On May 16, 2025, the U.S. Department of Energy (DOE) published a notice of proposed rulemaking (NOPR) to rescind the Production Incentives for Cellulosic Biofuels regulations at 10 CFR part 452. 90 FR 20942. That proposed rule invited comments on any reason to rescind or not rescind these regulations, specifically seeking input on the relevancy of 10 CFR part 452 and whether DOE should retain these regulations should funding be appropriated again to the relevant authority, section 942 of the Energy Policy Act of 2005 (Pub. L. 109-58), codified at 42 U.S.C. 16251.

The Cellulosic Biofuels Production Incentive program, originally established under the authority of the Energy Policy Act of 2005, was intended to provide production incentives for cellulosic biofuels. However, Congress has not appropriated funds to DOE to implement the program. As a result, DOE's Cellulosic Biofuels Production Incentive program is unused. Furthermore, since the program's inception, the landscape for biofuels incentives has evolved. For example, the Renewable Fuel Standard (RFS) program, administered by the Environmental Protection Agency (EPA), has become the primary federal mechanism to incentivize the production of renewable fuels, including cellulosic biofuels, through Renewable Identification Numbers (RINs).

As proposed in the NOPR, this final rule removes 10 CFR part 452 in its entirety, as it is outdated and no longer fits within DOE's current strategic priorities or the prevailing energy policy framework. This deregulatory action also reduces administrative burden by eliminating an inactive regulatory framework.

DOE received one comment in response to the NOPR published on May 16, 2025. The commenter is listed in Table II.1.

The commenter stated that the rulemaking is subject to National Environmental Policy Act (NEPA) and requires detailed statements on major Federal actions. Comment 1. The commenter further asserted that although DOE intends to use a categorical exclusion for NEPA compliance, this action has extraordinary circumstances, including “potential for uncertain environmental risks, potential impacts on sensitive resources, and potential for cumulative impacts[,]” which would prevent the use of a categorical exclusion. Id. The commenter concluded that DOE must proceed with analysis under an environmental assessment (EA) or environmental impact statement (EIS) prior to finalizing this rule.

DOE appreciates the commenter's input regarding its NEPA review. DOE has carefully considered the commenter's concern about the applicability of a categorical exclusion and potential extraordinary circumstances. DOE has analyzed this action in accordance with NEPA, as amended, DOE's NEPA implementing regulations (set forth in 10 CFR part 1021), and DOE's NEPA implementing procedures (published outside the Code of Federal Regulations on June 30, 2025 (Available at: www.energy.gov/nepa/articles/doe-nepa-implementing-procedures-june-2025 )).

On July 3, 2025, DOE published an interim final rule in the Federal Register that revised 10 CFR part 1021 to contain only administrative and routine actions excepted from NEPA review in appendix A, its existing categorical exclusions in appendix B, related requirements, and a provision for emergency circumstances. 90 FR 29676. DOE notes that appendix A in 10 CFR part 1021 (formerly categorical exclusions) are now administrative and routine actions that do not require NEPA review.

DOE has reviewed this action in accordance with NEPA and determined that removing requirements for awarding production incentives to the lowest bidder in a reverse auction is strictly procedural. 10 CFR part 1021, appendix A, paragraph A6. DOE has determined that, as a procedural action, it is an administrative and routine action and, therefore, is not a major Federal action significantly affecting the quality of the human environment within the meaning of NEPA and no further environmental review is needed.

In addition, this final rule removes an obsolete and inactive regulatory program. This program has not been utilized for a significant period and its objectives have been addressed by other federal programs, primarily the RFS program implemented by the EPA. The rescission of an inactive program, which has no ongoing direct or indirect environmental impacts, does not constitute a major Federal action with the potential for significant environmental effects. Therefore, the rescission of regulatory text for an inactive program does not introduce new uncertain environmental risks, impact sensitive resources, or create cumulative impacts and does not warrant an EA or an EIS as commenter suggests.

For the reasons discussed in the preceding sections of this document, DOE is finalizing the rescission of the Cellulosic Biofuels Production Incentive program regulations at 10 CFR part 452. This final rule removes an inactive and obsolete regulatory program.

E.O. 12866, “Regulatory Planning and Review” requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits; (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. For the reasons stated in the preamble, this final rule is consistent with these principles. Although the agency remains free to extend the sunset date on any particular regulation, the sunset rule is expected to generally result in decreased regulatory burdens and to ensure that regulations remain up to date in light of changing circumstances.

Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) for review. OIRA has determined that this regulatory action is a “significant regulatory action” under section 3(f) of E.O. 12866. Accordingly, this action was subject to review under that Executive Order by OIRA.

This final rule has been determined to be an “E.O. 14192 deregulatory action” because it intends to reduce the burden to society by streamlining the regulatory framework and improving efficiency for regulated entities. As mentioned previously, 10 CFR part 452 relates to the inactive Cellulosic Biofuels Production Incentive program. The primary impact from the final rule is to eliminate the regulatory burden associated with an inactive incentive program. This final rule allows affected entities to focus their resources on matters of importance to them. These benefits are difficult to quantify, although DOE believes them to be positive. Even small positive changes, when aggregated, can result in meaningful burden reduction for industry.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by E.O. 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (Aug. 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's website ( www.energy.gov/gc/office-general-counsel ).

DOE reviewed this final rule under the provisions of the Regulatory Flexibility Act and the policies and procedures published on February 19, 2003. This final rule rescinds an inactive program and imposes no new requirements or burdens on any entity, including small businesses. Therefore, DOE concludes that the impacts of the rule would not have a “significant economic impact on a substantial number of small entities,” and that the preparation of an FRFA is not warranted. DOE transmitted this certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

This final rule imposes no new information collection requirements subject to the Paperwork Reduction Act and OMB clearance is not required. (44 U.S.C. 3501 et seq. )

Pursuant to the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq. ), DOE has analyzed this action in accordance with NEPA, as amended, DOE's NEPA implementing regulations (set forth in 10 CFR part 1021), and DOE's NEPA implementing procedures (published outside the Code of Federal Regulations on June 30, 2025 (Available at: www.energy.gov/nepa/articles/doe-nepa-implementing-procedures-june-2025 )). On July 3, 2025, DOE published an interim final rule in the Federal Register that revised 10 CFR part 1021 to contain only administrative and routine actions excepted from NEPA review in appendix A, its existing categorical exclusions in appendix B, related requirements, and a provision for emergency circumstances. 90 FR 29676. DOE notes that appendix A in 10 CFR part 1021 (formerly categorical exclusions) are now administrative and routine actions that do not require NEPA review.

DOE has reviewed this action in accordance with NEPA and determined that removing requirements for awarding production incentives to the lowest bidder in a reverse auction is strictly procedural. 10 CFR part 1021, appendix A, paragraph A6. DOE has determined that, as a procedural action, it is an administrative and routine action and, therefore, is not a major Federal action significantly affecting the quality of the human environment within the meaning of NEPA and no further environmental review is needed.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The Executive order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this final rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, no further action is required by Executive Order 13132.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. 2 U.S.C. 1532(a), (b). The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.

DOE examined this final rule according to UMRA and its statement of policy and determined that the final rule does not contain a Federal intergovernmental mandate, nor is it expected to require expenditures of $100 million or more in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector. As a result, the analytical requirements of UMRA do not apply.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well being. This final rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Pursuant to E.O. 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), DOE has determined that this final rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving Implementation of the Information Quality Act (April 24, 2019), DOE published updated guidelines which are available at: https://www.energy.gov/cio/department-energy-information-quality-guidelines. DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

This final rule is a significant regulatory action under E.O. 12866. However, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects.

As required by 5 U.S.C. 801, DOE will submit to Congress a report regarding the issuance of this final rule prior to the effective date set forth at the outset of this rule. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

The Secretary of Energy has approved publication of final rule.

This document of the Department of Energy was signed on July 15, 2026, by Audrey Robertson, Assistant Secretary of Energy (EERE). That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

The OCC and the FDIC (collectively, the agencies) exercise their enforcement and supervision authority to ensure that supervised institutions  1 refrain from engaging in unsafe or unsound practices, operate in compliance with applicable laws and regulations, and address emerging supervisory concerns. To that effect, it is important to promote greater clarity and certainty regarding certain enforcement and supervision standards by defining them through regulation. Moreover, it is critical that examiners and institutions prioritize material financial risks over concerns related to policies, process, documentation, and other nonfinancial risks, and that the agencies' enforcement and supervision standards further that prioritization.

On October 30, 2025, the agencies published in the Federal Register a notice of proposed rulemaking  2 to clarify the agencies' supervisory and enforcement framework and focus on practices, acts, or failures to act, that, if continued, would be likely to materially harm the institution's financial condition or present a material risk of loss to the Deposit Insurance Fund (DIF). Specifically, pursuant to the provisions of section 8 of the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. 1818), the agencies are authorized to take enforcement actions against depository institutions  3 and institution-affiliated parties  4 that have engaged in an “unsafe or unsound practice.” The agencies proposed to establish a regulatory definition for the term “unsafe or unsound practice” for purposes of section 8 of the FDI Act. Additionally, the agencies proposed to establish standards for the issuance of Matters Requiring Attention (MRAs) and supervisory observations.

After considering the comments received on the proposal and as further described in this preamble, the agencies are adopting a final rule consistent with the objectives of the agencies' proposal, with certain modifications. The final rule will explicitly limit its scope to institutions the agencies supervise. The final rule will also clarify how the agencies will exercise their enforcement and supervisory authority, including how the agencies will tailor their use of unsafe or unsound practices and matters requiring attention based on risk factors specific to an institution.

The agencies proposed to issue a rule to define the term “unsafe or unsound practice” for purposes of section 8 of the FDI Act to mean a practice, act, or failure to act, alone or together with other practices, acts, or failures to act, that (1) is contrary to generally accepted standards of prudent operation; and (2)(i) if continued, is likely to (A) materially harm the financial condition of an institution; or (B) present a material risk of loss to the DIF; or (ii) materially harmed the financial condition of the institution. The proposed definition would have applied to the agencies' supervisory and enforcement actions taken against both institutions and institution-affiliated parties. The proposed rule also sought to establish that the agencies may only issue an MRA for a practice, act, or failure to act, alone or together with one or more other practices, acts, or failures to act, that (1)(i) is contrary to generally accepted standards of prudent operation; and (ii)(A) if continued, could reasonably be expected to, under current or reasonably foreseeable conditions, (1) materially harm the financial condition of the institution; or (2) present a material risk of loss to the DIF; or (B) has already materially harmed the financial condition of the institution; or (2) is an actual violation of a banking or banking-related law or regulation.

As proposed, the rule would have required the agencies to tailor their respective supervisory and enforcement actions under 12 U.S.C. 1818 and issuances of MRAs both with regard to the requirements or expectations set forth in such actions as well as whether, and the extent to which, such actions are taken. Tailoring would have been based on the capital structure, riskiness, complexity, activities, asset size and any financial risk-related factor that the agencies deemed appropriate. For matters that would not have met the criteria for the proposed MRA standard, the agencies proposed clarifying that they would be permitted to communicate a suggestion or observation orally or in writing to enhance an institution's policies, practices, condition, or operations, provided that the communication would not be, and would not be treated by the agencies in a manner similar to, an MRA.

The agencies received in total 36 comments on the notice of proposed rulemaking. Many commenters generally supported the proposed rule while others opposed it. Some commenters who supported the proposal highlighted the need for reform of the agencies' supervisory and enforcement practices. One commenter asserted that a high percentage of supervisory findings, including MRAs, relate to non-financial risks, and that bank employees spend an increasing amount of time complying with examiner mandates. One commenter asserted that limiting examiner discretion and eliminating many non-financial concerns with respect to the type of concerns that could serve as the basis for an MRA will lead to structural supervision reform that will address debanking concerns. Another commenter thought that the proposal would address expansive MRA usage that has shifted regulatory decision making from public rulemaking to private supervision on an institution-by-institution basis. Generally, the agencies agree with these commenters that the final rule will provide important reforms to the agencies' supervisory and enforcement practices and will help examiners and institutions take appropriate action where action is most warranted to promote safety and soundness.

Commenters that supported the proposal also expressed that the proposal's emphasis on targeted supervision for material financial risks would better focus examiners and institutions on key considerations in furtherance of safety and soundness. For example, one commenter indicated that clarifying unsafe or unsound practices would benefit institutions by allowing them to prioritize issues. Additionally, commenters noted that the proposal would promote the clarity, consistency, and transparency of bank supervision. For example, a commenter asserted that codification of the agencies' views of unsafe or unsound practices and the standard for issuing MRAs would enhance institutions' dialogue with examiners and accountability for the agencies in connection with appeals of supervisory determinations. The agencies also agree that the proposed rule generally struck the appropriate balance between proactive identification of material financial risks by examiners and providing each institution's board of directors and management with clear and transparent supervisory findings and the flexibility to enact day-to-day decisions based on their business judgment and risk tolerance.

Other commenters opposed the proposal, and some of these commenters suggested that the agencies withdraw the proposal. Commenters who opposed the proposal argued that the proposed regulatory definition of “unsafe or unsound practice” and standard for the issuance of MRAs would inhibit examiners from proactive identification of risks to institutions. For example, one of these commenters indicated that the 2008 financial crisis demonstrated that regulations could not keep up with rapid changes in institutions' products and practices. Commenters also indicated that the proposal disregarded the importance of policies, procedures, documentation, and nonfinancial risks in bank supervision, such as operational risks and risks to consumers. Some commenters asserted that bank policies and procedures could serve as leading indicators of financial risk without demonstrating this link. However, these assertions are not consistent with the agencies' supervisory experience. Rather, the final rule will encourage institutions to focus on the most important risks to an institution's safety and soundness. Examiners may still provide supervisory observations related to weaknesses in policies and procedures, and, in situations where issues related to an institution's policies or procedures would meet the criteria to be deemed an unsafe or unsound practice or merit the issuance of an MRA, the agencies could take enforcement or supervisory action accordingly.

Furthermore, commenters expressed concern that the proposal's more targeted focus on material financial risks could create incentives for institutions to improve their financial performance at the expense of controls. The agencies expect that institutions will prudently operate in accordance with generally accepted standards, and that any potential material financial risks would be properly addressed by the agencies. Finally, commenters argued that the proposal and its focus on risks to individual financial institutions failed to consider systemic risk to the financial system. Although macroprudential concerns are not the focus of the agencies' unsafe or unsound practices enforcement authority or MRA supervisory authority, the proposed standards' renewed focus on material financial risks will also strengthen the greater financial system by encouraging banks to address the most significant financial risks with the greatest vigilance.

Based on the agencies' supervisory experience and as a matter of policy, the agencies proposed to implement a definition of “unsafe or unsound practice” for purposes of section 8 of the FDI Act that would have focused on material risks to the financial condition of an institution and would have generally required that an imprudent practice, act, or failure to act, if continued, would be likely to materially harm the institution's financial condition or present a material risk of loss to the DIF. The proposal explained that, taking into account statutory text, legislative history, and case law, the proposed regulatory definition fit within the authority Congress granted to the agencies to take enforcement actions based on unsafe or unsound practices under section 8 of the FDI Act. 5

The term “unsafe or unsound practice” appears in section 8 of the FDI Act for purposes of the agencies' enforcement authority. The statute does not define the term unsafe or unsound practice. An unsafe or unsound practice may serve as a ground for several types of enforcement actions under provisions of section 8 of the FDI Act. These include involuntary termination of deposit insurance by the FDIC, 6 a cease-and-desist order, 7 a temporary cease-and-desist order, 8 or a Tier 2 or Tier 3 civil money penalty. 9 Most enforcement provisions in section 8 of the FDI Act also include other potential grounds, such as a violation of law or a breach of fiduciary duty, which are not affected by the regulatory definition in the final rule.

In determining what may be considered an unsafe or unsound practice under section 8 of the FDI Act, some courts have looked to a standard articulated by John Horne, then Chairman of the Federal Home Loan Bank Board (FHLBB) (Horne Standard), during congressional hearings related to the Financial Institutions Supervisory Act of 1966 (Act of 1966), which is the source of the agencies' cease-and-desist authority in section 8(b) of the FDI Act. 10 Specifically, Chairman Horne stated:

Representative Patman further described the authority added in the Act of 1966 as “aimed specifically at actions impairing the safety or soundness of . . . insured financial institutions” and providing the agencies with “flexible tools [that] relate strictly to the insurance risk and to assure the public of sound banking facilities.”  12

Defining “unsafe or unsound practice” by regulation will provide a clear nationwide standard and increase clarity for institutions. A regulatory definition of the term unsafe or unsound practice is also important to appropriately focus institution and examiner attention on practices that are likely to materially harm an institution's financial condition or present a material risk of loss to the DIF, providing the institution's board of directors and management additional flexibility to enact day-to-day decisions based on their business judgment and risk tolerance. The definition reflects the agencies' judgment and experience that their supervisory resources are best focused on practices that are likely to materially harm an institution's financial condition, such as risks that are more likely than other risks to lead to material financial losses, bank failures, and instability in the banking system. 13 For the same reasons, practices that are likely to materially harm the financial condition of an institution are critical for an institution's board of directors and management to address.

The definition of an unsafe or unsound practice will ensure consistency in identifying practices as unsafe or unsound only where they are likely to materially harm the financial condition of an institution, are likely to present a material risk of loss to the DIF, or have materially harmed the financial condition of the institution. This definition will focus institution and examiner attention on material financial risks facing an institution and otherwise provide the institution's board of directors and management the flexibility to enact decisions based on their business judgment and risk tolerance.

Therefore, as explained further below, in the final rule, the agencies define the term unsafe or unsound practice to mean a practice, act, or failure to act, alone or together with one or more other practices, acts, or failures to act, that (1) is contrary to generally accepted standards of prudent operation; and (2)(i) if continued, is likely to (A) materially harm the financial condition of the institution; or (B) present a material risk of loss to the DIF; or (ii) materially harmed the financial condition of the institution. This regulatory definition will provide greater consistency for institutions and appropriately focus supervisory and institution resources on the most critical financial risks to institutions and the financial system.

As in the proposal, the definition of “unsafe or unsound practice” in the final rule applies to the agencies' supervisory and enforcement activities prospectively only. Moreover, it does not apply to the agencies' rulemaking activities or authority. The agencies are making one technical change to the definition of unsafe or unsound practice in the final rule. Specifically, the definition of unsafe or unsound practices in the proposed rule would have applied to the agencies' supervisory and enforcement activities under 12 U.S.C. 1818. In the final rule, the agencies modified this language to refer separately to the agencies' “supervisory activities” and the agencies' “enforcement actions under 12 U.S.C. 1818.” This change reflects that the agencies do not engage in supervisory activities under 12 U.S.C. 1818, and it is not a substantive change from the proposed definition. In addition to enforcement actions under 12 U.S.C. 1818, the agencies identify unsafe or unsound practices as supervisory findings in other communications, including reports of examination, supervisory letters, and informal enforcement actions. These identified unsafe or unsound practices sometimes establish a record for a later enforcement action under 12 U.S.C. 1818. 14

Scope. The proposed rule would have applied to the agencies' enforcement and supervisory actions taken against an institution or an institution-affiliated party. The agencies requested comment on the effect the proposed rule would have on the agencies' ability to address misconduct by institution-affiliated parties under their enforcement and supervisory authority, and the agencies carefully considered the comments received. 15 A few commenters asserted that the proposed definition of unsafe or unsound practice would impede the agencies' ability to take appropriate enforcement actions against institution-affiliated parties that are affiliated with large institutions, even when an institution-affiliated party's actions result in a sizeable loss. Because the definition of unsafe or unsound practice would require that actions be likely to cause material harm to the financial condition of an institution or present a material risk of loss to the DIF, it would be rare that the actions of an institution-affiliated party could cause such harm to a large institution.

