworks Approvals Policy. As noted at 76 FR 38056, “[w]hile firework classification approvals will only be issued to fireworks manufacturers, PHMSA will accept fireworks approval applications from the manufacturer's U.S. designated agent on behalf of the manufacturer, as well as the manufacturer itself” and further at 76 FR 38057, “[i]t is the responsibility of the manufacturer to sign the application and certify that the device conforms.” Similarly, for self-certification of low hazard fireworks, U.S. agents may submit the application information on behalf of a non-U.S. manufacturer, but the manufacturer is required to certify. The automated system allows for a U.S. agent to submit an application and for the manufacturer to follow up on that same application to certify the firework.

• What is the expected turnaround time for the issuance of an FW number upon the submission of an application? Would the FW number be issued automatically upon self-certification of a firework?

○ As previously stated in the final rule, the self-certification process is an automated system. Manufacturers of information submitted for ground devices that meet the required criteria for the construction, formulation, and packaging immediately receive a certificate with the unique FW identifier number for each firework device. The expectation is that this process can take as little as five minutes from start to finish, especially where manufacturers already have an account with the PHMSA portal.

• Will there be an alternative method to apply other than electronically through the PHMSA portal?

○ The PHMSA portal will be the only method of application submittal with respect to explosives approvals applications. See the Section V.C. Amending the Approvals Process discussion of changes.

• Can a U.S. agent of a non-U.S. manufacturer terminate an active EX approval and if so, are there safeguards to ensure that an EX approval is not inadvertently terminated?

○ A U.S. agent may not terminate an EX approval. The request must be submitted separately by the manufacturer through the PHMSA portal for review and handling by PHMSA.

Provided certain conditions are met, 49 CFR 173.56(h) authorizes self-classification of certain types of small arms cartridges into Division 1.4S. In particular, § 173.56(h)(3) authorizes ammunition with inert projectile or blank ammunition. Tracer projectiles use a small amount of pyrotechnic composition to provide visible light upon exit from a firearm barrel. Tracer projectiles cannot be considered as an “inert” projectile due to the presence of the pyrotechnic composition.

However, the quantity of pyrotechnic composition on tracer projectiles is negligible compared to the quantities of pyrotechnic material contained within the cartridge itself. The presence of such small quantities of pyrotechnics neither increases the hazard as indicated when subject to a bonfire test, nor does its presence make unintentional initiation any more likely. The difference in hazard between inert projectile cartridges and the same cartridges with a small amount of pyrotechnic composition for tracer projectiles is negligible. Furthermore, there are no additional concerns related to tracer projectiles that justify exclusion from the self-classification provision of § 173.56(h)(3).

PHMSA received comment from SAAMI suggesting that the term “tracer projectiles” be used in place of the proposed parenthetical “(including tracer ammunition)” to clarify that the exception only authorizes self-classification when the tracer is on the projectile, which is a narrower scope of what might be included in the more general term “tracer ammunition.” Furthermore, SAAMI suggested a conforming revision to the packaging exceptions for limited quantities of small arms cartridges classed as Division 1.4S explosive materials in § 173.63(b) to also include a reference to tracer projectiles self-classed as Division 1.4S in accordance with § 173.56(h)(3). SAAMI believed the logic of the proposed addition of self-classification for tracer ammunition in the latter naturally coincides with the former limited quantity exceptions. SAAMI also made mention of use of the term “projectile” in the singular in § 173.56(h)(3) and in the plural in § 173.63(b); and suggested using the plural in both regulations. Here, PHMSA notes that, in accordance with 49 CFR 171.9—Rules of construction, unless context requires otherwise, words imparting the singular include plural and vice versa. Regarding use of projectile or projectiles, context does not require otherwise.