As proposed, the unsafe or unsound practice definition could result in enforcement actions against institution-affiliated parties being influenced by factors unrelated to the gravity of the misconduct, such as the asset size or staffing numbers of the institution with which a party is affiliated at the time of the misconduct. Given that an institution-affiliated party's misconduct would be confined to the relative scope of the party's responsibilities and sphere of influence at the institution, such misconduct may not materially impact the overall financial condition of the institution. Moreover, individuals who are institution-affiliated parties may move between institutions of various sizes. The application of this rule to institution-affiliated parties could allow an individual to engage in misconduct ( e.g., failing to appropriately underwrite loans or secure collateral) at a large institution without any remedy or recourse. The individual could then move to a smaller institution and engage in the same conduct.

Although the proposed rule attempted to create a single, uniform standard for the phrase “unsafe or unsound practice” that could be used in the context of enforcement actions under 12 U.S.C. 1818 and supervisory activities, the agencies recognize that applying a single uniform definition to both institutions and institution-affiliated parties could fail to account for differences in the agencies' supervisory objectives. Given this potential to impede, or distort incentives regarding, enforcement actions against institution-affiliated parties and that the primary purpose of this rulemaking was to address the agencies' supervisory and enforcement activities with respect to their supervised institutions, the agencies are not finalizing the rule's application to institution-affiliated parties. 16 The agencies are adding a new paragraph to the final rule to codify the refined scope of the rule.

Practice. The proposed rule defined an unsafe or unsound practice for purposes of 12 U.S.C. 1818 to apply to a practice, act, or failure to act, alone or together with one or more other practices, acts, or failures to act, that meet the other requirements of the definition. A few commenters asserted that the best reading of section 8 of the FDI Act is that the term “unsafe or unsound practice” applies only to practices, but not individual acts or failures to act, and that the final rule should apply only to practices that meet the criteria of the regulatory definition. Another commenter suggested that the agencies not consider an isolated or technical incident a “practice.”

Under the final rule, like the proposal, a practice, act, or failure to act, alone or together with one or more other practices, acts, or failures to act could be considered an unsafe or unsound practice. An individual act or failure to act may constitute an unsafe or unsound practice. Twelve U.S.C. 1818(b) provides that an agency may issue a cease-and desist order when an institution is engaging or has engaged, or the agency has reasonable cause to believe that the institution is about to engage, in an unsafe or unsound practice in conducting the business of the institution. For example, poor underwriting may constitute an unsafe or unsound practice. By making a loan that is poorly underwritten, an institution would have engaged in an unsafe or unsound practice to the extent it otherwise met the definition of an unsafe or unsound practice.

Whether an individual act or omission, as opposed to a pattern of conduct, could result in likely material harm to the financial condition of the institution is generally an academic question. In certain cases, a single event can materially impact the safety and soundness of an institution. But a single event could readily be described as multiple events, making the distinction between a single act or multiple acts that constitute a practice not useful. For example, if an institution agrees to purchase a portfolio of loans and weaknesses in one loan in the portfolio is likely to result in a material financial loss to the institution, the decision and act of purchasing the loan would be considered an outgrowth of the institution's lending practices. Accordingly, the term “unsafe or unsound practice” in section 8 of the FDI Act, as reflected in the final rule, applies to practices, acts, or failures to act, alone or together with one or more other practices, acts, or failures to act. 17 If an act or failure to act materially harmed the financial condition of an institution and met other requirements of the regulatory definition, such an incident would be considered an unsafe or unsound practice. 18

Imprudence. Consistent with the Horne Standard, the agencies proposed that a practice, act, or failure to act would have to be contrary to generally accepted standards of prudent operation to be considered an unsafe or unsound practice. 19 A practice, act, or failure to act could only have been considered an unsafe or unsound practice if it deviated from generally accepted standards of prudent operation (and otherwise met the proposed definition). 20 Two commenters recommended that the agencies revise the definition of unsafe or unsound practice to not require a finding that an institution acted contrary to generally accepted standards of prudent operation. Removal of the generally accepted standards provision could result in strict liability for assuming a risk of likely material harm to the financial condition of the institution. Consistent with the Horne Standard and relevant caselaw, a determination that a practice, act, or failure to act is unsafe or unsound is most appropriately found when the institution acted contrary to generally accepted standards of prudent operation. 21 The agencies also acknowledge that an essential role of institutions is to identify, measure, incur, and manage risk. As provided in the proposal, the agencies do not intend to take enforcement actions under section 8 of the FDI Act for prudent operations merely because they result in risk-taking. Under the final rule, a practice, act, or failure to act will only be considered an unsafe or unsound practice if it deviates from generally accepted standards of prudent operation (and otherwise meets the definition). For these reasons, the agencies are adopting the requirement that for a practice, act, or failure to act to be considered unsafe or unsound, it must be contrary to generally accepted standards of prudent operation.

Several commenters requested that the agencies clarify what constitutes generally accepted standards of prudent operations. One commenter requested that the agencies codify a list of generally accepted standards of prudent operation and commit to publish any updates to these standards. Some commenters requested clarification specifically regarding emerging risks and novel activities. One commenter requested clarification on what would qualify as a deviation from generally accepted standards of prudent operations. Another commenter requested that the agencies establish a safe harbor or include a rebuttable presumption regarding when an institution may be presumed to be acting in accordance with generally accepted standards of prudent operation. Finally, one commenter requested that the agencies clarify that best practices, including those identified through horizontal reviews, should not be the basis for findings of imprudent practices.

The agencies decline to codify a list of or adopt a bright line for generally accepted standards of prudent operation, which are concepts the agencies consider to be a matter of examiner judgment, based on objective facts and sound reasoning. Further, as discussed below, the agencies' expectations for what they consider to be generally accepted standards for prudent operation will be tailored based on the risks associated with an institution's capital structure, complexity, activities, asset size, and other financial risk-related factors. As the risk associated with these factors for an institution increases, the agencies' expectations for that institution's prudent operations would also increase.

The agencies agree with commenters that pointed out that generally accepted standards of prudent operation do not require an institution to adopt what the agencies consider to be best practices, including those practices identified in horizontal reviews of peer institutions. The agencies reserve the right to determine whether widespread practices are generally imprudent, taking into account the facts and circumstances, based on objective facts and sound reasoning.

For these reasons, the agencies are adopting the requirement that, for practices, acts, or failures to act to be considered unsafe or unsound, they must be contrary to generally accepted standards of prudent operation. The agencies also note that practices, acts, or failures to act that are imprudent, without more, would not be considered unsafe or unsound practices unless they also satisfied the other prong of the definition.

Likely. To qualify as an unsafe or unsound practice under the proposed definition, it also would have had to be likely—as opposed to, for example, merely possible—that the practice, act, or failure to act, if continued, would materially harm the financial condition of the institution or present a material risk of loss to the DIF. As explained in the proposal, the agencies believed that including the term “if continued” was important to allow for identification of an unsafe or unsound practice before it impacts an institution's financial condition. However, conduct would have had to be sufficiently proximate to material harm to an institution's financial condition to meet the proposed definition. 22 Moreover, the agencies invited comment on, but did not propose, more precisely defining the requisite likelihood under the proposed definition, such as through a minimum percentage ( e.g., 10 percent, 51 percent).

Many commenters opined on “likely” as the proposed probability threshold for unsafe or unsound practices. Some commenters suggested that the agencies specify that “likely” has the same meaning as “more likely than not” or a likelihood of at least 51 percent. 23 One commenter noted that a potential meaning of likely is not just probable but “very probable.”

Other commenters suggested that the agencies should not quantify a specific threshold for harm to qualify as “likely.” These commenters suggested that precise quantification as to the likelihood of future events is not possible and would not be credible. Further, a commenter suggested that quantifying a threshold for harm to be considered “likely” could introduce unnecessary complications and legal risk because likelihood is often qualitative and context dependent.

One commenter asserted, however, that it should be insufficient for the nexus between an imprudent practice and material financial harm to be conclusory or speculative. Some commenters suggested that the agencies identify a time horizon over which material financial harm must be likely. 24 One commenter suggested that harm must be “imminent” or “near imminent,” as opposed to speculative. One commenter suggested that, without a defined time horizon, the likelihood of material financial harm based on a practice differs.

Some comments opposed “likely” as the applicable probability threshold for an unsafe or unsound practice. A few commenters indicated that if the supervisory process only stepped in when material harm already is likely, that would often be too late to prevent the material harm, thereby making the process pointless. Other commenters suggested a “likely” standard would prevent the agencies from addressing low-probability, high-impact risks or preclude reasonable supervisory activities to proactively address risks.

Some commenters suggested alternatives to “likely” as the appropriate threshold for the likelihood necessary for an unsafe or unsound practice. A few commenters suggested “reasonably foreseeable” as the appropriate standard. These commenters pointed out that a risk can be excessive, unsafe, and unsound without a likely bad outcome and noted that “reasonably foreseeable” is more frequently used as a standard in legal contexts. Other commenters stated that Chairman Horne used “possible consequences” to refer to the probability of harm necessary for an unsafe or unsound practice. One commenter suggested that the agencies consider “under stress conditions that are plausible” as the appropriate standard, as systemic crises occur suddenly and this would allow the agencies to take proactive action. Another commenter noted that section 8 of the FDI Act provides for different probabilities of harm for different causes of action. 25

After consideration of these comments, the agencies are adopting “likely,” as proposed. Under this provision of the final rule, to be considered an unsafe or unsound practice, a practice, act, or failure to act, if continued, must be likely to materially harm the financial condition of the institution or present a material risk of loss to the DIF. The agencies considered commenter suggestions for different standards and ultimately determined that “likely” struck the right balance in terms of probability, clarity, and simplicity. This standard is sufficient to confirm that the agencies do not intend to identify unsafe or unsound practices by extrapolating from deficient conduct that could potentially result in, alone or in combination with other factors or events, material harm to the financial condition of an institution but is not likely to do so. The probability that a practice, act, or failure to act, if continued, will materially harm the financial condition of the institution or present a material risk of loss to the DIF must be more than speculative or merely possible. At the same time, a “likely” standard acknowledges that it is impossible to quantify the probability of future events with precision, such as by requiring that a specific result is more likely than not to occur. For the same reasons, the agencies decline to adopt a quantitative threshold for a result to be likely or identify a time horizon on which a result must be likely to occur. The agencies did not specify a time horizon over which the requisite harm could occur, as the appropriate time horizon would be a fact-specific determination based on multiple factors, including the certainty of projected conditions or harm and the magnitude of potential harm.

Harm to financial condition. Under the proposal, an unsafe or unsound practice would have included a practice, act, or failure to act that, if continued, was likely to materially harm the financial condition of an institution. In the preamble to the proposal, the agencies explained that they believed that harm to financial condition included practices, acts, or failures to act that are likely to directly, clearly, and predictably impact an institution's capital, asset quality, earnings, liquidity, or sensitivity to market risk. One commenter suggested that the agencies add this concept to the regulatory text to prevent reputational or other non-financial impacts from being considered. As described in section III.C of this preamble, the agencies have added paragraph (d) of the final rule to clarify that “[h]arm to financial condition refers to financial losses or other negative impacts to an institution's capital, asset quality, earnings, liquidity, or sensitivity to market risk.” In addition, described in section III.D of this preamble, the agencies are adding a provision to require that examiner determinations with respect to unsafe or unsound practices, as well as MRAs, are based on objective facts and sound reasoning.

Materiality. The proposed standard for unsafe or unsound practices would have applied to practices, acts, or failures to act that, if continued, were likely to materially harm the financial condition of an institution or that had already resulted in actual material harm to the institution. The preamble to the proposal explained that neither actual but non-material financial losses to the institution nor risks of minor harm to an institution's financial condition, even if imminent, would have been sufficient to meet the proposed standard.

Many commenters commented on the concept of materiality. Some of these commenters asserted that the agencies should define material or provide more information regarding when the agencies would consider financial harm to be material. Commenter suggestions for how the agencies should define materiality varied widely. 26

A few commenters indicated that the agencies' consideration of materiality should focus on whether practices, acts, or failures to act are likely to threaten an institution's financial integrity or financial stability, or call into question the ability of the institution to continue to conduct its business. These commenters indicated that defining materiality in this manner would better align with case law. 27 One commenter suggested that the agencies define material harm as harm that, in conjunction with the reasonably foreseeable operational and economic conditions that the institution is likely to be subject to, causes an institution to no longer be financially viable or to impose a loss on the DIF.

A few commenters suggested the agencies specify concrete, absolute dollar floors or percentages for harm that would be considered material, such as a specified basis point reduction in common equity tier 1 capital or an amount that could endanger the supervised institution's adequately capitalized status. One the other hand, one commenter suggested that the agencies should not adopt a quantitative threshold for materiality to allow the agencies to consider all aspects of harm, while another commenter suggested that the threshold for material harm should not be defined too narrowly, as it may constrain the agencies' ability to respond to emerging risks.

One commenter recommended clarifying that “material risk” must be tied to objective, demonstrable impacts on solvency, liquidity, capital, operations, or compliance—not reputational theories. Another commenter requested a concrete definition to ensure the definition is not susceptible in the future to regulatory drift that would include immaterial process or documentation issues. Other commenters suggested that any definition of material should consider the systemic impact caused by the bank's action. One commenter expressed that large banks, specifically, could be causing or distributing a problem but may not be directly financially impacted enough by their actions.

Several commenters proposed that the agencies use a term other than material to describe the threshold for potential or actual harm to the financial condition of an institution necessary to constitute an unsafe or unsound practice. One commenter suggested “undue” be used instead of material because it would preclude actions against a wide range of imprudent activities. A few commenters referred to “abnormal” as the threshold for risk or damage referred to by Chairman Horne in his statement.

Several commenters expressed disagreement with the materiality threshold. One commenter stated the standard would disproportionally affect smaller institutions while providing few scenarios to apply to larger institutions. Several commenters expressed concern that the new standard would permit banks to take too much risk or would prevent the agencies from intervening to correct bank deficiencies before there is a likelihood of material harm to financial condition.

After consideration of these comments, the agencies have determined to adopt materiality as the appropriate threshold for potential or actual harm to the financial condition of an institution for practices, acts, or failures to act to be considered an unsafe or unsound practice. This threshold strikes the right balance between permitting both small and large institutions to take on appropriate risks in line with their business judgment, while focusing supervisory resources on serious financial risks. Some alternative suggestions, such as abnormal or undue risk, would not add clarity as compared to material financial risk and may cause confusion between the concepts of financial risk and practices that are opposed to generally accepted standards of prudent operation. In addition, as described above, systemic risk is a separate concept from safety and soundness and the scope of this rulemaking. The agencies also decline to adopt a quantitative definition for what qualifies as material because assessment of what qualifies as material harm to the financial condition of an institution relies on examiner judgement, based on objective facts and sound reasoning, as described in section III.D of this preamble.

Some commenters expressed concern that the proposed definition of unsafe or unsound practices would be insufficient to address imprudent practices by large or complex institutions. As discussed further below, the agencies' expectations for what they consider to be material harm to the financial condition of an institution will be tailored based on the risks associated with the institution's capital structure, complexity, activities, asset size, and other financial risk-related factors. Specifically, as the risk associated with the factors identified in the tailoring provision increases, the threshold for materiality of the harm to the financial condition of an institution that constitutes an unsafe or unsound practice or warrants an MRA decreases and the assessment of the harm to the financial condition of institution becomes more granular ( e.g., specific business lines, products, or services).

As noted in the preamble to the proposal, the agencies acknowledge that, in limited circumstances, other practices, acts, or failures to act may be captured because, if continued, they are likely to result in material harm to an institution's financial condition. For example, a significant risk of disruption of an institution's operations through its information technology systems may, in some cases, be likely to cause material financial harm. Whether a cybersecurity vulnerability would meet the definition of an unsafe or unsound practice under this rule depends on the potential severity and likelihood of material harm to the financial condition of the institution. Mitigating factors such as compensating controls associated with a specific gap or weakness would also be considered. As an example, weaknesses surrounding unsupported operating systems and patch management may not be readily mitigated by controls in other areas. Such weaknesses are commonly leveraged by threat actors to interrupt and exploit institutions (via ransomware, data exfiltration, etc.). Such exploits may cause direct financial harm to institutions through the denial of banking services, data exfiltration, or other damaging actions, as well as costs associated with investigating and remediating such incidents.

The standard would not include risks to the institution's reputation unrelated to financial condition. 28

Risk of Loss to the Deposit Insurance Fund. Under the proposal, an unsafe or unsound practice also included a practice, act, or failure to act that, if continued, was likely to negatively affect an institution's ability to avoid FDIC receivership and present a material risk of loss to the DIF as a result of the failure. For example, the failure of an institution to implement appropriate contingency funding arrangements might not pose a risk of material harm to the financial condition of the institution, but could impair the institution's liquidity under stress and thus present an increased risk to the DIF. In other words, the proposed definition was intended to capture a practice, act, or failure to act that materially increases the probability that an institution would fail and impose a material risk of loss to the DIF.

The agencies received several comments relating to the agencies' proposed treatment of the risk of loss to the DIF. Two commenters asserted that the provision on material risk of loss to the DIF is superfluous, given that a loss to the DIF necessarily entails the failure of an institution, which in turn would have experienced material harm to its financial condition. As noted in the preamble to the proposal, inadequate contingency funding arrangements could impair an institution's liquidity under stress and present a material risk to the DIF without posing a risk of material harm to the financial condition of the institution. The agencies therefore decline to remove the DIF provision.

One commenter recommended that the agencies, when analyzing whether a practice presents “a material risk of loss to the DIF,” account for factors impacting the difficulty of resolving a particular institution. The agencies decline to adopt this suggestion. Specifically, the agencies' unsafe or unsound authority under section 8 of the FDI Act and the purpose of MRAs applies to the safety and soundness of institutions that are a going concern. The agencies will not consider a material risk of loss to the DIF as a means to consider an institution's resolution planning for their wind-down as a gone concern. The agencies' consideration under this prong will generally be limited to the likelihood that an institution's going-concern practices would cause it to fail in a manner that poses a material risk of loss to the DIF.

Another commenter asserted that a small institution is incapable of presenting a material risk of loss to the DIF. The materiality threshold is based on the risk of loss, not the potential amount of loss, so a small institution could still present a material risk of loss.

Taken together, the proposed provisions related to actual or potential material harm to the financial condition of the institution and a material risk of loss to the DIF provide the agencies with sufficient latitude to address imprudent practices, acts or failures to act that pose material financial risks. Accordingly, the agencies are adopting the DIF provision as proposed.

For these reasons, the agencies are defining the term unsafe or unsound practice, for purposes of the agencies' enforcement activities under 12 U.S.C. 1818, to mean a practice, act, or failure to act, alone or together with other practices, acts, or failures to act, that (1) is contrary to generally accepted standards of prudent operation; and (2)(i) if continued, is likely to (A) materially harm the financial condition of an institution; or (B) present a material risk of loss to the DIF; or (ii) materially harmed the financial condition of the institution.

The agencies also proposed to establish uniform standards for examiners' issuance and communication of MRAs. Specifically, the proposed rule provided that the agencies would only be permitted to issue an MRA for a practice, act, or failure to act, alone or together with one or more other practices, acts, or failures to act, that (1)(i) is contrary to generally accepted standards of prudent operation; and (ii)(A) if continued, could reasonably be expected to, under current or reasonably foreseeable conditions, (1) materially harm the financial condition of the institution; or (2) present a material risk of loss to the DIF; or (B) has already material harmed the financial condition of the institution; or (2) is an actual violation of a banking or banking-related law or regulation.

The proposed standard for MRAs differed from the proposed standard for unsafe or unsound practices in two significant respects. First, for the agencies to issue an MRA if imprudent practices, acts, or failures to act continued, material harm to the financial condition of an institution would have needed to be reasonably expected to under current or reasonably foreseeable conditions result in material financial harm, which is a lower bar than the likeliness requirement for unsafe or unsound practices. Second, the agencies could have issued an MRA for an actual violation of a banking or banking-related law or regulation. With respect to common terms between the proposed MRA standard and the proposed unsafe or unsound practices standard, the agencies are adopting those portions of the proposed MRA standard for the reasons discussed in section III.A of this preamble.

Many commenters supported the agencies' proposed standard for the issuance of an MRA. One commenter suggested that the agencies clarify that MRAs are not binding orders but are a warning of a potential enforcement action if the practice or violation is not corrected within a reasonable amount of time and that failure to remediate an MRA, in and of itself is not an unsafe or unsound practice. 29 Under the final rule, mere failure to remediate an MRA does not constitute an unsafe or unsound practice. The agencies characterize MRAs as concerns that, in the agencies' judgment, rise to the level of requiring presentation to the board of directors and for which an institution must take corrective action. 30

The 21st Century ROAD to Housing Act (the Housing Act) became effective on July 11, 2026. Section 902 of the Housing Act amended the limited exception for reciprocal deposits (the exception) in section 29(i) of the Federal Deposit Insurance Act (FDI Act). The exception was added to section 29 by section 202 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA)  1 enacted on May 24, 2018, and allows qualifying institutions to except a capped amount of reciprocal deposits from being considered to be received by or through a deposit broker ( i.e., the reciprocal deposits are considered to not be brokered deposits). The FDIC implemented section 202 of EGRRCPA by amending its brokered deposit and assessment regulations through a 2018 rule. 2 The FDIC is now issuing this interim final rule (IFR) to amend its brokered deposit regulations to conform with section 29 as amended by the Housing Act.

Under section 29 of the FDI Act, an insured depository institution (IDI) is restricted from accepting deposits by or through a deposit broker unless the institution is well capitalized for Prompt Corrective Action (PCA) purposes. 3 The FDIC may waive this restriction if the IDI is adequately capitalized; however, the restriction cannot be waived if the institution is undercapitalized. 4

A “deposit broker,” as defined by section 29 of the FDI Act, includes “any person engaged in the business of placing deposits, or facilitating the placement of deposits, of third parties with insured depository institutions or the business of placing deposits with insured depository institutions for the purpose of selling interests in those deposits to third parties. . . .”  5

Section 337.6 of the FDIC's Rules and Regulations implements the brokered deposit restrictions of section 29 of the FDI Act. Under the FDIC's regulations, a “brokered deposit” is thus defined as “any deposit that is obtained, directly or indirectly, from or through the mediation or assistance of a deposit broker.”  6

Neither section 29 nor the FDIC's brokered deposit regulations prescribe reporting requirements for brokered deposits or reciprocal deposits. Rather, IDIs are required to report deposits in accordance with the instructions to the Consolidated Reports of Condition and Income (Call Report) promulgated by the Federal Financial Institutions Examination Council (FFIEC). 7 The Call Report instructions describe the reporting requirements for brokered deposits, including reciprocal deposits, 8 to in part support the FDIC's calculation of assessments under the risk-based assessment system required by section 7 of the FDI Act. As discussed below, the FFIEC will be issuing supplemental Call Report instructions for the September 30, 2026 reporting period so that institutions may report brokered and reciprocal deposits consistent with the Housing Act.

Consistent with section 29 of the FDI Act, an “agent institution” can except reciprocal deposits received through a deposit placement network from being classified as brokered deposits up to its applicable statutory cap. 9 Prior to the Housing Act, section 29 defined an agent institution as an IDI that places a covered deposit at other IDIs through a deposit placement network in amounts that are less than or equal to the standard maximum deposit insurance amount, if the placing institution satisfies at least one of three prongs:

The FDIC has interpreted “a composite condition of outstanding or good” to constitute an institution that has been assigned a CAMELS  10 composite rating of “1” or “2.”  11

The amount of the four-quarter average described in the third prong is referred to as the special cap. The maximum amount of reciprocal deposits that can be treated as not being brokered under the exception is referred to as the general cap. Prior to the Housing Act, the general cap was the lesser of $5 billion or 20 percent of the total liabilities of the agent institution.

The Housing Act became effective on July 11, 2026, and made two amendments to the reciprocal deposit exception provisions in section 29. First, the Act changed the amount and calculation method of the general cap. Second, the Act amended the first prong of the agent institution definition to replace the requirement that an institution be found to have a composite condition rating of “outstanding or good” with the requirement that an institution was assigned a CAMELS rating of “1,” “2,” or “3” under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system).

As discussed below, this IFR amends the FDIC's brokered deposit regulations in section 337.6 to implement the statutory text of section 29 as amended by the Housing Act. The IFR also makes corresponding changes to the regulations to facilitate and simplify compliance.

An agent institution can except reciprocal deposits from being considered brokered deposits up to either its general cap or special cap, as applicable. 12 The Housing Act increased the maximum potential amount of the general cap and uses a tiered calculation based on the total liabilities of the agent institution. Consistent with the Housing Act, the IFR amends the general cap in section 337.6(e)(1) to be the sum of:

Under the general cap, as amended by the Housing Act, the maximum amount of reciprocal deposits allowed under the exception for any institution totals $30 billion, which would be the general cap for an institution with $96.33 billion or more in total liabilities (assuming the institution is not limited to the special cap ). An institution with less than $96.33 billion in total liabilities must calculate its general cap using the new tiered methodology. As an example for how the FDIC would calculate the amount of reciprocal deposits eligible for the exception, an agent institution with $25 billion in total liabilities would have a general cap equal to (0.5 * $1 billion) + (0.4 * $9 billion) + (0.3 * $15 billion) = $8.6 billion.

The FDIC will continue to calculate an institution's general cap based on data reported in its Call Report.

Consistent with the Housing Act, the IFR amends the first prong of the agent institution definition  13 to require that, when most recently examined under section 10(d) of the FDI Act, an institution was assigned a CAMELS composite rating of “1,” “2,” or “3” under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system). 14 The second element of the definition is that the institution be well capitalized; this element was not amended by the Housing Act. Thus, under the first prong as amended, an institution must have a CAMELS composite rating of “1,” “2,” or “3” and be well capitalized.

The FDIC recognizes that, although the Housing Act amends the first prong of the agent institution definition to replace the “outstanding or good” rating language, it did not amend the mirroring “outstanding or good” rating language used in the special cap prong. Thus, read together, the two provisions indicate that an institution that becomes subject to the special cap because it no longer satisfies the first prong of the agent institution definition may not have its four-quarter average ( i.e., its special cap ) calculated based on the preceding four quarters. Instead, this calculation may rely on quarters that are earlier than the preceding four quarters. 15

Although this could have the effect of an institution's special cap being smaller or larger than the average of the most recent four quarters prior to the institution ceasing to meet the first prong of the agent institution definition, an agent institution that becomes subject to the special cap may continue to hold reciprocal deposits previously received in an amount that is greater than the special cap;   16 therefore, institutions will not be disqualified from being considered an agent institution as a result of the timing disparity between the special cap calculation and its application.

The FDIC recognizes that section 902 of the Housing Act may result in increased holdings of reciprocal deposits by IDIs, including by institutions that previously did not utilize reciprocal deposits. To facilitate compliance with the FDIC's regulations concerning reciprocal deposits, and to assist institutions that may be reviewing and relying upon those regulations for the first time, the FDIC is clarifying certain aspects of the reciprocal deposits framework.

An agent institution that becomes subject to the special cap can continue to hold the reciprocal deposits that it received prior to becoming subject to the special cap; however, if an institution “receives” reciprocal deposits in excess of its special cap, it is no longer an agent institution, and all of its reciprocal deposits must be reported as brokered deposits. 17

The Agencies are finalizing the IFR published on July 3, 2025 (90 FR 29426), which revised their regulations at 23 CFR part 771 (Part 771) implementing NEPA (42 U.S.C. 4321-4347, as amended). The regulations at Part 771 were promulgated in 1974 based upon FHWA's guidelines for implementing NEPA, first issued on November 30, 1970 ( see 36 FR 23666, 23696; December 11, 1971, and 39 FR 41804; December 2, 1974) and subsequently amended several times. After the CEQ issued NEPA implementing regulations (CEQ regulations) in 1978 (43 FR 55978; November 29, 1978), Part 771 was considered a supplement to the CEQ regulations.

In 2025, Executive Order (E.O.) 14154, Unleashing American Energy (90 FR 8353; January 29, 2025), rescinded E.O. 11991, Relating to Protection and Enhancement of Environmental Quality (42 FR 26967; May 24, 1977), which directed CEQ to issue regulations implementing NEPA and required Federal agencies to comply with those rules. CEQ's regulations were removed, effective April 11, 2025. See Removal of National Environmental Policy Act Implementing Regulations (90 FR 10610; February 25, 2025). CEQ finalized the withdrawal of its regulations by adopting its IFR in a Final Rule issued January 8, 2026 (91 FR 618).

As a result of the foregoing, the Agencies removed cross-references to the removed CEQ regulations in Part 771 through the IFR. The Agencies previously followed the procedures contained in the removed CEQ regulations for any topics not addressed by Part 771. The Part 771 regulations stand on their own.

In addition to removing cross-references to the CEQ regulations, the Agencies revised Part 771 to reflect the amendments to NEPA included in the section of the FR Act of 2023 known as the BUILDER Act of 2023, Public Law 118-5, Div. C, Tit. III, Section 321 (June 3, 2023) (NEPA Amendments), which streamlined the environmental review process for all Federal Agencies. Part 771 also reflects amendments to 23 U.S.C. 139 and 203(e), regarding efficient environmental reviews, and applicable to the Agencies only, included in the IIJA, Public Law 117-58 (November 15, 2021).

This final rule makes further minor technical changes to Part 771 based on comments received in response to the IFR and following additional consideration by the Agencies regarding necessary changes to the regulations. Technical changes made in response to public comments are discussed in Section II (Comments).

The additional technical changes the Agencies determined were necessary include adding and revising relevant authorities in 23 CFR 771.123(b)(1) to read “23 U.S.C. 139(f), 168, 169, 23 CFR 450.212, 23 CFR 450.318, or 23 CFR 450 Appendix A, as applicable.” The Agencies also updated FHWA and FTA categorical exclusions (CE) found at 23 CFR 771.117(c)(23) and 23 CFR.771.118(c)(13) to incorporate the monetary threshold for projects receiving limited Federal assistance in accordance with Section 11317 of IIJA, which amended Section 1317(1) of the Moving Ahead for Progress in the 21st Century Act (MAP-21), 23 U.S.C. 109 note; Public Law 112-141. Effective in the fiscal year of October 1, 2021, the monetary limits for the CE for projects of limited Federal assistance are defined as (1) Projects receiving less than “$6,000,000” of Federal funds, or (2) Projects with a total estimated cost less than “$35,000,000” and Federal funding of less than 15 percent of total estimated project cost. Accordingly, the limited Federal assistance CEs were amended by striking “$5,000,000” and “$30,000,000” from clauses 771.117(c)(23)(i) and (ii), and 771.118(c)(13)(i) and (ii), respectively, and inserting “$6,000,000” and “$35,000,000.” Finally, the Agencies made nonsubstantive grammatical changes or changes for clarity in 23 CFR 771.101, 23 CFR 771.138, and 23 CFR 771.113.

The Agencies may seek future changes to Part 771 through a deregulatory rulemaking effort to further expedite the environmental review process and reduce additional burdens on regulated parties.

The Agencies received 1,991 comments in the docket in response to the IFR but only 244 unique comments. The Agencies considered the comments and respond to the issues raised by the comments in this final rule. Summaries of and responses to these comments, including minor technical changes to the regulation text, are provided in this section.

Many of the comments proposed various substantive edits and changes to Part 771. The Agencies appreciate and acknowledge these comments but decline to make the suggested substantive changes at this time because they are outside the scope of this rulemaking effort, which is limited to technical changes. However, such comments will be retained and considered for future rulemaking efforts.

Comment: Several commenters expressed general support for the IFR. These commenters praised the Agencies' effort to clarify the Agencies' NEPA procedures and requirements given the removal of the CEQ regulations, as well as to reflect amendments to NEPA included in the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA.

Response: The Agencies acknowledge and appreciate these supportive comments.

Comment: A number of commenters opposed the IFR changes, broadly noting their concerns over diminishing NEPA's intended purpose, reducing public input, increasing risks to wildlife habitats, and impacting Tribal and treaty rights.

Response: The Agencies are committed to complying with NEPA by analyzing alternatives to a proposed Agency action, ensuring meaningful public participation, and identifying the range of impacts to the environment as a result of the proposed alternatives, in line with statutory requirements. The Agencies made only technical changes to reflect the removal of the CEQ regulations as well as the amendments to NEPA included in the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. Part 771 retains procedures for public involvement and thorough environmental analysis proportional to project impacts. Respect for Tribal sovereignty and treaty rights will be upheld consistent with applicable law, including NEPA.

Comment: Several commenters disagreed that the Agencies had good cause under 5 U.S.C. 553(b)(B) to waive the Administrative Procedure Act (APA) notice and comment requirements or waive the 30-day delay of the effective date to make the rule effective immediately under 5 U.S.C. 553(d)(3). These comments asserted that the Agencies failed to demonstrate that an emergency or other exceptional circumstances existed or that the application of the APA's notice and comment requirements were “impractical, unnecessary, or contrary to the public interest.” Several commenters also requested additional time to review and comment on the Part 771 updates.

Response: As stated in the IFR, the technical, non-discretionary nature of the changes and expeditious need to update Part 771 to conform with statutory changes warranted application of the good cause exception to bypass notice and the opportunity for public comment and make the rule effective immediately. The Agencies made only technical changes to reflect the removal of the CEQ regulations, as well as the amendments to NEPA included in the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. Under the APA, the requirement for prior notice and opportunity for public comment does not apply when the Agency, for good cause, finds that those procedures are “impracticable, unnecessary, or contrary to the public interest,” 5 U.S.C. 553(b)(B). The Agencies determined that notice and opportunity for public comment were unnecessary due to the technical, non-discretionary nature of the changes and the urgent need to update Part 771 to reflect the removal of the CEQ regulations, which the Agencies had previously relied upon when they drafted Part 771. In addition, the Agencies found Part 771 contained elements that were no longer substantively supported and thus notice and opportunity for public comment would have been contrary to the public interest given the number of environmental reviews underway across the Agencies' programs. In order to remedy the unpredictability and regulatory inconsistency created by the removal of the CEQ regulations and the other statutory changes quickly, the Agencies made only necessary technical changes in this rulemaking effort. By limiting the changes to technical changes, the changes could be implemented immediately, and environmental reviews could continue without delay.

Nevertheless, the Agencies elected to solicit comments out of an abundance of caution and for reasons of good government. The Agencies considered all comments received, including the comments received after the deadline.

Comment: Several commenters opposed the IFR changes based on perceived reliance on the 2020 CEQ regulations, describing those regulations as legally flawed and insufficient in scope. Commenters urged alignment with CEQ's 2023 final rule, which restored broader environmental review elements such as cumulative and indirect impact analyses.

Response: The Agencies did not rely on any version of the CEQ regulations. The Agencies made only technical changes to the Agencies' NEPA procedures to reflect the removal of the CEQ regulations, as well as the amendments to NEPA, the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. The Agencies will continue to coordinate with the CEQ and other agencies to promote best practices in NEPA reviews.

Comment: Some commenters raised concerns over the Supreme Court's decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, 605 U.S. 168, 145 S. Ct. 1497 (2025) ( Seven County ), and revisions to Part 771 based on the ruling.

Response: On May 29, 2025, the Supreme Court issued its decision in Seven County. The Agencies reflected the outcome of the decision in the IFR by noting that NEPA is a “purely procedural statute.” (90 FR 29429; Seven County, 145 S. Ct. at 1507, 1511). CEQ has issued guidance, Implementation of the National Environmental Policy Act (September 29, 2025), superseding guidance of the same name it had issued on February 19, 2025, that addressed amendments to NEPA and discussed aspects of the Seven County decision, including that NEPA is “purely procedural.” This covers the extent the Seven County decision was included in the Agencies' technical changes to Part 771, which were made primarily to reflect the removal of the CEQ regulations, as well as statutory changes from the amendments to NEPA, the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA.

Comment: Several commenters expressed concern over the technical changes to Part 771 and suggested that these changes would make it more difficult to coordinate compliance with other applicable laws and statutes outside of NEPA.

Response: The Agencies made no substantive changes with respect to the coordination required to comply with other environmental laws or requirements, nor the Agencies' obligations under other statutory coordination requirements.

Comment: Several commenters pointed to risks of inconsistent NEPA procedures across Federal Agencies and other agency partners complicating multimodal projects, causing delays, or generating conflicting requirements because of the IFR changes.

Response: Part 771 outlines joint NEPA procedures for Federal railroad, transit, and highway projects and is intended to increase coordination and consistency for multimodal projects and across programs. As applicable, Part 771 continues to require or recommend coordination with Federal Agencies and other agency partners, including those outside of the DOT:

• Sections 771.109(c) and 771.111 discusses coordination with Federal Agencies and facilitation of early communication between agency partners. For environmental impact statements (EIS), a coordination plan is required in section 771.123(b)(2).

• Section 771.141, Reliance and Adoption Efficiencies, outlines the circumstances under which any other Federal Agency may rely on the Agencies' NEPA documents as if they were their own, thereby reducing delay. Section 771.105(a) declares that all environmental investigations, reviews, and consultations should be coordinated as a single environmental review process and in a single environmental document to the maximum extent practicable.

Comment: Several commenters expressed concern regarding public involvement, with some commenters suggesting that the Agencies made substantive changes to the Agencies' public involvement procedures and requirements.

Response: The Agencies made no substantive changes to public involvement requirements or procedures. Public involvement remains an essential part of the Agencies' NEPA process in accordance with 23 CFR 771.105(d), and early coordination and public involvement remain a requirement in 23 CFR 771.111. Project sponsors may, at their discretion, supplement these requirements commensurate with project complexity, controversy, or public interest.