PHMSA otherwise agrees with the suggestions offered by SAAMI. The conditions for self-classification in § 173.56(h)(3) are the same as the conditions for eligibility for packaging exceptions in § 173.63(b)(1)(ii)(B). Though not proposed, PHMSA views making the same change to § 173.63(b) to include tracer projectile(s) as ammunition eligible for exception from full regulation as a limited quantity material as a logical outgrowth of the proposal to allow tracer projectiles to be self-classified as Division 1.4S material. PHMSA also agrees with the subtlety of the scope change to refer to “tracer projectiles” instead of full cartridges. Therefore, PHMSA adopts the following changes:

• Revise § 173.56(h)(3) to include tracer projectiles; and

• Revise § 173.63(b)(1)(ii)(B) to include tracer projectiles. Note that PHMSA is also making an editorial change to § 173.63(b)(1)(ii). The list of materials that may be shipped as limited quantities includes an “and” conjunction following paragraph (b)(1)(ii)(E), but the “and” should instead follow paragraph (b)(1)(ii)(F) to complete the list with paragraph (b)(1)(ii)(G).

These revisions provide clarity that ammunition with tracer projectiles is eligible for self-classification as Division 1.4S and associated packaging exceptions. The changes maintain the current level of safety for transportation of small arms cartridges.

PHMSA currently provides several options for submitting applications for approvals, including by mail, email, and fax and through the PHMSA portal, though this latter method is not codified as an option. The final rule amends 49 CFR 107.705 to include the PHMSA portal as a submittal option for all approvals. The final rule also establishes the PHMSA portal as the only method for submittal and acceptance of explosives approval applications (including ground device self-certifications). Transitioning to an all-electronic system will improve efficiency. Delays occur when PHMSA personnel must transcribe application information into the portal database due to incomplete data, inability to read handwritten materials, and so forth. Where missing data or uncertainties are discovered, PHMSA personnel must follow up with the applicant or otherwise reject an application, which causes further delays. Electronic submissions improve efficiency for the applicant on the front end (data entry) and for PHMSA on the back end (review and issuance of approval). The PHMSA portal provides online access to PHMSA services, creating a single source for all hazardous materials explosives applications and data. Persons need only to register to create an account, if not having done so already, to access the PHMSA portal. Moreover, an average of three million metric tons of explosives are consumed annually in the U.S., of which a significant portion goes to mining. Explosives are essential for energy production and the manufacture of metal and mineral products. Improved efficiency in processing means shorter turnaround times for approvals of explosives which supports the unleashing of American energy. 10

PHMSA received comments from APA, AFSL, SAAMI, TNT Fireworks and UP, a U.S. designated agent for service for multiple international fireworks manufacturers. These commenters all requested that PHMSA maintain alternatives to the PHMSA portal for submission of explosives approval applications to provide applicants with additional flexibility. PHMSA acknowledges the commenters concerns but is committed to this electronic resource for explosives approval applications. PHMSA views any potential benefits from maintaining alternative submission methods as outweighed by the efficiency provided by a single process. Though PHMSA acknowledges there may be unforeseen service interruptions with the PHMSA portal that may negatively impact the ability to submit applications, our expectation is that any service interruption will be short-lived. The use of the PHMSA portal as the only method of submittal for all explosives approvals will reduce the paperwork burden on applicants and PHMSA personnel. The overall net benefits include an estimated cost savings of 846 labor hours annually. See the RIA for a full discussion.

PHMSA notes that SAAMI inquired as to why the processing of approvals electronically is limited to include only energetic approvals at this time. PHMSA streamlined the fireworks approval process in this rulemaking and viewed it as an opportunity to further modernize our systems. PHMSA considered including other approvals. However, because this rulemaking is focused on energetic materials, PHMSA determined that additional public notice and comment should be provided before expanding the electronic process to other approvals. PHMSA anticipates addressing electronic-only approval submissions for other approval types in a separate, future rulemaking.