Comment: Several commenters expressed concern over the removal of considerations for environmental justice (EJ) impacts in the environmental review process.

Response: On January 20, 2025, President Trump signed E.O. 14148, Initial Rescissions of Harmful Executive Orders and Actions, and E.O. 14154, Unleashing American Energy. These E.O.s revoked E.O. 14096, Revitalizing Our Nation's Commitment to Environmental Justice for All (April 21, 2023). On January 21, 2025, President Trump signed E.O. 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity. This E.O. revoked E.O. 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (February 11, 1994).

The Agencies made technical corrections to Part 771 to reflect the removal of the CEQ regulations, as well as to incorporate amendments to NEPA as part of the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. Per 23 CFR 771.105(c), the Agencies will evaluate alternatives and make decisions that consider the reasonably foreseeable social, economic, and environmental impacts of the proposed transportation improvement, consistent with applicable law.

Comment: Several commenters expressed concern over the removal of consideration for impacts related to greenhouse gas emissions and climate change in the environmental review process.

Response: On January 20, 2025, President Trump signed E.O. 14148, Initial Rescissions of Harmful Executive Orders and Action s, and E.O. 14154, Unleashing American Energy. These E.O.s revoked E.O. 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis (January 20, 2021) and E.O. 14008, Tackling the Climate Crisis at Home and Abroad (January 27, 2021). Subsequently on January 29, 2025, Secretary Duffy signed a memorandum for Secretarial Officers and Heads of Operating Administrations, Implementation of Executive Orders Addressing Energy, Climate Change, Diversity, and Gender.

The Agencies made technical corrections to Part 771 to reflect the removal of the CEQ regulations, as well as to incorporate amendments to NEPA as part of the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. Per 23 CFR 771.105(c), the Agencies will evaluate alternatives and make decisions that consider the reasonably foreseeable social, economic, and environmental impacts of the proposed transportation improvement, consistent with applicable law.

Comment: Several commenters raised concerns over the lack of requirements to analyze cumulative and indirect environmental impacts. Commenters emphasized that such analyses are critical for evaluating climate change impacts, EJ considerations, and protection of cultural and historic resources.

Response: The terms direct, indirect, and cumulative effects were defined in the CEQ regulations, which have been removed. The Agencies made only technical changes to Part 771 to reflect the removal of the CEQ regulations, as well as to incorporate amendments to NEPA as part of the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. For consistency with the NEPA statute, which does not use the terms direct, indirect, or cumulative effect, the final rule uses the term “reasonably foreseeable” to refer to the statutory NEPA standard for evaluating the social, economic, and environmental impacts of proposed transportation improvements. The Agencies will evaluate alternatives and make decisions that consider all effects that are reasonably foreseeable, including the social, economic, and environmental impacts of a proposed transportation improvement.

Comment: Several commenters raised concern with the “reasonably foreseeable” standard for assessing environmental impacts and requested that the Agencies define the term for clarity.

Response: For consistency with the NEPA statute, the final rule uses the term “reasonably foreseeable” to refer to the standard for evaluating the social, economic, and environmental impacts of proposed transportation improvements. This term applies across the Federal Government and is being added to Part 771 in this final rule to ensure consistency between the Agencies and other Federal Agencies.

Since publication of the IFR, CEQ has defined the term “reasonably foreseeable” via an appendix to guidance  1 issued on September 29, 2025. The Agencies decline to define “reasonably foreseeable effects” in Part 771 because substantive changes are outside the scope of this rulemaking. However, the Agencies may consider defining this term in a future rulemaking.

Comment: Some commenters proposed including non-major Federal actions in Part 771 in response to the request for suggestions from the Agencies in the IFR. Additional comments requested that the Agencies define “non-major Federal actions.”

Response: The Agencies appreciate and acknowledge the comments and will reserve and consider them for a future rulemaking. The Agencies decline the proposed substantive changes at this time because they are outside the limited scope of this rulemaking effort. The Agencies made only technical changes to Part 771 to reflect the removal of the CEQ regulations, FR Act amendments to NEPA, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA. NEPA defines a “major Federal action” by reference to the degree of Federal control and responsibility, 42 U.S.C. 4336e. The Agencies will continue to distinguish major Federal actions and non-major Federal actions consistent with applicable law.

Comment: Several commenters requested the Agencies update their CEs and implement efficiencies more broadly with respect to CE determinations.

Response: The Agencies appreciate and acknowledge comments requesting updated CEs and broader CE efficiencies but decline the suggested changes because they are outside the scope of this rulemaking effort, which is focused on technical changes. The Agencies will reserve and consider the comments regarding CE efficiencies for a future rulemaking but continue to support efficient processing of routine projects that qualify for CEs and will assess potential flexibilities to promote efficiency in the NEPA process.

Comment: Some commenters requested flexibilities in the public involvement process, such as removing the requirement to provide public notice through local newspapers and instead providing alternative means to provide notice.

Response: The Agencies appreciate and acknowledge comments requesting changes to public involvement requirements and procedures but decline to make such changes in this final rule because substantive changes are beyond the scope of this rulemaking effort. The Agencies will reserve and consider the removal of newspaper requirement for a future rulemaking. Regardless of the newspaper requirement, several sections throughout Part 771 already encourage the use of project websites or other publicly accessible electronic means to make the environmental document available while minimizing hardcopy requests and printing costs.

Comment: Several commenters recommended that DOT set a timeline of less than the one year for CE determinations and implement reporting procedures for delays.

Response: The Agencies recognize the value of timely environmental reviews to promote efficient project delivery. The relevant statutory authorities are silent on timelines for completing CE determinations, and the Agencies decline to set a timeline for CE determinations because substantive changes are outside the scope of this rulemaking effort. In addition, compliance with other statutory requirements may require additional time and documentation but the Agencies will continue to evaluate process improvements.

Comment: Several commenters recommended tracking and reporting milestones such as the time from award notification for discretionary grant program projects to environmental clearance completion to provide transparency to grantees and congressional oversight committees.

Response: The Agencies value transparency and recognize congressional interest in project delivery metrics, and the Agencies will continue to provide tracking information and reports as required by law. This includes providing environmental assessment (EA) and EIS project information on the Permitting Dashboard for Federal Infrastructure Projects, available at https://www.permits.performance.gov. However, the Agencies decline to make further changes in this final rule because substantive changes are outside the scope of this rulemaking. The Agencies appreciate and acknowledge the comments and will reserve and consider them for a future rulemaking.

Comment: One commenter requested that the Agencies provide more detail in 23 CFR 771.115(b)-(c) to differentiate between the EA and CE classes of action. The current language in paragraph (b) provides that a CE applies to actions that normally do not have a significant environmental effect and is excluded from the requirement to prepare an EA or EIS. The current language in paragraph (c) provides that an EA applies to actions that do not have reasonably foreseeable significant effects on the quality of the human environment or for which the significance of an environmental impact is unknown. Per the commenter, it is difficult to distinguish between the two classes of actions because the language in 23 CFR 771.115(b)-(c) suggests that both the EA and CE classes of action apply to actions that do not have a “reasonably foreseeable significant effect.”

Response: After careful examination of the language in 23 CFR 771.115(b)-(c), the Agencies agree the language should be revised to distinguish the difference between EAs and CEs as classes of action more clearly. Accordingly, the Agencies are revising the language in 23 CFR 771.115(c) to make clear that an EA applies to “[a]ctions that do not have reasonably foreseeable significant effects on the quality of the human environment but that cannot be categorically excluded or actions for which the significance of the environmental impact is unknown” to be consistent with NEPA, 42 U.S.C. 4336(b)(2) (emphasis added). For consistency, the language in 23 CFR 771.119(a) has been revised to read, “The applicant must prepare an EA in consultation with the Administration for each action that does not have a reasonably foreseeable significant effect on the quality of the human environment but that cannot be categorically excluded or actions for which if the significance of the environmental impact such effect is unknown, unless the agency finds that the proposed action is a CE and does not clearly require the preparation of an EIS.”

Comment: A commenter proposed removing the certification requirement at 23 CFR 771.138(c)(1) for the Draft Environmental Impact Statement (DEIS). The commenter noted that the certification requirement means that, for a DEIS, the lead agency is required to certify the timeline requirements are met under 23 CFR 771.138 prior to completing the NEPA process through the final EIS or combined final EIS/Record of Decision (ROD).

Response: The Agencies agree with the commenter and have removed the certification requirement for a DEIS in 23 CFR 771.138(c) in the final rule. This change should address any prior confusion by clearly stating that the lead agency must certify the EIS timeline requirement has been met at the completion of the NEPA process. The certification requirement remains with respect to timeline and page limit requirements for final EISs and combined final EIS/RODs.

Comment: Several commenters requested new flexibilities in the re-evaluation process, clarification on when a re-evaluation is needed, and that the timeframe for triggering the written re-evaluation requirement for an EIS be aligned with the 5-year threshold provided in DOT's NEPA Order.

Response: The Agencies appreciate and acknowledge the comment but decline to make the suggested changes because substantive changes are outside the scope of this rulemaking. In the final rule, the Agencies made only technical changes to Part 771 to reflect the removal of the CEQ regulations, amendments to NEPA in the FR Act, and amendments to 23 U.S.C. 139 and 203(e) included in IIJA.

Comment: Several commenters suggested delegating NEPA or related Federal requirements, such as routine consultations under the Endangered Species Act of 1973, as amended, 16 U.S.C. 1531 et seq., to non-Federal entities.

Response: The Agencies appreciate and acknowledge the comments, but decline to make these changes as NEPA and other Federal delegation programs are outside the scope of this rulemaking effort. The Agencies continue to encourage project sponsors to use environmental data and analyses prepared for compliance with State environmental review requirements in preparing the Federal NEPA document when it is relevant and contemporary to avoid duplication of effort and promote efficient environmental reviews. State documents and analyses related to compliance with State environmental requirements may be used to inform the NEPA process to the extent consistent with applicable law.

Comment: Some commenters expressed opposition to CEQ's recission of its regulations and other Governmentwide efforts and related policies, and expressed opinions not directly related to IFR and technical changes to Part 771.

Response: Comments related to NEPA implementation outside the context of Part 771, or actions taken by other Federal Agencies or entities, are outside the scope of this rulemaking effort.

This final rule is published under the authority of the Secretary of Transportation delegated to the Agencies pursuant to 49 CFR 1.81, 1.85, 1.89, and 1.91. Authority for these regulations is as follows: 42 U.S.C. 4321 et seq.; 23 U.S.C. 106, 109, 128, 138, 139, 203, 315, 326, and 327; 49 U.S.C. 303 and 24201; 49 U.S.C. 5323(c) and 5323(q); 49 CFR 1.81, 1.85, 1.89, and 1.91; Pub. L. 109-59, 119 Stat. 1144, Sections 6002 and 6010; Pub. L. 112-141, 126 Stat. 405, Sections 1315, 1316, 1317, 1318, and 1319; and Pub. L. 114-94, 129 Stat. 1312, Sections 1304 and 1432.

The Agencies considered all comments received before the close of business on the comment closing date indicated above, as well as the comments received after the deadline. The comments are available for examination in the docket (FHWA-2025-0007) at www.regulations.gov.

This rule is a nonsignificant regulatory action under E.O. 12866, Regulatory Planning and Review (58 FR 51735 (October 4, 1993)). Therefore, the Office of Management and Budget (OMB) has not reviewed this rule. E.O. 12866 further directs Agencies to assess all costs and benefits of available regulatory alternatives and, if a regulation is necessary, to select regulatory approaches that maximize net benefits.

Implementation guidance for E.O. 14192, Unleashing Prosperity Through Deregulation, issued by the OMB (Memorandum M-25-20, March 26, 2025), defines an E.O. 14192 deregulatory action as “an action that has been finalized and has total costs less than zero.” This final rule is considered an E.O. 14192 deregulatory action. The Agencies expect minor cost savings because this final rule would enable projects to move more expeditiously through the Federal environmental review process. It would reduce the preparation of extraneous environmental documentation and analysis not needed for compliance with NEPA while still ensuring that projects are built in an environmentally responsible manner and consistent with Federal law. These cost savings cannot be quantifiable. The Agencies do not have specific data to assess the economic impact of this final rule because such data does not exist and would be difficult to develop.

The Regulatory Flexibility Act, as amended, 5 U.S.C. 601 et seq., requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment. As discussed previously, the Agencies have determined that prior notice and opportunity for public comment is unnecessary under the APA. Because a notice of proposed rulemaking is not required for this action pursuant to 5 U.S.C. 553, or any other law, no regulatory flexibility analysis has been prepared for this final rule. See 5 U.S.C. 601(2), 603(a).

NEPA does not require any Federal Agency to conduct NEPA analysis for the development of Agency procedures that implement NEPA. In addition, the promulgation of this final rule is categorically excluded from the requirement to prepare an impact statement by 23 CFR 771.116(c)(15), 771.117(c)(20), and 771.118(c)(4) and, therefore, the Agencies have determined that no environmental analysis is needed. The Agencies do not anticipate any adverse environmental impacts from this final rule, and no unusual circumstances are present under 23 CFR 771.117(b).

The Agencies have analyzed this final rule in accordance with the principles and criteria contained in E.O. 13132, Federalism, which requires Agencies to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. The Agencies have determined that this action does not preempt any State law or State regulation or affect the States' ability to discharge traditional State governmental functions.

The Agencies have analyzed this final rule according to the principles and criteria in E.O. 13175, Consultation and Coordination with Indian Tribal Governments, and DOT Order 5301.1, Department of Transportation Programs, Policies, and Procedures Affecting American Indians, Alaska Natives, and Tribes. The Agencies have determined that this action will neither significantly nor uniquely affect Tribal communities or Indian Tribal governments. In addition, this action does not impose compliance costs on Tribal governments and does not preempt Tribal law.

Section 201 of the Unfunded Mandates Reform Act, 2 U.S.C. 1531, 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, and Tribal governments in the aggregate of $100 million or more (in 1996 dollars) in any given year, agencies must prepare, among other things, a written statement that qualitatively and quantitatively assesses the costs and benefits of the Federal mandate. This final rule applies to Federal Agencies and would not result in expenditures of $100 million or more for State, Tribal, and local governments, in the aggregate, or the private sector in any one year. This action also does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of 2 U.S.C. 1531-1538.

Under the PRA, 44 U.S.C. 3501, et seq., Federal agencies must obtain approval from OMB for each collection of information they conduct, sponsor, or require through regulations. This action does not impose any new information collection burden that would require additional review or approval by OMB for the purposes of the PRA.

The Agencies have analyzed this action under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agencies have determined that this is not a significant energy action under that order and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required.

A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in the spring and fall of each year. The RIN contained in the heading of this document can be used to cross reference this action with the Unified Agenda.

In consideration of the foregoing, the Agencies revise 23 CFR part 771, and 49 CFR part 264, and part 622, subpart A to read as follows:

This rule makes technical amendments to certain provisions in 28 CFR part 27 to reflect that “the Office of Attorney Recruitment and Management” has been renamed “the Office of Adjudication, Recruitment, and Management” (OARM) as part of a reorganization of JMD, which included the formal realignment of OARM to JMD.

In developing this rule, the Department considered numerous statutes and executive orders applicable to rulemaking. The Department's analysis of the applicability of those statutes and executive orders to this rule is summarized below.

This rule relates to matters of agency personnel, organization, and procedure, and, pursuant to 5 U.S.C. 553(a)(2), it is exempt from the requirements of notice and comment and a 30-day delay in the effective date.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, as supplemented by Executive Order 13563. This rule makes technical amendments to portions of the existing regulations that provide whistleblower protection for FBI employees and applicants to conform with organizational changes within JMD. The changes do not materially affect the number of claims or the time, cost, or resources required to address them.

Accordingly, this rule does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866. The Office of Management and Budget has not reviewed this rule under these Orders.

Further, as this rule relates to agency organization, management, or personnel, it is fully exempt from the numerical 10-for-1 and cost offset requirements of Executive Order 14192.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-12, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. 5 U.S.C. 601.

The Attorney General certifies under 5 U.S.C. 605(b) that this rule does not have a significant economic impact on a substantial number of small entities. The rule makes technical amendments to the portions of the regulations governing the Department's internal process for addressing allegations of retaliation for protected whistleblowing by FBI employees and applicants. It has no application to small entities as defined above.

This final rule does not call for a new collection of information under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-20.

A rule has federalism implications under Executive Order 13132 if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. E.O. 13132, sec. 1(a). The Department has analyzed this rule under that Order and determined that this rule does not have federalism implications.

The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-38, requires Federal agencies to determine whether a rule, if promulgated, will result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million (adjusted for inflation) or more in any one year. 2 U.S.C. 1532(a). This rule does not require or result in expenditures by any of the above-named entities.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988.

This rule does not have tribal implications under Executive Order 13175 because it would not have a substantial direct effect 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.

The reporting requirements of the Congressional Review Act (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996), 5 U.S.C. 801-08, do not apply to this rule. This rule relates primarily to agency management, personnel, and organization. 5 U.S.C. 804(3)(B). The rule makes technical amendments to 28 CFR part 27, as necessary to conform to recent Department organizational changes. This action is accordingly not a “rule” as that term is used by the Congressional Review Act, see 5 U.S.C. 804(3), and the reporting requirement of 5 U.S.C. 801 does not apply.

For the reasons stated above, the Department of Justice amends 28 CFR part 27 as follows:

This is a summary of errata from OSM's final rule published August 21, 2026 (91 FR 54218), FR Doc. 2026-17055 on page 54223, columns 2-3. In our August 21, 2026, final rule, OSM amended 30 CFR 926.12 (State program provisions and amendments not approved) to add our decision regarding State Program Amendment MT-041-FOR (Docket No. OSM-2023-0002) at paragraph (c). Paragraph (c) already existed and contained OSM's decision regarding State Program Amendment MT-042-FOR (Docket No. OSM-2023-0007). See 90 FR 3673, 3687 (January 15, 2025).

OSM is now correcting 30 CFR 926.12 by changing the designation of paragraph (c) to paragraph (d) to contain the entry that OSM published in the August 21, 2026, Federal Register (91 FR 54218).

In FR Doc 2026-17055, which published August 21, 2026, at 91 FR 54218, on page 54223 in the second column correct amendatory instruction 2 and accompanying regulatory text to read as follows:

The Coast Guard received notification that the Roar Offshore high-speed boat race will be occurring on the waters of Fort Myers Beach, FL. The Captain of the Port (COTP) St. Petersburg has determined that potential hazards associated with high-speed vessels are a safety concern for anyone within the designated safety zone.

Therefore, the COTP is issuing this rule under the authority in 46 U.S.C. 70034, which is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone.

Because of these potential hazards, the Coast Guard is issuing this rule without prior notice and comment. As is authorized by 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard was notified of this event too late in the planning process and we must establish this safety zone by September 11, 2026, to protect personnel, vessels, and the marine environment. Therefore, we do not have enough time to solicit and respond to comments.