SAAMI commented that the use of an online portal will cause information security issues because § 173.56(b) will require the electronic submittal of information that may be potentially proprietary and security-sensitive. SAAMI stated that the PHMSA portal may suffer from cybersecurity vulnerabilities, and that its use may cause a stakeholder to be out of compliance with security regulations. Contractors serving the Federal Government and its agencies are required to protect certain categories of unclassified information provided by or for the U.S. Government, including the systems on which the data is stored. One of those categories, Controlled Unclassified Information (CUI), replaces legacy labels For Official Use Only (FOUO), Sensitive but Unclassified (SBU), and Law Enforcement Sensitive (LES). CUI is government-created or owned UNCLASSIFIED information that allows for, or requires, safeguarding and dissemination controls in accordance with laws, regulations, or government-wide policies. It is sensitive information that does not meet the criteria for classification but must still be protected.

Furthermore, SAAMI stated that its members' most sensitive applications are classified as secret and above. As such they go through the Department of War ( i.e. Department of Defense) examiners and process, as opposed to PHMSA. SAAMI stated that they occasionally have some applications that go through PHMSA that are sensitive but being “commercial” in nature they have a designation that is less than secret. SAAMI further stated that in the rare instances when they must submit a “sensitive” application, they use hand delivery or a commercial courier service. SAAMI is concerned that PHMSA seems to be prohibiting these delivery methods, and requests that PHMSA maintain the options for mail or hand delivery, which requires a solution beyond the current PHMSA portal or email processes.

PHMSA acknowledges SAAMI's concerns and reiterates that the PHMSA portal system complies with relevant Federal information security laws, including the Computer Security Act of 1987 (40 U.S.C. 1441 et seq. ), the Clinger‐Cohen Act of 1996 (40 U.S.C. 11101 et seq. ), and the Federal Information Security Management Act (FISMA) of 2002 (44 U.S.C. 3541 et seq ). In addition, it meets Federal Government IT security requirements outlined in OMB Circular A-130, Management of Federal Information Resources, Appendix III, Security of Federal Automated Information Resources, and adheres to National Institute of Standards and Technology (NIST) Guidelines. Furthermore, for safeguarding data within the PHMSA portal, the following measures are implemented:

• Data encryption is applied both in transit and at rest.

• Secure Socket Layer (SSL) connection is employed for portal connectivity, with regularly updated certificates.

• Weak ciphers are disabled to enhance security.

• Continuous application of patches and updates is carried out to mitigate vulnerabilities and ensure system integrity.

Overall, these measures help to ensure the confidentiality, integrity, and availability of data within the PHMSA portal, safeguarding it against unauthorized access, tampering, or interception. PHMSA will maintain as proposed the PHMSA portal as the only method of explosives approvals submissions. Nonetheless, PHMSA reminds submitters that its systems are not cleared to process controlled or classified information, and that submitters should contact PHMSA in advance if it determines that any information it intends to submit has been labeled as CUI or Classified by another government agency.

Finally, the final rule revises the approvals process to allow approval holders to request termination of approvals. The final rule also clarifies that when an approval holder voluntarily requests termination, PHMSA is not required to issue a letter providing them an opportunity to show cause why the approval should not be terminated. PHMSA received comment from APA and an individual asking for clarification on how existing products, including products placed in transportation before their approval is terminated, would be treated. For example, one of these commenters asked if an approval holder requests termination of its EX approval, but boxes of that product are in the transportation chain, would those boxes now contain unapproved explosives.

PHMSA clarifies that any product placed into transportation in commerce while the approval was valid will continue to be valid until it reaches its destination. This also applies to product shipped for disposal purposes.

The following is a section-by-section review of the final rule amendments.

The requirements for submitting registrations, reports, and applications for approval are prescribed under 49 CFR 107.705. PHMSA revises paragraph (a)(1) to clearly specify that the PHMSA portal may be used to file all types of approval applications with PHMSA. Further, with respect to explosives approvals applications, PHMSA specifies the PHMSA portal as the required method for submittal of applications and removes options to submit those explosives applications via mail, email, or fax for all explosives approvals.