For the same reason, the Coast Guard finds that under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

This rule establishes a safety zone from September 11 through September 13, 2026. The safety zone will cover all navigable waters in Fort Myers Beach within the following points: Point 1 at 26°26′27″ N, 081°55′55″ W, thence to Point 2 at 26°25′33″ N, 081°56′34″ W, thence to Point 3 at 26°26′38″ N, 081°58′40″ W thence to Point 4 at 26°27′25″ N, 081°58′8″ W; thence returning to Point 1. Vessels and persons will not be allowed to enter the zone during this time, unless authorized by the Captain of the Port.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders.

The regulatory flexibility analysis provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to rules that are not subject to notice and comment. Because the Coast Guard has, for good cause, waived the notice and comment requirement that would otherwise apply to this rulemaking, the Regulatory Flexibility Act's flexibility analysis provisions do not apply here.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this rule will affect your small business, organization, or governmental jurisdiction and you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

We have analyzed this rule under Executive Order 13132, Federalism, and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in that Order.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect 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.

As required by The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this rule will not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment.

This rule is a safety zone. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

On July 12, 2026, the Postal Service introduced two new fees, the Hazmat Handling Fee for packages containing hazardous materials to cover the additional costs of transporting these items and the Hazmat Noncompliance Fee that will be applied when we detect a package that contains hazardous materials and that the customer did not appropriately declare and label.

The Postal Service is clarifying that pieces mailed under the standards for Free Matter will not be subject to the Hazmat Handling Fee. However, pieces mailed by commercial mailers under the standards for Free Matter are subject to the Hazmat Noncompliance Fee.

In addition, the Postal Service is adding to the standards governing Free Matter a requirement that all parcels bear an Intelligent Mail® package barcode (IMpb®) and an Intelligent Mail matrix barcode (IMmb TM ). The requirement to include the barcodes will benefit mailers and the Postal Service. It will provide customers the ability to track their packages and it will give the Postal Service better visibility in processing these packages to achieve the expected expeditious handling and delivery of the mailpiece.

The barcode will require mailers to use specific HAZMAT Service Type Codes (STC). This requirement will improve processing and transportation safety, also beneficial to achieving the expected expeditious handling and delivery of the mailpiece.

Commercial mailers of mailpieces not meeting the requirement for using a unique IMpb and IMmb, as outlined in the DMM and Publication 199, Intelligent Mail Package Barcode (IMpb) Implementation Guide for Confirmation Services and Electronic Payment Systems, will be subject to the Package Quality Noncompliance Fee provided in the Notice 123-Price List.

The Postal Service adopts the described changes to Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. We will publish an appropriate amendment to 39 CFR part 111 to reflect these changes.

Accordingly, the Postal Service amends Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations as follows (see 39 CFR 111.1):

On June 16, 2022, the Ocean Shipping Reform Act of 2022 (OSRA 2022) (Pub. L. 117-146) was enacted. Section 10 of the Act, “Charge complaints,” codified at 46 U.S.C. 41310, states that a person may submit to the Commission “information concerning complaints about charges assessed by a common carrier.” The statute directs the Commission, upon such a submission, to “promptly investigate the charge” and order refunds and penalties for charges that do not comply with 46 U.S.C. 41104(a) and 41102. Charge Complaints under 46 U.S.C. 41310 may be submitted regarding a broad range of noncompliant charges assessed by a common carrier. While complaints about the reasonableness of a demurrage or detention charge tend to be the most common, other carrier fees or charges which are not in compliance with 46 U.S.C. 41104(a) and 41102 may be submitted for investigation. During the investigation, the carrier has an opportunity to submit information related to the charge in question, 46 U.S.C. 41310(b)(1). Whereas a complainant typically bears the burden of establishing violations in adjudicatory hearing proceedings under 46 U.S.C. 41301, OSRA 2022 provides that the respondent carrier “bear[s] the burden of establishing the reasonableness of any demurrage or detention charges pursuant to [46 CFR] 545.5” when a Charge Complaint is involved. 46 U.S.C. 41310(b)(2). Section 41310 of the United States Code is self-implementing and became applicable and enforceable on June 16, 2022, when OSRA 2022 was signed into law.

Because the Charge Complaint provisions are self-executing, the Commission adopted an Interim Procedure for Charge Complaints (“Interim Procedure”) to address the new type of complaint. 1 The Interim Procedure is a streamlined procedure designed for faster resolution of Charge Complaint claims without significant participation by the filer. Under the Interim Procedure, a person submits a Charge Complaint and supporting information to the Commission by email to chargecomplaints@fmc.gov. Commission staff acknowledge the submission and, if necessary, contact the filer to obtain clarification or missing information. When the Commission receives sufficient information, it promptly investigates the complaint by contacting the common carrier and asking the carrier to respond/justify the charge or fee being investigated. Upon completion of the investigation, Commission staff notify both parties.

If the investigation supports a finding that the common carrier's charge or fee is not in compliance with statutes or Commission rules, the parties are informed that the matter will be referred to the Commission's Bureau of Enforcement, Investigations, and Compliance (BEIC). For matters where the investigation supports a finding of a violation, BEIC will recommend that the Commission institute Show Cause proceedings under 46 CFR 502.91 to formally adjudicate the Charge Complaint. Upon approval of FMC staff's recommendation, the Commission will issue an Order to Show Cause naming the specific common carrier and describing the actions alleged to violate 46 U.S.C. 41104(a), 41102, or both, and directing that common carrier to “show cause” why it should not be ordered to refund the fees or charges paid or waive such fees. The common carrier is provided the opportunity to “show cause” why the common carrier's actions should not be found to constitute a violation of 46 U.S.C. 41104(a) or 41102. The common carrier may submit an affidavit(s) of fact, memoranda of law, and any documentary evidence in support of its position. The Order to Show Cause defines what procedures apply. Charge Complaint-related Show Cause proceedings are conducted on a fast-track basis to provide an early determination concerning the shipper's entitlement to a refund. Procedures not consistent with achieving an expedited decision on refunds or waivers, such as discovery or oral argument, are waived for the refund proceeding. Additional procedures, however, may be requested if desired. If the Commission orders a refund by the common carrier, a separate civil penalty proceeding may also be initiated and referred to the Commission's Office of Administrative Law Judges for consideration of penalties under 46 U.S.C. 41107 and 41109. This is an entirely separate proceeding handled under the Commission's more detailed rules of practice and procedure.

The Commission's statement that the Interim Procedure “cannot be combined with formal proceedings under 46 CFR 502.61, or small claims proceedings—formal or informal, under 46 CFR 502.301-502.321” has been interpreted by some individuals as meaning that the Interim Procedure is the only route for bringing Charge Complaints. 2 That is not the case. The Commission's Interim Procedure is merely one way for the Commission to meet its statutory obligation to “investigate” Charge Complaints. An “investigation” under 46 U.S.C. 41310 can also be satisfied through the same processes that satisfies the “investigation” of complaints under 46 U.S.C. 41301(c). 3 The Commission's FAQs on Charge Complaints clearly explain, for example, that a person who has submitted a Charge Complaint under the Interim Procedure can still file a subsequent formal or small claims complaint with the Commission even where the initial investigation does not support a finding of a violation. 4 Likewise, the Commission's “Industry Advisory—Interim Procedures for Submitting `Charge Complaints' Under 46 U.S.C. 41310” issued on July 14, 2022, stated that a filer may choose to “pursue and control their own legal case, including with the assistance of their own attorney if desired, . . . under . . . Part 502 of the Commission's regulations.”  5

The Interim Procedure's prohibition on “combined claims” was implemented to recognize two limitations. First, a Charge Complaint cannot simultaneously be investigated by both an Administrative Law Judge (ALJ)/Small Claims Officer (SCO) and by agency staff under the Interim Procedure. Second, if choosing to file under the Interim Procedure, the filer cannot include claims other than Charge Complaints. This is because the Interim Procedure implemented under the authority of 46 U.S.C. 41310 only addressed Charge Complaints. As such, the Interim Procedure cannot address non-Charge Complaint claims. Thus, allowing filers to also include non-Charge Complaint claims when proceeding under the Interim Procedure would negate the goal of the new process, which is to allow for a streamlined and shortened timeframe to resolve Charge Complaint claims.

A filing that meets the requirement of 46 U.S.C. 41310(a) on its own or combined with other claims, in a private party formal or small claims complaint, is a Charge Complaint regardless of whether the filer submits it to the Commission under the Interim Procedure or files under Subparts E (§§ 502.61-502.75) or S (§§ 502.301-502.305) of the Commission's Part 502 rules. The Commission's July 2022 Industry Advisory incorrectly stated that Charge Complaints filed as a formal or small claims complaint could be filed under 46 U.S.C. 41301(a). A claim that meets the requirements of 46 U.S.C. 41310(a) is a Charge Complaint and must be resolved under the terms of 46 U.S.C. 41310, including the required burden shifting for demurrage or detention charges, regardless of whether the claim is submitted to the Commission under the Interim Procedure or under traditional complaint processes. So long as the submission includes the applicable bills of lading numbers and invoices, and alleges violations of 46 U.S.C. 41104(a), 46 U.S.C. 41102 (or both), 46 U.S.C. 41310 directs the Commission to consider such a submission as a Charge Complaint. If a Charge Complaint filed under traditional complaint process contains a mix of complaints under 46 U.S.C. 41301 and 41310, those portion(s) which concern charges assessed by a common carrier, provided that the submission includes the applicable bills of lading numbers and invoices, and alleges violation(s) of 46 U.S.C. 41104(a), 46 U.S.C. 41102, or both, must, by operation of law be considered by the Commission a “Charge Complaint” under 46 U.S.C. 41310. The remainder of the submission will continue to fall under 46 U.S.C. 41301.

The Commission is issuing this rule to highlight these existing statutory requirements.

The Commission clarifies that a Charge Complaint must be treated consistent with 46 U.S.C. 41310 and further clarifies that a Charge Complaint may be investigated via a filer by: (1) filing it through the Interim Procedure, (2) filing a private party formal complaint under § 502.62, or (3) filing a small claims complaint under § 502.304. A filer pursuing a traditional complaint process for a Charge Complaint must adhere to all procedural requirements set forth in 46 CFR part 502, including for the format and content of their complaint. Filers are encouraged to clearly identify claims as “Charge Complaints” in their submission. However, in accordance with law, so long as the complaint concerns charges assessed by a common carrier, alleges a violation of 46 U.S.C 41104(a) and/or 46 U.S.C. 41102, and includes the applicable bill of lading numbers and invoices, it is a Charge Complaint and it will be resolved in accordance with 46 U.S.C. 41310. This includes application of the burden shifting requirement for demurrage or detention charges under 46 U.S.C. 41310(b)(2). The Commission is amending 46 CFR 502.62(a)(3)(v) and adding a new 502.301(b) to alert readers to this fact.

For small claims complaints, both parties must consent to the determination of a Charge Complaint under informal adjudication procedures for the claim to be decided under subpart S. If both parties do not consent, the Charge Complaint will be decided under the procedures of subpart T. The potential application of civil penalties does not affect the $50,000 limit for small claims. Civil penalties are not part of the claim total—they may not be requested by claimants and are payable, if assessed, to the U.S. Treasury's General Fund. Paragraph (c) of section 502.301, as revised, (previous § 502.301(b)) reflects this. Paragraph 502.62(a)(4)(iv) has also been revised to reflect civil penalty application to Charge Complaints filed as formal complaints.

Section 41301 complaints must be filed within three years after the claim accrues in order to obtain reparations, 46 U.S.C. 41301(a). Section 41310 of title 46 of the United States Code, however, does not contain a statute of limitations for Charge Complaints. A Charge Complaint may be filed for any covered violations that occurred on or after the enactment of OSRA 2022 (June 16, 2022). OSRA 2022 does not apply retroactively. The absence of a statute of limitations in section 41310 is reflected in the Commission's amendments to §§ 502.62(a)(4)(iii) and 502.302(a).

The Commission's Interim Procedure for Charge Complaints continues to provide important benefits to filers as an alternative to independently pursuing a traditional claim. First, it allows the Commission to assist filers by requesting missing information that might be necessary to perfect a complaint. That level of assistance is not available if a filer proceeds directly with a Charge Complaint under traditional procedures. Second, those filers using the Interim Procedure do not currently pay any fees. 6 Complainants seeking resolution of a Charge Complaint through the Commission's traditional claims processes are required to pay the filing fee, currently $387 for Subpart E and $176 for Subpart S. Finally, because formal action arising out of a Charge Complaint investigation is brought by BEIC against the common carrier, the complaining party is not expected to testify or provide additional information in the Order to Show Cause proceeding before the Commission.

For these reasons, the Commission's current Interim Procedure for Charge Complaints remains in effect. A person who wants to file a Charge Complaint has the option to proceed under either the Interim Procedure for Charge Complaints or under the Commission's traditional complaint processes. The processes may not run simultaneously, however, and filers are prohibited from filing a duplicate claim that has been decided on the merits.

These changes to the Code of Federal Regulations are informational only and are intended to draw attention to the application of 46 U.S.C. 41310, a self-implementing statute, within the existing hearing procedures of 46 CFR part 502. They are not intended to have the force and effect of law, or to implement, interpret, or prescribe law or policy. The rule does not change substantive standards or affect the rights or obligations of non-agency parties. In accordance with the Administrative Procedure Act (APA), the Commission therefore finds that good cause exists that public comment is impracticable and unnecessary, 5 U.S.C. 553(b)(B). For these same reasons, the Commission finds that there is good cause to establish an effective date less than 30 days after publication of this amendment, 5 U.S.C. 553(d)(3). This rule is effective upon publication in the Federal Register .

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., does not apply when notice and comment is not required by the APA or other law. See 5 U.S.C. 601(2). The Commission is therefore not required to complete a regulatory flexibility analysis for this action. Additionally, the provisions of the Small Business Regulatory Enforcement Fairness Act (SBREFA) are not applicable, see 5 U.S.C. 804(3)(C). SBREFA's definition of the term “rule” does not include “any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties”.

Because this action is not intended to have the force and effect of law, or to implement, interpret, or prescribe law or policy, it is exempt from Executive Order 142192 and Office and Management Review under Executive Order 12866.

This action is a not a “rule” for purposes of the Congressional Review Act because it is a rule of agency organization, procedure or practice that does not substantially affect the rights and obligation of non-agency parties.

This amendment does not contain any new or modified collection of information requirements as defined by the Paperwork Reduction Act of 1995. See 5 CFR 1320.3(c).

The National Environmental Policy Act (NEPA) is not applicable to this action. NEPA only applies to major federal actions. The terms “major” and “federal action” each have independent force. This is not a major federal action because it does not impact the legal rights or obligations of non-agency parties. Alternatively, this rule is categorically excluded under 46 CFR 504.4(a)(4) as promulgation of procedural rules pursuant to 46 CFR part 502.

This rule meets the applicable standards in E.O. 12988, “Civil Justice Reform,” (61 FR 4729, Feb. 7, 1996) to minimize litigation, eliminate ambiguity, and reduce burden.

I. Background

On March 20, 2026, the Board published a notice of proposed rulemaking (NPRM) (91 FR 13559) to solicit views on the Board's provisional conclusions regarding increases to the CAS thresholds and agency waiver authority, and proposed clarifications on applying the CAS thresholds and exemptions to indefinite delivery contracts (IDCs).

The Board received nine sets of public comments to the NPRM: five from industry associations, two from individual contractors, one from a consulting firm, and one from an individual. Comments strongly supported the Board's proposed actions and the deregulatory nature of the NPRM. Although comments did not provide information to quantify the impact of this final rule, all comments strongly supported the qualitative aspects noted in the NPRM: reduced compliance costs, simplified CAS administration for existing contractors, and reduced barriers to entry for nontraditional contractors, new entrants, and mid-size entities who no longer qualify for a full exemption from CAS as small businesses. Specific comments and discussion, as applicable, are detailed in the sections below. This final rule reflects input from the public, as well as research conducted by the Board. This final rule is issued by the Board in accordance with the requirements of 41 U.S.C. 1502.

This final rule raises the thresholds for full CAS coverage and Disclosure Statement requirements from the current $50 million to $100 million. This final rule also eliminates the exemption at CAS 9903.202-1(c)(ii) which currently exempts a Disclosure Statement from a segment if during the most recently completed cost accounting period the segment's CAS-covered awards are less than 30 percent of total segment sales for the period and less than $10 million. As a result of the higher thresholds this exemption is no longer necessary.

Based on public comments this final rule further revises 9903.202-1(b)(2) to more clearly state that a Disclosure Statement is required only for segments or business units that independently meet the applicable thresholds for full CAS coverage. As a result, the Board is also removing CAS 9903.202-1(c) in its entirety as it is no longer necessary with the additional clarity provided in 9903.202-1(b)(2) as suggested by public comments.

Based on public comments this final rule further amends 9903.201-2 (b) to provide a mechanism for determining eligibility for modified coverage for new solicitations and awards for contractors or subcontractors currently subject to full coverage that would not otherwise be subject to full coverage at the new $100 million threshold. This requires that the contractor or subcontractor has no unresolved CAS noncompliances.

As detailed in the NPRM, the Board's analysis estimated these changes will result in a substantial reduction of burden and lower the barrier to entry with a minimal loss in the total dollars currently subject to full coverage and Disclosure Statement requirements.

Comments strongly supported the Board's provisional conclusions in the NPRM to raise the regulatory thresholds and eliminate the exemption at CAS 9903.202-1(c)(ii). Comments raising additional issues are as follows:

Comment: A number of comments requested additional improvements to the proposed language covering Disclosure Statement requirements. While these comments offered varying alternatives, they identified similar opportunities for the Board to further streamline and provide greater clarity on applying the Disclosure Statement requirements for entities with multiple CAS reporting segments. For example, as one comment explained,

The comment recommended revising the current language at 9903.202-1(b)(2) to more clearly state that a Disclosure Statement is required only for segments or business units that independently meet the applicable thresholds for full CAS coverage. With this clarification they further recommended deleting CAS 9903-202-1(c) in its entirety as it is no longer necessary with the recommended changes in section 9903.202-1(b)(2).

Response: The Board concurs this creates an unnecessary step and may cause confusion in determining whether a Disclosure Statement is required for each business unit. The Board has incorporated this recommendation in the final rule as noted above.

Comment: Multiple commenters recommended the Board consider issuing transition guidance related to the application of the new thresholds considering the potential implications for full versus modified CAS coverage. For example, as one commenter theorized; if a contractor is performing a $50 million contract subject to full CAS coverage under the current thresholds with no other CAS-covered awards and receives a $40 million CAS-covered award under the new thresholds it would be subject to full coverage. In this scenario, the new award itself is not over $100 million and taken together with the existing contract the awards are not over $100 million; however, because the contractor had an award subject to full CAS coverage under the prior thresholds, any new award between $35 million and $100 million (not otherwise exempt from CAS) would be subject to full CAS coverage due to the requirements at 9903.201-2(b)(2).

Comments also contend that to fully realize the deregulatory intent, the Board should ensure a level playing field for “mid-tier” firms. This would allow existing contractors otherwise eligible for modified coverage to receive the same benefit as a new entrant or other entity currently not subject to CAS if they are competing for an award that would qualify for modified CAS coverage. Without a transition mechanism, a number of existing contractors will face a significant competitive disadvantage against new entrants who benefit from the higher $100 million threshold immediately.