Section 107.713 prescribes procedures for the issuance, modification, and termination of approvals required by the HMR. PHMSA revises the introductory text to paragraph (c) to refer to new paragraph (e); and adds a new paragraph (e) to allow approval holders (of any type) to request termination of an approval voluntarily. PHMSA will then issue a termination letter, rather than a show cause letter. Hazardous materials offered into transportation or being transported in accordance with a valid approval prior to the approval's termination may continue to be transported to its destination without concern of being an unapproved shipment. However, where hazardous materials may need to be transported for disposal purposes after the termination of the approval, a temporary approval or special permit will need to be obtained should the hazardous material not otherwise be allowed for transport.

Section 171.8 provides definitions and abbreviations applicable to the HMR. PHMSA adds the new term “FW number” and defines it as a unique identifier number assigned by the Associate Administrator to a low hazard Division 1.4G consumer firework device that has been certified in accordance with the provisions of § 173.64. Note that PHMSA has revised the proposed version of the definition of “FW number” to refer to the Associate Administrator instead of “PHMSA” and to define it as a unique identified number. PHMSA received no comment on the proposed definition and adopts as revised in this final rule.

Section 173.56 prescribes the procedures for classification and approval of new explosives. Small arms cartridges meeting the criteria in paragraph (h) may be self-classified as Division 1.4S by the manufacturer. PHMSA modifies § 173.56(h)(3) to provide clarity that tracer ammunition ( i.e., ammunition with tracer projectiles) is eligible for self-classification as a Division 1.4S material, provided the other criteria in paragraph (h) are met. This revision maintains the current level of safety for transportation of small arms cartridges while providing greater understanding to shippers of what types of small arms cartridges may be self-classified in accordance with paragraph (h).

Section 173.59 provides informational descriptions of terms for explosives. PHMSA adds a separate term and description for “low hazard fireworks.” The addition of this description maintains the current level of safety with the HMR by ensuring proper understanding of the meaning of low hazard fireworks for purposes of the provisions adopted in this rulemaking.

Section 173.63 provides exceptions from the general packaging requirements for certain explosives, including small arms cartridges that may be shipped as limited quantity material under specified conditions in paragraph (b). PHMSA revises paragraph (b) to include tracer ammunition ( i.e., ammunition with tracer projectiles) consistent with the revision made to § 173.56(h) to allow classification of this material as Division 1.4S without obtaining an EX approval based on eligibility criteria. Paragraph (b) provides this same eligibility criteria to allow transport as a limited quantity material and, therefore, ammunition with tracer projectiles classed as Division 1.4S may also be transported as limited quantity material subject to specified conditions.

Section 173.64 prescribes classification and approval exceptions from the standard explosives approval process for Division 1.3 and 1.4 fireworks. PHMSA revises § 173.64 to include further exceptions for low hazard (consumer) fireworks that qualify for self-certification by the manufacturer. Specifically, new paragraph (b) outlines construction and formulation criteria for self-certification of certain ground devices as Division 1.4 fireworks. Seventeen ground devices are eligible for self-certification and classification as Division 1.4G fireworks. In addition, new paragraph (b) outlines criteria for exception from regulation for certain novelties. Finally, paragraph (b) includes provisions for maintaining supporting documentation demonstrating compliance for the manufacture of ground devices. The supporting information includes the assigned FW number and may contain other pertinent information such as the category of device, drawing(s), chemical composition list, gram quantities, and, if applicable, the U.S. agent of service information. Except for transportation by air, seven novelties are eligible for exception from the HMR. PHMSA also makes editorial changes to paragraph (a) consistent with revision to paragraph (b), such as adding a title to paragraph (a) and clarifying further the reference to § 173.65 for certification of Division 1.4G consumer fireworks by an FCA. These revisions maintain the current level of safety for the transportation of fireworks by ensuring proper understanding of which ground devices and novelties may qualify for self-certification, exception EX approval requirements, and exception from requirements of the HMR.