Response: The Board appreciates the concerns raised and generally agrees such a mechanism is desirable and in the spirit of the Board's deregulatory actions. However, the Board believes this needs to be contingent on a contractor currently being in a compliant status. As such, the Board has provided added coverage in 9903.202-1(b) to provide this with the requirement that the contractor or subcontractor has no outstanding CAS noncompliances. In addition, the Board expects contractors will continue to follow their existing practices as they comply with CAS. As such, any current or future cost accounting practice changes related to the transition from full CAS coverage to modified CAS coverage would be considered unilateral and subject to the contract price adjustment requirements.

Comment: Comments generally supported the use of the Unique Entity Identifier (UEI) as a proxy for a covered segment for the purpose of analyzing the potential impact of the regulatory changes contemplated in the NPRM. However, comments raised concerns that there may not always be a one-to-one relationship between a CAS segment and a UEI. These comments urged the Board to clarify it was not changing the CAS definition of a segment.

Response: The NPRM did not propose to change, nor is the final rule changing the definition of a CAS segment contained in CAS regulations. The Board appreciates the concerns raised by the public and will continue to evaluate how changes in other statutory requirements, technology, and the business environment impact CAS program requirements. If the Board determines further changes are necessary to the definitions and application of CAS program requirements they will be made through subsequent rulemaking.

As detailed in the NPRM, OMB developed a legislative proposal to decouple the basic CAS monetary threshold from the Truthful Cost or Pricing Data statute, and raise it to a stated dollar amount of $35 million. The proposal also eliminated the $7.5 million trigger contract threshold as it would no longer be necessary with a higher applicability threshold. The proposal was transmitted to Congress in June of 2025 for consideration in the 2026 National Defense Authorization Act (NDAA). As discussed in the NPRM the Board's analysis estimated these changes would reduce the number of CAS-covered business segments by approximately 60 percent, while still maintaining over 90 percent of the current dollars subject to CAS coverage. Section 1806 of the 2026 NDAA fully codified the OMB legislative proposal, and this final rule revises 9903.201-1 CAS applicability to implement these changes.

Based on public comments this final rule also modifies the three statutory CAS exemptions at 9903.201-1(b) to align them with the amendments made by Section 1806(d) of the 2026 NDAA. Section 1806(d) added language to the three statutory CAS exemptions in 41 U.S.C. 1502 to make them applicable to portions of contracts and subcontracts. These changes address contract arrangements that include multiple contract types ( i.e., hybrid contracts).

Comments strongly supported OMB's legislative proposal and the Board's provisional conclusions in the NPRM to raise the statutory thresholds as a result of the 2026 NDAA codification of the OMB proposal. A number of comments related to additional provisions of the 2026 NDAA were made as follows:

Comment: Commenters pointed out that the proposed rule did not address other CAS related provisions included in the 2026 NDAA. Specifically changes to the contract price adjustments requirements in 41 U.S.C. 1503, and the Section 1806(d) amendments to the statutory exemptions to accommodate hybrid contract arrangements.

Response: The Board recognizes the importance of the remaining 2026 NDAA provisions. The Board has updated the statutory exemptions included 9903.201-1(b) to align them with the 2026 NDAA revisions to apply those exemptions to portions of contracts and subcontracts ( i.e., hybrids). However, attempting to incorporate the complex issues related to the contract price adjustments requirements in 41 U.S.C. 1503 would require additional notice and comment. As noted in its July 2, 2025 notice of agenda topics, (90 FR 29048) the Board has already begun review of contract price adjustments requirements and has established a separate case which will incorporate the direction provided in the 2026 NDAA.

CAS 9903.201-5 currently provides the head of an executive agency the authority to waive CAS on their own for contracts valued up to $15 million without seeking approval from the Board, but they must notify the Board of the waiver. This final rule raises this threshold to $100 million. This increase implements changes made to 41 U.S.C. 1502(b)(3) by Section 820 of the 2017 NDAA.

Comments strongly supported the Board updating its regulations to accurately reflect the increased waiver authority for the head of an executive agency as a result of the 2017 NDAA change.

Indefinite delivery contracts (IDCs) are contracts where work is awarded through the placement of individual task and delivery orders as requirements arise, with a minimum guaranteed order value and a ceiling amount reflecting the maximum total value of orders that can be placed under the contract. They include the Federal Supply Schedule (FSS) program and government-wide acquisition contracts (GWACs). Obligations under the FSSs and GWACs are tracked separately from other task and delivery order contracts in the Federal Procurement Data System (FPDS).

As detailed in the NPRM, analysis of FPDS data indicates the use of IDCs has continued to increase in both size and as a percentage of overall contract obligations. Although there is a statutory preference to award IDCs to multiple contractors, they may also be awarded to a single contractor. The prevalence of obligations on task and delivery orders against IDCs awarded to a single contractor has also increased, reaching $262 billion in Fiscal Year (FY) 2024. This represented over one-third of all contract obligations in FY2024. Preliminary data for FY 2025 indicated a similar dispersion of contract obligations.

The Board has concluded that, unlike multiple-award IDCs, the information required to determine CAS exemptions and consistently apply CAS to single-award IDCs is available at the time of award of the single-award IDC. For these reasons, this final rule amends 9903.202-1 to make clear that application of CAS to multiple-award IDCs including all exemptions is determined at the task or delivery order level. For multiple-award IDCs CAS would apply only to those individual task or delivery orders whose values meet the monetary threshold for CAS coverage and do not qualify for another CAS exemption.

This final rule also amends 9903.202-1 to make clear that application of CAS applicability to single-award IDCs is determined at the time of award of the IDC using the ceiling value to assess if the monetary threshold has been met. Based on input from public comments, this final rule adds additional language to clarify that a single-award IDC can be exempt if the entire IDC meets one of the other exemptions in 9903.202-1(b) ( i.e., the IDC is awarded to a small business, the IDC only provides for orders of commercial products or commercial services, or the IDC only allows for orders that are firm-fixed-price and the IDC was awarded on the basis of adequate price competition without the submission of certified cost or pricing data).

This final rule is consistent with the criteria the Board identified for evaluating alternatives: it helps each contract party manage risk; it is expected to reduce regulatory burden, and promote competition by minimizing complexity and providing guidance that is clear and straightforward. Having a clear and predictable rule promotes consistency in the application of CAS and avoids friction and disputes. Public comments did not provide any additional alternatives or criteria for the Board to consider.

Comments strongly supported the Board's provisional conclusions in the NPRM to apply CAS exemptions at the task or delivery order level for multiple-award IDCs. However, comments did not support the Board's provisional conclusions in the NPRM to apply CAS exemptions at the IDC level for single-award IDCs. Comments preferred that CAS applicability for all IDCs should be determined at the task or delivery order level as proposed by the Board for multiple-award IDCs. Although the Board was not persuaded by these comments, it appreciates the breadth and depth of responses. Illustrative examples of concerns raised are discussed in further detail below.

Comment: Some comments argue that the Board's proposed approach of treating single-award IDCs differently than multiple-award IDCs creates inconsistencies. Some further posit the approach is contradictory to the purpose of the CAS exemptions themselves, which are meant to reduce the administrative burden on low-risk acquisitions. Others declared this approach creates inequity in the treatment of single-award and multiple-award IDCs.

Response: The Board does not consider the approach as inconsistent or creating inequities. Single-award and multiple-award IDCs are inherently different. Task or delivery orders awarded under each type of IDC are awarded under different circumstances and present differentiated levels of risk. Single-award IDCs establish a long-term relationship without maintaining competition for task or delivery orders. Single-award IDCs increase the potential for vendor lock-in, further reducing competition and creating risk to the Government. This type of transaction creates higher risk, not lower risk as some comments suggested.

Comment: Some comments theorized the Board's proposed approach of determining CAS applicability differently for single-award IDCs could result in applying CAS to transactions that would otherwise be exempt such as commercial products and commercial services. One comment postulated that the application of CAS at the IDC level could result in the application of CAS to tasks or delivery orders that would be exempt if these same task or delivery orders were issued under a multiple-award IDC or nearly all other contract scenarios. Another comment declared the Board's proposed approach of determining CAS applicability differently for single-award IDCs would result in application of CAS to fixed-price contracts.

Response: The Board appreciates the concerns raised associated with unique hybrid contract arrangements. As noted above, the Board is addressing the application of CAS to hybrid contracts through this rulemaking. In addition, the Board has added additional language to clarify that an entire single-award IDC could be exempt under certain circumstances.

Comment: A number of comments suggested the Board delay issuance of a final rule, and conduct additional data analysis related to single-award IDCs. This point was part of their overall objection to the Board's proposed approach for single-award IDCs, and concerns that in some cases the cumulative value of task or delivery orders on single-award IDCs may not reach or could fall well below the ceiling value. For example, it would be possible for a $35 million single-award IDC to receive less than $35 million in tasks or delivery orders. Similarly, a $100 million single-award IDC could receive less than $100 million in tasks or delivery orders.

Response: The Board recognizes the potential exists for cases as those described by comments and has carefully considered the likelihood of these scenarios in both the NPRM and this final rule. These scenarios under single-award IDCs are similar to the risk under definitive contracts that may, in some cases, not have all options exercised. The Board believes the risk, similar to most regulations applying thresholds, is amplified at or near the threshold. However, the Board believes this risk decreases at higher values and is mitigated as a result of the increased thresholds finalized in this rule. The Board's analysis also indicated that most of the entities receiving single-award IDCs would otherwise be subject to CAS based on definitive awards, which further mitigates this risk. The Board appreciates the willingness of the industry associations to engage with their members to collect, aggregate, and provide the Board with actual data. This would be particularly beneficial for subcontracts where currently the government-wide data is limited. Lastly, the Board notes that this final rule does not preclude the Board from conducting further analysis or additional rulemaking in the future as the impact of the threshold increases take effect and additional information becomes available or is provided to the Board.

This final rule is deregulatory, reduces compliance costs, simplifies CAS administration for existing contractors, and reduces barriers to entry for nontraditional contractors, including new mid-size entities who no longer qualify for a full exemption from CAS as small businesses. This final rule increases the basic CAS applicability threshold from the current $2.5 million to $35 million, and eliminates the $7.5 million trigger contract concept. This simplifies the determination of CAS applicability while dramatically lowering barriers to entry on larger value contracts. Larger contract values will attract additional private investment into the federal contracting marketplace and increase competition as a result of the higher point of entry without the need to establish more sophisticated compliance regimes required to comply with CAS requirements.

This final rule further reduces the CAS regulatory footprint by doubling the thresholds for full CAS coverage and Disclosure Statement requirements from $50 million to $100 million. This significantly reduce compliance burden and lowers barriers to entry into the federal marketplace. The Board analyzed FPDS data for the five-year period covering FYs 2020 through 2024 and estimates there have been 773 entities subject to full coverage and Disclosure Statement requirements with aggregate total contract values during the period of $1.22 trillion. Applying the finalized threshold of $100 million to the data set estimates a reduction in the number of entities to 564 while maintaining $1.21 trillion of the dollars. This represents a nearly 30 percent reduction in entities that would be subject to full CAS coverage and Disclosure Statement reporting with a less than one percent loss of the dollars currently subject to these requirements. The higher threshold for full coverage reduces the barriers to entry for nontraditional contractors including contractors that have outgrown their small business size status and no longer qualify for a full exemption from CAS as small businesses as they may be more willing to compete for larger contracts only subject to modified coverage.

This final rule codifies needed clarity on applying the CAS thresholds and exemptions to IDCs. Having a clear rule avoids unnecessary ambiguity, friction and contract disputes. Determining CAS applicability for multiple-award IDCs at the task or delivery order ensure CAS is not overapplied to lower-risk transactions. Similarly, determining CAS applicability for single-award IDCs at the IDC level ensures CAS is not underapplied to higher-risk transactions. This lowers barriers to entry into the federal marketplace as potential offerors now have clarity on whether or not they will be subject to CAS and, if covered, whether full or modified.

The changes addressed in this final rule, both individually and in conjunction with the Board's ongoing broader CAS to GAAP conformance efforts simplifies CAS administration and reduces barriers to entry for nontraditional contractors including new mid-size entities who no longer qualify as small businesses. These actions are expected to increase competition in federal contracting.

CAS Board rules do not impact small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601-612. Contracts and subcontracts with small business concerns are exempted from all CAS requirements.

Executive Orders (E.O.s) 12866 and 13563 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. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a significant regulatory action under E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is a deregulatory action under E.O. 14192 based on the discussion in the “Expected Impact of the Rule” section.

The Paperwork Reduction Act, Public Law 96-511, does not apply to this final rule, because this rule imposes no paperwork burden on offerors, affected contractors and subcontractors, or members of the public which requires the approval of OMB under 44 U.S. U.S.C. 3501, et seq.

For the reasons set forth in the preamble, the Office of Management and Budget is amending Chapter 99 of Title 48 of the Code of Federal Regulations as set forth below:

On March 20, 2026, the Board published a NPRM to solicit views on the Board's provisional conclusions regarding conformance of CAS 407 to GAAP. See the NPRM for background on the purpose of CAS 407. The NPRM noted that the vast majority of CAS 407 could be rescinded. The Board determined that despite the difference in general focus between CAS and GAAP, there has been significant convergence over the years as GAAP has evolved to address cost measurement and assignment of costs to accounting periods. GAAP now contains codified content in these areas very similar to the requirements contained in CAS 407. In addition, the creation of the Financial Accounting Standards Board (FASB) and the Accounting Standards Codification (ASC) as the recognized financial accounting and reporting standards for GAAP fosters increased uniformity and consistency. The FASB is recognized today by the U.S. Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are also recognized as authoritative by many other organizations, including State Boards of Accountancy and the American Institute of Certified Public Accountants (AICPA). The Board concluded that these developments have created opportunities to amend or rescind overlapping CAS requirements where GAAP standards under ASC may be applied as a reasonable substitute for CAS to support contract cost and pricing.

The Board concluded that nearly all of the content in CAS 407 has become unnecessary because the Government interests addressed by that content are adequately protected through reliance on GAAP, and existing requirements in other CAS standards. Due to the minimal amount of content identified for retention, the Board concluded that moving the retained requirements to another standard rather than maintaining CAS 407 with minimal content would best achieve the goal of streamlining CAS. This final rule reflects input from the public, as well as research conducted by the Board. This action complies with applicable requirements of 41 U.S.C. 1502 and furthers the Board's performance of its duties under 41 U.S.C. 1501(c), which requires, among other things, that the Board: (1) ensure that the cost accounting standards used by Federal contractors rely, to the maximum extent practicable, on commercial standards and accounting practices and systems; and (2) conform CAS, where practicable, to GAAP.

As noted in the NPRM, the Board's comparison of CAS 407 with pertinent GAAP content, other CAS Standards, and the Federal Acquisition Regulation (FAR) revealed significant overlaps and equivalent requirements. These comparable requirements protect the Government's interests and promote the uniformity and consistency that was the basis for promulgating CAS 407 more than 50 years ago, when comparable GAAP coverage did not exist.

The Board has concluded that, for the vast majority of the requirements in CAS 407, with the exception of certain limited requirements ( i.e., CAS 407-30(a)(7), CAS 407-40(b), CAS 407-50(a)(4)(i) and (ii), CAS 407-50(d)(1) and (2), CAS 407-50(e), and CAS 407-60(b)), the Government's interests are adequately protected by relying on disclosed GAAP practices that are consistently followed and subject to notice of changes and cost recovery pursuant to CAS 401. Specifically, all contractors, whether subject to full or modified CAS coverage, are subject to CAS 401 and will continue to be required to consistently follow their disclosed or actual cost accounting practices. In addition, they will continue to be bound by the 9903.201-4 CAS contract clauses requiring disclosure and consistency in cost accounting practices regardless of whether a specific standard exists. These contract clauses implement the statutory requirements for disclosure of 41 U.S.C. 1502(f)(1), and protections from payment of increased costs as a result of changes to contractor's cost accounting practices provided by 41 U.S.C. 1502(f)(2). The limited requirements that are being retained address standard costs and related variances at the production unit level which are not currently covered by GAAP. The Board has concluded to move these requirements to CAS 418—Allocation of direct and indirect costs.

This action is consistent with the Board's guiding principles for conforming CAS to GAAP because it would eliminate CAS content to minimize the burden on contractors while protecting the interests of the Government. Furthermore, rescinding CAS 407 aligns with the guiding principles to rely on coverage in GAAP when it would materially achieve uniformity and consistency in cost accounting without bias or prejudice to either party, rely on other CAS Standards which may protect the Government's interests, and rescind CAS coverage no longer necessary.

As noted in the NPRM the Board did not identify any instance where the rescinding of CAS 407 would result in a change to a contractor's disclosed cost accounting practices for government contracts. With the noted exceptions, the current CAS requirements are nearly identical to GAAP. The Board expects that contractors would continue to follow their existing practices as they are both compliant with CAS and GAAP. As such, having identified no cost accounting practice changes as a result of this final rule any current or future changes related to standard costing of direct material or labor and the treatment of variances would be considered unilateral as defined in 9903.201-6(b)(2). As discussed further in the “Summary of Public Comments” section below, respondents did not identify any instances or issues requiring further consideration by the Board regarding this determination.

The Board received three sets of public comments to the NPRM; two from industry associations and one from a consulting firm. All commentors agreed with the provisional decision to rescind CAS 407 and were supportive of the Board's progress with CAS to GAAP conformance. Specific comments and discussion are detailed below.

Comment: One commentor believes the Board has not gone far in enough in conformance because it proposes to retain certain limited requirements around the concept of the production unit. However, the other two commentors concur with the Board's conclusion that GAAP does not address the concept of the production unit and agree with the Board's decision to retain these requirements in CAS 418.

Response: The Board considered all current GAAP requirements and concluded that full adoption of GAAP does not provide adequate protection of the Government's interest. Retaining the requirements for accounting at the production unit level is necessary to ensure homogeneity while still providing contractors flexibility in setting and revising direct material and/or direct labor standards based on individual needs and circumstances. The Board, therefore, has not adopted the suggestion to rescind 407 in its entirety.

Comment: One commentor expressed concern that the Board appears to be expanding the “disclosure and consistency in cost accounting practices” to all GAAP accounting practices. The example given by the commentor was a contractor changing its inventory practices from first-in-first-out (FIFO) to last-in-first-out (LIFO).

Response: As noted in the NPRM, the Board is streamlining CAS 407 where reliance on existing standards and GAAP provides adequate protection of the Government's interests. A change from FIFO to LIFO would need to be disclosed by the contractor as this is a requirement for the Disclosure Statement (CASB DS-1) section 2.2.2. Furthermore, 41 U.S.C. 1502(f)(1) covers the disclosure in writing of all cost accounting practices, including methods of distinguishing direct costs from indirect costs and the basis used for allocating indirect costs. The Board is not expanding the disclosure requirement, but simply highlighting that these disclosures are already required under 41 U.S.C. 1502(f)(1).

Comment: One commentor suggested that the elimination of CAS 407 could result in a change to a contractor's disclosed cost accounting practice since GAAP allows for additional methodologies not prescribed under CAS 407 and believes that these changes should be deemed “required” or “desirable” under CAS 9903.201-6.

Response: While GAAP may allow for additional methodologies, all currently compliant CAS 407 practices are also currently compliant with GAAP and therefore, any current or future changes related to standard costing of direct material or labor and the treatment of variances would be considered unilateral as defined in 9903.201-6(b)(2). The Board, therefore, rejects the suggestion that any change should be deemed required or desirable.

This final rule is deregulatory in furtherance of 41 U.S.C. 1501(c), which requires the Board ensure that the Cost Accounting Standards used by contractors rely, to the maximum extent practicable, on commercial standards and accounting practices and systems. In addition, 41 U.S.C. 1501(c) requires the Board to eliminate or conform CAS requirements, where practicable, to GAAP. This final rule eliminates 12 of the 16 individual requirements contained in CAS 407, retaining only the minimal content the Board identified as needed to protect the Government's interest by moving it to another standard. This eliminates the need for a separate CAS standard addressing standard costs for direct material and direct labor. This final rule will result in the removal of almost 2,000 words of unnecessary regulatory text currently in place in this standard. Reliance on a contractor's disclosed GAAP practices for CAS purposes significantly reduces the regulatory footprint associated with CAS and places reliance on commercial accounting practices under GAAP consistent with 41 U.S.C. 1501(c).

These changes, as finalized, are expected to reduce burden for contractors, external auditors, government auditors, and oversight functions by reducing duplicative compliance requirements. These changes individually and in conjunction with the Board's ongoing broader CAS to GAAP conformance efforts and modernization of the CAS programmatic requirements are expected to simplify CAS administration and reduce barriers to entry for non-traditional contractors including new mid-size entities who no longer qualify as small businesses. These actions should increase competition in federal contracting.

CAS Board rules do not impact small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601-612. Contracts and subcontracts with small business concerns are exempted from all CAS requirements.

Executive Orders (E.O.s) 12866 and 13563 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 E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. OMB's Office of Information and Regulatory Affairs (OIRA) has determined that this is a significant regulatory action under section 3(f) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993, and OIRA has reviewed this rule under E.O. 12866. This rule is deregulatory action under E.O. 14192 based on the discussion in the “Expected Impact of the Rule” section.

The Paperwork Reduction Act, Public Law 96-511, does not apply to this final rule because this rule imposes no paperwork burden on offerors, affected contractors and subcontractors, or members of the public that requires the approval of OMB under 44 U.S.C. 3501, et seq.

For the reasons set forth in the preamble, the Office of Management and Budget is amending chapter 99 of title 48 of the Code of Federal Regulations as set forth below:

FMCSA organizes this final rule as follows:

To view any documents mentioned as being available in the docket, go to https://www.regulations.gov/docket/FMCSA-2025-0655/document and choose the document to review. To view comments, click this final rule, then click “Browse Comments.” If you do not have access to the internet, you may view the docket online by visiting Docket Operations in Room W58-213 of the DOT West Building, 1200 New Jersey Avenue SE, Washington, DC 20590-0001, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

Under 49 U.S.C. 14504a, the UCR Plan and the 41 States participating in the UCR Agreement assess fees to be collected from motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. The UCR Plan and Agreement are administered by a 15-member Board, which is comprised of 14 members appointed from the participating States and the motor carrier industry, as well as the Deputy Administrator of FMCSA, who is a statutory member. Revenues collected are allocated to the participating States and the UCR Plan.

In accordance with 49 U.S.C. 14504a(d)(7) and (f)(1)(E), the Board provides fee adjustment recommendations to the Secretary of Transportation (the Secretary) when revenue collections result in a shortfall or surplus from the amount authorized by statute. Statutory factors the Board considers when making a recommendation to adjust fees include the administrative costs of the UCR Plan and Agreement and whether the revenues generated in the previous year and any surplus or shortage from that or prior years enable the participating States to achieve the revenue levels set by the Board (49 U.S.C. 14504a(d)(7)(A)(i) and (ii)). The statutory allocation of revenue to participating States remains constant under 49 U.S.C. 14504a(g), even though the actual incoming revenue fluctuates each year based on the number of registered interstate carriers and freight brokers and the size of the carriers' fleets—factors that can vary based on economic conditions and market demand. If the required payments to the States and the cost of administering the UCR Plan exceed the amount in the depository, the UCR Plan must assess additional fees in subsequent years to recover the shortfall (49 U.S.C. 14504a(f)(1)(E)(i)). If there are excess funds after payments to the States and for administrative costs, they are retained in the UCR Plan's depository (see 49 U.S.C. 14504a(f)(1)(E)(ii)), and fees for subsequent registration years must be reduced as required by 49 U.S.C. 14504a(h)(4).

These two distinct statutory provisions are recognized in the fee adjustment recommended by the UCR Plan. In this final rule, FMCSA increases the annual registration fees established pursuant to the UCR Agreement by an average of 20 percent, effective for the 2027 registration year and subsequent years. 1

The final rule increases the fees paid by motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies to the UCR Plan and the participating States. Although the increase in fees is a private cost to covered entities, fees are considered transfer payments by the Office of Management and Budget (OMB) Circular A-4, Regulatory Analysis, not costs. The details of the amount of increase to the annual UCR fee for each fee bracket are included in the discussion below in Section VI.

This rulemaking adjusts the annual UCR registration fees, as authorized by 49 U.S.C. 14504a. Section 14504a provides that the revenues collected from the fees should not exceed the maximum annual revenue entitlements distributed to the 41 participating States plus the amount established for administrative costs associated with the UCR Plan and Agreement. In accordance with 49 U.S.C. 14504a(f)(1)(E)(i), the statute provides for the UCR Plan to request an adjustment by the Secretary when the annual revenues are insufficient to provide the revenues to which the participating States are entitled.

In addition, 49 U.S.C. 14504a(h)(4) states that any excess funds from previous registration years held by the UCR Plan in its depository, after distribution to the States and for payment of administrative costs, shall be retained and the fees charged shall be reduced by the Secretary accordingly.

The UCR Plan must also obtain DOT approval to revise the total revenue to be collected, in accordance with 49 U.S.C. 14504a(d)(7). The revenue allocations to the participating States are fixed by statute (49 U.S.C. 14504a(g)).

The Secretary also has broad rulemaking authority in 49 U.S.C. 13301(a) to carry out 49 U.S.C. 14504a, which is part of 49 U.S.C. subtitle IV, part B. Authority to administer these statutory provisions has been delegated to the FMCSA Administrator by 49 CFR 1.87(a)(2) and (7).

On April 7, 2026, FMCSA published a Notice of Proposed Rulemaking (NPRM) titled “Fees for the Unified Carrier Registration Plan and Agreement” in the Federal Register (Docket No. FMCSA-2025-0655, 91 FR 17618). The NPRM proposed amending regulations for the annual registration fees States collect from motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies for the UCR Plan and Agreement for the 2027 registration year and subsequent registration years. This recommended increase averages 20 percent, with varying increases ranging between $9 and $9,329 per entity, depending on the applicable fee bracket.

FMCSA requested public comments concerning the NPRM for 30 days ending May 7, 2026. At the request of the Small Business in Transportation Coalition (SBTC), the comment period was extended until May 26, 2026 (91 FR 23383). By that date, a total of 34 comments were received, 33 of which are in scope for this rulemaking. Three comments were submitted by trade associations, including the National Propane Gas Association (NPGA), the Owner-Operator Independent Drivers Association (OOIDA), and SBTC. Thirty motor carriers and individuals (including anonymous individuals) submitted comments. One comment was withdrawn from the docket for non-compliance with docket comment policy.

Comments: Several commenters opposed UCR registration fees in general, questioned the purpose behind establishing the UCR fees or the current use of UCR fees, or stated they did not know what UCR fees are used for. Some commenters stated that these fees are an unnecessary tax on motor carriers and should not be increased; some commenters also recommended ceasing to collect UCR registration fees entirely. OOIDA stated that the system no longer meets its original objectives and merely generates “slush fund revenue” for States, who may use the revenue as “a non-Federal match for Federal Motor Carrier Safety Assistance Program funding.”

FMCSA Response: The UCR plan and the requirement to assess fees to be collected were established by Congress and are codified in statute (49 U.S.C. 14504a). Neither FMCSA nor the UCR Board have the discretion to cease collecting fees.

By statute, UCR fees are required to be used by participating States for motor carrier safety programs and enforcement, or the administration of the UCR Plan and UCR Agreement (49 U.S.C. 14504a(e)(1)(B)). When each of the participating States joined the UCR Agreement, the statute required them to submit to FMCSA a State plan that, among other matters, demonstrates that an amount at least equal to the revenue derived by the State from the UCR Agreement shall be used for those motor carrier safety programs and enforcement, or the administration of the UCR Plan and UCR Agreement (49 U.S.C. 14504a(e)(1)(B)). The statute also gives primacy to the need to set the fees at a level that ensures that each of the participating States receive the revenues to which they are entitled (49 U.S.C. 14504a(f)(1)(E)(i) and (g)(4)). The adjustment in the fees to be paid to the UCR Plan for distribution to the participating States is necessary to accomplish this statutory objective. To ensure that the States are using this funding for its intended purpose, the UCR Board sent a letter to each participating State on May 4, 2026 seeking documentation demonstrating the State's continued compliance with the requirements of 49 U.S.C. 14504a(e)(1) and (h)(1). States have until August 1, 2026 to provide this documentation. 2

FMCSA finds the upward adjustment recommended by the Board is within a reasonable range, in accordance with the provisions of 49 U.S.C. 14504a(e)(1) and (2). This adjustment to the 2027 registration year is expected to cover the projected $21.79 million shortfall in the statutorily required funding. The actual fees collected in any registration year vary with the population of motor carriers and the number of CMVs they operate. If the overall number of registrants or the number of registrants in each fee bracket decreases, the UCR Plan collects less in fees than anticipated and must subsequently increase fees to cover the shortfall. Conversely, if there is a surge in the number of motor carriers or the number of CMVs they operate, the UCR Plan may collect excess fees and be required to return those to UCR registrants by reducing registration fees in future years. Currently, the UCR Plan has been collecting less than it projected in fees and therefore is facing a shortfall.

Any amount short of the recommended adjustments would impede proper operations of motor carrier safety programs, enforcement, or the administration of the UCR Plan and UCR Agreement. Even after the 2027 fee increase, the fees for registration year 2027 will still be lower than those in effect during registration years 2019 through 2022. This recalibration of fees is reasonable and in accordance with the structure of, and obligations created by, the statute.

Comments: Several commenters cited the cost of doing business, including increased fuel, maintenance, insurance, and compliance costs, in opposing the increase. One of these commenters stated that the Agency should focus on stabilizing markets and preventing predatory practices instead of increasing financial burdens on motor carriers, and that the UCR registration fee is harmful to the long-term stability of the industry.

FMCSA Response: FMCSA recognizes that the transportation industry faces numerous economic pressures. However, the UCR Plan was established by Congress to replace the highly complex and fragmented Single State Registration System. By consolidating State-level compliance into a unified program, the UCR Plan significantly reduces administrative red tape and streamlines operations for motor carriers nationwide.

The revenue generated by these fees is required to be dedicated to funding vital State highway safety initiatives, enforcement programs, and the administration of the UCR system itself. FMCSA has reviewed the Board's proposal and determined that it is necessary to increase fees for the 2027 registration year to cover the States' statutory entitlements so they can maintain these essential safety operations, as well as to fund the UCR Plan's reasonable administrative costs.

Comments: Three commenters, including SBTC, opposed finalizing the rulemaking, citing a pending legal proceeding that challenges the legality of the UCR system. In a separate comment, SBTC included a copy of a petition it submitted to the United States Courts of Appeals for the District of Columbia Circuit, to mandate a stay of the implementation of the ongoing 2027 UCR fee rulemaking. It also expressed the view that implementing the fees during an ongoing legal proceeding is inappropriate and the fees should either not be raised or not be collected at all. It urged FMCSA to deny the fee increase and withdraw the rulemaking until complete data is reviewed and the litigation is resolved. Another commenter did not specifically question the timing of the rule but referred to the substance of the pending litigation.

FMCSA Response: FMCSA is statutorily obligated to adjust UCR fees when the UCR Plan experiences a shortfall or has collected excess fees, situations driven by either decreases or increases in the overall number of registrants and the number of vehicles each motor carrier maintains in its fleet. When the UCR Board makes a recommendation to adjust fees, the Agency reviews all the information presented by the Board to determine whether a shortfall or excess collection has occurred and whether the recommendation is reasonable. Under 49 U.S.C. 14504a(d)(7)(B), the Secretary “shall set . . . any subsequent adjustment” of the UCR fees after receiving the recommendation and giving notice and opportunity for public comment. Therefore, the Agency is statutorily mandated to proceed with this rulemaking unless directed otherwise by a court of competent jurisdiction. The United States Courts of Appeals for the District of Columbia Circuit denied SBTC's motion on June 17, 2026, allowing FMCSA to proceed with the rulemaking. 3

Comments: Several commenters objected to certain administrative costs for the UCR Plan. NPGA and two individual commenters objected to the UCR Plan's accounting for the $250,000 allocation for legal defense funds as part of the increase, contesting that the trucking industry should not be responsible for covering those costs. NPGA stated that funding for the UCR Plan's legal fees should be covered by direct appropriations from Congress through DOT. Pink Cheetah Express's comment also referred to legal defense costs.

SBTC and an individual commenter expressed that FMCSA, not the trucking industry, should bear administrative costs related to operating the UCR's technical platform.

OOIDA stated that FMCSA should review the UCR Board's contract and administrative expenses to ensure that registrants are not paying more than necessary to fulfill the UCR's statutory purposes.

FMCSA Response: When Congress established the UCR Plan, it recognized that the UCR Plan would incur administrative costs that would be funded through registration fees (49 U.S.C. 14504a(d)(7)(A)(i) and (h)(3)(B)). Congress did not then, and has not since, authorized any appropriations for funding UCR programs, including legal fees. FMCSA finds it reasonable and necessary for the UCR Plan to have sufficient resources to defend itself in litigation. FMCSA also finds it reasonable and necessary for the Plan to maintain a technical platform and to include the cost of the platform in its administrative expenses. The statute authorized such expenditures by the UCR Plan and, conversely, does not give FMCSA authority to absorb the cost of operating such a platform.

The UCR Act expressly authorizes the UCR Board to contract with any person or State agency for administrative functions but does not allow the Board to delegate decision or policy-making responsibilities (49 U.S.C. 14504a(d)(6)). The Board considers and votes on each contract in open meetings. FMCSA's oversight of these contracts is limited to the participation of the FMCSA Deputy Administrator (or other presidential appointee within DOT) as a statutory board member.

Comments: SBTC submitted a comment to point out that the UCR's recommendation letter was not accessible in the docket and requested a 30-day comment period extension to provide industry with an opportunity to inspect the supporting documents. An individual commenter echoed SBTC's concerns.

FMCSA Response: Due to an administrative error, the supporting documents were not placed in the docket when the NPRM published. After SBTC informed the Agency of this fact, FMCSA ensured the supporting documents were displayed in the docket on April 24, 2026. The Agency then issued a notice to extend the comment period by 20 days, which was the exact timeframe this documentation was unavailable (91 FR 23383). By extending the comment period from May 7, 2026 to May 26, 2026, FMCSA ensured that the public had at least 30 days to comment on the NPRM after the supporting documentation was available.

Comments: SBTC and an individual commenter claimed that the method in which the 2027 registration fees were projected by the UCR Plan was inaccurate. They explained the UCR Plan could not have accurately projected revenue since the recommendation letter addressed to the Secretary recommending the fee increase was dated on September 18, 2025 following a UCR Board meeting held in August 2025. SBTC explained that it rejects the calculation method since the UCR Plan did not allow the year to end to make a more precise determination based on the previous year's data. Another commenter suggested that, if the data were collected after June 30, 2025, it would prompt a fee decrease. The commenter added that any projected revenue shortfalls should be covered by the UCR Plan's investment revenue rather than as an additional burden on small businesses.

NPGA also commented that it opposes fee increases in subsequent years. It states that “While FMCSA evaluates cost changes based on shortfalls from prior years, imposing a blanket 20% increase for 2028 and future years without any analysis would be arbitrary and capricious.”

FMCSA Response: The statute requires the Board to recommend fees based on “the revenues generated in the previous year and any surplus or shortage from that or prior years” 49 U.S.C. 14504a(d)(7)(A)(ii). However, the Plan assesses fees for any given “fee year” over a two year period: collections begin on October 1 of the year preceding the fee year to allow for advance registration and close on December 31 of the year following the fee year to allow for late registrations and dispute resolutions. Therefore, it is not possible for the Board to know the precise amount collected in a fee year before it must make a recommendation for an upcoming fee year. If the recommended fees, once adopted, result in excess collections, those are later returned to registrants in the form of reduced fees in future years; if they result in shortages, the UCR Board must seek future fee increases.

The fee calculations provided by the UCR Board include both actual collections through July 31, 2025 and projected collections for the remainder of the 2025 fee year. The Board provided extensive supporting information detailing how it determined projected collections based on trends from previous fee years. FMCSA has previously approved of the Board's method of calculating the amount of fees collected over the course of a fee year and finds that the current recommendation adheres to that methodology. Although one commenter contended that including collections after June 30, 2025 would prompt a fee decrease, FMCSA notes that the Board's submission includes actual collections through July 31, 2025, and reasonable projections of collections for the remainder of the fee year. FMCSA finds that any discrepancy between projected and actual collections is likely to be minor and to have little overall impact on the Plan's shortfall, 4 and consequently no material impact on the amount of the fees assessed to registrants.

Regarding NPGA's comment, FMCSA is not authorizing a 20 percent increase each year in perpetuity. Rather, the rule is authorizing a single fee increase that will take place in the 2027 fee year. The fee schedule for 2027 will then remain in effect until it is adjusted by a future rulemaking and consistent with the statutory criteria. The UCR Board will either make a fee adjustment recommendation or notify the Agency that it is not recommending any adjustments, in sufficient time for the Agency to complete any necessary rulemaking process before the next fee year ( i.e., prior to October 1, 2028).

Comments: An individual expressed concern about the effect of the fee increase on small carriers and suggested that FMCSA explore alternatives such as establishing a phased increase in fees or a relief system for smaller carriers. Pink Cheetah Express, LLC and another individual specifically mentioned the effects on small businesses when discussing general operational costs. OOIDA stated that the current structure is particularly burdensome for single truck operators and small fleet carriers because they are assessed disproportionately higher fees than large motor carriers.

FMCSA Response: FMCSA recognizes that small businesses are affected by this rule. For the smallest motor carriers and small brokers, the increase is $9 per year; for the next-larger bracket, the increase is $29 per year. These increases likely represent a small percentage of annual revenue and are not disproportionately higher for small motor carriers than for large ones. The brackets are arranged such that motor carriers at the smaller end of each bracket do pay more, expressed on a per-vehicle basis, than motor carriers at the larger end of each bracket. This is unavoidable, given the statutory directive to have no more than six fee brackets (49 U.S.C. 14504a(f)(1)(C)). 5 However, the proposal adopted here raises the fee by approximately $9.41 per vehicle for the smallest motor carriers in each respective bracket (ranging from $9 to $9.67). Similarly, the overall per-truck cost of registering in 2027 is similar for the smallest motor carriers in each of the six fee brackets at approximately $54.11 to $55.67 per truck, depending on the bracket.