This final rule is published under the authority of the Secretary of Transportation set forth in the Federal Hazardous Materials Transportation Laws (49 U.S.C. 5101 et seq. ) and delegated to the PHMSA Administrator pursuant to 49 CFR 1.97.

Executive Order (E.O.) 12866 ( Regulatory Planning and Review ), as well as the Department's rulemaking procedures in 49 CFR part 5 and DOT Order 2100.6B ( Policies and Procedures for Rulemaking ), 11 require agencies to regulate in the “most cost-effective manner,” to make a “reasoned determination that the benefits of the intended regulation justify its costs,” and to develop regulations that “impose the least burden on society.”  12 The Department, in 49 CFR part 5 and DOT Order 2100.6B, specifies that regulations should generally “not be issued unless their benefits are expected to exceed their costs.” In arriving at those conclusions, E.O. 12866 requires that agencies should consider “both quantifiable measures . . . and qualitative measures of costs and benefits that are difficult to quantify” and “maximize net benefits . . . unless a statute requires another regulatory approach.” Executive Order 12866 also requires that “agencies should assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating.” The Department's regulatory procedures further direct that PHMSA and other DOT Operating Administrations must generally choose the “least costly regulatory alternative that achieves the relevant objectives” unless required by law or compelling safety need.

E.O. 12866 and the Department's procedures also require that PHMSA submit “significant regulatory actions” to the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President's Office of Management and Budget (OMB) for review. This final rule is not a significant regulatory action pursuant to E.O. 12866 and has not designated this rule as a “major rule” as defined by the Congressional Review Act (5 U.S.C. 801 et seq. ). PHMSA has complied with the requirements in E.O. 12866 and the Department's regulatory procedures in 49 CFR part 5 and DOT Order 2100.6B and determined this final rule will result in cost savings by introducing efficiencies into the explosives approval process and providing clarity on applicability of the hazardous materials regulations and programs.

PHMSA has determined this final rule is an E.O. 14192 ( Unleashing Prosperity Through Deregulation ) deregulatory action. 13 PHMSA has developed a detailed economic analysis in the RIA, a copy of which has been placed in the docket, and determined that the total costs of the rule on the regulated community will be less than zero. This final rule does not implicate any of the factors identified in section 2(a) of E.O. 14219 indicative of a regulation that is “unlawful . . . [or] that undermine[s] the national interest.”  14

PHMSA has analyzed this final rule in accordance with the principles and criteria contained in E.O. 14156 ( Declaring a National Energy Emergency ) and E.O. 14154 ( Unleashing American Energy ). 15 The president has declared a national emergency to address America's inadequate energy development production, transportation, refining, and generation capacity and asserted a Federal policy to unleash American energy by ensuring access to abundant supplies of reliable, affordable energy from inter alia, the removal of “undue burden[s]” on the identification, development, or use of domestic energy resources. PHMSA finds this final rule is consistent with each of E.O. 14156 and E.O. 14154.

In addition, this final rule is not a “significant energy action” under E.O. 13211 ( Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use ), 16 which requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” Because this final rule is not a significant action under E.O. 12866, it will not have a significant adverse effect on supply, distribution, or energy use; accordingly, OIRA has not designated this final rule as a significant energy action.

PHMSA analyzed this final rule in accordance with the principles and criteria contained in E.O. 13132 ( Federalism ) and the Presidential Memorandum ( Preemption ) published in the Federal Register on May 22, 2009. 17 E.O. 13132 requires agencies to assure meaningful and timely input by State and local officials in the development of regulatory policies that may 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.” The Federal Hazardous Materials Transportation laws contain an express preemption provision at 49 U.S.C. 5125(b) that preempts State, local, and Tribal requirements on certain covered subjects, unless the non-Federal requirements are “substantively the same” as the Federal requirements, including the following:

(1) The designation, description, and classification of hazardous material;

(2) The packing, repacking, handling, labeling, marking, and placarding of hazardous material;

(3) The preparation, execution, and use of shipping documents related to hazardous material and requirements related to the number, contents, and placement of those documents;

(4) The written notification, recording, and reporting of the unintentional release in transportation of hazardous material; and

(5) The design, manufacture, fabrication, inspection, marking, maintenance, recondition, repair, or testing of a packaging or container represented, marked, certified, or sold as qualified for use in transporting hazardous material in commerce.

Though this final rule may operate to preempt some State requirements, it will not impose any regulation that has substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. The preemptive effect of the regulatory amendments in this final rule is limited to the minimum level necessary to achieve the objectives of the Federal Hazardous Materials Transportation Laws. Therefore, the consultation and funding requirements of E.O. 13132 do not apply.

PHMSA analyzed this rulemaking in accordance with the principles and criteria contained in E.O. 13175 ( Consultation and Coordination with Indian Tribal Governments ) and DOT Order 5301.1A ( Department of Transportation Tribal Consultation Policy and Procedures ). 18 E.O. 13175 requires agencies to assure meaningful and timely input from Tribal government representatives in developing rules that significantly or uniquely affect Tribal communities by imposing “substantial direct compliance costs” or “substantial direct effects” on such communities, or the relationship and distribution of power between the Federal Government and Tribes.

PHMSA assessed the impact of the rulemaking and determined it would not significantly or uniquely affect Tribal communities or Indian Tribal governments. The rulemaking's regulatory amendments have a broad, national scope. Therefore, this final rule will not significantly or uniquely affect Tribal communities, much less impose substantial compliance costs on Tribal governments, or mandate Tribal action. For these reasons, the funding and consultation requirements of Executive Order 13175 and DOT Order 5301.1A do not apply.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires Federal agencies to consider conducting a Final Regulatory Flexibility Analysis (FRFA) for a final rule that has been subject to notice-and-comment rulemaking under the APA unless the agency head certifies that the final rule will not have a significant economic impact on a substantial number of small entities. E.O. 13272 ( Proper Consideration of Small Entities in Agency Rulemaking ) obliges agencies to establish procedures and policies to promote compliance with the Regulatory Flexibility Act. 19 DOT posts its implementing guidance on a dedicated web page. 20

This final rule has been developed in accordance with E.O. 13272 and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act. As explained above, this final rule will provide an annual net cost savings of approximately $0.22 million because it facilitates the transportation of hazardous materials by streamlining the regulatory requirements for energetics manufacturers and shippers while maintaining the current level of safety for transportation of these items. Specifically, it amends the classification and approval process of certain low hazard Class 1 explosive materials ( i.e., fireworks) and clarifies classification eligibility for ammunition with tracer projectiles. Finally, this rulemaking will require the use of the PHMSA portal, an online application, as the sole method to submit explosives approval applications, thereby reducing, for example, the fireworks application approval processing time from 28 days to several hours, and will allow voluntary termination of approvals.

Therefore, PHMSA certifies the final rule does not have a significant economic impact on a substantial number of small entities.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and its implementing regulations at 5 CFR 1320.8(d) require that PHMSA provide interested members of the public and affected agencies an opportunity to comment on information and recordkeeping requests.

PHMSA has analyzed this final rule in accordance with the Paperwork Reduction Act. PHMSA currently accounts for information collection and recordkeeping burdens under OMB Control Number 2137-0057 Approvals for Hazardous Materials. In this final rule, PHMSA revises 49 CFR 173.64 applicable to low hazard fireworks that may impact the burden accounted for in OMB Control Number 2137-0057. The addition in § 173.64 requires ground device firework manufacturers to provide information in association with pursuing self-certification as low hazard fireworks for purposes of transportation. PHMSA determines the impact of these amendments to be negligible as the information is the same information currently required by the HMR under EX approval requirements but now are required as part of the automated self-certification process.