As required by the Regulatory Flexibility Act (5 U.S.C. 601 et seq., RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 6 FMCSA has considered the effects of the regulatory action approved in this final rule on small businesses and other small entities and to minimize any significant economic impact. The analysis for this consideration is set out below in the Regulatory Analysis in section VII.D. Based on this analysis, FMCSA has concluded and is certifying that this final rule will not have a significant economic impact on a substantial number of small entities, because the fee increase is less than one percent of the revenues or costs of small motor carriers and other small entities.

Comment: James Lamb, who serves as Executive Director of SBTC, commented that “multi-billion dollar [third-party logistics] freight brokerages” are categorized in the smallest fee bracket and should pay higher fees.

FMCSA Response: By statute, freight brokers pay the fee listed for the smallest fee bracket (49 U.S.C. 14504a(f)(1)(A)(ii)). FMCSA has no authority to require freight brokers or logistics companies to pay the UCR registration fees assessed for other brackets.

Comment: A commenter stated that the fees are too low and need to be set at a higher rate than the proposed amount for cost recovery.

FMCSA Response: The statute requires that the UCR Plan assess the collection of only the amounts necessary to provide each participating State its annual entitlement and to cover the costs of administering the UCR Plan and Agreement. Therefore, the UCR Board may not recommend fee increases that are calculated to create a surplus. If a surplus occurs, the extra money must be returned to the motor carrier industry through reduced fees in future years. The documentation provided by the UCR Board demonstrates that the proposed fee increase is calculated to provide the State entitlements and reasonable administrative expenses without creating a surplus, therefore FMCSA believes the fees should not be higher than proposed.

Comments: Obelisk Tech Systems, Inc. (Obelisk) filed a comment stating that the NPRM failed to comply with numerous statutes and Executive Order (E.O.) 12866 and other E.O.s. It asked FMCSA to withhold final rule action until these alleged defects are cured.

FMCSA Response: FMCSA addresses each point in Obelisk's comment as follows:

Obelisk contends FMCSA failed to document IOAA user fee justification under 31 U.S.C. 9701 and OMB Circular A-25. However, the cited statute and Circular do not affect UCR registration fees. This is because the registration fees are not a “charge for a service or thing of value provided by the agency.” Rather, these fees are designed to generate revenue for States to use in highway safety programs. Therefore, the UCR registration fees are not the type of fees or charges contemplated by 31 U.S.C. 9701. Although FMCSA is prescribing regulations to set fees, FMCSA is not compelled to ensure they meet the requirements of 49 U.S.C. 9701(b)(1) and (2).

Moreover, Congress specifically authorized and prescribed the method for setting UCR registration fees in 49 U.S.C. 14504a, which was implemented many years after IOAA. When a statute sets out a specific purpose and methodology, this supersedes general requirements that may exist based on an earlier statute.

Obelisk states that FMCSA failed to document the specific fee-setting procedures in 49 U.S.C. 14504a(f). However, section VI of the NPRM specifically describes the reasons for the Board's proposed fee adjustment and the Agency's evaluation of the recommendation.

Obelisk states that the NPRM does not document the cost-benefit analysis required for significant rules under E.O. 12866 and OMB Circular A-4. Although the NPRM and this final rule were not designated by OMB as significant, FMCSA has considered the potential costs and benefits of this action, and determined that there are none. FMCSA discusses below the expected impacts, consistent with the requirements of E.O. 12866 and Circular A-4.

Obelisk contends that “UCR fees fall heavily on small carriers,” and the NPRM does not contain an adequate regulatory flexibility analysis. However, the NPRM contains the required regulatory flexibility analysis in Section VII.D.

Obelisk states that agency outreach to small businesses on significant proposed rules is required. This characterization is not aligned with the text of Public Law 104-121, codified in the note to 5 U.S.C. 601, which states that, “Whenever appropriate in the interest of administering statutes and regulations within the jurisdiction of an agency, which regulates small entities, it shall be the practice of the agency to answer inquiries by small entities concerning information on, and advice about, compliance with such statutes and regulations, interpreting and applying the law to specific sets of facts supplied by the small entity.” While this section does not affect the rulemaking, FMCSA answers inquiries by small businesses about UCR fees when received.

Obelisk states that the UCR is a State-administered fee program and federalism analysis is required under E.O. 13132. The NPRM contains a federalism analysis at Section VIII.H.

Obelisk contends that UCR fee changes may impose unfunded mandates and that the NPRM does not properly document its analysis of such unfunded mandates. FMCSA disagrees that the registration fees proposed in the NPRM contain unfunded mandates. UMRA requirements are imposed on proposed rules that “may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year. . . .” (49 U.S.C. 1532(a)). This rule does not impose any costs, and therefore an UMRA assessment is not required.

Obelisk states that FMCSA failed to address the Agency's plan for submitting the final rule to Congress and the Comptroller General. However, agencies are not required to document such a plan when issuing an NPRM; the requirements of the Congressional Review Act are triggered upon issuance of a final rule. FMCSA submits all rules for review under the procedures set out in 5 U.S.C. 801.

Obelisk contends that the NPRM does not document significant determination, OMB Office of Information and Regulatory Affairs (OIRA) review status, or E.O. 14094 modernized review compliance. However, section VIII.A of the NPRM states that OIRA determined that the NPRM was not a significant regulatory action and did not review it under section 3(f) of E.O. 12866. In addition, E.O. 14148, Initial Rescissions of Harmful Executive Orders and Actions, revoked E.O. 14094.

Obelisk states, “Post-Loper Bright (2024), agencies bear heightened documentation burden for reasoned explanation. The notice does not adequately document factors considered or alternatives evaluated.” Obelisk does not explain what, specifically, it believes the Agency failed to consider or to document. FMCSA reviewed the Board's recommendation on UCR registration fee adjustments, as statutorily required, and explained the process and reasoning in the NPRM. The factors that FMCSA considered are adequate.

Obelisk states, “FMCSA's primary statutory mission is motor carrier safety. UCR fee changes may affect safety compliance investment by small carriers. The notice does not document the safety impact analysis.” FMCSA disagrees that such analysis is necessary. UCR registration fees are under the Agency's commercial statutes, found in 49 U.S.C. ch. 145. This authority is separate from the Agency's safety authority in Chapter 311. The statute governing the UCR Plan and Agreement, including the determination of fees, is 49 U.S.C. 14504a. This statute does not require an analysis of safety impacts.

Obelisk states that, to the extent the rule modifies information collections, it does not document those burdens. As stated in section VIII.G of the NPRM, the proposed rule does not contain any new information collection requirements.

Obelisk states that small motor carriers face cumulative Federal regulatory burdens across multiple agencies but the notice does not document this analysis. However, there is no statutory mandate for agencies to conduct this analysis. Moreover, the regulation is not expected to lead to a cost burden since the fees are transfers, as explained below in section VII. A. Any impact to the cumulative regulatory burden for motor carriers is expected to be minor and is the result of transfers rather than regulatory costs.

Obelisk contends that the NPRM does not document Board consultation, voting record, or State participation in the fee proposal. The docket contains the Board's letter to the Secretary recommending a fee adjustment, as well as the Board's methodology in calculating the proposed adjustment. This recommendation complies with the statutory requirements in 49 U.S.C. 14504a.

Obelisk contends that E.O. 13272 requires consultation with the Small Business Administration Chief Counsel for Advocacy, but the NPRM did not document such consultation. However, this rule does not require consultation as described by Obelisk; rather, it requires the Chief Counsel for Advocacy to be available to advise agencies on request, and agencies to notify the Chief Counsel for Advocacy of any rules that have a significant economic impact on a substantial number of small entities. As previously discussed, this rule was determined not to have such impact.

Comment: One commenter stated that UCR fees directly support State motor carrier safety programs and enforcement activities, and that States would have to raise other regulatory fees if they did not receive this revenue through the UCR Plan. The commenter stated that the current fee is necessary to ensure States receive the required funding.

FMCSA Response: FMCSA agrees with this commenter.

FMCSA appreciates the commenters' feedback regarding this rulemaking and has taken all within-scope comments into consideration. For the UCR Plan to secure both the funds for required distribution of statutory entitlements to all participating States and the funds for administration of the UCR Agreement, the UCR Plan must generate sufficient revenue, which can only be accomplished by a fee increase, as permitted, and required, by the UCR statute. The upward adjustment in fees for the 2027 registration year will provide an additional $21.79 million to meet the overall statutory revenue requirement of $118 million. The UCR statute provides for the UCR Plan to request an adjustment in the fees, within a reasonable range, by the Secretary when the fees will be insufficient to provide the annual revenue entitlements to which the participating States are entitled (49 U.S.C. 14504a(f)(1)(E)(i)).

FMCSA also notes that the excess collections from past years have now been depleted. Even after the 2025 and 2027 fee increases, the fee levels for the 2027 registration year will still be less than the fees that were in effect from 2019 to 2022. FMCSA has determined that the proposed increase is necessary and reasonable, and finalizes it without modification.

FMCSA removes the current 49 CFR 367.30 (Fees under the Unified Carrier Registration Plan and Agreement for Registration Year 2023), as that registration year is now closed for all purposes and fee collections are complete. This section is therefore obsolete.

FMCSA redesignates the current section 367.40 (Fees under the Unified Carrier Registration Plan and Agreement for Registration Year 2024) as section 367.30. FMCSA also revises current section 367.50 (Fees Under the Unified Carrier Registration Plan and Agreement for Registration Years Beginning in 2025 and Each Subsequent Registration Year Thereafter), retitles the section to indicate that this fee schedule expires in the 2026 registration year, and redesignates it as section 367.40. Finally, FMCSA adds a new section 367.50 that establishes new, increased fees applicable beginning in registration year 2027, based on the recommendation submitted by the UCR Plan in its September Fee Recommendation. The fees in new section 367.50 will remain in effect for subsequent registration years after 2027 unless revised by a future rulemaking.

FMCSA has considered the impact of this final rule under E.O. 12866 (58 FR 51735, Oct. 4, 1993) and DOT Rulemaking Procedures (49 CFR part 5, subpart B). OMB determined that this final rule is not a significant regulatory action under section 3(f) of E.O. 12866 and has not reviewed it under that E.O.

This rule will increase the registration fees paid by motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies to the UCR Plan and the participating States. Although the increase in fees is a private cost to covered entities, fees are considered by OMB Circular A-4, Regulatory Analysis, as transfer payments, not costs. Transfer payments are payments from one group to another that do not affect total resources available to society. By definition transfers are not considered in the monetization of societal costs and benefits of rulemakings.

This rule establishes increases in the annual registration fees for the UCR Plan and Agreement. The entities affected by this rule are the participating States, motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. Because the State UCR revenue entitlements will remain unchanged, the participating States will not be impacted by this rule. The primary impact of this rule will be an increase in fees paid by individual motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. The increase in fees for the 2027 registration year from the 2025 registration year fees will be an average of 20 percent, ranging from $9 to $9,329 per entity, depending on the number of vehicles owned or operated by the affected entities.

E.O. 14192, Unleashing Prosperity Through Deregulation, issued on January 31, 2025 (90 FR 9065), requires that, for every new regulation issued by an agency, at least 10 prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process. This final rule is nonsignificant under E.O. 12866 and is expected to have total costs equivalent to zero, and therefore does not qualify as either an E.O. 14192 regulatory or an E.O. 14192 deregulatory action. 7

This rule is not a major rule as defined under the Congressional Review Act (5 U.S.C. 801-808). 8

The RFA (5 U.S.C. 601 et seq. ), as amended by SBREFA, 9 requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term small entities comprises small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000 (5 U.S.C. 601(6)). Accordingly, DOT policy requires an analysis of the impact of all regulations on small entities, and mandates that agencies strive to lessen any adverse effects on these businesses.

This rule will directly affect the participating States, motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. Under the standards of the RFA, as amended by SBREFA, the participating States are not small entities. States are not considered small entities because they do not meet the definition of a small entity in section 601 of the RFA. Specifically, States are not considered small governmental jurisdictions under section 601(5) of the RFA, both because State government is not included among the various levels of government listed in section 601(5), and because, even if this were the case, no State or the District of Columbia has a population of less than 50,000, which is the criterion by which a governmental jurisdiction is considered small under section 601(5) of the RFA.

The Small Business Administration's (SBA) size standard for a small entity (13 CFR 121.201) differs by industry code. The entities affected by this rule fall into many different industry codes. In order to determine if this rule will have an impact on a significant number of small entities, FMCSA examined the 2022 Economic Census data for two different North American Industry Classification System (NAICS) industries: Truck Transportation (subsector 484) and Transit and Ground Transportation (subsector 485).

As shown in the table below, the SBA size standards for the national industries under the Truck Transportation and Transit and Ground Transportation subsectors range from $19.0 million to $43.0 million in revenue per year. To determine the percentage of firms that have revenue at or below SBA's thresholds within each of the NAICS national industries, FMCSA examined data from the 2022 Economic Census. 10 Boundaries for the revenue categories used in the Economic Census do not exactly coincide with the SBA thresholds. Instead, the SBA threshold generally falls between two different revenue categories. However, FMCSA was able to make reasonable estimates as to the percentage of small entities within each NAICS code.

The percentages of small entities with annual revenue less than the SBA's threshold ranged from 86.4 percent to 100 percent. Specifically, approximately 86.4 percent of All Other Transit and Ground Passenger Transportation (485999) firms had annual revenue less than the SBA's revenue threshold of $19.0 million and would be considered small entities. FMCSA estimates 100 percent of firms in the Mixed Mode Transit Systems (485111) national industry had annual revenue less than $29.0 million and would be considered small entities. The table below shows the complete estimates of the number of small entities within the national industries that may be affected by this rule.

Therefore, while FMCSA has determined that this rule will impact a substantial number of small entities, it has also determined that the rule will not have a significant impact on them. The effect of this rule will be to increase the annual registration fee that motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies are currently required to pay. The increase would be 20 percent on average, or $9 to $9,329 per entity, depending on the number of vehicles owned or operated by the affected entities. For example, as discussed above, the per-vehicle fee will increase by approximately $9.41 for the smallest motor carriers in each respective bracket (ranging from $9 to $9.67).

Although the RFA does not define a threshold for determining whether a specific regulation results in a significant impact, the SBA, in guidance to government agencies, provides some objective measures of significance that the agencies can consider using. One measure that could be used to illustrate a significant impact is labor costs; specifically, whether the cost of the regulation exceeds one percent of the average annual revenues of small entities in the sector. Given that entities owning between one and two commercial motor vehicles would experience an increase of $9, a small entity would need to have average annual revenue of less than $900 to experience an impact greater than 1 percent of average annual revenue. This is an average annual revenue that is smaller than would be required for a firm to support one employee. The increased fee amount and impact on revenue increase linearly depending on the applicable fee bracket.

Consequently, FMCSA certifies that the final rule will not have a significant economic impact on a substantial number of small entities.

In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857), FMCSA wants to assist small entities in understanding this final rule so they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the final rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult the person listed under FOR FURTHER INFORMATION CONTACT .

Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business Administration's Small Business and Agriculture Regulatory Enforcement Ombudsman (Office of the National Ombudsman, see https://www.sba.gov/about-sba/oversight-advocacy/office-national-ombudsman ) and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of FMCSA, call 1-888-REG-FAIR (1-888-734-3247). DOT has a policy regarding the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.

UMRA (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. The Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $206 million (which is the value equivalent of $100 million in 1995, adjusted for inflation to 2024 levels) or more in any one year. Although this final rule will not result in such an expenditure, and the analytical requirements of UMRA do not apply as a result, the Agency discusses the effects of this rule in sections VII. A. and VII. C. of this analysis.

This final rule contains no new information collection requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under section 1(a) of E.O. 13132 if it has “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.”

FMCSA has determined that this rule will not have substantial direct costs on or for States, nor would it limit the policymaking discretion of States. Nothing in this document preempts any State law or regulation. Therefore, this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Impact Statement.

The Consolidated Appropriations Act, 2005, 11 requires the Agency to assess the privacy impact of a regulation that will affect the privacy of individuals. This rule will not require the collection of personally identifiable information (PII). The Privacy Act (5 U.S.C. 552a) applies only to Federal agencies and any non-Federal agency that receives records contained in a system of records from a Federal agency for use in a matching program.

The E-Government Act of 2002, 12 requires Federal agencies to conduct a Privacy Impact Assessment (PIA) for new or substantially changed technology that collects, maintains, or disseminates information in an identifiable form. No new or substantially changed technology will collect, maintain, or disseminate information as a result of this rule. Accordingly, FMCSA has not conducted a PIA.

In addition, the Agency submitted a Privacy Threshold Assessment (PTA) to evaluate the risks and effects the rulemaking may have on collecting, storing, and sharing PII. The PTA was adjudicated by DOT's Chief Privacy Officer on May 28, 2026.

This rule does not have Tribal implications under E.O. 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect 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.

FMCSA analyzed this rule pursuant to the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and determined this action is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement under DOT Order 5610.1D, 13 Subpart B, Subsection e, paragraph (6)(h). The categorical exclusion (CE) in paragraph (6)(h) covers regulations and actions taken pursuant to regulation implementing procedures to collect fees that will be charged for motor carrier registrations. The requirements in this final rule are covered by this CE.

Accordingly, FMCSA amends title 49 CFR, subtitle B, chapter III, part 367 as follows:

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared and recommended by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The annual 2026 Pacific cod TAC allocated to catcher vessels greater than or equal to 50 feet (15.2 m) length overall using HAL gear in the Central Regulatory Area of the GOA is 1,387 metric tons (mt) as established by the final 2026 and 2027 harvest specifications for groundfish in the GOA (91 FR 11902, March 11, 2026).

The Regional Administrator, Alaska Region, NMFS (Regional Administrator) has determined that the annual 2026 Pacific cod TAC allocated to catcher vessels greater than or equal to 50 feet (15.2 m) length overall using HAL gear in the Central Regulatory Area of the GOA will be or has been reached. Therefore, in accordance with § 679.20(d)(1)(i) and (ii)(B), the Regional Administrator is establishing a directed fishing allowance of 1,187 mt and is setting aside 200 mt as incidental catch to support other groundfish fisheries. The Regional Administrator finds that this directed fishing allowance will be or has been reached. Consequently, in accordance with § 679.20(d)(1)(iii), NMFS is prohibiting directed fishing for Pacific cod by catcher vessels greater than or equal to 50 feet (15.2 m) length overall using HAL gear in the Central Regulatory Area of the GOA to prevent exceeding this sector's allocation of Pacific cod TAC.

While this closure is effective the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, 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 would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data on Pacific cod catch in a timely fashion and would delay the closure of Pacific cod by catcher vessels greater than or equal to 50 feet (15.2 m) length overall using HAL gear in the Central Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data on Pacific cod catch by catcher vessels greater than or equal to 50 feet (15.2 m) length overall using HAL gear in the Central Regulatory Area of the GOA only became available as of August 27, 2026.

There is good cause under 5 U.S.C. 553(d)(3) to establish an effective date less than 30 days after date of publication. This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.