The Unfunded Mandates Reform Act of 1995 (UMRA; 2 U.S.C. 1501 et seq. ) requires agencies to assess the effects of Federal regulatory actions on State, local, and Tribal governments, and the private sector. For any final rule that includes a Federal mandate that may result in the expenditure by State, local, or Tribal governments, or by the private sector, of $100 million or more in 1996 dollars in any given year, the agency must prepare, amongst other things, a written statement that qualitatively and quantitatively assesses the costs and benefits of the Federal mandate.

As explained in the RIA, available for review in the docket, this final rule does not impose unfunded mandates under UMRA because it does not result in costs of $100 million or more (in 1996 dollars) per year for either State, local, or Tribal governments, or to the private sector.

PHMSA has analyzed this rule pursuant to the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq. ) and has determined it is excluded categorically under 23 CFR 771.117(c)(20), which applies to the promulgation of rules, regulations, and directives. Under Section 9 of DOT Order 5610.1D, PHMSA may apply a categorical exclusion (CE) established in another Operating Administration's procedures. PHMSA followed the requirements outlined in DOT Order 5610.1D to apply the Federal Highway Administration's CE to this deregulatory action. PHMSA does not anticipate any adverse environmental impacts from this rule, and PHMSA has determined no unusual circumstances are present under 23 CFR 771.117(b). PHMSA's Categorical Exclusion Determination memo for this action is available on PHMSA's website. 21

In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at https://www.dot.gov/privacy. DOT's complete Privacy Act Statement is in the Federal Register on April 11, 2000, and is available for review on DOT's website at https://www.dot.gov/privacy.

E.O. 13609 ( Promoting International Regulatory Cooperation ) requires that Federal agencies consider whether the impacts associated with significant variations between domestic and international regulatory approaches are unnecessary or may impair the ability of American business to export and compete internationally. 22 In meeting shared challenges involving health, safety, labor, security, environmental, and other issues, international regulatory cooperation can identify approaches that are at least as protective as those that are or would be adopted in the absence of such cooperation. International regulatory cooperation can also reduce, eliminate, or prevent unnecessary differences in regulatory requirements.

Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. For purposes of these requirements, Federal agencies may participate in the establishment of international standards, if the standards have a legitimate domestic objective, such as providing for safety, and do not operate to exclude imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.

PHMSA engages with international standards setting bodies to protect the safety of the American public. PHMSA has assessed the effects of the final rule and has determined that its regulatory amendments will not cause unnecessary obstacles to foreign trade.

PHMSA finds that the various provisions of this final rule are severable and able to function independently if severed from each other. Thus, in the event a court were to invalidate one or more of this final rule's unique provisions, the remaining provisions should stand and continue in effect.

E.O. 14082 ( Improving the Nation's Cybersecurity ) directed the Federal Government to improve its efforts to identify, deter, and respond to “persistent and increasingly sophisticated malicious cyber campaigns.”  23 PHMSA has considered the effects of this final rule and has determined that its regulatory amendments materially would not affect the cybersecurity risk profile for affected entities.

In consideration of the foregoing, PHMSA amends 49 CFR chapter I as follows:

The snapper-grouper fishery of the South Atlantic includes snowy grouper and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and NMFS, was approved by the Secretary of Commerce, and is implemented by NMFS through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).

For snowy grouper, the recreational ACL is 1,713 fish (50 CFR 622.193(b)(2)(i)). The snowy grouper recreational AM states that if recreational landings exceed the recreational ACL, then during the following fishing year, NMFS will reduce the length of the recreational fishing season to prevent recreational landings from exceeding the recreational ACL (50 CFR 622.193(b)(2)(ii)). Preliminary 2025 landings information shows that snowy grouper recreational landings were 1,957 fish, exceeding the recreational ACL by 244 fish. Therefore, consistent with the recreational AM, NMFS is reducing the length of the 2026 recreational fishing season to prevent the recreational ACL from being exceeded.

The fishing year for snowy grouper is from January 1 through December 31, annually (50 CFR 622.7). However, the recreational sector for snowy grouper is closed annually from January 1 through April 30, and from July 1 through December 31 (50 CFR 622.183(b)(8)). Data from the NMFS Southeast Fisheries Science Center have informed NMFS' 2026 season length projection that recreational landings will reach the recreational ACL by June 7, 2026. Therefore, NMFS announces that the snowy grouper recreational sector in South Atlantic Federal waters will close at 12:01 a.m., local time, June 7, 2026, until 12:01 a.m., local time, on January 1, 2027. During the recreational closure, the bag and possession limits for snowy grouper in or from South Atlantic Federal waters are zero. The next recreational fishing season for snowy grouper begins on May 1, 2027.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 622.193(c)(2)(ii), which was issued pursuant to section 304(b) of the Magnuson-Stevens Act, and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule that established the recreational AM for snowy grouper has already been subject to public notice and comment, and all that remains is to notify the public of the end date of the recreational season. Prior notice and opportunity for public comment on this action is contrary to the public interest because of the need to protect the South Atlantic snowy grouper resource. Additionally, announcing the closure date as soon as possible allows recreational sector participants and businesses to better plan their activities to harvest snowy grouper.

For the reasons just stated, there is good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in the effective date of this action.

The DGN fishery is managed under the Fishery Management Plan for U.S. West Coast Fisheries for Highly Migratory Species and regulations at 50 CFR part 660, subpart K and occurs off the coast of California. NMFS regulations provide that, “No person may fish with, set, or haul back drift gillnet gear in U.S. waters of the Pacific Ocean east of the 120° W meridian from June 1 through August 31 during a forecasted, or occurring, El Niño event off the coast of southern California” (50 CFR 660.713(c)(2)). This area, which falls within the Southern California Bight (SCB), is referred to in the regulations as the “Pacific loggerhead conservation area.”

Under 50 CFR 660.713(c)(2)(ii), the Assistant Administrator (AA) is to rely on information developed by NOAA offices (CPC and the West Coast Office of the Coast Watch program). The AA is to use monthly sea surface temperature (SST) charts to determine whether there are warmer-than-normal SSTs off southern California “during the months prior to the closure months for years in which an El Niño event has been declared” by the CPC. Specifically, the AA is to use SST data from the third and second months prior to the month of closure.

NMFS published these regulations to protect loggerhead sea turtles, which are listed under the Endangered Species Act. The regulations addressed a reasonable and prudent alternative (RPA) included in NMFS' 2000 biological opinion on issuance of an incidental take permit under the Marine Mammal Protection Act. The biological opinion concluded that bycatch in the DGN fishery was likely to jeopardize the continued existence of loggerhead sea turtles and, as an RPA, recommended the fishery be closed during the summer months when El Niño conditions are present to avoid the likelihood of jeopardy. The Pacific Loggerhead Conservation Area regulations were implemented in 2003 to address this RPA, and were amended in 2007, to protect Pacific loggerhead turtles (72 FR 31756, June 8, 2007).

In May 2026, NMFS staff reviewed the SST anomalies in the SCB during March and April of 2026, relying on SST maps available through NOAA's Coast Watch program (for details see http://coastwatch.pfeg.noaa.gov/erddap/index.html ). These maps indicated that SSTs were above normal in the SCB. As such, NMFS concludes that a closure off southern California is warranted based on SSTs that are warmer than normal during the third and second months prior to the month of the closure, consistent with regulations at 50 CFR 660.713(c)(2)(ii).

If SSTs return to normal or below normal during a closure period, regulations at 50 CFR 660.713(c)(2)(iii) state that the AA may re-open the fishery after publishing a Federal Register notice. The CPS report on May 14, 2026, indicates an `El Niño Watch' status with El Niño likely to emerge soon (82 percent chance in May-July 2026) and continue through Northern Hemisphere winter 2026-27 (96 percent chance in December 2026-February 2027).

This action is required by regulations at 50 CFR 660.713 and is exempt from Office of Management and Budget review under Executive Order 12866.